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November 2001
Unwarranted optimism? November 21, 2001 -
Wall Street is abuzz with news the recession will end early next year. Is their optimism warranted? Maybe. But if we know anything about Wall Street, it's that they're inclined to make irrational claims and decisions. The dot com bubble, for instance, was anything but rational. With that in mind, it might be wise to take a moment to consider the following:
"The Labor Department reported Wednesday that for the work week ending Nov. 17, new jobless claims dipped by a seasonally adjusted 15,000 to 427,000."
This is a good thing. According to The Dismal Scientist, continuing claims "for the week ending November 10 fell to 3,734,000." Before we break out the champagne, however, we should note that, the spike to 535,000 caused by September 11th aside, initial claims are hovering dangerously close to 450,000. And if it bursts past this figure?
"(T)hat could lead to what John Lonski, the chief economist at Moody's Investors Service, calls a 'catastrophic decline' in the broader economy." - I See ... Declining Inventories ... Jobless Claims Falling ..., Scott McMurray, Business 2.0, October 2001
What do the good folks on Wall Street expect to bail us out?
"Economists and the Bush administration are counting on the Fed's aggressive reductions, along with new tax cuts and increased government spending being contemplated by Congress, to lead to a recovery in 2002."
If, as Peter Drucker says, "the interest rate has ceased to be important because businesses are no longer dependent upon borrowing from banks" (see The Guru's Guru, Erick Schonfeld, Business 2.0, October 2001), then we had better hope Bush and Congress come through. Otherwise, the enthusiasm over the anticipated recovery could turn out to be the twin of the enthusiasm that inflated the dot com bubble. (posted November 27, 2001)
- Newsday.
First signs of deflation? November 17, 2001 -
Deflation is one thing the Fed fears as much as Inflation. A deflationary collapse can turn a recession into a depression. And now there are early signs of deflation:
"Led by tumbling energy costs, especially for gasoline, overall consumer prices scored an unusual decline last month, dropping 0.3 percent, the Labor Department reported yesterday."
Although medical and prices on other consumer goods and services continue to rise, some see the decline as a sign the recession will end soon. But for the recession to end the economy needs people to spend money, and they won't have money if they don't have jobs, and that could be a problem:
"The Federal Reserve said its industrial production index dropped 1.1 percent last month, the largest monthly decline in nearly 10 years. It was the 13th consecutive decline and left the index, which tracks production in the nation's factories, mines and utilities, 6.3 percent lower than it was a year ago."
A turn-around won't happen until employers start hiring again:
"The turning point usually comes when firms decide they will lose sales if their inventories are becoming too low to readily fill their customers' orders. Then companies have to increase production."
Forecasters say that will happen sometime between March and May 2002, but with all the American employers who have exported jobs to places like India, it may not be that easy.
- Washington Post.
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October 2001
The Scaredy Cat Skies? October 18-25, 2001 - When Neil Godfrey tried to board a United Airlines flight bound for Phoenix from Philadelphia International Airport, he was detained and then refused passage. Was he carrying a knife, perhaps, or paper cutters? No, his offense was much worse! The 1991 novel Hayduke Lives! by Edward Abbey:
"Within minutes, Godfrey says, Philadelphia Police officers, Pennsylvania State Troopers and airport security officials joined the National Guardsman. About 10 to 12 people examined the novel for 45 minutes, scratching out notes the entire time. They also questioned Godfrey about the purpose of his trip to Phoenix."
United refused to allow him to board. Later, he told his mother, who called and booked passage on a later flight. But again, when he arrived at the Philadelphia International Airport, this time carrying a Harry Potter book, United refused to let him board. No reason was given at the time, but later they accused him of making "a joke about bombs."
Interesting, considering that "Federal Aviation Administration (FAA) regulations stipulate that any passenger who jokes about explosives be arrested on the spot. By contrast, Godfrey was never charged or even accused of breaking the law."
Being prudent about, even hypersensitive to airline security is understandable, right now. But barring a passenger over a book goes beyond paranoid. - City Paper.
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September 2001
Boeing bails on America! September 19, 2001 - Blaming the attack on America, the aerospace giant will dump more than 30,000 workers:
"Boeing is planning to lay off 20 percent to 30 percent of its commercial airline work force -- roughly 31,000 people -- as a result of last week's terrorist attacks, a congressional source said Tuesday."
But that shouldn't stop us from doing our patriotic duty to buy and consume as though nothing happened. Unlike real citizens, the multinational corporations don't have patriotic duties, only bottom lines. Question is, if they don't have the obligations, then why do they get the privileges? - Olympian.
Airport security is cheap: September 12, 2001 - It's not hard to breach security in our nation's airports: "I have brought knives, razors; and once, my traveling companion brought a hammer and chisel. No one stopped us."
How can this be? Aren't security people trained to do their jobs right? Maybe. But what do you expect for minimum wage? Or from pilots on welfare?
"Of course, I have gotten away with all of this because the airlines consider my safety SO important, they pay rent-a-cops $5.75 an hour to make sure the bad guys don't get on my plane....a first-year pilot on American Eagle (the commuter arm of American Airlines) receives around $15,000 a year in annual pay."
Thirty-five years ago American workers got a big slice of corporate profits, and executives figured they were doing all right if they made a 3% or 4% profit. Today, airline pilots are living on welfare and security is a joke, window dressing: "Four teams of 3-5 people were all able to penetrate airport security on the same morning at 3 different airports and pull off this heinous act? My only response is - that's all?"
It gets worse. Assuming the prime suspect - Osama bin Laden - is behind this, and assuming a rich guy living in a tent could find 4 people capable of flying jumbo jets who were willing to commit suicide crashing them onto targets on the ground, where did this monster come from? Communist China? The KGB?
"What I do know is that all day long I have heard everything about this bin Laden guy except this one fact - WE created the monster known as Osama bin Laden! Where did he go to terrorist school? At the CIA!"
What can we do? First, we deal with this event. Find who did it, bring them to justice. Then, we take a hard look at all the terrorist activities in the world our American government has perpetrated in the name of cheap oil and cheap running shoes, and we deal with that. - Michael Moore.
Qwest cuts back on customer service, focuses on sales: September 10, 2001 - Continuing the cut backs in customer service begun following their hostile take over of US West last year, Qwest announced plans to reduce its workforce by another 4,000 while adding more sales positions:
"Qwest expects to reduce its workforce by 4,000 jobs, from 66,000 to 62,000 employees, by the end of the first quarter of 2002. The company also will eliminate 1,000 staff positions while adding 1,000 quota-bearing sales executives in its global business markets unit to increase the focus on national accounts." - Qwest.
George Gilder - DSL is essentially cosmetics for the corpse: September 2001 - The 1996 Telecommunications Act socialized profits but privatized risks. "That's just a prescription for paralysis, and that's what we've got."
Consequently, rather than optimizing their cable system or switching to fiber optics, AT&T is contemplating abandoning its high speed cable internet system and crawling into DSL's copper cage. Bad idea:
"If AT&T really wants to compete, they should exploit their cable assets rather than sell them. Recently I visited a company called Narad...Narad's technology expands the potential communications capacity of cable from 1 gigahertz to 2 gigahertz. They've demonstrated the capability of 5 gigahertz. This allows a cable company to triple its revenues...This means that cable becomes three times more potent than it was, and the motive for expanding investment in it increases." - American Spectator.
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August 2001
Are the positive indicators really positive? August 21, 2001 - As they are typically interpreted, key indicators now suggest the economy may be turning around: "Two of the index's 10 leading indicators -- stock prices and building permits -- fell in July. Three were unchanged: vendor performance, manufacturers' capital goods orders and manufacturers' consumer goods orders. Five were positive: jobless claims, average weekly manufacturing hours, money supply, interest rate spread and consumer expectations." But one, jobless claims, can be very misleading. In a booming economy, a drop in jobless claims usually means more people are working. But in a faltering economy, it more often means unemployment benefits are running out for people who still have not found a job. If that's the case here, then a recession is almost certain. - Olympian.
Corporations want to get into your genes: August 17, 2001 - Employers and insurance companies oppose a proposal that would prohibit them from invading employee privacy at the most fundamental level: our genetic make-up. Dave Escher, whose blood was taken by Burlington Northern Santa Fe Railway for genetic testing without his permission, is all for it: "We have laws to protect us from people wiretapping our phones, stealing our mail and defrauding our bank accounts, how can we allow employers to steal the blood of their employees and use it to discriminate ... through the information learned from genetic studies?" - Hartford Courant.
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July 2001
Is a global New Deal the answer to a global economy? June 7, 2001 - High tech solutions have shifted much work from the office to the living room, contributing to a longer work week. Despite this, wages remain stagnant: "Overwork and job spill would perhaps be bearable if one were being well paid for it. But white-collar men earned an average of $19.24 an hour in 1997, just six cents more than their fathers made in 1973." Nor are we rewarded with security when corporations "regard firing whole ranks of employees as a way to post paper gains and so win Wall Street's favor." Globalism is part of the problem, but it may be part of the solution, too: "Without system-wide stability accompanied by a global New Deal that would protect society from the power of global corporations, the conditions of work ably documented by White-Collar Sweatshop are likely to only get worse." - Atlantic.
Truuuuust me: July 12, 2001 - After years of litigation, the Appeals Court has confirmed what everybody already knew: Microsoft is an "abusive monopolist." As if there was any doubt. Microsoft's response: "Microsoft Corp. is abandoning some of the business practices that got the giant software company in hot water." We've heard that before. - Boston Globe.
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June 2001
Sweatshops must be profitable: June 29, 2001 - "Nike Inc. reported yesterday its profits rose 30 percent in the fourth fiscal quarter, a steeper rise than analysts expected that was attributed to savings on marketing outlays this spring." Proving it still pays to export the creation of wealth to sweatshops overseas. - Boston Globe.
Geneva Overholser - An oppressive gap? June 10, 2001 - Feminists take a real pay gap of a few percent and turn it into a cause for revolution. Why then, are they silent about the corporate pay gap? In 2000, America's CEOs were making 458 times more than production and nonsupervisory workers. "One critic of growing wage inequality has noted that if consultants in the United States were observing this phenomenon in a Third World country, they would declare it dangerous. Yet we have responded to today's greatest income disparity since 1947, when we began keeping records, by enacting a tax cut that will increase the gap between rich and poor." - Boston Globe.
NW CEOs fared well in 2000: June 10, 2001 - As they began laying folks off, bonuses and paychecks for CEOs in the U.S.'s Pacific Northwest region grew bigger and bigger. "Even without options and other long-term incentives, Northwest CEOs did quite well for themselves last year: While the average base salary for the 73 executives studied rose a respectable 15.3 percent, to $513,709, the average bonus soared 55.5 percent, to $506,274." - Seattle Times.
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May 2001
Peter Maass - Is it starting with Ayn Rand? May 2001 - A free market is rising out of the ashes of war-torn Somalia. "Mogadishu has the closest thing to an Ayn Rand-style economy that the world has ever seen-no bureaucracy or regulation at all." - Atlantic Monthly.
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April 2001
Anti-globalization forces mobilizing: April 29, 2001 - A lot of people throughout the world are deeply concerned about corporate globalization, and in London authorities expect the worst riots ever against it on May first. "All police leave has been cancelled and 5,000 officers will be deployed across key areas in central London. The Met expects up to 10,000 committed activists to converge on the capital, 1,000 of whom it says are likely to be anarchists planning violence." - Sunday Times.
George Monbiot - In support of true market freedom, the antithesis of totalitarian capitalism: April 24, 2001 - Lots of groups oppose globalism and the increasing power of corporate multinationals, but what are they for? "The prerequisite of freedom...is effective regulation. ... (The state) must be empowered to force both producers and consumers to carry their own costs, rather than dumping them on to other people or the environment. It must be allowed to distinguish between the protection of workers, consumers and the ecosystem and trade protectionism." - Guardian.
Federal Reserve drops discount rate to 4 percent: April 18, 2001 - "Capital investment has continued to soften and the persistent erosion in current and expected profitability, in combination with rising uncertainty about the business outlook, seems poised to dampen capital spending going forward. This potential restraint, together with the possible effects of earlier reductions in equity wealth on consumption and the risk of slower growth abroad, threatens to keep the pace of economic activity unacceptably weak." - Board of Governors of the Federal Reserve System.
Frankfurt Group defrauded American government: April 13, 2001 - Several companies involved in Egyptian water projects stemming from the Camp David peace accords conspired to defraud the U.S. government out of millions of dollars. According to John M. Nannes, acting assistant attorney general in charge of the Justice Department's Antitrust Division, "Although the construction work that is the subject of this case was performed on foreign shores, the U.S. government paid the bill and the U.S. taxpayers were the victims of the scheme." - New York Times.
Noreena Hertz - Corporations increasingly define the public realm: April 8, 2001 - With the World Trade Organization (WTO) standing ready to guard their interests, corporations are running roughshod over local governments. "As corporations go bottom fishing, host governments are left with little alternative but to accept the pickings. Globalisation may deliver liberty, but not fraternity or equality." - The Observer.
CEOs no longer paid for performance: April 1, 2001 - Stock prices soared, and so did executive compensation. When pundits worried the income inequality would create a backlash, the execs replied they work for the shareholders, who are getting rich in the bull market, too. Along came the bear market, and suddenly executive pay was no longer based on stock prices. According to Judith Fischer, managing director of Executive Compensation Advisory Services, "The risk is being taken out of executive compensation. You don't even have to make the performance goals. The board will pay you anyway." - New York Times.
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March 2001
The mania from merging: March 30, 2001 - Mergers lead to trimming, policy changes, culture clashes and, sometimes, massive layoffs, and a lot of folks are feeling the pinch. "The corporate consolidation that actor Peter Finch railed against in Network in 1976 is ever closer to reality in 2001. Contrary to what Finch did passionately and memorably on film, no one in real life is all that keen to hang their head out of a window and yell, 'I'm mad as hell, and I'm not going to take it anymore.' There's too much to lose, like your job." - Boston Globe.
Nonexistent savings mean many at risk: March 20, 2001 - "Americans appear less prepared than ever to weather a prolonged stint of joblessness or extended economic slowdown ... with the economy slowing, financial specialists and consumer advocates say millions may have mortgaged their future." - Boston Globe.
Robert B. Reich: March 18, 2001 - They bought Republicans the election and now it's payback time. The corporations are in control. Credit card companies got the bankruptcy bill, Coal companies and utilities got a break on emissions. Oil companies are about to get Alaska, cigarette companies expect the government to drop its lawsuit against them, they all hope for weaker unions, longer patent periods, and the list goes on: "Demands for regulatory relief are growing louder, and most will have to be met. Corporate welfare will flow ever more freely. Once the tax bill is open to amendment, corporate tax breaks will blossom like the cherry trees. ... At some point - perhaps as soon as the 2002 midterm elections, surely no later than the next presidential election - the public will be aghast at what is happening. The backlash against business may be thunderous." - New York Times.
More than 425,000 manufacturing jobs lost in the U.S. since July 2000: March 18, 2001 - As the dot-com economy crumbles, traditional brick and mortar jobs in manufacturing are drying up leaving more Americans worse off than ever. - Boston Globe.
David S. Broder: March 14, 2001 - Corporations are back in control, so we should not have been surprised when Congress wiped out the ergonomics regulations that went into effect on January 16th and moved will all haste to pass the bankruptcy bill. "In both cases, money interests prevailed over the public interest." - Washington Post.
Japan's economic woes a threat as well: March 18, 2001 - "Their growth, in turn, opens opportunities for American business interests that contribute to American economic health. In an increasingly interdependent world, no one rises or falls alone. That is why Japan's troubles are everyone's." - Boston Globe.
No such thing as a "living wage" anymore? March 15, 2001 - Once upon a time, a small family could get by without aid on the income of a maintenance worker. Not anymore. - Washington Post.
U.S. Opinion on Free Trade is divided: March 17, 2001 - Public opinion in America has become increasingly hostile to the trade policies that have exported jobs abroad. - International Herald Tribune.
If the economy's doing so well, why are shares plummeting? March 14, 2001 - England is enjoying their lowest inflation in 30 years, the lowest long-term interest rates in 35 years, the lowest unemployment since 1975, and the lowest stock market prices since 1998. Stock markets are driven by fear and greed. Greed looks for bargains, but it also looks ahead. And what it sees on the horizon has British investors spooked. - Daily Telegraph.
Life after layoffs: March 14, 2001 - As the American economic bubble bursts and the pigeons of globalization come home to roost, workers need to ask their boss some hard questions. Maybe it's time to support the unions, again. - Chicago Sun-Times.
Europe faces a labor shortage: March 9, 2001 - Dwindling birthrates, longer lifespans and early retirement all point to a shrinking workforce. - International Herald Tribune.
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February 2001
America's trade deficit with the rest of the world rose to an all-time high: Critics of U.S. trade policy see the rising trade deficits as a major flaw in free trade that has allowed low-wage countries to displace American manufacturing workers - Salon.
Equipment cuts to blame for slowdown? In trying to understand how and why the US economy stalled, economists have zeroed in on one culprit. - International Herald Tribune.
Canadian policy makers sell-out: The notion that corporations should have both rights and responsibilities in the global economy has been undermined by the WTO - Toronto Star.
Nike: American shoemaker refuses to emblazon 'sweatshop' on personalized running shoes - Toronto Star.
Lower prices or higher wages? Productivity growth boosts living standards, either because firms pass on the gains to workers in the form of wage increases or to consumers in the form of lower prices - Ottawa Citizen.
Taxing the middleclass unto death: Rich Americans oppose lightening the financial burden of death on the middle-class - International Herald Tribune.
Kathleen Parker: Forget streamlining, downsizing, electronic dialoguing. If you want to hog a market niche, put a human being into the front office and give customers a break from electronic roulette - Jewish World Review.
Revolution? To listen to residents in this multicultural suburb east of Los Angeles complain about California's excruciating energy crisis is to hear the first rumblings of a threat that state leaders fear almost as much as another round of rolling blackouts: a ratepayers' revolt - Washington Post.
The bugs on Bill's butt: Some Seattle-area companies put personal profit ahead of principles, love of money ahead of the law, and show their support for the Redmond bully - Seattle Weekly.
US Economic news turns "ugly, ugly, ugly" - Seattle P-I.
The Continent cackles: Europe emerging as economic oasis from America's boom-to-gloom - International Herald Tribune.
Fed Chairman hits the panic button: Greenspan cuts federal funds rate another half point, but is it too little too late? - Detroit News.
Iceland doomed! - The Guardian.
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January 2001
Flurry of U.S. layoffs may be just the beginning - International Herald Tribune.
Chrysler: Plants go from OT galore to cut shifts, layoffs, closings - Detroit News.
When Black Friday comes: The coming Internet depression - Newsweek.
Michael Sherraden: Inequality of wealth is nothing to be proud of - Independent.
Dell warns that slowing global economy will hit profits - Financial Times.
Good Riddance Allstate agents are furious over losing company benefits - Forbes.
Microsoft could get off easy with Bush: Many observers feel breakup now unlikely - Seattle P-I.
It's Government by and for U.S. Corporations and Their Values - International Herald Tribune.
For Many Protesters, Bush Isn't Main Issue: Global Justice Groups Decry Corporate Clout, January - Washington Post.
Best economic barometer: factory floors?, January - Christian Science Monitor.
Business ethics: The role of the corporation in society has changed, January - Irish Times.
Network Commerce Inc: Is this the kind of company you would want to give your business? January - The Stranger.
Greenspan hit the panic button: Is he too late to head off a recession? January - Sunday Times.
Alan Greenspan: The miracle worker who built a boom Americans thought would never end, is now fighting to stave off recession, January - Sunday Times.
BP accused of tightening supplies to spike gas prices on West Coast, January - Star Tribune.
The Failed Experiment: NAFTA at Three Years, January - Public Citizen.
Retail closings, layoffs continue, January - Boston Globe.
Weekly Jobless Claims at Highest Since July 1998, January - LA Times.
Bad news for financial markets: The tax man cometh, January - Financial Times.
Is the PC hardware/software market about to founder? January - Forbes.
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