Say it ain't so, Tastykake!

If you grew up in the Philadelphia metropolitan area, it is likely that Tastykake was a treasured part of your childhood. In my pre-weight-loss era of life, Krimpets alone just about made up one of my Food Groups. I still enjoy their sugar-free options. So, it is with sorrow that I read that Tastykake is considering selling out in the face of growing challenges in their financial situation.

Tasty Baking Co. president and chief executive Charles Pizzi said in a statement that "unanticipated operational challenges" related to its new bakery in Philadelphia's Navy Yard had lowered projected savings for the fourth quarter of 2010 by $3 million to $10 million.

The company's shares plunged more than any other on the Nasdaq, giving up 37 percent of their value and hitting a 52–week low of $3.83 before closing at $4.05.
The company cited a bankruptcy filing by the owner of the A&P, Super Fresh and Pathmark grocery chains and rising commodity costs as contributing factors to the financial squeeze and said it was looking at all options.

I truly hope Tastykake can pull out of the death spiral and be restored to its former glory. Otherwise, I hope any would-be buyer would keep around the old brand in some form, instead of just adding any signature offerings to their own line-up.

The Employed Aren't Happy Either

There has been lots of talk about the perils of unemployment in the Great Recession, and they are certainly not to be underestimated. But it turns out staying employed in the Recession can be perilous, too.

The Labor Department reported Tuesday that worker productivity fell 0.9% in the second quarter. That's the first decline in eighteen months and may be a sign that employees have finally gotten to the point where they are simply stretched too thin.

The amount of hours worked rose at a faster pace in the month than actual economic output. That means that companies may no longer be able to rely on cutting costs, particularly through layoffs, to juice profits...

"What's happened is a lot of U.S. companies have reached the limit of how much they can slash their workforce and work existing employees to the bone," said Nariman Behravesh, chief economist with IHS Global Insight in Lexington, Mass. "At some point, even weak spending growth will require businesses to hire more people to meet the demand."

In other words, employees are doing the jobs that used to be done by many more people. We have all made heroic efforts to keep things moving, but now we're simply burning out.

Independence Day Fireworks punted by the Great Recession

As the Great Recession drags on and on, more and more municipalities are being caught by the cash crunch. This year, a major casualty of shrinking budgets may be the traditional July 4th fireworks celebration. Towns all over are canceling or getting creative.

"It's becoming harder and harder to justify," she says of the $20,000 event. "The tax dollars only go so far, and it's one of those expendable items."

Other places such as Birmingham, Ala., may scale back the festivities as well unless they can attract more corporate sponsors. The Independence Day celebration in Moorestown, N.J., across the Delaware from Philadelphia, was canceled for the second year in a row. Monterey, Calif., suspended its Fourth of July festivities because of "budget constraints and ongoing safety concerns regarding the Fireworks Display," according to the city's website. Maplewood, Minn., Mayor Will Rossbach told the Pioneer-Press that it no longer made sense to pay about $19,000 for the town's 30-minute fireworks display while struggling to maintain more basic city services.

In another strategy, Morris Plains, N.J., saved its traditional July 4th fireworks display -- and some of its tight budget -- this year by holding it on Saturday, June 26, instead.

Truly a Big BAD Wolf

The Cure is just as bad as the Disease?

From Townhall.Com

Utah flirts with abolishing Senior Year

We all knew a few of "that type" of student. The ones who worked hard all thru high school and as soon as they were accepted to college, they stopped trying at all. Of course, most of "that type" learned too late that colleges (1) keep an eye on early admissions, and (2) are able to rescind an acceptance if they see grades slacking off. Still, at least one legislator in Utah is exploring the option of eliminating the Senior Year of high school altogether or at least making it optional. But it is not with the good of the students in mind - it is an attempt to close a serious budget gap.

The sudden buzz over the relative value of senior year stems from a recent proposal by state Sen. Chris Buttars that Utah make a dent in its budget gap by eliminating the 12th grade.

The notion quickly gained some traction among supporters who agreed with the Republican's assessment that many seniors frittered away their final year of high school, but faced vehement opposition from other quarters, including in his hometown of West Jordan..."You're looking at these budget gaps where lawmakers have to use everything and anything to try to resolve them," said Todd Haggerty, a policy associate with the National Conference of State Legislatures. "It's left lawmakers with very unpopular decisions."

Are layoffs killing, rather than saving, our companies?

When the Great Recession hit, layoffs were the go-to strategy for most companies. They cut works left and right in an effort to increase efficiency, and dump long-term liabilities Newsweek is running an interesting article summarizing a series of studies on the effects of layoffs on companies, and the results are interesting. For the most part, layoffs lead to less productivity and less profitability for companies.

Layoffs don't even reliably cut costs. That's because when a layoff is announced, several things happen. First, people head for the door—and it is often the best people (who haven't been laid off) who are the most capable of finding alternative work. Second, companies often lose people they didn't want to lose. I had a friend who worked in senior management for a large insurance company. When the company decided to downsize in the face of growing competition in financial services, he took the package—only to be told by the CEO that the company really didn't want to lose him. So, he was "rehired" even as he retained his severance. A few years later, the same thing happened again. One survey by the American Management Association (AMA) revealed that about one third of the companies that had laid people off subsequently rehired some of them as contractors because they still needed their skills.

Another interesting correlation often forgotten by management is that your employees are also your customers. Every employee laid off is an employee no longer able to afford your services. This can lead to a downward spiral as every lost employee cuts demand, which leads to calls for more cuts.

Clearly, we need to rethink the knee-jerk turn to layoffs when the economy goes south. I am hoping no one calls for a legislative solution here. Better it come from the managers themselves. But it may be inevitable.

Whack-A-Banker?

Since I work in the financial services field (in Information Technology), it is no surprise to me that there is hostility to banker out there. Even before the Great Recession, bankers were often hated for obscure fees, labyrinthine rules, and a general lack of empathy. (Honestly, most of the banker I have known have been good people who went out of the way for their customers, but this is the perception.) When the crash came, things got even worse since the direct cause blamed was the Mortgage Derivatives market - clearly the fault of financial services management.

Now, one arcade owner is making a mint by taking advantage of anti-banker animosity with a retooled Whack-A-Mole called "Whack-A-Banker". The owner claims it is so popular, he keeps having to replace worn-out mallets.

Is I.T. Responsible for the Economic Crisis?

I work in Information Technology, so I am sharply aware of the dangers inherent in a badly-built set of systems. It is not just the risk of the Blue-Screen of Death that Windows users are familiar with, or the spinning beachball that haunts Apple users. Even a system that never crashes can be a danger to your business if it doesn't get you the info you need, when you need it. A logical question then, is whether better I.T. systems could have prevented the Economic Crash.

This fragmented IT landscape made it exceedingly difficult to track a bank’s overall risk exposure before and during the crisis. Mainly as a result of the Basel 2 capital accords, many banks had put in new systems to calculate their aggregate exposure. Royal Bank of Scotland (RBS) spent more than $100m to comply with Basel 2. But in most cases the aggregate risk was only calculated once a day and some figures were not worth the pixels they were made of.

During the turmoil many banks had to carry out big fact-finding missions to see where they stood. “Answering such questions as ‘What is my exposure to this counterparty?’ should take minutes. But it often took hours, if not days,” says Peyman Mestchian, managing partner at Chartis Research, an advisory firm.

Of course, it never helps to blame technology for the failings of human nature and human decisions. But poor human decisions about technology can lead to even more poor human decisions. Quality counts.

Senate explores taxes, taxes, and more taxes to pay for Health Care Reform

The Obama administration keeps pledging that Health Care Reform will wind up saving Americans money. But every time we hear back from Congress, the tax bill for it keeps going up. Now, the Senate is exploring new and interesting ways to tax hiring in the middle of the Great Recession.

The versions leaked so far would add as much as 0.5% on workers who earn more than $200,000. If assessed on both the worker and employer, this would increase the Medicare tax rate to 3.9% from 2.9% today. It would also create the first progressive payroll tax in American history, with wealthier workers paying a higher Medicare payroll tax rate than lower income workers...

In another trial balloon, Mr. Reid would impose the payroll tax on all income, not just wages and salaries. This means applying the tax to capital gains, dividends and other investment income. This would convert the Medicare levy into a de facto version of the income tax.

For those keeping score at home, that includes both taxes that punish investing (which creates jobs) and hiring (which gets people into jobs). Anyone out there think that will have a positive effect on Unemployment?

I am still amazed that the Democrats seem to think Unemployment is unimportant compared to all of their other priorities.

Unintended Consequences - Bank Bonus Edition

The banking system is still in disarray after last year's crash. Propped up by government loans (i.e. taxation and national debt), we are looking at an uncertain future. One way that regulators sought to punish bank executives whose policies lead to the crash was to decrease mandated bonuses. One way to do this was to make the bonuses payable in depressed stock. Brilliant idea, right? After all this would encourage executives to take actions that would be in the long-term interests of the company.

Instead, the stock payments are liked to end up in huge windfalls as stock prices have risen from their original valuation, giving executives an excellent reason to sell and reap large cash payments.

Economics - the game whose rules you never really know until afterward.

BBC: Recession Has Ended

Economics is messy business. You can never know where you are in the monetary cycle. You have to wait and look backward to see where you were. That being said, according to the BBC, the USA has emerged from the "Great Recession".

The US economy grew at an annual pace of 3.5% between July and September, its first expansion in more than a year.
The growth was helped by a substantial government spending plan, including a scheme to boost car sales.

The official figures indicate recession has ended, but some economists think there could be further setbacks...

The return to growth of the world's largest economy also sent shares on Wall Street sharply higher. The main Dow Jones index closed up 200 points, or 2.1%, at 9,962.58.

Here's hoping they are right. I have a lot of friends and family members who could use an improved economy. Then again, it may be a while between the first small improvements and an economy that produces jobs for most of us.

Sabbath Days really work

Once upon a time, the Sabbath Day's Rest - one day a week totally free from work - was considered a core American value. It came out of the Judeo-Christian heritage but was observed by pretty much all walks of life. But as the 20th century washed over us, it became harder and harder to take off any time from work. And the 21st century has made it even worse with cell phones and Blackberries that make it virtually impossible to avoid your coworkers when they want to reach you. In some areas of my company, workaholics think nothing of sending an e-mail at 2 AM and castigating a coworker for not responding immediately.

But new studies are indicating that days off are not only a "good thing", but key to productivity. Consulting companies are finding if they enforce "time off" provisions and require workers to be home for dinner, their other work hours are more productive and their stress levels are reduced. Those with poor work habits are exposed, highlighting the need to learn basic time management skills. And, it forces project teams to communicate, because they all know that the "expert" will be unavailable at least one day a week.

This is a lesson that America needs to learn quickly. We've always valued hard work, but in the Recession it is starting to look like we ONLY value hard work. But there are many other things that make life worth living.

Florida is a "Ponzi Scheme"

CRChair found this first, but let me have the honor of posting it. NPR has up an interesting story claiming that the economy of Florida is one big Ponzi Scheme that has been relying on constant immigration into the state by tourists and new residents. Now that the Recession has hit, and Florida has seen its first net loss of residents since World War II, the state is wondering if it can survive with its current policies

It was bound to catch up with us. Gary Mormino, a distinguished historian of Florida, says our whole economy is more or less a big Ponzi scheme. The state funds its roads and schools by bringing in new investors — that is, new residents — to pay sales taxes and property taxes. When nobody can afford a condo in Boca, when tourists stop coming even for a week at Disney World, the Ponzi scheme collapses.

Now it seems as though everybody here knows somebody who has left, is leaving or wants to leave. Even the governor wants to leave — for Washington, D.C. He's running for the U.S. Senate after one term.

I have only been to Florida once for a Christian youth conference. I loved EPCOT and enjoyed the many anoles (small chameleon lizards) that infested the hotel windows. Otherwise, I never really understood the charm of living somewhere that is hazy, hot, and humid 365 days a year.

Welcome to the Oligopoly

Many years ago, Federal regulators looked at AT&T and realized that a single company running all phones in America was bad for customers. It limited choice, and gave a single CEO too much power over national communications. So, they broke up the behemoth and brought about our modern world where multiple landline, cellular, and VOIP providers are competing for your business. This has brought down prices and increased choice.

But when the economy tumbled, regulators decided that some banks were "too big to fail" and moved to prop them up with taxpayer dollars. The idea was that these banks should be given support for a short time, to allow the economy to heal, at which point they could be safely returned to the wild. Instead, as it turns out, all of the banks declared "too big to fail" have gotten substantially bigger and more powerful, while smaller banks are failing in record numbers. And what happens when a smaller bank fails? Inevitably, it is sold to one of the "too big to fail" banks.

How much do you want to bet that the NEXT economic crisis is precipitated by bad behavior by one of the "too big to fail" banks with too much power and no incentive to act cautiously, in light of a guaranteed bailout?

Recession Ends... in France and Germany

It won't really affect the day-to-day lives of people yet, but it may begin the important psychological changes needed to lift the world economy. Germany and France have reported their first quarter of growth which technically ends the Recession in those countries. Of course, there is no telling if this is a false start - the bump is credited to policies where the governments propped up auto makers and paid company to keep workers on at reduced hours which are due to expire. But so much of the economy is mass psychology, that this may provide many positive changes going forward.

Recession Special: Peanut Butter Play Dough

Whether we are still in a Recession or not on a technical level, times are still tough. I was thinking over the weekends that my parents and my friend's parents had economized over the years, I was reminded of a fun recipe from my childhood: PEANUT BUTTER PLAY DOUGH. It is a cheap and easy recipe that my best friend's mother used to make when we lived in Cherry Hill, NJ (early 80s). It might be something that our readers with young children may want to try out now. It is non-toxic, edible/tasty, and if you add in food coloring then it is just as much "fun" as the official stuff. Click on over and check it out.

UPDATE: Sean made a good point about many kids having peanut allergies these days. For those in that particular boat, here are some alternate recipes including Kool-Aid play dough and coffee play dough. Honestly, I have never tried any of these, so try at your own risk. Although they all claim to be non-toxic, so the only real "risk" is tasting bad.

Dead men cash no checks?

Why is it most of the Obama administrations errors seem to be in the "well-meaning but clueless" category? Giving DVDs to the English Prime Minister that won't play in British DVD players. Sending VP Biden to talk about Swine Flu. And now issuing stimulus checks to the dead. Or did I miss a "Zombie Americans Act" somewhere?

Antoniette Santopadre of Valley Stream was expecting a $250 stimulus check. But when her son finally opened it, they saw that the check was made out to her father, Romolo Romonini, who died in Italy 34 years ago. He'd been a U.S. citizen when he left for Italy in 1933, but only returned to the United Stated for a seven-month visit in 1969.

The Santopadres are not alone. The Social Security Administration, which sent out 52 million checks, says that some of those checks mistakenly went to dead people because the agency had no record of their death. That amounts to between 8,000 and 10,000 checks for millions of dollars.

What's 8 billion dollars between friends?

In yet ANOTHER bid to save the struggling automaker, President Barack Obama today announced he will be giving Chrysler another $8b to finance chapter 11 bankruptcy. And yes, it will include selling a large portion of the company to the Italian Fiat.

Bankruptcy doesn't mean the nation's No. 3 automaker will shut down. A Chapter 11 bankruptcy filing would allow a judge to decide how much the company's creditors would get while the company continues to operate. The goal is for the whole process to happen quickly, Obama said, perhaps within a couple months.

The president said that Chrysler has been responsible for helping to build the American middle class, but over the years also had been weakened by "papering over tough problems and avoiding hard choices."

...The Obama administration had long hoped to stave off bankruptcy for Chrysler LLC, but it became clear that a holdout group of creditors wouldn't budge on proposals to reduce Chrysler's $6.9 billion in secured debt. Obama praised all the constituencies that have offered sacrifices and blasted those that did not.

He said a group of investment firms and hedge funds were holding out for the prospect of an unjustified taxpayer bailout.

Can anyone tell us when the flow of funds will *STOP*? There has to come a point where we will have invested more in the company than it is worth (if we have not already reached that point). At some point, do we not have to bite the bullet and let nature take its course?

I don't want to know what the bill is going to be when GM's execs decide to follow the same route. More and more it seems like that is not an "if" but a "when".

I'll miss Pontiac

From here