Archive: November, 2009
"If the Yankees win the World Series the economy will have a nice bounce back in 2010 but if the Phillies prevail it will be a long slog to recovery, according to a Real Time Economics analysis of gross domestic product following Yankees and Phillies World Series victories," writes the Wall Street Journal here.
"Since 1930, the Yankees — who would clinch their 27th World Series trophy with a win tonight — have been a harbinger of an average of 5% GDP growth in years following a series victory, healthy by any measure. In years in which the Yankees didn’t win the World Series U.S. output expanded at an unspectacular 2.9%..."
Why didn't Pennsylvania endorse Philadelphia's request for $22 million in federal Recovery Act funds to extend the city's Internet system? "Our evaluators thought others were better," said Gary Tuma, spokesman for Gov. Rendell. Like Intenet connections for rural Pennsylvania. And a Free Library plan to teach the poor to use computers.
Some city Internet advocates blamed corporate Internet providers for Pennsylvania's non-support. They noted that David L. Cohen, the Comcast executive vice president, told Bloomberg News last week the company opposed "applications to provide service in areas where there is already broadband service" from Comcast.
"The telephone companies and Comcast didn't want this to happen," Todd Wolfson, a Rutgers professor who helped write the city's application, told me. "The market model, which they champion, hasn't gotten the Internet into the hands of people who are working class."
"It certainly doesn't help if Comcast objects. Or if Gov. Rendell did not put Philadelphia's application on his list," said Beth McConnell, Philadelphia-based executive director of the Ford Foundation-backed Media and Democracy Coalition, which lobbied Congress to fund broadband for the poor.
But Tuma said Comcast's stand wasn't a factor: "We didn't get any comment from Comcast, pro or con," he said. Corporate opposition or gubernatorial indifference won't necessarily keep any plan from getting funded, says Tom Power, chief of staff to NTIA head Lawrence Strickling and former general counsel at Blue Bell-based Fiberlink.
Philadelphia chief technology officer Allan Frank says he understands why people might not see a city served by Comcast and Verizon as "underserved." But price matters, he added: "There ought to be affordable Internet." More in today's PhillyDeals print column here.
Billionaire Warren Buffett's Berkshire Hathaway Corp., an insurance and manufacturing conglomerate based in Omaha, is taking over Burlington Northern Santa Fe Corp. which ties Chicago, Houston and the whole West by rail.
It's a bet that U.S. shipping will recover - and that oil prices will rise, since rail transport is way cheaper than trucks.
"It's an all-in wager on the economic future of the United States," Buffett said in this statement. "I love these bets."
Updated: Deal includes $26 billion ($100/share) cash, plus assumption of BNSF debt. With existing Buffett holdings, values the railroad at $44 billion, or $100/share, vs recent $76/share trading price, says Bloomberg here.
Americans have been using their credit cards a lot less and their debit cards a little more, and that adds up to bad news for "big-ticket" Christmas shopping-dependent retailers, says Janney Montgomery Scott retail analyst David Strasser, in a report today using data collected by payment-systems analyst colleague ThomasMcGrohan.
Credit card use (in which shoppers borrow from banks) has been dropping since last fall at Visa and MasterCard. Debit card use (in which shoppers use their own money) is up, but a lot more slowly.
For every $2 less they use their credit cards, shoppers are spending less than $1 more on their debit cards.
Total U.S. credit card debt peaked at $975 billion in fall 2008, and dropped below $900 billion this summer. Charges fell more in August than in any prior month of the slowdown, falling $20 billion.
As Strasser notes, banks are "pulling back on consumers that were not creditworthy, or cutting the lines of consumers that were marginally creditworthy." Maybe forced savings, or at least less debt, will be good for the nation, over time. But this "bode(s) poorly for the holiday season and early 2010, particularly for big-ticket items that are credit dependent, as well as for retailers that are heavily dependent on middle-income customers."
"I thought all the Marxists were in the faculty dining room at Yale – they’re not," writes veteran South Jersey banker Gerard M. Banmiller, president and chief executive at 1st Colonial National Bank, Collingswood.
"Last week some of them were out in force in
"They don’t want to get it. The
"We are the people that lend your employers money to grow the businesses that keep you employed. We are the people who lend your neighbors money to buy or improve their homes once they’ve proven they can pay us back. There were no sub-prime mortgages here.
The government's war on identity theft has been put off again.
"At the request of Members of Congress, the Federal Trade Commission is delaying enforcement of the 'Red Flags' Rule [previously scheduled to take effect Nov. 1] until June 1, 2010, for financial institutions and creditors subject to enforcement by the FTC," the FTC said Friday here. Latest of several postponements.
"The Rule was promulgated under the Fair and Accurate Credit Transactions Act" in which Congress ordered the FTC "to develop regulations requiring 'creditors' and 'financial institutions' to address the risk of identity theft," which may mean huge increases in liability and security expense for any business that handles company data.
The Red Flags Rule, says FTC, would force firms to "develop and implement written identity theft prevention programs to help identify, detect, and respond to patterns, practices, or specific activities – known as 'red flags' " which might be signs someone unauthorized might have access to customer data at that business.
The last-minute delay, says James E. Kurack Jr., partner at Obermayer Rebmann Maxwell & Hippel LLP, "was requested by members of Congress who are currently considering a bill which would exempt health care providers and accounting practices with twenty or fewer employees from complying with the Rule. That bill passed unanimously in the House and is now being considered in the Senate."
It also came, as the FTC put it, the same day "the U.S. District Court for the District of Columbia ruled that the FTC may not apply the Red Flags Rule to attorneys." Lawyers are exempt, nice for them! Case is US District Curt for the District of Columbia, 09-1636, Kurack says.
More from FTC (corrected): http://www.ftc.gov/opa/2009/10/redflags.shtm
"The war is over. The subscription model has won," writes Sanford C. Bernstein & Co. LLC analyst Craig Moffett.
"Free video site Joost is already gone and forgotten... Even before Comcast began its dalliance with NBC Universal, there were reports that Hulu [which NBCU co-owns] was preparing to move to a subscription model... Newspapers are scrambling to put their content behind pay walls...
"The triumph of the pay model isn't just on the Internet. The 'free' model for broadcast TV is also dying" as the old mass market audience breaks up in a hundred or ten thousand little specialized markets.
"The broadcast networks are on their way to becoming cable networks... There is talk of Fox asking for $1 per subscriber per month." Meanwhile cable companies are readying their usual annual increases in many markets, while Verizon "recently raised its FiOS price by 21%" to $58/month for "Premier" service.
"But there's a problem. Where exactly is all this subscription revenue going to come from?" Since consumers are broke, more or less. Maybe media companies "haven't gotten the Recession memo."
"An obscure company whose main expertise is jails is key financial advisor to the Pennsylvania Turnpike Commission in their application to the Feds for permission to toll I-80," claims TollRoadNews.com here.
"The 41 page analysis 'Annex B: Financial Valuation of Proposed Rentals for Interstate 80' is authored by an entity titled 'Provident Capital Advisors LLC, Baton Rouge, Louisiana (PCA) part of Provident Resources Group of Baton Rouge, Louisiana (PRG).'" Read it here (starts Page 40)
It conludes, "'We believe the level of Rent (the PTC would pay the state for I-80) is a valid operating cost of I-80 and should be an eligible use of toll revenues under the ISRRPP (federal law on tolling interstates.)'
"PRG operates out of two residential houses in the Mississippi delta town of Baton Rouge LA. Its main activity seems to be operation of 14 jails called 'correctional facilities' in Texas, Oklahoma, Ohio, Georgia, Alaska, North Carolina and Pennsylvania... PRG also do student and oldies' housing, and some regular housing. They say they are getting into healthcare."
Updated: Tasty Baking Co. says sales rose 1.8% in the third quarter as it moved production of fruit and custard pies from its 87-year-old Hunting Park bakery to its new, automated plant at the old Navy Yard in South Philadelphia. Third-quarter earnings statement here.
Analyst Mitchell Pinheiro at Janney Montgomery Scott had predicted higher sales growth of around 5%. He blamed the difference on lower vending-machine sales; also noted the South Philly plant is now two months ahead of schedule.
Tasty Ceo Charles Pizzi says Krimpets and other baked Tastykakes will move to South Philly by next June. To hear Pizzi tell more, listen to Tasty's quarterly conference call at 11 a.m. http://www.tastykake.com , go to "Investors", go to "Webcasts & Presentations"