« October 09, 2005 - October 15, 2005 | Main | October 23, 2005 - October 29, 2005 »
Last spring, when Donald Trump fired Audrey, one of the young women on the Apprentice, he castigated her for not being a stand-up woman. "You never take any responsibility yourself, and no one from your team respected you."
Faced with a third consecutive season of declining ratings for his show, Trump accepted full responsibilty--on behalf of Martha Stewart, that is.
From Reuters:
In an ABC News Radio interview airing on Thursday, Trump said the fourth edition of his show was being dragged down in the ratings by Stewart's faltering series."I think there was confusion between Martha's 'Apprentice' and mine and mine continues to do well and ... the other one has struggled very severely," the real estate tycoon said. "I think it probably hurt mine and I sort of predicted that it would."
Asked whether he would give Stewart a second chance, Trump was noncommittal.
"That's up to (executive producer) Mark Burnett and myself and NBC as to whether or not the Martha show continues but it certainly has struggled mightily," said Trump, who also is an executive producer of both shows.
Trump's "Apprentice" remains a key element of NBC's Thursday night lineup but is well off its mark from last season's ratings performance. The show currently averages 10 million viewers a week, down 4 million from last season.
Stewart's show is averaging 6.6 million viewers through its first four weeks.
Posted by dan at 03:04 PM
Erstwhile smart social critic turned apparatchik David Brooks is excited at doings in Washington. On page A27 of today's New York Times, he writes:
"On the G.O.P. side, this is a moment of Republican glasnost. After years of following the leaders, Republicans are suddently rebelling and innovating on all fronts. Conservatives like Mike Pence and moderates like Mark Kirk are joining forces to battle the DeLay institutionalists to actually cut spending, including cuts in defense and veterans affairs."
Here's the headline from page A18 of the same paper: "House Republicans Put off Vote on Cuts."
Carl Hulse reports:
Acknowledging that they were short of the necessary support, House Republican leaders Wednesday abruptly put off a vote on their plan to cut federal spending by $50 billion and said they would go back to the drawing board to draft a fuller proposal that could win majority backing. . . .The leadership's inability to round up the votes for its initial plan to raise the broad target for spending cuts to $50 billion from $35 billion showed how difficult the specific cuts will be to achieve. And its backtracking in the face of opposition illustrated that the makeshift leadership structure is still trying to find its bearings.
In the Senate, lawmakers continued to make progress toward identifying their own $35 billion in reductions and revenue increases as the Agriculture Committee approved $3 billion in savings. And the Energy and Natural Resources Committee approved its plan to allow drilling in the Arctic National Wildlife Refuge to generate an extra $2.5 billion in royalties. . .
And the Finance Committee, which is responsible for about $10 billion of the overall $35 billion in savings being generated in the Senate, has not reached consensus over its plan, which involves more politically sensitive cuts to future spending on Medicare and Medicaid. Aides to Senator Charles E. Grassley, the Iowa Republican who is committee chairman, said he was close to making his proposal public.
In the House, Republican leaders did not want to take their proposal to the floor unless they were certain of passage. They wanted to avoid an embarrassing repeat of a recent close vote on oil refinery legislation, where leaders had to plead for 45 minutes with Republican critics of the bill to round up enough votes for passage. . . .
Some Republican lawmakers said privately that they were also concerned that the leadership was forcing a politically difficult vote on $50 billion in cuts when the Senate was unlikely to consider a similar level, in effect putting House Republicans on the record unnecessarily. But senior Republicans said the higher figure would give the House leverage in eventual negotiations with the Senate while demonstrating that House Republicans were serious about reining in the growth of spending."
By the way, these aren't really cuts. The $50 billion in question is over five years, or $10 billion a year. In the fiscal year just concluded, total federal expenditures were $2.47 trillion. So these bold and highly divisive cuts, which the Republicans can't even bring to a vote, constitute four tenths of one percent of last year's spending.
Glasnost? Nyet.
Posted by dan at 08:57 AM
My latest in Slate, on the GM-UAW health care deal.
Posted by dan at 05:10 PM
Adam Lashinsky has become a master of the form of journalism that Fortune does better than any other publication. The snappy, incisive, long-form CEO/mogul feature that manages to tell us something about the subject and the money/business cultural moment. Lots of access, no butt-kissing.
Check out his take on how the real King of All Media, Rupert Murdoch, is playing the Internet.
Posted by dan at 03:04 PM
Diana Henriques of the New York Times continues her excellent work on looking at the sad personal financial situation of many of today's soldiers. Today she turns her attention to the phenomenon of legalized gambling on military bases.
"Military gambling is a big business. About $2 billion flows through military-owned slot machines at officers' clubs, activities centers and bowling alleys on overseas bases each year. Most flows back out as jackpots, but 6 percent remains with the house, about the same ratio as in Las Vegas.Each year, the armed forces take in more than $120 million from on-base slot machines and $7 million from Army bingo games at home. These funds help pay for recreational programs for the troops. . . .
More than four years ago, Congress ordered the Pentagon to study how on-base slot machines were affecting military families. The Pentagon initially hired PricewaterhouseCoopers to do the study, but it ended the contract after a few months and completed the study itself.
The final report provided no new data about the rate of problem gambling. But it did caution Congress that the military could not maintain many popular programs, like golf courses and family activity centers, "without slot machine revenue or a significant new source of cash."
One consultant who worked with PricewaterhouseCoopers was Rachel Volberg, a medical sociologist who runs Gemini Resources, which measures gambling rates around the world. "We met a great deal of defensiveness, both in Washington and on base," she said. "Everyone was very concerned that those revenues might go away."
She added: "Only the chaplains took this really seriously. They told us that one out of three people who come to them for counseling have a problem with gambling, but can't tell anyone because they will be dishonorably discharged."
Slot machines are "a very profitable operation," said Peter Isaacs, the chief operating officer of the Army's Community and Family Support Center, which runs the largest slot machine program. "But we do not operate them strictly to extract profit. Our soldiers have told us they want access to the same games and gambling opportunities available to the civilians they are defending."
Read the whole thing while it's still free.
Posted by dan at 08:44 AM
Pittsburgh Brewing Co., the company that makes Iron City beer, is developing a new variation of the cram-down theme.
Christine Richard of Dow Jones Newswires reports:
"The company is seeking to terminate its udnerfunded pension plan and have its obligations assumed by the Pension Benefit Guaranty Corp. a government agency which hsa taken over more than 3,000 undrefunded plans in the last 30 years.
"What makes Pittsburgh Brewing's request unusual is that it is hoping to get this relief without filing for bankruptcy protection." [my italics.] . . .
"Jeffrey Speicher, a spokemsman for the PBGC, confirmed that Pittsburgh Brewing has applied to terminate its plan, which is underfunded by $12 million and covers 530 current and former employees. He said such terminatoins wern't unheard of, but couldn't recall an example."
Question: If Pittsburgh Brewing is allowed to get away with this, what's to stop any other nominally solvent company from simply walking away from the commitments it voluntarily made to employees? Answer: nothing.
Another question: does the ownership society mean that the federal government is going to end up owning all private sector pensions?
Posted by dan at 08:36 AM
Many people realize that the Republican-dominated fiscal policy of the last five years is designed to increase taxes massively after 2010, when the temporary marginal income tax rate reductions expire.
But not everybody has to wait until the end of the decade to see their taxes go up. No, plenty of Americans will see their taxes rise next year.
Tom Herman of the reality-based portion of the Wall Street Journal reports:
Many people are in for an unpleasant surprise next year: higher taxes.More taxpayers will be ensnared by the rapidly expanding alternative minimum tax in 2006, and more than 11 million people will pay higher Social Security taxes. Additionally, many more people will face a much higher tax bill unless Congress extends a number of popular tax breaks that are due to expire at the end of the year.
Until recently, it seemed a sure bet that Congress would extend the expiring provisions. But the outlook recently has become less certain amid growing congressional concern about budget deficits, especially following hurricanes Katrina and Rita.
One provision scheduled to expire at the end of this year allows people who itemize their deductions to deduct either their state sales taxes or their state and local income taxes on their federal returns. This is especially popular in states such as Texas, Florida, Nevada, Washington and South Dakota that have no state income tax. If the provision expires, many people will have to pay higher taxes for 2006 because they won't be able to deduct their sales taxes paid next year. . . .
But perhaps the biggest surprise for many taxpayers will come from the alternative minimum tax, or AMT. . .
Among the provisions scheduled to expire at the end of this year is one that protects many people from losing the value of certain personal tax credits because of the AMT. Another provision raises the AMT's exemption amounts; if that one isn't extended, those amounts will drop sharply next year.
Even if Congress extends the current law, the number of people who will owe more in tax next year because of the AMT will increase to about 5.3 million from an estimated four million this year, says Taylor Griffin, a U.S. Treasury Department spokesman. If Congress doesn't extend the current law, the number of people hit by the AMT next year will soar to more than 21 million, he says. Among the senators arguing for extending the current law is Max Baucus of Montana, the Senate Finance Committee's ranking Democrat.
The Bush administration didn't include extension of the AMT provision in its budget proposals earlier this year. A Treasury spokesman says the administration believes it's "more appropriate" for the AMT "to be dealt with in the context of fundamental tax reform." The president's advisory panel on tax reform met again yesterday and is expected to issue its recommendations by Nov. 1. . .
Another provision scheduled to expire at the end of this year allows many elementary and secondary school teachers to deduct as much as $250 of their out-of-pocket expenses for classroom supplies, such as books or chalk. Since this break may disappear, teachers and others who are eligible should be sure to take advantage of it this year. It is an especially popular break because you don't have to itemize your deductions to be eligible for it.
Separately, about 11.3 million workers will pay higher Social Security taxes next year. That is because the maximum amount of earnings subject to the tax will jump in 2006 to $94,200 from $90,000 this year and $87,900 last year, the Social Security Administration said recently. . . .
Self-employed workers will get hit harder. They may owe as much as $520.80 in additional self-employment tax next year, Mr. Sacks says. However, he notes, they can recoup some of this amount through a deduction on their federal income."
So: taxes are effectively being raised on the self-employed and workers who make more than $87,900, on teachers, and on people who have relatively high incomes but live in areas where state income taxes and property taxes are high.
Posted by dan at 08:29 AM
Your humble scribe on Delphi CEO Steve Miller in Slate, on Tuesday, October 11.
In a series of interviews with the New York Times, the Wall Street Journal, and the Financial Times, Delphi CEO Steve Miller offered unionized workers a choice: They can accept pay cuts of about two-thirds or face the termination of their pension plan, which is underfunded by several billion dollars.Miller, whom no one will confuse with the Gangster of Love, has performed similar drills at bankrupt industrial companies like Bethlehem Steel, Morrison-Knudson, and Federal-Mogul. And the experience has given him some insight into the forces transforming the industrial world, leading Micheline Maynard of the New York Times to dub him the "Oracle of Delphi." As he told the Financial Times, "Delphi is simply a flashpoint, a test case, for all the economic and social trends that are on a collision course in our country and around the globe."
Holman W. Jenkins Jr. on Delphi CEO Steve Miller in the Wall Street Journal today, Wednesday, October 19.
"He's not the gangster of love. This Steve Miller is the voice of doom, or if you prerer, the voice of the obvious. As CEO of bankrupt auto parts maker Delphi, he has trumpeted the unwelcome truth that $65 an hour for unskilled factory labor just isn't going to work. . . ."On one point, however, his Jeremiah act rings a mite tinny. He's askingthe UAW brethren at Delhpi to take unprecedented, mind-blowing wage cuts of 65%. But he conspicuously allows that no deciison has been made on whether to shuck the company's gilded retirement benefits. The pensions just might be saved, he implies. How so?"
I guess it takes lame pop culture references an extra week to penetrate the thick bunker of the WSJ editorial page.
Posted by dan at 08:20 AM
Monetary policy fossil Alan Greenspan foresees the end of the fossil fuel era.
Improving technology and ongoing shifts in the structure of economic activity are reducing the energy intensity of industrial countries, and presumably recent oil price increases will accelerate the pace of displacement of energy-intensive production facilities. If history is any guide, oil will eventually be overtaken by less-costly alternatives well before conventional oil reserves run out. Indeed, oil displaced coal despite still vast untapped reserves of coal, and coal displaced wood without denuding our forest lands.New technologies to more fully exploit existing conventional oil reserves will emerge in the years ahead. Moreover, innovation is already altering the power source of motor vehicles, and much research is directed at reducing gasoline requirements. We will begin the transition to the next major sources of energy, perhaps before midcentury, as production from conventional oil reservoirs, according to central-tendency scenarios of the U.S. Department of Energy, is projected to peak. In fact, the development and application of new sources of energy, especially nonconventional sources of oil, is already in train. Nonetheless, the transition will take time. We, and the rest of the world, doubtless will have to live with the geopolitical and other uncertainties of the oil markets for some time to come.
Posted by dan at 09:04 AM
Great article in today's Wall Street Journal by fellow Cornell Daily Sun alumnus Andrew Morse on a Japanese woman who, after apprenticing at Ess-a-Bagel in New York, has opened a successful bagel store in Tokyo.
TOKYO -- Five years ago, Miho Inagi quit her job as an office assistant to pursue a passionate dream. On a trip to New York, she had fallen in love with the city's bagels and yearned to open her own bagel shop in Tokyo.Never mind that bagels were barely known in Japan and that most Japanese expected bread to be soft and moist, not hard and crunchy. Determined to learn the trade properly, Ms. Inagi talked her way into an apprenticeship at New York's Ess-a-Bagel. From 7 a.m. to 5 p.m., she took orders, cleared trays and swept the floor. On Saturdays and Sundays, the shop's exacting owner, Florence Wilpon, let her make dough. Six months later, when she felt she had the hang of it, Ms. Inagi returned to Japan.
Last year, Ms. Inagi opened Maruichi Bagel, a tiny sliver of a bakery wedged between a coffee shop and a hair salon in an upscale Tokyo neighborhood. (Maruichi means No. 1 or, literally, the numeral one in a circle -- a symbol that resembles a just-baked bagel.)
She bakes her bagels in an oven that fits 18 at a time. Her bagels have become so popular that when she sells out, customers often will wait 15 or 20 minutes until the next batch is ready.
"Before I opened this store I had no goals," says Ms. Inagi, 29 years old. But now, she says, "I feel so satisfied."
There's more, but you have to subscribe.
Posted by dan at 09:00 AM
Apparently, prices aren't the only things that are high in the energy sector. Carola Hoyos has the troubing report ($ required) in the Financial Times:
Workers abusing and producing methamphetamines have left oil producers struggling to fill jobs, causing delays in projects and helping to push up the price of oil and petrol in the US and around the world.The problem was a big challenge in states such as Texas, Colorado, Louisiana and Oklahoma, industry insiders said. Ron Walsmith, director of oil & gas training at the Mid-Continent Oil & Gas Training Center, said entire rig crews of up to 12 people had been fired for making or using the drug. Methamphetamine labs have even been found on rigs, which is dangerous because both are highly explosive.
But the rigs, which cost anywhere from $2m to $20m (€17m, £11m), are conveniently isolated with easy access to sodium hydroxide, which is needed to reduce the acidity of drilling mud and also to make methamphetamine.
Ben Dell, analyst at Sanford Bernstein, said the issue was serious enough to have an impact on international oil prices. He said: "With a third of all rig crews in the Rocky Mountains having methamphetamine problems, it's difficult to get a crew that's not high."
Posted by dan at 08:55 AM
My take on the Refco debacle, in Slate.
P.S. the company filed for bankruptcy last night.
A question: the company's shares last traded in the pre-market on Thursday, Oct. 13, at $7.90. Was it fair and appropriate for the NYSE to halt trading in its shares, even as news continued to trouble out about the company's woes?
Posted by dan at 08:47 AM
Last week, I noted in Slate that Steve Miller, the CEO of bankrupt auto parts maker is Delphi is an oracle of the re-proletarianization of industrial work. In other words, Americans working in vital fields like manufacturing should no longer expect to have a decent bourgeois life.
In today's Wall Street Journal, Miller continues to expound on the theme. Some choice excerpts:
"Globalization is a fact of life these days. What has been brought into sharp relief is the differing value the global market places on knowledge workers versus basic manufacturing workers. I was struck by what I saw when I visited our Delphi operations in Mexico last week. Our average hourly worker makes about $7,000 a year, while the average salaried worker makes about $35,000 a year. A spread of five times. The same spread, or wider, exists in all low-cost countries. The implications for America are enormous, and it boils down to this. If you want your kids to enjoy the great American dream, get them a good education. The days when manual unskilled labor can deliver a $65-per-hour wage are disappearing."
And:
"You've got to think of two kinds of components. There are things that are labor intensive, very small. You can put a thousand of them in a box and ship them across the ocean. Those things are going to be made in low-cost countries. They're not going to be made in America. Not for $10 an hour or $5 an hour. They are going to be made for $2.There are other components like manifold covers for engines that are huge assemblies with all kinds of sophisticated electronic parts and fuel-feeding parts. Those are high value and logistically so hard to handle they have to be made next to the customer, close to the final assembly plant. Those will be made in America. But they will be made by people who have competitive, American industrial wages. And a competitive American industrial wage is, all in, about $20 an hour, in round numbers.
And to get $20 an hour all in, and have a health-care plan, pay the workers' comp bill, which is high in the states we are in like New York, Ohio and Michigan, then wage, retirement, then, bang, at a $10 wage you are already hovering around $20."
Translation: in Miller's view, the cash, pre-tax pay of Delphi workers should be $10 per hour. Lets see: 40 hours per week, 52 weeks per year, and that's an annual wage of $20,800.
Detroit mentality 1920: auto workers should earn enough to be able to afford to buy a car.
Detroit mentality 2005: auto workers should earn enough to be able to afford to buy a tire.
Posted by dan at 04:29 PM
The Washington Post: The Republicans are patting themselves on the back for balancing the budget on the backs of the poor. Jonathan Weisman writes.
"House Republican leaders have moved from balking at big cuts in Medicaid and other programs to embracing them, driven by pent-up anger from fiscal conservatives concerned about runaway spending and the leadership's own weakening hold on power.Beginning this week, the House GOP lawmakers will take steps to cut as much as $50 billion from the fiscal 2006 budget for health care for the poor, food stamps and farm supports, as well as considering across-the-board cuts in other programs. Only last month, then-House Majority Leader Tom DeLay (Tex.) and other GOP leaders quashed demands within their party for budget cuts to pay for the soaring cost of hurricane relief."
But the Congressional Republicans clearly lack the courage of their convictions. Brad DeLong reads between the lines.
"But if you read to the end of the article--and if you understand budget concepts and reporting conventions--you can see that Weisman's announcement that the House Leadership has changed course and wants a new "cut... $50 billion from the fiscal 2006 budget" is... strange. It seems that Speaker "Hastert... announce[d] that... cuts to entitlement programs such as Medicaid, food stamps and farm supports would be raised from $35 billion to $50 billion." So its a $15 billion change in direction--not $50. And it's not in the fiscal year 2006 budget. The original $35 that has been topped-off to $50 are cumulative "entitlement cuts over five years"--originally $7 and now $10 in each of the next five years.So we're not talking about a $50 billion cut relative to baseline in entitlement spending for fiscal year 2006. We're talking about a $3 billion cut."
It's like the Catskills line: the food at this restaurant stinks. And the portions? So small.
Posted by dan at 04:19 PM
What do New York Times reporter Judith Miller and domestic doyenne Martha Stewart have in common?
Each has seen her stock fall significantly since getting out of jail.
Posted by dan at 04:55 PM
Nice cover story in the New York Times magazine this week by Jon Gertner on upscale Mcmansion builder Toll Brothers. I can't help but wonder, however, if the combination of (a) the willingness of Toll to grant such access; (b) the unremitting, permanent, and futuristic bullishness of management [in the future, says Bob Toll, all houses will cost $4 million]; and (c) the decision to splash Toll Brothers on a mainstream magazine cover, with no cover reference to a housing bubble, makes this a nice contrary indicator. Of course, Toll is already off by about a third from its summer peak.
Posted by dan at 04:35 PM
What do Delphi and Germany have in common? Check out my piece in today's New York Times Week in Review.
Posted by dan at 02:13 PM
Uninformed speculation on the next Fed chief, at Slate.
Posted by dan at 02:11 PM