flahute

No More Perks: Coffee Shops Pull the Plug on Laptop Users – WSJ.com

A sign at Naidre’s, a small neighborhood coffee shop in Brooklyn, N.Y., begins warmly: “Dear customers, we are absolutely thrilled that you like us so much that you want to spend the day…”

But, it continues, “…people gotta eat, and to eat they gotta sit.” At Naidre’s in Park Slope and its second location in nearby Carroll Gardens, Wi-Fi is free. But since the spring of 2008, no laptops have been allowed between 11 a.m. and 2 p.m. weekdays and 10 a.m. and 3 p.m. weekends, unless the customer is eating and typing at the same time.

Amid the economic downturn, there are fewer places in New York to plug in computers. As idle workers fill coffee-shop tables — nursing a single cup, if that, and surfing the Web for hours — and as shop owners struggle to stay in business, a decade-old love affair between coffee shops and laptop-wielding customers is fading. In some places, customers just get cold looks, but in a growing number of small coffee shops, firm restrictions on laptop use have been imposed and electric outlets have been locked. The laptop backlash may predate the recession, but the recession clearly has accelerated it.

Read more …

I’ve often wondered about this trend and how many cafes manage to stay in business when it appears that most of their customer base is people sitting alone, on their laptop, nursing a cup of regular coffee (not even a cappumacchilatteccino!)

Well … now I know. They are finding it difficult and are trying to find different ways to discourage laptop loitering, from encouraged table sharing, to outright bans.

I think it’s fine for laptops users to hang out in a coffee shop … just make them stand or sit on the floor, and reserve seats for paying customers … or rent the chair by the hour, reduced by the amount of food and/or drink that is being purchased.

There are lots of places that offer free wi-fi … many of which are actually designed for loitering, like the public library, for example. The Salt Lake City Main is a perfect example of this … not only is there free wi-fi in the library, but there are a number of cafes in and around Library Square where you can get your caffeine fix; and surprisingly, food and drink are both allowed IN the library itself.

Sure, there are a few stinky people in the library as well, but it’s quiet, and best of all, it allows you to actually make use of your tax dollars rather than having a negative impact on a local small business owner (obviously, I’m not talking about Starbucks, but the smaller, local independent shops and chains).

If you are going to go to a cafe, at least be considerate, and make sure the business owner knows that you appreciate the amenities that they offer by spending some real money, not just a $2.00 cup of coffee, especially if you’re going to be there for any length of time. Don’t be a freeloader.

I’ve never understood people who take their own food/beverage into an establishment that’s in the business of selling same. The one exception is taking a special bottle of wine that a restaurant doesn’t serve, but even in that case, the restaurant will charge a corkage fee … so it’s more about drinking what you like, instead of taking money out of their pockets.

When I lived in San Francisco, I frequented a bar called the Hi-Ball Lounge. On Monday nights, there was DJ’ed swing dancing … and many of the dancers would show up carting gym bags filled not only with changes of clothes, but with energy bars and water bottles; essentially turning the bar into a gym. Since the really small cover charge on Monday nights went entirely to pay the DJ, if patrons didn’t spend any money at the bar, then the bar didn’t make any money that night.

Luckily, there were a few of us who did what we could to keep the Hi-Ball in business, but eventually it, like all good things, came to an end … all due to the freeloaders.

So the next time you go somewhere because they offer a free amenity, think about why they’re offering it … it’s not for people to come and take advantage, but to encourage people to come and spend. If you want to keep the economy moving, it’s the only way.

Tuesday’s market: Citigroup up. Morgan Stanley up. Wells Fargo down.

Now comes news that Bank of America will need to raise about $35 billion in additional capital, on top of the $45 billion they’ve already received.

Will be interesting to see what happens there.

In longer term prospects, American International Group, Inc. is trading with a 0.07 price-to-book ratio. This means that the book value of the company, if it were to be completely liquidated is currently about $24.70/share … AIG closed today (May 5) at $1.73. Looks like a lot of potential for growth there; especially since it now appears that AIG will not need another capital infusion from the Fed during this quarter.

Morgan Stanley, on the other hand, is trading with a P/B ratio of 0.89, so at today’s close of $27.21/share, the company’s book value is closer to $30.40/share. Citigroups P/B ratio is 0.25, so at today’s close of $3.31/share, the company’s book value is about $13.25/share. Still room for growth in the prices of these two companies’ stocks and still not pricing them over book value.

In a strong economy, companies typically trade somewhere above their book value; during the last bull market, Wells Fargo was trading a 2.4 times book value; and is currently trading about 1.4 times it’s book value. Depending on your point of view, it could potentially be viewed as overpriced, especially in light of its need to raise additional funds.

But what do I know?

Wells Fargo May Need Capital – WSJ.com

An initial U.S. stress test identified Wells Fargo & Co. as among the banks needing a buffer against future losses, said a person close to the company.

But it was unclear Monday whether Wells would be forced to raise fresh capital or if regulators would accept its argument that Wells can earn its way through losses in future years. San Francisco-based Wells expects more clarity Tuesday when 19 banks are briefed on final stress test results, following more than a week of appeals and negotiations. A bank spokeswoman declined comment.

Bank of America Corp., Citigroup Inc. and Wells, three of the nation’s four largest financial institutions, were among those with gaps when the government’s initial findings were released to the 19 banks last month. Some banks will still have capital needs once the final numbers are made public this week, according to the White House.

“There undoubtedly will be banks that need more capital,” White House spokesman Robert Gibbs said Monday.

But “everyone involved will be looking for banks to raise this through either private means or the selling of some assets that they have or that they control.”

Bank of America’s initial gap was in the billions, according to people familiar with the situation. The Charlotte, N.C. bank has contemplated a new share offering if its stock price climbs high enough, according to people familiar with the matter. It has also discussed the sale of certain assets, such as private bank First Republic, and shrinking the size of its balance sheet to preserve capital. It is not clear whether the bank would need to convert existing securities held by the government to common stock. One person close to the bank said regulators recently assured the bank that the “last thing” the U.S. wanted was government ownership of Bank of America.

Citigroup may need to raise as much as $10 billion in new capital, according to people familiar with the matter, although the bank may need less – or none at all — if regulators accept the bank’s arguments about its financial health.

Wells, despite its emergence as one of the survivors of the U.S. banking crisis, may be among the most capital deficient, some analysts said Monday. Keefe, Bruyette & Woods said Wells may need as much as $50 billion; SNL Financial said Wells will need $66.3 billion if it wants to maintain a tangible common equity ratio of 3%. Tangible common equity is one measure of a bank’s capital strength.

What worries some analysts is the risk Wells assumed with its recent purchase of troubled Charlotte, N.C.-based Wachovia Corp. Wells is now heavily exposed to commercial real estate, another weakening sector of the U.S. economy, and future earnings may come under pressure if Wells looks to reduce certain balance sheet items largely inherited from Wachovia, such as $6 billion in commercial mortgage securitizations and $137 billion of exposure to credit default swaps.

“Did they buy more of this risk than they anticipated?” said analyst Fred Cannon of Keefe, Bruyette & Woods.

Mr. Cannon, who predicts Wells will need $50 billion as a result of the stress test, said Wells could raise $25 billion by converting preferred shares held by the government into common stock. But he expects the bank instead to raise the money through “alternatives sources.”

Investor Warren Buffett, a big Wells holder, is among those critical of the stress test process, saying on Sunday that regulators were judging loss expectations too broadly. He is among those who could take a financial hit if Wells is diluted by an infusion of tangible common equity.

“To the cynical mind, he is talking his books,” Mr. Cannon said.

Interesting that the news in the Journal seems to be focussing on Wells Fargo, rather than Citigroup or Bank of America (although neither company escapes completely unscathed); but with Citigroup expected to need $10 billion in additional capital, and Bank of America possibly being able to shore up their balance sheet primarily by shedding assets (possibly avoiding having to convert preferred shares into common shares, diluting the shareholders), expectations that Wells Fargo may need as much as $50 billion in additional capital, today’s $4.64/share gain may not last.

It’s going to be interesting to see how this all plays out over the rest of the week once the final results of the stress tests are announced.

l’Équipe – Tour de France to welcome doping scandals

(AF: PARIS, 01/04/2009) In a move that stunned the racing community, the Amaury Sport Organisation (ASO), promoters of the Tour de France announced today that the 2009 Tour de France will be cancelled unless there is an immediate and large-scale doping scandal.

Christian Prudhomme, Director of the Tour de France stated in an interview, “As you are aware, the Tour de France is organized under the auspices of the Amaury Sport Organisation, which also owns and operates l’Équipe, the premier French sporting newspaper. Due to the current state of the global economy, advertising revenue is down at l’Équipe, meaning that ASO is faced with the choice of either canceling the Tour de France or shutting down the race’s primary media outlet. After much internal debate, the editorial staff has decided that we need scandal to sell newspapers … and what better scandal than doping!”

Prudhomme went on to say, “Face it, we all know that most professional cyclists at the ProTour level are doped to the gills anyway (except for those damned squeaky clean American riders, of course), so why fight it?”

As such any riders caught doping in any ASO races between now and the Tour de France will be given an automatic invite and allowed to race, assuming they agree to having their names and images promoted as the faces of “nouveau cyclisme du dopage”. The controversial move is sure to generate the kind of scandal that l’Équipe needs to sell more papers and generate the ad revenue required to keep the Tour de France alive.

While originally planned for 2009 only, if certain targets are met, then the ASO may contemplate continuing the policy in future years at random, just to keep things interesting.

Financials Weigh on U.S. Futures – WSJ.com

U.S. stock futures dropped on Monday after American International Group and HSBC Holdings took steps to raise more capital and Warren Buffett said that the economy would be in “shambles” this year.

About an hour before the start of trading in New York, futures on the Dow Jones Industrial Average were lower by 115 points, indicating an early retreat below the 7000 level for the blue-chip measure. Futures on the S&P 500 and Nasdaq 100 were also substantially weaker. Changes in futures do not always accurately predict early market moves after the opening bell.

I never thought I’d see it, and if it actually happens (it’s currently 12 minutes until the market opens), then I will have to admit that A-Train was correct. I can’t find it, but somewhere back then, when the Dow was still above 9000, he said that the Dow would crack 7000 before it broke back above 11,000.

I don’t like admitting I’m wrong, but when I definitely am I will certainly do so.

I still think that our economic situation would be much worse without the government invention that we’ve already had, and that which is currently planned. We have yet to see who is ultimately going to be correct there.

A-Train asked me today how I see the plan helping people (while avoiding answering my own question to him on how he would try to fix the problems facing our nation today).

I see the plan creating jobs by putting people to work building and updating necessary infrastructure and investing in our energy future, instead of costing jobs by doing nothing. I see the plan helping to maintain my property value by keeping people who are on the edge in their homes, instead of lowering my property value when my neighbors are foreclosed upon.

Keep in mind that the mortgage plan is for those who have ONE mortgage, and whose loan-to-property values are in the 90-105% range; not for those who have a $500K mortgage on a $250K house.

A flawed plan is better than no plan … but it appears that this plan will have safeguards built in. As the President indicated in his speech tonight:

[This is] a housing plan that will help responsible families facing the threat of foreclosure lower their monthly payments and re-finance their mortgages. It’s a plan that won’t help speculators or that neighbor down the street who bought a house he could never hope to afford, but it will help millions of Americans who are struggling with declining home values — Americans who will now be able to take advantage of the lower interest rates that this plan has already helped bring about. In fact, the average family who re-finances today can save nearly $2,000 per year on their mortgage.

While President Obama is not cutting non-war spending for 2010; he does plan to cut war spending in Iraq; offsetting increased spending in one area with cuts in another, and ultimate plans to halve the deficit by the end of his first (and hopefully not only) term in office.

Some people also seem to blame a lot of the economy’s problems on union labor, specifically, the United Auto Workers.

Union labor is not in and of itself a bad thing; in fact, the UAW has made many concessions over the past 20 years. In fact, it is not union labor that is killing the auto industry, but the thousands of useless middle managers.

• At General Moters, the average hourly wage for a union employee is $28/hour.
• Toyota Georgetown (Kentucky) pays $27 to $30/hour for non-union labor.
• Adding in GM benefits, the current employees cost about $51/hour.
• At Toyota, they cost about $55/hour including benefits.

And yet, Toyota isn’t struggling to quite the same extent as GM despite paying its workers more. You can’t blame the UAW for that.

On the other hand, GM’s CEO makes 14 times as much as his Toyota counterpart … perhaps a big chunk of GM’s problems are at the top of the salary chain rather than at the bottom of the wage chain.

GM also has 32,000 salaried employees (but only 62,000 hourly employees). How many companies have a 1:2 management/labor ratio? Certainly not financial services, and you can’t blame the UAW for the excessive numbers of salaried management employees.

GM is also paying pensions to their 365,000 retired employees (about half of which were salaried management workers) as opposed to their 62,000 active hourly workers). Of course, since GM’s market share has dropped from 60% 20 years ago to less than 25% today, you can see why they have more former employees than current employees. This is also a huge drain on their resources; caused not by the unions, but GM’s loss of revenue and market share due to competition and poor management. If GM focussed on developing new, innovative cars that people want, they might not be in this situation … and you can’t blame that on the UAW either.

In fact, in 2007, the UAW negotiated a historic deal that will allow the Big Three to contribute a one-time cost and subsequently allow the union to run the health care benefits program of retired autoworkers. That will allow the Big 3 companies to wipe out their health care obligations to retirees, relieving them of that drain on their resources.

In addition, the UAW made concessions agreeing to a two-tiered pay system such that new (second-tier) hires will start at about $14 an hour. When the ratio of new, second-tier workers reaches about 20 percent of the overall work force, the difference between labor costs at the Big Three and the transplant auto companies like Toyota will nearly disappear.