« August 28, 2005 - September 03, 2005 | Main | September 18, 2005 - September 24, 2005 »
Philip Coggan of the Financial Times alerts us to a neologism:
Ajay Kapur, global strategist at Citigroup, says the US is a "plutonomy", an economy powered by the wealthy. While the average consumer devotes 7.8 per cent of their total expenditure to energy-related products, high-earners devote just 6 per cent. "They account for the bulk of consumption and are relatively unscathed by high oil prices," Mr Kapur says.
Unfortunately, the plutocrats aren't very optimistic. The Spectrem Group,which devotes itself to studying the attitudes, desires, and trevails of the upper crust, reports that its monthly Spectrem Affluent Investor Index(TM) (which measures the investment outlook of households with $500,000 or more in inevstable assets) "fell 6 points in August to a reading of -1, the lowest level since its inception, on surging concern about higher oil and gas prices."
Said Spectrem President George Walper: "Higher oil and gas prices have finally taken their toll on affluent investors, driving their investment optimism to the lowest level since we began tracking it in February 2004. Nearly half of all affluent investors cited rising energy prices as their No. 1 news-driven concern, far outpacing even the Iraq War."
Posted by dan at 06:00 PM
When Spanish Prime Minister Jose Maria Aznar lost his re-election bad last year, U.S. Republican partisans fretted that the Spanish public had unwisely rejected a leader and party that was on the same geopolitical wavelength as they were.
They need not have worried so much. It seems Spain's Socialist Prime Minister Jose Luis Rodriguez Zapatero is taking a page right out of the Republicans' fiscal playbook: simultaneously cutting taxes and increasing entitlement programs.
Leslie Crawford reports in the Financial Times.
Healthy government finances and a booming economy have emboldened José Luis Rodríguez Zapatero, the Spanish prime minister, to promise tax cuts and a big rise in state pensions over the next two years.With the economy growing at an annualised rate of 3.4 per cent, and a €7.4bn ($9.3bn, £5bn) fiscal surplus in the first seven months of the year, equivalent to 0.8 per cent of gross domestic product, Mr Zapatero told a miners' rally near León, his home town, that next year's budget would include the cuts and also more spending on housing, healthcare and education.
Posted by dan at 05:50 PM
Weary of fighting Wal-Mart, the grocery store chain Albertson's put itself up for auction last Friday.
Janet Adamy and Dennis Berman note in the Wall Street Journal:
Albertsons has about 2,500 stores in 37 states and reported $39.9 billion in sales for the year ended Feb. 3. It operates chains including Acme, Shaw's, Jewel-Osco, Sav-on Drugs and Star Markets.Private-equity firms are keen on the company's real-estate holdings of about 70 million square feet. The company owns about 60% of its own space, with the rest under leases. Tapping into undervalued real estate helped drive last year's $11.5 billion purchase of Sears, Roebuck & Co. by Kmart Holding Corp.
Yes, tapping into undervalued real estate did help drive the merger of Sears and Kmart. But you have to wonder just how much undervalued real estate lies on the books of struggling retailers, especially now that every hedge fund and private equity firm has been kicking the tires of every struggling retailer for going on a year now. Unless, the chain's real estate lies in places where developers can turn them into condos--and quick--it's hard to imagine where the hidden value lies. Ultimately, another retailer has to fill up the giant boxes.
Posted by dan at 05:45 PM
Katrina has presented many companies with an opportunity to donate goods and services and thus burnish their images. Wal-Mart has clearly stepped up to the plate. Twenty-one of the company's stores remain shuttered. The Wall Street Journal notes today that it has "donated $17 million to big relief agencies and is offering displaced employees as much as $1,000 in emergency relief."
That's nice. But some habits plainly die hard. Even amid this natural disaster, the company is finding ways to keep employee compensation costs down.
As the Journal notes, "While most large companies are continuing to pay their displaced employees, Wal-Mart Stores Inc. says it provided three days of pay to employees who can't return to work."
Posted by dan at 11:10 AM
I have two articles in today's New York Times Week in Review section: (1) what the latest income data tell us (or don't tell us) about the efficacy of supply-side tax policies; and (2) vacations and the self-employed.
Posted by dan at 08:40 AM