Category Archives: Idaho

Business/Economics, Idaho, U.S.

What Economic Recovery? Corporate layoffs & stock market games, part of Corporate America’s stock buy back scheme. Hewlett-Packard case in point

“We’re relatively pessimistic about the economic outlook in two of our three major regions. 2012 just looks tough to me.”-Meg Whitman, new CEO of Hewlett-Packard

“It’s an extraordinarily unimaginative way to use money.”-Robert Reich, former U.S. Secretary of Labor

What’s the former U.S. Secretary of Labor talking about? Why Corporate America buying back its own stocks.  Companies are able to do this because they are not spending money on research and development, and, according to a New York Times article, it’s the real reason companies are still laying off employees. They’re using the money they would have paid for the labor to buy back company stocks.

In November employees at the Boise, Idaho, Hewlett-Packard (HP) factory reported that layoffs were in the works.  In July HP bought back U.S.$10 billion of their own stocks, then laid off 500 employees in September.  HP officials avoided directly answering questions about layoffs in Idaho by saying they were working on a “press release”.  It’s been a couple of weeks now and no press release.

A lot of problems are being created by the way Corporate America is buying back their stocks.  For one it artificially increases the value of their stocks:  “Unless earnings per share are adjusted to reflect the buyback, then to base a bonus on raw earnings per share is problematic. It doesn’t purely reflect performance.”-John L. Weinberg, University of Delaware

Number two, it’ll delay any economic recovery: “It’s a symptom of a deeper problem, which is a lack of investment in the long term. If we’re not investing in research, innovation and entrepreneurship, we’re going to be a slow growth country for a decade.”-William W. George, Harvard Business School

And thirdly, it’s increasing unemployment, which is only adding to the downward spiral of the economy.

On November 22, Meg Witman, former eBay CEO, former California Gubernatorial candidate, and new CEO of Hewlett-Packard, was questioned about HP’s huge cuts in R&D.  Here’s her response: “It’s not (return on investment) in year one or two. I think the investments we make in 2012 you’ll start to see in 2014 and 2015. I wish I could tell you differently but it’s not true. And you’re right. We cut out a lot of muscle in R&D at this company and we have to invest back in it. It’s a long term play. I will tell you, this management team, we are now building HP, we’re building it to last. We’re not building it for next month or next quarter. We are building this company to be great over the next decade. And you’ll see improvements every single year. You’ll be able to measure us on how we’re doing. But we’re making some long term bets here because we can’t continue to run this company for the short term.”

Knowing that the latest trend in Corporate America is buying back their own stock, at the expense of R&D and employment, is that what Whitman means when she says “…we’re making some long term bets…”?

Whitman’s answer is confusing.  Traditional economics tells you that investing in R&D is a long term “bet”.  Yet Whitman calls it “short term”. 

So is that what Whitman means when she says we should see returns on investment in 2014/2015?  The investment meaning buying back their own stocks?

Anyone who’s taken economics, or business courses should know that traditional investment into your own company means R&D; to come up with more efficient ways to produce products, or coming up with new products/services, better marketing, etc.  But it does not mean buying back your own stocks.

Perhaps stock buybacks are the real reason there are layoffs coming for HP’s Boise operation, and officials are still trying to come up with a good sounding reason for their forthcoming “press release”?

Hopefully, since Whitman just started her job as HP CEO, she’s talking about a return to traditional economics. Hopefully it’ll mean an end to HP’s stock buy backs and a return to putting money into R&D and employment, she did say: “We cut out a lot of muscle in R&D at this company and we have to invest back in it.” Oh well, wishful thinking.

 

Business/Economics, Idaho, U.S.

What Economic Recovery? Idaho farm tractors being stolen for scrap metal

“We’ve had a lot of scrap metal stolen. This is totally off the wall here.”– Jackie Morris, Power County Chief Deputy Sheriff

A farmer in American Falls, Idaho, had two old International tractors stolen right off his farm, in broad daylight.  Witnesses say they saw the tractors being hauled away on trailers pulled by pick up trucks.

The drivers of the pick ups were recognized as individuals who’re recently asking locals if they had any scrap metal they wanted to get rid of.

Farmers are being warned by law enforcement to inventory their farm equipment at least once per week.

 

Business/Economics, Idaho, Technology, U.S.

What Economic Recovery? Former HP employee, and MBA holder, finds new job by NOT talking about his college education

“Nobody ever thinks, ‘Hey, I’m having trouble getting a job now.  Let me go get this extra degree and I’m sure I’ll still have trouble.’”-Nathan Bussey

In 2008, Idahoan Nathan Bussey lost his coveted job with Hewlett-Packard.  He used the unexpected time off to get an MBA.

Forget the rhetoric coming out of Corporate America, that they can’t find “qualified” applicants, Bussey discovered that having a college degree actually hurt his chances of getting a job.   That’s because the only jobs available don’t really require college.

This year Bussey took a job with a dreaded call center.  He did not tell them about his MBA, because it would’ve hurt his chances for getting hired.  He’s getting paid much less than when he was working for HP, but he and his wife are desperate: “We have no savings anymore. If something happened, if one of us got hurt or sick, we certainly would be in a much worse situation now.  We’ve used our buffer.  That rainy day fund is now gone.”

 

 

Business/Economics, Idaho, U.S.

What Economic Recovery? Idaho’s Coldwater Creek continues its fall, but, is this a case of buy low now, and if Coldwater Creek recovers, you can sell high?

“Coldwater Creek (NASDAQ:CWTR) is one of today’s worst performing low-priced stocks…”-Adrienne Chilton, analyst

The month of October and November was so bad for the Idaho company that, maybe, it should be put out of its misery.

During the second week of November, there were reports that Coldwater Creek could be delisted from the NASDAQ.  That’s because in the second half of October their stock price dropped to just a little more than .90 cents per share.  At the begining of November, Coldwater Creek was downgraded to “underperform” by Zacks Investment Research Analysts.

By the end of  the first week of November their stock price jumped back over $1.10.  But more bad news.  By the second half of November their stock price is now below .90 cents; as of November 23 it was trading at .88 cents per share.

Things are so desperate that in a move to motivate investors, and maybe keep from getting delisted, the CEO of Coldwater Creek, Dennis Pence, bought U.S.$7 million worth of his own company’s stock.

At around .90 cents per share that’s a heck of a lot of stocks!

Pence claims this is a case of buy low, sell high.  He claims he still believes in the company and is sure they will turn things around.  If he’s right investors could make a killing.  One analyst thinks investors could end up with a 200%-500% return, over three years!  But that’s assuming a $60 million improvement in Coldwater Creek’s expenses and operating income performance.

The anonymous analyst, going by the nom de plume Violent Capitalist, also admits: “…this is a very very risky investment…”

Another analyst, with the nom de plume of Pimlico, responded to the buy low, sell high sales pitch with: “This one really looks doomed. I have rarely seen shareholder equity decelerate as quicky as I have with this one.”

Investors should wait until November 30, when Coldwater Creek will report its 3rd quarter earnings.  Most analysts surveyed are predicting negative earnings.

Of interest, for the past four months, analysts have advised stock holders to “hold” onto their Coldwater Creek shares (as reported by Reuters). Is there hope?

Business/Economics, Idaho, U.S.

Occupy America! Diesel disparity in Idaho. Gas prices way down, Diesel way up. Blame increase in U.S. exports! Blame pricing games! Warning for California. Fracking really for fuel production. Grow your own!

In eastern  Idaho, the difference between the price of one gallon of regular gasoline, versus diesel, is now a full one dollar.

Phillips 66, next to the Bannock County court house, Pocatello, Idaho

On November 19, the average price, in the Pocatello/Chubbuck area, hit $3.18 per gallon for regular gasoline, and $4.18 for diesel.

The U.S. Energy Information Administration (USEIA) says gas prices are falling, in general, due to the usual seasonal drop in usage.  I’ve never seen it drop by this much, here in eastern Idaho.  Back in May, the average price was $3.65 per gallon, and it stayed that way through most of the summer.  In the past two or three months the price has dropped almost 60 cents.

The USEIA also says regional fuel refining has a lot to do with prices, but back in September I discovered that PADD 4 gasoline production was being kept below demand. The latest data on PADD 4 gas production shows that, after months of keeping it around 290 thousand barrels per day, regional refineries are now pushing out more than 324 thousand barrels per day.  This is why gas prices, in the Rocky Mountain area (PADD 4) are, or should be, dropping.

In California it’s a different story.  The latest gasoline price survey shows the average price around $3.54 per gallon, with many areas paying $3.79.  California taxes are one reason for the higher prices, but the other reason is that California refines its own fuel, and the refineries are in trouble.

According to the USEIA, despite having the third largest refinery industry in the country California’s refineries are maxed out, there’s just too many people driving too many vehicles.  The USEIA is warning of a fuel price catastrophe in California: “California refineries need to be running near full capacity to meet the State’s gasoline demand. If more than one of its refineries experiences operating problems at the same time, California’s gasoline supply may become very tight and prices can soar. Even when supplies can be obtained from some Gulf Coast and foreign refineries, they can take a relatively long time to arrive due to California’s substantial distance from those sources. The farther away the necessary relief supplies are, the higher and longer the price spike will be.”

Regarding the rising cost of diesel fuel, it looks like some of what I warned about back on November 5 is coming true.  Bottom line; around the world diesel production is down, while international demand is going up and up.

The latest reports on diesel commodity prices show a slight decrease.  The decrease is so small that the global increase in demand for diesel will still cause pump prices to go up.

And how does the global demand affect us here in the U.S.?  According to the American Petroleum Institute (API), most diesel fuel produced in the Untied States is actually being exported to other countries (a 37.6% increase, in both diesel and gasoline exports, in the past year).  That means less diesel for the domestic market.

Diesel fuel is part of the “distillates” family of fuels.  In the U.S. ultra low sulfur diesel is referred to as “Distillate Fuel Oil 15 ppm (parts per million) and under of Sulfur”.  According to USEIA records, ultra low sulfur production, in the United States, varies between 3.2 million and 3.6 million barrels per day.  Now realize that international demand has gone up, and that U.S. refineries are exporting much of their diesel.  Since overall production is remaining in the 3 million to 4 million barrels per day rang, that doesn’t leave much for us.  The result is diesel prices will continue to go up, until U.S. distillate refiners greatly increase production.

For those of us in the Rocky Mountain (PADD 4) area, the USEIA shows an up and down pattern for “Distillate Fuel Oil 15 ppm (parts per million) and under of Sulfur”.  From March through May, diesel production was stuck at about 160 thousand barrels per day.  By the end of July it increased to 195 thousand barrels per day.  Since the end of August it’s dropped, to 185 thousand.  That explains why diesel pump prices in the Rocky Mountain area are going up.

But here’s one more reason, and one that many diesel fuel users have speculated on; the high pump prices of diesel is an attempt by producers to make a bigger profit, since they’ve actually been keeping gasoline pump prices artificially low.  A Reuters article states just that: “This in turn crimps diesel output until the cost of the fuel gets high enough to offset losses from additional gasoline sales.”

The Reuters article explains, not very well, that ultra low sulfur refining requires hydrocracking, a process involving hydrogen.  It’s also used for gasoline.  The problem is that many refineries in the U.S. can not produce both diesel and gasoline.  This might explain the swings in production; one month gasoline production up, and diesel down, the next month it’s reversed.

The push for fracking natural gas, is actually for the fuel refining industry, because it turns out that using the hydrogen in natural gas is a good cheap way to conduct hydrocracking in fuel refining.

Eventually more diesel will be produced, because of the global demand.  Several companies in the Gulf Coast area have invested billions of dollars to build new refineries to extract the hydrogen from natural gas to hydrocrack new diesel fuel.

Diesel fuel users should really look into making their own biodiesel, even though you could get into trouble with the Federal and State tax collectors, as well as the EPA.  Here’s some links:  Backwoods Home Official BioDiesel Home BioDiesel Diesel Master JR Whipple (good for moonshine too, remember diesel is a distillate) There plenty more sites on the internet about making your own diesel, do the research.

 

Idaho, Opinion, U.S.

United Police States of America: Idaho bars media from executions, violating Federal rules

“To determine whether lethal injection executions are fairly and humanely administered, or whether they ever can be, citizens must have reliable information about the ‘initial procedures’ which are invasive, possibly painful and may give rise to serious complications.”-9th U.S. Circuit Court,  2002 ruling

On November 18, Idaho will execute a man using lethal injection, for the first time.

Attorney’s have protested saying lethal injection has been proven to be inhumane.

Now, the Idaho Department of Correction is barring all the media, in full violation of the Federal court’s ruling, from witnessing the execution: “The procedures were developed so that we would preserve the dignity of the offender.”-Jeff Ray, Idaho Department of Correction

Can you say: Bull Crap on that?   “Preserve the dignity” of a guy convicted of killing three people in three separate incidents, my ass!  Prison officials don’t give a rat’s ass about prisoners’ dignity, there’s plenty of evidence of that!  More like keep the fact that lethal injection has turned out to be a highly painful way to die (it’s described as similar to people who are undergoing operations, and are fully conscious, and can feel everything yet can’t move or talk, even though the doctors think they’re under the effects of anesthesia).  Some witnesses to lethal injection executions say they could see the convict crying after the injections had taken effect.

Several other groups have been barred as well.  The American Civil Liberties Union is also protesting.  The Associated Press is joining almost all of Idaho’s major media organizations in official protest.  Idaho officials claim the Federal Court ruling applies only to California.

I still say a bullet to the head is the fastest most humane way to execute someone.

Business/Economics, Idaho, U.S.

Government Incompetence: Idaho County violates Federal Law, Federal Judge orders the County to violate Idaho Law in order to pay off fine

In 2010, Boise County was found guilty of violating the Federal Fair Housing law.  They must now pay $5.4 million in fines, with 5.5% yearly interest.

Boise County tried to file for bankruptcy, but a Federal bankruptcy judge found the county can afford the bill.

Now, the Federal district court has ordered Boise County to violate the Idaho law on property tax limits, in order to raise the money to pay the Federal fine.

The Federal court wants Boise County officials to charge at least 3% over the state property tax cap.  Under state law a 2/3rds majority vote must OK such a move.

Idaho State Tax Commission officials are handling this like a hot potato, saying they don’t have the time to review the case, but they are working on a public press release to explain their position.

Boise County is required to make two payments per year, and have already made the first payment of $1.2 million.

 

Business/Economics, Idaho, International, Technology, U.S.

U.S. increases embassy staffing in Brazil & China. Officially it’s to help foreign students come to the U.S. Unofficially it’s to bring in cheaper labor to the U.S., and help U.S. citizens leave the U.S.

“Idaho’s the last state that should say we don’t want to do business with Asia. Asia’s where the money is.”-Brad Little, Lieutenant Governor of Idaho

Recently the U.S. Department of State announced they were increasing staffing in China and Brazil.

Most U.S. and Chinese media reports suggested this was due to the increasing number of foreign students wanting to go to school in the United States.  The Chinese media even said it was a money making scheme for U.S. colleges: “A number of state governments in the U.S. are tightening their grip on education spending, which means smaller subsidies for public colleges to pay teachers and fund research. International students on average pay far more for tuition expenses than U.S. residents.”-ChinaDaily

According to U.S. Department of Commerce (yes it’s a “department”, not an “agency” as Rick Perry said), it’s also about the money Chinese tourists bring to the U.S.  In 2010 those visitors contributed more than $5 billion to the U.S. economy.

What about Brazil? In 2008 there were reports that Brazilians working in the U.S. wanted to go back to Brazil.  Now the U.S. State Department claims they can’t keep up with demands from Brazilians wanting to come to the U.S.

In September a report showed that the U.S. government has been wooing new Brazilian companies to move to the U.S.

EverWrite and DeskMetrics were two companies mentioned.  Young Brazilian entrepreneurs say it’s much too hard to start a new company in their home country, so they move to the United States (that’s funny ’cause just this past week Idaho business leaders told our U.S. Congress that it’s too hard to maintain a business in the United States).

Chinese businesses are being wooed here as well.  This brings me to one of two points; that increasing U.S. Embassy staffing in China and Brazil is really about bringing foreign workers into the U.S.  You see, many of those Chinese and Brazilian companies are bringing their own employees.

In fact, here in Idaho our state leaders have made a deal with the Chinese.  They will have their own 10,000 to 30,000 acre industrial and housing zone south of the Boise Airport, with their own Chinese employees, and even some level of national sovereignty.

“I think China’s coming over here shows they are willing to collaborate on the re-invigoration of the American industrial base.”-Jeff Don, Idaho representative for the Chinese company, called Sinomach

Here in southeast Idaho the Chinese have already moved in.

Sinomach is China’s third-largest contractor, and pressured Southeast Idaho Energy for a contract to build SIE’s $2 billion goal gasification fertilizer plant in Power County.  In May, 2011, SIE closed its American Falls, Idaho, office claiming they were trying to reduce operating expenses.

A polysilicon factory is just about to start up in Pocatello.  It’s run by Hoku International, which is now a subsidiary of a Chinese company.  The few local employees hired went to China to learn about their job duties.  So far no more word on anymore local hires, which makes you wonder if the main Hoku labor force will be coming from China?

Officials in Boise, Idaho, admit they’re working with more Asian corporations: “We’re getting calls from investors from all across Asia who are interested in Idaho.”-Cece Gassner, assistant to the mayor of Boise, for economic development.

The other point (regarding increased U.S. Embassy staffing) is that U.S. citizens are flocking to China and Brazil.

Japanese, and even PBS, media reports show that many U.S. citizens aren’t waiting until they’ve been hired to move to China; there’s a growing number of U.S. citizens who’ve moved to China, and are still looking for employment.  In fact many U.S. job seekers in China, are finding that they’re competing not only against Chinese job seekers, but their fellow U.S. citizens.

In Brazil, the current population, according to the World Bank, is more than 194 million people. That’s an increase of almost 3 million since 2008!  Most of those people moved to Brazil, many from the United States.

 

 

 

Business/Economics, Idaho, Technology, U.S.

What Economic Recovery? After donating $1 million to charity, HP will lay off Idaho employees

At the beginning of November, Hewlett-Packard reported they had donated $1 million to charity, for the fiscal year which ended October 31.

Now, according to a Boise TV station, HP employees called and reported a major layoff at the HP Boise operation was in the works.

KBOI says they contacted HP officials.  The officials stated they are still working on the details of a forthcoming press release, which will explain the layoffs.

Business/Economics, Idaho, U.S.

Occupy America: Foreclosure is not the end, Idaho one of many states that allow banks to sue you for money they lost on your home foreclosure. It’s now part of Wall Street’s new investment scheme

“I wish somebody had come to us, you know, in the months before all of this happened and said, look, you really, really should look at a short sale or taking any other option other than foreclosure.”-Ben Jensen, Idahoan who lost home to foreclosure and was still sued by Bank of America

Did you know that as many as 40 U.S. states allow banks, and debt collectors to sue you even after a home foreclosure is finalized?  It’s called ‘deficiency judgment’.

Idaho attorney Brian Webb, says he’s seeing a sudden increase in such legal action by Corporate America:  “I only probably handled five or six in 2010; versus 2011, it’s been, you know, off the top of my head, between 15 and 25 deficiency cases.”

If you lose your home to foreclosure you could get hit with a lawsuit fives years after the fact: “In many other states around the country, homeowners find themselves subject to deficiency actions one, two, three, four or five years after they’ve been foreclosed.”-Geoff Walsh, National Consumer Law Center

Another Idaho attorney, Terri Pickens, says the sudden increase in deficiency judgments are due to a disturbing new trend; banks are selling their deficiency claims to collection agencies.  It’s all part of Wall Street’s new “investment” strategy: “I do know some private investors who are coming in and purchasing up bank loan packages and have been paying literally pennies on the dollar; just sitting on the paper, waiting for the right time to collect on it.”