Competition is GOOD!

Competition

I just saw an American Express ad on TV urging its members to do business with small, local businesses and not just the mega corporations.  Awww....it's that nice of them, looking after the little guy like that?  How sweet.  What's that....ulterior motive?  Why yes, yes they do.

This reminded me of a conversation I had with a high-up-the-ladder marketing guy with Lowe's a few years ago.  He told me that consumers had the impression that, because of their volume, Lowe's (and Home Depot) received better pricing from appliance manufacturers than the smaller local retailers.  He said that was not true, and that they in fact paid a bit more.  I asked why that was?

He told me that the two large box stores combined already accounted for something like 50% of all appliance sales.  The appliance manufacturers understood that if they allowed the small retailers to disappear, and Lowe's and HD had it all to themselves, the two big boxes would effectively OWN the appliance makers.  They would bark "jump", and the manufacturers would have to reply, "how high, sir?"  Therefore they gave the small retailers a slightly better price to keep them competitive and in business. 

Until recently American Express was the only credit card the giant members-only store Costco accepted.  Ten percent of all Am Ex cards were issued thru Costco, and 20% of Am Ex total loan portfolio was with Costco.  Feeling like they had the power to pull American Express's strings, Costco demanded that Am Ex cut their processing fee and raise their rewards program, both benefitting Costco and hurting Am Ex.  

American Express realized the folly of having too many of their eggs in one basket and bid Costco adieu.  Now they're trying to boost their business with thousands of small retailers so as to never be held hostage like that again.  And that's, as Paul Harvey would say, "The rest of the story."

So with this in mind, please tell me why we let the Big Six banks (JP Morgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs, and Morgan Stanley) control roughly half of all American banking, with the other half divided up among roughly 6,000 "others"?  Tell me again why we shouldn't break up the Big Six?

Who do YOU bank with?

S

Back In The Saddle Again

I never knew Gene Autry was talking about bankers when he recorded this song.

Short recap:  The banking industry persuaded (bribed) lawmakers into relaxing rules and regulations that had kept them honest for the previous 50 years, allowing them to originate all kinds of highly profitable but also highly risky investments.  After massive profits were skimmed off the top the scheme collapsed, and taxpayers had to step in and take on massive debt to bail them out.

Lawmakers said "never again!" and drafted new rules that put curbs on big banks.  Of course the bankers fought back, wanting to keep their mega-profit machine up and running.  They won.  This was in the news this morning:

WASHINGTON-- Bank lobbyists are not leaving it to lawmakers to draft legislation that softens financial regulations.  Instead, the lobbyists are helping to write it themselves.

One bill that sailed through the House Financial Services Committee this month--over the objections of the Treasury Department--was essentially Citigroup's, according to e-mails reviewed by The New York Times.  The bill would exempt broad swaths of trades from new regulation.

In a sign of Wall Street's resurgent influence in Washington, Citigroup's recommendations were reflected in more than 70 lines of the House committee's 85-line bill.  Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word.  (Lawmakers changed two words to make them plural.)

Remember last November when candidates told us if we would just vote for them, they'd get the government out of our lives?  They double-crossed us.  What they really meant was, "Vote for me and I'll give the bankers whatever they want."  And we bought it.  Sure, they'll let us fight over the social issues of the day, but if there's money involved, the bankers call the shots. 

I think George Carlin was right:

Face it....the bankers own us, lock, stock, and barrel.  We're trapped.

S

Screwed again, and we didn't even get a kiss

So our politicians tell us that we're broke....way past broke, actually....because of all the old-timers now signing up for their Medicare and Social Security, which, by the way, they PAID for over their working lives.  (And if the tax rate was insufficient to keep those trust funds properly topped off, whose fault is that?)

But wait....now we find out that a cool $76 BILLION DOLLARS in special-interest tax credits was included in the recent "fiscal cliff" legislation.  Lobbyists such as the firm headed by former Senator's John Breaux (D-LA) and Trent Lott (R-MS), representing companies like General Electric and Citigroup, secured for them an extension to the provision that allows multinational corporations to defer US taxes by moving profits into offshore financial subsidiaries.  (Their profits are all credited to subsidiaries in low-tax countries like Luxembourg where they might have nothing more than a PO Box.  They then pay Luxembourg taxes, not US taxes.)

Known as the "active financing exception", this is the tool that GE (and quite a few others, too) uses to avoid paying nearly all US corporate taxes.  Also blessed with sweetheart tax breaks were companies like rum distiller Diageo, Goldman Sachs, Morgan Stanley, the American Wind Energy Association and the Motion Picture Association of America. (I checked and Park Place Custom Homes didn't get crap!)

Obviously their shareholders are ecstatic, but how is the taxpayer's interest served here?  

This scam was one the Obama administration insisted be included, and the Republicans feebly and quietly objected to, then voted "aye" anyway.  ("I'll vote for yours if you'll vote for mine?")  I wonder if we went back over the past 30 years or so and looked very carefully how much of our $16 TRILLION DOLLAR debt could be attributed to these kinds of giveaways?

No....no kiss, or dinner, or a movie, or even cab fare home.  Just a plain old fashioned screwing.  "I feel so....so used."

S

An offer they can't refuse....

Good morning world!

I heard on the Happy News this morning that men are helping out around the house more these days.  Not much more, but more than the 0% from days past.  The report said that women spend 52 minutes a day doing housework while men do 16 minutes a day, and women do 70% of the laundry, too.

Another advantage to downsizing to a much smaller place....there's less to clean.  I make up the bed 'cause I'm the last one up.  K does 90% of the cooking, while I do 90% of the clean up.  The laundry is pretty much 50-50.  A housekeeper every other week for a few hours does the heavy lifting.  We could do it ourselves, but after all these years Geneva is like family.  She stays.  

How about at your casa?

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Let's see....first there were the Castelano's, the Gambino's, and the Bonanno's, and now we have the USB's, the RBS's, the Citi's, the JPMorganChase's and a bunch more, too.  The list of mafia outfits grows every day.  HSBC just paid a $1.9B fine for money laundering.  (They helped Iran and the Mexican drug cartels.)  A dozen other banks are ratting on each other over their interest-rate-rigging scandal in the UK.  (Their defense....the others were more guilty than they were.)  

Now there are a combined TRILLION dollars in claims pending against BofA, JPMorganChase, Wells Fargo, Citigroup, and others over their fraudulent mortgage securities businesses.  The banks will probably settle for something like $400B.  (Does this mean they'll get away with the other $600B?  How is that fair?)  

The only thing missing from this organized crime drama is some executive "whacking" in broad daylight while they're eating their spaghetti dinners.  (Personally I'd classify that as "justifiable homicide".)

First we had "too big to fail".  Now we have "too big to indict".  It seems the Feds are offering plea bargains to the banks rather than indicting their ivory tower Dons because they're afraid a guilty verdict in court would scare away investors and the banks would go belly-up.  Then us taxpayers would get stuck with the clean up.

The message here....if you're gonna commit a crime, make it a BIG ONE!

Now, unless you're a banker....have a nice day.  :)

S

Just thinkin' out loud....

This thing intrigues me:

They're constructing a new multi-story building right behind ours.  I can see it going up from my den windows.  Being a builder myself I'm pretty good at geometry and figuring out how things work, but this crane thing has me baffled.  The large concrete weights hanging off to the right are obviously meant to counter-balance the weight being lifted on the left side.  So far, so good.  But as you lift a load and slide it towards the mast, to maintain balance shouldn't the counter-weights slide in too?  In practice, however, the lifted weight varies and moves, but the counter-weight never does.  Are there some new laws of physics at work here that I missed?  (Maybe I should have paid more attention in class?)

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Yesterday as soon as granddaughter Blakely was born they weighed and measured her, but then a few minutes later they took her to the nursery to "officially" weigh and measure her.  In between times she messed in her diaper and the new mom dutifully cleaned and changed her.  The nurse was slightly upset when she found out because she said this could change the baby's weigh-in.  Turned out to be a non-issue.  Her weight varied by .02 pounds, not enough to matter.  Which got me to thinking....when those little diapers say they're for 6-12 pounders, they're talking about the baby's weight....right??

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Finally, some common sense business news:  Citigroup shareholders have rejected the executive compensation package proposed for their top people.  Their vote isn't binding on the Board of Directors, but they would be fools to NOT take the shareholders views seriously.  'Bout damn time, I say!  These days companies give their CEO's raises if they lose less than expected.  And "retention" bonuses?  If they're running the company into the ground, why would you want to retain them?  If they're in fact as good at what they do as they say they are you'd think they would agree to work for less while they turn things around, just to redeem their exalted reputations.


Maybe I think too much....


S