December 19, 2005

A Week of Wall Streets (121905)

A possibly weekly feature that will note items reported in The Wall Street Journal during the previous week that weren’t significant enough to merit full posts, but still deserved notice elsewhere, and received little (All WSJ Links require subscription unless otherwise indicated):

Dec. 12 — EU-PU: NGOs Should Be No-Gos
Instead, non-governmental organizations get 1 billion euros a year, apparently to undermine the EU and engage in fraud:

Every year, the Commission hands out more than €1 billion to Nongovernmental Organizations — supposedly so that they can apply that “criticism” and “pressure.”
….. ‘Some of the NGOs receiving funds from the Commission describe…one of their main tasks as lobbying the Commission. The Commission is paying lobbies to be lobbied,” anti-fraud Commissioner Siim Kallas marveled earlier this year. Even more disconcerting is that the lobbying goes in one direction only. Instead of funding groups that represent a broad spectrum of political interests, as one might expect, most of the money goes to radical left-wing NGOs that are opposed to free markets and competition — the European Union’s very founding principles. The EU is basically financing the agitprop against its own reform policies.
….. the EU’s own anti-fraud unit, OLAF, is currently investigating more than 50 cases of possible fraud involving EU aid funds. More than half of those cases — 32 to be precise — concern NGOs.”

Dec. 14 — November Retail Sales Impressive
I’ll say“Excluding motor vehicles and gasoline, last month’s retail sales were up 0.5% from October and 7.6% from a year earlier. Economists sometimes strip out autos and gasoline sales because they are highly volatile; auto sales can rise or fall depending on the sales incentives offered by car makers, and gasoline sales are sensitive to crude-oil prices.” One reason I would consider holding the champagne: Last year’s November had 5 official Christmas shopping days in it, while this year’s had 6.

Dec. 14 — Hybrids Don’t Fly, Nor Do Their Economics
Don’t take my word for it, take his: “Kazuo Okamoto, Toyota’s research chief, recently told the Financial Times that, in terms of fuel efficiency, ‘the purchase of a hybrid car is not justified.’”

Dec. 15 — Unions Working to Expand Membership by Appealing to a Unique Group
Union carpenters in Denver, and unions in other cities, are seeking illegal immigrants as members–oh, I’m sorry, “undocumented workers.” Absolute madness.

Dec. 15 — General Motors’ Money for Nothing
GM’s job bank arrangement with the UAW involves an estimated 5,000 to 6,000 “workers” (using the term very loosely), and costs the company about $800 million per year.

Dec. 17 — Backlash by Donors to Already-Rich Colleges?
If so, it’s long overdue:

The wealthiest colleges and universities are so flush with cash that, increasingly, alumni and philanthropy experts are starting to wonder whether these schools really need more money — and why they spend so little of it. Ordinary Americans and the U.S. government are often attacked for spending beyond their means. Critics level the opposite accusation at higher education. They say some of the richest universities are hoarding money that could be spent on enrolling more students or providing more financial aid, in keeping with the public purpose — education — that qualifies them as tax-exempt charities. The criticism comes as tuitions continue to increase at twice the rate of inflation.

And they’re being awfully miserly with their billions:

But despite what are often double-digit investment returns, many wealthy colleges are withdrawing less than 5% — some about 4% — from their endowments, according to data collected by The Wall Street Journal. The U.S. government, worried about hoarding, has for years required foundations to pay out at least 5% of holdings annually. But colleges aren’t included.

The article goes on to note that some of these endowments are huge–Harvard’s was about $26 billion this past summer. I also think the 5% spending guideline is unacceptably low as, unless I’m missing something, it appears to ignore new contributions. These funds would do fine and continue to grow over the long haul even at withdrawal rates of 7% or 8% of the fund balances if new contributions of at least 3%-4% of the fund balances continue to come in annually. The funds would have to earn a readily achievable 7% or so return to retain their purchasing power; anything beyond that and the fund would still continue to grow.


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