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Economic forecast from Main Street...

How is the Buffalo area economy doing? Although national trends are heading up, Buffalo does not always follow suit.

Business reporter Matt Glynn spoke with several business people at the recent Entrepalooza gathering at the Buffalo Niagara Convention Center. Their outlooks may surprise you...

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JP Morgan heats up bank regulation debate


Jamie Dimon, CEO of JPMorgan Chase, will face shareholders at the bank's annual meeting in Florida today for the first time since the company revealed its $2 billion trading loss.

An editorial in the New Jersey Star-Ledger says this latest incident is proof that, despite bringing the American economy to its knees in previous gambles, big banks continue to take risks that put the entire economy in danger.

"Dimon and other bankers must now admit their human penchant for error — errors that can bring down the economy, as we learned in 2008 — and get out of the way of common-sense regulations such as the Volcker rule and its parent, Dodd-Frank, the major banking reform of the post-meltdown era," the editorial board writes.


Elizabeth Warren has called for Dimon's resignation from his board post at the New York Federal Reserve. "The banks cannot regulate themselves," she said on 'CBS This Morning.' (Read more of her opinions in this Washington Post blog).

Newsweek correspondent Michael Tomasky thinks Dimon should resign, too--from JPMorgan.

"I’m well aware that the suggestion will strike most people as ridiculous. And I am here to say that the very fact that it sounds ridiculous demonstrates the sickness that we have come to accept as normal. We live in a society whose elites do everything they can to take no responsibility for anything," Tomasky writes in the Daily Beast.


President Obama, in an appearance on TV talk show "The View," said the fact that one of the country's smartest, best bankers can make such a huge mistake in the derivatives market shows the need for its regulation.

"Keep in mind if we get all the rules that we proposed and were passed by Congress implemented into law, it should prevent this kind of stuff from happening ,"Obama said . "But this, again, is going to be part of what the election is about. We've got real differences here, because Governor Romney, members -- some of the Republican members of Congress and the financial industry have been arguing that this is unnecessary, that this is impeding capital formation."

Hulk smash record

In its second weekend at the box office, "The Avengers" has made history again, smashing with hulk-like authority previous box office records.

The superhero-packed film earned $103.2 million this weekend, bringing its total domestic take to $373.2 million and global gross to over $1 billion. It's the first time a film has made more than $100 million during its second-week run in theatres. It broke James Cameron's record for "Avatar," which earned $75.6 million during its second weekend.



A really big bank blunder

J.P. Morgan's $2 billion trading loss is the big story today, and has tongues wagging.


It is the lead story in both the Wall Street Journal , Forbes and the New York Times, but for bank reformers, the story is like manna from heaven.

While he failed to foresee his company's huge losses from risky trading, J.P. Morgan CEO Jamie Dimon did accurately predict the feeding frenzy among critics that would ensue.

"It plays into the hands of a bunch of pundits but you have to deal with that and that’s life,” Dimon said in a conference call., a non-profit reform group, said the incident at J.P. Morgan is all the proof necessary to show that reform is needed.

"Jamie Dimon and JP Morgan Chase just proved what anyone not getting a paycheck from a Wall Street bank already knows: gigantic too-big-to-fail banks are too-big-to-manage," writes Dennis Kelleher, the group's president.

Here is more of Kelleher's statement:

"Ignoring the trillions in dollars of damage done by Wall Street in causing the economic collapse, JPMorgan Chase CEO Jamie Dimon has been a relentless critic of financial reform.  He has denied that the biggest banks continue to threaten our financial system and our economy and claims they are well run and know how to manage risk.  JPM's announcement today of a surprise $2 billion in losses from illiquid derivatives proves him wrong and shows the need for financial reform, especially a strong Volcker Rule, to limit such risky betting."


The Volcker Rule would, among other things, restrict banks' ability to make risky trades.

"Today’s announcement is a stark reminder of the need for regulators to establish tough, effective standards to implement the Merkley-Levin language to protect taxpayers from having to cover such high-risk bets," said U.S. Senator Carl Levin, chairman of the Senate Permanent Subcommittee on Investigations and co-author of the Merkley-Levin language establishing the Volcker Rule.

But more than making the case for a Volcker rule, some say the incident exposes a major flaw in the proposed legislation.

Matthew Yglesias at writes:

"Dimon repeatedly insisted that the whole operation is Volcker-compliant, and JP Morgan is describing the operation as an effort at hedging gone wrong. Nobody knows exactly what happened, but in general if you just lost $2 billion that's a good sign that you're not hedging. The idea of hedging is to accept a small cost in order to insure yourself against the risk of a big loss. Two billion dollars is a big loss even for JP Morgan. So why call it hedging? Presumably because the Volcker Rule allows proprietary trading for the purposes of hedging. This turns out to be a big loophole."

Americans for Financial Reform believes that's why the Volcker Rule not only needs to be enacted, but strengthened.


"The regulators current rule has a loose, permissive standard for portfolio hedging that might have permitted these trades under a hedge exemption, even though they clearly violated the proprietary trading ban. We hope that regulators will heed the warning here, and move speedily to finalize a Volcker Rule that is stronger than their initial proposed rule," its statement reads. 

But according to the Journal's Steve Goldstein, blogging in MarketWatch, "The simple fact is that no rule is going to be strong enough to prevent a bank from acting with hubris and stupidity."

"The best way to combat 'too big to fail' is to make banks small enough that failures wouldn’t matter," Goldstein writes. "Short of that obvious step, best to be prepared for the worst."

United bows to consumer pressure

You can take away our in-flight meals, cram us into uncomfortable seats for hours at a time and charge a fortune for our checked bags, but don't mess with our pets.


That's the message United Airlines got recently from 46,000 petitioners who disagreed with the company's PetSafe pet transporting program. The policy did not allow for certain breeds of dogs to be transported in the company's planes.


Nine breeds were on the no-fly list, including the pit bull terrier, cane corso and American staffordshire terrier.

"They used to "fly the friendly skies," but United's new policy of canine profiling is anything but friendly to families who travel with their dog, if their dog happens to look like a pit bull," wrote Best Friends Animal Society, one of several pro-animal groups.

United reversed the policy this week, but still requires the breeds to be transported in a specific kind of reinforced container.


That's some floor!

MP Carrol Harwood of Cheektowaga just won a international award for a handcrafted floor the company installed in Orchard Park. Numerous craftsmen were involved in the creation and installation of the floor.Hardwood floor

Here's a press release about the award:

Floor makerM P Caroll Hardwood Wins International Award

The Wood Floor of the Year Award recognizes innovative design &
 The National Wood Flooring Association presented retailer, M P Caroll Hardwood, with its prestigious Wood Floor of the Year award at the 2012 Wood Flooring Expo. Held in Orlando, Florida in April, the award was presented by HGTV celebrity designer and carpenter, Carter Oosterhouse. Over 200 awards have been given to NWFA member companies throughout the world, since the program began in 1990.
The winning floor, chosen by over 3,000 National Wood Flooring Association members, is a 300 square foot dining room located in an Orchard Park, NY residence. The selection process for the design was led by Mark Taylor, Mark Taylor Interiors, a local interior design firm. The award winning floor consists of hundreds of individual pieces of hand scraped Hickory and Black Samoan Mahogany that were hand cut in the M P Caroll wood shop.
"I'm humbled and honored to be recognized as one of the best in our industry. I'm very proud to have some of the most talented people I've known, working with me at every level of my hardwood flooring business", says Mike Caroll, Owner.
About M P Caroll Hardwood
M P Caroll Hardwood is a full service hardwood flooring store located in Cheektowaga, New York. While the retailer works with architects, developers and designers throughout WNY in  designing and installing the area's most prestigious floors, the company also caters to the  do-it-yourself market offering dozens of pre-finished floors and free installation lessons. A "Closeout Corner" was recently added, featuring odd lots of greatly reduced flooring as well.
About The National Wood Flooring Association
The National Wood Flooring Association is a not-for-profit trade organization, with more than 3,000 members world-wide, dedicated to educating consumers, architects, designers, specifiers, and builders in the uses and benefits of wood flooring. NWFA members receive educational training, benefits, & technical resources, allowing  them the opportunity to accelerate their success in the industry.

Senecas land big Army contract

The efforts of the Seneca Nation to diversify its economy beyond casinos and cigarettes appears to be gaining traction. A Seneca construction business just landed  an $18.5 million contract to design and build an Army Reserve center in Schenectady.

Here is a press release announcing the contract:

Seneca Firm Wins $18.5 Million Army Contract

SCMC to build counter-terrorism Army Reserve center in Schenectady

       ALLEGANY TERRITORY, Salamanca NY May 8, 2012 – SCMC LLC, a Seneca Nation of Indians business, won a contract for $18.5 million to design and build a U.S. Army Reserve Center in Schenectady, NY.
        Sen. Kirsten Gillibrand of New York, a member of the Senate Armed Services Committee, recently said in a news release the center is for “state-of-the-art, high security military and counter-terrorism training.”
       “This is a proud achievement for our Nation, the company and our people,” said Seneca Nation President Robert Odawi Porter. “This is an example of how the Nation is diversifying its economy, broadening its construction expertise and winning competitive national contracts.
     “I also want to emphasize that the revenue and profits from this work, while supporting hundreds of  New York construction workers, will return to Western New York for reinvestment.”
      SCMC opened for business in May 2008 and has developed core competencies as a construction manager, general contractor and program manager specializing in vertical construction; infrastructure, including water and waste water; rehabilitation, renovation and demolition. SCMC provides construction, construction management and program management services to federal, state and local governments.
     “This is a major win for our company and it demonstrates the qualifications and expertise of our people,” said SCMC President and CEO Odie Brant Porter. “This shows without a doubt that a Seneca-run business can compete in this field against the heavy hitters and come out on top. That bodes well for the future.”
      Congress authorized the project, which will in part be administered out of West Point, Dec. 15, 2011, allocating $20 million. The money is for design and construction of a 60,000-square-foot center on three acres of the Niskayuna Commerce Park on Hillside Avenue in Schenectady.
      The center will have a training building, a vehicle maintenance shop, a library, a learning center, a weapons simulator and a fitness area for 12 reserve units from the Capital District.
     It’s expected to create 200 construction jobs and is due for completion in October 2013.

      More About The Seneca Nation of Indians

The Seneca Nation of Indians, one of the six nations of the Haudenosaunee [Iroquois] Confederacy, continues to live on its aboriginal lands in Western New York, including sovereign territories in Niagara Falls and Buffalo where the Nation operates resorts. The Senecas’ long history includes passing on constitutional and governmental traditions used by founders of the United States like Benjamin Franklin. Historically a warrior nation, the Seneca Nation traditionally controlled trade and protected the Western territories, earning the title “Keeper of the Western Door.” The Nation’s five sovereign territories are comprised of 31,095 acres along the Allegany River and the Southern Tier Expressway, known as the Allegany Territory; 22,011 acres along Cattaraugus Creek near Lake Erie known as the Cattaraugus Territory; one square mile in Cuba, called the Oil Spring Territory; 30 acres in Niagara Falls, and 9 acres in Buffalo. The Allegany Territory contains the City of Salamanca within its boundaries. Tens of thousands of acres of land in southern New York and northern Pennsylvania were taken from the Nation when the federal government built the Kinzua Dam and forcibly evicted Senecas from their land in the early 1960s. The Nation today operates a $1.1 billion economy that employs more than 6,000 people, native and not.


First pink slime, now meat glue?

Perhaps after seeing what a big splash they were able to make with pink slime, food activists are now going after something they've dubbed "meat glue."

The latest dustup is over transglutaminase, an enzyme used to bind different cuts of meat together.

This media report, if breathless and sensational, does a good job of demonstrating how it is used:

After media reports about the practice surfaced, a California senator contacted the USDA with concerns about food safety and asking for an investigation.

"If a whole steak was actually composed of different meat parts that were glued together, the center portions of the steak can be contaminated. The outside parts of the meat now become the inside parts of the new steak," said Sen. Ted W. Lieu of Sacramento. "If that 'reformed' steak is not thoroughly cooked and served rare or medium rare, the inside portions of the steak can still be contaminated and cause sickness to the consumer."


If an outbreak such as e.coli does occur, the fact that different parts from different animals are attached to one another would make tracing the source of the outbreak more difficult, he said.

He was also concerned about plain, old fashioned, consumer transparency.

"As a matter of honesty and the consumer’s right to know—food suppliers, restaurants, and banquet facilities should not be deceiving the public into thinking they are eating a whole steak if in fact the steak was glued together from various meat parts," Lieu wrote to the USDA.

Activists also said consumers should not be made to pay the same price for lower quality, reconstituted meat as they pay for whole cuts from one animal.

The American Meat Institute, an industry trade group, said the practice is safe and that concerns about consumer transparency have already been addressed, since manufacturers using transglutaminase are required to require their products as reconstituted or reformed meats.

The controversy manifested just as Beef Products Inc. announced it would close three plants, throwing 650 people out of work. BPI suspended production at the plants when school districts and several grocery stores vowed not to source its meat there after controversy erupted about the way its "finely textured lean beef trimmings" or "pink slime" filler was processed.

What are your thoughts? Does the idea of "meat glue" turn you off?


Is it a pump-and-dump?

David Robinson's column in the Sunday Business Today section is worth revisiting. He looked at the sudden rise in the price of Synacor stock, and pointed out the involvement of some Internet stock boosters.

A fellow named Jonathan Ledbed, well-known for his work boosting stock prices with breathless predictions of future increases, has been talking up Synacor. In his disclamer, Ledbed says he owns shares and is being paid by someone who owns a lot of shares.

The folks at Synacor are not saying anything, other than to note that it is a good company with solid growth potential.

We'll keep an eye on it.

Are electric cars really the better choice?


Ford Motor Co. is turning heads as it prepares to unveil electric and gas-powered versions of the same model of vehicle, the Focus. Debate has raged over whether electric cars are an appropriate replacement to fossil fuel-dependent traditional cars, but Ford's experiment provides the first opportunity for consumers to compare the tangible, user-level pros and cons for themselves.

So what are the arguments for and against electric vehicles?


According to the  U.S. Department of Energy, electric cars are more efficient than gas-powered ones, are better for the environment, quieter and don't rely on a foreign fuel source. Most of their problems, the DOE says, are related to their batteries, which are heavy, expensive, space-consuming and take a long time to charge. Gas vehicles can travel about 300 miles between fill ups, while electric cars can go about 200 miles between recharges. (Motorheads can get an in-depth look at the nuts and bolts of the electric car via this blog from Scientific American.)


A documentary called Who Killed the Electric Car posits that the only reason we're not already all driving electric cars is the fault of "an industrial culture whose aversion to change and reliance on oil may be deeper than its ability to embrace ready solutions."


Indeed, many Americans (on the right, left and middle of the political spectrum) have said they would prefer it if their country did not rely on the middle east for its energy supply. For many, it's not a question of pollution or consumer choice, but a matter of keeping our country safe and our soldiers out of war zones. It's a campaign issue for both Democrats and Republicans. Experts have said producing cars that don't run on gasoline is a major step in that direction.

The fact that electric cars don't burn fossil fuel is their major selling point, not just because they're not foreign-oil dependent, but because their emissions don't pollute the environment. But Time magazine's HealthLand blog claims electric cars are just as polluting as gas-powered ones--at least in China, where the electricity used to charge them is predominately sourced from the burning of coal. That's an easy fix, though, since Americans have more clean, domestic power sources available to us--hydropower, solar power, wind power.


In a post called "Why electric cars are awesome," CleanTechnica points out Chevy Volt and Nissan Leaf have been called a failure by the media for selling only 17,000 units by January, even though just 6,000 Toyota Prius sedans were sold in their first year and have since taken the market by storm.

And even though electric car sales pale in comparison to sales of cars with traditional combustion engines, demand for them far outpaces supply.


"People debated at length whether the Nissan Leaf all-electric car would be practical or cheap enough for the mainstream. But that debate was moot because Nissan doesn't have enough Leafs to sell to the mainstream anyway . . . . The limiting factor right now is not public interest in electric cars, it's the car companies' ability to make them," writes the Good News blog from Good magazine.

At the time the blog was written, the Leaf had a 20,000 person waiting list.

Ford's experiment will be one indication of consumer preference, though it may not be able to solve the theoretical riddles surrounding the question of gas vehicles versus electric ones.

What's your opinion? 

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