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Buying power and banking power

There's power in numbers. That physical fact is being utilized by dozens of small restaurants that have signed up with a buying group to control their food and equipment costs. The Dining Alliance is a Massachusetts-based company that negotiated deals with suppliers so small restaurants can get prices like the big chains. The restaurant supply business is a opaque world where suppliers reps negotiate different deals with each restaurant. The buying group seeks to clarify that process.

Banks, once a bastion of certitude and rectitude, have sunk in people's estimation to the level of used-car salesmen. The latest scandal of British bank Standard Chartered allegedly laundering money for Iran is just the most recent. HSBC has been fined for similar offenses. The economics behind the recent bank scandals is simple: bankers earn incentives (aka: huge bonuses) when they hit their budget targets. Ergo, they cut deals with anyone to make their numbers. Here are some stories on the latest scandal.

From the New York Times: The agreement is a victory for Benjamin M. Lawsky and his 10-month old agency, the New York Department of Financial Services.

From the London Daily Mail:  Standard Chartered staged a remarkable turnaround in a very short time after being confronted with allegations of money-laundering for Tehran.

From Investors Daily: Investors who don’t own shares of the bank should view the recent sell-off as a buying opportunity.

 

 

 

Canadians welcome here!

Canadian1With the loonie above par, Western New Yorkers can rejoice that we will get a fresh influx of dollars from cross-border Canadian shoppers.

We can, but sometimes we don't.

How many times have you heard someone complain about the "Canadians making a mess of mall parking lots" or grumbled about the driving skills of someone behind the wheel of a car with an Ontario license plate?

You would think anyone who has passed Economics 101 would thank their lucky stars to have Canadian consumers propping up our struggling economy. Our local retailers, hoteliers and small business owners certainly get it. And communities elsewhere would love to have something similar.

Yet you still hear the grumbles. And you still see stories like this one, where shoppers have begun calling Canadian shoppers "milk piranhas" for buying so much milk at U.S. grocery stores. One consumer calls shopping among Canadians a "nightmare." Doing without the $400.99 million in sales tax Canadian shoppers brought in to Erie County last year sounds like more of a nightmare to me. And I'm sure if you talked to our local dairy farmers, they count Canadian "milk piranhas" as a blessing.

Canadian2Shoppers in Bellingham, Washington have created a Facebook page called, "Bellingham Costco needs a special time just for Americans." It has 4,090 likes.

This story spells out why:

Canadians are being admonished on the Facebook page for littering, bad parking, cutting off other drivers, pushing past other customers to grab merchandise and clearing Costco shelves of milk.

“It’s not Costco, it’s everywhere!!! I feel like I’m in Canada anytime I drive anywhere in Bellingham. I wouldn’t have a problem if they were considerate people ... but they are the rudest people I’ve ever encountered,” according to poster Julie Lawson.

According to the same article, a handful of Canadians have started a movement of their own:

It’s that kind of ire that inspired Todd Smith, 25, of Coquitlam B.C., to launch his own Facebook page: “Canadians invade Bellingham Costco,” inviting Canadians to shop the Bellingham Costco on Saturday, Aug. 18.

Smith says he and his partner make the half-hour drive across the border weekly, not only because gas, food and clothes are cheaper in the U.S., but because stores there offer greater variety. About a dozen people have said they’re interested in the shop-the-Bellingham-Costco event.

“It’s a bit tongue-in-cheek, but we do go down there quite regularly and we might go down Saturday,” said Smith. “I find it kind of odd that these people would take such trivial things out of context. Have they not stopped to consider that we’re supporting their economy?”

It's a good question.

---Samantha Maziarz Christmann

 

Storage auctions exposed

A recent story in Business Today showed how different storage auctions are in Western New York than what is portrayed on popular "reality" television shows such as A&E's "Storage Wars."

Storage facility owners here say it's rare to find anything of value in an abandoned, auctioned storage unit. Usually, bidders end up with old clothes, mismatched household items or worthless papers. But on the show, bidders regularly find rare collectables, valuable antiques, even cash and gold.

Though it looks like it on TV, reselling storage auction items is not an easy way to make money. Even fan favorite Barry says so:

 

 

---Samantha Maziarz Christmann

Wilson Farms stores for sale

The 7-11 Corp. is putting up for sale 30 of the 188 Wilson Farms stores it recently bought. Here is a complete list of the stores being sold.

Olympian costs

No one is really getting their hopes up, but the latest buzz is the idea that Buffalo could team up with Toronto to make a joint bid to host the 2024 summer Olympics.

 But it does bring up the fascinating topic of what goes into hosting the global games.

Hosting this year's Olympics hasn't done much to pull London out of its recession. In fact, they are further in the hole after going over their $14.7 billion budget. This article from CBC News takes a look at how astronomically the tab has grown to host the games and with what kind of debt the games can saddle its host city.

This article from Bloomberg Businessweek says Greece's current fiscal crisis can be traced back to its hosting of the Olympics in 2004:

Hosting the event cost almost €9 billion ($11 billion at today’s exchange rate), making the 2004 Games the most expensive ever at that point. Greek taxpayers were on the hook for €7 billion, which did not include the cost of extra projects such as a new airport and metro system.

Within days of the closing ceremony, Greece warned the euro area that its public debt and deficit figures would be worse than expected. 

And this article from the Atlantic spells out "3 Reasons Why Hosting the Olympics is a loser's game."

---Samantha Maziarz Christmann

Money laundering redux

CharteredLondon-based Standard Chartered Bank stands accused by New York regulators of laundering $250 billion in oil money for Iran.

It follows a string of similar scandals, such as one uncovered at HSBC, in which offices in Buffalo helped to launder money from Mexican drug cartels, shady Russian business men and terrorists. HSBC ended up setting aside $700 million to cover penalties for that activity.

The New York Times has an interesting story today that looks at how each of the banks exploited a weak law in order to make money laundering easier:

Foreign banks until 2008 were allowed to transfer money for Iranian clients through their American subsidiaries to a separate offshore institution. In the so-called U-turn transactions, the banks had to provide scant information about the client to their American units as long as they had thoroughly vetted the transactions for suspicious activity. Suspecting that Iranian banks were financing nuclear weapons and missile programs, the loophole was finally closed in 2008 . . . .

Foreign banks until 2008 were allowed to transfer money for Iranian clients through their American subsidiaries to a separate offshore institution. In the so-called U-turn transactions, the banks had to provide scant information about the client to their American units as long as they had thoroughly vetted the transactions for suspicious activity. Suspecting that Iranian banks were financing nuclear weapons and missile programs, the loophole was finally closed in 2008 . . . . 

Since the tighter sanctions went into effect, there have been no charges brought on post-2008 conduct, although Treasury’s letter says that investigations are ongoing.

Gina Talamona, a Justice Department spokeswoman, said that the lack of recent illegal conduct is because the settlements with foreign banks “required the banks to implement rigorous compliance programs and other safeguards” against further violations of sanctions. She said that the department’s enforcement program “has had a significant impact on banking industry practices involving sanctions.”

- Samantha Maziarz Christmann


Wealthy toddlers dressed to kill (the family budget)

There's a fascinating story in today's Business section about the market for luxury childrenswear, which makes up about 3 percent of the $34 billion childrenswear industry. It turns out dressing affluent children can be very lucrative. We can't have mommy's favorite fashion accessory looking shabby, now can we?

"They're a walking billboard of you. They're a reflection of who you are, so if you are someone highly stylized, then you want to make sure your kids are the best-dressed kids out there," said Sasha Charnin Morrison, fashion director at Us Weekly.

After all, look how much celebrities and celebrity wanna-bes spend to deck out their dogs. And they will never even be able to drop names among their playmates!

But what exactly does a $2,000 children's dress look like?

Here are some looks from some of the priciest childrenswear lines. Mouse over each photo for the designer:

  Lanvin Blossom

Fendi    Gucci

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---Samantha Maziarz Christmann

New Yorkers pay more

Everyone knows it is expensive to close on a house in New York State, but Bankrate.com has done a survey that shows it's worse than that. The survey shows that New York has the highest closing costs in the nation!

Another survey shows New Yorkers pay the eighth-highest car insurance costs.

Any wonder the Empire State has trouble holding on to its people?

To see the closing costs survey, click here.

To see the car insurance survey, click here.

 

Laugh drought

The rain finally rolled in this weekend after a long, hot period of dry weather.

Analysts have begun predicting what that will do to food prices next year. So have cartoonists.

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---Samantha Maziarz Christmann

Poking fun at Facebook

Facebook shares have hit their lowest levels since hitting the market, losing 47 percent of their value, on the heels of the company's first earnings report.

The report showed costs are up, revenue growth has slowed and user activity is down.

Facebook's entry into the market has been entertaining to watch. Seems plenty of cartoonists think so, too.

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---Samantha Maziarz Christmann

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