Monthly Archives: September 2009

Goldman Sachs: The oil producer’s best friend

We oil speculators must rejoice today, since prices rebounded after a rather steep fall over the last few days.

Our friends at Goldman Sachs – those fellows who tried to sell the notion a few weeks ago that natural gas prices should triple this winter, despite unprecedented inventories and sagging demand – get some of the credit. Amazingly, the GS folks think that oil is headed to between $85 and $90. What were the odds?

I think the problem we speculators face is where we speculate on oil: At the gas pump, where the speculation is how much more we’re going to pay next week because of the real speculators.

Would you tell the boss he’s got a booger?

Ran across this this survey from CareerBuilder.  High “ick factor,” but pretty funny:

Given the following embarrassing situations, which of your co-workers you would tell the following:

1. Your zipper is undone
a. Same level co-worker – 67 percent
b. Lower level co-worker – 62 percent
c. Higher level co-worker – 50 percent

2. You have something in your nose
a. Same level co-worker – 51 percent
b. Lower level co-worker – 46 percent
c. Higher level co-worker – 33 percent

3. You have food in your teeth or on your face
a. Same level co-worker – 66 percent
b. Lower level co-worker – 60 percent
c. Higher level co-worker – 49 percent

4. Your hair is messy
a. Same level co-worker – 33 percent
b. Lower level co-worker – 30 percent
c. Higher level co-worker – 13 percent

5. You have a stain on your clothes
a. Same level co-worker – 51 percent
b. Lower level co-worker – 47 percent
c. Higher level co-worker – 34 percent

6. You need a breath mint
a. Same level co-worker – 33 percent
b. Lower level co-worker – 29 percent
c. Higher level co-worker – 14 percent

7. You need a shower
a. Same level co-worker – 28 percent
b. Lower level co-worker – 28 percent
c. Higher level co-worker – 11 percent

8. Your apparel is not appropriate for the office
a. Same level co-worker – 32 percent
b. Lower level co-worker – 37 percent
c. Higher level co-worker – 10 percent

Kansas commuters ride alone

WICHITA — I love the Census Bureau because it sometimes comes up with kooky, but revealing stats. This month it revealed that Kansas is in the top 10 states for workers who drive to work alone, with 81 percent riding alone. That means we’re among the least users of carpooling and mass transit in the US, or maybe they’re just less tolerant of neighbors and coworkers. One look at our anemic bus system would confirm that.

The states (or territories) with the highest percentage of more than one commuter per car: as you’d expect, the one’s with big cities. Washington DC, New York, Illinois, California. But, strangely, Wyoming, Montana and Idaho are also on the list.

They deliver for you — and the competition

I just this morning received a nifty little packet — what we in the newspaper business call a press kit — from FedEx Ground.

The packet touts the virtues of the FedEx Ground system and how that system allows nearly 13,000 people to be independent business owners working as contractors to FedEx.

What’s most interesting about this is not necessarily the packet, but how it came to me.

It was by way of the U.S. Postal Service’s Priority Mail.

Spending money to make money

It’s been a good week for the downtown venom-spewers: The NCAA says “no” to a proposal to host the men’s basketball first and second rounds at Intrust Bank Arena, and the arena parking debate moves into a higher gear today.

That’s why you’ll find a lot of people claiming vindication on today.

I’m not entirely unsympathetic to their concerns: This is a time when it seems like everyone has their hands in your pockets, and in my case, they’re down to fishing for pennies and nickels now. Don’t get me started on how financial institutions have reacted to the looming specter of regulation. Let’s just say they’ve got BIG hands.

But I wonder how the local “Oh, my God, don’t spend a dime” crowd will react in five years if Wichita’s economy remains in the toilet because the city and county fathers fell victim to economic panic and quit planning for the future.

I hear a lot about how the “free market” solves every economic problem. And although “free market” is Latin for “no regulations so I can make a bunch of money any old way possible” to a lot of folks, there are still free markets in Wichita.

To wit: Two of the city’s largest real estate brokerages are making changes and spending money in an effort to position themselves at the top of the industry – when the Wichita economy recovers.

J.P. Weigand & Sons has been nothing short of aggressive, opening new divisions and adding more staff to position itself for the economic recovery. Same story at Plaza Real Estate, which linked up with the national Coldwell Banker flag.

They share a simple idea: You’ve got to spend money to make money. And from where I sit, Wichitans need to keep that idea in mind as they grind their teeth over each and every expenditure at City Hall and the county courthouse.

Each expenditure comes with accountability down the road. Some will work out. I suspect some won’t.

But so does inaction.

Global warming bill to drive up gas prices, says manufacturers’ study

WICHITA – A study of a new cap-and-trade bill now in Congress aimed at reducing greenhouse gases shows that, if enacted, it would cut Kansas’ economy by $310 million to $532 million a year by 2020. And yet, said study author Margo Thorning, it really wouldn’t do much to curb greenhouse gases worldwide because China and India have done nothing. Her take is that the U.S. needs to focus on getting agreements with emerging economies, more R&D to lower the price of alternative energy and carbon capture technologies, and changes to the tax code to encourage producers to invest in greener technologies.

The study is by the National Association of Manufacturers and the American Council of Capital Formation.

Other findings:

By 2015, gasoline prices would rise 6-9 percent and natural gas by 16 to 25 percent. As a result, Kansans’ disposable income would fall $130 to $261 per year.

By 2020, gas prices would rise to 19-24 percent and natural gas by 64 to 77 percent. Kansans’ disposable income would fall $851 to $1,397 a year.

By 2030, Kansas would have lost between 21,417 and 29,168 jobs because of the higher energy costs.

Buying banks’ bad assets finally comes to fruition

WICHITA — It’s been nearly a year since the financial crisis began to take hold, causing the Treasury Department, Congress and then-President George Bush to unveil a series of efforts aimed at preventing a collapse of the nation’s financial system.

One of those proposed efforts that seemed to fade from the spotlight as quickly as it was mentioned was creating a system that would allow banks to get bad assets — primarily subprime mortgages — off their books.

The Federal Deposit Insurance Corp. said today that it has a winner of its pilot offering in the Legacy Loans Program.

Residential Credit Solutions bid more than $64 million in cash for a 50 percent stake in a limited liability company organized by the FDIC to hold a portfolio of mortgages with $1.3 billion in unpaid principal.

The FDIC said it “received various bids that were very competitive.”

The rub to all of this is the portfolio was from Franklin Bank in Houston, which regulators closed in November.

As this program moves forward, it hopefully will be used to buy bad assets from banks that are still in business, thus preventing them from failing.

Is customer service dead?

It happens more often than not anymore. You pick up the phone to call a business. Almost any business. There’s a flat monotone on the other end.

“Who? He’s not here.”

“Well, do you expect him back today.”

“I don’t know.”

“Can I leave a message?

“What is it?”

“Well, can I have his voice mail?”

“I suppose.”

We laugh sometimes at the Eagleland Businessplex about the opposite – the bright voice proclaiming that “It’s a great day at Willie’s Widget World.”

But with the death of customer service apparently at hand, those bright voices become less funny. And fewer.

I give it six months until “What do you want?” becomes the standard receptionist’s line in Wichita.

But how much did it cost?

WICHITA — American homebuyers will save $11.5 billion over five years because of the government intervention in the mortgage market to lower interest rates, according to First American CoreLogic.

Manipulating the media

It’s been awhile since we chatted about commodities trading, and the bald-faced manipulation of energy commodities by those in position to profit the most from any inexplicable rise in prices.

But, our pals at Goldman Sachs have given us a reason to bring the subject up again, courtesy of this MSNBC story.

Seems that they’re doing their best to prop up the sagging price of natural gas, with a baseless forecast that natural gas prices could triple this winter. Sort of the “Meet my wife, Morgan Fairchild. Yeah, that’s the ticket” shtick, commodities-style.

Read very carefully the recap of natural gas market fundamentals that follows in the story: There’s NO reason whatsoever that the price should rise. A bit.

Except, of course, for commodities traders, investment houses and financial voodoo – including a figurative yell of “fire” in the trading theater.

Update: An energy icon says oil and natural gas prices are headed down.

Retail sales encouraging

WICHITA — One of the big unknowns in whether we really are in a recovery has been consumer spending. Consumers have been laid off or scared of losing their jobs or trying madly to pay off their bills for about a year. It makes for some pretty conservative spending habits.

That’s why this August report on chain store sales from the International Council of Shopping Centers is good news. It’s down from last August, but only 2 percent, better than the companies expected. It suggests that consumers are feeling better about life and are willing to spend. That supports retailers, which supports manufacturers. Consumer spending is 70 percent of the US economy.

Of course, this is fragile, given the massive amounts of consumer, corporate and national debt that must still be paid down. Some predict the recovery will fall back into recession next year. But, for now, let’s embrace the encouraging news.

Cutting workforce too deep may mean no jobless recovery

WICHITA — Worker productivity rose 6.6 percent in the second quarter because companies cut their work forces a lot faster than their sales fell. Apparently, companies didn’t wait to see how bad this recession would be and just started swinging their axes, leaving their remaining workers to manage somehow. That’s different than in the past when companies laid off workers only after sales started falling. That’s why jobs and the unemployment rates are traditionally considered a lagging indicator — the last thing to go down in a recession and the last thing to snap back.

That’s bad in the short run. Obviously, millions are unemployed, and tens of millions more are having to work harder to compensate. For companies, there’s rising profits from running extremely lean (and furloughing and cutting salaries, eliminating the 401(k) contribution, etc.)

But there is a possible silver lining. Because companies cut quickly and deeply, it may mean they rehire more quickly than they have in the past. Companies may not be able to have that “jobless recovery” because they’re already so thin.