Discussion Divas

Strait Talk: Strait of Hormuz

Happy New Year. If you haven’t eaten any black-eyed peas yet this year, please try some. Seems the whole country could use an extra helping of good luck in 2012, and legend has it that these little beans can do the trick.

 

We certainly could use some good luck when it comes to the unemployment rate (clocking in at 8.5% on Friday, the lowest level in three years), both our economy and Europe’s economy, stability on the Iraq hand-off, the changing of the guard in North Korea, Egypt’s elections, and so on (pass the peas, please!).

 

I am surely hoping for the best, calm outcome when it comes to the Strait of Hormuz, three little words that have been ringing in my head since first hearing them a few weeks ago.

 

Tell me more

Seventeen million barrels of oil travel daily through the Strait of Hormuz, a waterway located between Iran and Oman. The U.S. Energy Information Administration calls it “by far the world's most important chokepoint” for oil transport. See map of SOH.

 

Iran--home to one of the four largest known oil reserves--is threatening to shut down the strait if the United States and Europe move ahead with threats to refuse to buy oil from Iran because of the country’s continued enrichment of uranium. Iran has long contended their uranium efforts are intended for civilian power use, while much of the outside world says they are building a nuclear bomb.

 

If the strait is closed, not only would oil prices spike--possibly by 50% according to some analysts--the situation could create world conflict (the U.K. signaled it would use military force to re-open the strait) and wreak economic turmoil globally, taking a big toll on the already weak European economy. The tensions have already tipped oil over the key $100 a barrel mark.

 

Ah, oil. Can’t live with you, can’t live without you.

Just to underscore that it’s oil that makes the world go round, U.S. car sales rose 8.7 percent in December, finishing the year on a high notefor Chrysler, Ford and General Motors. SUVs had a good year, too, as gas price stayed below the $4 mark.

 

For those looking for alternatives to traditional gas guzzlers, take note that sales of the electricChevy Volt popped 34% in December, despite warnings that the battery could catch fire (GM announced a fix) and despite little electric car infrastructure.

 

Putting it in perspective, there are approximately 10,000 each of the Nissan Leaf (also electric) and the Volt on U.S. roads, meaning they make up a mere fraction of the 13-plus million cars the big manufacturers each expect to sell in 2012.

 

Let’s leave it there

We could dive into a lot more on the energy front, starting with fracking (potentially causing earthquakes? yikes!). But you and I both know we like this email because it’s short :)

 

So be sure to eat some black-eyed peas. Tradition has it that you should eat them New Year’s Day, but I extend this to the first couple weeks of January. I put my recipe on the site if you need one. Goes great with Champagne, but what doesn’t?

Andrea Jung and The List

Holiday prep and festivities are making me really late with this post--so apologies and Happy Wednesday!

Speaking of the holidays, thank goodness for online shopping and shipping. They’re saving me this year. And apparently I’m not alone: Shoppers spent almost $31 billion online between Nov. 1 and Dec. 16, 15% more than last year. That’s a lot of stuff bought... And WSJ reports retailers are extending the deadline for purchases that can still arrive by Dec. 25.

I’ve been ordering through Amazon Prime like a fiend, and love the new Slice app that alerts you when packages have shipped, are out for delivery, and delivered (full disclosure: my sister works there).

I’ve also become a user of Birchbox, a startup that lets you give monthly subscriptions of little makeup samples, a fun treat for all the girly girls out there.

I was thinking about Birchbox last week when Avon announced that Andrea Jung, who has been chief executive of the beauty and cosmetics company since 1999, would be stepping down. The company’s stock is off 45% for the year, and while a lot of factors are contributing to the pressures at Avon, it’s hard not to think about their door-to-door sales model versus the simplicity of an online Birchbox purchase (also run by women).

Separately, any time one of the precious few female leaders of Fortune 500 companies departs, I think about “the list” and how many that leaves. Turns out, the list is at a record high in 2011. There are 18 women in the top job, with a whopping 8 new additions this year (some will take the helm in 2012, and Jung’s departure will leave 17). Fortune called 2011 a “banner” year for women.

Jung has been a fixture on this list (there the longest of any), and together these women control about a half trillion dollars in annual corporate sales across industries from tech to health care to retail, energy, food products and media. But as we see with Jung, it’s a list always in flux.

Already this year, Yahoo ousted Carol Bartz (in a story for the corporate ages, she was informed over the phone and then shot off a company-wide email telling everyone she was fired), while Hewlett-Packard brought in Meg Whitman (former eBay CEO) to run the huge but struggling company. 

On the whole, 2011 was a mixed bag for women in corporate life. Harvard and Wharton accepted the most women ever into their business schools -- 39% and 45%, respectively. But as the non-profit Catalyst noted last week, women in executive leadership positions held steady at 14%, so no progress there.  

 

Meryl Streep raised an interesting point about women in leadership in her appearance on “60 Minutes” this past Sunday, saying she took her latest role as Margaret Thatcher to have the opportunity “to deal with the deep, buried discomfort that people still have -- men and women -- with women in leadership positions.”

 
I’ve interviewed a number of female CEOs and many don’t think it’s helpful to call attention to the fact that they’re female in a sea of male CEOs. And they’re right on one level. But it seems to me the more there are, the more normal it seems, and that’s got to be a good thing when women make up 46.7% of the labor force. 

 
(Happy Holidays. We’ll see you NEXT week, just in time for the New Year.)

 

Black Friday's Teaching Moment

It’s hard to know whether to cheer or cry over 9,000 people standing in line for the midnight opening at Macy’s in New York City on Thanksgiving night. 

The younger version of me thinks fun! Something wacky and active to burn off all that turkey and pumpkin pie - yeah! The older version of me was happily avoiding crowds with blow-out sales online.

But the Black Friday craziness is in part evidence of the large and growing wealth divide in America. As one NYT story noted, a family waiting in line at Toys “R” Us on Thursday night was there to take advantage of big savings on diapers. 

Let's all have some brie

 

If you know me at all, you know I live, breathe and sleep cheese. My husband once joked that in our house we put it out like other people put out candies in little bowls. It sounded like a good idea to me. 

Fittingly, I’ve been eating brie (Fromager d’Affinois, a double-cream brie from France that tastes like a triple-cream) while trying to wrap my brain around this European debt crisis that has the U.S. stock market in such turmoil--this week the Dow lost 2.9%. Here’s what I’ve learned:

1. Many of the European countries are like little dominoes, independent but financially interconnected on a game board called the euro zone, consisting of 17 countries (see list).

Polka dot optimism

(photo credit Andrew Noyes)

Thank goodness for the Fall polka dot trend to invoke a little whimsy in an otherwise serious state of affairs.

I’ve been wearing them all week. And it’s not just me. I’m seeing them everywhere--polka dots paired with polka dots. And why not? Who couldn’t use a little cheer sprinkled in with the news these days.

Reviewing the week...
It began Monday with Obama’s speech on how to fix the deficit--raise taxes on the wealthy, cut spending. More specifically, meet the proposed “Buffett Rule,” named for uber-billionaire Warren Buffett who keeps saying it’s crazy that he pays less in taxes than his secretary (17.4% rate vs an average of 36%).

Under the Obama administration’s proposal, taxes would rise (or come more in line with what middle income earners pay) for the top one percent--people who earn over $1 million a year. The New York Times looked at Treasury Department data and said 238,000 households filed taxes with over one million in income in 2009. About 60,000 of those households paid less than 15% in taxes on that income.

Cue the “class warfare” rhetoric: Republicans say the wealthy are job creators who already pay more than their fair share in taxes. Obama responds: “This isn’t class warfare. It’s math.” Rather than “gut” education and medical research spending, it’s time to prioritize, make tough choices and have those who can afford it pay more. And if we do nothing...

Moving on, a few more highlights from the week...

• U.S. hikers imprisoned in Iran for two years are freed. Maybe soon we’ll understand exactly why they felt the need to hike along the border of Iran and Iraq, but we’re glad they are free. WSJ commenters were tough on these two.
• The United Nations met in New York where Palestinian leader Abbas lobbied for a seat in the United Nations, asking to be recognized globally as an individual state.
• Hewlett-Packard named former eBay CEO and California gubernatorial candidate Meg Whitman as CEO. Her appointment brings the number of women running Fortune 500 companies back to 12, which had dropped when Yahoo fired Carol Bartz a few weeks ago.

And finally...
On Thursday, Facebook rolled out changes to its site, introducing Timeline, a feature that lets you enhance your personal profile--to tell the story of your life and connect the dots. I covered the event, dressed in my polka-dot shirt, happy to be working in the excited, super-charged atmosphere created by the developers there. Silicon Valley these days feels like it exists in a carefree bubble, but the Facebook event was a welcome distraction from troubles brewing elsewhere in the world. Even as people partied it up, the Dow dropped a terrifying 500 points on worries that Europe’s debt crisis threatens a global recession.

Here’s hoping the polka dot optimism will see us through to the holidays.

 

When the news is this bad, sip Chardonnay

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Excuse me, but where did summer go? 

Since 2008 (when the mortgage mess began to show its teeth), August--once a sleepy, beachy month when Washington and Wall Street cleared out of town to recharge--has become a 24-7 news-manic month. Think debt ceiling. Think credit-rating downgrade. Think stock market mania. What a week...

By the numbers

• Rather amazingly, the Dow ended the week down just 179 points (-1.5%) from where it began; the S&P 500 lost 1.7%--not terrible given the wild, hair-pulling 500-point swings up and down. (See interactive tracking Dow in 5-minute intervals since Aug.1.)
• The SEC says it’s checking the mathStandard & Poor’s used to make the downgrade call, given the U.S. Treasury’s accusation that there’s a $2 trillion error.
• As the markets zigged and zagged, concern turned to another recession (a double-dip). One survey says 29% ofeconomists say we’re headed in that direction.

And briefly, in other news

• Apple briefly surpassed Exxon Mobil as the largest company in market cap (what investors think you're worth). By the end of the week, they were neck and neck with Exxon slightly ahead ($350 billion vs $349.5 billion).
• Republican presidential nominees flocked to Iowa for the Ames Straw Poll. Texas Gov. Rick Perry threw his hat in the ring, bringing the total number of Republican candidates so far to 12 (that doesn’t include will-she or won’t-she Sarah Palin). Michele Bachmann won the straw poll--we wrote about her recently.
• A bat on a plane caused a lot of commotion (video) before it was trapped in the bathroom. Now the CDC is looking for the people on the plane so they can test them for rabies. Yikes.

Enter the Chardonnay 
Of course for me, all news--good and bad--goes best with wine. Apparently most of America agrees with me--Americans now drink more wine than the French.

So what kind of wine goes well with this stressful August week? I’ve been sipping a French Chardonnay called Domaine de Bernier. At $6.99, it’s perfect for a bad economy--heavy enough to stand up to the weight of the moment, light enough to lift the mood. Cheers to summer.

 

 

What the heck is a debt ceiling?

Is it just me or is it a little counterintuitive to be talking about raising the “ceiling” on something--like debt--that is otherwise dragging you down? 

Of course in the case of the U.S. debt ceiling, which is dominating the news these days, we’re talking about “lifting” the amount the government is allowed to borrow in order to pay its bills. Congress sets a limit (or ceiling) on how much can be borrowed--currently $14.2 trillion--and that limit was reached on May 16.

Since then, the government has not contributed to government employee’s retirement benefits, as a way to have enough cash flow to meet other debt obligations. CNN explains this well here.

What’s happening?
Bottom line, there’s not enough money to pay the bills after Aug. 2, the deadline for raising the ceiling. And some in Congress--mainly Republicans--are opposed to simply lifting the limit again, so there will need to be some sort of deal to make it happen. Spending cuts and raising revenues (taxes) are on the table, but the talks have grown increasingly contentious. 

What’s at stake
Without more funds, the U.S. government will not be able pay the interest on borrowed money to investors--it would essentially default--and potentially not make Social Security payments. U.S. debt ratings might be downgraded (making them riskier assets to own and potentially harder to sell). The sum of all this would be a “huge financial calamity,” according to Ben Bernanke, the chairman of the Federal Reserve, and many others.

China and other countries that invest heavily in U.S. bonds may be less inclined to buy bonds, making the money situation here tight. This matters because like it or not, it is debt that keeps things moving in the economy -- debt finances new building projects, etc. If you own a home, you likely took on debt to purchase it, ultimately a much smaller example of the kind of financing it takes to run the country.

Bernanke told Congress that if the U.S. were to default on its debt it should stop Social Security payments to pay investors first, and said a default would send mortgage rates and interest rates higher. It would also make it more expensive for the U.S. to borrow money (which it currently borrows very cheaply--at about 3%). Putting this in context: for every dollar the U.S. spends, about 40 cents is borrowed.

Contrary to Bernanke, a group of Republicans in Washington say there would be no major fallout from not raising the debt ceiling and that payments would be prioritized. Others argue it would be a good experience for the United States to not know what it’s like to be able to pay its bills, and better not to “kick the can” -- or problem -- down the road.

The Washington Way
Washington is using this as a political campaign moment. Are you (the politician) for or against increasing tax revenue (closing tax loopholes)? Are you willing to let the government default on its debt obligations and possibly damage global economic stability? How deep are you willing to cut spending to help move the country out of debt? Within the Washington dealmaking, there are some important and challenging questions for the country to answer for itself. But as the clock tic-tocs toward Aug. 2, foreign investors and Wall Street are growing increasingly nervous, and likely so are people who rely on Social Security to live.

Paul Krugman (love him) has a poignant editorial on the topic worth reading.

For your digestion: Five news items from the week

Five things from the week (and all about food this week!)

Trading the pyramid for the plate

With a little help from Michelle Obama, the USDA replaced the food pyramid we’ve known but maybe not loved since 1992, with the new “MyPlate” this week. The new icon is a platedivided into four categories (grains, vegetables, fruits and protein), with a small side of dairy. The idea is to simplify the message about what and how much should fill a healthy plate: half should be made up of fruits and vegetables. MyPlate also urges smaller portions, low-fat dairy and less soda. 

Europe battles rare strain of E. Coli
A rare and deadly strain of E. Coli has sickened almost 2,000 people, killed 18, and left hundreds with kidney problems across Europe. Officials have yet to pinpoint where the rare and dangerous strain is coming from. Germany has taken the hardest hit, with the majority of cases reported there. Meanwhile, Russia has banned all imports of fresh vegetables coming from the European Union, a significant financial blow to farmers.

More Americans on food stamps
Just under 45 million Americans received food stamps in March, new data show, up from 40 million a year ago. The food stamp program, officially called SNAP (Supplemental Nutrition Assistance Program), cost $68 billion in 2010.How much money to allocate to the program next year is up for debate in Congress. Here’s a quick analysis of growth in use of food stamps.

Rice and corn prices set to double
There’s plenty of concern about the rising cost of food. Retailers say people spent less at stores in May due to rising food and gas prices; the United Nations reports global food prices are at a record high; and with some coffee bean prices up 99%from a year ago, chains like Starbucks are raising prices on consumers. Now, a new report says the cost of corn and rice will double over the next 20 years due to climate change. Look for conversation about stabilizing prices at the G20 meeting in France later this month.

U.S. considers food aid for North Korea
Some estimates say that due to a hard winter and its reliance on aid for food, North Korea’s food supply is running short, putting six million at risk. To assess the situation, the U.S. sent an envoy who is expected to offer a decision of whether to provide aid. But offering food aid to the isolated country is controversial--former President Jimmy Carter says it's a humanitarian must, others disagree.

Five things you (may have) missed this week

DSK and Arnold
Two men dominated headlines, and you probably couldn't avoid this news if you tried. IMF chief Dominique Strauss-Kahn resigned Wednesday amid sexual assault and rape charges related to an encounter with a hotel maid in New York over the weekend. He'll get a $250,000 severance and is free on $1 million cash bail, but apparently he's having a hard time finding somewhere to live while under house arrest. Meanwhile, Arnold Schwarzenegger put his come-back movie career on hold to deal with personal matters, namely the child he had with a member of his household staff. Paparazzi everywhere rejoiced. 

Arab Spring

On Thursday President Obama gave a 45-minute speech about the uprisings in the Middle East, known as the "Arab Spring," which began in December 2010 when a Tunisian cart seller set himself on fire. It later spread to Egypt, Libya and beyond (see interactive timeline of the uprisings). Obama's most important comments came at the end of the speech, when he said Israel's pre-1967 boundaries should be the foundation for any peace deal with the Palestinians. For background, in 1967 Israel and its neighbors (Egypt, Syria, Jordan) fought a six-day war in which Israel gained additional territories. Who that land ultimately belongs to is central to the decades-long Israeli-Palestinian conflict. The Israeli government was not particularly happy about Obama's remarks. (Good analysis of the speech here.)

LinkedIn goes public

Professional networking site LinkedIn (

LNKD) went public on Thursday, spiking above $120 a share before settling the day at $94.25 -- more than double it's initial offer price of $45. So far 63 companies have gone public this year--which is still a far cry from the 486 that hit the market in 1999 (see IPO chart). LinkedIn is the first of the social networks to go public, with Facebook expected next year. There's plenty of fresh talk about a bubble out there.

Circumcision on ballot in San Francisco

A group seeking to ban circumcision of boys under age 18 has succeeded in putting the initiative on the ballot in San Francisco. Proponents of the ban say it's an unnecessary and invasive surgery, which stands in stark contrast to the international effort to circumcise men to prevent the spread of AIDS. Some unconfirmed data show the number of babies circumcised at hospitals is dropping.

Ronald McDonald, "ambassador for good"

An open letter from some 550 health care professionals asked McDonald's to abandon using Ronald McDonald to market to kids. The CDC says 17% of kids under 19 are obese. CEO Jim Skinner told shareholders at the annual meeting no way, that Ronald McDonald is "an ambassador for good" and "going nowhere." In other related news... Man eats 25,000th Big Mac this week.

 

Awesome blog mention: Sites that make us smarter

Obviously we're thrilled to be included in this list of "Fab 5: Sites that make us smarter," along with some heavy hitters like the Library of Congress and the Smithsonian sites (love them too!). The CIA World Factbook is an amazing, amazing site and one we reference a lot. Check them out, and also check out www.dotcomsformoms.com, written by Rita Mauceri, who helps put information for moms at your fingertips quickly - something we like to do around here as well!

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