Financial Mines

Workers of the world, speak up!
As your colleagues have dwindled in number during the recession, how has it impacted your workload and your situation in the workplace? Reporter Michael Juliano is collecting your experiences for a Labor Day story to run Sept. 5 in the business section of the Hearst Connecticut Media Group newspapers. Requests for anonymity will be respected, but please include a general description of the business (i.e. Insurance company, general contractor) and its location. Please e-mail your comments to Michael.Juliano@scni.com.

When I hear a company’s executives say they want to “increase value” for their shareholders, I shudder.
In many cases, the major individual shareholders of those companies are those executives.
And “increasing value” often means cutting costs – often through job cuts – forcing the remaining workforce to produce more.
Don’t get me wrong, I realize these companies most often need to streamline operations to continue to produce or offer services. Otherwise, they wouldn’t be employing anyone.
In an article on the front page of the July 23 issue of our business section, analysts trumpeted Xerox’s solid second quarter profits, touting the company’s performance in the midst of the downturn.
But buried toward the bottom of the Bloomberg News story was a line that the company cut 2,500 jobs this year.
I’m not criticizing Xerox. It and other corporations do what they have to do to remain profitable, but let’s not forget those people who are left behind in the process.

Given all the talk, figures and news stories of an economy that, while technically out of the recession, is still pretty slow as many consumers are still out of work, restaurants, in my area anyway, seem to be doing quite well. On any given night and especially on weekends, a drive through the center of Fairfield often reveals several eateries with full parking lots and patrons walking in and out their front doors at a steady clip. A few weeks ago, my wife and I entered two restaurants before finding an open seat at a third. What does this mean? Are all of these places, which range from diner to high-end, offering five stars on the trinity of food, service and atmosphere? Have they all lowered their prices to an attractive level? Are consumers spending more as the economy shows signs of recovery? Does the area’s affluence play a factor? Perhaps it’s a combination of these factors. Having spent several years in the restaurant industry from the prosperous mid-to-late 80s to the not-so-prosperous early 90s, my feeling is that, in good times and bad, people just need to eat out, to satisfy the basic needs of nourishing the body and escaping the stress of the real world, if only for a little while.

The latest commercial touting the services of locally based GE Capital to small businesses and consumers shows an all-terrain vehicle racing over a series of pristine desert sand dunes.

I hate it, especially when the GE Cap exec being treated to a thrill ride by the Polaris exec gets off the four-wheeler and whoops it up like he’s just won Powerball.

Some might understandably see this as being about polluting the atmosphere, unnecessarily burning gasoline, making unconscionable noise in the wilderness and scarring a beautiful landscape, all for a few yucks and profit.

Now don’t get me wrong, GE Capital finances a lot of necessary and wonderful things, from refrigerators to keep your food warm to — as it announced this week — musical instrument purchases to add some beauty to our lives.

And all-terrain-vehicles are indispensable tools for such things as wilderness and wildlife management, fighting forest fires, search and rescue and many economically driven activities off the beaten path.

But for the company that has been touting its “ecomagination” to stink up the desert for a joyride commercial is a little unseemly — and irresponsible.

GE, you’re better than this.

This letter came out of the Connecticut Governor’s office today:

June 30, 2010

Mr. Timothy P. Selby, President
New York Hedge Fund Roundtable
c/o Alston & Bird, LLP
90 Park Avenue
New York, New York 10016-1387

Dear Mr. Selby and Members of the Roundtable:

As lawmakers in Albany consider a proposal to vastly increase the tax liability of hedge fund professionals who work in New York – many of whom have already wisely decided to live in Connecticut – I would like to convey a very simple, yet heartfelt, message: Connecticut welcomes you!

As Governor, I stand ready to do anything possible to assist you. Our economic development professionals stand ready to help you find convenient, modern and prime office space. Our relocation specialists stand ready to aid your families in locating great homes and good schools. Our quality of life is second to none – one need only ask a colleague who already makes Connecticut his or her home about the many pleasures of living in our state.

And I can assure you that Connecticut has been pursuing and will continue to pursue a much more enlightened approach to job creation and retention and economic development.

Packing up and moving is never an easy decision – I understand that. However, I also understand that short-sighted decisions have long-term consequences. That understanding is a hallmark of good decision-making in any business. I encourage you to consider the attractive options Connecticut can offer, and invite you to contact my office directly to explore the matter further.

Best Regards,

M. Jodi Rell
Governor

New York now has the highest cigarette tax in the country after the state legislature in Albany on Monday passed a bill that adds another $1.60 in state taxes to every cigarette pack sold starting July 1. The new tax will bring the average price for a pack of smokes in the Empire State to $9.20 and almost $11 in New York City, the New York Times reported. The tax hike comes as part of an effort to close the state’s $9.2 billion defecit, which is threatening to temporarily shut down state services. In October, Connecticut raised its cigarette tax from $1 to $3 per pack, bringing the cost of cigarettes to just under $8 per pack. Large cigarette companies claim publicly that higher cigarette taxes do not reduce adult and youth smoking, but execs at these firms have fretted among themselves behind closed doors that they do indeed correlate to lower cigarette sales, according to Washington, D.C.-based tobaccofreekids.org. A recent study from the David Geffen School of Medicine at UCLA suggests that increasing cigarette taxes could be an effective way to reduce smoking among individuals with alcohol, drug or mental disorders. The study, published online in the American Journal of Public Health, found that a 10 percent increase in cigarette pricing resulted in an 18.2 percent decline in smoking among people in these groups. Researchers based their work on data from 7,530 individuals from the 2000–01 Healthcare for Communities Household Survey. As a business writer who smoked about a pack a day for 15 years until July 2006, this may be one of a few scenarios that I can think of — perhaps the only one — where I actually applaud higher taxes and lower sales — in a single breath, no less.

Condo buyers have a week to look at 28 units going up for auction at The Classic Condominiums on Sunday, June 27. Available units include eight one-bedroom residences with starting bids of $150,000 to $185,000, 10 two-bedroom units starting at $230,000 to $255,000 and a four-bedroom unit starting at $400,000. The auction at The Classic, which has been holding open houses everyday, is expected to “set the market,” according to Jon Gollinger, co-founder of event organizer Accelerated Marketing Partners, which will sell another 27 units at The Classic based on final auction prices. In a June 3 article in The Advocate, Stamford condo builder Randy Salvatore said the auction won’t have much of an effect on area condo prices, while local condo seller Joan Harakal said it will bring prices down. Only time will tell.

President Obama is demanding that BP set up a victims compensation fund to assist businesses and individuals who have been and will be impacted by millions of barrels of crude oil that are still spewing from the company’s broken well at the bottom of the Gulf of Mexico.
Initial reports indicate that the company will agree to develop the fund that will require billions of dollars.
This should not have required a demand from the president. BP should have been proactive in establishing this account long ago, knowing that it would be responsible for a financial catastrophe for fishermen and businesses.
But, true to the company’s apparent standard operating procedure, it has dragged its feet in setting up the fund.
In the meantime, the company was reportedly meeting today to consider deferring its second-quarter dividend to fund the escrow account.
It’s inconceivable that the company would consider awarding a dividend after causing one of the worst – if not the worst – environmental disasters in the history of our country.
Missing a dividend is a risk that investors take when putting their money into a business. It happens, and it should happen here.