In light of the recent resignation of Treasury Secretary Paul O'Neill and today's appointment of John Snow as his replacement, David Gardner argues that the separation between how the media says the economy is doing and how it's actually doing may be at an all-time high.
To determine whether our economy is really "ailing," David looks at the best indicator: gross domestic product.
In today's Motley Fool Take:
- New Treasury Secretary Chosen
- Quote of Note
- Dell's Not-So-Small Business
- Freddie Mac and Foolanthropy
- Shameless Plug: A Free Holiday Gift
- The Bond That Binds
- Discussion Board of the Day: Bonds and Fixed Income Investments
- Quick Takes: UAL Corp., Citigroup, Microsoft, more
- And Finally...
Securities and Exchange Commission Chairman Harvey Pitt resigned more than a month ago, and a successor is still not in sight. However, the White House didn't dawdle when it came to replacing Treasury Secretary Paul O'Neill, who "resigned" on Friday. John Snow, CEO of freight rail operator CSX
Over the weekend, Democrats decried the ouster of O'Neill and White House Economic Advisor Lawrence Lindsey as superficial fixes for a struggling economy. On ABC's This Week, former Vice President Al Gore said O'Neill and Lindsey are "fall guys for failed policies." While much of it is political posturing, the truth is that it will take more than changing the nameplates on a couple of doors to put the economy on firmer ground.
November unemployment figures came in at 6%, matching April's number, which was an eight-year high. The stock market is poised to post its third straight losing year, and virtually nothing has been done to convince investors that another Enron or WorldCom can't happen again.
On the latter point, Snow has been vocal on the need for corporate America to clean up its act. In July, he appeared on CNNfn to urge fellow executives "to return to the ethical moorings of capitalism... The shareholders own the companies. Management are just the hired hands." According to Bloomberg, Snow was part of a Conference Board panel that recommended new financial statement reporting standards and the reduction in executive salaries. (However, according to The Washington Post, Snow recently signed a contract with CSX that provided for the usual lavish compensation: millions in salary, bonus, and stock options, as well as home security, medical care, accounting services, use of company aircraft, and country club memberships for life.)
So don't expect a runup in the stock market once a new treasury secretary is in place. At best, this is a sign that the current administration is finally turning its attention to the economy, which -- according to several polls -- is more important to the public than fighting terrorism or Iraq.
President Bush doesn't have to look far for an example of what happens to a chief executive who doesn't focus enough on the American pocketbook.
"Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so." -- Douglas Adams, British author, Last Chance to See
Even those ditzy Dell interns know this is a good idea. (Wasn't Steven, the Dell dude, at least more entertaining than those generic interns? But we digress.)
According to a report by AMI Partners, Inc., an estimated 70% of small businesses have no IT department. That's a huge gap and a sizable market opportunity for Dell. Non-techie business owners in doctors' offices and hair salons, for example, have been left trying to learn about, set up, and operate computer networks on their own.
Dell comes to the rescue, offering three services for small-business clients. First, they can get an expert opinion on what they need for a complete computer network. This service will start at $199 -- surely a bargain compared to hours of pulling your hair out over buying the wrong hardware.
Next, Dell will install all the necessary components to complete the aforementioned network. It will also make sure the information and files from the business' old computers make it onto the new ones. Obviously, this is where Dell will make the most moolah, as it sells its own extensive line of products to small businesses.
Lastly, for $99 a year, companies will be able to sign up for Dell's Business Professional Training, with online courses for more than 340 applications. For those impromptu IT staffers, this should be a significant help.
Dell didn't estimate how much it could make from this new venture, but given that most American businesses employ far fewer than 100 people, and that it's difficult to imagine a business that wouldn't benefit from the efficiencies of technology, you have to wonder what took the computer giant so long.
For Dell, small should indeed be beautiful.
How would you feel if a company you owned decided to donate $225 million to charity, thus reducing earnings by $0.21 per share? That's what Freddie Mac
Government-sponsored Freddie Mac, along with its sister company, Fannie Mae
The company also operates the Freddie Mac Foundation, which helps support various non-profit organizations such as Wednesday's Child and Healthy Families America. That foundation will receive most of the donation, which is enough to keep it operating for six to eight years. Freddie Mac says the contribution will actually reduce its administrative expenses since it won't have to make regular payments over that period of time.
It warms our hearts to see such generosity and gives us a chance to remind you about our very own Foolanthropy program, which benefits five charitable organizations. These groups help feed hungry Americans, lift people out of poverty, and invest in social entrepreneurs with world-changing ideas. Please, read more about them, and see how easy it is to share a tiny part of your good fortune with others.
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True to its title, the latest James Bond release, Die Another Day, is showing no signs of defeat at the box office. After yielding the top spot to AOL Time Warner's
For the fledgling MGM
But major releases are few and far between for MGM. While AOL Time Warner saw its Hogwarts' star pupil place third over the weekend, its own debut of Analyze That placed second. While Disney
Because of its low profile, many of its multiplex winners, such as Barbershop earlier this year and Legally Blonde last year, tend to sneak up as sleeper hits. Then again, sneaking up is spy's work, and James Bond -- like MGM itself -- will live to die another day.
While MGM has turned a profit just once over the last five years, Wall Street is looking for it to be in the black in fiscal 2003. That's welcome news for a company whose income statements have often aped the Bond series' opening shots of a bloodied eye.
Let's just hope tomorrow never dies.
Enough about James -- what about the other bonds? You know, the corporate, Treasury, and convertible type? Some of them are yielding better than 007 right now. Are bonds and other income vehicles safe for you to drive right now? All this and more -- in the Bonds and Fixed Income Investments discussion board. Only on Fool.com.
The mutual fund industry is being pressured to disclose how it votes, as a major shareholder, in proxy elections. You may not feel like your little vote makes a difference when companies you own send you proxy materials in the mail. But mutual funds can and do make a difference, and the SEC, among others, is interested in getting fund companies to make public the positions they take.
Investigations continue into the wheelings and dealings between Enron and investment-banking firms Citigroup
Companies that derive financial benefit from advertising (such as your friend, the Fool) have reason to wax optimistic. According to a Reuters report, media buyer Universal McCann, a unit of the Interpublic Group
Wall Street Journal (subscription required, free trial available to Fools) is reporting that Microsoft
Looking for holiday gifts? Associated Press writer Larry Blasko offers some computer gift ideas. We at The Motley Fool encourage you to stroll through FoolMart to shop for gifts for your loved ones. And please also consider giving to people you don't know -- whose lives you can improve or literally save through gifts to Foolanthropy.
Today on Fool.com: The tale of one swiped ID, a fraudulent phone call, and nearly 100 grand in heartache.... Rick Munarriz says that maybe two wrongs canmake a Right.... A headhunter explains how to leverage a thank-you note.... In Fool's School, what do companies do with their earnings?... And the Post of the Day: Legg Mason's interest in Amazon.
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