by Bill Ruesch

READ ON

The tag line to Talking Through My Hat is Printing, Publishing, and Observations. This particular post falls more in the category of Observations–or does it? We all know that the printing industry is changing, but did the changes have to be so catastrophic? Printing News Magazine recently posted an article on downsizing that contained these words in the first paragraph, “The latest financial crisis seems to have affected our industry like no previous recession. Record numbers of printers have closed or consolidated. Staff, salary and work hour reductions have become common themes.” To read more see, Implementing a Right-size Plan. It is a good article.

WILL THE REAL BOGEYMAN PLEASE STAND UP?

Goldman Sachs is in trouble with the S.E.C. It’s all over the news. Whether they are guilty of the charges against them I don’t really know, but I’m concerned that they are being singled out to take one for the team. You see, diversion is a common ploy used by government to pacify the populace. If they can hold up one bad apple and convince us that the problem will be solved by the censure, restriction, or removal of the perceived enemy all will be made right. Our anger will dissipate and we the people will continue blindly following and believing our leaders who are, after all, just sincerely protecting our interests.

DON’T BELIEVE IT!

The anger of the American people that arose from the financial collapse and bailout is justified. If they try to convince us that it was just because Goldman Sachs went renegade–don’t believe it. The problem is much bigger than one company. The problem was created by the congress in collusion with the financial industry.

I was one who was once convinced that the Free Market would make everything right. Doesn’t the idea of a free market make sense? After all, free people make choices based on what they want and how much they are willing to pay. Industries either find ways to provide the goods and services desired by the consumers or they go out of business. That’s free enterprise, and who could possibly be against free enterprise?

WRONG!

For most of my life I’ve been wrapped up in a warm pink bubble secure in the belief that the Constitution guides our government and protects our interests--wrong! Our elected officials have become masters of illusion. They pledge their hearts, minds, and souls to serving the people and upholding the Constitution and then they and their lobbyist buddies huddle in secret places to find, or create loopholes.

I was convinced that FDR was a socialist and that his policies were the real threat to the American way of life, but Roosevelt put restrictions on the banks that kept them from pulling the shenanigans that led to this deepest recession since the Great Depression and nearly toppled the financial systems of the entire world.

WHAT HAPPENED?

Deregulation is what happened. Deregulation was proposed by Ronald Reagan during his administration. Again, it seemed like a good idea at the time. Then came the Savings and Loan collapses. We slowed deregulation for a time, but over the years culminating with Bill Clinton, one-by-one all of the FDR restrictions were removed. Did deregulation make life better for consumers? At first it did–maybe. Then chaos reigned. Without rules the financial industry went wild. They started offering mortgage loans to people who didn’t have to prove they had the ability to repay those loans. Who thought that was a good idea?

Goldman Sacs executives were, and apparently still are, at the top of the gravy chain. By some miracle they finally got caught by the S.E.C. Like the SEC didn’t know what they were up to long before this–right? They along with other bazillion dollar a year execs plotted to sell derivatives and created other financial vehicles to muddy the waters and obscure the big secret that the nest egg had already been sucked dry. In reality there wasn’t a nest egg at all! A good-faith contract knowingly offered to a party that does not have the means to meet the terms of the agreement is not an asset–duh.

GOVERNMENT TO THE HIGHEST BIDDER

The banking interests have been funding lobbying like they never have before. The LA Times had this to say about lobbying expense,”The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.

“I have never seen such a scrum of bank lobbyists as I have in the last year — and I’ve worked on quite a few bank issues over the years,” said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. It seems like everybody is out of work except for bank lobbyists.”

SURPRISE, SURPRISE!

In retrospect, is it any wonder that this foolish behavior would lead to collapse? We were told two years before it happened that there was a housing bubble, but even our personal Realtor was convinced that prices were going to continue to escalate. For awhile he seemed to be right. The home we bought for just over 300 thousand, climbed to 500 thousand+ over the next two years. Lucky for us we bought low and with a mortgage payment we could afford, so we haven’t been in danger of foreclosure.  What is our house worth now? Closer to what we paid for it originally. At least we aren’t upside down. Thank goodness for that.

We have survived, so far, the housing bubble. What we are fighting everyday, however, is the aftershocks of the recession. All the banks are raising interest rates so they can recover, at our expense, the losses sustained from their bad decisions. People have had to cut back on purchases they would have normally made. Because of belt tightening by consumers, business saw decreases in sales and governments local, state, and federal saw resulting decreases in taxes so governments have been trying to recoup their losses by raising rates, fees, and taxes where ever they can.

WHEN WE CAN LEAST AFFORD IT

When we can least afford it, the poor taxpayer/consumer is being squeezed for every dime. Does Goldman Sacs deserve to be on the chopping block? I’m pretty sure that they do, but they aren’t the only ones. The system needs a huge overhaul and needs it now starting with reintroducing all of the FDR era banking restrictions.

For more of my thoughts go to: http://wp.me/pqeFo-qV and http://wp.me/pqeFo-v5

I don’t know about you, but I feel dispirited when I drive down the street and see yet another small business closed. Yes, there are tough brave souls starting new enterprises. Their offices decorated with optimistic grand opening banners, but most often the signs nowadays are final liquidation, lost our lease, or nothing at all, just an empty shell where a business once thrived. I’m not trying to bring you down here. This is a sad topic and I don’t know else to put it.

I’m not saying anything new when I report that the printing and mailing industries have been hard hit. Earnings have fallen 40% to 50% over the last two years. When a printing company calls it quits, you might think that the remaining shops would benefit by having less competition and the possibility of divvying up some one’s customer base. You’d think that, but it hasn’t been the case.

Unless you are in the printing business, you may not understand why it is happening, nor care. But you should care. No business stands alone. Businesses are about people and small business employs the most people. Those people when paid sufficiently buy the products and/or services of other businesses. We are interdependent.

A  business is NOT the sum total of its assets. Just go to a liquidation auction and see how much those assets are really worth–pennies on the dollar.

Why is this happening? Here are three reasons printers fail in a tight economy:

1. Printers count heavily on cash flow to pay operating expenses. No one I know has big reserves to tide them over. In fact it is nearly impossible to buildup a reserve when profits average 5% or less.
2. Printers are usually highly leveraged. To stay, or become more competitive a printer must invest in expensive equipment. The multi-color whiz-bang press they bought when times were better carries a multi-million dollar mortgage. Banks don’t care if business is down, they still demand their due.
3. Printing isn’t like the corner grocery. You can’t hire an employee for minimum wage and teach them the job in an hour. Press operators, for example, take years to train. Payrolls are relatively high because experienced people are necessary to fill critical positions. Just try to turn an inexperienced pressman loose on your whiz-bang press and at the very least you’ll be doing a lot of reprints. At the worst, who knows what costly damage could be done? I witnessed a press catch on fire one day. It didn’t do that by itself.

We are in a precarious position in the USA. Until we come to grips with the understanding that we are all in the same boat. One industry doesn’t fail to benefit another. When one suffers we all suffer.

I read in the latest AARP Bulletin that top executives especially in the financial sector are still getting increasingly lavish bonuses while at the same time cutting back on the retirement packages of other employees. I ask, who will take care of those employees when they are retired? Not the bonus babies, and not their companies. The burden will fall on all of the rest of us. A small percentage of the mucky-mucks will cruise along on their big retirements funded by extravagant bonuses leaving the worker bees to live on what the government can raise in taxes. Where does the tax money come from? The taxpayers, with the middle class carrying most of the burden.

Then New York Times in a January 9, post written by Louise Story and Eric Dash, entitled Banks Prepare for Big Bonuses, and Public Wrath, discloses the planned amounts of bonuses and  reveals that the bonuses were “earned” during 2009 when the taxpayers were bailing them out. When will we connect the dots and realize that their actions are not a victimless crime. And I think crime is the right word. They have taken away funds that could have made the country more prosperous for their own personal use. They have committed robbery by contract. If you think those zillion dollar bonuses don’t hurt you–think again. They do. Can’t we, for heavens sake, put a stop to this?

I was half-watching Stephen Colbert on television yesterday. It was his final show for this year. He spoke about the recession and at the top of his list of suffering industries was printing. Boing–he got my attention. Finally, the world has started to recognize how badly damaged we have been. In a way that is ironic, because printing created the Union and is the backbone of  history. And yet, when filling out a form or survey and the question is asked, “What industry are you in?” you won’t find printing. It’s like we no longer exist. I sometimes feel like Mr. Cellophane from the Broadway show Chicago. Hey world, printing is an industry. We do exist.

Printing, Publishing, and Observations

A friend called the other day. This is the same friend who introduced me to blogging almost a year ago. He said that my blog posts aren’t like other blogs. He finally figured out the difference, he says that I’m not writing traditional blogs, I’m more of a columnist.

Sometimes it is about the observations.

I’ve thought about it and believe he is on to something. My posts tend to be longer than what other bloggers do. I tackle subjects outside of my “stated purpose.” Maybe that is true, and perhaps the search engines get confused when they send out their crawly spider things, and they go back and report that my printing and publishing blog includes the economy, big business, and social injustice. It makes it hard to nail me down.

“Government of the people, by the people, and for the people.”

The last honest president?

I can’t help it. Maybe it is my maturity–I am sliding into senior citizenship quicker than I want to admit. After a certain age, you start realizing what you knew before, but only philosophically. You have seen enough, and experienced enough, to know that life isn’t fair. In my case, I truly know that life isn’t fair, but I haven’t given in. I still believe that it isn’t too late. I believe that if people gather in large enough numbers they can make the government listen. Is that naive? I suppose so, because millions of citizens contacted their representatives and the White House begging them to withhold TARP funds from ailing banks. Those millions had zero impact. For those financial institutions, the recession is over, and they can double their executive compensations, but for the rest of the country the recession they created continues. Mortgage foreclosures are still happening at an incredible rate. Is this “Government of the people, by the people, and for the people?” –Abraham Lincoln

We want it, but the government denies us.

We are still in the throes of health care reform. In survey after survey, the American public proved we overwhelmingly  support  the public option. The percentages range from 61% to 77%. The public option is a no-brainer. We want it. Why then do our representatives continue to insist that the public option is dead?

Do you smell the stink of sellout?

Let’s think about it–the citizens want it, congress doesn’t. Where is the disconnect? It stinks of sellout. Someone owns the congress lock stock and barrel, and it isn’t the citizenry–is it? I’m willing to bet everything I own that the final health care reform bill will do more to benefit the health insurance companies than the people. It’s just like the prescription drug plan. The government said it was for the old folks and it is, a little bit anyway, but the real winners were the pharmaceutical companies. It has made it possible for Senior citizens to pay the high drug prices with public money. How do the drug companies benefit? People who couldn’t pay for their medicines before, are now able to. They hit the jackpot and the pharmaceutical executives are smiling all the way to the bank with their bonus money, perks, and lavish lifestyles, while the rest of us are destined to pay more taxes. What, you don’t think you pay more taxes, you do, it is just deferred. It is called the national debt. Someday the piper will come calling, and then we’ll find out what deficit spending has really cost us.

The lucky ones are those who are gone before the collapse.

Like I said, I’m sliding rapidly into senior citizenship, and maybe, just maybe I won’t be around to witness the final collapse because of all this selfishness, greed, and foolishness.

Okay posts on printing and Self-Publishing are going to have to wait once again. It seems that the last post, We Sure Swallowed the Health Care Lie, I seriously stirred the pot. If you go back and read my post and the attached comments, you will find that sentiments are all over the place. The truth is we don’t know what to do about the corporate Godzilla’s wreaking havoc in our lives. We know who they are, and there is plenty of finger pointing to go around, but our backs are against the wall and there isn’t a rescuer in sight.

Does this sound a tad dramatic? It is, but unless we see the monsters for what they really are we won’t muster the will to fight them. Tracy commented on my post, and I quote, “I emphatically agree with you regarding your views on health insurance…perhaps because I, too, am self-employed and have been for 31 years. My Blue Shield plan just increased about 3 months ago by 22% and is going up another 18% in December (when I enter a new age bracket). I worked in the housing industry and my income is down 90% while my health insurance will have increased 40%. I have been charging my health insurance premiums since January of this year because I am afraid to cancel it because, as you stated, it will be impossible to get health insurance then. Something has GOT to change!”

Tracy’s example is representative of the trouble many of us are finding ourselves in; let’s look at the the history of the unholy trio: US Congress, Health Insurance Companies, and the Financial Industry; and discover the careful step-by-step path that led us into this unconscionable position.

• 1920′s Health Insurance created by Blue Cross/Blue Shield.
• 1929 estimated annual average health care expense for American families totaled $108.00.
• 1933 Federal Government passes Glass-Steagall Act wherein “banks, brokerages, and insurance companies were effectively barred from entering each others’ industries, and investment banking and commercial banking were separated.” Post by Kitty Wampus
• 1940′s saw the entrance of commercial insurance companies into health insurance  after seeing the success of Blue Cross/Blue Shield (source EHNet).
• 1960 Health Care expense rose to an average of 6.6% of a family’s annual income. It was no longer a luxury–it was now a necessity.
• 1973 the last year middle-class and poor Americans saw an increase in real earnings–only the top 20% saw gain–the bottom 80% has been stagnant for 36 years.
• 1980 congress passed Depository Institutions Deregulation and Monetary Control which broadened lending powers and banks rushed into real estate lending and speculative lending.
• 1980 Ronald Reagan elected president, took office 1981 (note: Regan didn’t start banking deregulation).
• 1981 Economic Recovery Act spurred a boom in real estate.
• 1982 Garn-St.Germain Act authorized money market savings accounts in banks and savings and loans. Seriously undermining their security.
• 1999 President Clinton, Republicans agree to deregulation of US financial system effectively nullifying all of the protections of Glass-Steagall Act of 1933.
• 2001 Health care insurance premiums risen three times more than wages. With company health care the average person paid $2,827.00 including premiums and deductibles. Health Reform.Gov
• 2005 Bankruptcy laws changed to protect banks at the expense of customers. Banks who encouraged consumers to participate in reckless free-spending credit card lifestyles feared to face the results of their own actions.
• 2006 Average spending on health care including premiums and deductibles rose 30% in five years to $3,744.00. For those without company sponsored group insurance the costs were even more. HealthCare.gov
• 2008 ushered in the biggest financial failing since the Great Depression. US Government offers bailout money to head off economic collapse. Banks promise to renegotiate home mortgages, instead raise credit card interest rates by double or more

So here’s the bottom line as I see it:

1. The way to unimaginable wealth is to create and market a product that becomes a necessity, like cigarettes and cocaine. The health insurance industry did just that. How? By allowing costs to spiral up. Since medical providers have had unrestrained ability to charge outrageous fees, i.e. the ten dollar dose of Tylenol, ancillary costs and services have skyrocketed too. Who now can afford treatment for even simple procedures without insurance? Furthermore, should a policyholder contract an illness or suffer an injury while covered, their options of changing insurance companies becomes impossible. Pre-existing condition clauses keep people stuck. Drop your insurance with a pre-existing condition and you may never qualify for coverage again.
2. The financial industry has manipulated the government into lifting all of the protections that were implemented to prevent the collapse experienced during the Great Depression. What happened? Is it any surprise that the country is experiencing a deep recession? It is okay with the CEO’s because they take their bonuses whether the company makes money or not. It is the workforce and small businesses are hit hardest. Big banks are recovering nicely because of bailout money, higher credit card charges, and tougher bankruptcy laws.
3. People like my commenter, Tracy, find themselves charging their rising
   

   New & Improved Card

   health insurance costs on credit cards that can, and do, double interest and fees without restraint. If she can’t find another way to pay those usurious interest rates and outrageous policy premiums she will lose everything she has.

4. Congress, the health insurance, and financial industries have us just where they want us. We have become slaves of the system just as surely as blacks were plantation slaves over 200 years ago. If you want proof, just try to get away without paying income taxes. Go to a hospital without an insurance card. Refuse to pay exorbitant credit card fees. Do all of those things and see what happens.

What’s next, debtor’s prison?

Have you ever been woken up by cold water splashed in your face? That was what happened to me when I read a blog post on another site the other day. To paraphrase (because I failed to bookmark the site and can’t find it again–drat) he said that those in the printing business should not hold expectations that 2010 was going to improve the state of the market. Furthermore he said that there were only two things companies could do to remain viable during the coming year. The first, was concentrate on customer retention. In this market losing customers is like losing blood. Do whatever you have to do to stop the loss. The second thing  was steal customers from the competition. Honest to goodness, steal was the exact word used. It wasn’t attract new customers, it was steal customers.

Part of me understands his point while another part of me is revolted. In a down economy new customers are rare. Prudent people rarely start new businesses during hard times. Banks are loath to loan and entrepreneurs are careful.  So if new customers aren’t springing up that only leaves current customers. If they aren’t your customer, then they are someone else’s. There is something very distasteful to me about targeting some other company’s livelihood knowing that if you win you may be causing their demise. That is what the emotional side of me says.

The pragmatic side says that you have to face reality. If it takes stealing a customer to keep your company afloat, and allow your employees to put food on their tables, that’s what you have to do. Strike first before they strike you.

Is that cutthroat? Maybe, but business is a jungle and it is survival of the fittest. Don’t we benefit as a society if those moving the bar up are the ones surviving? Don’t we get better goods and services? For the sake of all shouldn’t those weaker companies be weeded out? For the good of the garden thinning has to take place. OK, I’ve managed to mix at least three metaphors in the previous sentences, but you get my point–right?

Stealing customers might be a correct term even though it’s hard to swallow (yet another metaphor). I remember talking to a travel agency some years ago about their marketing. They got tired of fighting for position in the middle of the pack and decided to break out by being unique. What they did is identify ten commercial accounts who did large volumes in travel. Then they determined how much they were already spending on newspaper and magazine ads. They totaled their radio expense. In short they added all of their marketing costs and put it into an imaginary pot. Then they looked at those ten prospects again and divvied up the pot ten ways. During the next year they focused all of their energies on the golden ten. All they had to do was get three and their business would increase. When the dust settled, and the year was over they had six out of ten, and business more than doubled for them.

Those ten golden commercial accounts had been buying travel services from someone else. In effect, the upstart travel agency stole their customers. Or as I like to think of it they won the business. Because they were focused on only ten, they could service the businesses like they had never been serviced before. It wasn’t theft, is was a reward for a job well done. To not reward them with business after this effort would be criminal.

To stay afloat, and even improve during an economic downturn find a way to earn more business. Whinning all day long that business is bad won’t do it. No that won’t do at all.