Tag Archives: Wal-Mart

CVS / Pharmacy Stores Win First Prize In The Shrinking Toilet Paper Contest !

Quite honestly, it shouldn’t surprise anyone.

The CVS / Pharmacy chain of drug / variety stores (a division of CVS Caremark Corporation) was never on our list of places that provide “fair dinkum” value to consumers. That’s too bad, because they have about 6,200 stores in the United States. That makes them almost as ubiquitous as McDonald’s. Many towns have more than one CVS location.

We’re digressing, but come to think about it, McDonald’s doesn’t exactly offer great value for your money either. That’s one of the reasons we don’t eat at McDonald’s. Of course, most of the stuff they sell is so unhealthy that they’re probably doing you a favor by selling (in our opinion) barely edible food. I think we’ve set foot in a McDonald’s one time in the last five years. There must be a correlation between a chain of stores getting very large and offering poor value to consumers. And don’t get us wrong… Burger King, Wendy’s and the others aren’t any better values or (again, in our opinion) any healthier or more palatable.

The high prices at CVS are in line with the prices in convenience stores such as 7-Eleven, albeit with a much larger selection of merchandise. We only rarely walk into a CVS store, to pick up something on sale, and only if we happen to be passing by anyway. But frankly, we’re not careless enough with money to shop there otherwise. If you have a Target, Wal-Mart, K-Mart or other discount store nearby, you’d have to be insane to do much shopping at CVS. Nobody we know ever confused CVS with a discount chain. To make matters even worse, they are often out of stock on the sale items we try to find there. Like many other retailers, they go through the trouble of printing and distributing a weekly sale circular, but don’t seem to be able to have much of what they are advertising in stock. Keep your stinkin’ rainchecks. To us, they seem like a poorly managed company that takes their customers to be a bunch of idiots. We’re amazed they’ve grown as large as they are and manage to stay in business. Then again, there are many horrible retailers (here’s a prime example) that seem to defy the laws of physics by being able to stay in business. Go figure.

We will often find the HIGHEST prices for many different items at CVS. Toilet paper, a favorite topic of this blogger, is no exception. On my last visit to a CVS, they were up to $1.15 for a single role of Scott Tissue’s 1000-sheet roll, which is by far, the highest retail price we’ve seen for Scott toilet paper.

CVS’s store brand of 1000 sheet, single ply toilet paper is now the smallest roll we’ve ever seen in any brand of toilet paper. It boasts a sheet size of 4.3″ x 3.66″. That makes the miniature rolls of Scott Tissue’s 4.5″ x 3.7″ sheets seem huge by comparison.

The reduction in width from 4.5″ to 4.3″ means you’re getting about 5% less paper per roll. But then they added insult to injury, by chiseling 0.04″ off the length of each sheet, compared to what most brands currently measure (after a number of product downsizings).

Really now. 3.66″ instead of 3.7″ ?

How desperate are they getting ?

Now what about the price of CVS brand toilet paper ? Did CVS shrink the price too ?

No such luck. I believe it was selling for 89 cents a roll, which by concidence, is probably the highest price I’ve ever seen for a store-brand roll of toilet paper. But then again, it’s CVS, and I’ve never heard anyone say that the “V” in CVS stands for “value”.

– Routing By Rumor

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Filed under Business, Consumerism, Deception Engineering, Home, Kimberly-Clark, Life, Money, Retail, Retailers, Routing by Rumor, Scams, Scott Tissue, Shopping, Shrinking Products, The Economy, Your Money

Wal-Mart Photo Processing At The Impossible Price Of 9 Cents A Print ? Don’t Bet On It.

screenshot from walmart.com

Order 4″ x 6″ prints of your digital photos at walmart.com for only 9 cents each.

Impossible you say?

You’d be right. In fact, it appears that nobody ever paid 9 cents for a photo printed at Wal-Mart, regardless of how long they were willing to wait for it, or whether they picked it up or had it delivered.

Now, is it just us (we’ll admit to not always being the sharpest tool in the shed), or is this deceptive and illegal advertising ? Is this what you expect from Wal-Mart ? You be the judge.

Walmart’s online photo processing is actually provided by Hewlett-Packard’s Snapfish service, rebranded with the Wal-Mart name. If you choose the 1-hour processing option, Snapfish transmits your photos to the Wal-Mart store you select, where they are printed by Wal-Mart’s in-store minilab using FujiFilm equipment and FujiFilm photo paper. If you choose one of the two less expensive options, your photos are processed by Snapfish. They were reportedly processing these photos using Noritsu equipment and Kodak photo paper, but it appears that they may now be using FujiFilm equipment and paper for these orders also. Depending on the option chosen, Snapfish ships them to your local Wal-Mart store for pick-up within a few days, or mails them to your home.

Snapfish rebrands their website and processing service for many different retailers, not just Wal-Mart. Uploading your photos to the Wal-Mart/Snapfish website, and having them delivered to your local Wal-Mart, or to your mailbox, is certainly convenient. And we’re sure that regardless of whether Snapfish or Wal-Mart prints them, you’ll get good quality photos.

It’s interesting to note that whether your prints are processed on a Noritsu or FujiFilm minilab, the hardware was probably made by Noritsu, since they also supply hardware to FujiFilm. That’s what you call market penetration. In the automobile industry, that would be like Toyota supplying the engine and chassis to Honda for them to produce their cars with.

We can understand the “snap” in Snapfish, but why that name? Why not snapturtle.com, or snapdog.com, or snapcat.com, or snapcow.com, or snappy.com, or snapit.com, etc., etc., etc. There is a type of fish called the Red Snapper, but is there also a fish called the Snapfish? And even if there is, why choose that name? Just curious. After all, there’s a ton of strange names that have become popular Web destinations… ebay, google, yahoo, etc. We guess Snapfish is OK. Strange, but OK. Actually, in the Web universe, the rule seems to be the more ridiculous (and the shorter) the name is, the better the chance of success.

As shown above, Wal-Mart advertises 4″ x 6″ prints as low as 9 cents each. The problem is that there is no way to actually get them for 9 cents. The most expensive 1-hour option, with processing and pickup at a Wal-Mart store is 19 cents a print. The process-by-snapfish and pick-up at Wal-Mart option is 15 cents a print. The least expensive option, processed by snapfish and mailed to your home, is 9 cents a print, plus shipping. Shipping charges range from 14 cents a print (total cost of 23 cents a print) when ordering 10 prints, to 5 cents a print (total cost of 14 cents a print) when ordering 100 prints. We checked the cost for orders up to 600 prints, and it never dropped below a total cost of 13 cents a print, including shipping.

There appears to be no way to actually get 4 x 6 prints, in any quantity, for the advertised price of “from 9 cents” each. That holds true even if you are willing to pick them up at a Wal-Mart store, and even if you are willing to wait a week, or forever, for that matter.

Now, it’s perfectly acceptable for them to be charging for shipping. After all, they do have to pay for postage. But is it fair (or legal) to advertise the 9 cent per print price, when you can’t actually get them for that amount, even if you are willing to wait a week, and pick them up at your local Wal-Mart? We don’t think so.

…And don’t forget to add the sales tax, which is added to your total, regardless of the pickup or delivery option you choose.

Maybe we could swallow their pricing claims if they charged 9 cents a print when you choose in-store pickup (in days, not in 1-hour). The fact of the matter is that for either of their least expensive processing options, you’ll pay a total of 15 cents a print, plus tax (based on an order of 50 prints… even more per print for small orders).

We think a retailer such as Wal-Mart, who is the largest retailer in the world (as well as the largest private-sector employer in the United States), should be more forthright in their advertising.

Get the picture?

The true cost of printing your photos at walmart.com should be coming into focus now.

– RoutingByRumor

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Filed under Business, Consumerism, Deception Engineering, Digital Photography, Hewlett-Packard, Money, Retail, Retailers, Routing by Rumor, Scams, Shopping, Walmart, Your Money

Oh Great… Just When I Feel Like Having Arroz Con Pollo, They Announce Rice Rationing !

J. Howard Miller's World War II poster

J. Howard Miller’s (see obituary) World War II era poster

Global warming, mad cow disease, Iraq, disappearing honey bees, $4.00/gallon gasoline, the real estate slump, food riots around the world, a recession here in the U.S. (despite what Washington may be telling you), and now rice rationing ?

Check your calendar. Is it 2008, or 1942 ?

I’ve lost my appetite. Forget the rice. I’m going to buy some Soylent Green. Speaking of Soylent Green, maybe we can have Charlton Heston investigate this rice shortage. Oops, too late.

…And you do need a balanced diet, so get some Soylent Red and Soylent Yellow, too.

You have to wonder why Costco and Wal-Mart (Sam’s Club) would choose to ration rice purchases, rather than let market forces control demand and price. Rationing tends to induce panic buying. This is a bad omen, coming at a time when corn is in short supply because of the demand created by ethanol production.

What’s next ? Sending military advisors to Vietnam, to help the rice paddy farmers ? We’ll call it a “police action”. Maybe they can dust off “Rosie The Riveter” and have her star in a new campaign to eat potatoes, and the government can start issuing rice coupons.

I can see it now… McDonald’s running TV commercials advertising their “Freedom Fries”. Bags of “Patriot Chips” on store shelves. People throwing popcorn at weddings. Boycotts of Chinese restaurants that serve rice. Food manufacturers promoting rice-free products. The price of potatoes quadrupling overnight. Runaway wheat prices. Supermarkets using armored cars to deliver rice to their stores. “Rice lines” at the supermarkets, and “rice riots” in the streets. Soccer moms fighting in the cereal aisle over the last box of Rice Chex. Rice-free Fridays. “Black market” rice. Even/Odd day rice rationing. Flour rationing. Bootlegged rice. $5.00 or $10.00 loaves of bread (which isn’t such a huge jump, since many premium breads now sell for close to $4.00 a loaf). And don’t forget the inevitable Congressional hearings into the rice shortage, with farmers and wholesalers invoking the fifth amendment. Northerners might even discover what Southerners already enjoy, grits. The USO starts an anti-rice campaign, encouraging Americans to send potatoes to servicemen instead, with the catchy phrase… “Send a sack to our boys in Iraq” (inspired by “Send a salami to your boy in the Army” (youtube) …featuring Jerry Lewis at Katz’s Delicatessen, NYC, from “At War With The Army“.) Also see this blogger’s raving about Katz’s Delicatessen, a New York City landmark. (While we’re on the subject of movies and Katz’s Delicatessen, here’s the classic scene from “When Harry Met Sally”, starring Meg Ryan and Billy Crystal. It was also filmed in Katz’s Delicatessen.)

You’re walking down the street, and some guy steps out of a dark alleyway. Pssst… hey bud, youz wants to buy a bag of Basmati, real cheap?

$4.00/gallon gasoline will pale in comparison.

– RoutingByRumor

photo courtesy of Kobako / Wikimedia

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Oil Closes Above $100.00/Barrel, Toilet Paper Closes Above $1.00/Roll, Wal-Mart’s Quarterly Sales Surpass $100 Billion and Postage Rates Are Going Up Again !

All of these increases are related, and they all spell serious trouble for the U.S. economy.

Energy costs are driving up the price of all consumer goods and services. Raw materials, production and transportation costs are all being pushed higher because of the price of oil.

U.S. crude for March delivery jumped $4.51, closing yesterday at $100.01 a barrel on the New York Mercantile Exchange. The previous record close was $99.62 on January 2, 2008. It has never closed above the century mark until now.

In a recent shopping trip, we found single rolls of Scott toilet tissue selling at a national drugstore chain for $1.15 a roll. I’ve never seen single rolls of toilet paper priced at or above $1.00 a roll. The cost of paper products seems to have increased 25-30% within the space of a few weeks.

And with Americans hard pressed to stretch every dollar, Wal-Mart continues to post record sales figures despite the widespread belief that retailers such as Wal-Mart are major contributors to the nation’s economic problems. The United Food and Commercial Workers (UFCW) union says Wal-Mart employs more than one million U.S. workers, earning an average of $8.00/hour.

If you need a better feel for what $100 billion actually means, it’s the same as saying “one hundred thousand million dollars”. It’s $100,000,000,000.00 …and that’s just for the fourth quarter of 2007. That works out to more than $1 billion a day, or put another way, more than a thousand million dollars every day. That translates to $400 billion a year if they continue those figures for four quarters. At this rate, Wal-mart, the world’s largest retailer and the largest private employer in the U.S. (see this UFCW fact sheet), will have a trillion dollars in annual sales before long.

The prices mentioned above are significant milestones, even if the specific numbers are not economically significant. It’s similar to when U.S. gasoline prices went above $1.00/gallon for the first time, back in the Summer of 1979. We feel that they portend even higher prices in the near future. Expect sharp increases to continue in the cost of living and inflation. Expect the size of those rolls of toilet paper to continue shrinking, while the price continues heading North. If you have any letters to mail, better do it soon. On second thought, use e-mail.

Trips to the supermarket are getting more painful every week. All of the basic grocery items, bread, milk, eggs, cereal, etc. are rising sharply. For instance, we’ve seen the price of a dozen eggs almost double in the last few months. Too bad gasoline doesn’t taste better, because milk is now almost double the price of gasoline, per gallon. It makes you wonder if the cows are the ones who are getting milked. We’ve seen some bakeries raising prices so often that they don’t even wait until their old packaging is used up before they raise the price. They are covering the printed prices on their plastic bags with stickers showing the new price. I’ve seen that some boxes of cereal have shrunk to less than 9 ounces. For instance, I spotted a 8.9 ounce box of General Mills Cheerios.

Who decides on these strange product sizes? Did a committee of pricing experts say that 9 ounces was way too big, but 8.75 ounces looked too small ? It’s voodoo marketing. It’s deception engineering. What’s next? The 8.1275 ounce box of Kellogg’s Frosted Flakes?

We can’t remember any time in the past 30 years that the cost of living has risen so sharply and for so long a period of time.

Just nine months ago, the Postal Service raised the first class postage rate (up to one ounce) by two cents, to 41 cents. They have just announced another increase to take effect this Spring. No wonder they introduced their “Forever” stamp. They saw these frequent rate increases coming, and probably wanted to limit the public outcry. Unless you have lots of money to tie up in “Forever” stamps, the idea of locking in your postage rate is pretty meaningless. You’d be much better off investing your money anyway. What we need is the “Forever” gallon of gasoline and the “Forever” quart of milk. Shoppers going to the supermarket are behaving more and more like stock market speculators every day. Should I buy that loaf of bread today? I really don’t need bread yet, but it might be 30 cents more tomorrow. Better fill up the car today, because the radio just said the price of a barrel of oil hit a record high yesterday, and that means the price at the pump will be going up in the next couple of days.

With these almost daily price increases and product downsizings, what we need is a new way of tracking the true cost of living. Forget about the U.S. government’s inflation index. Forget about the “market basket” price surveys. Forget about The Lundberg survey of gasoline prices. What this country needs is “The RoutingByRumor National Toilet Paper Price Survey”, adjusted of course, for the shrinking size of toilet paper rolls. Laugh all you want. We think it will be a very accurate gauge of inflation.

– RoutingByRumor

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Filed under Business, Consumerism, Deception Engineering, Energy, Energy costs, Kimberly-Clark, Money, News, Politics, Retail, Routing by Rumor, Scott Tissue, Shopping, Shrinking Products, Stock Markets, The Economy, Your Money

Bad Day At Black Rock – The Axe Falls At CBS Flagship Radio Station WCBS 880 AM In New York City

…And we’re not referring to the 1955 John Sturges movie by the same name, starring Spencer Tracy.

We’ve written here recently that it seems to us that the vast majority of the advertising on radio stations lately is for products best described as snake oil, and services of questionable efficacy, almost always targeted at individuals in some sort of trouble. Advertising for legitimate, mainstream products and services seems to have all but disappeared. In our mind, this is direct evidence of the faltering economy in the United States, as well as a result of the impact the Internet has had on manufacturer’s and retailer’s advertising habits. We doubt that a radio station enjoys the same type of advertising revenue from a commercial for some brand of snake oil, as it would for an ad from an automobile manufacturer, airline, bank or any other “real” advertiser. And when you hear the same snake oil spot being broadcast every few minutes, day-in and day-out, we think it’s a good bet that they are buying the airtime dirt-cheap. Tough economic times always breed a bumper crop of hucksters, snake oil salesmen and get-rich-quick schemes. We guess P.T. Barnum was right.

It came as no surprise then, when we learned that there was a round of layoffs this week at CBS radio stations, including at WCBS-AM (880 kHz) in New York City. There are reports that nearly 200 CBS radio employees lost their jobs this week. According to this posting, it’s Crystal clear that the bloodletting included WCBS jettisoning their Program Director, Crys Quimby. You can still (at least at this writing) read about Crys on her page at WCBS880.com. She had been with CBS for more than 20 years! You know things are bad when people with that much service are shown the door. We guess that means there will be no gold watch.

The day after I blogged this story, this article appeared in the Newark Star-Ledger. A statement released by CBS Radio included the following explanation…

“With these actions, we continue to build on our strategy of deploying our assets to best grow our ratings and monetize the results”

Now, if that isn’t a piece of tortured doublespeak, penned by some corporate spinmaster, we don’t know what is. In fact, we’re not even sure it’s written in English. We parsed it using our Captain Midnight secret decoder ring. It translated into “The Internet has killed our audience. Between that and the failing economy, our advertising revenue has dried up like a lake bed in a drought. We’re running out of money”.

What’s next? Hooking WCBS 880’s traffic reporter Tom Kaminski up to a bunch of helium balloons instead of having him report from “Chopper 880”? Maybe they’ll have chopper pilot Christopher LaCasse manning the helium tank. We would love to have Tom take a few hits of helium just before he goes on the air. His traffic reports would sound like this (please don’t try this, since it could be dangerous, and there’s always the chance you could sound like one of the Munchkins permanently). The Wizard Of Oz has always been our favorite movie. As a child, we would cry every time we watched it, afraid that Dorothy and Toto wouldn’t get back to Kansas. By the way, here’s why helium does funny things to your voice.

…But we digress.

About the only advice we can offer to the employees at WCBS-AM and other CBS stations who are now unemployed, is to not bother applying for jobs at Macy’s. But WCBS could enter Tom Kaminski as the newest float in the Macy’s Thanksgiving Day Parade. Macy’s, one of America’s oldest and best known retailers, just announced they are cutting 2,300 jobs (read about it here). No big surprise here either, since retailers are really hurting in this economy. But hey, Wal-Mart is still hiring. As we have previously written, don’t expect the $600 income tax rebate checks Americans will be getting thanks to the U.S. Economic Stimulus Plan to be much help. In fact, we wouldn’t be surprised if Macy’s ends their more than 80 year sponsorship of the annual Thanksgiving day parade in New York City. In that case, you could say that the axe fell on the turkey, too. The Macy’s Fourth of July Fireworks show, which has dazzled New York City for over 30 years might also fizzle.

Of course, it’s not just CBS Radio or radio and TV broadcasters in general who are feeling the pinch. Newspapers are folding (pun intended) under the weight of a failing economy, coupled with the exodus of advertising dollars to the Internet, cellphones, and other electronic venues. Take The New York Times, one of America’s most venerable and respected newspapers, for example. The print edition of The New York Times is a shadow of it’s former self. Over the last year or so, entire sections of the Sunday New York Times have disappeared, while the newsstand price has climbed to $4.00. That alone, I am sure has contributed to much of the decrease in circulation that they have seen. For a long time, they didn’t even bother to renumber the remaining sections. For instance, when they killed section 10 (Help Wanted) and section 13 (Television), they simply sold the Sunday newspaper with those section numbers missing for about a year. I would imagine that prompted a lot of complaints from readers that their copy was missing some sections. Then recently, they decided to drop the section numbers altogether, simply using the remaining sections’ names only (Sports, Real Estate, etc.). I took this as an omnious sign that they expect to discontinue even more sections of their Sunday edition. We were particularly upset when the Technology section (formerly the Computers section) that appeared one (weekday) per week, shrunk and shrunk until all that remains today is one or two pages a week inside the Times’ Business section. Even the physical size of their pages has been reduced. We guess that means the Times is shrinking literally AND figuratively.

We’re not the only ones thinking that The New York Times is in big trouble. Internet pioneer Marc Andreessen, the co-founder of Netscape, has begun his “New York Times deathwatch” (see this CNN article).

So I guess we will be getting most of our news off of the Internet from now on. Too bad, because we were starting to find all those radio commercials for snake oil to be quite entertaining.

– RoutingByRumor

P.S. – Ever wonder why WCBS-AM, which used to go by the moniker “Newsradio 88” adopted the “880” identity? They’re still at the same spot on the AM dial, 880 kHz (or 0.880 mHz). When radios, especially car radios, had analog tuning dials, it was the norm to drop the last digit of frequencies below 1 megahertz. Hence, 530 kHz was shown as “53” or “53“, and 880 kHz was shown as “88” or “88” (to avoid clutter, only a few frequencies would usually be shown on the tuning dial. You would have to guesstimate the position of the other stations). Some listeners would scratch a mark into the face of the radio to mark the position of their favorite stations. We would put little dots of “white-out” on the face of the dial. With the move to digital displays on modern radios, 880 kHz is usually shown as “880”. WCBS, as well as other AM stations, simply wanted to keep things in sync, and have what you see displayed match their announced frequency.

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Filed under Business, CBS Radio, Employment, Jobs, Journalism, Labor, News, Retailers, Routing by Rumor, Shrinking Products, Technology, The Economy, WCBS-AM

What’s Next, Mr. Bernanke… Free Money?

The Federal Reserve surprised a lot of people today, including us, here at RoutingByRumor.

They announced another cut to the target federal funds rate, this time it was 50 basis points, or 1/2% (read the Fed’s announcement, here). That is on top of the 75 basis point or 3/4% emergency cut announced eight days ago. This brings the overnight bank rate down 125 basis points in the past week, to 3.00%. The only member of the Federal Reserve’s Open Market Committee to vote against the latest rate cut was Richard W. Fisher. There’s a black sheep in every herd.

The Fed must be very, very concerned about the economy. But they can’t repeat these tricks forever. Eventually, they will run out of string, and “eventually” is sooner than you may think. Just think about it… Another two cuts like those in the past week, and money will almost be free.

Have you ever come across a vending machine that was set up to dispense product without having to insert any money? You can find these machines in some company cafeterias. I can still remember the time that I accompanied my father on a trip to a company he did business with. I must have been seven or eight years old at the time. That company had such a soda machine. Like any young child, I would push the buttons on every machine I’d come across, trying to get free gumballs, candy, soda or whatever. And don’t forget to check the coin return for some free money. Of course, I had to press every button on this soda machine, too. Every time I’d hit a button, another can of soda would be dispensed. I thought I hit the jackpot. The man who had to put all those soda cans back into the machine was not as amused as I was.

Now, if the Fed keeps lowering the funds rate, we figure that pretty soon, the banks might set up their ATMs to dispense free cash. It would make the kid in me very happy. I could just stand there all day, pressing buttons.

What’s next, banks giving away free toasters, blenders and TV sets? I remember those days too. Actually, I could use a new television, since in February 2009, when broadcasters stop transmitting analog signals, my current televisions will no longer work (at least not without a digital-to-analog converter box). Gee, Mr. Bernanke, maybe this was a great idea after all.

Then again, maybe not.

In fact, maybe black isn’t such a bad color after all. I like black better than red. Black goes with everything.

Maybe following the herd just leads you to the butcher sometimes.

So, they’re making money cheap, which should encourage people to start buying homes again… and cars, and televisions, and computers, and everything else we don’t make here any more.

Who will be hurt the most by these aggressive rate cuts by the Fed?  People on fixed incomes and retirees.  You can’t depend on the stock market these days.  Putting your nestegg into stocks, even if diversified,  is just slightly less dangerous than playing Russian roulette.  Inflation was already outstripping anything you might hope to earn from a bank CD or insured money market account.

With the rate cuts in the past week, bank rates have fallen through the floorboards.  I just checked Bank of America’s website… Putting $10,000.00  into a 1-year CD or a money market account will currently get you an APR of slightly more than 2%.  To add insult to injury, if by some miracle you manage to earn a few dollars in interest, it’s taxable income.  That dismal rate of return is sure to go even lower over the next few weeks and months, especially if there’s another Fed rate cut.  Just a few months ago, 1-year CD rates of 5% were commonplace.

Make no mistake about it.  The faltering stock market and  plummeting interest rates on instruments such as certificates of deposit,  are very bad news indeed.  You will see increasing numbers of elderly Americans, who thought their golden years would be reasonably secure, now faced with loss of their homes, or worse.

Time to start stuffing the mattresses.

bush-at-state-of-union-address-1-28-2008.jpg
President Bush delivering his final State of the Union Address on 1/28/2008

In his State of the Union Address two nights ago (read the full text here), President Bush touched on the need to increase exports. Funny, but I didn’t catch him mentioning the need to limit imports. In fact, President Bush never mentioned the phrases “trade deficit” or “imports” even once during his State of the Union Address. Rather, he said “we are pursuing opportunities to open up new markets by passing free trade agreements“. That’s wonderful. Just what America needs. More jobs going overseas. More cheap imports flooding the U.S. More unemployed American workers. The imbalance between U.S. salaries and those in most foreign countries is so great that we will never be on the winning side of any free trade agreements. Have any free trade agreements we’ve signed in the past resulted in a trade surplus (I think that’s what you’d call the opposite of a trade deficit, but since we never hear the term, I’m not sure that’s correct). Have they ever even resulted in balanced trade?

Thank God for term limits. Could you imagine four more years of this? Our trade deficit is already so lopsided, that unless we put limits on imports, we can never hope to make a dent in the trade deficit.

Cheap money will allow very few people who are at risk to avoid foreclosure on their homes.  For the few it might benefit, our advice is to postpone the celebration, because  cheap money won’t last forever. Maybe until the next election. Then what? Americans who can’t find decent paying jobs will use cheap credit to increase their spending and their debt. Then, when interest rates inevitably rise again, look out. If you think things are bad now, you ain’t seen nothing yet. Pity all those families who are convinced that lower interest rates mean that this is now the perfect time to buy a home. If you think there have been a lot of foreclosures recently, just wait a while and see what happens.

We’ve said this before, and we’ll say it again… If America continues to be flooded with cheap imports that are sucking good paying jobs out of this country, our economy will continue to get worse, no matter how many interest rate cuts the Fed delivers. Can you say “quick fix”?

Wal-Mart might be the biggest employer in America, but they can’t employ all of us. And even if they did, we couldn’t afford to shop there. Minimum wage doesn’t go very far. Especially when you need medical care, and your employer doesn’t provide health coverage.

So thank you, Mr. Bernanke. It was very gracious of you and the Federal Open Market Committee to give America this latest gift. We don’t want to seem ungrateful, but could we exchange the gift for something we really need? Perhaps the creation of good jobs that pay decent wages. Imagine being able to go shopping and actually finding products that say “Made In USA” once again, not to mention having the money to buy those products without going into debt. How quaint.

Thank You.

– Sincerely,

RoutingByRumor

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Stimulus, Schmimulus ! Why The U.S. Economic Stimulus Plan Won’t Have Much Effect

They are saying that the President’s economic stimulus package might be agreed upon today. Woo Hoo. Happy days are here again.

But wait a minute… I can still hear that “giant sucking sound”,  and it’s getting louder (oh, how I wish I could have found a clip on youtube of Ross Perot coining that wonderful phrase). What will the U.S. economic stimulus plan actually accomplish? Will it lower the U.S. trade deficit or increase it? Will it lower the unemployment rate? Will it have any effect on the crumbling real estate market? We believe that the proposed U.S. economic stimulus plan will not work. It is an attempt at a quick fix. It is an ill-conceived band-aid approach to what ails the U.S. economy, proposed by an administration that does not seem to grasp the root causes responsible for the American economy being in deep, deep trouble.

What the United States needs now is something along the lines of the Works Progress Administration (WPA), which put Americans to work and helped pull the country out of the Great Depression. The WPA existed between 1935 and 1943. A chicken in every pot, and two hybrid (or electric) cars in every garage wouldn’t be a bad idea either. (We’ve copyrighted that new twist on an old campaign phrase, so if Rudy, Hillary, Barack or John want to talk, you know how to reach us.) It’s quite likely that many of the government buildings and infrastructure projects in the American city or town where you live today were constructed by the WPA during that period. The WPA was one of President Franklin D. Roosevelt‘s New Deal programs.

Taking the money the U.S. government is proposing to distribute as tax rebates, and putting it into a massive infrastructure improvement program would have several benefits, both immediate and long-lasting. It would…

– Provide long-term employment for millions of Americans

– Stimulate spending by reducing the unemployment rate, and giving the currently-employed higher incomes

– Repair or replace our crumbling infrastructure, particularly bridges

– Provide an infrastructure that will facilitate future economic growth

– Keep the money in America rather than giving the recipients of the rebate checks the ability to buy even more imported goods, a major reason we’re in this mess to begin with

Let’s say, for argument’s sake, that every taxpayer in the United States gets a check for $1,000 (although it looks like many, if not most Americans will receive far less). Let’s say that Americans will spend every one of those checks rather than putting the money in the bank. Where will that money go?

If you’re about to loose your home to foreclosure, chances are good that that rebate check wouldn’t even allow you to make a single mortgage payment. Even if it does, that’s just postponing the inevitable for a few more weeks.

Perhaps you will take that rebate check and go on a shopping spree at Wal-Mart, K-Mart or Target. Wal-Mart is already America’s largest retailer and largest employer, but bigger is always better. If Wal-Mart grows, that means more low wage jobs for Americans. It means more Americans with little or no healthcare coverage. It means paving over more open land for new parking lots and big-box stores. It means more tough times for the few American manufacturers left, who are already being squeezed by the way Wal-Mart deals with their vendors.

About the only place you can spend that rebate check where the majority of the products are made in USA is at the grocery store. Unfortunately, for most Americans, eating is not a discretionary activity, and the amount of money you spend at the grocery checkout is unlikely to be influenced to any measurable extent by your rebate check.

Ben Bernanke will probably tell you that buying goods is exactly what you should do with your new found windfall. But wait a minute. As I’ve pointed out in this blog, and what you already know, unless you’ve been in a coma for the past few years, is that the vast majority of consumer goods you’ll find on retailer’s shelves are imported, overwhelmingly from China. In fact, we think that China will be the real winner if Americans go on a shopping spree. If you doubt this, just wait a few months and look at how our trade deficit with China increases as a result of this plan. Go to the mall and try to find clothing, shoes, toys, hardware or housewares made in USA. You won’t.

How is buying foreign goods supposed to help the U.S. economy? The U.S. national debt is being increased substantially by the stimulus plan in the first place. Buying foreign goods will only increase the trade deficit. Few American jobs will be created by this plan. That’s because we manufacture few products here any more, with the notable exception of food products, and even those are increasingly being imported.

With the cost of heating your home and filling your gas tank becoming an unaffordable luxury for many Americans, perhaps all of us should use our rebate checks to buy fuel oil or gasoline. The oil producing countries would love that more than oil itself. The American oil companies would support that too. Despite the fact that the oil companies have been raking in record profits, you can never be too rich, or too thin. On second thought, I think we will just cash our rebate check and ask the teller to give it to us in one dollar bills only. Then we’ll take the cash home, and use it as kindling in our fireplace. That’s one way to stay warm this winter, and it should reduce our heating bill slightly. Is it illegal to burn money?

About the smartest use we think you could put that rebate check to would be as a down payment on a hybrid or other low-emission or zero-emission vehicle. That would reduce America’s dependency on foreign oil, while helping the environment at the same time. The only problem is that very few low-emission vehicles, and almost no zero-emission vehicles are being manufactured today. And chances are good that your next car will be a foreign make that might not even be assembled in America anyway. So much for stimulating employment.

The biggest reason that the economic stimulus plan will not have any significant or long-lasting effect on the U.S. economy, is that it does nothing to address the two underlying causes of our economic problems; loss of jobs (particularly loss of good paying jobs) and the U.S. trade deficit. Until those issues are addressed, the administration can throw all the money they want at the problem, but it won’t go away. The deepening economic recession will turn into a depression, as sure as Winter will be followed by Spring.

I just came across a posting on the AFL-CIO’s website outlining their views regarding what a U.S. economic stimulus plan should include. Unfortunately, it looks like a couple of their suggestions which were originally announced by the President as being part of the package, have been eliminated in the final draft. Although I have never belonged to a labor union, I was struck by how many of their ideas match my thinking on the subject.

Maybe those rebate checks should come with the stipulation that they are not to be spent on food, imported goods or foreign oil, gas-guzzling vehicles, and may not be burned.

– RoutingByRumor

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