tough times

The headlines in the newspaper constantly remind us that we’re in tough times.

Today, there were two stories that made me wonder when this will end. One was of a long time furniture retailer, Plunkett Furniture, in the Chicago area. They are just one in a series of significant businesses that have called it quits, or have had it called for them in the past few years.

Plunkett’s is (was) a very nice retailer of upscale products. The high end has been particularly hard hit by this recession. These are people who tried to run a business the right way and just ran out of cash. They are not the exception.

There are a lot of nice people who have had to close their doors after decades in business. What used to be a reliable way to make a nice living, put your kids through school, pay some taxes, and give something back to the community, has now turned into the tourniquet yoke that chokes them into submission. And, it’s happening too often.

The second story is the announcement that Simmons Bedding produced a $492.2 million loss for their prior fiscal year on sales of just over $1 billion. This is the antithesis of what happened at Plunkett’s.

It seems that Simmons has been bought and sold and bought and sold and bought and sold like it was some sort of house being flipped after a remodel. Only, these guys never remodeled, except on the balance sheet. All they did was show cash flow and profits and try to make a killing.

Instead of bringing innovation to their product line with some of the profit, these schemesters took all of the profit to inflate their balance sheet without reinvesting in the company. They were milking the cow, but deciding not to feed it.

The banks had cash to loan and profits to make. And bankers needed to make deals under any circumstances. These guys saw dollar signs. This was a deadly combination.

Today, Simmons is mired under a pile of debt that makes the federal government look miserly. Most of that $492.2 million is the inflated value (all borrowed) of the company being erased to bring their balance sheet back in order. The only problem is, they owe and they owe it now.

There are real victims here, the employees that showed up for work everyday and gave the only assets they had, their sweat and their time. These are the people that put their flesh against the product with pride for a paycheck. And now, that seems in jeopardy.

Expect to see Simmons right next to GM, in front of a judge, asking to have their debts released.

real capitalists

Buried in yesterday’s news was an announcement by the Chinese government that they would be increasing the Value Added Tax rebate for exports leaving China starting June 1.

Why is this important?  China has a relatively complex tax system that requires a 17% tax on goods sold business to business in China.  Instead of a sales tax, they collect their money this way.  For exports, they offer a rebate to encourage foreign trade.  A few years ago, the rebate was 13%.  They moved it down to about 8% for furniture products.  Now, it’s 15%.  That is a 7% direct tax credit for goods being exported from China. 

Assuming internal raw materials account for 70% of the cost of an item coming from China, the 7% credit represents a 5% decrease in the cost of goods being exported from China.

With very Ronald Reagan type thinking, the Chinese are looking to expand their economy by taking in less tax money per transaction, but creating more transactions.  If this move is revenue neutral, the Chinese win because they have fewer people receiving public aid and they grow their economy.  They also receive more income tax.

It seems like the Chinese are better at this capitalism thing than we are.  Whodathunkit?

would you buy furniture from this man?

I wouldn’t either!

aaaaaaahhhhhhhhhh

Have you ever tried to stay awake on purpose? You know the feeling; When you want to sleep, you stay awake. And, when you want to stay awake, you fall asleep.

Unlike my earlier post where I couldn’t sleep, I’m doing everything I can to stay awake. I drank about half a gallon of Coke. I’m wide awake, but feel like I have anvils hanging from my eyelids.

So, I’m working both a caffeine and sugar high at the same time. I’m wondering when I’m going to crash. I hope I’m not standing. The fall could be ugly. Seismologists will wonder what happened, why they couldn’t predict this quake. They’ll all be in therapy before the day is out.

Why would a 51 year-old (no that’s not me in the picture, but add wrinkles and you’re close) want to stay up all night?

That is the beauty of working with factories in China, especially when something goes wrong, and believe me, something did go wrong (no, nothing related to Angelo). With all of the technology we have today, we can work in real time and solve things through photos, IM, Skype, and video. For some reason, we haven’t figured out how to solve the time issue of being on the other side of the world.

And, if they screwed up, why am I the one staying awake?

tolerance

Norman Lear was featured on the CBS news magazine “Sunday Morning” today. He delivers a powerful message, tolerance.

The creator of Archie Bunker, Lear strives to expose the fear of bigotry, that the bigot is fearful of change, change he, or she doesn’t understand, and the need to be careful that we don’t become bigoted of the bigot. Huh?

I spend a lot of time talking to people about politics, social issues, religion and all of those things you’re not supposed to talk about in polite society. But, I think that’s the only way you really understand people, how you break down walls. Impolite as it may seem, this exercise gives me perspective to understand.

Bigotry isn’t just about race, but religion, science, environmental issues, age, ideas and more. Really, how could there be global warming? It was cold yesterday. How could he know anything? He's only 10 years old. My God is the one. Your's is not.

Those of us “enlightened” people need to also understand the bigotry of intolerance of the bigot, and their ideas. They have ideas, too. And, they believe their ideas are right, sometimes very right. Huh?

Now, exactly what does that mean?

It means we must embrace the consideration of ALL ideas. That means we must talk to people with whom we disagree. We must consider why they think the way they think and find a way to understand their circumstances. Maybe they have a reason to think in a way that defies reason to us. Huh?

To dismiss the ideas of someone with whom we disagree, no matter how wrong they are, might make us....... intolerant. Huh?

Genius

Last night, I decided to become one of the millions of people who chose to watch “Up”, the Pixar animated movie distributed by Disney.

Since it’s been out a week, I thought it might be easy to get a ticket with maybe not so many little kids around me. You know, sticky stuff, crying babies, running around, and all that stuff that make it a little difficult to watch the movie.

So, I went to one theater, sold out. Then I went to another, full house, but not sold out. This is the second week!?

I’m not going to get into the specifics of the movie; I’ll let you discover that for yourself. But, let me tell you this. When the lights came up in the theater, it was mostly adults and older teens. And, during the movie, there was genuine laughter, tears, characters you cared about, and more.

And, for a little less than two hours, I was transported to a place and introduced to people that didn’t exist in my mind before last night. They are etched in my mind forever, now.

monday morning

On a normal Monday morning, I leave my home about 7:00 a.m. for a two plus hour trek to my office in Melrose Park, IL. I’ve tried all kinds of different times, but this seems to turn out the most reasonable traffic, and ultimately wastes less of my time.

This morning, while I was just coming out of some road construction, there was a police squad car bearing down on me at breakneck speed. Of course, the first thought was he’s coming after me. But, I pulled over and he sped on ahead.

A few minutes later, I saw several squads surrounding three coach style buses. traffic was moving behind them, but none was really passing. They seemed to be setting the pace for traffic, but not going any faster. At the time, I was wondering if we were watching a “Speed” movie in real life.

But, then one squad car peeled off and another took its place. Periodically, the squads would block off all lanes and the buses would change lanes. It was the weirdest thing.

When the highway became more than four lanes, traffic began to pass on the left. I was one of those people. I rubbernecked to see what was going on. In the window, I could see some camouflage clothing.

Then it occurred to me. These squad cars were an escort for some new Marines going to the airport, presumably to some hell hole in the Middle East. Their lives were going to change forever. This was their send off.

I couldn’t help but wonder what each of these people was thinking, about the families left behind, and their dreams. Was this what they thought would happen when they signed up? How would they cope with the coming days, months, years?

With all of that said, I want to say thank you to all of you and Sempre Fi.