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The Biz Roundup February 6

The deal is done. Right now. This very minute as I type.

Senate Democrats reached agreement tonight with at least two Republican moderates on significant cuts to a massive economic stimulus bill in an effort to push the package toward final approval.

Announcing the compromise on the Senate floor after a day of wrangling, Sen. Ben Nelson (D-Neb.) said a bipartisan group of negotiators agreed on a $780 billion package, cutting roughly $110 billion from the massive stimulus plan that had been under debate on the Senate floor. . . .

“We trimmed the fat, fried the bacon and milked the sacred cows,” Nelson said. He said the compromise includes $350 billion in tax cuts that would reach 95 percent of all Americans.

Joining the Democrats on the deal were Republican Sens. Susan Collins (Maine) and Arlen Specter (Pa.), who announced their support in speeches on the Senate floor. If all 58 Democrats agree to the new package, the two GOP senators would bring those in favor to 60, a filibuster-proof majority that would guarantee passage.

(“Senators Appear to Reach Tentative Deal on Stimulus Package,” Washington Post, February 6) Mark my words: tonight, every single Republican except for Specter and Collins are going to vote against this bill. Every. single. one.


Meanwhile, in the real world, where people actually work for a living (or don’t, as is increasingly the case), the number isn’t $780 billion, it’s 598,000

The unemployment avalanche gathered momentum in January as the U.S. economy lost 598,000 jobs, the government reported on Feb. 6—and once again the losses were heaviest in the goods-producing sector. Education, health care, and government actually added jobs in defiance of the worst economic downturn since the 1970s.

For workers who make, distribute, and sell stuff—rather than provide services—the news was unrelentingly bad. Manufacturing lost 207,000 jobs in January for its worst performance since 1982. Employment also fell by 45,000 in retailing and 111,000 in construction. Over the past year construction job declines are the highest since 1943, according to economist John Silvia of Wachovia.

Merrill Lynch economist Sheryl King, in a Feb. 4 report, wrote that businesses have been “sideswiped” by a slowdown of demand in the U.S. and abroad. Manufacturers didn’t react quickly enough to the slump and have gotten stuck with lots of unsold goods and unneeded raw materials. In recent months inventories have surged at the fastest pace in proportion to sales since the recessions of the mid-1970s and early 1980s, King wrote. Now, companies are belatedly cutting production to work off some of those inventories, which means they don’t need as many workers. In manufacturing, “the surge in inventories suggests to us there will be further deep production cuts in the coming months,” King said.

(“598,000 Jobs Lost in January,” Business Week, February 6) Say after me: S-T-I-M-U-L-U-S. What does it spell? SURVIVAL!

There’s a new sheriff at the SEC.

One virtue of appointing Mary Schapiro as chairman of the Securities and Exchange Commission is that she used to be a member of the commission, and therefore knows how things were done before Chris Cox slowed them down.

Today she announced she is ending two Cox policies that delayed enforcement actions. No longer will the commissioners demand advance approval of penalties to be imposed on companies as part of settlement talks, and the commission will no longer stall for weeks on a decision on whether to allow the staff to open a formal investigation.

(“Unleashing Enforcement,” New York Times, February 6) McCain said the first thing he’d do as president was fire SEC Director Chris Cox. After the Makropolos testimony, this is looking like one of the best campaign promises of last season. Well, looks like Sheriff John T. Chance just slapped the gun belt on and she don’t back down. “Sorry don’t get it done, Dude.”


If you’re strapped for business ideas, try ripping people off.

Cash4Gold.com, the metal refinery that offers fast money to those who mail in baggies full of jewelry, has hit on a formula that would make 13th-century alchemists weep: It’s found a way to turn desperation into gold.

And in this economy, that’s a growth business. The Florida company ponied up enough bullion Sunday to buy 30 seconds of famously expensive Super Bowl airtime, capping an ascent from the basement of late-night “as seen on TV” marketing. . . .

But beneath the shiny veneer lies a dull reality: Cash4Gold is essentially a buyer of scrap metal. And scrap doesn’t fetch much on the open market. . . .

The Better Business Bureau has processed 269 complaints nationwide about Cash4Gold in the last 36 months. The pattern of complaints, the bureau’s website says, is similar to what the Florida attorney general’s office describes: Consumers allege that “the company is not offering a fair value for the jewelry,” and that they’ve had a hard time getting their materials returned.

(“http://www.latimes.com/business/la-fi-cashforgold6-2009feb06,0,7527500.story,” Los Angeles Times, February 6) Listen, if Ed McMahon is hawking it on a commercial, then you know — as certainly as you can know anything in this life — you know that you’re getting a bum steer. But there isn’t much you can say about people taking advantage of other people’s misfortune.


Toyota loses $3.9 billion with a B. (“Toyota warns of Y450bn deficit,” Financial Times, February 6)

Weyerhauser loses $1 billion with the same B. (“Earnings: Weyerhaeuser Co.’s 4th-quarter loss balloons,” Seattle Post-Intelligencer, February 6)

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