Archive: July, 2009
Versa Capital, the West Philadelphia distressed-company turnaround investor led by Greg Segall and backed by Ira Lubert, is among investors who have made an offer to buy Finlay Enterprises Inc., the financially troubled New York jewelry retail holding company that owns Philadelphia's Bailey Banks & Biddle and J.E. Caldwell & Co., writes Bloomberg News, citing unnamed sources, here.
Finlay also operates Carlyle, Congress and Promenade jewelry stores. No immediate comment from Segall's office.
Are rich Americans paying their share of taxes?
Yes, and more, writes Scott A. Hodge of the Tax Foundation here. Citing the most recent Internal Revenue Service data (through 2007), the richest 1 percent of individual U.S. taxpayers paid 40% of total federal income taxes. The poorest 95% paid 39%. (The 4% next-richest paid the rest.)
But the richest 1% are paying more because they also make a growing portion of U.S. income - over 20%, writes Catherine Rampell on the New York Times website here.
That still seems like the rich pay more than their share. But income tax is only half the story, writes Casey B. Mulligan of the University of Chicago here.
"One AIG subsidiary, the National Union Fire Insurance Company of Pittsburgh, shows what can happen by heavily relying on affiliates... At the end of 2008, more than a third of National Union’s portfolio was invested in the stock of other AIG companies, which are not publicly traded. National Union might not be able to sell all of these shares, and it is not clear what it could get for them. Many states bar insurers from investing that heavily in related companies..
"National Union’s biggest reinsurance partner is American Home Assurance, an AIG. subsidiary that has taken $23.1 billion of obligations off National Union’s hands. In a New York filing, American Home reports total assets of $26.3 billion, but part of that consists of assets that cannot be used to pay claims, like furniture... In addition, American Home has 'unconditionally' guaranteed the obligations of 16 other AIG subsidiaries, bringing the total it might have to pay to $140.6 billion...
"Gross domestic product contracted at a less-than-projected 1 percent annual rate after shrinking 6.4 percent in the prior three months, the most in 27 years, Commerce Department figures showed today in Washington. Revisions showed the economic downturn last year was even deeper than previously estimated," Bloomberg News reports here.
Have to take Bloomberg's word. Commerce hasn't posted the figures on its page, last we checked. What good is it?
"The economy was forecast to shrink at a 1.5 percent pace, according to the median estimate of 78 economists surveyed by Bloomberg News... Last quarter's decline was the fourth in a row... the longest losing streak on record."
When the President sits down at the White House tonight for a beer with Harvard Prof. Henry Louis Gates Jr. and Sgt. James Crowley, the Massachusetts cop who famously arrested Gates for getting mouthy, all three will be drinking foreign-owned brews, complains Anat Baron, Los Angeles-based director of the movie Beer Wars and former manager of Mike's Hard Lemonade.
"The president keeps saying it will be entrepreneurs that take us out of the recession. Well, there's plenty of American-owned, entrepreneurial beers available around the White House," Baron told me from home in Los Angeles.
Foreign-owned? "Obama’s press secretary says he’ll be drinking a Bud Light. It’s the No. 1 beer in America in terms of sales. It's made by Anheuser-Busch, which for $52 billion was sold last year to Belgian beermaker Inbev."
Joe Trahern, former Washington lobbyist for General Motors and a former aide to ex-Senate Democratic Leader Tom Daschle (D-S.Dak.), four other Democrats in Congress, and President Clinton, has joined Comcast Corp. as Senior Director of Federal Government Affairs, which means he'll lobby Congress.
Also, Rudy Brioche', former legal advisor to Federal Communications Commission member Jonathan S. Adelstein and an ex-aide to U.S. Sen. Frank Lautenberg, D-N.J., joined Comcast Tuesday as Senior Director of External Affiars and Public Policy Counsel, which means he'll help draft legislation strategy. Statement (from Tuesday) here.
Comcast - under executive vice president David L. Cohen, who actively oversees the lobbying group - is following the national tilt toward the Ds, after the departure last year of Comcast Republicans Kerry Knott, senior vice president for government affairs, and Brian Kelly, senior director of federal government affairs.
Cigna Inc. profits from health insurance, the Philadelphia company's biggest business, rose to $177 million for the second quarter, from $154 million in the first quarter, even though premiums and fees slipped to $2.86 billion, from $2.91 billion, as membership in Cigna plans fell to 11.2 million, from 11.4 million in the first quarter. Also down from 12.1 million a year ago.
That means an after-tax profit margin on health insurance of 5.4%, up for the quarter and for the year. How do you get more from less? By laying off workers (Cigna announced cuts in January), jawing down vendor prices, and cutting real estate costs, said spokesman Chris Curran. More on Cigna corporate earnings, which rose overall thanks mostly to favorable interest-rate movements, in the company's reports here.
No recovery yet. Corporate America is making money mostly by cutting people and other costs, not boosting sales.
Second-quarter earnings are out and, as usual, most publicly-traded U.S. firms are reporting they beat the projections that analysts published - which were based on what the companies had been feeding the analysts. They like to look like they're doing better than expected.
But as economist Ed Yardeni tells clients in a note today, parsing the Standard & Poor's 500 industry-by-industry: "All ten sectors have a positive earnings surprise, but just five have a positive sales surprise so far." Emphasis added.