In a last ditch effort to save Hostess Brands, bankruptcy judge Robert Drain arranged mediation talks between management and the Bakery Workers union. CNN Money reports that one day of negotiations has been scheduled for Tuesday, November 20. The judge has postponed ruling on management’s liquidation motion until Wednesday.
A bankruptcy judge has enormous leverage in most proceedings and parties generally feel obligated to defer to his wishes. It is unclear if management will improve its last offer to the union, which called for an 8% wage cut and reductions in employee benefits, or if the union is now willing to accept a concessionary contract as liquidation looms over the horizon. The Bakery Workers union is also under tremendous pressure from the Teamsters, whose members narrowly accepted their own concessionary contract in order to save their jobs.
Photo credit: Larry D Moore via Wikipedia
Section 4205 of PPACA (ObamaCare) requires any pizzeria, grocery, or convenience store with more than 20 locations to post calorie information in their store on menu boards. The way the bill is written, Dominos, for example, will have to write out the caloric information for 34 million different pizza combinations (yes, they’ve done the math on that). The OMB ranked this rule as the third most costly rule enacted during FY 2010 since it will cost each store up to $4000. It looks like the FDA is set to put the rule into effect any time during the Lame Duck session.
This is the proposed FDA menu board:
And this is what the new Domino’s menu would look like:
- This regulation has nothing to do with advancing consumer health and everything to do with financially punishing small businesses, not something a country trying to get its economy moving again needs.
- If this regulation goes through as written, Domino’s, for example, would be required to provide calorie information for all of their 34 million pizza combinations (yes, they counted up all the different combinations) in every one of their 5,000 U.S. locations.
- The required signage could cost upwards of $4,700 a year, per store location. Many of these stores are small, family-owned businesses. Coughing up almost $5000 for something like this will hurt.
- Domino’s, already committed to nutritional awareness, provides its customers with a comprehensive online Cal-o-meter.
- For many pizza lovers, it’s a shared meal so the calorie count of an entire pizza is not beneficial for one person.
- The Office of Management and Budget (OMB) ranked this menu labeling regulation as the third most costly rule enacted during FY 2010.
Here’s an Op-Ed from Dominos SEO Patrick Doyle:
Here’s a release from the American Pizza Community, a coalition of pizza chains that wants to overturn and replace this rule:
We must stop this Nanny State intrusion before it devastates this country!!!
As The Fiscal Cliff Approaches, Some On The Left Are Campaigning Against Compromise
Dem Admits: Liberal Base ‘Horribly Unreasonable’
AP: “…Obama allies worry that liberal demands will make it harder for the president to seal a bargain with the GOP.” (“Democrats Toughen Stance On Trimming Benefits,” AP, 11/18/12)
· “Rep. Mike Quigley, D-Ill., said Obama has the same problem with his party’s liberal base… ‘and the president has equally the same sort of problems with people who are horribly unreasonable.’” (“Democrats Toughen Stance On Trimming Benefits,” AP, 11/18/12)
Left Preps Multi-Million Dollar Campaign
AFL-CIO PRESIDENT RICHARD TRUMKA: “There is no fiscal cliff! What we’re facing is an obstacle course within a manufactured crisis…” (Remarks, National Mediation Board Conference, 11/15/12)
“The election is over, but the campaign isn’t. … 11 leaders of progressive and labor groups [the President] met with Tuesday laid the groundwork for continuing a campaign approach through the fiscal cliff battle.” (“Obama, Left Leaders Discuss Fiscal Cliff Campaign,” Politico, 11/13/12)
· “In another move that will intensify the brinksmanship, I’m told labor unions are preparing a multi-million campaign, including TV ads…” (“As Obama Lays Down Marker On Taxes, Labor Has His Back,” Washington Post’s “The Plum Line,” 11/9/12)
HOWARD DEAN: “Maybe 700,000 people would lose their jobs. That is a tough price to pay. But what you’d get out of it is the deficit problem is significantly altered. … I think let’s just go over the fiscal cliff. Let’s — everybody’s going to bite the bullet.” (CNBC’s “Squawk Box,” 7/23/12)
Q: “You believe that’s a viable option, going over the cliff?” … SEN. PATTY MURRAY (D-WA): “Yes.” (MSNBC, 11/14/12)
Retiring Chairman Calls For Entitlement Reform
SEN. KENT CONRAD (D-ND): “…fundamental reform, we absolutely need it in our entitlement programs, Medicare, Social Security. …we do need to address Social Security because it’s headed for insolvency as well.” (Fox News’ “Fox News Sunday,” 11/11/12)
· CBO: “With the population aging and health care costs per person likely to keep growing faster than the economy, the United States cannot sustain the federal spending programs that are now in place…” (“Choices For Deficit Reduction,” Congressional Budget Office, P.6, 11/12)
· SIMPSON-BOWLES: “Federal health care spending represents our single largest fiscal challenge over the long-run. As the baby boomers retire and overall health care costs continue to grow faster than the economy, federal health spending threatens to balloon.” (“The Moment Of Truth,” The National Commission On Fiscal Responsibility And Reform, P.36, 12/10)
· WASHINGTON POST: “Entitlement Reform Must Be On The Table … no serious [debt-reduction plan] can exclude entitlements. With Republicans in control of the House and holding 45 votes in the Senate, this is basic political realism. It’s also fiscal realism…” (Editorial, “Entitlement Reform Must Be On The Table,” The Washington Post, 11/14/12)
James Valvo, Director of Policy at Americans for Prosperity, recently wrote; “Carbon Tax Regressive And Damaging”
I don’t think the question should be, is Washington ready for a carbon tax, it should be is the American economy ready for a carbon tax? The answer to that question is a resounding no.
A carbon tax is one of the most regressive and damaging taxes Congress could propose, driving up the cost of energy, manufactured goods, and anything that is transported to market.
The harshest impacts of these price spikes would fall on those least able to cope. CBO recognized as much recently with their working paper discussing how to offset the higher costs on low-income households. The biggest takeaway from CBO’s analysis is that a carbon tax is not a free-standing policy; it must be coupled with massive new redistributions of income to adjust for the blow a carbon tax would deal to certain individuals. Some of these redistributions would be triggered automatically, like the Social Security COLA and SNAP. However, some would need to be legislated, like a beefed-up EITC or LIHEAP.
Even an increased dependency on government wouldn’t fully shield the economy from a carbon tax’s impact. The impact studies from earlier cap-and-trade proposals detail the job losses and reduced growth that carbon taxes would usher in. The ACCF-NAM study showed that the country would see nearly 2 million fewer jobs and approximately $500 billion less GDP growth, by 2030.
President Obama recognizes as much and following his first term’s deviation from economic revival down the health care and financial regulation rabbit holes, he appears hesitant to do it again. At his recent press conference, the President said: “If the message is somehow we’re going to ignore jobs and growth simply to address climate change, I don’t think anybody’s going to go for that. I won’t go for that.” He later added, “We’re still trying to debate whether we can just make sure that middle-class families don’t get a tax hike. Let’s see if we can resolve that. That should be easy.” But of course a carbon tax would be a massive tax hike on all Americans.
The President is right: Rejecting a carbon tax and its impact on the economy “should be easy.”
He’s absolutely right “The impact studies from earlier cap-and-trade proposals detail the job losses and reduced growth that carbon taxes would usher in. The ACCF-NAM study showed that the country would see nearly 2 million fewer jobs and approximately $500 billion less GDP growth, by 2030.”
Here’s the study:
Originally posted at Center for Security Policy By Frank Gaffney, Jr.
While debating Mitt Romney this fall, Barack Obama declared that he had decided to embrace the term “Obamacare” – a name originally coined and to that point only used by its detractors to tie the president firmly to the health care fiasco he had spawned. Perhaps he will, therefore, not object if we dub the escalating conflict in the Middle East by a similarly apt name: Obamawar.
After all, frantic efforts underway at the moment by assorted diplomats aimed at containing hostilities between Israel and the terrorist enclave known as the Gaza Strip (primarily by blocking Israel’s decisive retaliation) cannot obscure a dismal reality: The crescendo of rockets and missiles unleashed by the Palestinians on Israeli civilians are a predictable repercussion of President Obama’s reckless defense and foreign policies.
Consider how such attacks – and the danger to Israel and to us that is growing by day – have been aided and abetted by an Obama Doctrine that can be described in nine words: Embolden our enemies; undermine our friends; diminish our country:
- Let’s start with the hundreds of incomings Israel has sustained since Mr. Obama was reelected by the Muslim Brotherhood’s Palestinian franchise, the designated terrorist organization Hamas. These have been made possible and encouraged by the ascendancy of the Brotherhood throughout the Middle East and North Africa. That trend, in turn, has been enabled by the president’s assiduous legitimating of the world’s preeminent jihadist organization, the Muslim Brotherhood, his engaging with its operatives, in some cases (notably, Egypt) his enriching them and in others (for sure Libya and probably Syria) his arming them.
As a result, it is not just the Islamists of Gaza who think they can act with impunity against America’s only enduring ally in the region, Israel. The same goes for: the Brotherhood’s Mohammed Morsi in Egypt (who sent his prime minister to the Gaza Strip last week to demonstrate tangibly solidarity with the terrorists there); Turkey’s Recep Tayyep Erdogan (whose open hostility and increasingly aggressive behavior towards Israel is materially supporting Hamas and other enemies of this country); and the jihadist elements in Libya, Tunisia, Yemen and Syria.
- Then there’s Iran, whose inexorable pursuit of nuclear weapons has not been appreciably slowed, let alone derailed, by President Obama’s “engagement” with the mullahs in Tehran. His failure to check their ambitions and the advent of an imminent Iranian bomb is heartening to our foes, and adding tremendously to the volatility of the region.
Thanks in no small measure to such emboldening, the next shoe to drop in the region seems likely to be the overthrow of the king of Jordan. Other royals in the Persian Gulf are also in the Islamists’ cross-hairs, despite the longstanding practice by the former of generously underwriting the latter in the vain hope of buying them off. It is hard to overstate the dire implications of these prospective tectonic shifts and those accomplished in the recent past, thanks in no small measure to Team Obama and its embrace of the Islamists.
- President Obama has also contributed to the unfolding war by isolating, demeaning and otherwise undermining Israel. Arguably, for the first time in the history of the Jewish State, her enemies have grounds for thinking there is strategically exploitable “daylight” between the United States and its ally. Repeatedly in the past, even when that perception has not been warranted, the Arab nations have tried to drive the Jews into the sea. It is not hard to imagine that they will seize the present opportunity to try to achieve that long-deferred goal.
That response is made all the more probable if Israel’s enemies have the savvy to recognize favorable trends in what might be called a ”fundamental transformation” of the Democratic Party now underway that threatens to end its historic solidarity with the Jewish State. As the Washington Free Beacon’s Adam Kredo reported last week http://freebeacon.com/israel-in-the-balance/, the incoming class of congressional Democrats is, like the president, markedly more hostile towards Israel than their predecessors.
The prospects for, at a minimum, a terrible regional war are further increased by the last element of the Obama Doctrine: the diminishing of our country. Such an effect is particularly evident with respect to the wrecking operation the administration is pursuing with respect to the U.S. military. At particular risk is our armed forces’ ability to maintain the sort of presence and to project the sort of power that has proven effective in deterring aggression against us, our allies and our interests. Even if President Obama actually meant it when he said “we have Israel’s back,” he is greatly reducing our ability to honor that commitment.
History will, in due course, assign a name to the horrific war now in prospect. For the moment, it seems appropriate to give the dubious credit for helping to catalyze such a nightmare in the same way we have his monstrous health care legacy, by calling it Obamawar.
Cliff Notes: The Joy Luck Club
After meeting with President Obama last week, Congressional leaders attempted to inject a new tone of hope and optimism into the fiscal cliff negotiations — and this time, they’re promising not to take American to the brink of the December 31st deadline. But with Washington facing the same “familiar hurdles” that led to the sequestration in the first place, not everyone is resting easy. As lawmakers kick back for the extended holiday, many business owners and investors are bracing for failure.
Congressional Leaders Express Optimism – Business Community Takes Cover
While Administrations And Congressional Leaders Express Optimism On Fiscal Cliff Negotiations, Business Leaders Prepare For The Worst:
Bloomberg: “Congressional Leaders Optimistic About Averting `Fiscal Cliff’” (Mark Silva, “Congressional Leaders Optimistic About Averting `Fiscal Cliff’,” Bloomberg, 11/19/12)
“Congressional leaders emerged from talks with President Barack Obama at the White House this morning voicing confidence in solving the budgetary and tax questions needed to avert a ‘fiscal cliff’ before year’s end.” (Mark Silva, “Congressional Leaders Optimistic About Averting `Fiscal Cliff’,” Bloomberg, 11/19/12)
Harry Reid “Very Comfortable” Congress Won’t Take “Fiscal Cliff” Talks To The Brink. “We feel very comfortable with each other, and this isn’t something we’re going to wait until the last day of December to get it done,” Reid said, offering some hope of not taking the talks to the brink of the Dec. 31 deadline when automatic spending cuts kick in and when Bush-era tax cuts expire. (Mark Silva, “Congressional Leaders Optimistic About Averting `Fiscal Cliff’,” Bloomberg, 11/19/12)
Roll Call: “Fiscal Cliff Talks Kick Off On Optimistic Note” (Steven T. Dennis, “Fiscal Cliff Talks Kick Off On Optimistic Note,” Roll Call, 11/16/12)
“Talks to avert the year-end fiscal cliff began on a hopeful note at the White House Friday, with the top Democratic and Republican leaders leaving an hour long meeting with President Barack Obama expressing confidence that they can reach a deal and work toward a compromise marrying new revenue with spending cuts in the coming weeks.” (Steven T. Dennis, “Fiscal Cliff Talks Kick Off On Optimistic Note,” Roll Call, 11/16/12)
Speaker Boehner: “’I believe that we can do this and avert this fiscal cliff,’ Boehner told reporters outside the White House. (Steven T. Dennis, “Fiscal Cliff Talks Kick Off On Optimistic Note,” Roll Call, 11/16/12)
Associated Press: “Hill Leaders Voice New Confidence In Deficit Deal” (David Espo, “Hill Leaders Voice New Confidence In Deficit Deal,” The Associated Press, 11/16/12)
Meanwhile, Business Owners And Investors Are Preparing To Shield Themselves From The Fallout:
Business Owners And Investors Are Rapidly Maneuvering To Shield Themselves From The Prospect Of Higher Taxes Next Year, A Strategy That Is Sending Ripples Across Wall Street And Broad Areas Of The Economy. “In my 30 years in practice, I’ve never seen such a flood of desire and action to transfer a business and cash out,” said Kenneth K. Bezozo, a partner in New York with the law firm Haynes and Boone. “We’re seeing a watershed event.” (Nathaniel Popper and Nelson D. Schwartz, “Investors Rush to Beat Threat of Higher Taxes,” New York Times, 11/18/12)
Corporate Executives Say They Are Slowing Or Delaying Big Projects To Protect Profits Amid Easing Demand And Rising Uncertainty. “The whole world is looking for stability and clarity from the United States,” said David Seaton, chief executive of Fluor Corp., a large engineering and construction firm. If uncertainty isn’t removed, he said, “People will sit on their war chests of cash and return it to shareholders. You’ll have a retarded growth trajectory.” (Sudeep Reddy and Scott Thurm, “Investment Falls Off a Cliff,” Wall Street Journal, 11/18/12)
Nearly Three-Quarters Of The Chief Executives Attending The Event Listed The Fiscal Cliff As Their Biggest Worry On The Global Landscape—Above Europe’s Financial Troubles, A China Growth Slowdown And Uncertainty Over Conflict In The Middle East. “Going off the fiscal cliff would create a period of financial and economic instability,” the CEOs said in an action item they adopted as their top priority. They urged President Obama and Congress to “take advantage of the chance for a grand bargain” on tax and spending issues “so businesses and consumers can plan for the long term.” (Alan Murray, “CEOs to Washington: Strike a Deal – and Do It Now,” Wall Street Journal, 11/19/12)
Corporate America Is Raising The Volume Of Its Plea That The U.S. Government Avert A Year-End “Fiscal Cliff” That Could Send The Nation Back Into Recession. “If the last debt ceiling discussion was playing with fire, this time they’re playing with nitroglycerin,” [Honeywell CEO David] Cote said in an interview. “If they go off the cliff, I think it would spark a recession that’s a lot bigger than economists think. Some think it would just be a small fire. I think it could turn into a conflagration.” (Scott Malone, “Congress, Obama Playing With Dynamite, CEOs say of ‘Fiscal Cliff’,” Reuters, 11/13/12)
“We simply won’t be investing in the United States. We will be investing elsewhere where we have more certainty of the outcome,” Duncan Niederarur, CEO of NYSE Euronext, said in an interview. (Scott Malone, “Congress, Obama Playing With Dynamite, CEOs say of ‘Fiscal Cliff’,” Reuters, 11/13/12)
CEOs are not alone in this worry. The CBO report warned that failure to reach a deal could push the U.S. unemployment rate up to 9.1 percent, the highest since July 1991. It is currently 7.9 percent. (Scott Malone, “Congress, Obama Playing With Dynamite, CEOs say of ‘Fiscal Cliff’,” Reuters, 11/13/12)
Wall Street Journal: “States Brace For Possibility That Fiscal Cliff Isn’t Averted” (Mark Peters, Douglas Belkin and Josh Mitchell, “States Brace For Possibility That Fiscal Cliff Isn’t Averted”, Wall Street Journal, 11/16/12)
“State budget chiefs have begun setting aside money and looking for programs they can quickly scale back if leaders in Washington fail to reach a deal to avoid sending the economy over the so-called fiscal cliff. The challenge is particularly acute in parts of the nation that are highly dependent on federal dollars, from communities with military bases to counties in the Washington beltway.” (Mark Peters, Douglas Belkin and Josh Mitchell, “States Brace For Possibility That Fiscal Cliff Isn’t Averted”, Wall Street Journal, 11/16/12)
Businesses Have Held Back On Buying Capital Goods Until The Outcome Of Negotiations In Washington Becomes Clear. “The impacts of the potential cliff are already being felt,” Brian T. Moynihan, CEO of Bank of America Corp.’s, said. In the bank’s survey of chief financial officers, “the number one issue they see is the fiscal cliff. They tell us it’s affecting their business plan. That uncertainty continues to hold back the recovery. Simply put, our clients tell us they will not be aggressive in times of uncertainty.” (Hugh Son, “BofA Chief Moynihan Says Fiscal Cliff Already Hurts Economy,” Bloomberg, 11/13/12)
Jamie Dimon: CEOs Already Cutting Back Due To The Fiscal Cliff. “[The fiscal cliff] alone would take 3 percent or so out of (gross domestic product), that is a recession,” he said. “The problem is that’s kind of a static analysis, people’s reaction could actually make it worse… “A fiscal cliff and another recession would be terrible for America, we should do everything we can to avert something like that. So it’s not about JPMorgan. It’s about what’s right for the country.” (Deepanshu Bagchee, “Dimon: CEOs Are All Telling Me the Same Thing,” Business Insider, 10/27/12)
Congress Is Still Facing The Same “Familiar Hurdles” That Led To The Sequester In The First Place
New York Times: “At Bipartisan Budget Meeting, Familiar Hurdles But A New Attitude” (Jackie Calmes and Jonathan Weisman, “At Bipartisan Budget Meeting, Familiar Hurdles But A New Attitude,” New York Times, 11/16/12)
“President Obama and Congressional leaders on Friday reopened budget negotiations that ended badly in 2011 with surprising bipartisan bonhomie, and even some initial agreements toward a year-end deal. Yet a familiar hurdle remains before any handshakes: resolving the parties’ dispute over whether to extend the Bush-era tax rates for the wealthy.” (Jackie Calmes and Jonathan Weisman, “At Bipartisan Budget Meeting, Familiar Hurdles But A New Attitude,” New York Times, 11/16/12)
May 2011: “Taxes Remain Sticking Point In Budget Talks.” (Richard Cowan, “Taxes Remain Sticking Point In Budget Talks,” Reuters, 5/13/11)
November 2012: “Tax Rates Are Main Sticking Point On Reaching ‘Fiscal Cliff’ Deal.” (Andrew Taylor, “Tax Rates Are Main Sticking Point On Reaching ‘Fiscal Cliff’ Deal,” The Associated Press, 11/9/12)
And Despite New Warnings From The CBO, The Real Issue Of Overspending Is Being Overlooked
“CBO: Debt poses greater long-term economic threat than fiscal cliff” (Joel Gehrke, “CBO: Debt poses greater long-term economic threat than fiscal cliff,” The Washington Examiner, 11/16/12)
“Lawmakers wrangling over ‘fiscal cliff’ negotiations may have a bigger problem on their hands over the next decade, as the current rate of federal spending could drive the United States into a fiscal crisis, according to the Congressional Budget Office.” (Joel Gehrke, “CBO: Debt poses greater long-term economic threat than fiscal cliff,” The Washington Examiner, 11/16/12)
CBO: Economic Effects of Policies Contributing to Fiscal Tightening in 2013
“[I]f the fiscal tightening was removed and the policies that are currently in effect were kept in place indefinitely, a continued surge in federal debt during the rest of this decade and beyond would raise the risk of a fiscal crisis (in which the government would lose the ability to borrow money at affordable interest rates) and would eventually reduce the nation’s output and income below what would occur if the fiscal tightening was allowed to take place as currently set by law.” (Congressional Budget Office, “Economic Effects of Policies Contributing to Fiscal Tightening in 2013,” 11/8/12)
House Democratic leader Nancy Pelosi says she’s hopeful lawmakers can come to a deal to avoid a year-end “fiscal cliff” but any agreement has to include tax rate increases for the wealthy.
She tells ABC’s “This Week” that she can’t accept a deal that caps deductions and closes some loopholes but does not alter current tax rates for the wealthy.
Just to be clear: the most effective plan floating around out there is to cap deductions at $50,000 Doing so would raise about $750 Billion in revenue… about 100 Billion shy of what Democrats want. Nancy says NO! to this plan!!!
I say the Republican House and Senate should give the Dems exactly what they want, let them propose whatever deal they want, and all Republicans vote “Present.” The only way to force the Democrats and the media to own this mess they’ve made is to hang it around their heads… otherwise no matter what the Republicans do to compromise the narrative will be that they were obstructionists. The American People voted for this nonsense – let them have it!
Via Detlev Schlichter of DetlevSchlichter.com,
Let us start by looking at the economy from 10,000 feet above: After 40 years of boozing on easy money and feasting on fantastical asset price inflations, the global monetary system is approaching catharsis, its arteries clogged and instant cardiac arrest a persistent threat. Most financial assets are expensive, and many appear to be little more than securitized promises with low probability of ever delivering payment in full. Around the globe, from Japan to the US, a policy of never-ending monetary stimulus consisting of zero interest rates and recurring rounds of ‘quantitative easing’ has been established aimed at numbing the market’s growing urge to liquidate. Via the printing press, the central banks, the lenders-of last resort, prop up banks and financial assets and simultaneously fatten the state, the borrower of last resort, which, despite excited editorials against the savage policy of ‘austerity,’ keeps going further into debt almost everywhere.
‘Muddling through’ is the name of the game today but in the end authorities will have two choices: stop printing money and allow the market to cleanse the system of its dislocations. This would involve defaults (including those of sovereigns) and some pretty nasty asset price corrections. Or, keep printing money and risk complete currency collapse. I think they should go for option one but I fear they will go for option two.
In this environment, how can people protect themselves and their property?
Before I start sharing some of my own personal thoughts on this topic with you I should repeat my usual disclaimer: I provide economic analysis and opinion, food for thought. But I do not intend to give investment advice and certainly not any specific trade ideas. I provide a worldview, and an unconventional one at that. You alone remain responsible for your actions, and whatever you do, you do it at your own risk.
My three favourite assets
My three favourite assets are, in no particular order, gold, gold and gold. After that, there may be silver, and after a long gap of nothing there could be – if one really stretches the imagination – certain equities or commercial real estate.
Fox Business – Housing data will take center stage next week as financial markets take a day off on Thursday for the Thanksgiving holiday.
A report on existing-home sales is due Monday. Like many housing statistics, existing-home sales data, which measure closings of previously constructed homes, condos and co-ops, have bounced around in recent months but the trajectory seems to be moving slightly higher in the long run.
After years of an inventory glut brought about by record foreclosure levels, the number of available homes is tightening, housing experts say. That bodes well for home prices.
Also Monday, the National Association of Home Builders will release its monthly housing market index, which is compiled through a survey of NAHB member who are asked their views on the overall economy and housing environment.