June 9, 2006

Four Good Pieces of News to Wrap Up the Work Week

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 3:28 pm

Four Pieces of Good News You Can Take Home Today (but don’t be a stranger this weekend :–>):

  • U.S. Consumers Upbeat About Economy

    Consumer confidence in the economy rebounded over the month, suggesting that people are taking still-elevated gasoline prices and the specter of even higher borrowing costs in stride.

    The RBC CASH Index, based on results from the international polling firm Ipsos, showed confidence snapped out of the doldrums and clocked in at 84.1 in early June. That was a big improvement from May’s reading of 67.1, a seven-month low.

    June’s number marked a return to a more normal reading for the confidence barometer. A year ago, consumer confidence stood at 84.

    “In spite of high energy costs and all the uncertainties around them, consumers are holding in there. It’s still a decent economy,” said Joel Naroff, president of Naroff Economic Advisors. “Consumers seem to be weathering a lot of storms out there.”

  • U.S. Seeks to Recover Fannie Mae Bonuses“The government will pursue some Fannie Mae executives to recover bonus money they reaped in an accounting scheme — if the mortgage giant itself fails to do so.”
  • Administration Bumps Up Its Economic Growth Estimate — They’re notoriously but understandably conservative, but up it went:

    The White House, in a slightly more optimistic forecast, predicted Thursday the economy will log solid growth and that the nation’s unemployment rate will dip lower this year.

    The Bush administration forecast that the gross domestic product will grow by 3.6 percent, as measured from the fourth quarter of last year to the fourth quarter of this year. That is a better than its previous forecast of a 3.4 percent growth rate for this year.

  • Here’s the coup de grace, from Jim Glassman at TCS Daily:

    The global economy is roaring. “For the first time since 1969,” reports a newsletter I rely on, Bridgewater Daily Observations, “not a single country in the world has had negative year-over-year growth.”

    Overall, the world economy is rising at a 4.4 percent rate, after inflation. At that pace, Gross Domestic Product doubles in 17 years, quadruples in less than a generation and rises by a factor of about 30 in a lifetime. Imagine the average nation being 30 times richer than it is today!

    It’s no secret why this is happening. Nearly half the world’s population — China, India, the former Soviet Union and its satellites — has moved within 20 years from an anachronistic economic system that doesn’t work, like autarky or communism — toward a free-market system that does. Certainly, these nations haven’t fully embraced an open, competitive system with limited government involvement yet — but, then again, neither has Europe, or the United States for that matter. The vector, however, is clear, and a growing world economy is very, very good for us.

  • As long as world leaders can keep their bureaucratic nannies at bay and more tyrannies from forming, things will be good.

1Q06 Bankruptcy Numbers Finalized; 2nd Quarter Will Be the First True Indicator of “Reform” Impact

Filed under: Bankruptcy & Reform,Economy,Taxes & Government — Tom @ 1:36 pm

From CardTrak:

Consumer and business bankruptcy filings imploded during the first quarter, dropping to a record low of 116,771 petitions. The figure was about one-fourth the level of year-ago filings.

1Q06BRs

According to the Administrative Office of the U.S. Courts, Chapter 7 filings rose 25.4%, from 1,141,715 in the 12-month period ending 1Q/05 to 1,432,074 in March 2006. Chapter 13 filings fell 19.5%, to 355,756 in March 2006 from 441,838 in March 2005.

The final first quarter 2006 figure is more than 13,000 higher than the initial estimate back in April.

The point of the 12-month comparison through March 2006 vs. March 2005 is that it smooths out the effect of the rush to file ahead of the law change on October 17 of last year.

So the second quarter will really tell the tale. Will bankruptcies return to something resembling their old levels of 300,000 or more? I personally don’t think so; based on what I’ve seen reported elsewhere, we may very well find that a lot of situations that used to result in bankruptcies are, because of the delays built into the new bankruptcy framework, instead leading to foreclosures. I’m not at all certain that this constitutes progress.
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UPDATE: The monthly trend in the five months ended in March definitely is upward in Reuters piece that jumps the gun in its headline (“Personal bankruptcy cases rise despite reforms”; sorry people, not true, yet by any reasonable comparison to last year) — 3,758 in November, 21,636 in December, 27,235 in January, 35,352 in February and 49,977 in March (I know, the Jan.-Feb.-Mar. numbers don’t add up to the 116,771 above; I don’t know why, and the difference is too small to bother with). The final number in the pre-law change rush month of October was 619,322.

Attention State of Ohio: Get Our Money Back

Filed under: Corporate Outrage,Economy,Taxes & Government — Tom @ 12:33 pm

If Marion County can recover undeserved tax abatement money, as it appears will happen in this case, you can in this one.

This Is Pretty Much Where I Am on Net Neutrality

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 11:23 am

Although he is a senior VP at Internet Wall of Shame member Cisco Systems, Charles Giancarlo made some very good points about the net neutrality debate in a subscription-only Wall Street Journal op-ed piece. Plus, as I see it, he would seem to be more objectively interested in the promoting the growth and development of the Internet as a whole than the corporate legacy protectors at Yahoo!, Google, and Microsoft:

Is regulation needed to accomplish “Net neutrality”? The prudent policy at this point would be not to regulate. First, the Internet is still in its adolescence, and it is undergoing rapid change. Regulation would lock in rules and practices that might seem correct today, but could create havoc tomorrow. Instead, we should allow the massive convergence to Internet technology to continue unabated, and regulators should address specific problems on a case-by-case basis.

The FCC has already endorsed “connectivity principles” that clearly spell out that consumers should be able to access their choice of safe, legal content and applications within the bandwidth limits and quality of service of their service plan. The House’s Energy and Commerce Committee recognized this approach by rejecting proposals to regulate network technology and management tools in a way that would have reduced innovation, choices and new services.

Congress must protect freedom and openness on the Internet, while promoting responsibility and fairness among its users, and the ability of providers to compete on technology and services. Quick, reactionary and heavy-handed regulation could snuff out incentive and creativity. With forbearance and wise policies, we can actually ensure that innovation and growth continue and that consumers win.

If what Mr. Giancardo says about “connectivity principles” is true, I fail to see where the potential crisis is. IF there is to be a faster service arrangement than the current cable modem or DSL set-ups (or the T1s, etc. at companies), the “connectivity principles” would seem to dictate that all customers for a given plan would HAVE TO get the same level of service.

So what am I missing?
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UPDATE: It’s not like the House bill is toothless — This is from an AP piece at The Houston Chronicle:

The Barton bill gives the Federal Communications Commission authority to enforce net neutrality principles and set fines of up to $500,000 for violations.

Many Democrats, backed by a diverse lobby of content providers such as Google Inc. and Microsoft Corp., and users ranging from religious broadcasters to liberal bloggers, said this wasn’t enough to maintain the Internet’s freewheeling openness.

I don’t see why not.

What Makes Local Governments Think They Can Run Their Own Broadband Business?

Medina County Has a Muddled Idea for Muni Broadband; The Ohio Taxpayers Association Opposes It

S.O.B. Alliance member Scott Pullins has a post on this at The Pullins Report, and has his Ohio Taxpayers Association (OTA) on the case of this suburban Cleveland county, for this reason:

Medina County Commissioners are planning to borrow and spend over $8 million in taxpayer dollars to build a high speed broadband network for the benefit of a few, politically connected companies. This is money that should be used for more important purposes like supporting our schools, our roads, and our safety forces. The Ohio Taxpayers Association has sponsored this website as a public service to educate Northeast Ohio taxpayers about this wasteful project and take action.

I’d like to see more detail, which I suspect Scott will provide, but Medina appears to be making at best a dangerous move, and at worst engaging in serious political cronyism (it’s unclear to me from the description above whether all residents will benefit from the network).

It’s one thing for the City of San Franscisco to, as I understand it, commit little if any money to a muni broadband project with the likes of deep-pocketed companies Google and EarthLink, which I would expect will run the system and assume the primary risk of financial loss (if I’m wrong, the City by the Bay is run by people who are dumber than a box of rocks). It’s quite another to go into serious municipal hock for that purpose.

Scott has some great research at the web site set up to oppose Medina County’s plans explaining why, with rare exceptions like San Francisco, muni broadband projects often fail in the short run, and will hold back the march of technology in the long run.

Here’s another supporting item from The Institute for Policy Innovation, along with an excerpt about down-the-road issues and existing failures:

But government ownership of networks will shut out, rather than provide, competition. What do you think will happen when a private network company comes into a market and can provide better/faster/cheaper service than the government-owned network? Do you think that a local government that has come to depend on the subscriber revenue from its municipal network will “play fair”? Of course not — they will favor themselves and hinder the new competitor as much as possible. The result is that constituents who live in the area served by the municipal network will pay higher costs for network access, not the lower prices offered by a potential competitor.

Financially, these municipal networks are failing. Marietta, Ga., has had to sell its municipal network at a substantial loss. The city spent $34 million of its taxpayers’ dollars on the network but sold it for $11 million — a loss of 23 million taxpayer dollars. In Ashland, Ore., millions of dollars in cost overruns have forced the city to borrow from other city funds in order to cover the overruns.

If local officials want to become broadband entrepreneurs, they should resign their elected offices and start a network company. Then they can assume the financial risks themselves with voluntary investors, rather than playing at broadband with taxpayers as their underwriters.

I encourage readers to do more of their own research on this. If you conclude that you’re against what Medina County is doing, go to the opposition web site the OTA has set up, specifically its “Take Action” page, and either e-mail or call as suggested.
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UPDATE: Here is an interesting piece on what Google is doing as it rolls out WiFi in its headquarters hometown of Mountain View, California, which includes some controversy over privacy.

“The Evil Rich Are Carrying Us” — An Update

Filed under: Economy,Taxes & Government — Tom @ 9:29 am

Steve Forbes notes the following in his subscription-only column in the June 19 issue of Forbes that adds an exclamation point to this previous post:

The top 0.1 percentile earned 8% of the nation’s personal income and paid 15% of federal income tax revenue.

With 136 million tax return filers (second paragraph at link), that means 136,000 filers and their families are shouldering 15% of the personal income-tax burden.

Is that “progressive” enough?

And those few souls who haven’t read this previous BizzyBlog post (“Voodoo Schmoodoo”) may need this timely reminder from Forbes:

Experience has repeatedly demonstrated that if you want more money from the rich, cut tax rates.

Bizzy’s AM Coffee Biz-Econ-Life Links (060906)

Free Links:

  • Larry Kudlow thinks that the stock market’s miserable week may have as much to do with the Canadian terrorist arrests (i.e., that there is a more clear and present danger than many previously thought) as with anything Ben Bernanke did or didn’t say.
  • USA Today reported Wednesday that about 90% of the $4 billion in (my term) pork that was part of what the Senate disgracefully tried to add to what was supposed to be a clean Katrina relief and war funding billing has been stripped away. It should have been 100%, and I want to find out about what happened to the other $10 billion in pork the Senate wanted before I get too excited.
  • Hey, I thought you retired — Taking what looks to be a cue from our previous president, Alan Greenspan ran off his mouth Wednesday about how energy prices are starting to hurt the economy. Great: Now we have the Twin Towers of the previous administration with second careers as second-guessers. Would it be impolite to note that no other previous White House or Fed Chair occupants have engaged in this behavior, at least in my lifetime?
  • On balance, I would say this is an improvement

    Move over Budweiser. College life isn’t just about drinking beer.

    In a rare instance, Apple Computer Inc.’s iconic iPod music player surpassed beer drinking as the most “in” thing among undergraduate college students, according to the latest biannual market research study by Ridgewood, N.J.-based Student Monitor.

    Nearly three quarters, or 73 percent, of 1,200 students surveyed said iPods were “in” — more than any other item in a list that also included text messaging, bar hopping and downloading music.

    Look, the idea that “studying” might appear on the list was too much to hope for.

  • Maybe they should lock up the iPods too“BlackBerry addicts have a crack at freedom when they check into one Chicago hotel: the manager will put the communications devices and others like them under lock and key for guests who want a break.”
  • This may be an early sign that the WORM (Worn-Out Reactionary Media, known to most as The Mainstream Media) meme that “the economy is slowing” may not be correct — “Americans increased their borrowing in April at the fastest pace in 10 months as credit card spending and auto loans both picked up.” I’m not the biggest fan of the debt buildup, and the correlation between debt buildup and GDP growth isn’t that strong, but it is an indicator of consumer confidence.
  • I missed this early in the week in the excitement about the record hot streak in manufacturing — The Institute for Supply Management (ISM) services index, which deals with the remaining 80% of the economy, showed expansion for the 38th straight month. I had to go to the ISM site to learn this; this BBC report (headlined “Growth slows in US service sector”) concentrated on the fact that the reading dropped from 63.0 to 60.1 and the possibility that it indicates the economy is “cooling” (any reading over 50 means “expansion,” NOT cooling). Zheesh — in the roughly nine years of the survey, the reading has been higher than 60.1 a total of 39 times, and equal to it or lower 67 times.
  • “So how did Jing Fei Jiang, a man allegedly ordered deported in 1990, manage to buy two homes, launch a restaurant and get a divorce, yet still elude immigration authorities for more than 15 years?” He even got an SBA loan.
  • Words to live by — “When Scamming People, Best Not To Admit It In Your Autobiography.”

Positivity: Policemen Commended for Honesty

Filed under: Positivity — Tom @ 5:57 am

What was returned translates into the equivalent of about $40,000:

June 03, 2006

BECAUSE of their honesty, four Manila policemen helped save a truck driver’s job when they returned more than P2 million worth of checks and P20,000 in cash belonging to his employer that he had lost.

A teary-eyed Ronnie de Guzman, who works as a driver and messenger for a rice retailer, gratefully accepted the white envelope full of checks and cash during a turnover ceremony at the Manila Police District (MPD) Moriones Police Station in Tondo yesterday morning.

“These honest policemen saved my life because I was in danger of losing my job,” said De Guzman, who accidentally dropped the envelope at the corner of Dagupan Street and Recto Avenue Thursday afternoon.

Senior Supt. Edgardo Danao, MPD Moriones station commander, commended Dagupan police community precinct commander Insp. Eduardo Morata, PO3 Monico Sumala, PO2 Jess de Jesus and PO2 Conrado Juano for their honesty.

Danao said the policemen, led by Morata, were patrolling the area at around 2:30 p.m. Thursday when Sumala saw a fat envelope on the sidewalk. When he opened it, Sumala saw five checks worth P2,080,000 and P20,000 in cash inside.

….. It was the second time for Juano to be cited for his honesty. Last year, he returned P65,000 in cash and valuables to a robbery victim.