7 years ago
When we last left the Federal Deposit Insurance Corp., the Depression-era aqency that backs up our bank accounts was trying to keep a lid on a ”secret” list it had compiled of 90 U.S. banks teetering on the edge of failure. FDIC’s big brothers over at the Securities and Exchange Commission warned everybody not to spread any unsubstantiated ”false” rumors about this list, lest it spawn another wave of financial heebie-jeebies. Well, it turns out that there are not 90 banks on the FDIC’s critical list. That’s because the FDIC is now publicly reporting that 117 U.S. banks are about as stable as the San Andreas fault. Even worse, the FDIC chairman went over to the Treasury Department this week and banged a tin cup on the big iron door in front of the place where they print our George Washingtons and Ben Franklins. Apparently, FDIC’s $45 billion reserve fund is not sufficient to cover the deposits in the banks that are now on life-support. Since the 1930s, FDIC has backed up every deposit up to $100,000 in most U.S. banks. FDIC has informed Treasury that it may have to tap into some ”short-term lines of credit” that were established in the early 1990s to deal with the last widescale banking crisis in the U.S. When the federal banking guarantor last dipped into this emergency federal well in 1991, it needed more than $15 billion to bail out the banking speculators. The money was repaid by the end of the following year. This year’s emergency ”loan” from the national pocketbook will probably be a lot larger and will take a lot longer to be paid off, since it may take years to sell off the assets of this year’s domino-chain of collapsing banks. Fortunately, not all of the financial news coming out of Washington this week was gloomy. Over at the IRS, they announced that the number of individuals reporting more than $20 million in annual income has grown in the U.S. by 62 percent during the past 20 years. There are now nearly 47,000 ultra-rich Americans, up from 26,000 in 1998. Now, if we can just convince some of these really fat cats to invest in a few failing banks…
Does the cube farm in your office have the population density of Shanghai? Do you eat your lunch next to the copy machine because the nearest restaurant is five miles away? When you plug your work address into MapQuest, do you get a response that says ”page not found?” Well, have we got a deal for you! According to this week’s edition of Crain’s New York Business, there currently is a whopping 54 blocks of large office space—defined as 100,000 square feet or more—available in Manhattan. Not only that, says Crain’s, at least 15 buildings in the heart of the Big Apple are totally empty as of this writing. Office vacancies in New York City have increased by about 35 percent during the past year. The imbalance between supply and demand is so extreme in the large-space market that rents are expected to plunge in the long term and tenants are going to be reluctant to rush into new leases in the short term, according to Crain’s report. Struggling financial firms in the nation’s business capitol apparently are dumping space as quickly as they can lay off employees. We assume that among them are some of the characters who inflated the housing bubble until it imploded like one of those galactic cataclysms recorded by the Hubble space telescope. Unfortunately for them, it didn’t take 14 million light years for the ramifications to show up in midtown. Some of the fanciest addresses in the city are begging for tenants, including a gold-plated location on Park Avenue that boasts wraparound terraces, a private parking garage, and ”branding opportunities”—along with 440,000 square feet of primo office space. We like the branding part. Already know what we’ll call the place: ”This Dump Ain’t Trump’s .” Grin and bear it, Donald.
Small business owners in the United States are overwhelmingly disillusioned and dissatisfied with the federal government, according to a recent press release from American Management Systems, a 21-year-old organization that provides turnaround services and profitability guidance to more than 6,000 small- to medium-sized business across 400 industries. The clear-cut results of the survey, conducted this year from June 23 to July 3, certainly aren’t sunny or optimistic. In fact, the opinions of small business owners are rather bleak in regards to the US economy and government. 86% say the federal government is doing “little to nothing” to help small businesses 81% believe the United States is in an economic recession 50% believe the US economy will get worse before it rebounds 78% say the economic stimulus checks did nothing to help their businesses 72% believe that the government is bailing out big businesses on Wall Street “Our country’s 23 million small business owners are disappointed with the lack of actions on their behalf. While Wall Street and big businesses get bailed out, small businesses receive no assistance in these difficult times,” says George Cloutier, founder and CEO of American Management Systems. “Tens of thousands of small businesses will fail this year due to government inaction. They create 60% of the nation’s jobs; the small business industry is clearly an economic engine and it’s stalling. It’s time to get it re-started.” When the survey tiptoed into our volatile political landscape, 80% of respondents admitted to having no idea what Senators Barack Obama’s and John McCain’s platforms are pertaining to small business. Yet, 38% of small business owners favor McCain over Obama, who attracted 21% while 32% remained undecided. Perhaps coinciding with the preference to McCain, 77% of respondents believe the government should tap into restricted oil reserves in Alaska and off the coasts of California and Florida. Of the 400 people who took part in the poll, 37% identified themselves as Independents, 33% as Republicans, and 22% of Democrats.
A few months ago, we reported in this space that there is a silver lining in the generally depressing story of the plummeting U.S. dollar: the corresponding rise of the euro is dramatically increasing the cost of manufacturing cars in Europe, leading overseas car makers to take a close look at shifting production to the United States. German auto giant Volkswagen has now put an exclamation point on this trend with its announcement that it will locate its new car plant in Chattanooga, TN. VW closed its last US plant, in Pennsylvania, in 1988. The increasing cost of European car production was cited as a major factor in VW’s decision to locate its new plant in the U.S. The Tennessee site was declared the victor after an intense competition with locations in Alabama and Michigan. VW’s move is expected to pump more than $1 billion into Tennessee’s coffers. ”This project will have a significant impact on the economy of Tennessee and the region for decades to come,” Gov. Phil Bredesen declared in announcing the news. Tennessee officials are predicting that the arrival of Volkswagon eventually may put the state in position to become the overall leader in U.S. car production in coming years. When it is fully operational in 2011, the new plant will employ 2,000 people directly as well as offering business to hundreds of suppliers. The new facility will eventually have an annual capacity of 150,000 vehicles and will be used to build a new midsized vehicle for the U.S. market. VW said its decision also was based on a range of factors including financial incentives offered by the state linked to job creation, investment and training. Currency exchange rate fluctuations—the euro is now worth almost $1.60—in the past two years have made European carmakers look for cheaper production solutions. VW also is building plants in India and Russia. So perhaps all those reports of the impending demise of U.S. auto manufacturing you’ve been reading in recent years were a bit premature.
When cheerleaders from Ohio and Pennsylvania start shouting at each other, it’s usually because Penn State’s Nittany Lions and The Ohio State Buckeyes are battling it out for the number one ranking in college football. Well, the cheering has come early this year, and we are pleased to report that the ranking generating all the hoopla is Business Facilities’ annual tallying of Overall Biotechnology Strength in the U.S. It seems like the entire state of Ohio erupted as soon as they got their hands on our annual Rankings Report, which was published last month (and currently is appearing on the home page of this Web site). Ohio ranked fourth in overall biotech strength (tied with Texas), a quantum leap forward from last year’s showing. Ohio’s move up to the biotech big leagues was made possible by the state’s commitment to its Third Frontier tech-funding initiative and muscular university research programs, among other advances. When our Rankings Report hit the streets, we immediately got a call from the Columbus Dispatch. The newspaper published a story in the next day’s Business section, and papers in Dayton and Cincinnati also covered the news. The Dayton paper put the word out on national business wires. The next time our phone rang it was a National Public Radio station in Cleveland (WCPN) on the line, asking for an interview about the biotech results. We ran into the bathroom and gargled, and then used our best radio voice to extol the virtues of Ohio’s achievement. We knew it wouldn’t take long for Pennsylvania, which snared the top ranking in overall biotech strength, to clear its throat. Sure enough, this week we heard a roar from Nittany Lion number 1–no, not Joe Pa, but Gov. Ed Rendell. During a groundbreaking in Montgomery County for the new North American headquarters of Almac, a provider of research, development and manufacturing services for the global pharmaceutical and biotech industries, Gov. Rendell made a special announcement citing his state’s top ranking in the annual Business Facilities report. ”We have laid the groundwork to keep Pennsylvania number one in biotech,” Rendell said. “The commonwealth’s support for the entire continuum of biotech initiatives, from research and development and product commercialization to bringing mature companies to our state, is paying dividends, even in these uncertain economic times.” The initiatives that secured the top biotech spot for Pennsylvania included the investment of more than $228 million in tobacco settlement funds in health-related research projects (including $150 million for bioscience in 2007-2008); more than $500 million […]
For the past 80 years, Nutley, NJ has been a company town. For as long as anyone can remember, the Swiss pharmaceutical giant Hoffman-La Roche has loomed over the local landscape and served up thousands of jobs along with thousands of little blue and yellow pills. The creator of valium and librium probably saw a spike in sales for the popular sedatives in Northern New Jersey late last month, when it sprung an announcement that, as part of its takeover of biotech behemoth Genentech, Hoffman-La Roche will be moving its U.S. headquarters from Nutley to California. The news that the company—called ”Roche” by long-time denizens of Jersey–would rip out its deep roots in the Garden State and head for the Left Coast took everyone by surprise, apparently including New Jersey’s beleaguered governor, Jon Corzine. Corzine’s has had a very rough time during his inaugural term in Trenton. First, he discovered that the state is in debt to the tune of $30 billion, prompting the governor to propose increasing tolls on the NJ Turnpike from $7 to $50. Under intense criticism for negotiating a state labor pact with his then-girlfriend, a union president, Corzine responded to demands that he release his personal email messages by announcing that he would no longer use email. This probably explains why he didn’t acknowledge our get-well message after his near-fatal car crash. Corzine, late for a meeting with radio shock jock Don Imus, instructed his state trooper driver to put the pedal to the metal. The unbelted governor went flying through the back window of his SUV during the 90-mph crash, breaking about 20 bones in the process. To his credit, Corzine not only paid the fine for failing to wear his seatbelt, but also taped a memorable public-service ad in which he somberly intoned: ”I’m Jon Corzine and I should be dead.” Unfortunately, some Jersey political wags have reacted to Corzine’s latest menu of tax increases by suggesting the line may reappear as a bumper-sticker slogan should the governor attempt to run for re-election next year. While he thankfully has recovered from the grievous injuries sustained in the crash, the governor’s string of bad luck continues unbroken: According to reports, Corzine and his current gal pal were in Israel when news of Roche’s defection broke. (The governor paid all the travel expenses out of his own pocket, but it wasn’t a vacation–it was a ”trade mission,” says his office). Roche employs more than 3,000 at the Nutley complex, centered around a 10-story tower that […]
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