HOLLYWOOD RAGS FIND ECONOMY A DRAG!

I remember the old black and white movies and the Variety newspaper headlines they would show about the celebrity character in the film. They were big (usually all caps) and often highlighted with an exclamation point. With that, I couldn't resist giving homage to this old style when I learned recently that some of the movie industries biggest newspapers are facing serious troubles.

Mediabistro notes that "for more than 75 years, Daily Variety and The Hollywood Reporter have battled to be the movie industry's top newspaper, but recent layoffs due to the recession and competition from Internet blogs has Hollywood wondering if it will soon become a one paper town."

Advertising revenues are plummeting, even during the Oscars season where it is very common for the movie studios to spend big money on full page ads to get their films the recognition they believe is deserved. There are few things more powerful than an Oscar to get people into the movies. The public relations value is without compare. Furthermore, although Variety and the Reporter are expensive to buy ad space, they are less expensive than ads in publications that have larger audience. So with those ads movie makers can hit their target constituents hard to get the statue, but this year they are not doing it.

Don't worry though, the studios are still promoting their films, but they are using bloggers and other online media rather than spending big budgets on forms of promotion that often solicits skepticism rather than interest. Here are a few factors working against the Hollywood newspapers:

• People are more influenced by the opinions of others than they are ads. Ads are insincere, "you mean they think you should watch their movie?" This is not a surprise and the movie makers are becoming aware of this reality.


• The Hollywood set are more technically savvy than the larger population. These people are less likely to wait for a newspaper or look for one when they know the absolute latest information is on their laptop or mobile. News is about currency and that is exactly what print newspapers lack. The suffering that is rampant among old media in general is even greater in Hollywood news.


• Although Hollywood fairs better than other industries in times of recession, everyone including tinsel town is operating with far more caution.

Increasingly print media is simply losing its relevance. People want what they want, when they want it. This does not bode well for print media, no matter the industry.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The States and Minimum Wage

Unemployment is rising fast and Americans are looking for quick answers. Currently, President Obama is looking for the federal government to solve that problem and, frankly, that level of government is the primary reason why we are in this mess. The federal government ended the multi-year supply-side tax cut that kept the US going and growing in spite of wars and the implications of September 11th and has continually turned to failed "bail outs" that are not only not working, but will likely lead to hyperinflation like we have only read about in history books.

I think that the President should draw on the wisdom of the Founding Fathers and look towards state solutions to the unemployment crisis. The federal system created by our nation's early leaders points to the virtues of the states as a resource for answers. I think it is exactly where the President should go for employment answers and the place to start is minimum wage.

For some reason, the minimum wage issue has not even been discussed by our policy leaders, but I believe it may be as big as a contributor to our current situation as are some of the other factors that are debated about daily. According to the Bureau of Labor Statistics, unemployment has largely been below 5 percent for years until the summer of 2008. What happen then? The Congress had raised the largest increase in the minimum wage in 16 years. In July of 2009, that minimum wage will jump again to over $7 an hour. It is doubtful the economy can sustain such an increase and as a result, the federal government should consider an alternative approach, which is to eliminate the federal minimum wage entirely because it is a deterrent to job creation.

I know, it sounds radical, but instead of the federal government in Washington, DC telling states, often thousands of miles away, where they should keep their minimum wage; the US government should simply mandate the states to set their own basements. This would create competition among the states and give them a tool to radically change their own economies. Some states (like California) would likely keep the minimum wage at the same rate. Other states might set their own minimum wage but permit cities to have lower wages still if their economies demand such. For example, Camden, NJ; East St. Louis, MO; and Detroit, MI have suffered from long term depressions long before the national recession. This would give them what they need to turn their economies around.

For years states and cities have set minimum wages that are higher than the federal mandate (for example, San Francisco's is around $9 an hour). Minimum wage is not brain surgery and there is nothing about it that would make it necessary for the federal government to set it. It makes perfect sense for it to be determined by the people who are most profoundly affected by it and those are the states and the cities through out this country.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Why the Market and Unemployment Jump at the Same Time

On Monday of this week over 70,000 jobs disappeared from some of America's largest businesses. Today, Boeing announced they were laying off 10,000 more. What was Wall Street's response? The first upward trend for the Market since Barack Obama came to office.

There is a clear divide between the short term interests of the public and business in general and an even bigger gap between the average person and Wall Street. The latter is all about profits and bottom lines. They could not be happier about the Draconian steps being taken by businesses this week for several reasons:

• When economic environments get to this point, there is nothing that Wall Street desires more than action. Often "retreat" (cutting costs and employees) is one of the most attractive actions in the eyes of investors.


• There is no quicker way to cut costs than to cut employees. Employees are one of the most expensive aspects of doing business and so Wall Street is particularly excited by such cuts. The more harsh, the better.


• Wall Street has been waiting for the market to capitulate. They have been waiting to see investors hit bottom (the DJA is now roughly half of what it was a year ago) and another indicator that the decline has plateaued is when you start to see massive layoffs. Such job losses are horrific for the recipient of the pink slip, but is great news for those who are investing in those businesses.

The job cutting is far from over. Virtually every publicly owned company is going to seek ways to increase investor confidence in their companies. There is no quicker way to achieve that following a decline in profits than through layoffs. Those who have not cut yet are watching the Market's response favorably and you can expect many more to jump on board. In fact, even as I write this, Fox News is reporting that Best Buy and Target are adding to the jobless numbers. Furthermore, many of the companies that have had layoffs also have vendor relationships that are dependent on them. As we see these companies lay people off, expect many more businesses that are dependent on them to do the same thing.

I know it looks a little dark, but these layoffs could very well be the beginning of the "light at the end of the tunnel." This hope becoming a reality depends heavily on the policy choices of Barack Obama.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Can't Find a Job? Check Out this List

So you can't find a job. Well, Fortune Magazine has just released a list of the 100 top companies to work for and many of those companies are actively hiring at this time. The benefits these companies offer are unheard of and they provide such because they want to keep their employees. They remain hungry for those employees they consider to be the best and the brightest.

Altogether there are 100 companies listed, I want to focus on the top ten.

1. NetApp replaces Google as the number one company to work for. Rising up from 14 last year, this company actually enjoyed an increase in job growth. The average salary employee makes is over $133,000 and the typical hourly employee make over $80,000 (the example was an "executive assistant"). The company provides a fitness center, compressed work week, five paid days for volunteer work, and telecommuting.
   
   
2. Edward Jones bucks a trend among Wall Street firms, rising to number 2 from number 4 last year. Average salaried employees make well over $70,00 and hourly employees make well over $30,000. The company offers paid sabbaticals, subsidized gym membership, and telecommuting.


3. The Boston Consulting Group rose from number 11 to 3 in the last year. Again, this company enjoyed job growth and the average salaried employee makes over $140,000 a year, while hourly employees make over $60,000. Hundred percent health coverage, paid sabbaticals, and a compressed workweek are among the reasons this company is so highly rated.


4. Dropping from number 1 is Google, which has been forced to drop some of the things that has made its work place famous, but is still considered one of the best companies in the country to work for. There was no provision by Google as far as salaries go, but the company is famous for its onsite childcare, onsite fitness center, telecommuting, and more.


5. Wegmans Food Mart chimes in at number five (dropping from number 3). It is unusual for a grocery store to land in such a high position. The employee incomes are among the highest in the industry, with salaried employees making over $50,000 a year and hourly income employees making close to $30,00, on average. Compressed work weeks and job sharing are among the unique characteristics of this company.


6. Cisco Systems stays the same rank as last year. Income for employees are very high, with salaried employees making over $130,000 a year and hourly ones enjoying close to $60,000 on average (the latter being for an Administrative Assistant). Onsite child care, onsite fitness center, and telecommuting are among the reasons it is in the top ten.
   
7. Genetech drops from number 5, but still maintains among the best work environments in a country (biotech) that has been hit fairly hard. Employees enjoy high incomes (over $112,000 for salaried and close to $70,000 for hourly), plus paid sabbaticals, onsite childcare, telecommuting and much more.
   
8. Methodist Hospital System. Methodist (up from ten) is part of the largest medical center in the world (Houston, Texas) and a leader in offering excellent jobs. The gap between salaried and hourly incomes is surprisingly small with the former making over $88,000 and the later making over $80,000. Furthermore, the company offers an excellent onsite fitness facility, job sharing, and a compressed work week.


9. Goldman Sachs turns up at nine (the same as last year) in spite of being a part of all the turmoil that hit Wall Street in September. The company did not provide information on hourly wages, but salaried employees make over $140,000 a year. Onsite childcare, compressed work week, and job sharing are among the reasons people love to work here.


10. Nugget Market (rose up from 12), rounds up the list at number 10. This grocery store offers very high incomes of over $116,000 for those on salary and well over $30,000 for those being paid hourly. One hundred percent health care coverage makes this company unique in an industry not noted for its benefits.
    

It is good to know that, even in a weak economy like the one we are in, that there are still excellent companies trying to make work a great place to go to.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Forbes Magazine Ranks Liberals

Forbes Magazine is one of the most free market and conservative (at least when it comes to business) publications in the country and it is one of the most authoritative when it comes to the economy. They are also noted for their love of "lists" and in light of its Right wing credentials, I was surprised to see its article on the most influential Liberals.

My surprise isn't because one can't tell that Liberals are effective, with some more effective than others, but usually Conservatives describe such while cursing and not as a compliment. I guess Forbes simply wants to keep its readers on their toes.

An obvious springboard to such a list is the fact that American politics is now dominated with Liberals, be it in the White House, Senate, or the US House. So, it does make sense to be aware of who the major players are. The following are some highlights of the list, read about the entire 25 at Forbes.com.

• Kevin Drum. Showing the continued influence of the new media, Drum is a blogger by profession at MotherJones.com, which is one of the nation's most influential liberal publications.


• Gerald Seib, Executive Washington Editor of the Wall Street Journal. In a newspaper that is noted for its Conservative pedigree, it is hard to find a prominent individual with such Liberal credentials. Don't be fooled though, Seib is not the paper's "token Liberal" but a leader in the publication's perspectives.


• Glenn Greenwald of Salon.com. Another blogger who shows up high for his influence on the media on a website that is noted for its strong, new media roots.


• Maureen Dowd of the New York Times is one of the few females on a list dominated by white males, which doesn't seem very Liberal or Progressive.


• Bill Moyers, Bill Moyers Journal. For many decades this laid back, but philosophically extreme, journalist has been one of the Left's more influential voices.


• Chris Matthews, Hardball on MSNBC. I believe that Matthews influence has become largely limited to the Left. He has been told by MSNBC that he cannot serve in an anchor role and he recently said in an interview that it was his job to make sure that the Obama Administration is very successful (see video above). This was an odd choice.


• Markos Moulitsas Zuniga , the Daily Kos. Another new media leader whose entire platform is online. I actually don't buy this choice. "Influential" means the ability to change the views of others. Zuniga merely preaches to the choir and it is an extreme one at that.


• Oprah Winfrey. I found the fact that Winfrey, who spent years above the political fray, is now recognized as a Liberal and she is probably the most influential one because she does influence people of various ideologies, without them knowing it.


• Jon Stewart, The Daily Show. I believe Stewart is effective. He is extremely smart, but not biting. Because he is likable, you want to believe him. He is very influential and most people don't realize they are being influenced.


• Thomas Friedman, New York Times. Friedman may be the intellectual Godfather of the modern Liberal movement. His cool style and bright analysis makes him difficult to debate.


• Arianna Huffington, Huffington Post. Huffington is another new media leader and she lands very high, at number two. She is extremely Liberal, but I think she is bright and makes the website reader do a little work before they realize its philosophy. She even has a few Conservatives on the site.

It is an interesting list and the vast majority on it are in the opinion making business. I think that culture (Jon Stewart and Oprah Winfrey), play a bigger role on Liberal influence. However, the great thing about lists is their capacity to begin debates. The debate on the influential Liberals begins at Forbes.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Only Barack Obama Could Pull this Off and it Would Cure Economic Woes

Every week we here of increasingly higher jobless numbers and policy makers are dumbfounded as to what to do about it. Approximately one year ago we had virtually full employment at around 5 percent unemployment. At current trends, it will likely be ten percent or higher by the end of the year, unless something miraculous happens.

However, we are not hearing about any stroke of genius, but rather traditional government "solutions" to economic problems. We are hearing about "make work" programs and "bailouts" that have government at the center of the solution. It is interesting that Barack Obama, who was marketed as an agent of change, would find his solutions in the waste bin of government created work, for answers. He needs to go deeper, he needs to pursue an entire paradigm shift.

Obama campaigned as a candidate who supported transparent government, but there is nothing more deceptive than our current tax system that discourages wealth creation and places businesses in the role as tax collector. Remember, businesses don't pay taxes, they are merely tax collectors. Taxes are a fixed cost of doing business. If taxes on businesses were eliminated, consumers would enjoy the savings over night because businesses couldn't afford to be reluctant to transfer the savings due to competition. These taxes on businesses are the single force undermining job creation today. They force businesses to find countries that are cheaper for doing business, be it in labor, taxes, or other factors. Currently, the US has the second highest tax rate of any industrialized country in the world and we do not even want to compete with cheap salaries (nor can we). Eliminating dishonest business taxes would restore some transparency to government and create many more jobs. It is as simple as that.

But those taxes would have to be replaced with others and the only honest place to raise those revenues are directly on the people and on their consumption (rather than income), however challenging to pursue. This is contrary to Obama and the Democrats class conflict philosophy, but it is the most honest, efficient, and the least damaging on all job creation (in fact, it would generate more jobs). Obama could make history with these realities.

No one, but an anti-Communist like Richard Nixon, could open relations with the Chinese. If any President who had a history of being "soft" on Communists open these doors, they would have been denounced and dismissed. Nixon brought an element of surprise that made the move possible. So, too, was the case with Bill Clinton who truly did end "welfare as we know it." It took a progressive Democrat to break the cycle of poverty that was holding the poor hostage. If a Republican President had proposed such a policy he would have been dismissed as being "cruel" and "heartless." To change our tax code towards a consumption system would require a similar element of surprise and would need to be done by someone who has promoted himself as a champion of the poor. That describes Obama very well.

With such a policy, the only serious challenge he would face is among his fellow Democrats in Congress. However, if he continues to pursue policies that destroy jobs, he will likely have a Republican Congress in 2011. This is a similar situation that Bill Clinton had in the 1990s in which a Republican Congress played a role in getting his reform passed. Clinton's welfare reform is one of the greatest policy achievements of the second half of the 20th century. A change in the way we collect taxes by Obama could be one of the greatest policy achievements of the 21st century and it is one many would love for him to seriously consider. Especially those facing unemployment.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Apple Faces a Very Small Business Problem

When a business owner gets ready to sell, one of the very first questions a business broker or marketing consultant will ask is "does the business have an image outside of the business owner?" So many businesses completely link themselves to the owner that, if the owner died or was forced to quit, the business would be seen as being in serious trouble.

This is a problem that is typically associated with small to medium business. It is the mattress store that is known by its energetic owner that will "save you money," or the carpet guy who is convinced that his company is the only one that really knows its trade. Big companies tend to have enough products, services, and prestige to stand on their own.

There have been big companies that have lived a little dangerously in this regard. Lee Iaccoca "single handily" saved Chrysler and there was huge concern about the company surviving without him. Ever since Orville Rickenbacker passed away there has been a void in the popcorn company. Old commercials of the now dead founder are designed to remind viewers that the company has not wandered far from its roots. The death of Wendy's founder, Dave Thomas has created a similar void for which the company has yet to recover. The company continues to appear to be interested in being bought by another country. But the situation with Steve Jobs of Apple is creating a situation that we simply have not seen before.

The Seattle Times reports that "for months, Apple's shares have gyrated on rumors and bogus reports that Steve Jobs was in ill health. Recently, Apple said Jobs suffered from a treatable hormone imbalance. But optimism didn't last. Jobs began a leave of absence Wednesday saying his health issues were 'more complex' than thought. Shares opened sharply lower Thursday, and closed down 2.3 percent. On Friday, the stock declined 1.3 percent, finishing the week at $82.33."

Steve Jobs is a cultural and business icon of amazing proportions. We have seen very few like him before and I doubt we will see very more after. This leader has taken many products from idea to best seller and he has had his finger prints on those products. His linkage to the company is so profound that his ill health, could lead to a serious sickness for his company.

The challange for Apple is to determine a way to transfer some of the founder's prestige to the company itself and that seems to be no small challenge.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Bush Finally Gives a Little Justice to Border Patrol Agents

Two Border Patrol agents became front page stories in 2005 after they shot a Mexican drug runner. This drug runner complained to Mexican authorities about how he was treated (how dare the US not allow this illegal smuggle drugs into our country) and the next thing you know Ignacio Ramos and Jose Alonso Compean were serving eleven year and twelve year terms respectively.

The conservative movement was up and arms. How could two law enforcement officers be put in jail for carrying out their duties? For years we have all been frustrated by impotent agents who watch illegals cross the border and do virtually nothing to stop it. Considering what these two men went through, do you blame them?

What they went through was nothing short of horrific. Ramos and Compean were treated like the most hardened criminals in the system. Like those individuals who continually perpetuate murders and other crimes once in prison, these former agents were placed in solitary confinement and were let out only one hour a day for exercise. Why such harsh treatment? Because if these former law enforcement officials were part of the general population they would be walking around with targets on their backs. Such harsh treatment was the only way they could protect them.

According to psychologists, this form of isolation is among the ugliest forms of punishment individuals can face. People are social animals by design and to be unable to communicate with others only leads to mental health issues over time. For two years these men lived under such harsh circumstances.

Finally, Ramos and Compean are having their sentences commuted and I join millions of Americans who are glad to see this happen. However, I am also wondering how it took so long to happen. Furthermore, instead of commutation, I join the vast majority who have an opinion on these convictions that believe they should have never have been found guilty in the first place. They should have been pardoned. A commutation will still allow these convictions to haunt them with a prison record and they will never be able to serve in law enforcement again.

I'm glad that these two men who had the courage to do what we have wanted our agents to do for quite some time and that they are finally getting their freedom back. It would be great if they could get their reputations fully restored as well.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

New Bank of America Logo, Sign of the Times

I often wonder what goes into the decision making of some of America's companies. The American people have felt as though they have been mugged by the federal government as it confiscates their income in an attempt to bailout Wall Street's fiscally irresponsible financial institutions. One of the biggest beneficiaries of that bailout, and a company that has just this week gone back for more, is Bank of America (requesting and going to receive an additional $20 billion, adding to the billions it received and making the bank the biggest beneficiary of the bailout at $45 billion).

In the last couple of days I was driving home and I noticed something different about the Bank of America branch just a few blocks from my home. It was entirely trimmed in red! The blue "Bank of America" words are now floating in what looks like a red ocean. It is actually a very ominous sign of the times.

For the millions of Americans who are offended by mega corporations receiving bailouts, this seems like a very odd memorial to the debt ("in the red") we are all in. The Bank of America seems to be celebrating this financial blood bath. It is the Bank of America's way of thanking us taxpayers for the tens of billions it has received in a bailout.

That leads to another issue. So the Bank of America has hit hard times. They line up like all the other financial institutions, car companies, porn executives, and other white collar free loaders at Capital Hill, and actually receive billions of dollars. Among the first thing they do is change their signs? I would think that would be expensive for the many branches. Following this expenditure they turn around and ask for more? You have to give them credit for their audacity! But the person who was behind this new sign decision should really be looking for another job.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

"Tim the Tax Cheater" is Obama's Answer to "Joe the Plumber"

During the final days of the 2008 Presidential campaign, Sen. John McCain was finally able to steal some of Barack Obama's thunder with a guy in Ohio who was later known as "Joe the Plumber." Samuel Joseph Wurzelbacher of the city of Holland became something of a rock star(and even shortened his name to "Joe") after he casually encountered Barack Obama walking through his neighborhood and held the Senator accountable on his views of taxation. Essentially, Obama told Joe that a little wealth redistribution is "a good thing."

Well, Obama survived Joe and was elected President by a solid number and is well on his way to appointing his new Cabinet. His choices have been surprisingly conventional. Most have strong academic credentials and big business backgrounds, although few have any experience making payroll for employees (something that I think most Americans would like to see in their governing leaders).

The President Elect's choice for Treasury is Tim Geithner, who was considered some what of a moderate choice and was even a George Bush appointee for another office. Most considered him a "shoe in" until it was discovered that Geitner didn't pay his self-employment taxes for four years. According to Time.com: "Before becoming President of the Federal Reserve Bank of New York, Geithner worked for the International Monetary Fund in 2001 and 2003. While he had paid all of his income taxes on his IMF earnings, he failed to pay self-employment taxes. (Geithner had initially done his tax returns himself, but an accountant preparing an amended return in 2002 also failed to catch the mistake.) Geithner voluntarily corrected that mistake upon discovering it on November 21, 2008, during the Obama transition vetting process, and paid an additional $25,970 as a result."

The story isn't that simple. Geithner did not pay these taxes for four years, was caught in an audit for two of those years, and only paid those two years at first. He didn't pay the last two years until he was appointed Treasury Secretary. You would think he would have remembered the other questionable years during the audit. This, and the questionable immigration status of one of his domestic servants, makes a "sure bet" a little less sure.

The down side to this situation is obvious -- a man who oversees our economy and the IRS, but does not pay taxes is certainly an issue of concern. But maybe there is an upside. Millions of Americans have complained about how complicated our tax code is and now we have a Secretary of Treasury designate who has been confused about it also. He is a sympathetic character. And like millions of Americans who are tempted to avoid full disclosure when caught, it appears he actually succumbed to the temptation. The extreme Right might love this guy as a tax defector.

My instincts tell me it isn't going to spin that way for Geithner. Instead it will likely be seen as part of the hypocrisy and elitism that is so common in government. Politicians telling us to "do as we say and not as we do." With the withdraw of the Commerce Secretary designate and the battle over the Transportation Secretary designate (because of his love of earmarks while in Congress), the Obama transition has gone from one of the smoothest to one that could be called the Titanic.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Will CBS 60 minutes Get a Pass on the Oil Boom?

This past Sunday 60 Minutes (CBS) did an "expose" about the forces behind the explosive increase in oil prices. Unfortunately, they limited their discussion to mere oil speculation and missed several other factors that drove prices up. A few of them include:

• The rapid drop in the value of the dollar since 2001. There has been a 40 percent drop since that time. This alone would lead to an increase in fuel costs.
  
• People seem to forget that the wars in the Middle East are in the heart of where oil is produced. It doesn't take a rocket scientist to understand that the possibility of disruption can lead to an increase prices.


• Since 2001 there has been a rapid increase in all commodities, not just oil. Some of those commodities have seen a bigger increase than oil. Is there collusion going on in all these industries or are there simply larger business pressures playing a role? 60 Minutes didn't even consider this possibility.
  
• 60 Minutes completely ignored the link between an expanding economy (which increased the demand for oil and therefore led to higher prices) and the recent recession (which has decreased demand and recently led to lower prices). This is something that would be covered in a high school economics class, but again ignored by 60 minutes.


• There was no mention in the dramatic change in geo-politics since September 11th, 2001, including the rise of al-Quada, the growing hostilities in the Middle East, the disdain of Hugo Chavez of Venezuela towards the US, and the Nigeria crisis that has led to a disruption of supplies. These are among the factors that 60 Minutes did not even consider.


• Then there is the rapid economic expansion of China and India that has only added to the demand on every commodity (as mentioned earlier), including oil. Again ignored by 60 minutes.


• High prices in fuel led to a dramatic decrease in travel in the US by several billions of miles. This has led to a decrease in demand and a decrease in prices. This further proves that there was more than mere speculation involved in the rise of fuel prices.

These are just a few of the things 60 Minutes didn't address. One can easily go on, unless you have an apparent agenda like CBS. So far, virtually everyone in the media has given the network a pass, with the rare exception of Eric Bolling at Fox Business. Currently he is one of the only serious financial journalists to address the poor reporting by CBS. Maybe most journalists simply didn't watch the CBS program or maybe they don't believe they should hold their fellow news journalists accountable. All I know, is that the news industry needs to be held to a higher standard.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Madoff Stays Free

If you listened to the business pundits, you knew Madoff was going to jail. After all, he is accused of stealing over $50 billion from his victims. To make matters worse, FBI agents discovered checks made out in Madoff's apartment to family members in what appears to be an attempt to hide his wealth. To the surprise of pundits, neighbors, victims, and more, Madoff is not going anywhere. He remains in his comfortable New York City apartment.

It seems odd that a person who is in such a terrible mess would find any day to be a "good one." But considering the pressure he is currently under, he probably feels as giddy as a kid at the amusement park. This was a close one. Fox News is reporting Madoff could stay in this apartment for years as they proceed through the legal process, but I wonder how he can afford to do such. His apartment is very expensive, he is under house arrest (making it difficult for him to "get a job"), and he doesn't strike me as the type that would start a home business.

Bloomberg reports that "U.S. Magistrate Judge Ronald Ellis in Manhattan today said Madoff, arrested last month for running an alleged $50 billion Ponzi scheme, may continue to live under house arrest in his Manhattan apartment on the Upper East Side. Ellis imposed new conditions, ordering Madoff to compile an inventory of all items in his home and barring him from transferring property." So although he remains far more free than he would be in jail, he is far from off the hook and, in fact, he has additional requirements on his release.

Everything from a TV remote to every spoon in his kitchen will have to be made accounted for, put on the records, and stay in his possession until the issues surrounding his case are settled. He will be spending months getting this job done. Furthermore, he has every incentive to drag this process on in order to delay the judicial process.

What I find odd about Madoff is that he is so incredibly cool. He acts as though he was slapped with a parking ticket and not the type of crime that could keep him in jail for the rest of his life. Don't get me wrong, I'm not impressed. In fact, I think that his apparent detachment from this reality may be an indication of serious mental health issues. Imagine if he wins his case due to being not guilty, due to insanity. Anything is possible and it would make quite a news day.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Why Bush's Consumer Driven Tax Cuts Didn't Work

For decades Republicans wisely discredited Democrat attempts to provide small and modest tax cuts for the middle and lower class at the expense of those with higher incomes, simply because such polices are ineffectual. In 2008, as Republicans were fighting for their political lives, President Bush passed just such a package. Most Americans received checks that were designed to make them go out and buy a new TV, maybe take a vacation, or even use it towards the down payment on a car. I predicted on my radio show that it wouldn't work and have defined effective tax policy often in this blog. I hate to say I told you so, but they didn't work. Instead, people used them towards their mortgage so they can stay in their home one more month, others paid on a credit card, and others still put it away for a rainy day. Very few used it to jump start the economy.

This "demand side" tax cut (meant to increase consumption) has the potential of giving all tax cuts a bad name. Supply side tax cuts have a much different effect. These cuts are usually long term (multi year in scope) and proportional (giving as big of a percentage to the affluent as those in lower income brackets). The amount of savings for the affluent -- who pay the vast majority of all the revenues the government acquires annually -- are typically significant enough to lead to the creation of new jobs, the expansion of businesses, and to stimulate the economy. History has proven this to be true.

Calvin Coolidge passed a massive tax cut that led to one of the greatest expansions of the economy in US history during the 1920s. In the 1960s, Presidential candidate John F. Kennedy eloquently stated that it was imperative to "get the economy going again" and believed that tax cuts would lead to a "rising tide that will lift all boats" (rich as well as those not so rich). Those tax cuts, which were predicted to lead to a depletion in revenue, let to one of the last balanced budgets the US enjoyed for decades and economic expansion. In 1980 Ronald Reagan inherited one of the worst economies since the Great Depression and he attacked taxes with a plan that was largely modeled after the Kennedy tax cuts. That tax bill was called a "jobs creation act," which is exactly what supply side tax cuts achieve, and it lead to one of the strongest periods of economic growth in US History. Finally, following the technology bubble burst at the end of the Clinton Administration and the tragedy of September 11th, President George W. Bush used supply-side tax cuts to create an economy that sustained the lowest unemployment for the longest period of time since the early part of the 20th century (years of full employment). He followed that up with the ridiculous consumer tax cut of 2008 that did nothing to move things in the right direction and has left many scratching their heads. Not all tax cuts are alike.

The dramatic decline in the economy is actually linked to the end of the Bush supply-side tax cuts, that had to be approved each year by the Congress in order to stay in effect. In 2006, pro supply-side Republicans were beat by Democrats who opposed those policies. The businesses that largely drive the economy knew their days were numbered. The results were almost instant. After less than two years unemployment went from 4.5 percent to 6 (and is now pushing 7), consumer confidence reached an all time low, and the Dow Jones went below ten thousand for the first time in four years (is is now typically between 8 to 10 thousand). 2008 should have been a Referendum on the Democrats. Instead, Americans decided to consume more of the poison that is destroying the economy.

Americans need to know the difference between consumption and supply-side tax policies, and remind their representatives of those differences before the next election cycle.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Government Needs a Primer on Money

When you ask the average person what inflation is, they will tell you "high prices." This is like saying that a person with pneumonia merely has a fever. Both are partial descriptions, but very incomplete.

Inflation is more accurately described as "too much money chasing too few goods." Simply put, as we increase the supply of money but not the productivity you have higher prices and so much more. The hundreds of billions (and now trillion plus) that is being spent by the government for bailouts will come from printing money, as well as other sources. Currently, twenty percent of every tax dollar goes to paying the interest on the debt. That makes printing money more attractive, in spite of the potentially negative consequence, and those consequences are significant.

• Such pumping of money into the economy will lead to a massive devaluation of the currency over time and a significant increase in prices.



• Wages will grow artificially high, which will lead to many moving into higher tax brackets even as the value of their income declines.



• There will be an obvious need to increase interest rates, regardless of where the government sets them, because businesses have to make sure that what they receive back is more than what they loaned or provided in credit. This is one of the reasons why interest rates have not gone down for consumers and others, although they have gone down for lenders. It is not mere selfish greed, but self interest in protecting their share holders.



• New businesses will find it more difficult to start up because of the perceived decrease in its future value, because of the instability of the money supply. These business will find it difficult to find investors, markets, or any future at all.
  

The bottom line is that calling inflation "high prices" simply does not give this major problem justice. Unfortunately, I am fairly confident that many, if not most Americans are unaware of how far reaching inflation can be. I have heard people say, "why doesn't government just print money to solve deficit and other problems?" If a large quantity of money made people rich, Zimbabwe, Guinea, and Yemen should be among the richest countries in the world. They are not, in fact they are among the weakest, and they also have the highest inflation.

Pouring more money on this economy is the equivalent of pouring gasoline on a fire. The projected long term consequences could be devastating.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Is the Federal Government about to Create a Consumer Bank?

Back in September, when Wall Street suffered a horrible meltdown, we were told that $800 billion being pumped into financial institutions through taxpayer dollars would get the "economy moving again." Four months later and we could not be more amazed by the delays in the process. Essentially, the major banks have enjoyed a massive gift that make them more secure, but they have done nothing for the average consumer.

As a result many Members of Congress in both the House and Senate are up in arms and are about to declare that they will not take it any longer. The way I believe they may respond, is by taking the $300 billion plus left from the first bailout and additional dollars from the $1 trillion in being proposed by President-Elect Obama, to create a government based, consumer lending bank.

I don't believe they will make these banks "within" banks or even attempt to run the programs through credit unions, but will make them separate, government run, institutions. They no longer trust the banks to be altruistic, which I think was foolish to believe they would be in the first place. Banks are largely successful because they are self interested and run on the profit motive. Banks are only behaving like banks.

That leads us back to the new, government driven, banks that I believe are right around the corner. These new institutions will run with the efficiency of most government bureaucracies, which means they will continuously be running deficits, will be unresponsive to consumer needs, and will possibly undermine the competitiveness of private banks because it is very hard to compete against free or cheap money.

Since Wall Street is so dependent on private banking, the possible rise of these lending institutions will only further drive stock market fears. These banks will create ever more unpredictable investment environments and further drag the economy into despair. Although it is true that many bankers have made horrible decisions (mainly driven by political pressure from organizations like ACORN), such poor decision making would become standard with government run banks. Instead of making investments based on possible returns, they will be based on altruism and political pandering. If you ever wondered what the expression that the "road to hell is paved with good intentions" means, wait until you see these new banks.

Government leaders continue to seek short cuts and political solutions to our economic situation. Members of the US House of Representatives will all be fighting for their political lives in just two years and the President is not that far behind with his four year term. With these type of election cycles, the pressure is on to improve thing immediately, even if the consequences are potentially harmful in the long run.

A good doctor would allow some of these economic woes to run their course and not keep applying quick fixes to long term problems. Our financial institutions, like the economy in general, need a time to heal and not so called "reforms" that promise to have devastating long term consequences.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Get Ready for Chicago Style Politics

Barack Obama has yet to be inaugurated as the new President of the United States and his Administration is already mired in controversy. First, there were the concerns over how his campaign was financed at a sum well over $600 million (the most ever in any US Campaign) with extremely weak accounting on the part of the campaign and concerns that he received monies from foreign countries. Then there were questions regarding whether Barack Obama was a naturally born US Citizen, which remains unanswered. Next there was Illinois Governor Rod Blagojevich allegedly trying to sell a US Senate seat and Barack Obama denying there were any communications between the governor and the President-Elect's office, followed by the then jaw dropping discovery that Obama's Chief of Staff did, in fact, have conversations and they were on FBI recordings. Finally, the President's choice for Commerce Secretary, New Mexico Governor Bill Richardson, has had to withdraw his name from consideration because of on going corruption charges.

Richardson shocked the political world by endorsing then Senator Obama during the Presidential race, while slighting the Clintons who gave him much of his impressive resume. Obama rewarded Richardson with the very high level Commerce position. Unfortunately, scandal has followed Richardson and MSNBC reports that a "federal grand jury is investigating how a California company that contributed to Richardson's political activities won a New Mexico state contract worth more than $1 billion. Richardson said in a statement issued by the Obama transition office that the investigation could take weeks or months but expressed confidence it will show he and his administration acted properly." The story goes on to point out the extent of the alleged link between the California company (CDR Financial Products) and Richardson: "The largest donation, $75,000, was made by CDR in June 2004 — a couple of months after the transportation financing arrangement won state approval — to a political committee that Richardson established before the Democratic National Convention that year. "

The media has yet to mention the fact that this Obama Administrated has already faced more concerns of corruption than many Presidents face in four or more years. Americans can expect to see much more of this in the next several years. Obama cut his political teeth in Chicago and that city is the most politically corrupt city, in the most politically corrupt state, in the Union. Eventually I am afraid we will all be in awe of what we witness from the Obama Administration. I eventually believe that Obama will bombard us with so many examples of corruption that we will become desensitized to it.

The state of Illinois has become notorious for its political corruption. The FBI in charge of the Blagojevich case has said that if Illinois is not the nation's "most corrupt state," it certainly is a major contender for the title. Three former Illinois governors since the 1960s have gone to prison, including the governor before Blagojevich, George Ryan. It is not uncommon for dead people to vote in Chicago elections and charges of "pay to play" for contracts are common place. Again, this is where Obama learned politics. Washington politics are corrupt enough without the hardball style that is known in Chicago. Because of the media and its love of a good scandal, I believe Obama's effectiveness will be continuously plagued and weakened with charges of corruption.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Jett Travolta's Death Says Something About News Authority

I was surfing around the Web today while watching football games and I stumbled on a notice that John Travolta and Kelly Preston's son, Jett died today while they were vacationing in the Bahamas. I wasn't particularly familiar with the site and so I immediately went to look for more information. After all, as a person who was a teenager in the 1970s, I was as big a John Travolta fan. Also, Jett's news was tragic regardless of what you thought of his acting parents. Soon I found TMZ reporting this and I knew that site had more credibility than most entertainment news sources, but this young man was only 16 and the source was still "entertainment news." I was looking for a more reliable source.

Soon I began to find it in more traditional sources and learned that young Jett often suffered seizures and John Travolta had been quoted saying "we almost lost him" in a TV interview a few years ago. However, the cause of death was conflicting. Some sources said he injured himself in a bathtub, while others said it was a seizure. I assume it will be concluded that if a head injury was involved, it started with a seizure.

It took a few"clicks" before I found a page that I considered authoritative and it made me think about the way people perceive web sources. In spite of the rise of blogs -- there are over 133 million of them on the Internet -- I believe people still want to get their news from traditional sources. The more traditional, the better, it appears. I didn't fully embrace the validity of the story until I read it in Reuters (showing my bias for business news I assume).

As someone who writes four or five posts a week, I find this a little disconcerting. Although it is true that some blogs carry more authority than others and this one is written by someone with twenty plus years experience in journalism, it is still a blog. When I did my search based on authority, I instantly dismissed articles that were blog sources.

There are reasons why there are 133 million plus blogs on the Internet today and it isn't because people have nothing better to do than write them (well, not all of them at least). I know many read mine, as I find quotes by me on other blogs and news articles and I get emails and calls from others about my posts. But the gap between traditional and new media remains obvious.

Note: I hate for my analysis to distract from the tragedy of the passing of a teenager who is far too young to die. However, I will leave stories about him to those who are more eloquent than myself to write such. I leave it to those who know him and the family far better than I do. As a father, I find this story particularly tragic and send my sympathies.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Gift of Ronald Reagan for Christmas

As a parent I love to watch my children enjoy the presents they receive. When you have as many kids as my wife and I, gifts to one another are simply not a priority. The most memorable gift I may have received was from a couple we know (Archie and Robin Arredondo). There is a huge group of friends that participates as "secret Santas" made up of a families we know. Archie was my secret Santa. We know around Thanksgiving who has who. A few weeks ago, Archie and Robin asked my wife what I like. Wisely, she said "anything with Ronald Reagan." She naturally thought -- as would I -- that I might get a great tribute book (like my daughter gave me a couple of years ago) or a T-Shirt (like my sons gave me on a Father's Day). Archie would have none of it, he went on a quest at eBay.

What I received was a Ronald Reagan action figure. Move over GI Joe, here comes the Gipper. Okay, it was more like a talking doll with a push button instead of a string, but it was one of the most thoughtful gifts I have ever received and it is the type of gift that keeps on giving. Americans, everywhere, should be familiar with the quotes of Reagan and this gift was full of them. The following are a few examples from the "Great Communicator."


* "Above all, we must realize that no arsenal, or no weapon in the arsenals of the world, is so formidable as the will and moral courage of free men and women. It is a weapon our adversaries in today's world do not have."


The statement was even more powerful when delivered two decades ago when our primary enemy -- the Soviet Union -- had become weakened after decades of brainwashing and lies from its bloodthirsty regime.



* "Entrepreneurs and their small enterprises are responsible for almost all the economic growth in the United States."


Where was wisdom such as this when the federal government decided to bailout Wall Street, while taxing the backs of Main Street?



* "Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same, or one day we will spend our sunset years telling our children and our children's children what it was once like in the United States where men were free."


Bravo! Most parents enjoy giving their children the fruits of our freedom, but are not doing enough to pass it on to the next generation. This is a message that must be conveyed.


* "The government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."


One of my favorite Reagan quotes.


When I was a kid the "in thing" was a GI Joe action figure. I think every child should be given a Reagan action figure so we can raise another generation of adults who enjoy freedom. A Reagan action figure is the gift that keeps on giving.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.