The Perjury of I. Lewis Libby
The Wall Street Journal Defends Libby
It's Nice When Smart People Give Me Lots of Pointers to Interesting Things...
Daniel Gross is on a roll, posting a great many things of interest:
Daniel Gross: October 23, 2005 - October 29, 2005 Archives: PRIUS ENVY: When discussing the Prius and the potential of hybrid cars, critics--generally U.S. car makers--generally focus on the fact that the gas savings don't make up for the higher price people have to pay for the hybrids. That may be true in the short-term. But gas isn't the only operating cost associated with a car. If a car breaks down, or needs repairs frequently, that adds to the operating costs. There's the cost of maintenance, and the cost of your time spent taking it to and from the dealer. Lets say your time is worth $100 an hour, and driving a hybrid saves you 15 hours a year in time--fewer trips to the gas station, fewer trips to the dealer, etc.--then the investment would pay of in two years, regardless of how much you save on gas.
And guess which car requires the fewest trips to the mechanic?
Karen Lundegaard reports on the Consumer Reports reliability survey in the Wall Street Journal: "Of the top 31 most reliable vehicles, 15 were from Toyota and Lexus and eight were from Honda. The most reliable 2005 model? The Toyota Prius hybrid car, with only 4% of drivers having to take the vehicle into the dealership for service."
STEEL MAGNOLIAS: The Russians are invading Mississippi! And they're bringing several hundred million dollars! Peter Marsh reports in the Financial Times: "In a project that will be widely watched in the global steel industry, Severstal, the large Russian steelmaker, is taking a majority stake in an $880m venture in the US to make steel sheet for automotive bodies..."
INFLATION WATCH: It's a good thing that inflation is contained to the food and energy sectors, and not seeping into the larger economy. Otherwise there would be real inflation. So what to make of the strong quarterly reports of railroads Norfolk Southern and CSX. Daniel Machalaba reports:... "Norfolk Southern Corp. and CSX Corp. reported gains in third-quarter profit, buoyed by rising freight rates that helped offset higher costs from more-expensive fuel and from hurricane disruptions.... Earlier this week, railroad company Burlington Northern Santa Fe Corp. reported a large third-quarter profit gain. 'After years of price declines, they are finally able to get across-the-board rate increases', said Anthony Hatch, an independent transportation analyst in New York."... Both companies said they are capitalizing on strong demand and tight supply of rail transport to make rate increases stick.
MOST PROFITABLE, NOW BIGGEST: Toyota provides proof that you don't have to give away your cars to build volume. David Ibison and James Mackintosh report in the Financial Times: "Toyota Motor is poised to become the world's largest carmaker, ousting General Motors of the US from the top spot, according to a new business plan to be released in December. The plan is expected to state that Toyota aims to make more than 9.2m vehicles in the year to March 2007 - a figure that should allow it to surpass GM if the US carmaker continues to suffer from falling sales and is forced to cut production further. GM made 9.1m vehicles last year, and last week predicted a fall of about 20,000 units this year."...
GASBAGS: This is rich stuff. Carl Hulse of the New York Times reports on the brilliant new strategy of Republican Congressional leaders to reduce oil prices: begging. "WASHINGTON, Oct. 25 - After forcing through two pieces of legislation with significant benefits for the oil industry this year, House Republican leaders on Tuesday called for oil companies to return the favor by building new refineries and taking other steps to increase fuel supply and lower gas prices. 'It is time to invest in America', said Speaker J. Dennis Hastert, who said that in a period of soaring industry profits, 'we expect oil companies to do their part to help ease the pain American families are feeling from high energy prices'.... 'If you couple that with the fact that we are seeing record profits by the oil companies', said Representative Eric Cantor, Republican of Virginia and chief deputy to Mr. Blunt, 'there are questions being raised by our constituents across America wondering how such a situation could exist'."
Earth to Rep. Cantor: it's called the free market. And it's how the American system works. Indeed, as Holly Yeager reports in the Financial Times, House Speaker Dennis Hastert stepped a bit on his colleague's line by holding up the oil companies' massive profits as a ringing affirmation of all that makes this country great....
LACK OF DEPTH: Caroline Daniel and Christopher Swann of the Financial Times make a good point about the void left by the appointment of Ben Bernanke. "'When Ben Bernanke clears out his desk, he will leave unfinished work: as chairman of the Council of Economic Advisers, he will not sign off on the Economic Report of the President, the annual tome that charts US economic progress. The administration will miss not only his signature but also his role as a useful but relatively low-profile defender of George W. Bush's economic policies. This will mean there is one less voice out there.... It is crucial to have a solid economic voice in the White House', says a former administration economist. Mr Bernanke's departure for the Federal Reserve points to a lack of strong and influential economists across the administration, the person says. 'Of the new people who have now been finally confirmed at the Treasury, none is trained as an economist. There is no one in the White House now, with the exception of the two young CEA nominees who are not yet confirmed, who has a good understanding of economics....' Few analysts expect Mr Bush to appoint a powerful CEA chairman to replace Mr Bernanke...
NEW ECONOMY/OLD ECONOMY: Sometimes the new economy looks a lot like the old economy. One of the reasons Amazon.com and other online retailers were supposed to crush bricks-and-mortar retailers was that their hyper-efficient, asset-light operations would run at significantly higher operating margins. Oops. Amazon.com's... third-quarter results... had operating income of $95 million on sales of $1.86 billion, or about 5.1 percent. That's not bad.... But it's down from the previous year. And as... competition continues to increase, the margin seems to be slipping....
WAL-MART WOES Great piece of reporting by Steven Greenhouse and Michael Barbaro on Wal-Mart's scrooge-like attitude toward employee benefits in the New York Times....
LEE SCOTT KENNEDY: Wal-Mart CEO Lee Scott channels Ted Kennedy, advocating a higher minimum wage out of enlightened self-interest. He finally realizes there's a connection between the minimum wage failing to rise over the past ten years and Wal-Mart's stock failing to rise over the past five years. Ann Zimmerman reports:... "Mr. Scott, noting that minimum wage hasn't changed in almost a decade, described Wal-Mart's core customer base as finding it increasingly difficult to afford basic necessities between paychecks. 'We simply believe it is time for Congress to take a look at the minimm wage and other legislation that can help working families'."
VALUE PRICING: Well, that didn't last long. Several weeks ago, the Big Three said they'd stop the ruinous practice of offering gimmicks like 0% financing, massive rebates, and employee discounts to cover for the fact that buyers weren't willing to pay anywhere near sticker price. Instead, they'd just change the sticker price.... But sales are off again, so they're going back to the well....
BLUE MOON ALERT! Useful and interesting content on the Wall Street Journal editorial page. Writer John Schnapp chronicles GM's woes, and casts a wary eye on the folks exercising oversight over management. "Inadequate corporate governance. A company like GM badly needs a board with at least a core group of directors able to advise and evaluate management from their own successful turnaround experiences. The central GM directors have not. George Fisher... left Eastman Kodak after having been unable to halt its downward spiral. Eckhard Pfeiffer drove Compaq into a ditch. Percy Barnevik virtually destroyed engineering giant ABB.... Karen Katen is a vice-chairman of Pfizer, whose share price collapse has paralleled GM's.... The only GM director who had reinvigorated a sickly company, A.G. Lafley of Proctor & Gamble, quietly withdrew from its board in April."...
ALL THE TEA IN CHINA: You mean to tell me that an until-recently totalitarian Communist dictatorship that has comparatively little experience in free markets and has an insolvent banking system may be fudging its numbers? Don't tell Tom Friedman. Richard McGregor writes in the Financial Times. "'The Chinese economy expanded 9.4 per cent year-on-year, basically the same as in the first and second quarters, despite the fact there has been a major deterioration in the external contribution from the second to the third quarter that should have chopped GDP growth substantially', [Jim Walker] said in a research note....
OWNERSHIP SOCIETY: A piece of stunningly bad news, from Louis Uchitelle's piece in the Sunday New York Times: "Thus far this year, the median weekly wage earned by blacks fell by 5 percent, to $523, adjusted for inflation, according to an analysis of Bureau of Labor Statistics data. Whites as a group are also experiencing a drop in their median weekly wage, but for them the decline this year is less than 1 percent, to $677, adjusted for inflation."...
Posted on October 29, 2005 at 20:35 in #economics | Permalink | Comments (20)