This week's sign of the pending apocalypse: After victories against the tobacco companies, emboldened lawyers and activists are now taking aim at companies that sell junk food with hopes of recovering costs of diseases associated with obesity.
According to Salon.com, the real hope is that targeting the companies who provide our delectable treats will force price increases and marketing that will keep us from eating so much.
With 61% of American adults overweight or clinically obese, and the number of obese children tripling over the past 20 years, there's no question that this is a critical -- not to mention costly -- health issue. The surgeon general estimates that the cost of healthcare and lost wages from obesity-related illness is $117 billion.
But the whole idea of "suing our fat asses off," as Salon puts it, seems awfully Big Brotherish to us. Can you imagine suing McDonald's (NYSE: MCD) or Yum! Brands (NYSE: YUM) -- owner of such culprits as Taco Bell, KFC, and Pizza Hut -- because you've been packing on the pounds? Is it really the companies' fault that they are fulfilling our demand?
Proponents of these kinds of potential lawsuits also say that consumers are being snookered by those double-cheeseburgers, unwittingly taking in oodles of fat and calories. Could this possibly be true? Does anyone really walk into a Burger King thinking that a Whopper is a healthy choice?
Plus, if lawsuits like these are pursued, they undercut the tobacco litigation by saying that cigarettes are no more dangerous than Kentucky Fried Chicken. Better for Americans to take a little personal responsibility for their weight than to shift the blame to corporations.
The Motley Fool 50 has been known to have a Big Mac on its breath, but it also does 100 push-ups and sit-ups every day, after spending 30 minutes on the Stairmaster. The market index fell about 1.5% today, but it remembered to walk a few blocks after super-sizing its fries.
The market's closed on Monday, so we'll see you Tuesday. Enjoy the holiday weekend. Here's the rest of today's Motley Fool Take:
Sun's Sore Spots
Ever have one of those business cycles? Poor Sun Microsystems (Nasdaq: SUNW). A year and a half ago the server specialist was trading nearly 10 times higher than it is today. Prospects in all of its hardware lines looked promising and the possibilities for its Java universal programming language couldn't be brighter.
Now the company's stock is trading in single digits, and while the company is reaffirming its fiscal fourth-quarter profit targets it is also warning of a slowdown in orders. That's bad news for shareholders who were singing Annie show tunes about the Sun coming out tomorrow.
Tack on accounting irregularity accusations stemming from payments to AOL Time Warner (Nasdaq: AOL) and the announced retirement of President and COO Edward Zander earlier this month, and folks begin to wonder when and where Sun will finally set.
This was supposed to be Sun's time to shine. After four quarters of losses, concerns are running deep over lower bookings at a time when the company was supposed to be showing sequential improvement. You also have charismatic CEO Scott McNealy getting ready to inherit Zander's hats this summer. How many hats can one stack on before they start toppling over? We may find out, Annie, tomorrow.
Is Sun on the comeback trail? Some of your fellow Fools are breaking down its short conference call, trying to read into the company's position. Will Sun rise again? And when? All this and more -- in the Sun Microsystems Discussion Board. Only on Fool.com.
"It's not our natural inclination to sell... We would sell if we needed the money for something else, but that hasn't been a problem in the past 10-15 years. Earlier in my career, I had more ideas than money, but now it's the reverse." -- Warren Buffett at Berkshire Hathaway's 2002 annual meeting
Whining Politicians Face Conflicts
We told you a couple of days ago about the little outburst from Rep. Michael Oxley (R-Ohio) following the settlement between Merrill Lynch (NYSE: MER) and the New York state attorney general's office. Oxley expressed concern that "Our capital markets could be picked apart" by "the voracious trial bar and politically ambitious state attorneys general."
It turns out another congressman can't come to grips with the fact Attorney General Eliot Spitzer actually made decent progress in reforming the awful conflicts of interest analysts face. Rep. Richard Baker (R-La.), who is chairman of the House subcommittee on capital markets, is making noise about passing a law prohibiting further efforts by states in reforming financial firms. The main worry, allegedly, is possible confusion over regulations. "If it results in 30 different states coming up with 30 different sets of rules regulating national financial services firms," Baker is quoted in the Washington Post, "that's a calamity."
We should get a few things straight here. First, as the Post story points out, no one wants to see a smorgasbord of conflicting regulations -- least of all the different states. Second, there seems to be a great deal of sour grapes inside the Beltway as Spitzer was able to do in a few months what lawmakers have been unable to accomplish in a few years.
Finally, Merrill was nailed for conflicts of interest -- namely, its analysts were accused of highly recommending stocks they didn't like (one was referred to as "a piece of junk") in order to obtain or maintain lucrative investment banking relationships. We should, therefore, point out the conflicts of interest among the bickering politicians involved. Yes, Spitzer probably has higher aspirations than his current role as attorney general in New York -- but that's not a conflict of interest.
Consider, however, who filled the campaign coffers for Baker and Oxley in the current election cycle. Three of Baker's top ten contributors are among the very Wall Street firms under scrutiny: JP Morgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MWD), and Credit Suisse First Boston (NYSE: CSR). Oxley's biggest contributor by far is Credit Suisse First Boston, and Lehman Brothers (NYSE: LEH) is also in his top ten.
Something to keep in mind as we continue to hear these fellows bellyache about people who are actually doing something to curb the disgusting corruption on Wall Street.
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The Nasdaq Stock Market will begin requiring its members to obtain shareholder approval for stock option plans that include executives. It will also be implementing other new rules concerning related party transactions, disclosure information, and other corporate governance issues.
SEC Chairman Harvey Pitt says it's time to take a closer look at possible hedge fund fraud, now that they're being sold to "the average investor."
There's word out today that Lehman Brothers (NYSE: LEH) is interested in Tyco's (NYSE: TYC) CIT Group. Lehman is reportedly offering $5 billion for the financial services company -- about half what Tyco paid for it last year.
GlaxoSmithKline's (NYSE: GSK) shares took a 9% hit today after a U.S. court invalidated the remaining patent protections for the antibiotic Augmentin. The British drug maker says it will appeal.
Biogen (Nasdaq: BGEN), in the meantime, leapt 20% after an FDA committee recommended approval of the psoriasis drug Amevive.
And Finally...
Today on Fool.com: Has Bill Mann had a stroke or is he really coming to Merrill Lynch's legal defense in today's Fool on the Hill?... The Fool's School takes a look at something many would prefer to avoid: your will.... Roy Lewis has tips for saving on taxes when you gift money.
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