I Got your REAL State of the Union right here
by Daniel J Becker (DOLB for the rest of you)
UPDATED BELOW.
Well, I thought being tonight is the big night for the President I would give my version of the SOU. This is an update on the flower shop. For any new readers, these are real numbers from an honest to goodness small business.
As you can see from the chart below, or maybe not, I don’t need a loan. I don’t need a tax break. I could use a real national health plan as the medical for this year again, including premiums hit $15K (16.5 and 17.7 prior 2 years). I have a high deductible plan that increased from $6471 in ’06 to $7195 in 2009, 11% up.
No, even if you did the cash for clunkers again, I don’t have the extra cash flow to take a loan. Though the delivery van has 235K miles on it. It’s a 2002 Caravan.
All my loans are fixed, so I’m not worried about deficit fueled inflation as it relates to my monthly payments. My property, even with the 15% loss in the last 2 years based on tax evals is still 1.69 times more than my mortgages and I only have 15 or less years to go.
We’re working with less people at the shop and have layed off our manager/worker (he’s fast, a good designer and can carry the load when we’re not there) to 1/2 time. We’re watching every penny as to inventory, utilities, insurances (I’m getting money back on the WC because payroll is down).
There is only one thing that will fix it: CUSTOMERS!
So, let me be clear to the Congress and the President: I NEED CUSTOMERS…WITH MONEY!
Update: A commentor asked for some more data.
Ins, Maintenance, Rent, Utilities, and Property/inventory taxes are 13% of gross. Payroll is 25% Payroll is down 14%, but gross is down 16%. We can cut payroll more, but the issue becomes my sweety having some down time. (please no lectures). Payroll was 25% of gross last year.
Supplies (what we sell) were 48% of last years gross, this year 47%.
Nicely stated Dan. My experience up here as well.
I was talking to a key account manager for Herr’s potatoe chips, who had a similar experience. His key account is Redner’s Supermarket in PA. The buyer from Redner’s told the Herr’s rep that his chip sales to his chain are down 9% for 2009. The buyer said that’s not bad, but his customer count is down more than 9%, he told the Herr’s rep the biggest problem his store chain has is trying to get customers in the store.
DOLB,
I NEED CUSTOMERS…WITH MONEY!
Well, look at the bright side of healthcare apparently going down to defeat. There will be another batch of 46,000 deaths this year, so stock plenty of mums and other funeral flowers.
Oh 2slugbats, your crude. 😀 But that is the gist of it. Only, the dollars per sale are also going down.
One other trend. We’re open 7 days/wk. Sundays we now go with no one calling or coming into the shop on some days.
Oh 2slugbats, you’re crude. 😀 But that is the gist of it. Only, the dollars per sale are also going down.
One other trend. We’re open 7 days/wk. Sundays we now go with no one calling or coming into the shop on some days.
Phenomenal speech by Obama tonight!
The Obama administration is in the beginning stages, I fear, of collapse. Progressives thought a black President would end racism in the US. Instead it has stoked the fires of it (disguised of course) and the plutocrats have him on the run. Pretty soon the party will turn its back, etc. It was very foolish of the Democrats to think a black President could ever be successful. Not in the USA.
Or to put it more succinctly: the USA wasn’t readly for a black President.
This is parody, right?
If things get any worse for Obama, and I suspect they will, since the plutocracy knows now it has him on the run, he ought to resign and turn things over the Biden. He could very usefully say that his race made it impossible for him to be effective in the office and that a white President would be better for the Democrats and for the nation. It would be a moment of brutal confrontation with who we really are and just might pave the way for a successful black President in the future.
PS You know he’s had it when he loses the support of people like Krugman. Krugman thinks Obama caved in to the plutocrats. He doesn’t understand that given his race Obama didn’t dare take them on. Krugman doesn’t completely understand the problem a black President faces.
We all need customers with money.
I should look at the bright side of breaking up with a gf over the holidays. I didn’t have to buy her anything, and I now can pass right by the flowers this valintine. Sweet.
Why are you so focused on the President’s race? Were you also focused on Hillary’s gender? Lieberman’s religion? McCain’s age? Because those cover four of just about the ugliest ism’s that the more ignorant members of our society latch onto.
If you actually think that the US isn’t ready for a Black president, then you must have somehow slept through the last election when the US voted for a Black president. Voting for the man is about the clearest statement of readiness for that leader that I can imagine.
Dr. Krugman didn’t support Obama during the primary, either. His explanation is that he has never believed that Obama is as progressive as many of his supporters believed and he felt that Obama’s lack of experience relative to Ms. Clinton’s was a handicap. I’d appreciate you citing any of Krugman’s writings to support your conclusion that he doesn’t understand the problems a Black president faces. Do you, perhaps, think Krugman has gotten through life without ever encountering and overcoming prejudice?
If there were any progressives simple-minded enough to think that a single election would end racism, as you assert, then they deserve to be disappointed. This progressive hoped that Obama would end torture, rendition, war for profit, health for profit, predation on the middle class, contempt for science and crony capitalism. A quarter of the way through the president’s first term, I’m only about a quarter satisfied.
20 years ago my wife and I started a woodworking business in our garage (it was a large garage). We harvested materials using fuel-wood permits in the Tahoe Basin, and we lived in Truckee, Calif..
Mostly we made log beds. After building about 300 beds we started to get repeat customers who wanted matching dressers and other bedroom furniture. We also made everything imaginable, but bedroom furniture was the core undertaking for several years.
Slowly but surely though competition increased; and a market that had about 10 competitors, if the Western half of US is considered, changed over a period of about 8 years to a number in the low hundreds. In that year, our 8th, there were as many rustic woodworkers in the Tahoe area, as there had been in the western US just 8 years earlier. But NAFTA and the competitive price pressure slowed this trend over time. We slowly shifted to rustic lighting and my wife began making lampshades. UPS though, and other shippers, were breaking the lighting almost as fast as I could produce it, and this was especially true with our chandeliers($), and so after a couple of years worth of fighting with UPS over insurance claims, unsuccessfully, and after having to replace not only the broken products, but also having to pay the additional shipping costs, we shifted again to a lampshade business (easy to ship!).
We still make shades although my wife recently took a job. I foresaw the housing collapse and we sold our property and like so many Americans we had our savings invested in our home. My carpentry skills had created some “sweat equity” over the years and so things could be much worse. Business however is beyond slow. We were tired of the process though too and we lack the enthusiasm we once had.
We could revitalize things if we were to create some new designs. We know just about everyone in our little industry so if we create something interesting enough, it will sell. We sold our shades to 110 different stores at one point several years ago,(about 10 now), and so we have an extensive mailing list of outlets. But, increasingly through the years, our best designs tend to become prototypes for some factory in China. So inspiration is on a downward trend. This might seem whiny but we see our designs at Wal-Mart, Lowes, etc., and our customers mostly have small, upscale shops, and they can not sell shades, that are essentially the same, as those selling at Wherever Inc. for less than half the price. So, I don’t know how this story ends, but, it does seem important to note that my grandparents owned a flower shop, and even in bad times it smelled great.
gotta get beyond all the micro…gotta excite the pop…gotta provide more than a scattershot and flat sotu
contrary to b-ob’s speech [ and in very short form]
recovery plan must be synthetic, must be a combining of multiple industrial sectors to produce, e.g., a national maglev system [steels/specialty metals/aggregates/composites/high tech control systems/high temp superconductors/energy from clean burn coal tech to nukes/many many others which, over a decade, bring about a new social structure of accumulation of, ideally, a more democratic nature than anything we’ve had so far]…………. this is man to the moon/apollo program stuff which can catch and set attentions and expectations but, at least initially, must be accompanied by the setting of true social floor. so ok, zero interest federal reserve credit cards to all w/incomes at/below seventy five percent of median
federal reserve credit cards™
MM,
Please. A few weeks ago I had a post showing that by the data, Obama’s policies so far looked more like those of GW than those of a Democrat. The man chose to continue failed policies. (Remember – he also voted for those policies as a senator.) The policies have predictably, been failing. Now he wants to double up. Exactly how does that have anything to do with him being Black?
Sure, there is animus from the racists, but they’d be pissed off even if he walked on water. His failures, however, are pissing off everyone else.
I assume Afghanistan isn’t off topic for the SOTU post, or did Obama not speak of Afghanistan?
Anyhoo here is a funny:
http://news.yahoo.com/s/ap/20100128/ap_on_re_eu/eu_britain_afghanistan
The old Nixon/Vietnam solution. Take out the troops and “turn it over” to local forces. Of course when you do that your puppet regime collapses and you lose.
I thought I had explained that endlessly. He thinks as a black he is “on approval” hence his attempts to placate the Right with semi right wing polciies. Why do you think Krugman considers him a sell out? He is a sellout because he knows or thinks he doesn’t dare be radical or even left wing. He has to be a “uniter” meaning he has to suck up to the powers that be. I won’t bother explaining this to you again. If you surf the net much you can see all the demeaning attacks on him. You have to be blind to America and its nature not to understand the racism in that even if you want to tell yourself we are not racist. Here, maybe you will understand this: Being black…have to stay away from anything radical (black positions)…meaning have to placate the plutocrats and the GOP….this means trying to compromise on healthcare to the point that nothing much changes….that means getting deeper into Afghanistan….that means letting Wall Street steer the economy….etc., etc. It should be obvious how all this comes from his knowing his blackness is a weakness….
Oh me oh my. Have to explain again. Yes the Democrats nominated a black and the nation, determined to get rid of the Bush era, voted for him. But things change and evolve or don’t you understand that. Once in the White House he and his race made him vulnerable to nasty attacks that played on his race and his “foreignness” etc., etc. And these incessant attacks have done their work by derailing his program and putting him off balance, as they were intended to do. Thus the obvious conclusion that the nation wasn’t ready for a black President. I marvel that people don’t understand the process and that so many want to delude themselves that the US is not racist. It always has been and it still is to a large degree. The racism however has gone below the surface for appearances sake…rather like crocs wait for their prey just below the surface of the water. Krugman preferred Hillary. He didn’t say exactly why. I suspect he knew Obama’s blackness would be a weakness. He won’t admit that now. Krugman doesn’t like to admit the US is still racist. The reason Obama hasn’t tried to do all the things Progressives want is that he fears being seen as a radical black. So he has to pursue “white” conservative policies and votes.
Recent article I don’t recall where I saw it that shows that housing in the US is still rigidly racially segregated. If the US were not racist that segregation of housing would by now have broken down. It hasn’t.
Related funny: the imperialists plan to offer the Taliban “jobs and housing”. I thought Americans needed jobs and housing first. Or do we give jobs and housing to “terrorists” rather than to our own. We must have oodles of money to be able to do that. Oh me oh my. That isn’t the issue for the Taliban but the imperialists are too dumb to see it.
Krugman’s meme now that Obama has always been a Reagenite is very recent. Up to the recent failures, etc., Krugman was an Obama supporter. And it is telling that he points out that Reagan faced with similar problems to Obama stayed loyal to his right wing ideology without explaining why Reagan could get away with that. What Krugman doesn’t point out but should is that Reagan was not black but white, so his support in time of adversity was vastly stronger. As was FDR’s. In short, a black President is not going to be a successful leader in times of trouble, but a divider.
http://krugman.blogs.nytimes.com/2010/01/26/a-tale-of-two-sotus/
If you would be even more forthcoming; I would be curious to know the cost of occupancy (lease or mortgage interest + RE tax + building maint.) as %/sales as I was arguing elsewhere that small retail businesses are more efficient in that area than their big-box counterpart. Think especially book sellers. It’s important in a larger sense too. My son who is underwater on his starter home, though perfectly able to remain current on his mortgage, lives on a street where there are at least 3 houses for sale. One in some phase of foreclosure purgatory. No chance he could move into more satisfactory facilities. But if you think that’s bad consider a home in a stripmall with empty windows. The only way those numbers work is with the synergies of all the occupants. 2 or 3 souls in purgatory and the whole place goes to hell? Implications for CRE? I believe these companies are more efficient users of capital and beleive also they do there books differently. But believe also that there are substancial questions.
If you would be even more forthcoming; I would be curious to know the cost of occupancy (lease or mortgage interest + RE tax + building maint.) as %/sales as I was arguing elsewhere that small retail businesses are more efficient in that area than their big-box counterpart. Think especially book sellers. It’s important in a larger sense too. My son who is underwater on his starter home, though perfectly able to remain current on his mortgage, lives on a street where there are at least 3 houses for sale. One in some phase of foreclosure purgatory. No chance he could move into more satisfactory facilities. But if you think that’s bad consider a home in a stripmall with empty windows. The only way those numbers work is with the synergies of all the occupants. 2 or 3 souls in purgatory and the whole place goes to hell? Implications for CRE? I believe these companies are more efficient users of capital and beleive also they do there books differently. But believe also that there are substancial questions.
If you would be even more forthcoming; I would be curious to know the cost of occupancy (lease or mortgage interest + RE tax + building maint.) as %/sales as I was arguing elsewhere that small retail businesses are more efficient in that area than their big-box counterpart. Think especially book sellers. It’s important in a larger sense too. My son who is underwater on his starter home, though perfectly able to remain current on his mortgage, lives on a street where there are at least 3 houses for sale. One in some phase of foreclosure purgatory. No chance he could move into more satisfactory facilities. But if you think that’s bad consider a home in a stripmall with empty windows. The only way those numbers work is with the synergies of all the occupants. 2 or 3 souls in purgatory and the whole place goes to hell? Implications for CRE? I believe these companies are more efficient users of capital and beleive also they do there books differently. But believe also that there are substancial questions.
Extreme cost of health care for small business is exorbitant. I know individuals who have given up successful businesses simply because the premiums got so costly. They went to work for large corporate enterprises to deal with it.
M. Mean Not Well could kill a blog with endless commentary.
I appreciate the notion that micro is less important on a blog that tends to macro. I do think this has a place in our thinking, and reminds us of who we are fighting for. Store ownership is a very romantic notion to many Americans, only a stereotype.
Hi Juan,
Yes, we need to think macro to fix the micro. However, the macro thinkers need to think about how their macro solutions are connected to the micro. That seems to not have been happening over the last 40 years. The thought has clearly been on the macro as if it is the key to all that is. Thus you have rl love’s story above.
So, I decided and I hope many others rl love above start telling thier stories. They want small business to drive the economy through the innovation that comes out of it, then they need to stop the lip service and understand business at the scale I’m at.
Store ownership was the other means into the middle class. It is the area of our economy that is completely not discussed. It was the big driver of local economies.
We all hear and talk about manufacturing going over seas, well in essence, so has retailing.
rdan,
You can delete this after reading. But when are you going to ban MM? In all teh years I have been posting and reading here I don’t beleive I have ever even mentioned this, but its hard to read a thread, even skipping here insanity, when she posts so many times.
Thanks
buffpilot
Great idea, for everyone to capitalize on an idea Cactus has suggested. People think the credit card game is all about the fees and interest to the card holder. It’s not. It’s about the 1.75% or more they collect every time the card is used. The service charges to the 3 card companies for this year was $3940.
M&M
It is possible to endlessly explain something and still be wrong.
DOLB,
I look at your graphs and they look a lot like the home value graphs you can see on the housing bubble sites (Except what was with 2004-2005?). People are spent out. Flowers are a luxery good. ON the whole people have stopped digging debt holes and our trying to fill them in. Personal example: two years ago my wife asked me to stopo buying her flowers. She would rather I spent the money on tickets to a play or symphoney or just to save the money for vacations. So I stopped – considering even a small flower arrangment can run $60-70 it adds up.
Now I just by flats and plant them myself. The flowers last longer, bring in bees and butterflys, and its much cheaper.
Your just getting hit with the everyone else selling luxery goods when people are having trouble paying the mortgage…
Islam will change
how to say this?
the one, micro, is inside the other. an other which, at this point, requires an exiting centerpiece,,,one which represents a synthesis of multiple existing and to-be-developed industrial sectors, creates millions of jobs and, in concert with shorter term setting of a social base, provides just the demand which so many small businesses require.
it’s not either micro or macro but both yet i’d say reaching the former is easier through the latter, especially if this is a true and newly based reindustrializaton.
Our log furniture business was very labor intensive. The building materials we used cost $30 per year for the permits, so other than a small cost for fuel and equipment, it was labor costs from beginning to end. And we did everything in house, resource extraction, designs, building, marketing, sales, we even made our finishes and we took the photos for our advertising. Before NAFTA we provided health-insurance and we had 5 employees at the high-point. As the competitive pressures increased we eliminated health-insurance and then we were forced to downsize, although, as our children grew older they became increasingly helpful and we paid their friends to help out at times. There was always bark to peel and that process took about 2 minutes to learn. Most of the kids who lived nearby worked for us on occasion but the work was hard and they rarely lasted more than a couple of hours. We rarely borrowed from banks but we did borrow from our kids from time to time.
A competitor in Montana worked out a deal that allowed him to use prison labor. Other competitors were using undocumented workers, and a builder in Oregon allowed a commune to exist on his property; and he would come down to Tahoe a couple times a year and sell stick furniture off the back of a large trailer. He would always stop by and we became friends over the years and eventually, we learned that he didn’t even actually own the land where the commune existed, and so the free rent that he traded for labor gives him the distinction of having the lowest labor costs in our little industry. The prison labor was almost free too, but “Fire Mountain Bob” would use his profits to buy some Green-bud on his way home and then sell it to his ‘workers’ so his labor costs were in fact profits. He was a far better business man that I was.
But in the end it was more than just labor costs that made things difficult, I became hyper-sensitive to the endless dust and I was getting to old for such strenuous work and so, because this is in part a prequel to my earlier post, and because it had no ending, this story has no ending either, but some ‘macro’.
Where is America’s Vision?
http://magnetbahnforum.de/index.php?current-editorial
Yes, I agree it is both, just as understanding the environment. I did not mean to imply either/or.
Seems those at the top dealing with the economy think they only need to think about the one: macro. They don’t think “synthesis” as far as I can tell. Besides, as you state it is easier to get at the micro via the macro. Such easiness seems to have been converted into thinking it’s the only need of focus. Cognitive laziness frankly.
In my thinking one can look at the macro all one wants, but if one doesn’t stop to assess the macro via the results at the micro (you know trickle down), then one is probably failing in the desired results. This of course is assuming the one is actually trying to implement a real trickle down as your suggestions for macro would do.
Frankly, I’m confident the one could care less about producing real trickle down as shown via the implementation of Chicago School theory and it’s resultant worse off citizens where ever it was implemented. Including Us.
What’s that, did I hear a call for the implementation of outcome data in econoimics? No, must be wishful thinking. A little application of Evidenced Based Medicine is what I’m calling for with this posting.
Yes, I know. But that such trade is taking a hit does not speak well for our “standard of living”. That we are getting hit is not an excuse for getting hit.
Screw high-speed rail. Lets get out of here…
While I think a number of Obama’s policies have been wrong-headed, we might want to work on our perspective here. Clinton’s first-term mid-term was crushingly bad. He wised up and became a successful president, in the sense that he won a second term, got a few things done and left office with a high approval rating. (The fact that he is now the model for much of what is wrong with Obama’s administration is another issue.) Reagan was equally unpopular early in his first term, and for similar reasons – the economy stank. He brazened it out, and with a great deal of help from a staff and a political culture who tried very hard to pretend he was something other than he was, he too attained significant popularity later in his term – when the economy was in better shape.
Oh, and while we are working on perspective, it mibht be worth noticing this “when the economy was better” pattern in presidential approval. There is a really strong tendency for approval to track the jobless rate, which is entirely understandable. It is not all that clever, though, for people attemping political analysis to attribute the effects of a week economy on presidential approval to the president’s policies or leadership of choice of socks.
His policies may not be all that good. His approval rating has come down sharply. But let’s not make strong assertions about the nature of causation until we take the economy into account.
Here is some working-class macro: A producer who is also a consumer sells an watermelon for $3. He has a labor cost of $1 that goes to our worker who is also a consumer. The consumer who buys this melon could also be a worker, or he could also be a producer, it matters not.
The producer has a total input cost of $2, and of course that leaves a profit of $1. Our GDP is $3.
But if the producer pays the worker $2 and charges the consumer $4 we have a GDP of $4. The profit is unchanged but because the producer is also a consumer he now receives less. But as he increases the number of workers his consumption costs go down by percentage.
The workers share on the other hand is dictated by how much he consumes. His incentive is to save by consuming less so as to save and become a producer (investor). This is the incentive formula that allows upward mobility.
The World Bank standard for poverty in the poorest nations is $1.25, this equates to about 16 cents per hour. As poor nations increase their labor forces the price of our watermelon goes down. And upward mobility rates, if the entire human race is considered, will continue to trend downward as resources devalue, and as machines put further downward pressure on labor values. The leverage being added to the top end of the global economy creates the illusion of progress, but the devaluing of resources dictates how much goes to investors as opposed to workers. The trends over time lead to two disparate classes, an investment-class, and a welfare-service-class.
But the devalued resources are benefiting investors in places having no rights to that value. This is nothing more than a sophisticated type of theft, and mostly based on a faulty economies of scale theory that ignores not only this devaluing ploy, but also the negative externalities.
It is a similar issue with cantab when he uses volume on a thread. Both will cooperate.
My macro lacks ‘pop’.
hey buff,
not space bunnies or high-speed rail but +300 mph maglev of the type nevada just ‘lost out on’:
Jan. 28, 2010
Copyright © Las Vegas Review-Journal
WASHINGTON — Nevada lost out on another multimillion-dollar stimulus program when the government doled out $8 billion for high-speed rail projects today and a route being planned for a magnetic levitation train between Las Vegas and Southern California was deemed ineligible.
The denial of $83 million in coveted federal funds that might have been used to create work and advance a futuristic mode of travel for casino-bound tourists set off a round of finger pointing.
Republican Gov. Jim Gibbons blamed President Barack Obama and Democratic Sen. Harry Reid, saying it was an example of the state’s senior U.S. senator not using his clout to help Nevada.
A Reid spokesman said Gibbons has no place to look but “in the mirror,” releasing a letter from the U.S. Department of Transportation that said the project had misapplied for funding, and was not considered.
http://www.lvrj.com/news/Vegas-LA-MAGLEV-project-failes-to-get-federal-funding-82971952.html
If’n we’s gon get us a bito tha real recovery, this isnt the way.
DOLB,
Thanks for the thoughtful reply.
That is one of the dilemmas of explaining economics….no ‘pop’.
Thank you. Either it’s an industry difference or you have proven me wrong about sm. retail bussinesses being more efficient at occupancy costs. Expect big-box retail to be also at 13%. Familiar with building materials in which industry avg. was more 40% margin, 18% payroll, 8% occupancy, 10% other. That is “please drive around to dock” location. Having low GM hoofs in merchandised area is more exp. and can only work where there is lower cost of capital. Being on S&P AAA welfare queen list has advantages.
Designs tend to become prototypes…
This resonates.