Starbucks And Exotic York, PA--Marketing Blunder?

Starbucks is seeking to restore lost lustre to its brand. On the low end, McDonald's and Dunkin' Donuts are aggressively courting its hard core coffee drinkers, while $4.00 a gallon gasoline prices are causing even its well-heeled customers to skip the occasional latte.

I find Starbucks' espresso excellent, and stopped into my local bistro for a dopio this afternoon. In what must be an attempt to impress customers with the quality of its coffee, chalked on the signboard behind the counter was "Pike's Place Brew Freshly Roasted on May 16 at our York PA plant."

Part of premium coffee's appeal is the romance of its geography. Kenya. Kona. Columbia.Ethiopia. Jamaican Blue Mountain. As a Keystone State resident, I am unable to understand how an association with York, PA adds to the cachet (or romance) of Starbucks.

Sure, York is home to a Harley-Davidson factory. And that's cool, if not especially gourmet. On the other hand, Wikipedia notes "The alternative rock band Live is from the city of York.^[19] The Live song "Shit Towne," from their album Throwing Copper is about York, and does not portray it in a positive light.^[20]"

I'm not the only customer who noticed this new emphasis on York , PA. A New York City store's chalkboard with a similar message has been posted on Flickr.

Clearly that York, PA plant is important--look at this Internet posting for a Senior Engineer to "to develop & implement engineering designs in specific technical functions within manufacturing or packaging to improve efficiencies, increase capacity and reduce costs." Sounds just yummy.

Part of the Starbucks corporate myth centers on its beginnings with a single store in coffee-loving Seattle, WA. Keep selling the Seattle. Skip the York.

Spam Up. Economy Down.

Forget the filet mignon. Sales of that recessionary favorite food, Spam, are on the rise!

"Sales of Spam — that much maligned meat — are rising as consumers are turning more to lunch meats and other lower-cost foods to extend their already stretched food budgets.

What was once cheeky, silly and the subject of a musical (as Monty Python mocked the meat in a can), is now back on the table as people turn to the once-snubbed meat as costs rise, analysts say.

Food prices are increasing faster than they've risen since 1990, at 4 percent in the U.S. last year, according to the Agriculture Department. Many staples are rising even faster, with white bread up 13 percent last year, bacon up 7 percent and peanut butter up 9 percent."

No News Today

What if nothing happened?

Less Revenue. More Spending. What's New?

The Wall Street Journal reports that corporate tax revenues are falling by 14% compared to last year even as federal spending soars. Wonder if Paulson can get us one of those zero percent Visa cards?

With turmoil rocking financial markets and housing woes slowing the economy, corporate tax revenues are falling and leaving big holes in the federal budget.

The Treasury Department reported Monday that corporate income-tax revenue over the first seven months of the fiscal year, which began Oct. 1, was $171.1 billion, 14.7% lower than during the same period a year earlier. Meantime, government outlays rose 7.3%, to $1.7 trillion, and the federal deficit ballooned to $152 billion, 88% higher than the same period last fiscal year.

"The budget picture is growing darker and is set to get much darker in the next few months, as the impact of the tax rebates hit the government's bottom line," said Mark Zandi, chief economist at Moody's Economy.com, a research firm.

Recommended Line For Obama

For the moment, Hillary remains the candidate who will not die, mimicking the attack of the zombies from the Night Of The Living Dead. Per the NY Times on May 8:

Senator Hillary Rodham Clinton struck a publicly defiant posture on Wednesday about continuing her presidential bid despite waning support from Democratic officials and donors.

The time has come for Obama to say clearly and consistently, "I have every confidence that Hillary Clinton will ask those who have voted for her in the primaries to turn their energies and enthusiasm to the main task at hand, which is ensuring that the Democrats win the White House." Then he should demand her pledge to exhort her supporters to back the Democratic presidential candidate.

Hidden Stat: Housing Prices Plunging At Minus 28% Annual Rate

In a report, that was not carried in the mainstream news, the US Treasury says that, by one measure, US housing prices are falling at a truly terrifying 28% annual rate.

Our source is the official April 30, 2008 "Report to The Secretary of the Treasury from The Treasury Borrowing Advisory Committee of the Securities Industry And Financial Markets Association." This was made publicly available as a press release on that date.

The relevant passage says:

In fact, housing price data from S&P/Case-Shiller was released hours before our meeting and highlighted that the decline in housing prices is not over but that prices are actually accelerating to the downside. For example, while year-over-year prices were reported to be down almost 13%, prices on a 6-month, 3-month and 1-month basis have declined 21%, 25% and 28% annualized, respectively.

The same gloomy report also says that the US budget deficit may increase from 2007's $163 billion to as much as $500 billion in 2008--which would be the largest ever in our history.

A recent survey of primary dealers estimates that the deficit for the 2008 fiscal year ending in September will exceed $400 billion with some economists expecting a deficit of more than $500 billion--a significant deterioration from fiscal 2007's deficit of $163 billion. Economic stimulus measures will complement the forces widening the budget deficit. This year's shortfall may surpass fiscal year 2004 as the largest on record in nominal dollars.

The folks over at The Wall Street Examiner say "The statements by the TBAC are so sobering and so stunning in their scope that it’s hard to believe that the Ministry of Truth would have allowed its publication."

Of course, hiding horrible truths is very easy in a world where the main stream media choose not to cover our national financial market disgrace, and the financial media itself has become simply a cheerleader for the Plutocracy. Long live CNN and Fox Business News.

Safety Patrol On Wall Street

May 2 (Bloomberg) -- A month after the Federal Reserve rescued Bear Stearns Cos. from bankruptcy, Chairman Ben S. Bernanke got an S.O.S. from Congress.

There is ``a potential crisis in the student-loan market'' requiring ``similar bold action,'' Chairman Christopher Dodd of Connecticut and six other Democrats wrote Bernanke. They want the Fed to swap Treasury notes for bonds backed by student loans. In a separate letter, Pennsylvania Democratic Representative Paul Kanjorski and 31 House members said they want Bernanke to channel money directly to education-finance firms.

Student loans are just the start. Former Fed officials and other Fed-watchers say that Bernanke's actions in saving Bear Stearns will expose the central bank to continuing pressure to use its $889 billion balance sheet to prop up companies or entire industries deemed important by politicians. The Fed satisfied Dodd's request today, expanding the swaps to include securities backed by student debt.

``It is appalling where we are right now,'' former St. Louis Fed President William Poole, who retired in March, said in an interview. The Fed has introduced ``a backstop for the entire financial system.''

Critics argue that the result will be to foster greater risk-taking among investors emboldened by the belief that the government will bail them out of bad decisions.

George Carlin has a routine where he laments that parents are way too overprotective of children these days. "There are a lot of loser kids out there and you can't protect them all," he says. "These soft fruity baby boomers are raising a whole generation of soft fruity kids who aren't even allowed to have hazardous toys."

Have our financial leaders gone soft and fruity themselves? Those posturing macho masters of the universe are all clamoring now for the Fed to give them a free do-over on their speculative excesses of the past few years. Now Congress is insisting that the Fed insure and bail out everything from student loans to fraudulent mortgages.

Carlin says, "Whatever happened to natural selection, survival of the fittest? The kid who eats too many marbles doesn't survive to have kids of his own."

Having seen my own kids get gold stars for simply handing in homework, and win trophies simply for being on the roster of a last place soccer team, and watched as the local middle school banned touch football at recess for being too hazardous, I know whereof Carlin speaks.

But nannies on Wall Street to wipe the spilled milk of investment bankers?

The greatest danger in any democracy is that the 'people' will discover that they can give themselves all that public money. Like a kid who learns where the cookies are hidden, the temptation to eat them all before dinner is just too great.

A last word from George Carlin:

Nature knows best. We are saving entirely too many lives in this country--of all ages. Nature should be allowed to do its job of killing off the weak and sickly and ignorant people without interference from airbags, and batting helmets.

And Ben Bernake.