Archive for June, 2010

Job candidates behaving badly … 8 bonehead moves.

June 30, 2010

From the WSJ:  eight bone-headed moves job hunters commonly make. …

1. Entitlement syndrome.

One company received an unsolicited résumé full of grammatical and spelling errors with a note asking to have someone on the company’s staff correct them. “I’m sure you have people there that could fix them before they put it into your online database on my behalf,” the applicant wrote.

2. Behaving rudely.

A candidate for an administrative position showed up to an interview with a preschooler in tow.

A candidate for an entry-level outsourcing job at Accenture Ltd. unwrapped a sandwich during an interview and asked the hiring manager if he could eat it since it was lunchtime.

Job hunters have also acted rudely by showing up more than an hour early for interviews, interrupting interviewers in mid-sentence and refusing to fill out a job application, referring hiring managers to their résumés instead, say hiring managers and recruiters.

3. Acting arrogantly.

In the middle of the meeting, the interviewer suddenly heard Madonna singing — it was the ring tone for the candidate’s cell phone … and the person took the call.

Other candidates show arrogance by demanding to bypass human resources, inquiring about salary and job benefits at the start of an interview and insulting former employers.

4. Lies, lies, lies.

Job hunters also commonly lie by taking credit for work they didn’t do, inflating their salaries and saying they don’t smoke when seeking positions at companies with no-smoking policies.

5. Dressing down.

“She was wearing a t-shirt three sizes too small with bright red letters across her chest … I couldn’t help but pay more attention to her breasts than her résumé.”

While it might be acceptable to skip a suit and tie in some office environments, it’s never appropriate to wear jeans, cleavage-revealing tops, flip-flops or skin-tight pants.

“You should also take out all your funky piercings and hide your tattoos.” 

6. Oversharing.

After learning that a position involved a great deal of travel, a candidate for a senior sales job at a midsize manufacturer told the interviewer he was worried about how his saltwater fish would get fed while he was away.

Other things employers say that job hunters reveal — but shouldn’t — include comments about their health problems, details about their love lives and tales of their financial hardships.

7. Saying thanks with gifts.

A finalist sent a pricey fruit bowl from Tiffany & Co. to a hiring manager following a third interview. The candidate was instantly knocked out of the running. “That was a real big faux pas … It’s trying to buy yourself a job..”

A thank-you note is really the only appropriate way to show appreciation. But even so, hiring managers say they’ve received everything from pricey tickets to sporting events to bottles of alcohol —a ll big no-no’s.

8. Sporting a mom-and-dad complex.

One recruiter reports has receiving emails from parents of applicants asking why the company hasn’t extended their adult children job interviews.

“There’s a significant lack of judgment when you have your parents intercede with a potential employer … We expect individuals to be able to represent themselves and sell themselves.”

Hiring managers say they’ve also seen moms and dads accompany their offspring to job interviews and try to intervene in salary negotiations.

WSJ, Big Blunders Job Hunters Make,JUNE 25, 2010
http://online.wsj.com/article/SB10001424052748703615104575328641186507512.html?mod=WSJ_hps_MIDDLESixthNews

Finally, an event sponsorship that won’t make you barf …

June 30, 2010

Pepto-Bismol is joining the list of sponsors for Nathan’s Famous Fourth of July International Hot Dog Eating Contest.

It will be the first stomach remedy product associated with the event.

Held since 1916, the hog-dog eating contest is an iconic summer ritual in which contestants scarf down as many wieners as possible in 10 minutes. Last year’s winner, Joey Chestnut of San Jose, Calif., swallowed 68 hot dogs and buns.

Nationwide, nearly 1.5 million households tuned into ESPN’s live television broadcast of the circuslike event last year.

Source: WSJ, JUNE 24, 2010 Famed Hot-Dog Event Gets a New Sponsor
http://online.wsj.com/article/SB10001424052748704911704575327031542864968.html

Thanks to JMH for feeding the lead.

* * * * *

Late Breaking

Major League Eating recently announced a ban on vuvuzelas, the plastic horns whose hums have provided a constant backdrop during FIFA World Cup matches.

No kidding re: the name of the organization or the ban.

Super skimmer kept out of the Gulf … score another for the unions.

June 29, 2010

This is nuts.

A skimmer capable gathering more oil in a day than has been collected to date in the Gulf is being kept out of the action because of the union-protectionist Jone’s Act.

Makes sense since Louisiana voted for McCain and the unions voted for Obama.

* * * * *

Excerpted from AP: Super skimmer stops in Virginia while waiting for clearance to work in Gulf, June 28th, 2010

With no assurances it will be allowed to join the Gulf of Mexico oil spill cleanup, a Taiwanese-owned ship billed as the world’s largest skimming vessel is docked in Norfolk, VA ready to join the Gulf clean-op effort.

The ship—the length of 3 1/2 football fields and 10 stories high—is designed to collect up to 500,000 barrels of oily water a day.

The company is still negotiating with the Coast Guard to join the cleanup and does not have a contract with BP to perform cleanup work. The company also needs environmental approval and waiver of a nearly century-old Jones law aimed at protecting U.S. union interests.

Environmental Protection Agency approval is required because some of the seawater returned to the Gulf would have traces of oil.

The Coast Guard, which has received more than 2,000 cleanup proposals, said the supertanker skimmer had survived a preliminary review and was being studied further.

The converted oil tanker has the capacity of holding 2 million barrels, but would limit its holding tanks to 1 million barrels for environmental reasons. Oil skimmed up by the tanker would be separated from seawater, then transferred to another vessel.

Its owners claim the ship could gulp oily water at a daily rate that nearly matches the skimming total to date in the Gulf.

“This spill is unprecedented and you need an unprecedented solution.“

Full article:
http://dailycaller.com/2010/06/28/super-skimmer-stops-in-virginia-while-waiting-for-clearance-to-work-in-gulf/

Alum props: Jen Folsom of Momentum Resources featured in Newsweek

June 29, 2010

Jen Folsom, MSB MBA ‘02, got some nice press in Newsweek … she’s become one of our rockstar alums ! 

Way to go, Jen.

* * * * *

Newsweek, The Vanishing 9-to-5 Job, June 25,2010

On a typical weekday, Jennifer Folsom works from 5 a.m. to 7 a.m., from 10 a.m. to 3:30 p.m. and from 7 p.m. to about 8 p.m. Her hours may sound like they belong to a college student cobbling together a hodgepodge of part-time jobs, but Folsom is the director of a successful D.C. headhunting firm where she oversees a handful of employees with equally irregular schedules.

“We get the job done and I work 50 or 60 hours a week,” says Folsom, who adapts her work schedule to give herself time with her three sons. “I just don’t necessarily do it from 9 to 5.”

As the traditional U.S. workday continues to fade, Folsom’s experience may soon become the rule rather than the exception. Two generations ago, America’s workforce — from Ford’s assembly-line workers to IBM’s “company men” — would show up to work at 9 a.m. on the dot and leave the second the whistle blew at 5 o’clock. Now, one in five Americans works mostly nonstandard hours — nights, weekends, or rotating shifts.

Experts believe that statistic will balloon in coming years as the Great Recession accelerates a cultural shift in the corporate world, allowing more employees to tailor their work schedules to preference, position, and personal life.

Folsom has seen this firsthand. Her company, Momentum Resources, is designed to place professionals in senior-level positions with flexible hours.

When she helped start the firm in 2007, her biggest challenge was convincing CEOs that their stringent loyalty to the 9-to-5 workday was impeding them from acquiring top talent, specifically working mothers with impressive résumés.

“They just weren’t set up to do it,” she says. But the model has proven remarkably successful at companies like Best Buy and employers seem more willing to adapt these days: since 2007, Momentum has placed flex employees with more than 250 clients in the D.C. metro area, and Folsom says demand is growing.

Full article:
http://www.newsweek.com/2010/06/25/the-vanishing-9-to-5-job.html

A middle class marginal tax rate of 37% … way to go ObamaCare

June 29, 2010

There are many perverse incentives built into ObamaCare. Here’s one:

Middle class Americans who aren’t insured through their companies can buy heavily subsidized policies under the plan.

The problem is that as their incomes rise, the subsidies decline, giving them far less incentive to work more hours or stretch for raises.

For example, if the income for a family of four rises from $55,000 to $66,000, their contribution to their premium jumps from $4,400 to $6,600, erasing 22% of the $10,000 increase.

Source: Fortune, The best stimulus? Spend less, borrow less, June 24, 2010
http://money.cnn.com/2010/06/24/news/economy/stimulus_spending_cuts.fortune/index.htm

* * * * *

Note:

Assuming that the $66,000 puts the family in the 15% tax bracket, it’s the equivalent of a 37% marginal tax … right up there with the rich folks.

Go figure …

Don’t these jabronies* ever learn ?

June 28, 2010

Holder looks dumb when he has to admit that he hadn’t read the Arizonia law that he intends to challenge in court.

Napolitano looks dumber when – a day or two later – she says she’s opposed to the law but hasn’t read it either.

Pelosi says they haad to pass ObamaCare to find out what’s in it.

Now, our DC intelligentsia passes a massive Financial Regulatory law (which, incidentally, doesn’t touch Fannie or Freddie) and …

Sen. Dodd who as chairman of the Senate Banking Committee says:

“No one will know until this is actually in place how it works. But we believe we’ve done something that has been needed for a long time.” 

Source article:
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/25/AR2010062500675_pf.html

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* jabronie: used to describe a person or action lacking judgment or sense.
http://www.urbandictionary.com/define.php?term=jabronies

Bold Stroke: GMAT to start testing skills that matter to MBAs

June 28, 2010

In its biggest change in more than a decade, the B-school admissions test will have a new section designed to test advanced reasoning skills.

Two years from now, the Graduate Management Admission Test (GMAT), the primary gatekeeper to business school for generations of MBA students, will get its biggest makeover in more than a decade, with the addition of a new section designed to test advanced reasoning skills.

The new section will replace one of the two writing sections currently on the exam … The test’s current verbal and math sections will remain unchanged.

The coming changes to the GMAT were pressed by faculty members at business schools around the world, who told the testing organization that they wanted a section that simulated the skills students use in MBA classrooms.

“These questions are really microcosms of what goes on in the MBA classroom, and it will help schools identify students [who] will thrive in the classroom, not just survive.”

The format of the new GMAT section—which GMAC has dubbed the integrated reasoning section—will be different from anything students have encountered before on the test.

Test takers will need to interpret charts, graphs, and spreadsheets, determine the relationships among data points, and answer interactive questions that will test their analytical skills.

The changes to the exam mirror shifts in the business school classroom in recent years, as schools have changed their curriculums to emphasize problem-solving and critical thinking.”So far, with the students we’ve tested, they felt like it did simulate what they are expected to do in business school.” 

Excerpted from BusinessWeek, The GMAT Gets a Makeover, June 24, 2010
http://www.businessweek.com/bschools/content/jun2010/bs20100624_048037.htm

Yesterday the Homa Files, today the Wall Street Journal …

June 25, 2010

Yesterday, the Homa Files posted ”Business Roundtable CEOs come out of the closet … “
https://kenhoma.wordpress.com/2010/06/24/business-roundtable-ceos-come-out-of-the-closet/

Punch line:  CEOs are finally speaking out about Obama’s anti-business policies.

Today, the WSJ is on the case

WSJ, Business’s Buyer’s Remorse, June 25, 2010
http://online.wsj.com/article/SB10001424052748704911704575327241599453032.html?mod=WSJ_Opinion_BelowLEFTSecond

Punch line:  For cooperating with the White House, member companies of the Business Roundtable gets socked with higher taxes and more regulations.

Think the WSJ editors read the Homa Files ?

Bold Move: CA stops use of welfare debit cards in casinos

June 25, 2010

Gov. Schwarzenegger has issued an executive order barring California welfare recipients from using state-issued debit cards at casino ATMs.

The order followed a report by The Los Angeles Times that found CalWORKS cards were used to withdraw cash in more than half the casinos in the state.

The newspaper reported that welfare recipients have withdrawn more than $1.8 million in taxpayer cash at casinos since October.

Schwarzenegger’s order requires welfare recipients to sign a pledge that they will use their benefits only to meet the basic needs of their families.

Source: AP, Shwarzenegger bans welfare cards at casinos,  June 24, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/06/24/AR2010062406172.html

In 1970, 10% of babies were born out of wedlock; in 2008, the percentage was …

June 25, 2010

… a whooping 40.6% for the overall population, and 72.3 % for non-Hispanic Blacks.

May be common knowledge, but was a shocker to me …

image

image

http://thf_media.s3.amazonaws.com/2010/pdf/wm2934_bythenumbers.pdf?utm_source=Newsletter&utm_medium=Email&utm_campaign=Morning%2BBell

Warning: this will make your mouth water … guaranteed !

June 25, 2010

The Center for Science in the Public Interest puts out an annual ranking of unhealthy (i.e. really good tasting) restaurant dishes.

Reads like they just shadow the Homa family around for awhile.

I may submit a job app – imagine getting paid for scarfing this stuff.

* * * * *

NutritionAction CSPI: Xtreme Eating 2010 , June 2010

2010 Xtreme Eating Awards

Five Guys Bacon Cheeseburger: A Five Guys Bacon Cheeseburger has 920 calories and 30 grams of saturated fat (1½ days’ worth) without toppings. Think two Quarter Pounders. And how many Five Guys patrons eat a burger without fries or a drink? Add 620 calories for the regular fries .

The Cheesecake Factory’s Chocolate Tower Trouble Cake. A tower of any food is rarely a good idea. If it weren’t served on its side, this one would stand over six inches tall. And upright or not, the slab of cake still weighs in at threequarters of a pound. What do you get for all that heft? Just 1,670 calories and 2½ days’ worth of saturated fat (48 grams.

California Pizza Kitchen Tostada Pizza with Steak: The (individual-size) Tostada Pizza brings 1,440 calories and more than a day’s saturated fat (27 grams) and sodium (2,630 mg) to each diner. The crust alone supplies some 400 calories’ worth of flour (about 1 cup). With grilled steak the pizza has 1,680 calories, 32 grams of sat fat, and 3,300 mg of sodium.

The Cheesecake Factory’s Pasta Carbonara: A serving of Pasta Carbonara with Chicken has 2,500 calories and 85 grams of sat fat (more than a four-day supply).

P.F. Chang’s Double Pan-Fried Noodles Combo: the Double Pan-Fried Noodles Combo delivers an off-the-charts 7,690 milligrams of sodium. That’s 3 teaspoons of salt—a five-day supply, and double the outrageous levels in Chang’s lo meins.

Outback Steakhouse New Zealand Rack of Lamb: The total damage from the lamb-plus-sides: 1,820 calories, 80 grams of sat fat, and 2,600 mg of sodium. If you’re on a diet, consider Outback’s 16 oz. Prime Rib instead. With the same sides, it’s a steal at “only” 1,580 calories, 57 grams of sat fat, and 2,240 mg of sodium.

Chevys Crab & Shrimp Quesadilla: the platter packs 1,790 calories and 63 grams of saturated fat plus 3,440 mg of sodium. Ay caramba!

California Pizza Kitchen Pesto Cream Penne:  before you add any chicken or shrimp — it hides 1,350 calories, 49 grams of saturated fat, and 1,920 mg of sodium. That’s essentially what you’d get in a plate of fettuccine Alfredo, which we dubbed a “heart attack on a plate” in 1994. 

Bob Evans Cinnamon Cream Stacked & Stuffed Hotcakes: a stack of three ordinary hotcakes that will add around 1,000 calories’ worth of white flour to your midsection, with a bonus 3 to 9 grams of trans fat (1½ to 4½ days’ worth) and 6 to 12 grams of saturated fat for your heart. And you can pump up the calories on your own by adding syrup (every ¼ cup—just 4 tablespoons— adds 200 calories). Take two pancakes and stuff them with either good stuff (like blueberries or bananas) or garbage (like cinnamon chips made of sugar and oil). Then add a layer of vanilla cream cheese (it’s more like cream than cheese) and a sugary topping (like cinnamon cream), with whipped topping as the coup de grease. Voila! Bob Evans Cinnamon Cream Stacked & Stuffed Hotcakes — bumps up the calories to 1,380, the bad fat to 27 grams of saturated plus 7 grams of trans, and the sugar to 27 teaspoons.

Source article:
http://www.cspinet.org/nah/articles/xtremeeating2010.html

Business Roundtable CEOs come out of the closet …

June 24, 2010

This is a big deal.

The Business Roundtable – the CEO “club” – has stopped playing nice-nice with the President and gone public with a 54 page listing of specifics on how the Obama administration is stifling business growth and employment prospects.

This is important for 2 reasons:

1) The policy concerns are what’s keeping CEOs from hiring.  It’s why unemployent levels will stay around 10% for the foreseeable future.

2) The letter and speech represent a new boldness on the part of the CEOs

I’ve heard directly from a Roundtable member that that the group had been silent on their concerns because, initially, they expected Obama to “move to the middle” and wanted to give him some time. Then, when they saw how vindictive and punishing the administration was towards certain industries and specific companies, they were afraid to speak out.  Now, they figure “what the hell”.

It’s too bad that the McChrystal situation hogged the air the past couple of days … that pushed these public grievances off the front pages.

* * * * *

Excerpted from WSJ : Business Leader Slams ‘Hostile’ Policies on Jobs, June 23, 2010

Where the U.S. Chamber of Commerce, the other big business group in the capital, has been openly confrontational with the administration, the Business Roundtable — whose member companies pay 60% of U.S. corporate taxes and employ 12 million people — has until now been reluctant to criticize its policies in public. That has changed.

Verizon CEO Ivan Seidenberg, current head of one of the nation’s most influential business groups, slammed the Obama administration for decisions he said “create an increasingly hostile environment for investment and job creation.” He urged the administration to “focus on the big goal,” meaning job growth, “and stop trying to micromanage industries.  By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses … the government needs to be removing itself from the private sector.”

The comments mark one of the sharpest breaks between top executives and the Obama White House. Mr. Seidenberg used  his speech at Washington’s Economic Club to unleash a list of policy grievances over taxes, trade and financial regulation.

  • Increased taxes on foreign earnings
  • Stalled free-trade agreements
  • Shareholder rights to nominate directors
  • End to secret ballots in union elections
  • Expanded damages for pay discriminationEPA regulation of greenhouse gases 

White House spokeswoman Jennifer Psaki said businesses would be helped by the administration’s policies, including its overhaul of the health-care system and promotion of clean energy. “The president has consistently pursued policies designed to create a better climate for American businesses in order to foster job creation, innovation and economic growth,” she said.

http://online.wsj.com/article/SB10001424052748704853404575322931249166908.html?KEYWORDS=business+roundtable

Business Roundtable CEOs come out of the closet …

June 24, 2010

This is a big deal.

The Business Roundtable – the CEO “club” – has stopped playing nice-nice with the President and gone public with a 54 page listing of specifics on how the Obama administration is stifling business growth and employment prospects.

This is important for 2 reasons:

1) The policy concerns are what’s keeping CEOs from hiring.  It’s why unemployent levels will stay around 10% for the foreseeable future.

2) The letter and speech represent a new boldness on the part of the CEOs

I’ve heard directly from a Roundtable member that that the group had been silent on their concerns because, initially, they expected Obama to “move to the middle” and wanted to give him some time. Then, when they saw how vindictive and punishing the administration was towards certain industries and specific companies, they were afraid to speak out.  Now, they figure “what the hell”.

It’s too bad that the McChrystal situation hogged the air the past couple of days … that pushed these public grievances off the front pages.

* * * * *

Excerpted from WSJ : Business Leader Slams ‘Hostile’ Policies on Jobs, June 23, 2010

Where the U.S. Chamber of Commerce, the other big business group in the capital, has been openly confrontational with the administration, the Business Roundtable — whose member companies pay 60% of U.S. corporate taxes and employ 12 million people — has until now been reluctant to criticize its policies in public. That has changed.

Verizon CEO Ivan Seidenberg, current head of one of the nation’s most influential business groups, slammed the Obama administration for decisions he said “create an increasingly hostile environment for investment and job creation.” He urged the administration to “focus on the big goal,” meaning job growth, “and stop trying to micromanage industries.  By reaching into virtually every sector of economic life, government is injecting uncertainty into the marketplace and making it harder to raise capital and create new businesses … the government needs to be removing itself from the private sector.”

The comments mark one of the sharpest breaks between top executives and the Obama White House. Mr. Seidenberg used  his speech at Washington’s Economic Club to unleash a list of policy grievances over taxes, trade and financial regulation.

  • Increased taxes on foreign earnings
  • Stalled free-trade agreements
  • Shareholder rights to nominate directors
  • End to secret ballots in union elections
  • Expanded damages for pay discriminationEPA regulation of greenhouse gases 

White House spokeswoman Jennifer Psaki said businesses would be helped by the administration’s policies, including its overhaul of the health-care system and promotion of clean energy. “The president has consistently pursued policies designed to create a better climate for American businesses in order to foster job creation, innovation and economic growth,” she said.

http://online.wsj.com/article/SB10001424052748704853404575322931249166908.html?KEYWORDS=business+roundtable

Alibi Ike … and other great lines from George Will.

June 24, 2010

Conservative columnist George Will offered up his review of Obama’s oval office oil spill speech.

The link is below … here are some of my favorite lines:

  • The news about his speech is that it is no longer news that he often gives bad speeches. This one, however, was almost magnificently awful.
  • There were trite war metaphors about “the battle” against oil “assaulting” our shores, for which “siege” he has a “battle plan.” (Our government declares war promiscuously — on drugs, poverty, cancer, environmental problems, etc. — but never when actually going to war.)
  • As usual, he attacked George W. Bush. (Chicagoan Obama resembles the fictional baseball player invented by Chicago’s Ring Lardner — Alibi Ike.)
  • He introduced a weird lament about a problem he has aggravated: “We’re running out of places to drill on land and in shallow water.” He and his party oppose drilling in the tundra of ANWR and in shallower coastal waters.
  • “The one answer I will not settle for is the idea that this challenge is somehow too big and too difficult to meet. You see, the same thing was said about our ability to produce enough planes and tanks in World War II.” Was it really? By whom? Most Americans then were too busy producing—and flying and driving—planes and tanks to entertain the thought Obama imagines was prevalent.
  • Advisers should explain to our Demosthenes that the correlation between the quantity of his speaking and the fortunes of the things for which he speaks is inverse.
  • Diminishing returns from his rhetoric may reflect the public’s recoil from wretched excess everywhere. The unceasing torrent of his ill-chosen words is analogous to the unstoppable oil spill, which itself resembles his and his party’s incontinent spending.

Newsweek, Word Spill – Our Demosthenes is also Alibi Ike, June 20, 2010
http://www.newsweek.com/2010/06/20/word-spill.html

Making quirky profitable … the Subaru way.

June 24, 2010

Punch line: By maintaining the quirky persona of its brand and keeping prices low, Subaru has quietly, but aggressively, increased growth … even through the recession.

* * * * *
Excerpted from: Bloomberg Business Week, At Subaru, Sharing the Love Is a Market Strategy, May 20, 2010

While much of the U.S. auto business is just beginning to emerge from retrenchment mode, sales at Subaru are climbing.

“Our customers were not affected by the recession … They have a better financial situation.”

By courting financially solid buyers with a taste for the quirky, has grown steadily and, for the first time, its unit sales exceed those of such better-known brands as BMW, Lexus, Mazda, and Volkswagen.

Subaru has long been popular with a core of professorial drivers in tweed in the Northeast and flannel-clad outdoor enthusiasts in the Northwest. Lately, however, the carmaker has been aggressively moving beyond the snowy, soggy, and mountainous regions that are its stronghold.

Subaru’s secret is that it understands the customers who drive its cars and has gotten smarter and more aggressive about reaching out to new ones who would feel at home as part of that clan.

  • The average household income of a Subaru owner is $88,000, the same as Honda Motor and $10,000 more than Toyota.
  • Subaru buyers are three years younger than the industry average and a quarter more likely to have a college degree.
  • They are a thrifty lot, traditionally buying less car than they can afford. Some 36 percent pay cash.

Much of the automaker’s marketing focuses on cementing its connection to customers.

  • Subaru’s research shows them to be an eco-friendly bunch who value the freedom to go where they want, when they want.
  • Subaru supports causes such as the American Canoe Assn. and the Leave No Trace Center for Outdoor Ethics. Unlike luxury car buyers, Subaruers are “customers who are not buying things, but experiences.”
  • “In their marketing they’ve been focusing on what creates love between the owner and the automobile.”
  • “They are basically adding people who are Subaru buyers in their hearts, but don’t know it.”

The bottom line: By maintaining the quirky persona of its brand and keeping prices low, Subaru has quietly, but aggressively, increased growth.

Full article:
http://www.businessweek.com/magazine/content/10_22/b4180018655478.htm

And you thought you had a bad day …

June 23, 2010

This week hasn’t been going well for President Obama.

First, he catches a Tony Hayward ricochet: As the media tries to pillory Hayward for yachting (a dumb act, for sure), Obama gets outted for taking another stroll around the golf links.  His presser says “ Everyone is ok with the President taking some time off to clear his head on Father’s Day.”  Ken asks: why wasn’t he spending Father’s Day with his kids ?

Then, it gets leaked that Rahm Emmanuel is packing his bag.  Why?  Because a “pragmatic” Rahm is getting burned out butting heads with the White House ideologues.  Ouch.

Then, budget master Peter “Bend the Cost Curve” Orzag announces that he’s outta there in July.  Let somebody else tally the healthcare savings and cut the deficit.  Ouch, again.

Then, a Federal judge in LA rules that the arbitrary and capricious moratorium on off-shore oil drilling is, well, arbitrary and capricious.  Seems he didn’t think the 40 year record of non-spills from thousands of wells should be simply dismissed as an inconvenient fact – and he did have sympathy with the 90,000 workers who were losing their livelihoods.  Hmmm.

Then Gen McChrystal goes off in Rolling Stone – yakking about incompetency, disorganization, and lack of commitment in the administration – at a time that our military heroes are in harm’s way.  Most interesting point: nobody’s disputing the facts, just lamenting that loose-lipped Stanley went rogue.

Now, Obama has a tough decision,  Give McChrystal a pass and he confirms that he isn’t in command.  Fire him and the he takes sole ownership of the Afghan war – which, by the way, isn’t going that well these days.

Cue the teleprompter …

Bailing out government pension plans …

June 23, 2010

There has been mucho chatter recently about gov’t pay levels which exceed comparable private industry rates and gov’t pension plans that make the UAW envious.

Bottom line: Many states have crafted gov’t pension plans that are going to implode in the not too distant future.

So, tax payers in fiscally responsible states will be forced to ante more into the pot to bail out the free-promising, overspending states.

Think about it next time you’re standing in line at the DMV.

* * * * *

Bloomberg: Pension Plans Go Broke as Public Payrolls Expand, June 11, 2010

Seven states will run out of money to pay public pensions by 2020.

That hasn’t stopped them from hiring new employees.

The seven are Illinois, Connecticut, Indiana, New Jersey, Hawaii, Louisiana and Oklahoma.

Combined, these states added 9,700 workers to both state and local government payrolls between December 2007 and April of this year.

Companies started firing more employees than they hired in January 2008.

Employment peaked in December 2007 at 115.6 million. During the subsequent two years, companies shed 8.5 million workers, or 7.3 percent.

By contrast,  from a peak of 19.8 million, state and local governments have reduced headcount by 231,000, or 1.2 percent.

What our politicians are telling us is that state and local governments are optimally sized — just right.

If tax revenue declines, well, then we’ll just have to find more taxes and fees to replace it.

We couldn’t possibly look at the cost-of-labor side of the equation.

If you really want to provoke outrage, you have to take into consideration public pensions.

Generous and bloated are the terms that have been used to describe them … What’s clear is that such pensions and benefits now seem unaffordable, because those responsible — state and, sometimes, local governments — didn’t put away enough, or haven’t invested wisely enough, to pay for them.

Full article:
http://www.bloomberg.com/apps/news?pid=20601039&sid=awW.rqJzAad4

That American brand may be, well, Mexican.

June 23, 2010

Punch line: From Thomas’ English Muffins to Borden milk, Saks Fifth Avenue department stores to The New York Times newspaper, Mexican investors have taken advantage of low interest rates and depressed prices during the economic downturn to expand their holdings in el norte.

* * * * *

USA TODAY, Mexico invests, puts its mark on more U.S. brands, June 18, 2010 

Huge Mexican corporations are snapping up U.S. brand names, opening U.S. factories and investing millions of pesos north of the border.

  • Grupo Lala, Mexico’s largest dairy company, purchased Dallas-based National Dairy Holdings, which controls the Borden brand and 18 regional dairies selling milk under the names Flav-O-Rich, Dairy Fresh, Velda Farms, Sinton’s, Cream O’ Weber, Goldenrod and others.
  • Grupo Bimbo, Latin America’s largest baked-goods company, bought the U.S. baked-goods operations of Weston Foods for $2.4 billion, taking over 22 industrial bakeries and 4,000 distribution routes, and national brands such as Entenmann’s pastries.
  • Mexican billionaire Carlos Slim has expanded his empire into the USA. In 2008, Slim bought a 6.9% share in The New York Times and  increased his stake in the Saks Fifth Avenue department stores from 10.9% to 18%.

http://www.usatoday.com/money/world/2010-06-17-mexowned_N.htm

Obama shells out a mega-buck of taxpayer money to extol his “Big … Deal”

June 23, 2010

On Friday, President Obama’s economic victory lap stopped for an hour in Columbus, Ohio where he declared:

This is a “big….deal,” pausing for effect between the two words between which Biden had inserted an expletive in an overheard whisper three months ago.

CBS estimates that the trip cost taxpayers – you know, about half of the country —  between $500,000 and $1 million since:

  • Air Force One alone bills out at $100,000 per hour
  • There’s a fleet of accompanying military aircraft to carry limos and secret service vehicles
  • The Marine One helicopter is  on standby
  • The security entourage includes Secret Service, local police and other first responders.

And, oh yeah, construction sites in the immediate area were shut down for the day (on Secret Service orders) – so, about 100 workers got unpaid (and unwanted) days off. 

Source article: CBS News, Obama Jokes About Biden’s “Big F-ing Deal” Comment, June 18, 2010
http://www.cbsnews.com/8301-503544_162-20008201-503544.html

No budget … no budget director … no problem (unless you’re in the half that pays taxes)

June 22, 2010

Previously,  Congress decided that it wouldn’t pass a budget this year – for the first time since 1974.

Apparently, our elected reps concluded that no budget would be easier to defend during this year’s election campaigns than a budget with a staggering deficit.

No Budget from Congress for the first time since 1974.

Congress to busy spending and regulating they have no time for budgeting.

House Majority Leader Steny Hoyer announced that, for the first time since 1974, the House will not pass a budget resolution this year. 

Without a House budget, no final and binding budget can be enacted. 

As the House Rules Committee website explains, “The budget resolution provides Congress with the opportunity to lay out its spending, revenue, borrowing and economic goals and serves as the vehicle for imposing internal budget discipline through established enforcement mechanisms.” 

No budget means no caps on discretionary spending, and makes it severely unlikely that the Bush tax cuts will be extended, raising taxes on low- and middle-income families in the midst of a recession.

http://www.valuesvoternews.com/2010/05/no-budget-from-congress-for-first-time.html

Now, the WSJ reports that White House budget director Peter Orszag will be leaving his post in July. 

Though he lied thru his teeth on ObamaCare economics, he’s known as one of the few deficit hawks hanging around the White House.

So, this can’t be good news.  We’ll be getting another spend, spend, spend ideologue, for sure.

WSJ, Obama’s Budget Chief to Step Down June 22, 2010

White House budget director Peter Orszag, one of the most visible members of President Barack Obama’s economic team, will be leaving his post in July—the most senior official to leave the Obama administration, according to two knowledgeable administration officials.

Mr. Orszag helped steer through Congress a $797 billion economic-stimulus bill in his first weeks at the White House job before becoming one of the driving forces in shaping the health-care law.

In the fall, the administration will begin the arduous process of putting together the fiscal 2011 budget amid some of the greatest budget pressures in modern U.S. history.

Mr. Orszag, a man who made his name as a budget hawk, first at the Brookings Institution, then at CBO, failed to make a dent on a deficit swollen by spending that shot up during the economic downturn and stayed high as Mr. Obama pushed spending … to restore economic growth.

The deficit is lingering at nearly 10% of the gross domestic product.

Even under the president’s assumptions on declining health-care spending and a freeze on non-security domestic spending, the deficit would not drop to what Mr. Orszag has called sustainable levels over the next decade without a sharper policy response.

 http://online.wsj.com/article/SB10001424052748704895204575321672983811544.html?mod=WSJ_hps_MIDDLETopStories

Oops on the Gulf: The perils of cash businesses …

June 22, 2010

A lot of attention has been focused on the Gulf’s claims process.

Prevalent question: why does it take so long for BP to  pay claims against lost earnings ?

Should be simple, right?

Just submit your 2009 1040 tax return as substantiation of your normal year’s income.

Oops. 

Heard a commentator make a passing observation: “most of these are cash businesses – they don’t keep a lot of records”.

English translation: they don’t report all of their income for tax purposes … so if they just submit tax returns, they won’t get paid for all of their earnings.

Horns of a dilemma: substantiate all earnings and risk getting busted for tax evasion … or take less than your full earnings in a claims settlement.

I think this is called collateral damage.

Let’s see if & when the mainstream media catches onto this one …

Which athlete has the higest Q-score ? … Hint: It’s not Tiger any more.

June 22, 2010

“Sports Q measures the familiarity and appeal of personalities in a variety of sports categories to determine targeted audience attraction.”

For the first time in more than a decade, Tiger Woods is not at the top of the annual Sports Q Scores list, upon which hundreds of millions of dollars’ worth of advertising and marketing decisions are based.

Woods has shared the top spot in the Sports Q rankings with Michael Jordan for as long as Marketing Evaluations, the  research firm that calcs Q-scores can recall.

Tiger now ranks #25. 

Here are  the 2010 Top Sports Q scores …

51 Michael Jordan       
41 John Madden         
41 Shaun White        
40 Peyton Manning   
39 Joe Montana 
39 Arnold Palmer     
38 Jerry Rice   
38 Nolan Ryan  
37 Julius Erving  
37 Magic Johnson  
37 Apolo Anton Ohno 

Source: Marketing Evaluations
http://www.sportingnews.com/golf/article/2010-06-08/sbj-tiger-woods-plummets-on-sports-q-scores-list

Are those Hillary’s footsteps that O is hearing ?

June 21, 2010

Last week in the Homa Files we opined that President Obama made a critical mistake when he heeded Michelle’s advice and passed on Hillary as his VP

My argument: Obama has no operating people in his posse of lawyers, academics and political hacks – Hillary would have made an effective COO.

For the record, the Homa Files was on record before a flurry of Hillary chatter.

A day after our post, Sally Quinn wrote in the Wash Post that Hillary and Joe Biden should switch jobs. 

Her logic: it would position Hillary for 2016.

But there’s more …

* * * * *

Buried in a weekend WSJ opinion piece on how snakebit the President appears, Peggy Noonan snuck in a showstopper:

“ … among Democrats — and others — when the talk turns to the presidency it turns more and more to Hillary Clinton.

“We may have made a mistake. She would have been better.”

Sooner or later the secretary of state is going to come under fairly consistent pressure to begin to consider 2012.“

WSJ, A Snakebit President, Noonan, June18, 2010
http://online.wsj.com/article/SB10001424052748704289504575313181930072638.html

* * * * *

A couple of factoids:

Shortly after the 2008 election, a plugged-in politico told me that Hillary was looking towards 2012 by “keeping the core of her campaign group, expecting Obama’s presidency to implode.”

Hmmm.

Then last fall, Gallup published the results of a survey that revealed Hillary to have favorable ratings than Obama … and that was before the healthcare fiasco, the Sestak meddling, the dissing of Israel, the BP oil spill, etc.  Gotta think her gap is even greater now.

image

Source: Gallup, Hillary Clinton Now More Popular Than Barack Obama October 15, 2009
http://www.gallup.com/poll/123665/Hillary-Clinton-More-Popular-Barack-Obama.aspx

* * * * *

These days, Bill is running around trying to save Dem congressional candidates who are trying to distance themselves from Obama.

Think Obama — with his approval rating down to 41% and even mainstream media questioning his competence — is looking over his shoulder ?

Keep your non-union skimmers away from the Gulf (continued)

June 21, 2010

Last week, several sources reported that Team Obama was repelling foreign nation’s offers of high capacity skimming vessels. 

Why ? Because the ships and barges were made outside the U.S., possibly with non-union labor – and barred by the Jones Act.

Here’s the WSJ’s recap …

* * * * *

JUNE 19, 2010 The President Does a Jones Act
Why Obama turned down foreign ships to clean up the Gulf.

President Obama has repeatedly said his Administration is doing everything in its power to expedite the oil clean-up and mitigate the damage.

But in the two weeks immediately after the spill, 13 foreign governments reached out and offered their assistance.

The U.S. State Department response?

“While there is no need right now that the U.S. cannot meet, the U.S. Coast Guard is assessing these offers of assistance to see if there will be something which we will need in the near future.”

The Belgian dredging group DEME says it has offered the U.S. specialized vessels and technology that can help clean up the spill in three to four months compared to the estimated nine months that the U.S. will need.

There are only a handful of these vessels in the world, and most of them belong to Dutch and Belgian companies. So why aren’t we calling on them?

Blame it on the protectionist Merchant Marine Act of 1920, also called the Jones Act, that requires ships working in U.S. waters to be built, operated and owned by Americans — unions don’t want ships built with foreign labor to be used in U.S. waters.

Presidents can suspend the Jones Act in emergencies, as George W. Bush did after Hurricane Katrina. But the Obama Administration continues to maintain that this isn’t necessary.

There’s no excuse for turning away ships that can clean up the oil merely because that might offend Mr. Obama’s union friends.

Full article:
http://online.wsj.com/article/SB10001424052748704324304575306881766723718.html?mod=djemEditorialPage_h

Submarine warfare: Quiznos tosses focus groups for “speed dining”

June 21, 2010

Punch Line: To speed time-to-market, Quiznos employs rapid-fire taste tests that help it give customers what they want, sooner.

* * * * *

Excerpted from Bloomberg Business Week: Damn the Torpedoes! Getting Quiznos, January 14, 2010

Quiznos has always positioned itself as a cut above Subway in the fast-food market — and priced its sandwiches accordingly.

While restaurant operators regularly enlist consumers for feedback, many have turned away from traditional focus groups … to avoid the peril of group think from a methodology that some experts say is “a bit dated”.

Quiznos  swear by a method called “speed-dining”.  The company  empanels as many as 25 groups in back-to-back, 90-minute tastings.

By reworking recipes based on snap reviews, Quiznos can get products from test kitchen to the market in six months … twice as fast as competitors.

Now Quiznos is gunning for upmarket consumers with two new subs priced at up to $7.49.

That may seem foolhardy, with unemployment at 10%. But Quiznos is confident.

After all, speed diners ate them up in October.

Full article:
http://www.businessweek.com/print/magazine/content/10_04/b4164054518256.htm

Smackdown: Hulk Hogan vs. the Flintstones

June 18, 2010

Punch line: Wrestling superstar Hulk Hogan says  a Cocoa Pebbles commercial degrades his image.

Gotta be stopped !  Otherwise, some jabrone will start claiming that wrestling is fake. Go Hulk !

* * * * *

Excerpted from:  Tampa Tribune: Yabba-Dabba-Sue! Hulk Hogan files suit against Cocoa Pebbles maker,  May 21, 2010

Hulk Hogan is suing the maker of Cocoa Pebbles, accusing the company of appropriating his image in commercials for the cereal.

In the “Cocoa Smashdown” commercial, a cartoon character resembling Hogan easily beats Fred and Barney inside the ring. But then Bamm-Bamm steps in and pounds the blond-haired, mustachioed wrestler to bits.

Hulk, the federal lawsuit states, “is shown humiliated and cracked into pieces with broken teeth.'”

The commercial character goes by the name “Hulk Boulder,” which Hogan’s lawsuit says is a name he used early in his career until wrestling promoter Vince McMahon decided he should have an Irish name.

The wrestler contends he has been harmed by, among other things, “the unauthorized and degrading depictions.”

Source article:
http://www2.tbo.com/content/2010/may/21/211702/yabba-dabba-doo-hulk-hogan-sues-cocoa-pebbles-make/news-breaking/

* * * * *

To view commercial click pic or link below

image 
http://www.youtube.com/watch?v=E7S7KFKmYP4

“Keep your non-union oil skimmers out of our Gulf” … huh

June 18, 2010

“We’ve been doing everything we can since Day 1”

Oh really ?

Except for letting other nations send their oil skimming fleets to the Gulf.

Team O has turned down offers from the Dutch (on day 3), the Swedes, the Saudis, and the Mexicans.

Why ?

The Jones Act prohibits foreign flagged ships from our waters – except for single port loading or unloading of freight or people. It’s “an antiquated 1920 law mandating that goods shipped between U.S. ports be handled by U.S.-built and -owned ships manned by U.S. crews.”

Why the Jones Act?  Because unions say so.

Unions fiercely support the law as a means of preserving U.S. jobs.

Bush waived the Jones Act in the first week of Katrina.

Obama refuses waive it for the Gulf clean-up to because his union base says no.

Politics trumps clean-up.

Surprised ?

For more details:
http://online.wsj.com/article/SB10001424052748704198004575310800313251666.html?mod=djemEditorialPage_h

Want a mortgage? … Then quick, what’s 300 divided by 2 ?

June 18, 2010

Punch line: If you can’t add & subtract, then you probably can’t do a budget … and will eventually end up in financial hot water.

* * * * *

Excerpted from NY Times: Study Says Math Deficiencies Increase Foreclosure Risk. June 9, 2010

If you can’t divide 300 by 2, should you qualify for a loan?

That is one of the questions raised by a new study led by a Columbia business professor who found that borrowers with poor math skills were three times more likely than others to go into foreclosure.

Survey respondents were asked five questions, with the first requiring borrowers to divide 300 by 2, and the second to calculate 10 percent of 1,000.

About 16 percent of the respondents answered at least one of the first two questions incorrectly. The results were consistent among all levels of education and income.

Over all, 21 percent of the respondents whose math abilities placed them in the bottom quarter of the survey experienced foreclosure, versus 7 percent of those in the top quarter.

Mr. Meier said the study had at least two implications for mortgage lenders.

One alternative would be working to help borrowers improve their financial literacy before they took out the loan.

Another alternative might be to add math tests to the process and screen the math-challenged away.

“People say they’re doctors, so they don’t really need math … So what? We see doctors who took out loans they didn’t understand, and who are in foreclosure now.”

“Many of them don’t understand how to do a budget — which is basic math, I guess,” she said.

Full article:
http://www.nytimes.com/2010/06/13/realestate/13mort.html?ref=business

How’s your productivity today ? … More or less than $1 billion per minute?

June 17, 2010

Show ‘em you’re boss – Step #1

Summon the top execs of a (foreign) mega-corporation to the White House.

Show ‘em you’re boss – Step #2

Demand that they ante $20 billion into a recovery slush fund.

Show ‘em you’re boss – Step #3

Leave the meeting after 20 minutes.

* * * * *

Productivity = $1 billion per minute = pretty good

* * * * *

Implication: If O can keep up the pace, the National Debt will be gone in no time.

* * * * *

Question: Why did BP ante in without a fight ? 

Dumb or something up their sleeve?

I’m watching their sleeves …

http://www.reuters.com/article/latestCrisis/idUSN16174261

20/20 Hindsight: Obama’s critical mistake … coming from me, this will surprise you.

June 17, 2010

Here’s a take I haven’t heard from the pundits …

Obama is getting slammed – justifiably if you ask me – for flailing (and failing) as an executive.

Even Lib Dems are raising the competency issue.  Much chatter about his complete lack of executive experience and his entourage of lawyers, academics, and politicos. 

Not a business exec or “operating person” in sight … think goofy Joe Biden dishing stimulus money to non-existent zip codes or creepy Ken Salazar threatening BP or clueless Robert Gibbs spouting nonsense about what corporate boards do.

Obama fashions himself as a CEO. 

My take: he’s more akin to a non-executive chairman of the board … think Tony Hayward’s boss at BP.  A mega-high altitude thinker who occasionally prods the organization for better performance.

But, I’ll give Obama the CEO title.

What he’s missing is a strong, operations-oriented COO reporting to him.  Somebody who’s into details, has mental toughness, and has a propensity to get things done.

Somebody like – here it comes – Hillary Clinton.

Can’t you imagine her on the Gulf right now – kicking butt without waiting for a committee to tell her who to target – working 24 hour days to make stuff happen ?

I disagree with  Hillary on practically all policy issues and question her motives, but I’ve always conceded her aggressiveness and qualifications.

Obama ruled her out as VP because he felt threatened by her (my opinion) and because he didn’t want to operate in Bill’s shadow (Obama says).

The irony is that now Obama is counting on Bill to save the Dem’s butts in the November elections.

Imagine what the Obama administration would be like with Hillary running the operations …

Subway claims only their’s is a footlong … depends where you measure from, I guess.

June 17, 2010

Punch line: The term “footlong” has been around for decades – maybe centuries. 

But Subway, fresh off its $5 footlong promotion, is trying to claim the phrase is proprietary and suing other folks who use the term.

Come on, Subway …  go fight McDonald’s, not push-cart vendors.

* * * * *

Excerpted from BrandChannel: Did Subway Put Its Foot(long) In Its Mouth? ,  May 19, 2010

Subway successfully positioned itself via its Jared Fogle healthier eating campaign as the antithesis of “fast food.”

Launched in 2008, the chain’s $5-footlong deal has become its most successful campaign ever.

Now, Subway is moving to protect its “footlong” golden goose …

Subway is sending cease-and-desist letters to hotdog vendors using the term “footlong” to sell their wares.

In one case, Subway even targeted a hotdog vendor that has been selling “footlong” dogs for 40 years.

* * * * *

A patent attorney points out, “Federal trademark law prohibits federal trademark registrations on words which, when used in connection with the goods, are merely descriptive. A cursory Google search reveals over 6,000 uses of the words ‘footlong sandwich’ apart from the term ‘Subway.'”

Full article:
http://www.brandchannel.com/home/post/2010/05/19/Subway-Sues-Over-Footlong.aspx

The teams played to an exciting nil-nil tie … huh ?

June 17, 2010

Whew, it’s not just me thinking that soccer can be a bit of a bore these days.

You gotta wonder about games that get their oomph from drinking, fighting and incessant loud horns.

Yeah, we American sports watchers like a lot of action – grand slam homers, long TD passes, 3-pointers from downtown, etc.

So, a game where rare scoring comes on fluke plays — ref calls, penalty and corner kicks, goalie muffs –- just doesn’t get the old heart pumping.

But, the rest of the world seems to have World Cup fever.

Must be an explanation …

* * * * *

WSJ: The Fading Art of Goal Scoring, June 14, 2010

With just 18 goals in 11 games, this World Cup is on pace to record a record-low 105 goals, down from 147 in 2006, 161 in 2002 and 171 in 1998.

“Football is more and more about keeping the ball rather than scoring goals.”

This trend could make a sport that many people regard as boring even more so.

The average number of World Cup goals has been declining steadily for the past 60 years, from a high of 5.38 goals per match when West Germany won the trophy so thrillingly in 1954, to 2.3 in Italy’s more phlegmatic triumph in 2006.

There are a number of factors behind this reduction: Defenses are organized better and players are fitter than they were 50 years ago, when the halftime interval would see gasping players reach for the nearest pack of Marlboros.

“Keeping possession is now the most important thing in football.”

“Managers are looking at the game and saying we don’t want goal scorers, we want people to keep hold of the ball.”

“But isn’t scoring the point of football?”

Full article:
http://online.wsj.com/article/SB10001424052748704324304575306532213696808.html?mod=WSJ_hps_MIDDLESecondNews

Flash: O’s morning after polling …

June 16, 2010

According to this morning’s Rasmussen poll results …

Overall, 42% of voters say they at least somewhat approve of the president’s job performance.

That’s the lowest level of approval yet recorded for this president.

The president’s approval rating has held steady in the 46% – 47% range for six months.

It remains to be seen whether this new low is merely statistical noise or the start of a lasting change.

image

Full report:
http://www.rasmussenreports.com/public_content/politics/obama_administration/daily_presidential_tracking_poll

Surprise, surprise: It’s the wealthy that drive retail sales … so, tax ‘em to improve the economy … huh ?

June 16, 2010

A new poll from Gallup (chart below) confirms that consumers who make more than $90,000 account for practically all of the periodic variation in consumer spending.

Upper-income Americans’ self-reported spending averages about $120 per day – about twice the spending level of those making less than $90,000.

Note that lower income spending is practically flatlined at $60 per day. Makes sense since most of the spending is on necessities (or at least I hope so).

But, upper income spending ranges plus or minus 20% – from about $100 per day when times are perceived to be tougher, to $145 per day when optimism reigns.

Couple of implications …

These days, gov’t programs (e,g, via Obama’s dollar-a-day “make work pay” tax rebate) don’t move the needle on lower income spending … not even the dollar-a-day seems to flow through.

Higher taxes on the wealthy drive them to the lower limit of their spending ($100 per day) … from their higher limit ($145 per day). 

Impact on the recovery?  Draw your own conclusion …

image

Source article: WSJ, Wealthy Are the Only Ones Spending, June 11, 2010
http://blogs.wsj.com/economics/2010/06/10/wealthy-are-the-only-ones-spending/

Roof leaking? … Then bulldoze the neighborhood.

June 16, 2010

Couple of takes from last nights speech ….

* * * * *

Probably just me, but the President just didn’t look right in the venue.  It reminded me of student-government day when the Class Prez got to be Mayor of Maple Heights for a day. 

Or, maybe it was the lack of a doting throng of pressers and supporters.  Just didn’t seem right.

* * * * *

I’m glad the WH leaked that last night’s address would be a shameless pivot to Cap & Tax – oops, I mean Cap & Trade.  Otherwise I would have screamed.

After a couple of minutes of necessary Gulf spill foreplay, it was …  bang ! … go for the order: 

The roof is leaking badly, so it’s time to bulldoze the neighborhood and rebuild with most costly homes (Fannie financed, of course).

* * * * *

I cringe every time Obama mentions the Nobel prize winning Secretary of Energy. 

1) Doesn’t the President know that many folks considered his Nobel Peace Prize to be laughable?  Where exactly has peace broken out ?

2) I forget, was Chou’s prize in petroleum engineering or something else relevant? 

3) What exactly has the dude done so far? Looks to me like the oil is still gushing and heading towards shore …

* * * * *

I didn’t hear any references to the Governors who have stepped up to make things happen.

Why no mention Salazar (it’s his arena), Napolitano (“it’s a matter of national security”), Holder (lien on them and put ‘em in jail), or the head of FEMA (whoever that might be).  Weren’t they dispatched to manage the mess?

There still isn’t an organization structure – staffed by capable managers – that can get control of the situation.

* * * * *

Unprecedented” has replaced “paradigm” as my most dreaded word …

Stop right there, professor … proof of citizenship, please !

June 16, 2010

Now it’s personal …

I was suspected of crossing a border to illegally access government-provided services.

Yes, your mild mannered (usually) man of the classroom … suspected of unlawful conduct.

So, an intimidating officer of the state demanded to see an ID and proof of citizenship.

Really !

OK, it wasn’t the U.S.- Mexico border … it was the Maryland-Virginia border.

The services that I was allegedly attempting to use illegally: use of the “Anne Arundel County landfill and recycling center” (a.k.a. the local dump).

That’s right.  In order to throw a couple of big cardboard boxes into the recycling grinder, I had to show my driver’s license and to produce proof of Anne Arundel County, Maryland residency.  Fortunately, I may be the only person driving around with paid real estate tax bills in my glove compartment.

Think about it.

Maryland is a state that – for example – reportedly looks the other way when it comes to admitting illegal immigrants into public schools and allows them to pay in-state tuitions at colleges.  No harm, no foul.

But, the line gets drawn in the sand at the local dump.

I didn’t mind showing my ID docs, but the situation certainly did make me scratch my head …

Flashback: Help Wanted, No Private Sector Experience Required

June 15, 2010

Have you noticed that Salazar and Napolitano haven’t been getting much Gulf face time these days ?

Have you noticed that – except for Coast Guard Admiral Allen – nobody from Team O has a clue how to take charge of the situation ?

All completely predictable from the Team O resumes – all lawyers, academics, and political hacks – nobody who has run anything but a campaign.

Here’s a flashback to last December that saw this one coming.  Only suspense was what the ‘event’ would be.

* * * * *

Originally posted December 4, 2009:
https://kenhoma.wordpress.com/2009/12/04/help-wanted-no-private-sector-experience-required/

This analysis — reported by AEI and sourced to JP Morgan researchers — examines the prior private sector experience of the cabinet officials since 1900 that one might expect a president to turn to in seeking advice about helping the economy.

It includes secretaries of State, Commerce, Treasury, Agriculture, Interior, Labor, Transportation, Energy, and Housing & Urban Development, and excludes Postmaster General, Navy, War, Health, Education & Welfare, Veterans Affairs, and Homeland Security—432 cabinet members in all.

obamacabinet
AEI, Help Wanted, No Private Sector Experience Required, November 25, 2009
http://blog.american.com/?p=7572

In the Obama administration over 90 percent of the players’ prior experience was in the public sector, academia, or law practices. Virtually no “business experience” per se.

* * * * *

Ken’s Take:

(1) Quibble with the numbers, but directionally the conclusion fits — which is why the Faux Stimulus didn’t work, why the spending is out of control, why there’s sloppy implementation (think Cash for Clunkers), and why businesses refuse to rebuild their payrolls.

(2) Note that the analysis was sourced to JP Morgan. I’ve heard from my sources that off-the-record boardroom commentaries re: the Obama administration has turned very, very negative.  But, public commentary is constrained by fear of vindictive government retribution (think pay caps, voiding of contracts, etc.).  Surprised me that JPM is associated with the analysis.

(3) Liberal blogs have marshalled to debunk the 10% number for Obama’s advisers.  Their rebuttals are laughable — largely claiming that private sector experience includes having had a parent who had a real job. having been a lawyer with at least one private sector client, having run a campaign, or having been a university administrator.  For example, here are a couple of my favorites:

Vice President Joe Biden – Private experience:  Yes.   Biden’s father worked in the private sector his entire life — unsuccessfully for a critical period.  Biden attended a private university’s law school (Syracuse), and operated a successful-because-of-property-management law practice for three years before winning election to the U.S. Senate.   Running a campaign is a private business, too — and Biden’s first campaign was masterful entrepreneurship.

Secretary of Interior Kenneth L. Salazar – Private sector experience: Yes. Besides a distinguished career in government, as advisor and Cabinet Member with Colorado Gov. Roy Romer, Salazar was a successful private-practice attorney from 1981 to 1985, and then again from 1994 to 1998 when he won election as Colorado’s Attorney General.    Salazar’s family is in ranching, and he is usually listed as a “rancher from Colorado.”

Secretary of Labor Hilda L. Solis – Private sector experience:  Yes.   Solis’s father was a Teamster and union organizer who contracted lead poisoning on the job; her mother was an assembly line worker for Mattel Toys.  She overachieved in high school and ignored her counselor’s advice to avoid college, and earned degrees from Cal Poly-Pomona and USC.  She held a variety of posts in federal government before returning to California to work for education and win election to the California House and California Senate, and then to Congress.

Secretary of Education Arne Duncan – Private sector experience:  Yes.  Duncan earned Academic All-American honors in basketball at Harvard.  His private sector is among the more unusual of any cabinet member’s, and more competitive.  Duncan played professional basketball: “From 1987 to 1991, Duncan played professional basketball in Australia with the Eastside Spectres of the [Australian] National Basketball League, and while there, worked with children who were wards of the state. He also played with the Rhode Island Gulls and tried out for the New Jersey Jammers.”  Since leaving basketball he’s worked in education, about four years in a private company aiming to improve education.

To verify the above examples — and for a few more chuckles — check out
http://timpanogos.wordpress.com/2009/11/26/obamas-well-qualified-cabinet-conservatives-hoaxed-by-j-p-morgan-chart-that-verifies-prejudices/

Where’s Red Adair when you need him ?

June 15, 2010

This is a retro post for my higher mileage readers …

Watching the BP spill gives me a touch of nostalgia.

Remember in the old days – whenever an oil well caught fire or “blew out” — the SOS went out to Red Adair – a legend in capping distressed oil wells.

Adair became world notable as an innovator in the highly specialized and extremely hazardous profession of extinguishing and capping blazing, erupting oil well blowouts, both land-based and offshore.

Over his long career he battled more than 2,000 land and offshore oil well, natural gas well, and similar spectacular fires.

He gained global notability in 1962, when he tackled a fire at a gas field in the Sahara nicknamed the Devil’s Cigarette Lighter, a 450-foot (137 m) pillar of flame.

In 1977, he and his crew (including Asger “Boots” Hansen) contributed in mending the biggest oil well blowout ever to have occurred in the North Sea (and the 2nd largest offshore blowout worldwide, in terms of volume of crude oil spilled).

Adair died August 7, 2004, so BP couldn’t call him this time.

Isn’t there another Red Adair out there someplace who can swoop in and save the day ?

Bio excerpts from Wikipedia – the Homa Family wagering bible:
http://en.wikipedia.org/wiki/Red_Adair

* * * * *

Red Adair, The Legend
http://www.redadair.com/hisstory.html

Red Adair, oil-well firefighter, dies at 89
Texas businessman revolutionized science of burning wells
http://www.msnbc.msn.com/id/5641205/

Don’t call me ‘Chevy’ … my name is Chevrolet

June 15, 2010

GM thinks the name Chevy causes brand confusion – that some dolts don’t know it’s short for Chevrolet.

I guess that these guys have never ordered a Coke — a.k.a. Coca-Cola.

Talk about swimming upstream … unnecessarily. 

* * * * *

CNNMoney.com: GM dumps Chevy for Chevrolet, June 10, 2010

General Motors has banned the use of the Chevy name in all of its corporate communications.

From now on, the bow-tie brand will go by its proper name, Chevrolet.

It’s OK if you still call your car a Chevy. It’s just that GM won’t.

According to GM:  the use of two different names for one car brand — Chevy and Chevrolet — can cause confusion abroad.

While Chevy is a popular nickname for the brand in the U.S. and Canada, it’s not used in any of the other 130 or so countries where the brand is sold.

Customers in other countries who want to learn more about Chevrolet and come across the name Chevy on a U.S.-based Web site might think it refers to a separate brand.

A memo that was sent out to GM employees even asked them not to use the Chevy name in conversation. However, the ban on speaking the two-syllable word won’t be strictly enforced.

Existing advertising and corporate communications won’t be changed, he added, but the rule will be enforced in any materials produced from here on out.

* * * * *

Founded in 1911 as the Chevrolet Motor Co., Chevrolet was named for founding partner Louis Chevrolet, an early race car driver.

Full article:
http://money.cnn.com/2010/06/10/autos/gm_no_chevy/

Cutting healthcare costs by cutting the more effective programs … huh ?

June 14, 2010

Punch line: The trillion dollar cost of ObamaCare is reportedly funded 1/2 by tax increases and 1/2 by Medicare cuts.

Of the $500 billion in Medicare cuts, 1/2 is cuts in waste & fraud (yeah, right !) and 1/2 by program cuts — the majority of which comes from killing Medicare Advantage – an HMO option to Medicare run by private insurance companies.

The idiocy: Medicare Advantage is a cheaper alternative – about 2% lower cost than traditional Medicare.

Not the way we did it in the companies where I worked …

* * * * *

WSJ: Farewell, Medicare Advantage, June 11, 2010

Medicare Advantage gives almost one of four seniors private insurance options, and Democrats are about to cut its funding by some $136 billion over the next decade.

The Congressional Budget Office says these cuts will cause enrollment to drop by 35%, the Administration’s own Medicare actuaries predict 50%, and both outfits take for granted that benefits will also decline.

Dems loathe Medicare Advantage because it sanctions the private choices that might eventually liberate the U.S. health market from government control . They also want to raid Advantage to finance their new subsidies.

Here’s the rub.

According to the Medicare Payment Advisory Commission, the Advantage HMOs that serve 15% of all seniors in Medicare cost on average two percentage points less for the same benefits than the traditional Medicare program.

Using government data, the insurer trade group AHIP estimates that Advantage beneficiaries in California spend 30% fewer days in the hospital than fee for service, 23% fewer days in Nevada.

These successes and others have come about because Advantage allowed insurers and providers to collaborate, pay for value and coordinate care.

These successes are threatening to politicians because they are a model for true Medicare reform, which would reduce the health-care powers that Congress has exercised for nearly a half-century and let patients decide.

This terror explains why Democrats are so intent on killing Medicare Advantage, and on blaming someone else for destroying a program that millions of seniors prefer.

The President knows this, so he and his fellow Democrats are gearing up to blame these cuts on . . . insurers, rather than on their own policies.

They desperately want to dodge any near-term blame when seniors who use Advantage start to lose its benefits. Ergo, blame insurers first.

Full article:
http://online.wsj.com/article/SB10001424052748703302604575295021352835874.html?mod=WSJ_Opinion_AboveLEFTTop

Thanks to JJP for feeding the lead.

* * * * *
From the Homa Files archive:
Medicare Advantage saves money … so cut it to save money. Huh?
https://kenhoma.wordpress.com/2009/09/25/medicare-advantage-saves-money-so-cut-it-to-save-money-huh/

Those who can’t do, teach … those who can’t teach, blog … ouch !

June 14, 2010

A WSJ ‘Best of the Web’ caught my eye.

Title: “Those Who Can’t Teach, Blog”

For obvious reasons, it made me cringe a bit.

Turned out that it had nothing to do with folks like me. 

It was reporting on a Philly HS teacher who took a political disagreement with a student public on her blog.

Whew !

But it did make me think …

* * * * *

WSJ: Those Who Can’t Teach, Blog, June11, 2010  
http://online.wsj.com/article/SB10001424052748703509404575300600624245226.html?mod=WSJ_Opinion_MIDDLETopOpinion

Those who can’t do, teach … those who can’t teach, blog … ouch !

June 14, 2010

A WSJ ‘Best of the Web’ caught my eye.

Title: “Those Who Can’t Teach, Blog”

For obvious reasons, it made me cringe a bit.

Turned out that it had nothing to do with folks like me. 

It was reporting on a Philly HS teacher who took a political disagreement with a student public on her blog.

Whew !

But it did make me think …

* * * * *

WSJ: Those Who Can’t Teach, Blog, June11, 2010  
http://online.wsj.com/article/SB10001424052748703509404575300600624245226.html?mod=WSJ_Opinion_MIDDLETopOpinion

Going where no Starbucks coffee could go before.

June 14, 2010

TakeAway: The ubiquity of Starbucks stores, combined with management resistance to further de-value the Starbucks “experience,” has left few opportunities for continued domestic growth of the Starbucks brand. 

To provide growth opportunities for shareholders, Starbucks will roll out a second brand, Seattle’s Best Coffee, targeting the mass-market crowd. 

In addition to distribution in fast-food outlets, supermarkets and coffee houses, Seattle’s Best will be sold in c-stores, coffee carts, and vending machines, places Howard Schultz would never consider for the Starbucks brand.

If successful, the venture will put Starbucks on the offensive against its fast-food rivals while minimizing cannibalization of Starbucks-brand sales.

* * * * *

Excerpted from WSJ, “Starbucks Targets Regular Joes,” by Kevin Helliker, May 12, 2010 

In a counterattack against its lower-priced fast-food rivals, Starbucks Corp. plans to roll out a second coffee brand.

By autumn, Seattle’s Best Coffee … will be sold in about 30,000 fast-food outlets, supermarkets and coffee houses. … Eventually … the brand will also be sold in convenience stores, drive-through kiosks, coffee carts, vending machines and mobile trucks. …

The new push by Starbucks is a response to the invasion of the specialty-coffee market by McDonald’s Corp., Dunkin’ Donuts and other fast-food chains, which offer espresso-based drinks at lower prices than Starbucks.

Starbucks has struggled to expand beyond a limited menu and a largely morning clientele.

… executives unveiled a new logo for Seattle’s Best, along with a new motto: “Great Coffee Everywhere.” The motto reflects the Starbucks theory that the success of McDonald’s and others in selling coffee has created a fresh opportunity to sell a mass-market brand.

Associating Starbucks with a product sold from vending machines could … damage the brand’s upscale image. And it could cannibalize Starbucks customers. …

But Seattle’s Best is intended to appeal to just this sort of Starbucks critic. For those who find Starbucks coffee too strong-tasting, Seattle’s Best is promoting the “smoothness” of its blend …. For those turned off by the prices and ambiance at Starbucks stores, Seattle’s Best is touted as “unpretentious.” …  

Pricing will vary widely. … Seattle’s Best beans will cost consumers less than Starbucks-brand beans but more than conventional brands …

Seattle’s Best helped pioneer the specialty coffee-house concept when it opened its first store in Seattle 40 years ago. … When Starbucks acquired it in 2003, Seattle’s Best had about 50 stores and a sizable supermarket presence, particularly in flavored beans, a lucrative category that Starbucks never entered.

Perhaps the most radical feature of the Starbucks strategy calls for selling Seattle’s Best from vending machines. Vending-machine coffee has long been regarded as a last resort, … But Seattle’s Best engineers have developed a coffee-making machine that Starbucks predicts will improve that image. …

Edit by DMG

* * * * *

Full Article
http://online.wsj.com/article/SB10001424052748703565804575238584204665378.html

* * * * *

You’ll understand what’s in it when we pass it …

June 11, 2010

Pelosi argued that once ObamaCare was passed, folks would see what was in it and rally to support it.

Seems that the opposite is occurring: as reality gets unveiled folks are jumping off the canoe …

The reasons: bad economics and aversion to so-called social democracy’.

* * * * *

Excerpted from RCP: Refusing the Entitlement Lollipop, May 28, 2010

After a brief bump, support for Democratic health reform has declined.

According to a recent Rasmussen poll, 63 percent of voters support repeal of the law, the highest level since passage.

On the theory that the distribution of lollipops usually doesn’t provoke riots of resentment, opposition to the health entitlement requires explanation.

First, the economic case for Democratic health reform has been weak, contrived, even deceptive.

Recent events in Congress make the point. Two months after passing a law that supporters claimed would reduce federal deficits, largely through Medicare cuts, the House is moving toward a temporary “doctor fix” that would add tens of billions in Medicare costs.

The economic arguments for reform — that it would reduce the deficit and health inflation — were questionable from the beginning. Now they have been revealed as absurd.

Second, Americans are troubled with health reform, not because they lack knowledge of its provisions, but because they are uncomfortable with social democracy.

  • When entitlements began in America, they were mainly focused on the elderly (through Social Security and Medicare) and the poor and disabled (through Aid to Families with Dependent Children and Medicaid).
  • Benefits for the middle class were largely given through tax deductions for mortgage interest and the purchase of health coverage by businesses.
  • America eventually retreated from some entitlement commitments to the poor because they involved a moral hazard — discouraging work and responsibility.
  • Entitlements for the elderly have remained a strong, national consensus.

The idea of a middle-class entitlement to health care, achieved through an individual mandate, subsidies and aggressive insurance regulation, seems to change the nature of American society.

Entitlements in the Obama era are no longer a decent provision for the vulnerable; they are intended for citizens at every stage of life.

Americans resist taking this lollipop precisely because America is not Europe

http://www.realclearpolitics.com/articles/2010/05/28/refusing_the_entitlement_lollipop_105762.html

Unleashing millions of entrepreneurs …

June 11, 2010

Tom “World is Flat” Friedman laments that there are now a dirth of start-ups which ultimately fuel any economy.

Here’s his Rx …

* * * * *

NYT: A Gift for Grads: Start-Ups, Thomas L. Friedman, June 8, 2010

Good jobs — in bulk — don’t come from government. They come from risk-takers starting businesses — businesses that make people’s lives healthier, more productive, more comfortable or more entertained, with services and products that can be sold around the world. You can’t be for jobs and against business.

A surprising number of entrepreneurs and innovators have told me they had voted for Obama, and an equally surprising number of them now tell me they’re unhappy.

I think part of the business community’s complaint about Obama has merit.

This administration is heavily staffed by academics, lawyers and political types. There is no senior person who has run a large company or built and sold globally a new innovative product.

And that partly explains why this administration has been mostly interested in pushing taxes, social spending and regulation — not pushing trade expansion, competitiveness and new company formation. Innovation and competitiveness don’t seem to float Obama’s boat.

How can we unleash millions of entrepreneurs.

Curtis Carlson, the chief executive of SRI International, the Silicon Valley-based innovation specialists says he would create a cabinet position exclusively for promoting innovation and competitiveness. “Secretary Newco” would be focused on pushing through initiatives — including lower corporate taxes for start-ups, reducing costly regulations (like Sarbanes-Oxley reporting for new companies), and expanding tax breaks for research and development to make it cheaper and faster to start new firms.

I’d also cut the capital gains tax for any profit-making venture start-up from 15 percent to 1 percent.

I want our best minds to be able to make a killing from starting new companies rather than going to Wall Street and making a killing by betting against existing companies.

Full article:
http://www.nytimes.com/2010/06/09/opinion/09friedman.html

When was the last time you got bumped from an overbooked flight ?

June 11, 2010

Answer: Probably a long, long time ago.

About 1 in every 5,000 passengers … about 100,000 people each year.

Doesn’t sound like a lot to me.

Still, the Feds are up in arms about it.

* * * * *

WSJ: Auctions for Overbooking, June 8, 2010

The Department of Transportation has announced new rules for airlines to compensate passengers who are involuntarily bumped from an oversold flight.

The feds want to raise payments for those involuntarily bumped to $600 from $400 for short delays and to as high as $1,300 from $800 for lengthy delays.

We have a better idea — or, more precisely, the late economist Julian Simon had one 30 years ago.

In the 1970s, Simon proposed an auction system in which airlines would offer passengers on overbooked flights a gradually rising reward for giving up their seat.

For example, if 115 passengers showed up for a flight with 100 seats, the airline would start to offer, say, a $300 voucher to passengers who agreed to take a later flight. If there weren’t enough takers at $300, the airline would increase the offer to $400, then $500, a free round trip ticket, etc., until 15 passengers volunteered.

Auctions like this are highly efficient ways of allocating a scarce resource.

Starting with American Airlines in the late 1970s, a version of the proposal was widely adopted. Studies demonstrated that airlines saved money and the rate of bumping was reduced by more than 80%.

So why are there still so many involuntary bumpings?

Because many airlines offer one take-it-or-leave-it deal — say, a $500 voucher — and if there are not enough takers, the random bumping begins.

A real auction would prevent this and optimize the welfare of all parties. Those who take the payment for a later flight are better off because they have freely chosen this option. Passengers who cannot afford at nearly any price to miss the scheduled flight are guaranteed a seat.

The airlines also benefit because an auction may save them money over a set price or a government penalty.

Full article:
http://online.wsj.com/article/SB10001424052748703303904575293011757655060.html?mod=WSJ_Opinion_LEADTop

Perceptual Differences: Is 68 cents per day enough to “buy” seniors’ support ?

June 10, 2010

In marketing, there’s a concept called a “perceptual difference”.

The basic notion is that something has to be sufficiently different from a comparative benchmark in order to make a difference in the way people think about it.

For example, throwing an extra 1/2 ounce of Cheerios into a 14 ounce box probably doesn’t pass the perceptual difference test. It adds to the cost of the product, but probably doesn’t motivate buyers to pay more for it.

Increasing the contents by, say 20%, probably does .  Folks are likely to notice.  Whether they’re willing to pay more for the super-size is another question …

Which brings us to Pres Obama’s push to win seniors over to his health care plan.

Keep in mind that roughly half ObamaCare’s comes from $500 billion in Medicare cuts – half from cutting waste & fraud (yeah, right) and half by eliminating Medicare Advantage – a step-up HMO version of Medicare.

$500 billion passes the perceptual difference test, and seniors are taking the cuts personally.

To partially offset the cuts, ObamaCare is “filling the doughnut hole” in Bush’s prescription drug plan – a program that supplemented Medicare to cover seniors’ prescriptions – but only up to a certain amount – and then kicked back in for extraordinary prescription drug users. The gap between “a certain amount” and “extraordinary – designed to suppress unnecessary prescriptions “at the margin” – is the “doughnut hole”.

To close the doughnut hole, Obama is sending each Medicare senior a check for $250 – the equivalent of 68 cents per day. Hardly a perceptual difference.

Does the administration really think that 68 cents a day will get old folks to think that $500 billion in cuts is good for them ?

* * * * *

Side note: The notion of perceptual differences also provides an explanation for why Obama doesn’t get credit for his “tax cut to 95% of workers”.  His “making work pay” program paid out a max of $400 to workers – that’s a little over $1 per day.  A significant perceptual difference ?

Draw your own conclusion.

ESPN Zones: Going … going … gone !

June 10, 2010

ESPN found it increasingly challenging to operate the sports-themed restaurants and will be closing ESPN Zones five of its seven ESPN Zone locations: Baltimore, Chicago, New York, Las Vegas and Washington.  Locations in Los Angeles and Anaheim will stay open.

ESPN Zone, an arcade-style restaurant used as a brand extension for the popular sports network, becomes a victim of the economic downturn, where consumers increasingly cut back on visits to restaurants. 

WSJ: Disney to Close Most ESPN Zone Restaurants, June 9, 2010 
http://online.wsj.com/article/SB10001424052748703890904575296690000235662.html?mod=WSJ_hps_MIDDLEForthNews

Rent vs. Buy: The rule of 15

June 10, 2010

Punch line: If the annual rent for a home is less than 1/15th of a comparable home’s market value … rent, don’t buy.

* * * * *

Excerpted from WSJ: A Fresh Look at Rent vs. Buy, June3, 2010

Is it cheaper to buy, or to rent?

The cross-over point is about 15 times annual rent.

In other words, as a rough rule of thumb, homes are probably fairly valued in a city when they cost about 15 times a year’s rent.

So, for example, if you’re paying $10,000 a year to rent a place, think twice about buying a home that costs more than $150,000.

So what’s the multiple in New York right now?

The average two-bedroom condo or townhouse in New York city costs about 32 times as much to buy as it does to rent.

Other major markets over 20 times include Seattle (24 times), San Francisco (22 times) and Portland, Ore. (22 times).

On the other hand Miami list prices are now about eight times annual rents. Phoenix is about 10 times and Las Vegas about 11.

Note: a cut-off point at 15 times rents may be on the low side … it assumes you’re only going to stay in your home for the typical seven years. If you stay a lot longer, the transaction costs of buying and selling become less and less important. That makes owning more attractive – hence a higher multiple.

The cult of homeownership makes no sense. If renting is much cheaper than buying, think seriously about it.

Full article:
http://online.wsj.com/article_email/SB10001424052748703561604575282910161870380-lMyQjAxMTAwMDAwNDEwNDQyWj.html

 

A Spillover Effect: Lessons in crisis management

June 9, 2010

OK, let’s do a a brief recap re the oil spill response:

(1) Ignore the problem and hope it will go away

(2) Clearly (and repeatedly) assign blame to the “Bs”: Bush & BP

(3) Ratchet up the rhetoric: “Put your boot on their throat”

(4) Focus on the money: make ’em pay every dime

(5) Call in experts with no experience in deep water drilling to second guess

(6) Express empathy (at the Paul McCartney concert)

(7) Send in Eric Holder to start a criminal probe

Hmmm … not by the textbook, but might work …

* * * * *

Quick Shots from: How Washington Just Worsened the Gulf Oil Spill, June 3, 2010

President Obama made BP’s problem worse, and in so doing has worsened the problems facing not only the administration but also the unfortunate residents of the Gulf of Mexico.

He dispatched Attorney General Eric Holder to initiate a high-profile criminal investigation into the BP’s behavior.

In two other areas where human error can have disastrous consequences — medical practice and airline operations—it has become clear that in the essential task of finding out what happened and how to prevent it, a crucial tool is the absence of an immediate criminal or civil penalties investigation.

The reason is simple. In diagnosing and fixing errors, information is at a premium, and the faster it is found and used, the better.

  • The National Transportation Safety Board investigates airline crashes, and possesses neither the power to regulate nor to punish. As the NTSB itself emphasizes, “To ensure that Safety Board investigations focus only on improving transportation safety, the Board’s analysis of factual information and its determination of probable cause cannot be entered as evidence in a court of law.” Bolstered immeasurably by the airlines’ innate desire to avoid accidents, domestic airline fatality rates have steadily declined nearly to the vanishing point.
  • In medicine, the current tort system does not promote open communication to improve patient safety. On the contrary, it jeopardizes patient safety by creating an intimidating liability environment. Studies consistently show that health care providers are understandably reticent about discussing errors, because they believe that they have no appropriate assurance of legal protection. This reticence, in turn, impedes systemic and programmatic efforts to prevent medical errors. 

“Because that information is typically embedded in a mass of details that can only be untangled by experts — often the same experts who could be implicated in civil or criminal litigation — it is counterproductive to have those experts thinking about how to avoid severe penalties while also trying to uncover the best that science offers.”

Who said that ? 

The authors were an astute pair of lawyer-politicians: Hillary Rodham Clinton and Barack Obama.

* * * * *

Full article:
http://american.com/archive/2010/june-2010/how-washington-just-worsened-the-gulf-oil-spill