Category: Economics & Business

Why would U.S. Sugar sell to the state of Florida you ask?

Florida offered $1.75 billion, which comes to about $350 a share. That’s well above two previous offers of $293 a share that the company turned down, and much higher than the $180 to $204 its shares have traded for privately in recent times, reports the St. Pete Times, which also notes the company will get to operate for six years—and presumably earn money—before winding down operations.

CJR

And here’s the money quote: “But more than 100,000 acres of it could be turned back to farming—perhaps growing crops for use as fuel, said [Florida] Department of Environmental Protection Secretary Mike Sole.”

Hmmm. U.S. Sugar is happy, because they’re getting nearly twice the stock value. Florida government is happy, because they can go into the fuel business. And environmentalists are happy because they don’t have a clue what’s really going on. And the national news media bought it hook, line and crocodile.

That means the world’s largest auto maker has a stock market value of only about $7 billion. That compares with a market cap of about $56 billion in 2000, when the stock was at its all-time high of $94.62 a share.

To put that in even more perspective, GM’s market value is now roughly equivalent to that of tax-preparation provider H&R Block or toy maker Mattel.

Even more humbling for the auto maker, GM’s value is now:

• Half that of cosmetics company Avon
• A third of cruise operator Carnival Cruiselines
• A quarter of Internet media company Yahoo!
• A fifth of online auction house Ebay
• A sixth of retailer Home Depot
• A seventh of biotech firm Amgen’s
• An eighth of drugstore chain CVS
• A ninth of fast-food giant McDonald’s

CNBC.com

This was first posted here four years ago today, but is still valid. It’s from AlterNet:

Indeed, Costco’s pay is much, much, much better — a full-time Costco clerk or warehouse worker earns more than $41,000 a year, plus getting terrific health-care coverage. Wal-Mart workers get barely a third of that pay, plus a lousy health-care plan. Costco even has unions!

Yet, Costco’s labor costs are only about half of Wal-Mart’s. How’s that possible? One reason is that Costco workers feel valued, which adds enormously to their productivity, and they don’t leave — employee turnover is a tiny fraction of Wal-Mart’s rapidly revolving door.

Three times the pay but half the labor costs. Imagine that!

“Four years of home gains have been wiped out[.] Home prices in 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor’s.”

Calculated Risk

From Mental Floss:

The 10 Best-Paying Jobs in America

The 10 Worst-Paying Jobs in America

Typically the business media is reporting on how much Yahoo! stock was off early this week when the deal with Microsoft fell through. They need to look a little further back.

Microsoft’s intention to buy Yahoo! was announced February 1st.

On January 31st, Yahoo! stock closed at $19.18. Today it’s at $25.30; up 31.9%.

On January 31st, Microsoft stock closed at $32.60. Today it’s at $29.86; down 8.4%.

Calculated Risk reports on a house in Costa Mesa (Orange County), California, that sold for $177,500 in 1994, $600,000 in 2005, and is offered for $439,000 today.

“Yes, nominal prices in Orange County are off about 22% from the peak, and real prices (inflation adjusted) are off about 26% from the peak – but prices will probably fall significantly from here.”

The above was written the other day when the asking price was $559,000 (less than the existing mortgages). It was reduced $120,000 over the weekend. That would be a 27% drop in three years, fairly consistent with what Calculated Risk is saying — if it sells.

Here is the listing. Note the freeway sign hanging almost in the backyard. $439,000 is still $340 per square foot.

(You might notice also that the annual property tax is $6,965.)

DataQuick’s final count of Orange County home-buying activity last month shows the median selling price for all residences at $506,000 — the lowest since March ‘04 and off 19.6% from a year ago. Buyers grabbed 1,663 homes last month down 46.9% from a year ago. It’s the 30th consecutive month where total sales failed to beat the year-ago level. 

OCRegister.com via Calculated Risk.

“Perplexed by the U.S. economy? You’re not alone. Law professor Michael Greenberger joins Fresh Air to explain the sub-prime mortgage crisis, credit defaults, the shaky future of other types of loans and what we can expect from the U.S. financial markets.”

I’ve read that this NPR “Fresh Air” discussion is a pretty good explanation of what’s going on in the economy. You can get it from NPR here or as a podcast here.

39 minutes.

Two buck chuck.

Fortune: By year-end, 15 million Americans could have mortgages worth more than the value of their homes. What happens then?

Krugman: Actually, I think home prices will fall enough for us to produce about 20 million people with negative equity. That’s almost a quarter of U.S. homes. If home prices are rising, or if there’s positive equity, you can refinance or sell. But if you have negative equity, you can end up being foreclosed on, and then some people will just find it to their advantage to walk away. We’re probably heading for $6 trillion or $7 trillion in capital losses in housing.

Fortune

Krugman goes on to say:

So that’s about a 25% decline in overall home prices. Only a fraction of that’s happened so far. Of course, it varies a lot. In places like Houston or Atlanta, where home prices have not risen much compared with underlying rents, the decline will be relatively small. In places like Miami or Los Angeles, you could be looking at 40% or 50% declines.

“This is the worst US financial crisis since the Great Depression…”

RGE Monitor

The U.S. economy is beginning to look like Uncle Billy misplaced more than just the Bailey Building and Loan’s deposit.

The deal calls for J.P. Morgan to pay $2 a share in a stock-swap transaction, with J.P. Morgan Chase exchanging 0.05473 share of its common stock for each Bear Stearns share. Both companies’ boards have approved the transaction, which values Bear Stearns at just $236 million based on the number of shares outstanding as of Feb. 16. At Friday’s close, Bear Stearns’s stock-market value was about $3.54 billion. It finished at $30 a share in 4 p.m. New York Stock Exchange composite trading Friday.

The Wall Street Journal

Read it again. The company was valued at $3.54 billion Friday at 4PM and sold today for $236 million.

Feel a little like taking your money out of the bank and stuffing it into your mattress?

“The market is in the process of correcting itself. I believe there ought to be action, but I’m deeply concerned about law and regulation that will make it harder for the markets to recover.”

That’s Bush speaking today, not Hoover in 1929.

The Wall Street Journal has a fascinating and harrowing article about stores pursuing “suspected” shoplifters with civil actions — some of which amount to little more than extortion — when criminal charges can’t be brought. The article, which every shopper should read, begins:

After Miami handyman Glenn Rudge was accused of shoplifting an $8 set of drill bits at Home Depot, he thought he’d settled the matter when he showed his receipt to prosecutors and they dropped the charge.

But a few weeks later, a law firm hired by Home Depot began sending him letters demanding first $3,000, then a total of $6,000, implying he’d be sued if he didn’t pay it.

In an escalating battle against theft, retailers are going after anyone suspected of shoplifting, turning over their names to lawyers and collection firms, who pursue the suspects for stiff penalties and split the take with the retailer.

A Daily Kos diary entry about the economic stimulus tax rebate includes this great little story about one of NewMexiKen’s favorite retailers.

A few years ago I bought a TV from a store which shall remain nameless. (Best Buy) They promised me a $50.00 mail-in rebate on my purchase, need I continue? After filling out the paperwork and waiting the required 6 weeks and guessing the name Rumplestiltskin I began to make phone calls. First they claimed that the date of purchase on the store receipt was illegible, then I hadn’t checked the box on line 27, and all the other hoops that I was required to jump through.

I finally got my rebate after explaining to them that the rebate company and Best Buy were partners in this scam. Best Buy induced me to buy this television with the promise of a rebate and if that rebate was to be denied to me then our contract was void and I would return the now 2-month old TV to Best Buy for a full refund. From then on, whenever I happen to see any product with a mail in rebate, it is immediately disqualified from purchase. I think to myself whenever I see a Best Buy advertisement that they spend millions of advertising dollars trying to lure me into the store but have eternally pissed me off by promising a $50.00 rebate and then trying to worm out of it. Why not eliminate the middleman and just spit on every tenth customer coming through the door?

Apple stock is under $130, down from a high just 32 days ago of $202.

Good time to buy?

In light of the stock market and Davenetics new retirement investment strategy mentioned here Wednesday of taking the Giants and the points, Jeanne sends along a complimentary tactic:

If you had purchased $1000.00 of Nortel stock, it would now be worth $49.00.

With Enron, you would have $16.50 left of the original $1000.00.

With WorldCom, you would have less than $5.00 left.

If you had purchased $1000 of Delta Air Lines stock you would have $49.00 left.

But, if you had purchased $1,000.00 worth of beer one year ago, drunk all the beer, then turned in the cans for the aluminum recycling REFUND, you would have $214.00.

Based on the above, the best current investment advice is to drink heavily and recycle.

It’s called the 401-Keg Plan.

So let me get this straight.

If you’re over-extended and have an ARM mortgage you can’t afford, the reduction in the prime interest rate of .75% by the Fed yesterday will help reduce your upcoming payments.

But if you’ve saved and put your savings in money market funds (to avoid plummeting stocks and real estate), you will now get a lower return on your investment.

I don’t know about you, but seeing this recession coming on I sort of feel like I’m on the streets of Baltimore and I just heard somebody whistling “The Farmer in the Dell.”