Goldman,Using The Conservative-Libertarian Model, Made $5 Billion By Manipulating Inventories of Aluminum

 Goldman,Using The Conservative-Libertarian Model, Made $5 Billion By Manipulating Inventories of Aluminum

What sexual favors were exchanged so that the New York Times blunted the impact of an important, detailed investigative story on Goldman profiteering, this time in the aluminum market, by releasing it on a heat-addled summer Saturday?

On a high level, the story sets forth a simple and damning case. Not all that long ago, banks were prohibited from being in operating businesses. But the Federal Reserve and Congress have loosened those rules and big financial players have gone full bore backward integrating from commodities trading into owning major components of the delivery and inventorying systems. This doesn’t just give them a big information advantage by having better access to underlying buying and selling activity. It allows them to manipulate inventories, and thus, prices. And Goldman’s aluminum henanigans increased prices all across the market, not just for the customers who chose to use them for warehousing and delivery.

The article A Shuffle of Aluminum, but to Banks, Pure Gold by David Kocieniewski, tells us that the newly-permissive rules allowed Goldman to buy Metro International Trade Services, a concern in Detroit with 27 warehouses that handles a bit over 25% of the aluminum available for delivery. And here’s where the fun and games begin:

    Each day, a fleet of trucks shuffles 1,500-pound bars of the metal among the warehouses. Two or three times a day, sometimes more, the drivers make the same circuits. They load in one warehouse. They unload in another. And then they do it again.

    This industrial dance has been choreographed by Goldman to exploit pricing regulations set up by an overseas commodities exchange, an investigation by The New York Times has found. The back–and-forth lengthens the storage time. And that adds many millions a year to the coffers of Goldman, which owns the warehouses and charges rent to store the metal. It also increases prices paid by manufacturers and consumers across the country…

    Before Goldman bought Metro International three years ago, warehouse customers used to wait an average of six weeks for their purchases to be located, retrieved by forklift and delivered to factories. But now that Goldman owns the company, the wait has grown more than 20-fold — to more than 16 months, according to industry records.

    Longer waits might be written off as an aggravation, but they also make aluminum more expensive nearly everywhere in the country because of the arcane formula used to determine the cost of the metal on the spot market. The delays are so acute that Coca-Cola and many other manufacturers avoid buying aluminum stored here. Nonetheless, they still pay the higher price.

The Times’s sources estimate the price impact across the market at 6 cents per pound, which adds $12 to the price of a typical car. Goldman piously claims it obey all the rules, but obeying the rules is far from operating in a fair or pro-customer manner.

The last thing conservatives and rightie libertarians want is a competitive market. They want total control and anyone who suggests using some regulation to stop that control is quickly gang piled on as a liberal pinko communists.

Wal-Mart Proves They Are Not a Business, They're a Conservative Plantation

Wal-Mart Proves They Are Not a Business, They're a Conservative Plantation

There's a power struggle going on between the D.C. city council and the world's largest retailer, one that Wal-Mart is likely to win.

There's a power struggle going on in Washington right now, not between Republicans and Democrats but between Wal-Mart—which is supposed to open six stores in the District—and the city council, which has a bill pending to require big-box retailers to pay a living wage. As you surely know, Wal-Mart was built on keeping costs as low as possible, particularly labor costs. The model Wal-Mart recruit is someone who has no other employment options and will take whatever they can get. The retail colossus isn't going to let some uppity city council tell it how much it can pay its employees:

    The world's largest retailer delivered an ultimatum to District lawmakers Tuesday, telling them less than 24 hours before a decisive vote that at least three planned Wal-Marts will not open in the city if a super-minimum-wage proposal becomes law.

    A team of Wal-Mart officials and lobbyists, including a high-level executive from the mega-retailer's Arkansas headquarters, walked the halls of the John A. Wilson Building on Tuesday afternoon, delivering the news to D.C. Council members.

    The company's hardball tactics come out of a well-worn playbook that involves successfully using Wal-Mart's leverage in the form of jobs and low-priced goods to fend off legislation and regulation that could cut into its profits and set precedent in other potential markets. In the Wilson Building, elected officials have found their reliable liberal, pro-union political sentiments in conflict with their desire to bring amenities to underserved neighborhoods.

For Wal-Mart, this isn't just about these particular stores. They can make money even if they pay a higher wage at these stores, and with over 10,000 stores around the world, the D.C. locations are a drop in their enormous bucket anyway. It's about their relationship both to the people they employ and to the communities they locate in. It's about power, and as far as they're concerned, power has to reside with Wal-Mart. Their employees do what they're told and get paid what they're told, and if they don't like it they can go find another job. By the same token, the city council gives Wal-Mart what it wants, and if it doesn't they can try to find somebody else to open a store there.
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My guess is that in the end, either the city council will cave or Mayor Vincent Gray will veto the bill (he says he's considering it). Why? Because Wal-Mart can walk away from the D.C. stores without a second thought, while the council desperately wants both the jobs the stores will bring and the ability for their constituents to have a convenient place to shop. One side has virtually nothing to lose, while the other side has a great deal to lose.

Would Wal-Mart make less money if they paid their employees a little more? Not necessarily. There are other models out there, most notably Costco and Trader Joe's, which believe that by giving their employees higher wages and good benefits, they can reduce turnover and provide better service, which lowers costs and increases sales. And it works: they've achieved steady growth and excellent profits by making their employees happy.

The owners of Wal-Mart, the Walton family have a set in cement attitude about who deserves what. They are worth more than 40% of the population that earns at or below median income, that means they are worth about $89 billion dollars. They could easily pay every employee a living wage, but they believe it is their God given right to run a wage slave plantation. The Waltons and their conservative supporters do not care about American values, they care only about wealth and the power that goes with it..

It Is Time For Patriots To Stop Subsidizing Walmart Billionaires

It Is Time For Patriots To Stop Subsidizing Walmart Billionaires

Due to low wages and few benefits, Walmart workers at a single 300-person Supercenter store rely on anywhere from $904,542 to $1,744,590 in public benefits per year, costing taxpayers, according to a new report from the Democratic staff of the House Committee on Education and the Workforce.

The report focused its analysis on Wisconsin, because the state’s data is the most comprehensive and up to date. It looked at how many workers enroll in the state’s Medicaid program and extrapolated how many services they rely on from programs such as the Supplemental Nutrition Assistance Program, Earned Income Tax Credit, school lunch program, Low Income Home Energy Assistance Program, and Section 8 housing vouchers, among others.

Looking at just those currently enrolled in Medicaid, the report estimates that each employee takes in $3,015 in public benefits a year. But that may be a low estimate, as other workers may enroll in other programs. Assuming a higher number, each employee could use more like $5,815 in benefits a year.

Walmart’s wages are some of the lowest in the industry, despite the fact that it is the country’s largest private employer and one out of every ten retail workers is employed there. Workers make $8.81 per hour on average, according to IBIS World, 28 percent less than those who work for other large retailers.

Its employees also get few benefits through their employment. Only about half of Walmart workers are covered by its health care plans, in part because the costs may be to high. While the company decided to expand health care coverage to part-time workers in 2006, it has since reversed course.

Walmart’s model isn’t the only way in the discount retail space, however. Rival Costco, which competes with Walmart’s Sam’s Club stores, pays employees about 40 percent more. The average Costco worker makes $21.96 an hour. Nearly all of the workers who are eligible for the company’s benefits are enrolled.

Costco has come under analyst pressure to lower wages and boost profit, but the company’s CFO has thus far refused to do so. Its bottom line, however, seems strong: Profits rose by 19 percent to $459 million last quarter.

Meanwhile, Walmart’s sales have been struggling. Its sales suffered during the first quarter of the year and the company has come under criticism for failing to keep shelves stocked thanks to too few employees working at a time. That has led to long lines and customer dissatisfaction, which helped it rank at the bottom of the American Customer Satisfaction Index in February.

While Costco has a lower profit margin than Walmart, it gets much more revenue and profit per employee and generates a higher return for investors.

Walmart has embraced the conservative Republican semi-plantation model of business; screw over employees to squeeze every last penny of profit out of powerless workers. They do all of this and stock 50% or more of their products from factories in Asia. Walmart loves America the way a dog beater loves dogs.

The screen capture graphics are from the Twitter feed of this site, Why Privacy Matters Even if You Have 'Nothing to Hide'.

How America's Sleazy Fast Food Industry Screws Over Workers and Capitalism

How America's Fast Food Industry Screws Over Workers and Capitalism

The gulf between CEO pay and staff McWages is shockingly wide: a strike serves this system of super-exploitation right.

Last week, approximately 400 workers in the fast food industry went on a one-day strike protesting the "McWages" that keep them them living at or even below the poverty line. Despite their modest demands – the workers want to be able to exercise their right to form a union without intimidation or harassment and they want to be paid a living wage of $15 per hour – they face an uphill battle to achieve them.Fast food workers take part in a protest at a McDonald's restaurant in Harlem, New York for better wages, 4 April 2013. (Photograph: VIEWpress Corp/Corbis)

One of the catch phrases used by striking workers was "we cannot survive on seven twenty-five," a reference to the insulting $7.25 average hourly wage most fast food workers in New York get paid. This paltry sum, which adds up to less than $300 pre tax for a 40-hour week, would not amount to a living wage anywhere in the country, and doesn't even come close in New York, one of the most expensive of cities in the US to live in. That is the federal minimum wage, however – and it's not hard to imagine that employees would be paid even less than $7.25 an hour if their bosses could get away with it.

One striking worker, Joseph Barrera, who works for TacoBell, told MSNBC's Chris Hayes that when he started working at the chain, at the age of 15, he was paid $7.15 an hour. Six years later, as a supervisor, his pay has increased to $7.25 an hour, a ten cents raise. If you're finding it hard to imagine how Barrera makes it through the month on such meager wages, that's because he can't. He says he often has to skip meals or walk to work because he can't afford the subway fare and he hasn't bought clothes in years. He'd like to be able to get married and start a family, but doing so on his full-time supervisor's salary is impossible.

Treating an employee this badly might be excusable if the company that hired him was struggling for survival, but this is far from the case. Yum Brands Inc, which owns Taco Bell, as well as KFC and Pizza Hut, proudly boasts on its website an EPS growth of 13% in 2012, an increased dividend for shareholders of 18%, and a net income of $1.6bn. Rival fast food companies like McDonald's, Burger King and Wendy's are all doing similarly well: according to Business Wire, fast food is one of the fastest growing industries, thanks to a competitive cost advantage.

Yet, the fast food companies are not only unembarrassed about how they exploit their workers, but they actually seem to think they are doing employees like Barrera a favor in providing him with a job that is a step above indentured servitude. This attitude is evident in the various statements made by the companies to the media following the strike. Burger King issued a communique saying that the company has provided "an entry point into the workforce for millions of Americans" and that they "offer compensation and benefits that are consistent with the QSR [quick service restaurant] industry".

McDonald's also waxed lyrical about their commitment to their workers, and said that "employees are paid competitive wages and have access to flexible schedules and quality, affordable benefits." The National Restaurant Association went a step further and seemed to be almost looking for sympathy with their statement that "the industry provides more than 13m jobs, that could be jeopardized if the minimum wage goes up." My personal favorite was this nugget, also from the National Restaurant Association:

    "The industry is one of the best paths to achieving the American Dream."

If the American Dream circa 2013 has morphed into a nightmare of inescapable poverty and struggle, then I guess they have a point. I think, however, most hardworking Americans – and surely, anyone who puts in a grueling 40-plus-hour week at a fast food restaurant counts as a hardworking American? – have higher expectations of the American Dream than the fast food industry has in mind for them. But perhaps the National Restaurant Association was referring to senior executives and those lucky few who end up as CEOs, because for them, the fast food industry is dreamy indeed.

In general, CEOs in the US earn 380 times what their average employee earns. That rather shocking disparity starts to look almost modest, however, when compared with the fast food world. In 2011, the CEO of McDonalds earned over $20m, which means he was paid nearly 1,333 times more than the average crew member or cashier, who earns around $8 an hour or less. Even if those employees were to get their wish of earning $15 an hour, the CEO would still be earning 640 times more than them.

But don't expect McDonald's CEO, or any of the fast food restaurant CEOs, to accept this outrageous pay disparity as a reason to raise their employees wages. The only way workers will ever change their situation is to mobilize and strike. But going on strike when you are not in a union, and are easy to fire and replace, is incredibly risky. Last week, 400 workers took that risk regardless – and as long as the media and the public keep paying attention, it will be difficult for their companies to make them suffer for it.

So far, it's one-nil for the brave 400. Imagine what could happen if all 13 million of their colleagues followed their lead.

Sadhbh Walshe is a film-maker and former staff writer for the CBS drama series The District.

 One can also imagine that Social Security and Medicare funding would be in better shape if more workers earned a living wage. Is this the America we want to live, are these the ideals we want to live up to- creating millions of wage slaves.