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China apparently is looking for a bulk discount on key commodities. Somebody might want to inform the Chinese government that announcing that you plan to buy a huge quantity of a commodity for which there is a global market might encourage people to raise prices, rather than to lower them. Richard McGregor reports in the Financial Times:
China has signalled it will demand a larger role in setting global commodities prices, with an announcement that it will form new industry negotiating groups to leverage its buying power to secure lower prices.Wei Jianguo, a vice-minister for commerce, the ministry responsible for trade, said China would establish negotiating groups “as soon as possible” covering oil, alumina and copper, in the same way it did for iron ore this year.
Mr Wei’s comments reflect a belief in China that its emergence as the largest, or fastest-growing, market for many commodities should allow it to have a greater influence over their price.
Many of China’s old-style bureaucrats, schooled in the days of the planned economy, also believe that any profit made by sellers of raw materials should be limited to a small margin above the cost of production.
China’s plan faces potential legal barriers because global trading rules limit such bodies if they are government-run, and it also must overcome the multiple other factors that dictate resource prices.
In China, most heavy industrial sectors are still state-owned and remain closely supervised if not controlled by the government.
China’s rapidly growing industrial economy has been a key factor in pushing raw materials prices up to generational highs, especially for commodities such as iron ore, copper and alumina.
Resentment has been smouldering in official circles in China since 2005, when the world’s main iron ore producers won a 71 per cent annual increase in the price of iron ore in negotiations with Japan and Europe. Although China is by far the largest importer of iron ore, which is used to make steel, it played no role in the talks and was forced to accept the price.
Posted by dan at 02:06 PM
An unintentionally funny piece in the Wall Street Journal by Brody Mullins and Kara Scannell on the efforts to form a private equity trade/lobbying group.
Private-equity firms, flush with cash and snapping up companies, are turning their attention to the nation's capital, planning a trade group and boosting spending on lobbyists and campaign contributions.Their goals: to pre-empt the types of moves toward federal regulation that have emerged for their hedge-fund cousins and to enlist Washington's help in battling restrictions in Europe and Asia.
This summer, representatives of Carlyle Group, Texas Pacific Group, Kohlberg Kravis Roberts & Co. and Blackstone Group joined to map out a trade group, set a budget, hire a staff and define its mission. Overseeing the effort is Harry Clark, who worked in the Nixon White House and went on to found Clark & Weinstock, a Washington lobbying firm. Mr. Clark sold the firm a decade ago, and now runs his own investment fund in Greenwich, Conn. . . .
Firms separately have been ramping up their political activities. Private-equity firms spent $820,000 on lobbyists last year, up from $40,000 in 2001, according to the nonpartisan PoliticalMoneyLine, a group that tracks lobbying in Washington. Political contributions from the industry have ballooned. So far in the 2006 election cycle, employees of large private-equity firms have donated $1.3 million to candidates for Congress, according to the Center for Responsive Politics, a nonpartisan monitor of campaign finances. That is an 86% increase over the $700,000 the industry contributed to candidates during the 2002 campaign, the last nonpresidential election cycle. . . .
Private-equity firms are hardly new to the influence game. For years, such companies have hired well-connected insiders. For example, Carlyle Group, of Washington, has employed as advisers former President George Bush, former Treasury Secretary James Baker and former Securities and Exchange Commission Chairman Arthur Levitt. . . .
As for the emerging trade group, neither Mr. Clark nor any companies involved would publicly discuss details of the project. But Woody Campbell, a private-equity counsel with the law firm Debevoise & Plimpton LLP, said, "the issue is that there is not a group out there watching out for private-equity funds."
That last bit is the funny part. Given the role that private equity executives play in political fundraising, there's not one but two groups out there watching out for private-equity funds: the Republican party and the Democratic party.
Posted by dan at 09:26 AM
Robin Sidel reports in the Wall Street Journal on how the housing slowdown is creating some discontinuities for banks.
The cooling housing market is starting to pinch the nation's banks, which are more exposed to real estate than ever -- and it comes at a time when some of their other key businesses already are being squeezed. . . .Indeed, banks have begun to warn investors that the housing slowdown is starting to hurt their business. FirstFed Financial Corp., a Santa Monica, Calif., bank with a large mortgage business, said in a securities filing Monday that its mortgage originations were down 47% in July from year-earlier levels. The next day, First Horizon National Corp., a Memphis, Tenn., bank that sells home loans across the country, said it expects mortgage originations to fall by $1 billion in the third quarter due to a falloff in applications. And Punk Ziegel's Mr. Bove last week cut his rating on Salt Lake City-based Zions Bancorp to a "hold" from a "buy" due to views that the bank, which provides loans to home builders, will experience lower volumes as construction slows and land values decline.
Posted by dan at 09:19 AM
My latest in Slate, on Stephon Marbury's line of shoes. Much as I'd like, I can't take credit for the brilliant headline.
Posted by dan at 09:16 AM
A brief disquisition on the utility, or lack thereof, of the sales estimates analysts create for big retailers, courtesy of the Wall Street Journal:
According to Thomson Financial, of the 40 retailers that have reported same-store results so far, 21 beat estimates, while 19 missed. So far, no results have matched estimates. Same-store sales are sales at stores open at least a year and are considered a key measure of a retailer's health.
Posted by dan at 09:12 AM
0% financing is back! Jennifer Saranow and Gina Chon report in the Wall Street Journal:
Eager to lure buyers into showrooms this fall, car makers are laying on a host of deal sweeteners on top of 0% financing.Many of the incentives from auto makers including DaimlerChrysler AG's Chrysler Group, Volkswagen AG and Toyota Motor Corp. involve better financing deals to offset higher interest rates. Along with 0% financing offers, other new perks include: low rates for up to six years, additional cash bonuses on top of low rates and extending the deals to people with subpar credit. . . .
Beginning tomorrow, the Chrysler Group will begin offering 0% financing for up to 72 months until Sept. 30. Customers can also choose various cash-rebate offers instead of the financing. Chrysler offered its Employee Pricing Plus program until today,which included 0% financing for just 36 months or cash rebates for certain models.
Among other domestic auto makers, on top of the incentives programs it was already offering, GM on Tuesday began offering $500 to $1,500 cash back on many 2006 and 2007 models. GM was already offering a variety of incentives, including 0% financing for 36 months and $1,000 bonus cash on pickup-truck sales in Texas, California and Florida. Those offers end Sept. 5.
Posted by dan at 09:10 AM
Steven Greenhouse reports on the latest sounding of how Americans feel about the allegedly great economy.
Three new opinion polls released yesterday found deep pessimism among American workers, with most saying that wages were not keeping pace with inflation and that workers were worse off in many ways than a generation ago.The Pew Research Center found in a survey of 2,003 adults completed last month that an overwhelming majority said workers had less job security and faced more on-the-job stress than 20 or 30 years ago.
The nonpartisan Pew center, said, “The public thinks that workers were better off a generation ago than they are now on every key dimension of worker life — be it wages, benefits, retirement plans, on-the-job stress, the loyalty they are shown by employers or the need to regularly upgrade work skills.”
In a poll of 803 registered voters commissioned by the A.F.L.-C.I.O., Peter D. Hart Research found that 55 percent said their incomes were not keeping up with inflation, 33 percent said their incomes were keeping even and 9 percent said their incomes were outpacing inflation. . . ."
But if they don't count what they're paying for food, energy, and housing, I'm sure they're all doing just fine.
Posted by dan at 09:06 AM
I think we've got a topic for Stanley Bing's next column in Fortune. The AP reports, via the New York Times:
NEW YORK (AP) -- No, Katie Couric didn't suddenly lose 20 pounds. The incoming ''CBS Evening News'' anchor appears significantly thinner in a network promotional magazine photo thanks to digital airbrushing.The touched-up photo of Couric dressed in a striped business suit appears on the inside of the September issue of Watch! which is distributed at CBS stations and on American Airlines flights. . .
Gil Schwartz, executive vice president of communications for CBS Corp., said Wednesday in a phone interview the photo alteration was done by someone in the CBS photo department who ''got a little zealous.''
But he dismissed any notion of heads rolling over the matter.
''I talked to my photo department, we had a discussion about it,'' Schwartz said. ''I think photo understands this is not something we'd do in the future.''
He said the photo department ''services tens of thousands of photographs every year'' for all parts of the company and that it ''does a fantastic job.''
''The article that accompanies the picture is very responsible, very interesting,'' he added.
Posted by dan at 08:56 AM
Given the recent troubles Coca-Cola has had in India over charges of excessive levels of chemicals in its drinks, the optics on this move don't look particularly good. Andrew Ward reports ($ required) in the Financial Times:
Clorox, the consumer products group, last night announced that Donald Knauss, president of Coca-Cola's North American business, was to become their new chief executive, removing him from the list of potential successors to Neville Isdell, chief executive of Coke.California-based Clorox, which competes against Unilever and Procter & Gamble, has been without a permanent chief executive since Jerry Johnston retired in May following a heart attack.
Posted by dan at 08:52 AM
From the Financial Times Observer column:
Startling research from a couple of Harvard economists, Ilyana Kuziemko and Eric Werker, in a forthcoming paper for the University of Chicago's Journal of Political Economy. The pair examined aid given to countries when they take up one of the 10 revolving seats on the 15-member United Nations Security Council.On average, the authors find, a non-permanent member of the council enjoys a 59 per cent increase in total aid from the US when it joins, receives continuing high levels of aid during its two-year term and suffers a drop back to prior levels "almost immediately upon completion".
Perish the thought that the US is hoping in some way to influence the votes of those countries. Surely it's simply a matter of getting to know their new buddies and feeling sympathy for their needs. And just as quickly forgetting them again.
Posted by dan at 08:47 AM
Boston Consulting Group has a new study out on the impact of high energy prices on consumer spending in different demographics. The upshot: the middle-class and well-off are less affected by the poor, but chunks of the higher-earning cohorts are saying that gas prices are affecting their consumer behavior.
So of those families earning between $75,000 and $99,000 per year, 27% said that high gas prices had forced them to alter vacation plans; 16 percent of the over $100,000 set said the same. Some 23 percent of famliies with income over $75,000 say they're trading down to less-expensive products. Nearly a third of the families making betweeen $75,000 and $99,000 say they're eating out less, while 44% of the families in that income level are holding back from making impulse purchases.
And finally this nugget on the anxious upper middle:
Despite all the cutting back and spending changes, particularly among middle- and lower-middle income Americans, the majority of Americans – at all income levels – are confident they’ll be able to maintain their lifestyles in the face of rising gas prices, according to the survey. But there exists uneasiness: 64% of Americans with household incomes under $35,000 often or sometimes worry about having enough money when they put their heads on the their pillows at night, as do 45% of Americans with household incomes between $35,000 and $74,000. 39% of Americans with household incomes between $75,000 and $99,000 worry in this way, as do 27% of Americans with household incomes over $100,000.
Posted by dan at 08:42 AM
Jesse Eisinger writes in the Wall Street Journal on problems in the subprime loan market.
Almost as if they are following a script, the mortgage companies that cater to those with poor credit -- so-called subprime customers -- see trouble first, and they're already warning about emerging credit troubles.Last week, H&R Block, the big tax preparer, alerted Wall Street that its Option One Mortgage unit, which focuses on the subprime market, would have to set aside about $60 million, or 19 cents a share, because borrowers were falling behind on their payments.
Customers of Countrywide Financial, which has products across the credit-quality spectrum, are paying loans off more slowly, as are those at subprime companies Impac Mortgage and Accredited Home Lenders. Mortgage companies, such as regional bank Fremont General, have begun putting money aside to account for loans going bad. . . .
If the problems spread beyond customers with poor credit, they'll infect the world of exotic mortgages for supposedly credit-worthy customers first. Along with the companies that offered mortgages to customers who didn't produce much documentation of their income and assets, the more vulnerable will be banks that sold huge numbers of option adjustable-rate mortgages. . . .
In an indication that there was reason to worry, Washington Mutual, one of the country's biggest mortgage lenders and a big option ARM player, slipped in a rather stunning confession in its annual filing with the Securities and Exchange Commission.
In the filing, WaMu confessed it had bungled the underwriting for option ARMs, improperly measuring some of its customer's debt-to-income ratios for 2004 and most of 2005. As short-term interest rates rose in those years, the company disclosed, the interest rate at which lenders qualified for loans "was not adjusted upward, which resulted in loans being made to borrowers who were qualified based on debt-to-income ratios calculated using an interest rate below" the prevailing interest rate.
In other words, the applicants looked more credit-worthy than they really were. Talk about violating Rule No. 1 in lending.
Of $43 billion of such loans, WaMu discloses, the unpaid balance for borrowers who were qualified at below the market rates totaled $30 billion.
Posted by dan at 11:03 AM
The Census Bureau reports that: overall median household income rose 1.1 percent in 2005; that median income of full-time male workers fell 1.8 percent in 2005; that median income of full-time female workers fell 1.3 percent in 2005; that neither the poverty rate nor the number of people in poverty budged in 2005; that the percentage of people without health insurance rose from 15.6 percent in 2004 to 15.9 percent in 2005; that median income for households where the age of the households is under 65 (i.e. people who work) fell .5 percent in 2005. In other words, it was another year in which people generally worked the same amount for less wages and less health care benefits.
The response from Republicans in Washington: Oh Happy Day! From Rick Lyman's piece in the New York Times:
The White House seized on the positive numbers, which had been in short supply in previous recent census reports.“Unemployment is low, wages are rising, and there are more jobs in America today than at any other time in history,” said Rob Portman, director of the Office of Management and Budget. “While we still have challenges ahead, our ability to bounce back is a testament to the strong work ethic of the American people, the resiliency of our economy and pro-growth economic policies, including tax relief.” . . .
“While many Democrats have jumped on the opportunity to point out some statistics today, we can’t forget that the economy remains strong,” said Carolyn Weyforth, spokeswoman for the Senate Republican leader, Bill Frist. “Yes, there are some disconcerting numbers that Senator Frist feels that Congress must continue to address, but by no means do these numbers mean that the economy is anything but strong and continuing to grow.”
Posted by dan at 10:21 AM
David Leonhardt has a good column in today's New York Times, in which he gives props to the highly useful Economic Cycle Research Institute, and nods to my upscale-consumer-slowdown thesis.
And this morning, more evidence. Costco, the warehouse store that caters to a generally upscale audience, warned on earnings. In August, same-store sales in the U.S. were up only 5 percent, significantly below the recent trend. And it's having to work harder to get those sales, as margins are shrinking.
Posted by dan at 10:12 AM
My latest in Slate, speculating, irresponsibly, on a possible sale of Time, Inc.
Posted by dan at 10:07 AM
And you thought the produce at Whole Foods is expensive. A correspondent for the Economist includes the following in a dispatch ($ required) from the Japanese town of Yubari.
"Yubari melons, promoted assiduously by its mayor, have gained fame in Japan chiefly for their price--a pair sold this year for 800,000 yen ($7,200)."
Posted by dan at 05:20 PM
Your humble scribe is a finalist in the best commentary category for the Online Journalism Awards. It's an honor just to be nominated.
Posted by dan at 01:26 PM
Remember all that junk you'e been reading, mostly on the Wall Street Journal editorial page, about how onerous regulations are inhibiting foreign companies from listing their stocks in the U.S. Lynn Cowan debunks the myth somewhat in the Wall Street Journal's news pages.
In the two years since stricter financial-control rules took effect in the U.S., an unexpected trend has occurred: The amount of money raised by foreign companies on American exchanges has grown.So far in 2006, non-U.S. companies have sold $5.8 billion in stock through U.S.-listed IPOs, the highest year-to-date volume since the tech-stock boom in 2000 saw $27.2 billion of IPO listings emerge from overseas, according to data from Dealogic.
Though the number of companies tapping American exchanges for their new listings isn't up -- Dealogic shows there have been 17 this year, compared with 20 in 2005 -- the amount of money raised has nearly doubled in that time. Bigger deals, including Canadian doughnut chain Tim Hortons Inc.'s $772.5 million offering in March and German semiconductor firm Qimonda AG's $546 million debut earlier this month, helped create the higher volume.
It is no accident that the uptick coincides with a resurgence in the public stock markets after a slump from 2001 through 2003. But the increase also comes despite continued complaints about the costs associated with the internal control regulations of the Sarbanes-Oxley Act, which were phased in starting in 2004. (While those rules aren't yet in effect for foreign issuers, most are preparing for their implementation).
"When we talk to CEOs, they say 'yes, these rules are frustrating and our costs have gone up, but there are some benefits, too,' " namely higher investor confidence and greater liquidity and valuations, says Charlotte Crosswell, head of Nasdaq International. "So I think there is a more balanced view out there than is perceived in the press."
Posted by dan at 10:48 AM
Detroit wakes up and smells the expensive gas. Micheline Maynard reports in the New York Times:
The Chrysler Group, which depends more heavily on sales of pickup trucks and sport utility vehicles than any other Detroit automaker, said Monday that it expected gasoline prices to remain at $3 to $4 a gallon for the rest of this decade.
Posted by dan at 10:43 AM
Steven D. Jones reports in the Wall Street Journal on the latest developments, and crunches some numbers.
President Bush recently signed into law a comprehensive bill aimed at rehabilitating the traditional pension plans still operated by many American companies. The irony is that many companies whose pensions are in fine form probably will limit benefits anyway.The Pension Reform Bill compels many companies to fully fund their defined-benefit plans over a period of years and pay a small additional premium to shore up the U.S.'s pension-insurance fund, which essentially is the pension insurer of last resort. But the bill also may add to incentives to freeze benefits. . . .
Verizon Communications Inc., Motorola Inc., Hewlett-Packard Co., International Business Machines Corp. and others have announced freezes of defined-benefit pension plans. Delta Air Lines and Northwest Airlines intend to impose freezes as part of reorganizations under the U.S. bankruptcy code.
Yesterday DuPont Co. said starting next year it will cut its contribution to its pension plan by two-thirds while raising its contribution to an employee savings and investment plan. . . .
For companies, there are clear economic benefits to freezing a pension plan. Jack VanDerhei, a professor at Temple University and a research director at the Employee Benefit Research Institute, has analyzed pension freezes and estimates a hard freeze can cut the annual retirement payout to a worker by more than half.
Payments to most pensioners in a defined-benefit plan are calculated using what is referred to as final-average defined-benefit formula. The company multiplies the number of years worked by the average of the worker's three highest years of pay times 1%.
Take an employee who retires at age 65 after 35 years on the job, who earned an average $103,000 a year during his final three years of employment. His benefit would be about $36,000 a year, or $103,000 times 35 years times 0.01. If that retiree lives to age 85, the total benefit paid would be $720,000.
Yet consider what would happen if the company had frozen the pension plan when the worker was age 50 and had put in 20 years on the job
Suppose the employee's average salary for the three years before the freeze was $70,000. Upon retirement at age 65 the benefit would be just $14,000 a year ($70,000 times 20 times 0.01.), or $22,000 a year less. At 85, the total benefit paid out would be $280,000, or $440,000 less than the total benefit had the pension not been frozen.
Posted by dan at 10:27 AM
Motoko Rich reports in the New York Times on the efforts by Hyperion to start an imprint aimed at women in their mid-30s and up.
Called Voice, the imprint, which will publish its first title in April, is the brainchild of Ellen Archer, Hyperion’s publisher, and Pamela G. Dorman, a 19-year veteran of Viking. It will be just one of a number of new imprints aimed at female readers: Warner Books already has a women’s imprint called 5 Spot and in the fall is starting the Springboard Press, for baby boomers, with a large portion of its titles catering to female readers.Voice is specifically focusing on women from their mid-30’s and older and will have a resolutely anti-chick-lit bent, said its founders. . . .
To help Voice pinpoint what women want, Ms. Archer and Ms. Dorman have recruited a panel of 10 professional women to meet twice a year. Members include Subha Barry, a vice president in charge of global diversity for Merrill Lynch; Ellen Levine, editorial director of Hearst Magazines; and Candace Bushnell, a novelist. (Ms. Archer said Ms. Bushnell has evolved from writing chick lit.) Voice also plans to ask each of these women for the names of about 50 friends and colleagues to send copies of the books to help create buzz.
Andrea Wong, an executive vice president in charge of alternative programming at ABC Entertainment and a member of the advisory panel, said that she liked the idea of an imprint that could help her winnow her choices.
Hmm. So to find out what the broad reading public wants, Hyperion is assembling an advisory board that seems to consist almost entirely of women who work in the media in New York. That kind of insularity explains a good deal about some of the woes gripping publishing. And it explains, for example, why an editor at a publishing firm thought there would be broad interest in a memoir by Ed Kosner, who had a thoroughly respectable and fine career as a magazine editor.
Posted by dan at 10:16 AM
Back in February, I had some sport with OfficePirates, Time Warner's attempt to create a blog with the sensibility of Maxim. Well that didn't last long. OfficePirates has been canned.
Posted by dan at 10:09 AM
President Bush discusses his theory of economic growth and recovery on the Gulf Coast. Anne Kornblut reports in the New York Times.
“There will be a momentum, momentum will be gathered,” the president said. “Houses will begat jobs, jobs will begat houses.”
Posted by dan at 10:06 AM
The Bank of England's chief economist thinks U.S. economists miss the point by focusing on core inflation. I agree. Krishna Guha reports in the Financial Times.
The US Federal Reserve is wrong to focus on core measures of inflation that exclude energy prices, Charles Bean, chief economist at the Bank of England, has suggested.It should focus instead on headline inflation, which is much higher, he argued. Including energy and food costs, US consumer price inflation is running at an annual rate of 4.1 per cent, against 2.7 per cent for core inflation.
Mr Bean told the Fed's annual Jackson Hole symposium at the weekend that energy prices were rising for the same reason the price of many manufactured goods were falling: the rise of China and other emerging market economies. Since both price trends had a common cause, he said it makes little sense to focus "on measures of core inflation that strip out energy prices while not stripping out falling goods prices as well."
Mr Bean did not mention the Fed by name but his implication was clear. Fed officials, including chairman Ben Bernanke, typically talk about measures of core inflation excluding volatile food and energy prices, which they say better predict future headline inflation.
Central bankers in Europe take a sharply different approach. Both the Bank of England and the European Central Bank put greater emphasis on talk of headline inflation, which includes the immediate "first round" effect of rising energy prices.
Must be a different Mr. Bean .
Posted by dan at 04:31 PM
Edmund Andrews reports in the New York Times that the economists assembled in Jackson Hole are waking up and smelling the coffee about global inflation.
In recent years, global integration has made things easier for the Fed in two ways. An explosion in low-cost exports from China and other countries helped keep prices of many products low even as Americans spent heavily and loaded up on debt.At the same time, China and other relatively poor nations reversed the normal patterns of global investment by becoming net lenders to the United States and Europe. Analysts estimate that this “uphill’’ flow of money from poor nations to rich ones may have reduced long-term interest rates in the United States by 1.5 percentage points in recent years — a big difference when home mortgage rates are about 6 percent.
But as Fed officials held their annual retreat this weekend here in the Grand Tetons, a growing number of economists warned that those benign international trends could abate or even reverse.
For one thing, they said, China’s explosive rise as a low-cost manufacturer does not mean that prices will fall year after year. Indeed, China’s voracious appetite for oil and raw materials has aggravated inflation by driving up global prices for oil and many commodities.
Beyond that, new research presented this weekend suggested that the United States could not count on a continuation of cheap money from poor countries. Those flows could stop as soon as countries find ways to spend their excess savings at home.
“Medium- and long-term interest rates are set outside of the country,’’ said Kenneth S. Rogoff, a professor of economics at Harvard University and a former director of research at the International Monetary Fund. “It’s very important to think about what to do if the winds of globalization change.’’
The warnings come as the Fed’s new chairman, Ben S. Bernanke, faces widespread skepticism among economists about his forecast for a “soft landing” — a mild slowdown that will tame inflation without costing many jobs.
Inflation is already running above Mr. Bernanke’s unofficial target — 2 percent a year, excluding energy and food prices — and few analysts here say they believe the Fed will raise rates and slow growth enough to bring inflation down to its target anytime soon.
“They are in a box, and they know it,” said John H. Makin, an economist at the American Enterprise Institute and a hedge fund manger. “It’s an awkward position for them to be in.”
Posted by dan at 04:28 PM
Great article by Katharine Seelye in the Sunday New York Times on the break-up of Knight-Ridder. The upshot: investor Bruce Sherman got caught in a bad bet on a bunch of newspaper companies and sought the easy way out--he bullied one of his big holdings into putting itself up for sale. Meanwhile, CEO Tony Ridder was oddly passive. If he had any gumption and any belief in his skills as a manager, he could have tried to round up some capital and take the company private.
Posted by dan at 04:25 PM
Excellent article in the weekend Wall Street Journal by Miriam Jordan on the poverty among wealth in Monterey County, California. Well worth reading the whole thing. A brief excerpt:
Yet amid this land of plenty, there is squalor. Virtually beside the fields, in the city of Salinas, neighborhoods rival high-rise-jammed cities in population density. Multiple families occupy small houses; others live in converted garages. Gang graffiti mars the façades of apartment complexes. A school's walls are riddled with bullet holes. Fueling Salinas's troubles, many say, is a housing market that offers few affordable dwellings for the thousands of Hispanic immigrants who pick the area's crops.The five-member family of Gabriela Alvarado, for example, has shared a tiny two-bedroom rented house with two fieldworkers. "It's the only way we can afford to live here," says Mrs. Alvarado, whose husband came to Salinas 18 years ago to work in the lettuce fields. The Alvarados charged two fieldworkers $150 a month each to board with them. . . .
Monterey County is torn by competing priorities. On one side are farmers, developers and immigrant advocates, who want to see more housing built. On the other are environmentalists and residents, including those in the upscale coastal towns, who want to preserve open space and their quality of life. As the two camps fail to reach a middle ground, low-income immigrants have borne most of the fallout: limited housing, with sky-high prices.
The stalemate has helped create housing prices in Salinas, a city of 150,000, that are out of sight, even by California standards. Last year, Salinas was the least-affordable place in the country to live, based on the percentage of median income required to make the mortgage on a median-priced house, according to Moody's Economy.com. The median resale price of a single-family home in Salinas was $620,000 in June 2006, compared with $175,750 the same month in 1996, according to DataQuick Information Systems. City manager Dave Mora says that Salinas's 19 square miles are "99% built out."
Monterey County's unusual combination of prime agricultural land and stunning coastal property, of great wealth abutting great poverty, make it an extreme example of how land-use questions can turn political. The clash here provides a glimpse of what may be faced by other areas and industries that increasingly rely on low-wage immigrant laborers, without enough places to house them.
The fight is also emblematic of "slow-growth" movements across the country. From California to Vermont, residents are rebelling against plans they worry will trigger sprawl, rejecting the notion that what's good for the economy is good for them. Many want to maintain the small-town character of their communities, or preserve historic sites or the environment.
Posted by dan at 04:23 PM
Does this sound like the right time to be entering the subprime market? Ford thinks so. Bernard Simon reports in the Financial Times:
Ford will target consumers with an impaired credit history in a renewed drive to bring down swollen inventories of 2006 cars and trucks.Ford said yesterday that "sub-prime" borrowers would be eligible for a new promotion offering interest-free financing for up to six years. "Our programme is going to be quite a bit more accessible," Ford said, describing the scheme as "something customers will see as great value, and dealers will be able to rally around".
Ford justified extending financing to buyers previously not considered creditworthy on the grounds that it was making its vehicles more affordable.
"It's not that [the buyers] are not creditworthy, it's that they don't have quite as high a credit score," it said. Bad debts will be treated as a marketing cost.
Posted by dan at 04:20 PM
Another Indian company invests in a U.S. consumer products company. India's Tata Group pays $677 million for a 30 percent stake in Energy Brands.
Posted by dan at 04:18 PM
A nugget in Sarah Lueck's article about Republicans and immigration in last Thursday's Wall Street Journal:
Christmas-tree grower Arlene Frelk, of Merrillan, Wis., says she was unsuccessful recently when trying to meet in Washington with Rep. James Sensenbrenner (R., Wis.) to discuss immigration. Ms. Frelk, a Republican, did meet with a Sensenbrenner aide; she came to Washington as part of a "fly-in" organized by the American Agri-Women and wanted to tell the lawmaker that the House-passed immigration bill he sponsored would harm her business.On the way home, she says she and her daughter saw the Judiciary Committee chairman at the airport baggage claim. When they approached him, Ms. Frelk says, Mr. Sensenbrenner told her that "this is his free time and he didn't want to be bothered" and walked away.
Posted by dan at 04:16 PM