November 2008


The list of culprits that contribute to global warming just got a little longer with the addition of video games according to a new report produced by the National Resources Defense Council (NRDC) , a New York based environmental organization.

According to the study conducted with the help of Ecos Consulting in Portland, OR, video game consoles are some of the biggest energy wasters consuming an estimated 16 billion killowatt hours of electricity per year- which is roughly the annual electicity usage of the city of San Diego.

The report not only attacks the energy use of the consloes themselves range from 20 watts for the Nintendo Wii to 150 watts for the Sony Playstation 3,  but states that if the systems were left on all the time that they would consume enough electricity to power two refigerators for one year.

To be honest I am all for saving energy.  I go around my home and turn off lights and unplug cell phone chargers at every opportunity.  Now I don’t profess to know how many people with video games leave their systems on all the time, but it doesn’t happen in my household and I doubt that it occurs as often as the authors of this study estimate.

I will give the NRDC credit though for picking on an industry that is ripe for attack.  With an estimated 92 percent of children between two to 17 playing video games, what better place than to develop the next generation of global warming scaremongers?

This will be an interesting battle as games become more complex and feature laden they like computers will require even more power.  Will the children be willing to trade the improvement of games and entertainment over dubious claims of saving the environment?  I think the environmentalists may have crossed the line and will face a stiff backlash from children everywhere.

After the turkey, mashed potatoes and stuffing have been eaten in gluttonous proportions and all of the football games have ended many individuals and families will then sit down and plot their strategy for the biggest shopping day of the year, Black Friday.

This year however thanks to the economic crisis that has gripped the U.S. and the rest of the world since mid-September Black Friday may leave retailers blue.

Normally the lure of deep discounts is enough to lure shoppers to stores hours before they open as they hope to snag that inexpensive flat screen television or incredible bargain on an article of clothing.  But that was the past and now in addition to pricing many items below cost to get consumers to open their wallets stores are adding extra discounts or giving away gift cards with purchases just to stimulate traffic. 

When the crisis first started the Christmas season for retailers was looking very bleak and reported sales figures by the major retailers only confirmed the toll the crisis was having on consumer spending.

But that was before gas prices dropped like a stone to less than $2.00 a gallon nationwide bringing smiles to the faces of consumers.  Yet this will probably not be enough to save the retailers from one of the worst seasons in the last two decades.

The main reason is that we still have a housing slump and foreclosures are continuing apace despite the efforts of the federal government and banks to stem the tide.  Couple that with exceptionally tight credit and portfolios that have been decimated in many cases and you have a pretty poor outlook.

For me, I might venture out to look for a bargain on some items, but I am only talking about things in the $20 range at best.  I don’t plan to map out any particular strategy or arrive early enough to freeze to death just to buy something that I probably don’t need. 

With my own portfolio back to 2004 levels and having seen some $170 k erased since the market’s peak, I am in no mood to splurge on anything.  My losses are probably small by comparison to many as I had a larger cash position than at any time in my life which for the most part spared me from losing even more money.  If I had stayed away from financials I would actually be doing quite well overall, but that’s another story.

I hope that I am wrong and that sales and profits are strong on Friday, but with deep discounting likely to be the norm, I am not optimistic.

It will take a lot of time to restore consumer confidence and anyone who thinks Obama will be able to wave some magic wand to solve this crisis is dreaming. 

The Democrats won the prize they have been seeking for the last eight years but it came with a huge downside in a slumping economy and credit crunch.  If Obama and the congress don’t turn this around quickly 2010 will be a very ugly year for them and 2012 even worse.

The Chancellor of D.C. Schools Michelle Rhee, a Korean-American running a predominantly black school system has been shaking up the establishment since  her arrival by firing poor performing principals and closing underpeforming or underenrolled schools.   Now she faces her biggest test with her pay proposal for the teachers.

Under Rhee’s plan teachers would be eligible for salary increases of up to 40% plus bonuses for student performance.  This could conceivably lift salaries to as much as $130,000 per year, a figure normally only seen by administrators in the system.  But this isn’t a free lunch.  In return for the opportunity to earn more money, the teachers would agree to give up their tenure for one year exposing them to the possibility of being fired by the hard charging Rhee.

So the teachers are facing a huge dilemma.  Do they risk their lifetime job security for the chance to increase their income?  The teacher’s union as one might expect is firmly against this proposal because it not only attacks the outdated notion that teachers should in essence have a job for life, but that teacher performance is actually important.

If the teachers aren’t willing to be judged on their performance like most workers are in their jobs then they shouldn’t be teaching.

One would normally think that such ideas or actions might be the brainchild of a conservative reformer but in this case there is nothing further from the truth.  Rhee is a Democrat who has even been praised by Obama during the campaign for her efforts and is now fighting the very same entrenched union bureaucracy that has been a large support base for the Democratic party.

Whether or not Rhee will be successful with her pay proposal remains to be seen.  But in any event she has proven herself to be an educator who actually cares about the children in a broken system and is wlling to go against conventional norms in an effort to provide the children in D.C. with a decent education.

The gay boycott hasn’t begun but the Sundance Film Festival has already decided that they need help with next year’s event to be held at the end of January.

Thanks to the slow economy corporate sponsorships have slipped and that has pinched the festival’s organizers so they are now seeking $1.5 million in state aid.  Money which the state doesn’t have.

The festival which is estimated to have brought in close to $60 million in economic activity to Utah is important in a time when business activity is slowing down.  However it seems that the Sundance officials have caught bailout fever thinking that they are so important to the state that they deserve public money to operate their festival.

I’ll bet the thought of actually scaling back the festival due to a shortage of funds sent shivers through the spines of the festival’s organizers.  After all how could they possibly look less ostentatious for the Hollywood hoi polloi that frequent Park City every year?  Would Sundance lose it’s cachet?

Rather than go after public money, Sundance should go back to its founder Robert Redford and his Hollywood pals and get them to pony up the money they need.  But then again that would be so-responsible.

The Wall Street Journal reported yesterday that despite a recession and shrinking state and local budgets public employees have been spared the pain that workers in other sectors have faced.

According to the Journal, the number of public employees in cash strapped New York City has risen froma  little over 240,000 in 1999 to almost 314,000 as of June 30 of this year.  Granted public employment dropped slightly in 2002 and 2003 when the economy was slowing down but jumped by 40,000 the next year as things picked up.

Mayor Michael Bloomberg has touted his business experience as a major qualification for running New York City yet the rapid explosion of public employee growth during his tenure defies all business logic.  As a corporation grows it will need more employees but they will also gain economies of scale and won’t require the same ratio of employees to do the work as they did when they first started operating.

But thanks to weak-kneed politicians like Bloomberg, the public employee unions have only gained more clout and have managed to increase their numbers and thereby costs to the taxpayers with ever highre salaries and benefits.  So now when the budgets are strained to the point of breaking government leaders whine about cutting services but won’t face the true problem of a bloated payroll that breeds inefficiencies.

The current recession which many economists are predicting will be the worst economic situation that we have have since the Great Depression will test mayors and governors across the U.S. as to whether or not they have the mettle to deal with the heart of their fiscal problems or punt the ball and watch the public employee unions inflcit more damage.

For a clue on what they are likely to do just watch the parade of mayors hitting Washington, D.C. who are asking the government for a piece of the bailout pie.  No pain here.

The backlash from the recently passed Prop 8 initiative in California banning gay marriage may claim the ultraliberal and gay friendly Sundance Film Festival in Utah as one of its first victims.

This is due to the suggestion of John Aravosis, editor of the liberal Americablog who suggested recently that the state of Utah be boycotted to punish the Mormon Church for supporting Prop 8.

For the festival’s organizers, the non-profit Sundance Institute founded by Robert Redford the boycott would present a major challenge as it is their major fund raiser for the year.

The next festival is scheduled for January and is expected to attract 50,000 people who pay up to $3,000 for admission to screenings and events and pumped an estimated $59.6 million into the Utah economy in 2007.

Americablog’s Aravosis brushes off any criticism about the boycott’s potential effect on a liberal organization by saying that is is unfurtunate that Sundance is located in a really bad state.

What Aravosis and other liberals fail to realize is that the Mormon Church may be the dominant religion in the state but a boycott will punish people of all faiths who have come to Utah after fleeing expensive states like California and Washington.  This has led to a lessening of both the Church’s influence politically as well as a rise in a more liberal attitude in cities like Salt Lake and Park City.

I would like to see Aravosis and his liberal friends try to convince Hollywood stars that own homes in Park City agree to boycott the state.

To complicate matters for Sundance the CEO of the Cinemark movie chain contributed $10,000 to the Prop 8 effort.  The theater where the Sundance films are screened just happen to be owned by Cinemark, and there are no other options for the fetsival so they may face protestors come next January.

In the end those that fought against Prop 8 and lost are sore losers.  The voters spoke and now they have chosen to use threats, intimidation and anything else that they can think of to reverse the result.  Since when does the will of the minority take precedence over the majority?

The US Postal Service announced yesterday that they posted a loss of $2.8 billion dollars in the fiscal year ended September 30.

The main culprits according to the USPS was slowing mail volume and costs associated with pre-funding retiree health benefits.

This continues a general pattern that despite efforts of the Postmaster General and others to cut costs and streamline the agency that as a stand alone entity the USPS can’t survive using a flawed business model.

Mail volume has been slowing for several years now and has accelerated as internet usage has increased.  How many of us now receive our bank, credit card, brokerage and other statements via e-mail instead of by regular postal or snail mail?  To add to that how many of us pay our bills online for the convenience and to save the hassle of finding a stamp?  Charities now receive millions of dollars in contributions online which helps their cash flow, but cuts mail volume for the postal service.

The younger generation has grown up on e-mail and prefers to use e-mail, text messaging and e-cards rather than mail a letter or a card.  That has resulted in a nation of youth that also doesn’t know how to compose a letter ( a different subject altogether) and once again nothing for the postal service to deliver.

And what about the current economic crisis we are in?  The wave of bankruptcies and mergers is already having an effect on mail volume as financial firms that once flooded the mail with refinancing and credit card offers have either gone out of business or cut back because the credit crunch has dried up lending opportunities.

Most businesses manage to adapt to change.  If they don’t they go out of business.  The USPS has been taking baby steps to address their problems, but their biggest one is still the one they would rather avoid.  I am speaking about labor costs.  Just like our very troubled auto industry the postal service is being weighed down by high labor costs for both current employees and retirees.  Yes that have somehow managed to reduce overall work hours but that is not enough.

As automation has swept through virtually every industry on earth the postal service is still very wedded to labor intensive activities.  But it isn’t for a lack of effort.  While they have managed to automate some tasks, the powerful labor union the represents the workers has rebuffed efforts to truly streamline the agency and allow them to reduce the overhead associated with sorting and delivering the mail.

Postal customers need to share some of the blame here as well.  We are very spoiled by six day-a-week mail delivery, cheap postage rates and literally thousands of post offices that serve a small customer base all for the sake of convenience.  Retailers close unprofitable locations, the postal service just subsidizes them as there is very little incentive to close them.

Well I hate to tell you this but times have changed.  We are in a fast paced technologically centered world now and mail services and delivery are inefficient and costly bureaucracies that need to be torn apart and restructured to meet the challenges of what lies ahead.

The postal service is an anachronism in today’s world and will die a slow and painful death unless swift action is taken to overhaul it immediately.

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