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

A two-part-er.....

Tonight the top-10-polling Republican presidential candidates will bloviate in a nationally televised debate.  And front and center will be The Big Wind himself, Donald Trump, aka "The Donald".  He's a lightning rod for sure, but I must give him due credit for two things:  

First, I like the way he speaks his mind.  It's obvious he says what he thinks, and not just what this morning's poll numbers say people want to hear.  Whether I agree with what he's saying or not is another matter, but at least I never have to wonder what he's thinking. 

Second, I like the way he is paying for his campaign out of his own pocket instead of having to prostitute himself before the usual cesspool of special interests.  

Of course, following this logic, that would mean only billionaires should run for president, which is of course a complete other problem.  But as my lovely wife pointed out, it's either the billionaire who funds his own campaign, or the common man who is corruptible.  Maybe we should look at public funding of campaigns, taking fund raising and all it's corrupting influence out of the equation?

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The Securities and Exchange Commission is expected to rule soon on whether publicly traded corporations will have to reveal what their CEO's make (in TOTAL compensation, not just salaries) as well as the gap between what they make and what their employees make.  The two Republican commission members are against it, the two Democrats are for it, and the lone Independent is expected to be the tie-breaking "yes" vote.

Big business interests such as the US Chamber of Commerce are steadfastly against it saying it will cost businesses $700 million to calculate and report the yearly numbers (the SEC says it shouldn't cost more than $73 million), and that it is simply an excuse to embarrass highly paid CEO's.

That last excuse seems self incriminating to me.  If you haven't done anything to be embarrassed about, why should you fear being embarrassed?

I have no problem seeing CEO's make big bucks IF THEY DESERVE IT.  But too often they make their money via smoke and mirrors.  Think of the 2008 financial meltdown and today's Greek debt fiasco....those were just giant shell games!  They tweaked things to make it look like they were masterful business people when they were just blowing up a property bubble that eventually burst, or were making loans to credit-worthy sovereign countries.  Their shareholders were left ruined, while they lived happily ever after (with their millions of $$$$ in ill-gotten compensation) in the Hampton's.

Legitimate, skillful management that builds a solid, long term company SHOULD be handsomely rewarded (former CEO's like Southwest Airline's Herb Kelleher and Costco's James Sinegal come to mind), but not these "skim all you can and move on" shysters.  

Maybe this new rule will shed light on the "too good to be true" CEO's.  If their company is a laggard, but their pay is at the top of their segment chart, why shouldn't it be brought forcefully to the attention of their shareholders?  What possible excuse can you use to justify NON-transparency?

S