THE ENTERPRISE
LOOK & LIFE ARE LONG GONE—NEWSWEEK & TIME NEXT?
Economist envy and celebrity mania of People dominate the old style weekly news magazines. LOOK and LIFE magazines were pictorials, and were killed by TV. Time and Newsweek are dinosaurs of another kind, dying slowly due to the Internet, which is both faster and more diverse. Less people read these days, and those who do, want real content (The Economist, Wall Street Journal, The Week, IBD, etc.) and those who don't want fluff--People, Us, and all the shiny "hot cover" magazines you see on the newsstand. A new magazine, Portfolio, (from Conde' Nast) which covers mostly business, but not only business, has had some good features in its early issues. Let's see if it has "legs."
VINCE FLYNN NOVELS TO BECOME MOVIES
CBS Films bought options on the best-selling counter-terrorism author's books to be made into movies. Can't wait to see who is cast as Mitch Rapp. These should be good ones, if they are anything like the books. A real replacement for James Bond.
DYSFUNCTIONAL PUBLISHING-BOOKSELLING INDUSTRY STRUGGLES TO CHANGE
Any industry that expects 30-40% of its products to be returned unsold has a problem. On-line booksellers gain as the traditional bookstores struggle. Prime placement in front of bookstores, like in slotting fees in supermarkets, costs a fortune. Publishers pay for proven name authors and celebrity fluff. Too many new books flood the market each year--185,000 last year. Borders is experimenting with the way books are displayed on the shelves. Barnes & Noble is not sure what to do. Both are drowning in complexity--self-induced overload of titles that move at glacial pace. It's a mess. Amazon is the winner.
SPEAKING OF DYSFUNCTIONAL: THE TWO-PART MORTGAGE-SUBPRIME COLLAPSE
Greedy lenders and irresponsible home buyers combined with speculators flipping homes to create the first part. Private equity lenders and hedge funds became entranced with the amount of leverage they could finance for deals, and that led to the second part. Deals are dead in the water, because financing is just not there. Housing is a mess, as we might have expected. When both the lender and borrower are irresponsible, what else would you expect. but a bunch of insanely irresponsible loans It's like tossing your 16 yr. old the keys to the new Corvette and telling him to go see how fast it will go, but not to get any tickets. DUH.
COMMODITIES HAVE TO COME DOWN--DEMAND IS NOT THAT HIGH
Oil is irrationally high. So are metals. Demand is not that strong, and sooner or later, the speculators who drove them so high will have to cave in and move. Watch for some meaningful declines in the next 4-6 mo., which could help contain inflationary pressures. Negotiate hard and hold off on purchase commitments as long as possible. China costs, which are really up, will still drive up inflation, but perhaps the commodities coming back to reality will temper the amount. I hope so.
HOW UNIONS ARE SEEKING TO CRIPPLE AMERICAN BUSINESS
I want to wrap up this edition with the scariest news of the week. It has to do with Unions. First a little history. Unions were formed in the early part of the 20th century to protect workers from abusive employers and to give them a voice in their own "collective bargaining" to get better pay, benefits, working conditions and work rules. Now Unions have become what they were formed to overcome—power-hungry, bureaucratic, political organizations whose function is to grow like parasites "on the backs" of American workers—with a near total disregard for the impact on American competitiveness.
THE SOCIALISTS (WHOOPS, I MEANT DEMOCRATS) WILL HELP THEM
The two current Democratic candidates are both echoing frightening "pro-Union" and anti-trade propaganda that could devastate America for decades to come. How? The President gets to select who sits on the National Labor Relations Board, which is the body that rules on what are and are not unfair labor practices. From there, you can imagine the drill if that board is stacked with Union sympathizers. Employers won't have a chance. The President also has a heavy say in trade policies. Ironically, the party that "cries wolf" about sending US jobs overseas may be the ones who are doing it--and it matters little which of the two Democrats are the candidate, because both are "bought and paid for" by Union funding. (But they complain loudly about big business funding the GOP--isn't that ironic?
The latest ruse of the Union movement is to simply '"count 'interest' cards" signed at an employer and certify the union. No secret ballot election at all. This allows union organizers to use whatever pressure and coercion tactics they want to get employees to sign those cards. Believe me, I've had my plant in the middle of that kind of campaign and it isn't pretty what goes on. Read on.
WHAT DO THE AMERICAN PEOPLE THINK ABOUT TAKING AWAY SECRET BALLOT UNION VOTES?
New Research Data on Secret Ballot Union Elections from American Solutions
The right to a secret ballot is at the core of American democracy. But as millions of Americans privately cast their votes for the next president, privacy in the workplace is under attack.Last year, Congress introduced a bill (H.R. 800) that would strip workers of their secret ballot rights when deciding whether or not to join a union. The bill, known as the Employee Free Choice Act (EFCA), would replace the secret ballot with a card-check system that would make workers' votes public and subject to intimidation by union organizers.
The EFCA is the top legislative priority for union bosses, so we <http://www.americansolutions.com/General/?Page=ca1e5e83-21dc-4c98-9357-9f6cbfd09835>decided to ask the American people their opinion. In our new poll, we discovered that 79% of the American people support a worker's right to a federally supervised secret ballot election when deciding whether or not to join a union.
The tri-partisan agreement to defend this right is overwhelming, as 77% of Republicans, 82% of Democrats, and 79% of independents believe in protecting private ballots. Support for private ballots was so broad it also spanned every subgroup examined, including majorities of every age, race, geographic group and both genders.
WHAT DOES ANOTHER SOURCE SAY? HERE'S KIPLINGER FORECASTS TAKE ON IT.
Determined to get their way in the general election in Nov... Big Labor and business groups are girding for battle with large war chests and sophisticated voter outreach efforts.
Labor plans to spend well over $100 million in coming months in a bid to elect pro-worker candidates to the White House, Congress and state and local offices. The two big labor federations, the AFL-CIO and Change to Win, plan to give particular priority to getting out the vote in five swing states...Pa., Ohio, Mich., Wis. and Minn...in which union households make up over 25% of the vote.The top priority: Passing the Employee Free Choice Act, which would require a business to recognize a union if a majority of its workers sign pro-union cards. Union organizers stress that putting a Democrat in the White House and increasing the clout of Democrats on Capitol Hill would greatly improve the bill’s chances.
Among other union concerns: Health care, jobs and retirement security. Note a slight uptick in union membership, prompted in part by companies cutting back on health care and retirement benefits.
BOTTOM LINE--IF DEMOCRATS CONTROL BOTH CONGRESS AND THE WHITE HOUSE--LOOK OUT
The American economy will take a decade to recover--if it ever does--from their misguided actions. Want a real nightmare: Obama in the White House and Hillary as Senate Majority Leader. There's talk about it right now. It's time to bring the youthful idealists back to earth from the Obama orbit they are in. "THERE IS NO SUCH THING AS A FREE LUNCH!" He can't deliver on his dreamy promises, and Hillary just lies her way around the facts.
Talk to your kids, and any younger people (who'll listen) that you can help educate about the truth about policies, politics, economics and reality. Their future is the one that is at risk. McCain can't "charm them," he's too old and too "stodgy"—but he knows what to do, and he will try to do the right things (as much as any Pres. can with a Congress that is controlled by the opposition party.)
FINALLY--RECESSION OR NOT--IT'S GOING TO BE A LONG SLOW YEAR--OR MORE
I brought back the Economic Week in Review section since there is so much talk about and concern about the economy. Whether we have a technical recession is less important than how soft, for how long, the US economy remains. It's slow out there now, but tax refunds, stimulus checks, mortgage relief, and Fed interest rates and financing help are going to have some effect. How much, nobody knows. Don't bet against another dose of government giveaways--after all, it is an election year.
Meanwhile, stay frugal and sell hard. Those are the only prudent things to do.
Best, John
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Economic Week in Review: Second quarter begins with a bounce
Investors ushered in the second quarter with a stock market rally, even though financial markets remain unsettled by fears of more sub-prime mortgage-related write downs. Most economic news pointed to continued weakness and recessionary concerns, as the employment situation deteriorated and construction spending and new orders for manufactured goods fell again. However, a few rays of sunshine in the form of better-than-expected numbers brought hope that April showers might yield some May flowers.
Nonfarm payrolls continued to shrink in March, losing 80,000 jobs—bringing the total job loss to 232,000 for the first quarter. The worse-than-expected report from the Department of Labor was viewed as another possible recession indicator. Construction and manufacturing led the decline, losing a combined 99,000 jobs, partly offset by gains in education and health services. The unemployment rate rose in March to 5.1% from 4.8% in February and first-time filings for unemployment in the week ended March 29 jumped to 407,000, the highest level in more than two years.
Total construction spending in February decreased 0.3%—less than expected and less than the drop in the previous two months. Spending in the troubled homebuilding sector slid for a record 24th consecutive month, down 0.9%, contributing to the 0.5% drop in total private construction activity. The Commerce Department also reported that construction in the considerably smaller public sector continued to buck the trend, increasing 0.4%.
The Institute of Supply Management (ISM) Index of factory activity improved slightly in March to 48.6 (from 48.3 in February). (A reading below 50 in this closely watched gauge indicates that manufacturing activity is generally contracting). New orders declined to 46.5, the lowest level since the last recession, and the production index fell below 50 for the first time this year. Although new export orders remained solid (at 56.5), overseas may be vulnerable to spreading recessionary pressures. Fueled by rising prices for oil and other commodities, the ISM price index jumped to 83.5 (from 75.5), the highest level since Hurricane Katrina. The combination of rising prices and weak U.S. demand is squeezing manufacturers.
Another measure of manufacturing activity showed further signs of a slowdown. The Commerce Department reported that new orders for all manufactured goods—a barometer of capital spending plans—fell 1.3% in February, the second consecutive monthly decrease. Orders for new durable goods (products with an expected life of more than three years) slipped 1.1%. Weakness included machinery orders (especially for construction) and demand for iron and steel. Aircraft and parts orders (civilian and defense) rose, however, after falling in January. Rounding out the orders picture, nondurable goods orders fell 1.5%. Inventories of durable goods increased to the highest level since this data series began in 1992. Combined with a drop in shipments, this drove the inventory-to-shipment ratio to a one-year high.
The ISM Non-Manufacturing Index improved modestly to 49.6 in March. Similar to its manufacturing index counterpart, a reading below 50 indicates contraction in the services sector. Within the survey, the business activity index is considered one of the more important indicators: It rose to 52.2 from 50.8 in February but remains below 2007 levels. As in the manufacturing sector, the price index rose (for the 58th consecutive month), to 70.8 in March from 67.9 in February.
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