IBM, interviewed 1,734 CMOs from 19 industries and 64 countries.
Here’s their worry list:
Archive for October, 2011
What keeps marketing VPs up at night?
October 31, 2011You may be closer to the top 1% club than you think … or, at least the top quartile.
October 31, 2011The IRS recently released 2009 tax data.
Here are some highlights:
- It takes $343,927 in household income to make it into the top 1%; $112,124 to make the top 10%; and $66,193 to make the top quartile … sounds to me like a reasonable reach.
- Excluding Warren Buffett, the top 1% pays a 24% effective rate … higher than Buffett’s secretary … whew!
- The top 10% pays 70% of Federal income taxes; the bottom half pays essentially nothing … hmmm.
Virtually all of the people in the bottom half think that people at the top should pay more … it’s called “fairness”
The good news: housing is more affordable now … if you have a job, that is.
October 28, 2011According to the WSJ ;
“While the fall in home prices has been painful for current owners, it has also made housing far more affordable for new buyers.”
In fact, the ratio of homes prices to annual income is at its lowest point in 30 years.
Tidbits
Five years into the housing bust, the U.S. still has 10.9 million “underwater” borrowers, whose homes are worth less than the original purchase price.
* * * * *
If Pres. Obama’s homeowners refinance gets traction, investors who hold mortgage-backed securities will take a hit when those securities fall in value as borrowers prepay their old loans. In fact, the MBS market fell out of bed after the White House announcement on Monday.
* * * * *
The Congressional Budget Office tested an economic model of the President’s refinancing plan and estimated that:
- Government enterprises like Fannie and Freddie would save $3.9 billion from refinancing, but they’d also lose $4.5 billion from the reduced value of their mortgage-backed securities.
- Pension funds, banks and others would lose as much as $15 billion.
Maybe marketing is too important to be left to the marketing department …
October 28, 2011History has it that David Packard (of Hewlett-Packard fame) was the first to say that “marketing is too important to be left to the marketing department”.
Hmmm.
Seth Godin – of “All Marketers are Liars” notoriety — has been echoing the Packard theme for years.
Recently, the McKinsey Quarterly published an article “We’re All Marketers Now”. The thinly veiled message: “marketing is too important to be left to the marketing department.”
Ouch.
Since marketing was the central hub of business activities at the companies where I worked, I just shrugged off the critiques.
But, some data has come to light that supports the Packard theme.
IBM’s interviewed 1,734 CMOs in 19 industries and 64 countries to better understand their goals and the challenges they confront.
According to the report, the respondents came from a wide variety of organizations, including 48 of the top 100 brands listed in the latest Interbrand rankings.
Here’s the finding that hit me hard:
If CMOs are to be held responsible for the marketing returns they deliver, they must also have significant influence over all four Ps: promotion, products, place and price.
Surprisingly, this is often not the case.
CMOs told us they exert a strong influence over promotional activities such as advertising, external communications and social media initiatives.
But, in general, they play a smaller role in shaping the other three Ps.
Less than half of all respondents have much sway over key parts of the pricing process, for example.
Similarly, less than half have much impact on product development cycles or channel selection.
Apparently many companies have, in fact, concluded that marketing is too important to be left to the marketing department.
Bummer.
I hate it when that happens …
October 28, 2011Punch line: Hate when your chips get stuck in the vending machine? You are not alone … Kettle brand launches its first, dialogue-free, national tv campaign, inspired by consumers’ passion for Kettle’s all-natural potato chips.
* * * * *
Excerpted from mediapost.com, “Kettle Brand In First National TV Campaign”
After 30 years of heavy reliance on word-of-mouth advocacy, Diamond Foods, Kettle Brand Potato Chips are getting star treatment with a major new campaign that includes the brand’s first national television advertising.
The campaign, themed “Nobody Likes Kettle Chips. They Love Them,” kicked off this week with national TV spots, print ads, public relations, in-store marketing, digital display ads, online video and social media ….
The humorous, dialogue-free TV spots portray fans of the batch-cooked, all natural potato chips in everyday moments in which they are eagerly anticipating satisfying their craving for the chips, only to have their hopes dashed by various glitches.
One spot shows a boy’s crushed expression as his teacher confiscates his secret bag of Kettle Chips (and proceeds to eat them herself). In another, a man at work desperately scrounges up enough change to buy a bag of the chips; his facial expression shifts from excited to gravely disappointed as the bag gets stuck in the vending machine …
The campaign’s creative was inspired by real consumers describing their passion for the chips and “the extraordinary lengths they go to during ordinary moments to get, save and enjoy their favorite Kettle Brand chips.”
Diamond Foods reports that Kettle Brand’s U.S. sales in mass retail channels increased by 6.9% during the 12-week period ending Oct. 1, per Nielsen FDMx data …
Edit by KJM
Prediction: Obama’s midnight pardons will rock the world.
October 27, 2011On his current campaign swing, President Obama is throwing around tax payer money to rebuild his base.
Earlier this week it was the Federal refinancing of underwater home loans. Taxpayers will own any defaults.
Yesterday it was the announcement of an executive order to restructure, cap, and eventually forgive student loans after 20 years of payments.
That one troubles me.
Even CNN acknowledges:
The president’s focus on college loan assistance could also help him with younger voters — generally a core Democratic constituency. In 2008, Obama carried two-thirds of all voters ages 18 to 24, according to national exit polls.
Did you know that a provision of the ObamaCare law was to nationalize student loan programs? Amazing what you can sneak into a 2,000 page unread law.
Now, the Executive branch (i.e. the Obama administration) has wide, unprecedented latitude to grant, structure and forgive student loans.
Presidents have often issued pardons and waivers during their last hours in office. Think Bill Clinton pardoning uber-tax evader Marc Rich.
I predict that if Obama gets beat in 2012 – a 50 / 50 bet as things now stand – he will issue the mother of all pardons: forgiveness of all Federally held student loans and maybe, while he’s at it, the forgiveness of all Federally held home loans.
Far-fetched?
I don’t think so, and now, I’m on the record.
Mr. Sculley, what makes a good manager?
October 27, 2011An interviewer asked John Sculley, former Pepsi exec and Apple CEO;
Mr. Sculley, you’ve said you aren’t a great manager. What makes a great manager?
Sculley’s answer:
Really good managers want to turn one-off projects into as much of a routine process as they can.
I am a project-centric leader.
I like to work on projects and solve tough problems.
Whereas a really good manager will say, “How do we replicate the processes so that when a problem comes up like this again we can routinely solve it?”
That is a very different skill set.
It takes both to run a successful company.
I always tried to complement my creative problem-solving skills with people on my team who had more process and management skills, so as a team we were very successful.
It’s important to understand what you are really good at and weak at so you can fill out the leadership team with all the needed talent to be successful.
So, are you project-centric or process-oriented?
Taking a pulse … How’s your “Facebook health”?
October 27, 2011Punch line: While there is no magic way to gain strong consumer engagement on Facebook, a Covario study highlights the “Facebook health” of 100 leading advertisers across industry verticals. This study reveals less is more and quality counts …
* * * * *
Excerpted from mediapost.com, “Facebook Fans Say ‘Coke Is It’”
Coca-Cola ranks as the world’s No. 1 brand in a Covario study focusing on the Facebook health of 100 leading advertisers.
Hyundai, MTV, Disney and Bayer round out the top most liked and Wal-Mart rates best for engagement.
With the number of global Facebook users exceeding 750 million, its importance as an advertising medium is undeniable and growing fast … Coke has more than 34 million fans on Facebook, which is growing at a monthly rate of nearly 3%. The brand has strong fan engagement, typically posting seven items a month on its page with each garnering more than 235 comments and nearly 1,750 “likes.”
… “Several advertisers — Bayer and SC Johnson — have built followers, but their engagement statistics are relatively low … This is a huge branding opportunity for the firms.” AT&T, Wal-Mart, Dr. Pepper and Fox have excellent engagement, but lower than expected “reach” statistics …
Wal-Mart ranks on top for overall engagement, receiving an average of 7,390 comments and 726 “likes” on every post, which far exceeds all of the other advertisers in the study.
Apple is the only company among the nation’s top 100 advertisers that does not have an official Facebook page. The top Apple listing is a user page with 188,000 followers.
The study broke out Facebook leaders by vertical industry segments, including automotive, consumer packaged goods — sundries (Johnson & Johnson), consumer packaged goods — food and beverage (Coca-Cola), entertainment and media (MTV/Viacom), financial services/insurance (American Express), pharmaceuticals (Bayer), restaurants (Wendy’s), retailers (Victoria’s Secret), technology (Hewlett Packard) and telecommunications (DirecTV) …
Having many outbound posts is not an optimization factor … less is more with Facebook and quality is what counts … The best brands at engagement obtain upwards of 750 comments and 1,500 “likes” per post.
There is no magic to the type of posts being run by successful brand advertisers. While promotions are rampant in advertiser posts, often posting generalized questions is more successful than hard promotions …
Edit by KJM
Strategy: The GE–McKinsey nine-box matrix
October 26, 2011Excerpted from McKinsey Online: “Enduring ideas: The GE–McKinsey nine-box matrix”, September 2008
* * * * *
The GE–McKinsey nine-box matrix, a framework that offers a systematic approach for the multibusiness corporation to prioritize its investments among its business units.
Below is a summary of the article, a link to the full article, and a link to an online presentation on the topic.
* * * * *
With the rise of multibusiness enterprises in the 20th century, companies began to struggle with managing a number of business units profitably. In response, management thinkers developed frameworks to address this new complexity. One that arose in the early 1970s was the GE–McKinsey nine-box framework, following on the heels of the Boston Consulting Group’s well-known growth share matrix.
The nine-box matrix offers a systematic approach for the decentralized corporation to determine where best to invest its cash. Rather than rely on each business unit’s projections of its future prospects, the company can judge a unit by two factors that will determine whether it’s going to do well in the future: the attractiveness of the relevant industry and the unit’s competitive strength within that industry.
Placement of business units within the matrix provides an analytic map for managing them.
With units above the diagonal, a company may pursue strategies of investment and growth; those along the diagonal may be candidates for selective investment; those below the diagonal might be best sold, liquidated, or run purely for cash.
Sorting units into these three categories is an essential starting point for the analysis, but judgment is required to weigh the trade-offs involved. For example, a strong unit in a weak industry is in a very different situation than a weak unit in a highly attractive industry.
The criteria for assessing industry attractiveness and competitive strength have grown more sophisticated over the years.
* * * * *
Full article
Online presentation with interactive matrix
>> Latest Posts
Aiming for the 1%, MBAs still flock to Wall Street…
October 26, 2011So what if Wall Street firms almost caused the world economy to implode.
So what if a couple of the biggest firms cratered and bonuses have been slashed.
So, what is the Feds and protesters have the evil bankers in their sites.
Sill, according to the WSJ, MBA grads are heading to Wall Street – if they can land offers.
Financial-services industry hiring at the big Master of Business Administration programs hit a post financial-crisis high this year.
Employers such as banks, hedge funds, investment managers, private equity and venture capital firms hired 39% of job-seeking 2011 graduates at Harvard Business School and the Yale School of Management, 36% at the Stanford Graduate School of Business and 51% at Columbia Business School.
Even in an age of heavy layoffs, shrinking bonus pools and noisy antibank protests, it is no mystery why M.B.A. students keep entering the revolving door that is Wall Street. It pays well and carries considerable prestige.
But those getting jobs in finance will be entering an industry undergoing a massive belt-tightening, as investors flee banks hammered by a weak economy, tumultuous markets and tightening regulation.
“You’re vulnerable if you’re in that five-, seven- or nine-year range. You’re expensive and you don’t have clients.”
Investment bankers with about five years of experience can command compensation of close to $400,000.
New hires from business schools can expect about one-third as much.
Have to admit that I’m surprised that interest in finance careers hasn’t slowed a bit.
I guess there’s nothing like the smell of money.
Tanning salons say “go get ‘em B of A”
October 25, 2011As if Bank of America didn’t cause enough of a stir with its $5 monthly debit card charge …
A B of analyst issued a report predicting that U.S. debt will be downgraded again in November or early December.
His rationale: the so-called “super committee” designated to craft a plan to reduce the nation deficit and debt will fail to reach a compromise and the draconian default cuts will kick in.
Specifically,B of A analyst Ethan S. Harris wrote:
We expect a moderate slowdown in the beginning of next year, as two small policy shocks — another debt downgrade and fiscal tightening — hit the economy.
The “not-so-super” Deficit Commission is very unlikely to come up with a credible deficit-reduction plan.
The committee is more divided than the overall Congress
It is hard to imagine the liberal Democrats on the Committee agreeing to significant entitlement cuts.
And, all the Republican members have signed the “no taxes” pledge.
The credit rating agencies have strongly suggested that further rating cuts are likely if Congress does not come up with a credible long-run plan.
Hence, we expect at least one credit downgrade in late November or early December when the super Committee crashes.
Didn’t these jabrones see what happened to S&P, Gibson Guitars and the tanning salons?
Halloween: Battle of the bite-sized candies …
October 25, 2011Punch line: Despite a tough economic situation, Americans are likely to spend more this Halloween season. And, what candy should you buy for the trick-o-treaters? Well, this year consider bite-size M&Ms and Skittles – they scored the highest across all key metrics according to Insight Workbench …
* * * * *
Excerpted from brandchannel.com, “M&Ms and Skittles Best Bite-Size Halloween Brands”
According to the National Retail Federation’s 2011 Halloween Consumer Intentions and Actions Survey, Americans will spend $72.31 on costumes, candy, and decorations, up from last year’s $66.28 and 2009’s $56.31 …
Overall, this Halloween is all about bite-size …
According to Insight Workbench, Candy Corn, the most iconic Halloween candy had the weakest metrics across all categories: lowest share of buzz, a Net Sentiment score of 52 and a Passion Intensity score of 48. Most people eat it solely at Halloween for tradition’s sake …
According to the NPD Group, about 5% of all candy consumed annually is eaten between Halloween and the week after with the most popular choices being chocolate, chewy candies and hard candy.
“It really came down to a battle of the bite-sized candy bits: the good ole reliable, melts-in-your-mouth-not-in-your-hand chocolaty M&Ms vs. the chewy, fruit-impersonating Skittles that let you “taste the rainbow.”
“Halloween was once an inexpensive holiday. Families made treats like candy apples, constructed costumes out of old bed sheets, and made their own spooky decorations. As stores stockpile all of the typical Halloween fare … plan a budget for this trick or treat season,” says Howard Dvorkin, CPA and founder of Consolidated Credit Counseling Services, Inc. …
Edit by KJM.
Tech point re: charitable contributions …
October 24, 2011I know that I said that Part 5 of my Buffett tax analysis would be my last. but …
First, I got input from a loyal reader that my analysis was wrong because “only 5% of charitable contributions can be deducted in 1040s”
That sent me back to the tax code. Specifically to Publication 526 : Charitable Donations.
Keeping in mind that HomaFiles doesn’t offer tax or investing advice, here’s the law:
The amount of your deduction for charitable contributions is limited to 50% of your adjusted gross income, and may be limited to 30% or 20% of your adjusted gross income depending on the type of property you give and the type of organization you give it to.
Here’s the English translation.
In general, for all typical charities,e.g. churches, schools, hospitals, disease-causes, a taxpayer can deduct 100% of his charitable … but there’s a ceiling …. the total amount of charitable deductions is limited to 50% of the taxpayer’s AGI.
So, if a taxpayer had $100,000 AGI, he can write $50,000 in checks to qualified charities and deduct all $50,000. If he writes checks for $60,000 … he can deduct only $50,000.
The major exception: donating appreciated assets (think “stocks). A taxpayer can claim a charitable deduction for the fair market value of the asset, pay no capital gains, and deduct up to 30% of his AGI.
Things get a bit trickier if there are both cash donations and appreciated assets in the mix.
The general takeaway: up to a total of 50% AGI, all charitable contributions can be deducted ,,, slightly less if the donations are stock not cash.
That said, the Buffett analysis survives intact.
We estimated charitable contributions at $20 million …about 1/3 of Buffett’s $63 million AGI … so, based on our anlysis, he can deduct all of his charitable deductions, sheltering all or most of his ordinary income.
Whew.
* * * * *
Separately, I got a few emails and replies commenting on the HomaFiles-coined GBSR™ – “Give Back to Society Rate” … the sum of fed & state taxes, and charitable contributions divided by AGI.
Some of the emails said “you’re on to something”, so I’ve trademarked the metric by adding the legal “TM” super-script.
Gotta protect your intellectual property, right?
Sculley on Jobs … notable quotes
October 24, 2011In one of the many tribute pieces to Steve Jobs, Business Week published a note from John Sculley.
A couple of lines caught my eye …
On PLC management:
When I first joined Apple, my priority was to squeeze three more years of cash flow out of the near-end-of-life Apple II so Steve would have enough cash runway to create and launch the Mac.
Simplify, simplify, simplify
Steve would say the hardest decisions are what to leave out, not what to put in.
He was the ultimate systems designer.
Always simplifying.
Everything began and ended with the user experience.
Simplify the steps. “Look, we can do it in three steps. … Not good enough, do it in one step.”
The master impresario:
The advances in technology over these years are extraordinary, but Steve wasn’t an engineer.
As an artist he barely drew anything recognizable on his white board.
But as a master impresario, the clarity and brilliance of his creations was genius.
Great companies, noble causes
Great companies must have a noble cause.
Then it’s the leader’s job to transform that noble cause into such an inspiring vision that it will attract the most talented people in the world to want to join it.
Squeezing Buffett’s numbers … Part 5 (and done !)
October 21, 2011OK, today should about do it.
After a recap, I’ll drop my conclusion on you … my very surprising conclusion
First. a recap to get everybody on the same page.
In Part 1, we looked hard at Buffett’s effective income tax rate (17.4%), and showed how he could get to that low rate by offsetting practically all of his ordinary income with $23 million in deductions.
This conclusion debunks the popular pundit point that he gets to the rate by having practically all of his income in capital gains and dividends.
In Part 2, we showed that about $20 million of the deductions are probably charitable contributions – a device that rich folks use to (1) do good things and (2) to manage down their tax liabilities.
Better to give to a cause that you believe in, right? Why give it to the government and have it waste the money?
In Part 3, we agreed that Buffett’s tax rate as a percentage of his taxable income is probably less than his secretary’s – partially due to his capital gains being taxed at a comparatively low rate, but mostly because he shelters his ordinary income with charitable deductions.
And, we showed how ordinary earners can get to a rate lower than Warren’s … just by donating a huge chunk of their income to charity. Not realistic, but mathematically possible.
In Part 4, we showed that Buffett’s tax rate as a percentage of AGI is only 11% …. about half of the estimated rate for our hypothetical secretary surrogates.
Now, my first reaction when I stared at the taxes to AGI rate was “Wow, Buffett’s right – he’s nothing but a coddled piker.”
But now, I’m not so sure.
On one hand, his paying a rate (to taxable income) that’s 5 points less than his secretary doesn’t seem fair. Especially since he gets to the rate by exploiting some dreaded tax loopholes, aka. “deductions”.
The situation seems even worse when you consider his taxes to AGI rate – a mere 11% – less than half of his secretary’s rate (I suspect).
Gotta jack up taxes, right?
Not so fast.
Let’s construct another measure: the GBSR™ — “Give Back to Society Rate”
Since I’m coining the measure, I’ll define the GBSR™ as the sum of taxes paid plus charitable contributions – since those are all money that’s supposed to be going to the common good, albeit administered by different organizations – divided by AGI.
OK, so what’s Buffett’s GBSR?
Well, based on my estimates, Buffett pays about $7 million in Federal taxes, about $3 million in state taxes, and about $20 million to charities. ,,, for a total of $30 million … which dived by his $63 million AGI … gives a GBSR™ rate of almost 50% (47.6% to be precise).
Now, let’s pretend that Buffett’s secretary profiles like our $100,000 ordinary earner above. Her charitable deductions would be at most $5,700. Otherwise she wouldn’t be taking the standard deduction, she’d itemize.
So, her GBSR™ @ $100,000 AGI is 27.5% ($5,700 + $21,709 = 27,409 / $100,0000 = 27.5%).
That means that Buffett’s GBSR™ is almost twice his secretary’s.
Hmmm.
Maybe he’s not such a bad guy and I should stop ranting about him.
And, maybe he should stop causing trouble for other folks by constantly whining about the tax code.
It just may be that the tax code is leading to the right answer.
Just have to look around the trees to see the forest.
AMEN
If you aren’t being paid enough, taxpayers will make up the difference … huh?
October 21, 2011Gene Sperling – one of the Obama’s economic hacks – has an editorial in today’s WSJ trying to defend the “pass it now” Jobs Bill.
First, he argues that
“It provides a strong and immediate boost to demand that could create up to 1.9 million jobs, increase growth by up to 2%, and lower unemployment, according to independent economists such as Moody’s Analytics.
First, note that the administration has at least learned a lesson re: setting benchmarks. The squirrely “up to” is a maximum, not a minimum. So, the result can be anything less than those benchmarks and they can declare success. Huh? I wish my pay-for-performance targets had been “up to a 2 point share gain”. I would have gotten rich.
Second, I like the phrase “such as Moody’s Analytics”. Obama has been saying “all economists agree”. Based on SAT training, we all know that “all” is usually not the answer. The only economist I’ve seen on record is Mark Zandi at Moody’s. He’s the guy who said the first stimulus would keep unemployment under 8%. And, oh yeah, one of Moody’s biggest shareholder’s is Warren Buffett. Coincidence?
Sperling also argues that the provisions of the Jobs Bill are “specifically designed to take on the problem of long-term unemployment.” It includes:
- A tax credit for hiring the long-term unemployed and veterans
- A ban on hiring discrimination against the unemployed
- Major reforms to our unemployment-insurance system, including wage insurance to assist workers whose new job pays less than their old
- A “Bridge to Work” program to help the unemployed reconnect with the labor force through temporary work
- Job-search assistance for all long-term unemployed
- Support for unemployed workers looking to become entrepreneurs.
Some on these provisions are laudable – at least on the surface. I don’t think anybody is against helping veterans, or providing job search assistance.
Bot others are questionable. For example, take the provision that would give those claiming discrimination a right to sue, and violators would face fines of up to $1,000 per day, plus attorney fees and costs.
Why do we need that?
Sperling says “the National Employment Legal Program recently found, in a span of four weeks, over 150 Internet job postings that include “do not apply” notices discriminating against those who are currently unemployed.”
Oh my God — 150 evil posting in a month … out of the gazillion web postings each month Statistically insignificant – and certainly not worth another slew of frivolous law suits. Cue the trial lawyers.
And, if your new job pays less, taxpayers will make up the difference?
Who thinks this stuff up?
Unfit to serve … under 6% qualify for military
October 21, 2011The ABC News headline reads
“Nearly one-fourth of the students who try to join the U.S. Army fail its entrance exam”.
That’s true, but it’s only part of the story.
A study by The Education Trust found that 23 percent of recent high school graduates don’t get the minimum score needed on the enlistment test to join any branch of the military.
Here’s the line that caught my eye.
The military exam results are also worrisome because the test is given to a limited pool of people:
Pentagon data shows that 75 percent of those aged 17 to 24 don’t even qualify to take the test because they are physically unfit, have a criminal record or didn’t graduate high school.
Doing the arithmetic, the military is drawing from a pool that only contains 5.75% of those aged 17 to 24.
Holy smokes …
Making science cool (again) … dy-no-mite!
October 20, 2011My daughter-in-law has a group of PhD scientist-friends.
Last summer I was chatting with them about why the U.S. is reportedly falling behind in math and science.
They offered that the PhD grind is, in fact, a grind … and that comp levels in science are paltry.
My hypothesis: there aren’t enough aspirational heroes for kids these days.
In my day, Salk was a hero vaccinating polio and every kid wanted to be an astronaut.
My prescription: we need more heroes and we need to make school (and science) cool again.
Well, maybe science is getting cool again.
Check out this video from the McGill Cancer Research Center … a fun view of lab science.
See, science doesn’t have to be boring!
Thanks to Barbara Gordon & Jess Homa @ American Society for Biochemistry and Molecular Biology for feeding the lead
Squeezing Buffett’s numbers … Part 4
October 20, 2011In Part 1, we looked hard at Buffett’s effective income tax rate (17.4%), and showed how he could get to that low rate by offsetting practically all of his ordinary income with $23 million in deductions.
This conclusion debunks the popular pundit point that he gets to the rate by having practically all of his income in capital gains and dividends.
In Part 2, we showed that about $20 million of the deductions are probably charitable contributions – a device that rich folks use to (1) do good things and (2) to manage down their tax liabilities.
Better to give to a cause that you believe in, right? Why give it to the government and have it waste the money?
In Part 3, we agreed that Buffett’s tax rate as a percentage of his taxable income is probably less than his secretary’s – partially due to his capital gains being taxed at a comparatively low rate, but mostly because he shelters his ordinary income with charitable deductions.
And, we showed how ordinary earners can get to a rate lower than Warren’s … just by donating a huge chunk of their income to charity. Not realistic, but mathematically possible.
Whew.
Now let’s start pulling things together.
The chart below makes the obvious clear … at least to me to me.
Note that Buffett’s tax rate as a percentage of AGI is only 11% …. about half of the estimated rate for our secretary surrogates.
Now that’s a gap!
But, I haven’t seen anybody in the mainstream media even notice. They, and Chuckie Shumer, just focus on the rate to taxable income.
What’s going on?
Same story as before: Buffett shelters over a third of his AGI – and practically all of his ordinary income with charitable deductions.
Simply stated, because he gives money away to charities (e.g. the Bill Gates Foundation) he only has to give a pittance to the Feds.
Is that a good thing or a bad thing?
We’ll save that for a subsequent post.
Today’s Deal: Groupon at 1/3 off … buy now?
October 20, 2011Punch line: Groupon’s IPO was originally expected to value the three-year-old company at between $15 billion and $20 billion … now, the company is talking $12 billion … still a huge deal, but heading south
In a stark comedown for what was expected to be one of the hottest stock offerings of the year, Groupon is scaling back plans for its public debut.
The Chicago company and its bankers will begin meeting with investors in the next few days to sell them on a deal that values the daily deals pioneer at less than $12 billion.
Groupon’s IPO was originally expected to value the three-year-old company at between $15 billion and $20 billion, according to people familiar with the matter.
The change comes in the wake of recent market volatility as well as several missteps by the company, the people said. Regulators have been scrutinizing Groupon’s accounting and the company was forced last month to change the way it books revenue.
Groupon plans to conduct its road show for investors next week.
.
The size of the stock sale, expected to be completed in the next two weeks, could be $500 million to $700 million.The small offering, which would represent well under 10% of the company’s outstanding shares, is meant to cut the amount of stock being sold, in hopes that more shares can be sold later at higher prices
As we’ve said before, these guys will rue the day they turned down Google’s $5.5 billion offer …
IBM study indicates CMOs are old school … but trying to catch-up
October 20, 2011Punch line: This IBM study outlines top concerns from global CMOs and highlights how CMOs fail to analyze and capitalize on digital channels …
* * * * *
Excerpted from “IBM Study Shows CMOs Fail To Monitor Digital Channels”
“From Stretched to Strengthened,” IBM’s latest Global Chief Marketing Officer Study, interviewed 1,734 CMOs from 19 industries and 64 countries. Topline findings converge on three points:
- The empowered customer is now in control of the business relationship
- Delivering customer value is paramount — and an organization’s behavior is as important as the products and services it provides
- The pressure to be accountable to the business is not just a symptom of hard times, but a permanent shift that requires new approaches, tools and skills.
While 82% of marketing chiefs rely on traditional market research — which delivers information about consumers in the aggregate — comparatively few “are exploiting the full power of the digital grapevine,” with only 26% regularly tracking blogs, 42% tracking third-party reviews and only 48% tracking consumer reviews.
Four major priorities concern CMOs:
- Data explosion
- Social media
- Proliferation of channels and devices
- Shifting consumer demographics.
… IBM warns that a majority of CMOs are missing the personal touch, by paying more attention to markets than individuals and “peddling, not partnering,” and favoring data over relationships.
The researchers offer three key areas for improvement:
- understand and deliver value to empowered customers;
- create lasting relationships with those customers;
- measure marketing’s contribution to the business in relevant, quantifiable terms.
While more than half of the interviewees are confident their organization’s corporate character is understood in the marketplace, just 20% believe their employees are fully on board, and 75% believe marketing should oversee brand reputation inside and outside the enterprise.
Conclusions on how to “Get fit for the future” include:
- Create value for customers as individuals
- Reprioritize investments to analyze digital channels to access customers’ views and use advanced analytics to recognize preferences and trends across every touch point
- Work with IT to assess potential data and infrastructure exposures, employ tools to secure customer data and update privacy policies to address customers’ concerns
- Capitalize on new digital channels to stimulate customer conversations and new relationships; use tangible incentives to attract followers.
“Marketing people will need unique skills in the near future. They’ll need to be capable of integrating marketing and IT – like footballers who can kick with both feet,” concludes Jeroen de Punder, CMO of Ricoh Netherlands.
Edit by KJM.
Squeezing Buffett’s numbers … Part 3
October 19, 2011In Part 1, we looked hard at Buffett’s effective income tax rate (17.4%), and showed how he could get to that low rate by offsetting practically all of his ordinary income with $23 million in deductions.
This conclusion debunks the popular pundit point that he gets to the rate by having practically all of his income in capital gains and dividends.
In Part 2, we showed that about $20 million of the deductions are probably charitable contributions – a device that rich folks use to (1) do good things and (2) to manage down their tax liabilities.
Better to give to a cause that you believe in, right? Why give it to the government and have it waste the money?
Today, let’s look at the popular headline: “Buffett’s Tax Rate Lower than His Secretary’s”
Since we don’t know his secretary’s specifics, we looked at 3 hypotheticals: a single taxpayer (i.e. not married), all ordinary income, no dependents, standard deduction (i.e. doesn’t itemize).
The bottom line: The headline seems reasonable. In each of 3 income scenarios ($50k, $75k and $100k) the rate to taxable income is in the lower 20s – about 5 points higher than Buffett’s rate.
But, keep reading …
First, these are scenarios the get to the highest possible tax rates – a joint-married filer with dependents and itemized deductions would pay less.
Nonetheless, it’s hard to imagine an ordinary person closing the gap to Warren’s rate unless they had a big mortgage deduction and played the charity angle: giving a lot to charity to shelter income down to the 15% rate.
For example, if our 50K single taxpayer had no mortgage interest and paid about 5% in state & local taxes, he could make a charitable contribution of about $10,000 and land in the 15% tax bracket (which is capped at $34,000)
Here’s the arithmetic: $50,000 less $3,650 in exemptions, less about $2,500 in state and local taxes, less $10,000 in charitable deductions is less than$34,000 – which is the top of the 15% bracket.
The charitable deduction would be 20% of AGI … which is lower than Buffett’s apparent 30% donations’ rate ($20 million / $63 million = 31.4%) … but probably not practical at that income level.
And, using the same logic, getting our $75k and $100k ordinary income earners into the 15% bracket would require a charitable giving rate approaching 50% of AGI.
That certainly doesn’t seem practical.
What’s the point?
Buffett’s case illustrates how a completely discretionary itemized deduction – charitable contributions – can be used by folks – especially rich folks – to shelter ordinary income from taxes … and get them to a low effective tax rate.
That’s not a shot at charitable deductions – more on that in subsequent posts – just raises the point that closing the gap between Buffett and his secretary may be less a matter of raising tax rates (on capital gains) and more a matter of how deductions are allowed and applied.
More to come ..
Occupy Wall Street … by the numbers.
October 19, 2011According to Democratic pollster Doug Schoen:
Research shows clearly that the movement doesn’t represent unemployed America and is not ideologically diverse.
Rather, it comprises an unrepresentative segment of the electorate that believes in radical redistribution of wealth, civil disobedience and, in some instances, violence.
Specifically …
- Half (52%) have participated in a political movement before
- Virtually all (98%) say they would support civil disobedience to achieve their goals
- Nearly one-third (31%) would support violence to advance their agenda.
- The vast majority of demonstrators are actually employed
- An overwhelming majority of demonstrators supported Barack Obama in 2008.
- Now 48% say they will vote to re-elect him in 2012, while at least a quarter won’t vote.
- 65% say that government has a moral responsibility to guarantee all citizens access to affordable health care, a college education, and a secure retirement—no matter the cost.
- By a large margin (77%-22%), they support raising taxes on the wealthiest Americans, but 58% oppose raising taxes for everybody,
Schoen’s bottom line: Occupy Wall Street is a group of engaged progressives who are disillusioned with the capitalist system and have a distinct activist orientation.
For Groupon, suddenly, $5.6 billion is looking better …
October 19, 2011Punch line: Groupon’s luster – and valuation – are starting to fade. These guys will rue the day they sent Google packing.
Last year, four mutual fund companies – including Growth Fund of America, T. Rowe Price and Fidelity Investments — invested in Groupon at a price that valued the entire company at $4.7 billion,
Then, Groupon turned down an offer from Google reported to be just south of $6 billion?
At the time, Groupon was said to have potential IPO valuations ranging from $15 billion to as high as $30 billion.
But the U.S. IPO market has been largely dormant, the Securities and Exchange Commission has required more-conservative accounting from Groupon, and a top company executive has departed.
Some IPO analysts now predict a Groupon IPO, if completed, might value the company at $5 billion to $10 billion.
If the valuation keeps falling, some early-in funds may find themselves marking down the value of their holdings on their books.
Of course, I’m betting the under …
Squeezing Buffett’s numbers … Part 2
October 18, 2011In Part 1, we looked hard at Buffett’s effective income tax rate (17.4%).
We tested the conventional wisdom that the rate is low because Buffett gets practically all of his income from capital gains and dividends.
Maybe and maybe not.
We showed that, in fact, almost half of Buffett’s income could be from ordinary income and he’d still pay the low rate.
Why?
Because deductions are first applied to higher taxed income (think ordinary income @ 35%) and then to lower taxed capital gains.
Buffett could, in effect, be getting his ordinary income tax-free.
Let’s dig a little deeper on Warren’s tax data.
The key numbers: AGI = $53 million, Deductions (aka. “loopholes”= $23, Taxable Income =$40 million, and taxes = $7 million … 17.4%
Let’s think about the deductions for a moment
Some pundits have theorized that many of the deductions are “interest on investment borrowing”, suggesting that Buffett buys a lot of his holdings on margin.
I don’t think so.
First, he’s a frugal guy who doesn’t strike me as margin kind of guy.
Second, interest rates are essentially zero … especially for a big hitter like Buffett … and zero times any balance is, well, zero.
Third, Buffett himself says it ain’t so.
He says the roughly $23 million difference between his AGI and taxable income is due largely to deductions he took for charitable giving and local taxes.
Let’s do taxes first.
Nebraska state income taxes have a max marginal rate of just under 7%. So, Buffett probably pays about $3 million in state & local taxes.
That leaves about $20 million in charitable deductions. It’s oft reported that many of those donations go to the Gates Foundation.
We’ll come back to the charitable deductions in a subsequent post.
We’re not saying they’re necessarily good or bad … just remember the $20 million number.
* * * * *
Next up: How does the 17.4% compare to ordinary folks? And, is it the right number to focus on?
How to keep the flab off …
October 18, 2011Most folks have dieted at one time or another to shed a few pounds.
Inevitably, the pounds creep back.
But, according to a place called the National Weight Control Registry, regaining lost weight isn’t inevitable:
Some people are able to lose a substantial amount of weight and keep it off at least a decade.
Here’s how they do it:
- Track their food intake.
- Count calorie or fat grams or use a commercial weight-loss program to track food intake.
- Follow a low-calorie, low-fat diet … about 1,800 calories a day with less than 30% of calories from fat.
- Eat breakfast regularly.
- Limit the amount they eat out … dining out an average of three times a week and eating fast food less than once a week.
- Eat similar foods regularly with no binging on holidays and special occasions.
- Walk about an hour a day or burn the same calories with other activities.
- Watch fewer than 10 hours of TV a week.
- Weigh themselves at least once a week.
OK, I’ll start by having breakfast … the rest can come later.
Squeezing Buffett’s numbers … Part 1
October 17, 2011Last week Warren “Don’t Coddle Me” Buffett released some of his tax info.
Just some highlights, but enough to give fodder to some analyses.
I think I have some interesting unreported angles on the nums that I’ll be dribbling out in this and subsequent posts.
First, the facts:
- Buffett’s adjusted gross income (AGI) was $62,855,038 last year
- His taxable income was $39,814,784
- His federal income tax bill came to $6,923,494, or 17.4% of his taxable income.
- He said The roughly $23 million difference between his AGI and taxable income was due largely to deductions he took for charitable giving and local taxes
- He paid $15,300 in payroll taxes … but, so what?
You may remember, the buzz us about how Buffett’s 17.4% is lower than his secretary’s mid-20s tax rate.
Conventional wisdom is saying that the issue stems from so much of Buffett’s income comes from capital gains and dividend (taxed at 15%) rather than ordinary earned income (taxed at 35% at the margin).
A simple analysis suggests that for Buffett to have an overall 17.4% tax rate, his $40 million in taxable income must be split roughly $35 million from capital gains & dividends (taxed at 15%) and $5 million in ordinary income (virtually all taxed at 35%).
But, not so fast …
I’m not a tax adviser but …here’s something that I think is right and that I bet you didn’t know:
Mechanics for applying the tax code work to the tax payer’s advantage in at least one very import way … deductions against income aren’t applied pro-rata across tax categories – ordinary income and capital gains … rather they get applied to the highest taxed category of income first.
Said differently, deductions are first applied to ordinary income, then to capital gains (if there are any left).
That’s a big deal … for Buffett and for us ordinary folks.
What it could mean for Buffett is that the could pay his 17.4% rate with an almost 50 / 50 mix or ordinary income and capital gains.
Here are the nums:
So what?
Well, if I’m right then maybe Buffett’s right … he is being coddled.
But, the problem isn’t the tax rate (sorry, Chuckie Shumer) it’s those devilish loopholes.
It’s that he can generate tax deductions by giving mucho $$$ to his buddy Gates’ foundation … and, in effect, can shelter almost all of his ordinary income from any taxes.
Now, that’s a big deal!
More in subsequent posts. Trust me, I’m not done with this one.
At ripe age of 132, P&G’s first mass marketed brand gets a makeover …
October 17, 2011Punch line: P&G launches Ivory soap in new colorful packages and with a redesigned logo, and a back-to-basics nostalgic marketing campaign.
* * * * *
Excerpted from philly.com, “P&G launches for Ivory soap”
… The remake is part of an effort to breathe new life into Ivory. It comes at a time when Americans are scaling back on spending in the down economy, but are looking for little, cheap ways to pamper themselves … As P&G has focused on bigger, faster-growing brands, the white bar of soap has lagged behind its rival Dove and faced increasing competition from Dial and Irish Spring.
Ivory isn’t among the 24 brands with at least $1 billion in annual sales at P&G … but the soap that floats has a long history with the company.
Ivory was the first brand mass-marketed by P&G. It is the namesake of a P&G research and production center called “Ivorydale.” It’s deeply entrenched in American pop culture as a sponsor of early television soap operas and the first televised major league baseball game …
“Ivory is where our origins are … It has a special place in a lot of people’s hearts around here. It’s incredibly important to keep it alive and growing.”
… P&G expects the new campaign to remind people why their families used Ivory in the past, and to attract new users with quality for low price …
“There is so much tail wind at our back: the economic environment, this trend of getting back to things that work, and reminding us of a time when things were a bit simpler.”
… Instead of Ivory’s usual nearly all-white packages, new ones will be more colorful. One is mostly bright blue. The new package emphasizes the 10 bars compared to 8- and 6-packs sold by most competitors with a big “10.” A simpler logo plays off the previous of the 1950s and carries the slogan, “pure, clean & simple.”
… The ads have some understated humor, calling Ivory “meticulously scented to smell exactly like soap” and pledging that “when dirt changes its formula, so will we.” …
Edit by KJM.
Thanks to DM for feeding the lead
Tanning salon update: tax collections 64% below ObamaCare projections
October 14, 2011Well, well, well.
It appears that tanning salons either don’t know about their targeted ObamaCare tax or they aren’t complying with it or the added tax has dampened demand … and the IRS is having trouble tracking the salons down to figure out what’s going on.
So, the new federal tax on indoor tanning services isn’t bringing in as much revenue as promised.
The Treasury Inspector General for Tax Administration says the new federal tax on indoor tanning services isn’t bringing in as much revenue as hoped.
Tanning tax receipts for that nine-month period ending March 31, 2011 totaled $54.4 million, the report found.
That was below projections by the Congressional Joint Committee on Taxation, which had estimated the tax would raise $50 million per quarter.
The IRS had difficulty determining the actual number of tanning salons and the contact info for businesses required to collect the new tax from customers.
Using an April 2010 Indoor Tanning Association estimate, the IRS initially projected the tax would be due quarterly from roughly 25,000 stand-alone tanning salons, plus spas, health clubs and beauty parlors.
But the inspector general report found that actual tax returns filed for the first three quarters through March 31 averaged just above 10,300.
Source: USA Today
It’s a shocker, isn’t it ?
Rewarding failure to spur innovation … say, what?
October 14, 2011TakeAway: Companies are looking for a new way to be innovative by rewarding individuals on their failures.
The rewards for failures vary by company from statues to monetary awards with the hope of generating innovation.
Excerpted from WSJ: “Better Ideas Through Failure”
Amid worries that we are becoming less innovative, some companies are rewarding employees for their mistakes or questionable risks.
The tactic is rooted in research showing that innovations are often accompanied by a high rate of failure.
“Failure, and how companies deal with failure, is a very big part of innovation,” …. Failures caused by sloppiness or laziness are bad. But “if employees try something that was worth trying and fail, and if they are open about it, and if they learn from that failure, that is a good thing.”
A unit of WPP’s Grey Group started handing out the “Heroic Failure” award because he was worried that fast growth at the agency was making employees “a little more conservative, maybe a little slower,”
Extracting lessons from foul-ups is the focal point of Michael Alter’s “Best New Mistake” awards at SurePayroll.
Only people who are trying to do a good job, make a mistake and learn from it are eligible for the $400 annual cash award.
Edited by ARK
Ken’s Take: I always scratch my head when I hear people say that companies punish risk takers.
If GE and Black & Decker had given trophies for ‘nice tries’ that didn’t pan out, I’d need another wing on the house to hold them.
With junk mail & gov’t checks being the pillars of their business, what’s the USPS to do ?
October 13, 2011Talk about being at the end of the product-life-cycle … how would you like to be the dude running the US Postal Service?
The vast majority of the stuff still handled by USPS is made up of catalogues, junk mail ads, unwanted solicitations and, oh yeah, government checks.
In a few years, all that will be left will be government checks.
Hard to make a living off them.
Unless, of course, Team O gets re-upped for a 2nd term.
Excerpted from WSJ: Junking the Junk Mail Office
Email and Fedex already take care of serious delivery business. Why subsidize catalogue carriers?.
The United States Postal Service (USPS) lost $9 billion last year.
The rapid growth of email, online bill paying and the like has reduced the volume of first class mail by 22% since 2006, cutting into the government’s monopoly.
An inexorable decline is underway. The lesson here is that even monopolies can die if they provide inefficient services to shrinking markets.
Both Fedex and UPS do a much better job shipping packages than does the USPS.
The cost of a first-class stamp to 44 cents when it should be closer to 30 cents, if held to the rate of inflation.
Meanwhile, bulk-mail discounts have resulted in a glut of unwanted catalogues and credit-card offers in our mailboxes — and have led to billions of dollars in losses.
Our political leaders should end the USPS’s dysfunctional first-class mail monopoly, opening it up to private competition.
Postal Service employees are generally very well paid and (with some notable exceptions, usually in smaller towns) have rarely been characterized by high productivity.
Visits to the post office are not normally known to be user-friendly experiences. It is a good bet that the private sector will be considerably more productive — and user-friendly — than today’s government employees, no matter how loyal they may be.
And, post offices usually occupy prime real estate in cities and towns across America, potentially of great interest to retailers, restaurateurs, municipal governments and others.
And, don’t forget, the more than 200,000 USPS vehicles are also saleable.
I’d bid on one of those USPS carrier jeeps …
Why not Occupy Omaha ?
October 12, 2011Well, Tuesday was the day that, according to CNN Money …
Community groups and progressive organizations that have been working with the broader Occupy Wall Street movement marched on the homes of JP Morgan Chase CEO Jamie Dimon, billionaire David Koch, hedge fund honcho John Paulson, and News Corp CEO Rupert Murdoch.
The millionaires and billionaires are being targeted for what event organizers called a “willingness to hoard wealth at the expense of the 99%.”
Why not stake out Warren’s place until he agrees to forego all of his tax loop holes (e.g. deductible contributions to his buddy Gates)?
Or, better yet, Washington … picket the millionaire who has been pushing hard for class warfare.
Hope Barry & Warren are proud … mission accomplished.
Tracking the progress at GM …
October 12, 2011The U.S. Treasury aimed to sell more of its 26.5% stake in GM by August or September.
Then, the stock started tanking.
GM stock would need to hit $53 a share for the U.S government to break even on its $50 billion bailout of the auto maker.
At $30 a share, the U.S. would lose more than $10 billion on its $50 billion bailout of GM.
So far this year, GM stock is down about 40%
It was trading just over $22 this week,
Than makes the loss about $15 billion … but, who’s counting?
The top 100 brands … and the movers.
October 12, 2011Interbrands’s has released its 2011 estimates of brand values.
First, the top 11.
I went 11 deep since I think it’s noteworthy that Toyota gained in brand value despite the flap in the US over the alleged gas pedal problem.
Also, noteworthy is HP in 10th place … obviously doesn’t reflect the recent turmoil there.
Rest of the list are the usual suspects.
* * * * *
Here are the biggest gainers in brand value from 2010 to 2011.
Note that VW and Audi earned nice gains.
* * * * *
And, here are the biggest losers in brand value from 2010 to 2011.
Only surprises (to me) is IKEA and MTV. It’s a bummer getting old …
For the article, methodology and interactive chart click here
It’s 4 o’clock …. quittin’ time.
October 11, 2011Couple of wars, economy is tanking … let’s call it a day.
Reported by the NY Post (so it has to be true):
The president’s workdays are said to end early, often as early as 4 p.m.
He usually has dinner in the family residence with his wife and daughters, then retreats to a private office.
One person said he takes a stack of briefing books.
Others aren’t sure what he does.
True or not, most CEO’s don’t relish this kind of buzz …
Fair share revisited…
October 11, 2011Obama’s tax plans don’t really impact , so this issue is strictly philosophical.
I’m still struggling with his “fair share” riff.
Out of 140 million tax filers, there 1,470 millionaires who pay no taxes of them.
Doesn’t sound like they’re paying their fair share, but there aren’t many of them … and, I bet each has an interesting story.
More generally, according to the IRS, folks making:
• More than $1 million pay 24% of income in taxes
• $200,000 to $300,000 pay 17.5%
• $100,000 to $125,000 pay 9.9%
• $50,000 to $60,000 pay 6.3%
• $20,000 to $30,000 pay 2.5%
And, the IRS reports that – as a % of income tax revenues:
• The top 1% pays 39%
• The top 5% pays 60%
• The top 10% pays 72%
• The bottom half pays 3%
So, what’s “fair share”?
Neither Obama nor his frontmen seem comfortable saying/
Wouldn’t you like to know?
Hmmm.
Tanning salons are back in the hot seat …
October 11, 2011Apparently, the ObamaCare tax surcharge wasn’t enough to kill the tanning business.
Now, California is banning use of tanning salons by minors.
According to Reuters:
Governor Jerry Brown signed a bill on Sunday prohibiting anyone under the age of 18 from using ultraviolet tanning devices.
The bill was part of a cluster of legislation designed to “improve the health and well-being of Calfornians.”
I guess you don’t want to own a tanning salon or Gibson Guitars …
Cutting to the chase on Solyndra (again) …
October 10, 2011Punch line: The proper role for government is to support basic research, not commercial ventures
Excerpted from the WSJ: The Solyndra Economy
“Listening to the President, Solyndra was a necessary casualty in the greater campaign to steer the U.S. economy toward Mr. Obama’s noble goals.
Private competition that winnows out losers is so yesterday.
Brad Jones of Redpoint Ventures got to the heart of the Solyndra economy in a December 2009 email to then-National Economic Council director Larry Summers:
“The allocation of spending to clean energy is haphazard; the government is just not well equipped to decide which companies should get the money and how much . . . One of our solar companies with revenues of less than $100 million (and not yet profitable) received a government loan of $580 million; while that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money.”
Which is precisely the point.
The proper role for government is to support basic research, not commercial ventures that become exercises in taxpayer risk but private reward.
When government takes $535 million and invests in a loser, it not only wastes taxpayer money but it also denies that capital to some other project in the private economy that might have succeeded.
The Solyndra emails show how ill-equipped government is to predict the industries of the present, much less the future.”
Why no Occupy Wall Street placards on this one ?
Still another “protected class” … unemployeds.
October 10, 2011Punch line: Obama’s job bill would let unemployed folks sue an employer with an opening if they think they haven’t received due consideration in the hiring process.
Excerpted from AP: Unemployed seek protection against job bias
A growing number of unemployed or underemployed Americans are complaining that they are being screened out of job openings for the very reason they’re looking for work in the first place.
Because they’re unemployed.
Some companies and job agencies prefer applicants who already have jobs, or haven’t been jobless too long.
They may get help from a provision in President Barack Obama’s jobs bill, which would ban companies with 15 or more employees from refusing to consider — or offer a job to — someone who is unemployed.
The provision would give those claiming discrimination a right to sue, and violators would face fines of up to $1,000 per day, plus attorney fees and costs.
Let me get this straight.
So, when benefits run out after 99 weeks – almost 2 years – then companies must hire them.
Perhaps there’s a reason that the 9% who are unemployed aren’t in the group of 91% who are employed.
You think ?
What exactly is a “flash in the pan”?
October 10, 2011Many pundits are calling Herman Cain a “flash in the pan”.
I thought it simply meant “here today, gone tomorrow” … but got curious.
Here’s a more official reading from Phrases.org
Flash in the pan: Something which disappoints by failing to deliver anything of value, despite a showy beginning.
The origin …
One notion is that this phrase derives from the Californian Gold Rush of the mid 19th century.
Prospectors who panned for gold supposedly became excited when they saw something glint in the pan, only to have their hopes dashed when it proved not to be gold but a mere ‘flash in the pan’.
This is an attractive and plausible notion, in part because it ties in with another phrase related to disappointment – ‘it didn’t pan out’.
Nevertheless, gold prospecting isn’t the origin of ‘a flash in the pan’.
The phrase did have a literal meaning, i.e. it derives from a real flash in a real pan, but not a prospector’s pan, a musket’s pan.
Flintlock muskets used to have small pans to hold charges of gunpowder.
An attempt to fire a musket in which the gunpowder flared up without a bullet being fired was a ‘flash in the pan’.
Now we know …
The USPS is needed .. to deliver all of those gov’t checks.
October 7, 2011Punch line: According to the WSJ, nearly half of all U.S. households now receive some type of government benefit.
- Over 1/3 of Americans lived in a household that received benefits such as food stamps, subsidized housing, cash welfare or Medicaid.
- Almost 15% lived in homes where someone was on Medicare or Social Security, or both.
Reminder: Some 46.4% of households will pay no federal income tax this year, according to the nonpartisan Tax Policy Center. That’s up from 39.9% in 2007
My bet: All of these households think spending cuts are a bad idea …
and tax hikes on other folks are strokes of brilliance.
Hit the potty, kid … diapers cost money!
October 7, 2011Punch line: In tough economic times you gotta cut back, right?
Some parents are simply lengthening the time between their kids’ diaper changes.
Gross.
And, it’s penny wise – pound foolish … just raises the home’s decibel level and the ointment bill.
Excerpted from WSJ : Cut Back Diapers
As the economy continues to sputter, recent data show diaper sales are slowing and sales of diaper-rash ointment are rising.
Diapering a child six times a day costs about $1,500 a year, so it isn’t hard to see how it could become a burden on families dealing with chronic unemployment or struggling to cover rising costs.
Meantime, sales of diaper-rash ointment have increased 8% over the past year and pediatricians say the higher sales likely reflect either less frequent changes or a shift to lower quality diapers.
A pediatrician at Northwestern Memorial Physicians Group in Chicago, says she has seen a 5% to 10% spike in diaper-rash cases this year.
“We’re definitely seeing major effects of the economy: Diapers are very expensive, and the longer you sit in a dirty diaper, the more likely the chances of an infection.”
P&G says the new “wetness indicator” on Pampers Swaddlers has saved his family unnecessary diaper changes because “you don’t have to take the diaper off. You can just see the indicator, and you know if the baby is wet.”
P&G says its research shows parents are also potty training children earlier to save cash as economic uncertainty deepens.
Wonder if the wetness indicator was inspired by the pop-up that tells you when the T-Day turkey is ready?
Thanks to DM for feeding the lead.
A couple of years late, Orzag jumps on the HomaFiles idea re: housing.
October 6, 2011For a couple of years, I’ve been saying that private capital should be unleashed to stabilize the housing market.
How? Accelerated depreciation for residential rental property with unabsorbed passive losses used to reduce ordinary income … and no capital gains on the property when sold – after a couple of years minimum holding period.
Well, well, well.
In a Bloomberg article “U.S. Can Rent Its Way Toward a Housing Recovery”, Peter Orszag – Obama’s former budget guy – now proposes roughly the same idea.
Just a couple of years late.
The unpredictability of innovation …
October 6, 2011According to innovation guru Clayton Christensen:
Statistically, 93% of all innovations that have ultimately become successful started off in the wrong direction
The probability that you’ll get it right the first time out of the gate is very low.
Excerpted from MIT Sloan Review: Good Days for Disruptors – An Interview with Clayton Christensen Spring 2009
Bottom line: stay flexible, don’t get wedded to a concept …. constantly look for repurposing of the product or its technology.
The price of the “seniors’ buffet” is going up …
October 6, 2011According to Business Week, Costco claims gets about 75% of its income from membership fees.
So, with income under pressure, the company is going to the well and jacking them up.
Costco said it is raising membership fees 10% for about 22 million customers, as the largest U.S. warehouse club operator seeks to offset rising costs.
The fee increase is the company’s first in more than five years.
Currently most members pay an annual fee of either $50 or $100 for executive members
What’s a “seniors’ buffet”, you ask?
Well, Costco is famous for having blue-haired women cooking up and passing out food samples. So many, that legend says that some fixed income oldsters buy the membership just so they can come and graze on the samples.
I’m not into to that, but I am into Costco’s giant hot dog and 16 oz. drink for $1.50.
The post-Obama recovery …
October 5, 2011As far back as July, 2009, the HomaFiles is on record as saying that the economic recovery would be slow and delayed for reasons beyond pure economics. That CEOs would be reluctant to hire as long as the Administration was punitively anti-business.
At the time, we said:
The bottom line: businesses will resist government policies passive aggressively. Fewer jobs will get added back than history would suggest, and those that get added back will materialize later than past patterns. Businesses will add jobs as a last resort rather than trying to build capacity ahead of the economic growth curve. Why should companies increase their costs and risks any more than is absolutely necessary ? Companies will continue to off-shore jobs, but will be more clever and clandestine about it, e.g. by vertically disintegrating and simply buying goods and services from 3rd parties.
Given the Administration’s anti-corporate rhetoric, actions, and proposed game-changing rules, I doubt that many CEOs will be taking on added costs and risks to boost the administration. More likely, they will let unemployment continue to creep up, and will slow roll the process of rehiring. Corporate chieftains will sit back and watch the President squirm.
My view wasn’t really original thinking. It was simply what I was hearing privately from senior biz execs.
Well, a couple of years later, the argument seems to be catching some traction.
In an article titled The Coming Post-Obama Renaissance, Victor Davis Hanson writes:
When Obama leaves office, there will be a sense of psychological release in the business community that will lead to a far greater “stimulus” than printing more money.
the country is still growing, still needs new homes, more food, and more energy.
We are not a shrinking nation with the demographic crises of a Europe or Russia.
Soon the mounting pressure will be released by a new change in government and we will see a recovery that should have occurred more than two years ago when the recession officially “ended” in June 2009 — only all the more enhanced due to its delay.
If I were a GOP President-elect, I’d call in the business movers & shakers … tell them that I’ll be working feverishly to support business … and ask them to give the benefit of the doubt and to start making decisions “at the margin” – e.g. an extra job here or there – to move the economy ahead. Not dumb stuff – just some decisions at the margin. Suddenly, there would be a virtuous cycle.
Remember, you heard it here first. …
If you use a tablet pc, you probably spend more … hmmm.
October 5, 2011TakeAway: Tablet users are making more purchases online at a higher volume per purchase than consumers who shop via smartphones or the internet and retailers are responding to this trend.
* * * * *
Excerpt from WSJ: “Tablets: Ultimate Buying Machines”
Tablets still account for only a small percentage of overall e-commerce, but they are punching above their weight.
While the conversion rate — orders divided by total visits — is 3% for shoppers using a traditional PC, it is 4% or 5% for shoppers using tablets…
Many retailers also report that tablet users place bigger orders—in some cases adding 10% to 20% more to the tab—on average than shoppers using PCs or smartphones.
Retailers are trying to take advantage of that trend by tweaking their websites to better accommodate tablets and rolling out catalogs that have been developed for the device.
Edit by ARK
Want a job? Then learn to crunch nums …
October 5, 2011McKinsey recently published a report “Big Data – The Next Frontier” that concludes:
The United States faces a shortage of 140,000 to 190,000 people with deep analytical skills as well as 1.5 million managers and analysts to make decisions based on their findings.
Crunch those nums …
For jobs … drill, baby, drill.
October 4, 2011Punch line: Part of the formula for getting the economy moving is to have a new industry emerge – or have a latent one take-off.
Obama tried with his failed green energy initiatives.
Now, there’s increasing support for for turning the domestic oil, gas and coal industries loose.
Makes sense to me.
And, makes sense to Senators Webb & Warner who have introduced a bill that would expand oil drilling off the shores of Virginia … and split the royalty fees between the Feds and the state.
Their argument: raises revenues without raising individuals’ taxes, reduces dependency on foreign oil, potentially reduces – or at least contains – gas prices, and – oh yeah – adds jobs.
Keep reading …
* * * * *
Excerpted from Forbes: Gassing Up: Why America’s Future Job Growth Lies In Traditional Energy Industries
The Praxis Strategy Group looked over data for the period after the economy started to weaken in 2006.
Not surprisingly “recession-proof” fields such as health care and education expanded some 11% over the past five years.
But the biggest growth in jobs by far has taken place in the mining, oil and natural gas industries, where jobs expanded by 60%, creating a total of 500,000 new jobs.
The average job in conventional energy pays about $100,000 annually — more than twice as high as those in either health or education.
Overall U.S. oil production has grown by 10% since 2008; the import share of U.S. oil consumption has dropped to 47% from 60% in 2005.
Over the next year, according to one recent industry-funded study, oil and gas could create an additional 1.5 million new jobs.
The relative strength of the energy sector can be seen in changes in income by region over the past decade. For the most part, the largest gains have been heavily concentrated in the energy belt between the Dakotas and the Gulf of Mexico.
Energy-oriented metropolitan economies such as Houston, Dallas, Bismarck and Oklahoma City have also fared relatively well.
In energy-rich North Dakota there’s actually a huge labor shortage, reaching over 17,000 — one likely to get worse if production expands, as now proposed, from 6000 to over 30,000 wells over the next decade.
With the proper environmental controls, these industries could provide a major jolt to the economy while cutting down on energy imports, reducing debts and bringing jobs back home.
As long as Americans consume oil and gas, why not produce close to the market and with reasonable environmental controls?
The Homa Files 