We agree with the Princeton finance professor quoted toward the end of the story who says these investors need to be wiped out before any taxpayer money is put into these companies. The government shouldn’t subsidize the risk-taking of these shareholders and bondholders.
In non-financial (but even more stomach-turning) news, the Los Angeles Times reports on the California meatpacker who testified before Congress yesterday about what led to the massive recall last month of more than 140 million pounds of beef.
Steve Mendell, the president of Westland/Hallmark Meat Co., initially denied that so-called “downer” cows—sick ones that aren’t supposed to be slaughtered for food—were killed for meat. But Congress went to the videotape, the exec hung his head, admitted it was true and said “my life is up in smoke.” The WSJ reports the Humane Society worker who went undercover to report on the doings says he worked at the plant for six weeks without training.
Mendell’s firm is not the only one doing this, of course. It just got caught. These are problems that are going to come with the structure of our current factory-food system. (Cue promo for one of our all-time favorite pieces of journalism, “Fast Food Nation”). If you can stomach watching the video embedded in the LAT story, do so. We’re not veggie burger fans—yet. But keep trying us, meat industry.
Bad Moon Rising
In economic news, Reuters reports a measure of retail sales fell 1.1 percent in February, according to MasterCard. That’s the steepest drop since the credit-card company started keeping track in 2003. January registered an anemic, but still positive gain of 0.2 percent.
Most chief financial officers think the country is in recession and won’t emerge until next year at the earliest. Just 13 percent said they expect the economic downturn to end in 2008, nearly as much as think it will extend into 2010 and beyond.
That finding suggests that the U.S. is in for a more serious downturn than the last two recessions, each of which lasted eight months
About one-third of the finance chiefs said their companies are feeling the effects of the problems in the lending markets directly, either through the reduced availability of credit or higher credit costs. Three-quarters said the U.S. Federal Reserve’s interest-rate cuts haven’t helped their firms.
Oil touched $110 a barrel, another record, before ending just below that figure. The dollar fell to a new low against the euro. One euro now buys $1.55 dollars.
The Perverse Penny
Finally, we like this Chicago Tribune look at the perverse economics of (literally) making money.
These days, your thoughts are worth 1.7 cents.
That’s what it costs the government to forge a penny, thanks to the rising price of metal. A nickel costs 10 cents. Congress, in its infinite wisdom, has concluded that’s a pretty bad deal.
The Trib says pennies may be made of steel by the end of the year. Here’s a better idea: Get rid of the stupid things.