Category Archives: Finance

June 2, 2013

Just the Bare Minimum?

By Just Torch

I am not picking on Nicholas Ruiz.  He is a good man, and I hope that he does succeed in his efforts to unseat John Mica in 2014.  However, it was Nick’s recent post, and the ensuing conversation we had, which has actually formed the spark and starting point for today’s epistle.  In particular, these words:

My politics are progressive. I aim to raise the minimum wage.

First, I am not opposed to raising the minimum wage.  I agree that it needs to be raised.  Let me be clear about that.  No one can live on the minimum wage at its current level and as it currently exists.  I have a conservative friend who argues that the minimum wage was never intended as a livable wage.  It is his contention that the minimum wage was intended only for kids that were getting their first jobs, interns learning a craft, and the like.  That is, quite simply horse puckey and shows either that he is completely ignorant of history, which would be very typical of most people, or that he has been brainwashed by the right, which would also be very typical.

A very brief history lesson on the minimum wage, and if you are interested in more, then I will trust that you know how to use either the library or the internet.  The minimum wage was first enacted in Australia.  It traveled from there to the UK, and did not finally make its way to the US nationally until 1938.  In 1907, a legal decision was rendered in Australia that clarified the intent of the minimum wage.  This was known as the Harvester case, and it made it clear that the minimum wage “means that the wages shall be sufficient to provide these things, and clothing and a condition of frugal comfort estimated by current human standards.”  In America, it was specifically summarized as being intended to achieve the “elimination of labor conditions detrimental to the maintenance of the minimum standards of living necessary for health, efficiency and well being of workers.”

A wholly different concept has been at various times discussed and even implemented, and that is a training wage.  Perhaps it is this which my friend has confused for the minimum wage.  That’s possible.  (Conservatives are often easily confused.)  A training wage is still often used at a new position.  An employer will pay a new employee a lower amount during training, and at the completion of that training period, a raise will go into effect.  Again, though, that is an entirely different animal and should not be confused with a minimum wage, which is intended to provide at least sufficient wage to live upon.  According to research done recently, one can not live on the minimum wages we are paying.

According to the National Low Income Housing Coalition, in West Virginia, a worker earning minimum wage has to work 63 hours a week to afford a two-bedroom unit at fair market rent.  That is the fewest hours in the country, and the highest is in Hawaii at 175 hours per week.  Ponder that for a moment.  At minimum wage in Hawaii, you have to work more hours in a week than there are just to afford rent on a standard two bedroom unit.

From their 2013 report, another way to look at it, in order to afford a two-bedroom rental unit at fair market value without paying more than 30% of one’s income, one would have to earn $19.14 an hour.  The lowest in the 2013 report, is in West Virginia at $12.35.  (Not counting Puerto Rico at $10.41)  The highest is still Hawaii at $32.14 an hour.  These are not wages to live extravagant lifestyles.  These are just to be able to afford a two-bedroom home.  Family friendly.

We are a long way from providing a minimum wage that would allow for even living in “frugal comfort.”

So then, what do we do?  Certainly, the minimum wage should rise.  The cost of living has gone up.  Inflation affects everything, and the minimum wage is no exception.  However, all wages, except at the top have been stagnant.  And, there is a question that has been bugging me about this.  One that I will tell you right up front that I do not have an answer to.  If we raise the minimum wage to where it really should be, say somewhere in the neighborhood of $14 to $18, then what happens to the rest of our wages?  Those would necessarily need to be raised as well, yes?  If not, then is the effect not to have brought everyone’s wages down?  Rather than the “rising tide that lifts all boats”, have we not, instead, sunk all but the biggest ships?  And, that is what the right has been doing to us for years.

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2 Comments   |  tags: , , , , , , , , , , | posted in Economy, Finance, Politics, Solutions, Wages

May 12, 2013

Google Viewing Peer-To-Peer

By Just Torch

On March 11, 2012, I posted about peer-to-peer financing.  I wrote at the time that I felt this was a way for the people to use the system against itself.  It is not a perfect answer, but it was one tool that can be used.  I still believe this to be the case.  However, I heard something that is only slightly disturbing this week.  It is also reaffirming.

Google is getting involved.  Google directly, mind you.  Not their investing arm, Google Ventures.  Google is investing $125 million dollars and taking a seat on the board at Lending Club.  This indicates a number of things.

From a practical standpoint, neither Google nor Lending Club are speaking out directly about what their plans are specifically.  Speculation is that Google wants to implement their technology and bring Lending Club into the Google Wallet fold.  There is also, of course, their cut.  It’s just a good investment, when they’re going to get a slice of the loan fees generated; $350 million in loans in the last quarter.

It also, indicates that people are catching on more and more to this method of lending.  People are looking beyond banks more every day, and seeing other methods and ways to move beyond them.  Consider:

Chanda Lugere works for a bank, but when she wanted a loan to consolidate her credit card debt, which carried a high interest rate, the bank didn’t have much to offer. She tried other banks, but even with her excellent credit score she got nowhere.

So Lugere, who’s in her 30s, went online seeking alternatives.

People living in a 20th and 21st century capitalist society often find themselves in need of credit.  That is, sadly, a reality.  It was not always so, and it does not always have to be so, but it is the case now.  Do we have to go through the wringer to get it?  Do we have to sell our soul to the company store?  Not necessarily.  Peer-to-peer lending offers a way forward for people to get financing to reduce the interest they’re paying, while still returning a profit to those lending.  As I wrote in my previous piece on this topic, this not only has a solid financial basis, but a much higher social value.  For the borrower though, this saves them significantly and thus allows them to get out of debt much more quickly!  Chanda Lugere, mentioned above, got her loan at 6% which, while still high, is half of what she was paying.

Another issue that Google’s investment indicates though is that bigger businesses are catching on, and this part worries me.  If big business gets into the game, they will find ways to pervert it.  They will find ways to wrest control of the system even further away from the people.  Make no mistake about it, business was already involved.  As I pointed out in my previous piece, both of the big P2P lending facilitators, Lending Club and Prosper, were associated with WebBank.  This, as Robin Chase, founder of Zipcar put it, is not a true peer-to-peer system, but rather a “peer incorporated” system.  The smaller the corporation stays in relation to the overall system though, the more the peers are able to stay in control and to benefit from the system, rather than to become simply grease for the gears.
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March 3, 2013

Sanctions Against Americans

By Just Torch

In 2004, I worked for a small company.  (At least by standard definitions.  It always seemed to me to be at least a midsized company, but then, I think those definitions are a bit whack.  Still, we’ll stick with the standards for now.)  When the time came for the annual raise process, one of the things that was said was that we should be happy because we were receiving “3 times the average raise.”  Our president and CEO went on to tell us that the average raise in the country at that time was 4%.  Now, at the time, I didn’t check, because it didn’t matter.  What mattered was that he was a liar.  I had not, in fact, received a 12% raise, and I called him out on it. The next day, I did get an adjustment and my pay raise was increased to that 12%.  It’s probably a good thing I didn’t research it, because the actual average increase was only 3.5%.)

Those kinds of things can happen in a small company and they could happen back then, too.  It was a bit before the economy nearly completely collapsed.  It appeared the economy was, in fact, booming along.

Times are different, eh?  This year, the average pay increase in America is expected to be 3%.  Even less if you are working in the public sector.  In the county where I live, those employees haven’t had a merit pay raise in 5 years.  Federal Employees, generally, continue to be on hold for raises, and many of them are facing the possibility of furloughs thanks to the game of SequestrationTM that the Republicans and Democrats you all elected are playing this month.

Do I need to remind you, yet again, that those employees are your family and friends?  We are not talking about welfare for some faceless person that you can demonize and look down on.  People that you can pretend meet your stereotype of the drug addicted, slut that doesn’t have any desire to work but rather just wants to drain you for all you’re worth, right?  We are talking about the people that are out there working for a living supporting the daily functions that you, yes you whether you like it or not, rely on for the smooth functioning of the government.  And, yes, I did say smooth functioning of the government.  I am not talking about all the BS in congress, and the bickering and backbiting of the presidency.  I’m talking about the DOT, the food and health inspectors.  I’m talking about the people who process the payments to the Medicare doctors, and the checks to the Social Security recipients.  Air traffic controllers.  So called security personnel.  The civilian employees of the Defense Department.  The Veterans Affairs department.

I am talking about 1 million or so people who are part of the backbone of the government.  Not the ugly face of politics that so many people think of when they want to criticize and withdraw from it.  I’m talking about the part that matters.  You remember that part right?

I digress from the point I actually wanted to focus on today, because this too is an important point, and one you need to remember as you allow this game to be played out in your name.  When there is pain that is felt, it won’t be at the top.  Like any sanctions, it isn’t the leadership that pays the price.  It is the rank and file.  The people at the bottom.  Maybe even in the middle.  Sanctions are a political tool designed to foment revolution from within.  Either by causing sufficient discontent among the masses that the leadership can’t contain it and relents on their own, or by causing sufficient discontent that the masses literally arise in revolt.  Allowing this sequester to proceed is a calculated move by both the Democratic leadership and the Republican leadership to put sanctions on the American people with the precise same intent.

And, lest there be any misunderstanding, that is the precise reason that I am somewhat in favor of them myself.  I hope that this is a case of both parties having taken very careful aim before shooting themselves in the foot.  I hope that they have very carefully calculated this out correctly and will cause just enough damage to the people and the economy that it will finally cause sufficient discontent among the American masses to lead to an end of the far right domination of the politics in America.

I think I’ll hold my intended topic for next week.  It’ll keep.

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February 10, 2013

Educate and grow! Indoctrinate and stall!

By Just Torch

 educate

Pronunciation: /ˈɛdjʊkeɪt/

verb

    give intellectual, moral, and social instruction to (someone), typically at a school or university: she was educated at a boarding school

Here is today’s shocking truth for you.  Some of you will know this consciously.  Others will know it subconsciously.  Some will deny it strenuously.  View it how you may, it is a sad, truth.

indoctrinate

Pronunciation: /ɪnˈdɒktrɪneɪt/

verb

    teach (a person or group) to accept a set of beliefs uncritically: broadcasting was a vehicle for indoctrinating the masses

Most parents, hell, most people in the world, and in particular in America do not really want to teach their children.  They damn sure do not want other people’s children taught!  They want them indoctrinated.  They want them to be indoctrinated in very specific ways.  In the same ways that they were.

I admit it.  There was a period when I had to overcome it myself.  My oldest son was around 3 when I realized it.  I even verbalized it to his mother.  I told her, “You know, it isn’t that we don’t want our kids to be indoctrinated.  It’s just that we want them to be indoctrinated in the same beliefs that we hold dear.”  It was the beginning of an internal dialogue that went on to break through that particular log jam in my own head.  Fortunately, he was young enough, that I don’t think he suffered too much for it.

Anyway, that is the point, isn’t it?  For most people, they never really look past the, I want my child to believe the same as I do.  I have consistently taught my kids, to think for themselves.  I have been writing this with the hopes of educating, and yes, convincing, you, but in each and every case, I have presented evidence and arguments, and asked that you think for yourselves.  At no time would I ask that you simply take my word for it.  Take what I say and verify it.  Go do your own research.  It’s out there.

When it comes to my children, beyond the basics of parental responsibility (chores, teaching modern hygiene, safety, etc), I expected them to think for themselves.  Absolutely listen to me, but question it.  Go out and research it.  If you can show me where I am wrong, go ahead.  Please do.  I will admit it.  I am okay with that.  I would rather admit that I am wrong, learn from it and move on.  In fact, I made it a point to let my kids see me admit I was wrong when I was.  I thought it was a valuable lesson for them to see.

And, that is what is missing from many people, but in particular what is missing from the right wing as a rule.  For example, despite the overwhelming mass of evidence over the last 40 years, not to mention all of the previous experiments with it, they continue to insist that supply side economics works.  Despite all the collapsed sectors of the economy where they had to violate their own expressed principles and step in to prop up those sectors in order to not have them drag down the rest of their carefully constructed system of wealth redistribution, they continue to insist that this focus on moving more and more wealth in to the hands of fewer and fewer people works.  In fact, they want to do so at a faster and faster pace.  They continue to insist that not only should we not raise taxes, but that we need to cut spending.  But, the only places that the far right wants to cut spending, of course, is on the backs of the poorest of our citizens, and on what’s left of the middle class.  They want to cut the very programs that are most needed.

They also, of course, say that they want to cut the programs that actually pay for themselves.  How ironic, no?  (Again, this is why I have previously said that Conservatism is no longer a philosophy.  It is a religion.  It is no longer based on thought and reason, but rather on belief, superstition, and indoctrination. “accept a set of beliefs uncritically”)
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2 Comments   |  tags: , , , , , , , , , , , | posted in Economy, Education, Finance, Media, News, Personal Responsibility, Politics, Reform, Solutions, War of Definitions

January 6, 2013

Push The Lemmings Off The Cliff

By Just Torch

The so-called “fiscal cliff” came and went and a bogus deal was reached, as many of us knew it would be.  A tiny increase in taxes on those making more than $400,000 a year was passed while these rest of us “get to keep” a tax break.  Meanwhile, we continue to have the same problems in the country that we’ve had for years.  They remain wholly unaddressed.  Does anyone remember the last time that our “leaders” discussed education?  How about real attempts to address mental health issues such as support for the families and care for the patients?  When is the last time you heard anything positive coming out of NIH about AIDS research, or anything else for that matter?  Remember the space program that we, as a nation, allowed to die?  Remember the unemployment rate that is sitting at 7.8% nationally, according to the December report, but will likely go back up when the seasonal jobs go away?  Pay no attention to the man behind the curtain!

US Constitution, Amendment 14, section 4

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.{emphasis added}

Let me translate and shorten that for you.  “Once congress has approved, and the President has signed, the budget, we pay it, period.”

Now, what does that mean?  What it means, in effect, is that the political kabuki theater of the debt ceiling is nothing more than a show put on to scare and confuse.  The constitution supersedes any and all laws in the country.  Whether you like that or not, it is the fact.  As a result, regardless, of what congress does, or doesn’t do, the Treasury department is required to pay the debt.  America, canNOT default on its debt.  What it is not required to continue doing is paying the new spending.  That is why the silly memes that go around “Why does the president always threaten to stop Social Security checks and paychecks to the military?” make so little sense.  As with so many internet memes, they are made and spread by people who either don’t understand, don’t care to understand, or are intentionally using people who fall into the first categories in order to confuse and abuse you.  While SS checks ought not stop because those are debts owed, checks to employees of the government would stop for just that very reason, they are new spending.

Oh, but it does get better.  You see, part of this the reason that you never heard about this until recently is that it was an act that was never put on for you before.  It isn’t that you weren’t paying attention, or that you’ve forgotten.  It just wasn’t done.  This, too, you can thank the far right wing for.  No, really.  Not even conspiracy theorists are needed to make these things up.  These are just simply the facts.  You see, until the Repugnicrats, under Newt Gringrich, suspended the standard practice of simultaneously passing a budget and making any necessary raises to the debt limit in one vote, this political hostage taking couldn’t take place.  They couldn’t play these games with our economy, our money and our lives.  So, the Repugnicrats create the game, then, while their guy is in office, they pass the raises as though it’s no big deal, matter of normal business.  Suddenly, their opposition takes office, and it’s the end of the world, the sky is falling, all hell is breaking loose, cats and dogs sleeping together…

The US has had debt from our very outset.  We incurred over $75 million in debt during the Revolution.  We had no debt ceiling until 1917.  The whole point of the debt ceiling was to give more flexibility during World War I.  It was meant to be a constraint, but more than that, it was meant to give a semi-open check.  Prior to that, congress authorized any necessary borrowing at the same time that they authorized the budget.  The debt ceiling was intended to allow for additional borrowing in case of need, up to a specified limit.  It’s like saying, you need to go grocery shopping, but you don’t know how much it’s going to be, so here, take $300.  Now, congress is using it in a truly irresponsible way to authorize spending that they know will exceed the debt ceiling, and then trying to use that as a negotiating tool.  What congress is doing now is akin to saying, spend $600 on groceries, spend $500 on new tires, spend $300 on new clothes, but don’t spend more then $1000.  Then, when the government runs out of money and comes back and says, “Please authorize us to borrow the rest”, then the Republicans are saying, “Well, we could, but first we need you to kiss our ass.”

Guess what, boys and girls.  Their debt ceiling is likely unconstitutional and certainly unnecessary.  There is a constitutional argument to be made that the act of approving the budget, approves the borrowing itself, via the 14th amendment.  As such, the debt ceiling law is unnecessary, and its application to prohibit previously authorized spending  would be unconstitutional.  Any conflict between a law and the constitution, as you will recall, means the law must be discarded.  The only way to resolve that, of course, is for the courts to decide.  The only way for that to happen is for the law to be challenged, and the only way for that to happen is for the center right to show some testicular fortitude and call them out on this.  Just as I had advocated for going over the so-called “fiscal cliff” at the New Year and though we are just about two months away, I am telling you now, you should be telling your friends, your family, call your Senators, your Representatives, and your President.  Tell them, “Just say, ‘Do it’.  Raise the debt ceiling or don’t.  It doesn’t matter, but pay the bills, and keep on chugging.  Ignore the idiot Repugnicrats.  Let’s get this issue behind us, and if necessary, we’ll settle it in the courts.”

Let us be proactive about this one.  Make no mistakes, the far right is already gearing up for this one.  How do you want to play it?  As victim?  Or, are you finally ready to take the little toads by their throat and say, “No!  Enough is enough!!  Get out of my house!”?  Which will it be?  You do, in fact, have the power.  Each and every one of you.

I love my country, and I am tired of the word “patriot” being used as cover by those who would destroy it and all that we have worked to build.  They have been too successful over the last 40 years.  It is well nigh past time we fight back.  It is long past the time we continue what our fathers and mothers, uncles and aunts, brothers and sisters started before us.  It is time the anger and strength of the left came back.  Not with violence, because that is really not the path of the liberal.  That is the path of the conservative fear mongers.  Those who are too afraid to stand on their own two feet.  It is time to stand up, look those who are chipping away at what is good in the eye and say, “No! Stand aside!”  It is time to repair that damage.  Heal what can be healed.  Build what new is needed, and move forward.

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December 9, 2012

Reform School, boys and girls?

By Just Torch

Campaign finance reform is now officially off the front burner.  Almost everyone will let this slip off the radar until the next big election, because that is what we do in this short attention span theater culture we’ve developed.

And, yet, this is really an important time to act on it.  Yes, I know we have other issues going on, and I am not suggesting that we should put them aside.  We need to deal with the unemployment situation.  We need to deal with the financial “crisis”.  We need to deal with a lot of things.  However, this is one of those things that really should be dealt with before the next election cycle.  Preferably before the mid-term, but definitely before the next presidential election.  I know that isn’t going to happen, but it should.

There is a very strong argument to be made that the ideal situation is a truly level playing field.  That would be a situation of completely publicly funded campaigns.  If individuals, corporations, unions, PACs, etc still wanted to contribute then they would be able to contribute to that fund in a similar way that we as individuals are able to contribute to the Presidential Campaign Fund with our income tax filing.  It is highly unlikely that they would, of course, since they are not actually interested in funding democracy, but rather in buying candidates and influencing the outcomes of campaigns.  They are not altruistic, but rather acting with a specific goal in mind.

Still, that is precisely the reason that the argument for public financing of campaigns is so strong.  It takes that influence out.  It makes the campaigns and the outcomes more pure, because the candidates are less likely to have been purchased so blatantly and publicly.  It does open the possibility that companies and unions, more so than PACs, would contribute to these funds for the positive PR.  This move would certainly put an end to the Citizens United ruling and the mess it created.  There would be no more SuperPACs.  And, that leads to the strongest negative also.  It would make it more difficult for groups of people such as unions, AARP, NRA, etc to get their messages out.  If not done properly, a system like this would intrude on 1st amendment rights, and courts would properly strike it down.  While this is not the space for a full solution, there are ways around those pitfalls.

Public financing of campaigns, if done properly, would also help to break the strangle hold that the Democrats and Republicans have on our winner take all election system by, again, leveling the playing field.  If all sides have equal funding to get their messages out, then voters actually have a chance to hear it.  The Rocky Andersons, Gary Johnsons and Jill Steins of the elections will have a better chance to unseat the 800-pound gorillas sitting in the throne.  As it stands, money is allowing for a louder voice to be heard, instead of a better voice or all voices.   Despite the best efforts of the campaigns themselves, myself (here and elsewhere), and others, the mainstream media virtually ignored all of the “third-party” candidates, to the point that some people were shocked to see candidates other than Barack Obama and Mitt Romney on their ballots.

There are many issues that would be addressed by moving to a fully publicly financed campaign system.  It would come with other pitfalls that would have to be guarded against, but it would provide the greatest solutions to what all sides say they see as a huge problem in our political system.  All sides decry the influence of special interests via money on the outcomes of the process.  All sides insist they believe that something must be done about it, and yet, when the time comes to actually do something about it, no one wants to give up their own sweet deals, perks and benefits.

So, we know that public financing is off the table any time soon.  “Top tier” candidates opt out of it because they can spend much more money if they are not limited by it, the public is choosing not to contribute to it (participation is down to 6.6% per the FEC), and no one in office today has the testicular fortitude to suggest it, much less the support to actually get it passed.  What’s left?  What other alternatives do we have to address the issues with campaign finance and the corruption in our system?

First, make no mistake.  It is rampant, systemic corruption, but it is not confined to just the elected officials.  The corruption is, in fact, in the minds of the voters, or more often, in the minds of the non-voters.  At least the voters, even when misguided or simply selfish, are still participating and trying.  They have not completely given up or been lulled into being total sheep that choose to be acted on rather than making even the slightest effort at acting for themselves.  There is nothing more enslaving than the belief that one is powerless.  There is little more foolish than to believe that one can live in a society and be unaffected by the decisions that are made by that larger society.  To choose not to participate in those decisions is to choose to believe that one is, in fact, quite powerless.

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November 25, 2012

Pro-Health Care Action: Take A Stand!

By Just Torch

The power of the boycott remains one of, if not, the most effective tools in the market place.  Particularly when combined with a vocal campaign to let the target know that is what is going on. In fact, it is almost pointless if the target is unaware of the action, as they may get the wrong message, and make the wrong changes.  If one simply avoids shopping somewhere and a store believes that their business is suffering because they’re offering the wrong products rather than because of the policies they have put into place, then they will make the wrong changes.

It is this economic vote which is both the strongest weapon in the consumer’s arsenal and the most difficult to wield.  It requires both perseverance and a willingness to sacrifice.  Perhaps it is only a small sacrifice of a selfish desire, but in this modern world of immediate gratification, that is a difficult thing for many to do.  It is also a group effort which is generally self-enforced.  Who really knows that you haven’t shopped at that store you’re supposed to be boycotting, except for you?  And, yet…

There is a long history of boycotts, and their effectiveness is undeniable.  Business groups hate them, and over the last few years those on the right would have you believe that they are somehow immoral, wrong, or anti-American.  This is really quite ironic.  After all, what at its core is a boycott?  At its core, a boycott is a decision to choose not to shop at a particular business, period. It is a choice made based on ethical reasons, or perhaps on reasons of solidarity.  Regardless of the reason, from the standpoint of the free marketer, is it not precisely what the market is supposed to do?  The consumer is to make a choice based on whatever factors they see fit including price, location, quality, etc and purchase the products they prefer from the supplier that they choose.  Well, that is precisely what the consumer is doing.  They are including in that, what we might call the moral quality of the supplier.  In the case of a company that is being boycotted, the consumer has found that supplier to be wanting in quality.

So, I choose to boycott Chick-fil-A, as I wrote back in April, because they openly discriminate against homosexuals.  When the rest of the world caught wind of this in July, I wrote again about how franchisees benefit from corporate names, and thus have to take the penalties that come with corporate blunders and foul policies.  It was reported that Chick-fil-A had bowed to public pressure and stopped their contributions to anti-gay advocacy groups.  Dan Cathy, the CEO, however announced this was a false report.  Thus, the boycott must continue.

Now a whole other band of greedy big business-men and women have forced those of us with consciences into action.  Again, we have to expand our list of restaurants to avoid.  Honestly, many of these places for me are not too difficult.  However, a small handful,…. well, I’ll almost miss them.

“Naturally, the Left is outraged. How dare a company try to stay profitable!”

No, Twitchy.  What we are outraged by is that this is unnecessary for the company to stay profitable.  The amount that prices would have to be raised is ridiculously small, and most of us would be willing to pay it.  Most of us are not the greedy, self-centered, selfish persons that the right wants us to be.

Papa John’s Pizza founder and CEO, John Schnatter, has announced that he would begin reducing employees’ hours in order to avoid having to either provide health care benefits or pay the penalty associated with the Affordable Care Act becoming the law of the land.  The additional cost, which he would pass on to customers, amounts to approximately $0.15 to $0.20 per order.  In other words, for less than a quarter per order, the third largest pizza delivery and take out chain in America could provide health insurance to its employees.  However, rather than do so, the CEO would rather make an example of his employees, and punish them in order to make his political point.  I cannot imagine that there are very many people who would be ordering from Papa John’s restaurants who would even notice a $0.25 increase on their order, much less actually care about that increase.

As a result, Papa John’s can be sure that I will no longer be ordering from them.  This is only slightly a shame.  Their pizza isn’t that good, but it was a convenience every once in a while.

You know the beautiful irony of this?  Even Schnatter himself has already admitted that this is just greed on his part.
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3 Comments   |  tags: , , , , , , , , | posted in Boycott, Economy, Finance, Freedom, Politics, Solutions, Voting

November 18, 2012

The Hostess With The Leastest

By Just Torch

OH!  MY!  GODS!

Yeah, so suddenly everyone cares, right?  Very few of y’all cared about Hostess, Wonder Bread, Dolly Madison, Blue Ribbon, Butternut Breads, or any of the 27 brands that were part of the Hostess Brands, Inc.  The company was in bankruptcy twice in the last 8 years.  The first time in 2004 and the second time right now, but starting January 10, 2012.  It came out of the first bankruptcy in 2009.  That means, they managed to stay out of bankruptcy for less than three years before going right back in.  Is that a successful company?  No.  And, who does the right blame for this?  The unions, of course.

It’s never management’s fault.  It’s simply astounding how this works from their perspective.  There is always someone to blame, right?  It wasn’t management’s fault that they couldn’t stay current on their $700 million loan.  It wasn’t the fact that their board members gave themselves up to 80% raises.  It wasn’t that the previous management had failed to properly plan to live up to their commitments, and the contracts they had signed, thus leaving themselves with roughly $2 billion in unfunded pension liabilities.  It wasn’t the changing conditions of the Multi-Employer Pension Plans, and overall failure of supply side economics.  It wasn’t competition.  It wasn’t a changing market.  It wasn’t that their sales were down.  (11% from 2008 to 2011, and 28% since 2004)

Nope, it’s all because 92% of a 6600 member union said, “No” to the last offer which included more pay cuts (8% immediately), fewer benefits (27-32% wage and benefit reduction overall), and the hope of maybe something more in the future.

“They’ve already took away our pension and not brought that back; and they’re not negotiating with us on anything we’d like to see negotiated,” Rocha said.

Oh, and that 6600 member union, the Bakery, Confectionery, Tobacco Workers and Grain Millers’ International Union?  Yeah, on its most recent bankruptcy filing, Hostess listed that union’s pension fund, the Bakery & Confectionery Union & Industry International Pension Fund, as its largest unsecured creditor at $944.2 million.

Please read that again.  Out of more than a billion dollars in liabilities, almost $1 billion of that is owed to the union that the right would have you believe is being unreasonable by refusing to accept further cuts and promises of future compensation.  In other words, the group to which Hostess already owes nearly $1,000,000,000 said, “No, we will not extend you any more credit.”

Let me pause for a moment.  I would like you to consider this situation in full.  Consider all of these facts.  Take a moment or three to read through the links provided and any more that you may stumble upon or go looking for.  After you have done that, ask yourself these questions.

Why? Why would the union members have any faith in the management’s ability to lead the company out of a second bankruptcy and into a better position?  Why should they be willing to trust that giving up the now for a promise of the future would be a smart move, when the company isn’t even making good on the previous commitments they’ve made?

Do you continue to trust someone who has betrayed you over and over again?  Is that not why you enter into a contract?  Would you continue to trust someone who has lied and stolen from you?  Better question, would you enter into another contract with someone who has repeatedly broken contracts with you and is massively in debt to you already?

Strictly from a business perspective, what is going to happen here?  Hostess has asked the judge presiding over their bankruptcy for permission to liquidate their assets.  As a result, assuming the judge grants the request which is highly likely, the brand names will be sold off, and most of them will reappear on store shelves.  Likely they will be purchased, lock, stock and barrel, by Grupo Bimbo (the world’s largest bakery group, owner of Entenmann’s) or Yucaipa Companies (an investment firm out of LA), both of which have previously tried to buy Hostess in 2007.  They may wind up splitting the spoils, much like Bain Capital or any other vulture capitalists.

So, then what?  Well, then, all those employees who have been out of work will likely go back to work.  At least the vast majority of them.  And, thanks to the union, they will have had some help getting through the lean times.  Thanks to a strong union, because that is one thing that a union is able to do.
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Leave a comment   |  tags: , , , , , , | posted in Boycott, Finance, Jobs, Politics, Solutions, Unions

August 12, 2012

How many bankers does it take to rob a nation of millions?

By Just Torch

Did you hear the one about the group of bankers that manipulated the bank interest rates in order to make millions?  No?  No, not Lehman Brothers.  They failed because of a lack of regulation and over extending themselves in a subprime bubble.  Nooo, not Bear Stearns.  They failed because they failed to keep enough capital to back up their investments.  Nor, any number of other banks that most of us have heard of.  Sadly, it’s not a joke, and it is being almost completely ignored in the main stream media.

In fact, other than a passing reference in most places, it really isn’t getting much coverage anywhere outside of dedicated financial news, and yet, this is one that is hugely important.

So, what the heck is it?  The London Interbank Offered Rate (LIBOR) and its manipulation by Barclays Bank staff.  Oh?  You haven’t heard about it?  That wouldn’t surprise me.  And, yet, it has the possibility to impact as much as $800 trillion in various financial products!  Granted, that’s the extreme end, and it is likely only $3 trillion.  Did you read that correctly?  $3 trillion.  With a T.  Three times the annual US budget deficit for each of the last three years that the American politicians and media make such a brouhaha about, and yet, there is almost no coverage of it.

How can this rate be so important?  Because more than half of every contract, loan, credit card, and mortgage rate is tied to the LIBOR.  It is specified in the contract.  So, when a small handful of people are sending e-mails back and forth with one literally asking the  other to either raise or lower this rate so that they can make a few million dollars, this is a big problem for the rest of us.  It affects the interest rates that we are being charged for the instruments that are attached to it.

The worst part is that this is not new.  The Wall Street Journal first released a study revealing this might be possible in 2008.  The New York Federal Reserve released documents in 2012 showing that they have known banks were falsely setting the LIBOR as far back as 2007, and yet, chose to do nothing about this.

So, what is the real impact here?   Well, the lawsuits have already started.  In fact, Barclays paid a $450 million fine to settle charges that they lied about their rate.  But, that’s just the beginning.

Who has a claim? “Anyone with a floating rate. The suits are building with some class actions forming already,” says bank analyst Glenn Schorr of Nomura. Earlier this year three plaintiff groups including Charles Schwab and the City of Baltimore filed suits against the 16 banks that submit Libor rates accusing them of collusion, or price fixing, under the Sherman Antitrust Act.

Think about that.  Anyone with a floating rate.  Any of the ARM mortgages.  Any credit cards.  etc.

So, how long will it be before this is the new line of defense against foreclosure?  Where are the smart lawyers to use it in Bankruptcy proceedings?  They’re coming.  And, they will have a strong case.  Barclays was smart.  They plead out.  It will give them some legal standing and leniency when the time comes.  The rest will have fought it, and will therefore face a harder road when they’re caught out.

This is just the tip of the iceberg.  What you haven’t heard is going to be huge.  What should really scare you is why they’re keeping this so under wraps.  If it is only being peripherally covered, then you know that you need to know!!

Today’s column is a lot lighter on detail than many that I present.  I am aware.  The problem is that no one really knows the depths of the problem that we face.  Or, rather, the people who do know, are not talking.  We know that Barclays has admitted their part.  It is likely that most, if not all, of the other 17 banks involved in calculating the LIBOR are also guilty of the same type of fixing.  In fact, it is most likely that these banks were coordinating together.  That is, admittedly, speculation.  It is, however, speculation based on well founded suspicion and it is shared by those who are actually investigating this, as you will have seen if you followed the links above.

So, then, for a column that tries very hard to focus on known facts to have veered into this grey area, as a reader, you would have every reason to ask, “Why?”.  The answer is two fold.  One, because even though we do not have the facts yet, this is important and has the potential to have massive waves when it does hit.  Two, because we need to be seeking out the information on this.  We need to be making noise and asking questions.  We need to be talking amongst ourselves, calling our representatives, senators, etc and demanding of them that they are looking into it.  It needs to be a proactive concern.  That, is why.

Leave a comment   |  tags: , , , , | posted in Finance, Politics

July 29, 2012

In for a penny. In for a pound.

By Just Torch

The internets and the air waves are aflame!  But, what is that which is burning?  It’s old news that has come to light, again.  While there is a whole paper to be written on that phenomenon, we’re going to move on to a more important aspect right now.  At least in this case, the news is still relevant, and that is why there are more important aspects that we should focus on.

I previously wrote on the importance of our economic vote.  In short, where you shop does, in fact, matter.  It is a constantly updating list also.  For example, I have recently become aware that I will have to forgo my occasional late night trips to Waffle House , because of their sizable corporate contributions to Karl Rove’s superPAC, American Crossroads.  As we, as consumers, make our choices, our impact will be felt, or our apathy will be shown.  Either way, we are making our stand.

  • Bringing Chick-fil-A back to the forefront of the news this week though are several events:As Equality Matters had reported in March, I linked to in April and we have actually known for at least a decade, Chick-fil-A through their charitable foundation, WinShape has been consistently giving to anti-gay marriage groups.  However, in an interview posted July 16th, the COO, Dan Cathy, acknowledged that, “We are very much supportive of the family — the biblical definition of the family unit. We are a family-owned business, a family-led business, and we are married to our first wives. We give God thanks for that.”  (We’ll accept that he’s not talking about all the various biblical definitions of marriage, and only the currently popular one man-one woman definition, since that’s the most likely definition to which he was referring….)  Snopes goes on to add other quotes that are even more damning, but that I can’t validate so I won’t include here.
  • The letter from Mayor Thomas M Menino of Boston to Dan Cathy of Chick-fil-A, strongly suggesting that Chick-fil-A abandon plans to find a location within Boston.
  • Chicago Mayor Rahm Emanuel made the statement that Chick-fil-A’s “values are not Chicago values.”
  • San Francisco Mayor Ed Lee tweeted,  “Closest #ChickFilA to San Francisco is 40 miles away & I strongly recommend that they not try to come any closer.”

I have a very good friend who grew up going to the original location in Jonesboro, GA.  He maintains that these positions are not consistent with the S. Truett Cathy who founded the chain and that his grandfather introduced him to repeatedly.  Now, the original Mr. Cathy is still alive and kicking and is still, at least titularly, the Chairman and CEO at 91.  Is he actively involved in the company any more?  Who’s to say?  He has not, that I’ve seen, been quoted in the latest flaps.  Honestly, it doesn’t matter.  It is the corporate position.

This same friend has expressed that he feels torn because the 975 franchisees (in 2007) spent years building up the business and wonders if these franchisees should be held accountable for the corporate policies.  Also, he points out that while he worked there in the past, the franchisee that he worked for, hired gay employees.

There is a significant flaw in this reasoning.  It is the same flaw that so many people in American make, and it is such a fundamental flaw that when I was having the conversation with him, it didn’t strike me at first either.  It wasn’t until later that it hit me.

This is precisely the reasoning that comes from the same line as those who would demand their rights without accepting their corresponding responsibilities.

The franchisees have benefited from the marketing and the “good name” of the Chick-fil-A corporation for the last 65 years.  They have benefited from the recipes.  The name recognition.  They’ve benefited in every way possible from the positives – the rights – of being associated with the Chick-fil-A name/brand.  And, now, it’s time to fully pay the piper.

They have certainly paid the franchise fees, which have historically been ridiculously low, by industry standards, thanks to the “cult like” screening process which allowed Chick-fil-A to make sure they were filtering out all of the “undesirables”.  These processes involved literally dozens of interviews over the courses of years.  Then, instead of charging a franchise fee of $25,000, like KFC does, Chick-fil-A would only charge $5,000.  Of course, they also made up for this in other ways.  It was no accident that their franchisees were earning roughly 1/3 what other franchisees were bringing in.  They have paid for their product, of course.

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7 Comments   |  tags: , , , , , , , , , | posted in Finance, Politics, Solutions, Voting

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