The Daily Show's news team illustrates what that would look like:
Showing posts with label economics. Show all posts
Showing posts with label economics. Show all posts
Saturday, September 1, 2012
Sunday, August 12, 2012
Dark Knight Rises Copycats?
It was expected that last month's shooting at the premiere of The Dark Knight Rises might inspire copycats.
Last weekend, an Ohio man was arrested after he brought a gun, ammo and knives into a screening of the movie. He was seated in the center of the back row, with a large duffel bag (he may as well have worn a sign that said "sniper wanna-be").
But in a less violent case of life perhaps imitating art, one of the movie's odder subplots was eerily echoed at the beginning of August when a brokerage firm found itself the victim of rogue trades supposedly caused by a "glitch" in the firm's newly-installed software. The brokerage made a large volume of bad bids, other brokerages exploited their errors, and the firm found itself nearly bankrupt in a day. The broader market was not affected, seemingly, as share prices did not swing significantly.
(Spoiler Alert) - in the movie, the villains break into the stock exchange (literally), and install their own software to execute a high volume of trades, targeting just one firm (Wayne Enterprises) in order to wipe out most of its worth and allow a corporate takeover. They do this to gain access to a particular corporate asset that they can weaponize.
I was surprised that the ExtremeTech article did not mention, while discussing the feasibility of breaking into the stock exchange, that it is not actually necessary to do so. Plenty of brokerage firms with lesser security than the NYSE have the ability to execute high volumes of trades electronically, and the article's comments do point that out, but the commenters assume the market would stop trading and all erroneous trades would be reversed.
By the time I saw the movie, and by the time the article was posted, however, the debacle at a brokerage coincidentally named Knight Capital was in the news. Their trades were not reversed, and the company barely survived with an emergency credit deal.
Of course, Knight Capital was not deliberately targeted (at least, not that anyone can tell). There would be no real motive, except to make a bit of money at their expense on the day of the software disaster, and I believe those profits were split among many firms. It's not like Knight had a coveted corporate asset that they would not sell unless they were in dire straits. Then again, maybe they did.
Last weekend, an Ohio man was arrested after he brought a gun, ammo and knives into a screening of the movie. He was seated in the center of the back row, with a large duffel bag (he may as well have worn a sign that said "sniper wanna-be").
But in a less violent case of life perhaps imitating art, one of the movie's odder subplots was eerily echoed at the beginning of August when a brokerage firm found itself the victim of rogue trades supposedly caused by a "glitch" in the firm's newly-installed software. The brokerage made a large volume of bad bids, other brokerages exploited their errors, and the firm found itself nearly bankrupt in a day. The broader market was not affected, seemingly, as share prices did not swing significantly.
(Spoiler Alert) - in the movie, the villains break into the stock exchange (literally), and install their own software to execute a high volume of trades, targeting just one firm (Wayne Enterprises) in order to wipe out most of its worth and allow a corporate takeover. They do this to gain access to a particular corporate asset that they can weaponize.
I was surprised that the ExtremeTech article did not mention, while discussing the feasibility of breaking into the stock exchange, that it is not actually necessary to do so. Plenty of brokerage firms with lesser security than the NYSE have the ability to execute high volumes of trades electronically, and the article's comments do point that out, but the commenters assume the market would stop trading and all erroneous trades would be reversed.
By the time I saw the movie, and by the time the article was posted, however, the debacle at a brokerage coincidentally named Knight Capital was in the news. Their trades were not reversed, and the company barely survived with an emergency credit deal.
Of course, Knight Capital was not deliberately targeted (at least, not that anyone can tell). There would be no real motive, except to make a bit of money at their expense on the day of the software disaster, and I believe those profits were split among many firms. It's not like Knight had a coveted corporate asset that they would not sell unless they were in dire straits. Then again, maybe they did.
Sunday, June 3, 2012
Why I'm Voting to Recall Walker
These are my main reasons for voting to recall Governor Walker:
1. He is destroying Wisconsin's economy. The claims of a surplus are bogus. He has pulled a significant amount of money away from Wisconsin consumers and given it to out-of-state corporate interests. That is why Wisconsin's job market is now doing worse than the rest of the nation. The kool-aid drinkers who believe in supply side economics (rightly called "voodoo economics" by George H.W. Bush back in 1980) refuse to believe this. The media's practice for the last three decades of treating all debates as mere policy disagreements with both sides having equal validity has raised a generation of Americans who are completely ignorant of how our economy actually works. Supply-side economics is bullshit. Demand-side economics is reality.
2. He pulled an enormous bait-and-switch by campaigning on economic issues and instead pushing through union-busting, voter-suppression, incumbent-protection, and right-wing social engineering. Anyone who trusts a word he says is a fool.
3. He is every bit as corrupt as Chuck Chvala and Scott Jensen and the rest of the caucus criminals, as evidenced by the charges (and first batch of convictions) among his Milwaukee County aides. Judging by his administration's stonewalling of open records requests, Walker will use his criminal defense fund to delay justice as long as possible, much like Scooter Jensen did.
4. He doesn't give a damn if Wisconsinites have safe water to drink. I challenge Walker appointee Cathy Stepp to drink a nice tall glass of Jefferson County well water from the neighborhood near Herr Environmental. There are a great many other reasons, but those are the big ones for me.
1. He is destroying Wisconsin's economy. The claims of a surplus are bogus. He has pulled a significant amount of money away from Wisconsin consumers and given it to out-of-state corporate interests. That is why Wisconsin's job market is now doing worse than the rest of the nation. The kool-aid drinkers who believe in supply side economics (rightly called "voodoo economics" by George H.W. Bush back in 1980) refuse to believe this. The media's practice for the last three decades of treating all debates as mere policy disagreements with both sides having equal validity has raised a generation of Americans who are completely ignorant of how our economy actually works. Supply-side economics is bullshit. Demand-side economics is reality.
2. He pulled an enormous bait-and-switch by campaigning on economic issues and instead pushing through union-busting, voter-suppression, incumbent-protection, and right-wing social engineering. Anyone who trusts a word he says is a fool.
3. He is every bit as corrupt as Chuck Chvala and Scott Jensen and the rest of the caucus criminals, as evidenced by the charges (and first batch of convictions) among his Milwaukee County aides. Judging by his administration's stonewalling of open records requests, Walker will use his criminal defense fund to delay justice as long as possible, much like Scooter Jensen did.
4. He doesn't give a damn if Wisconsinites have safe water to drink. I challenge Walker appointee Cathy Stepp to drink a nice tall glass of Jefferson County well water from the neighborhood near Herr Environmental. There are a great many other reasons, but those are the big ones for me.
Friday, December 2, 2011
Quote of the Day
We’ve had it backward for the last 30 years. Rich businesspeople like me don’t create jobs. Middle-class consumers do, and when they thrive, U.S. businesses grow and profit. That’s why taxing the rich to pay for investments that benefit all is a great deal for both the middle class and the rich.Venture capitalist Nick Hanauer, who also said "An ordinary middle-class consumer is far more of a job creator than I ever have been or ever will be."
So let’s give a break to the true job creators. Let’s tax the rich like we once did and use that money to spur growth by putting purchasing power back in the hands of the middle class. And let’s remember that capitalists without customers are out of business.
That's the same argument I tried to make a month and a half ago. Maybe it will have more weight coming from one of the 1%.
Sunday, November 13, 2011
Buying Shares to Have a Voice
The Sisters of St. Francis have developed an interesting strategy to try to influence corporations into being more socially responsible. They use their retirement fund to purchase the minimum number of shares needed to introduce resolutions at the annual shareholder meeting and use that leverage to gain private audiences with the CEOs. Other orders have done likewise. However, they do not have enough leverage to really bring about change.
I wonder if it would be possible for a consortium of progressive stockholders to actually gain control of a major corporation. They would need to keep their purpose and connections quiet, to prevent a spike in share price and courting of a "white knight" to prevent a takeover. The big question is, which corporation should be the target? The nuns went for Goldman Sachs. Given that bank's influence on our nation's economic policies (the firm is such a revolving door for future and former Treasury Secretaries that it has long been nicknamed Government Sachs), it's probably a good place to start.
I wonder if it would be possible for a consortium of progressive stockholders to actually gain control of a major corporation. They would need to keep their purpose and connections quiet, to prevent a spike in share price and courting of a "white knight" to prevent a takeover. The big question is, which corporation should be the target? The nuns went for Goldman Sachs. Given that bank's influence on our nation's economic policies (the firm is such a revolving door for future and former Treasury Secretaries that it has long been nicknamed Government Sachs), it's probably a good place to start.
Friday, November 4, 2011
The Economy Must Be Improving
Great Wolf Resorts actually turned a profit in the last quarter.
This is a company that was so badly run, it built its huge Lake Delton waterpark resort without convention space to put heads in beds. When it finally realized that hotels with convention centers can be highly profitable, it built one in Sheboygan, which doesn't even count as a "second tier" convention city.
While rivals Chula Vista, Kalahari and Wilderness Resort managed to do decent business during the recession, thanks largely to convention business, Great Wolf temporarily closed their flagship resort and eventually sold it. The company pushed out the Board members who wanted to provide actual oversight rather than rubber stamp inflated management compensation and continued to borrow to build new resorts like Las Vegas developers during the boom years.
If Great Wolf, which is deeply in debt and heavily dependent on discretionary spending by families rather than corporations, is now turning a profit, things must really be turning around.
This is a company that was so badly run, it built its huge Lake Delton waterpark resort without convention space to put heads in beds. When it finally realized that hotels with convention centers can be highly profitable, it built one in Sheboygan, which doesn't even count as a "second tier" convention city.
While rivals Chula Vista, Kalahari and Wilderness Resort managed to do decent business during the recession, thanks largely to convention business, Great Wolf temporarily closed their flagship resort and eventually sold it. The company pushed out the Board members who wanted to provide actual oversight rather than rubber stamp inflated management compensation and continued to borrow to build new resorts like Las Vegas developers during the boom years.
If Great Wolf, which is deeply in debt and heavily dependent on discretionary spending by families rather than corporations, is now turning a profit, things must really be turning around.
Friday, October 14, 2011
We Are All Job Creators
One of the latest memes making the rounds of the right wing is that only rich people are job creators. "I've never been hired by a poor man" is the sound byte. Perhaps not, but I have been hired by non-profit organizations and cooperatives, which had a distinct shortage of rich people. Members of my family used to tend bar in a neighborhood tavern that didn't even make enough money to support a family of three (the mom ran the bar while the pop worked a day job -- they lived in a modest ranch house near Oscar Mayer).
When you buy locally-produced goods and services, you are creating jobs in your community. You don't have to wait for largesse to trickle down from the highest tiers of society (most of those golden showers will fall overseas anyway).
If you have an IRA or 401(k), you are a stockholder and/or a bondholder. Read those annual reports you get in the mail and find out what companies' stocks and bonds are held by your mutual fund(s). Do you recognize the companies? Do you know what they produce? You may want to move some of your money into companies that are investing in U.S. production.
Remember that the super-rich are not the only investors in this country. We are all job creators.
When you buy locally-produced goods and services, you are creating jobs in your community. You don't have to wait for largesse to trickle down from the highest tiers of society (most of those golden showers will fall overseas anyway).
If you have an IRA or 401(k), you are a stockholder and/or a bondholder. Read those annual reports you get in the mail and find out what companies' stocks and bonds are held by your mutual fund(s). Do you recognize the companies? Do you know what they produce? You may want to move some of your money into companies that are investing in U.S. production.
Remember that the super-rich are not the only investors in this country. We are all job creators.
Wednesday, October 12, 2011
PSC Prohibits Plale Purchasing Privileges
OK, so that's grammatically incorrect. I should have said revokes rather than prohibits, but I couldn't resist the alliteration.
There was an episode of The Sopranos where Tony and his crew went after a small businessman who welshed on a gambling debt. They raided the man's sporting goods store and took whatever inventory they could easily sell, then used company credit cards to buy plane tickets and other big-ticket items.
I've often thought that episode provides a useful metaphor for what Scott Walker is doing to the State of Wisconsin, turning civil service jobs into overpaid patronage positions, hiring high-priced private lawyers at taxpayer expense rather than giving the work to the Justice Dept., and privatizing whatever he can for the benefit of his donors.
However, Walker appointee Jeff Plale and his staff seem to be literally copying that episode.
There was an episode of The Sopranos where Tony and his crew went after a small businessman who welshed on a gambling debt. They raided the man's sporting goods store and took whatever inventory they could easily sell, then used company credit cards to buy plane tickets and other big-ticket items.
I've often thought that episode provides a useful metaphor for what Scott Walker is doing to the State of Wisconsin, turning civil service jobs into overpaid patronage positions, hiring high-priced private lawyers at taxpayer expense rather than giving the work to the Justice Dept., and privatizing whatever he can for the benefit of his donors.
However, Walker appointee Jeff Plale and his staff seem to be literally copying that episode.
Friday, October 7, 2011
Johnsonville Looks for International Growth
A day after I tried to point out how corporations have more incentive to grow their markets overseas than to keep the U.S. economy strong, I noticed this article.
The relevant passage is here:
If "high double-digit" means 50%, then international sales will account for 15% of the company's revenue in a year. If that "high double-digit" rate of growth continues, it will take only five years for the majority of Johnsonville's revenue to come from outside the U.S.
No wonder the company is backing Scott Walker.
The relevant passage is here:
About 10% of revenue is derived from international sales, which have been producing high double-digit growth, said Michael Stayer-Suprick, managing director of the company's international business group and Ralph Stayer's son.
If "high double-digit" means 50%, then international sales will account for 15% of the company's revenue in a year. If that "high double-digit" rate of growth continues, it will take only five years for the majority of Johnsonville's revenue to come from outside the U.S.
No wonder the company is backing Scott Walker.
Monday, October 3, 2011
Trading Places with India and China
After World War II, the American economy embarked upon an era of tremendous growth and prosperity. This was fueled in part by new technologies that were developed for the military during the war, but mostly by a rapidly-growing population and pent-up demand for bigger houses and durable goods like automobiles and household appliances.
We have reached a point where our birthrate and population growth from immigration have slowed. We have also saturated our market with automobiles and appliances. Consumers in China and India, on the other hand, are just beginning to acquire automobiles in large numbers and move into less-crowded housing.
That is why large corporations are much more interested in doing business with China and India. Steve Wynn is blowing smoke when he says the Chinese government is more favorable to business. The real reason he prefers the Chinese market is because Macau has only a handful of casinos and proximity to millions of newly-wealthy Asian gamblers, while Las Vegas is saturated with competition.
When large corporations push tax-the-poor memes and schemes to end employer-sponsored health insurance and replace it with vouchers for individual policies, they really don't care that they are reducing the buying power of American consumers. Their future profits will come from overseas markets.
Once an entire generation of Americans has given up the "American Dream" of owning a spacious single-family house and a car for every adult, big corporations will again find the American consumer worth courting. Getting us to that point while expanding their markets in Asia is their long-term strategy.
We have reached a point where our birthrate and population growth from immigration have slowed. We have also saturated our market with automobiles and appliances. Consumers in China and India, on the other hand, are just beginning to acquire automobiles in large numbers and move into less-crowded housing.
That is why large corporations are much more interested in doing business with China and India. Steve Wynn is blowing smoke when he says the Chinese government is more favorable to business. The real reason he prefers the Chinese market is because Macau has only a handful of casinos and proximity to millions of newly-wealthy Asian gamblers, while Las Vegas is saturated with competition.
When large corporations push tax-the-poor memes and schemes to end employer-sponsored health insurance and replace it with vouchers for individual policies, they really don't care that they are reducing the buying power of American consumers. Their future profits will come from overseas markets.
Once an entire generation of Americans has given up the "American Dream" of owning a spacious single-family house and a car for every adult, big corporations will again find the American consumer worth courting. Getting us to that point while expanding their markets in Asia is their long-term strategy.
Sunday, August 28, 2011
Is the Gold Bubble About to Burst?
The price of gold declined this week, leading many analysts to believe a significant correction will continue. "Briese believes a 33% correction from recent highs, to about $1,250, is quite plausible."
The proprietor of one Madison retail store that buys and sells gold warned a customer on Saturday that he will not receive the same price for his jewelry on Sunday, and the store has already made arrangements to sell off its entire stock of gold early this week.
Those who took investment advice from Glenn Beck and G. Gordon Liddy are in for a bumpy ride.
The proprietor of one Madison retail store that buys and sells gold warned a customer on Saturday that he will not receive the same price for his jewelry on Sunday, and the store has already made arrangements to sell off its entire stock of gold early this week.
Those who took investment advice from Glenn Beck and G. Gordon Liddy are in for a bumpy ride.
Thursday, August 11, 2011
The Gold Bug
In Ian Fleming's Goldfinger, the eponymous villain, heavily invested in gold, sought to increase the value of his horde by destroying the United States' gold reserves at Fort Knox.
It would have been far more lucrative for him to boost demand for gold, rather than reduce the supply, by destabilizing the world's economy. Rather than employing a specialist assassin like Oddjob (who probably didn't work cheap and likely incurred very large equipment and cleanup expenses), he could have employed some lobbyists and creative investment brokers to invent complicated debt-based investment vehicles, then pull down the house of cards and watch the value of gold skyrocket as the world financial markets imploded and government bonds were downgraded.
Maybe the upcoming Bond 23 should be a remake of Goldfinger. Of course, people may have trouble believing that a criminal conspirator could con everyone into driving up the price of gold. Oh, wait...
It would have been far more lucrative for him to boost demand for gold, rather than reduce the supply, by destabilizing the world's economy. Rather than employing a specialist assassin like Oddjob (who probably didn't work cheap and likely incurred very large equipment and cleanup expenses), he could have employed some lobbyists and creative investment brokers to invent complicated debt-based investment vehicles, then pull down the house of cards and watch the value of gold skyrocket as the world financial markets imploded and government bonds were downgraded.
Maybe the upcoming Bond 23 should be a remake of Goldfinger. Of course, people may have trouble believing that a criminal conspirator could con everyone into driving up the price of gold. Oh, wait...
Sunday, June 5, 2011
Quote of the Day
And all that stuff about camels getting through eyes of needles... with the tax breaks Ryan is giving the rich, they can breed miniature flying camels.
The Paul Ryan Watch contributor DownWithTyranny
Sounds like a lucrative new enterprise for Sokoblovsky Farms.
The Paul Ryan Watch contributor DownWithTyranny
Sounds like a lucrative new enterprise for Sokoblovsky Farms.
Thursday, April 28, 2011
An Entertaining Economics Lesson
Too few Americans have studied Economics. It's taught less in high school than in past decades (along with other social studies classes), and it's a dry subject that does not invite self-study.
The folks at EconStories have produced this entertaining rap video that provides a lively lesson in the debate between the economic theories of John Maynard Keynes and F. A. Hayek. Take ten minutes and watch it.
The folks at EconStories have produced this entertaining rap video that provides a lively lesson in the debate between the economic theories of John Maynard Keynes and F. A. Hayek. Take ten minutes and watch it.
Thursday, March 31, 2011
Keep Your Government Hands Off My Seniorcare
The right wing spent a lot of time and money last year convincing seniors (erroneously) that the recently-passed health care reform legislation would undermine their Medicare benefits. Political operatives know that the elderly are more likely to vote than younger people, and they are very concerned about any potential cuts to entitlement programs (because they rely very heavily upon them to maintain their standard of living).
So it was very foolish (but deliciously ironic) of Scott Walker to include cuts to Wisconsin's popular Seniorcare program in his budget. This particular issue is driving a wedge in his control of the State Senate. He might have been able to keep Darling and Hopper in line, if they weren't facing recall campaigns thanks to the shenanigans of the Fitzwalkerstan administration.
It seems that the Governor has been hoist by the Teapublicans' petard.
So it was very foolish (but deliciously ironic) of Scott Walker to include cuts to Wisconsin's popular Seniorcare program in his budget. This particular issue is driving a wedge in his control of the State Senate. He might have been able to keep Darling and Hopper in line, if they weren't facing recall campaigns thanks to the shenanigans of the Fitzwalkerstan administration.
It seems that the Governor has been hoist by the Teapublicans' petard.
Wednesday, March 23, 2011
Kasich Out-Yeltsins Walker
Ohio Governor John Kasich, using the same Koch-authored playbook as Wisconsin's Scott Walker, has proposed a budget which deeply cuts aid to cities and privatizes state assets.
Although Scott Walker wants to sell off state-owned power plants with no-bid contracts, much like Boris Yeltsin did with Russia's energy assets, at least he hasn't proposed privatizing Wisconsin's prisons. Yet.
Although Scott Walker wants to sell off state-owned power plants with no-bid contracts, much like Boris Yeltsin did with Russia's energy assets, at least he hasn't proposed privatizing Wisconsin's prisons. Yet.
Friday, March 11, 2011
Bank Run at M&I?
M & I Bank, whose executives donated significantly to Scott Walker's campaign for Governor, became the target of protesters yesterday. Members of Firefighters Local 311 withdrew money from their accounts and urged others to do likewise. The Bank closed early, supposedly due to safety concerns. It is certainly possible that it was really due to a shortage of cash on hand at that branch if the firefighters indeed withdrew close to $200K in the space of a couple hours. The Internet is filled with calls to withdraw funds from M&I Bank.
M&I survived the collapse of 2008, thanks to TARP funds but has been on shaky ground ever since. It was recently bought by a Canadian bank.
M&I survived the collapse of 2008, thanks to TARP funds but has been on shaky ground ever since. It was recently bought by a Canadian bank.
Friday, February 18, 2011
Walker Administration Sends Wisconsin Tax Dollars to India
Scott Walker is creating jobs, alright -- in India.
(h/t Uppity Wisconsin).
This is exactly the sort of thing I've been trying to point out to people who say that cutting the public sector payroll doesn't remove money from Wisconsin's economy because taxpayers will have more money in their pockets. I think RS is pretty sharp about a lot of things, but he really missed the boat when he said (about halfway down the list of comments to his post): "Your wife is paid with funds collected by government from the public as a whole. If your wife takes a $2,000 hit, it doesn't mean that $2,000 disappears from the economy. It means that $2,000 is simply able to be spent (on newspapers, and cars, and Brewers tickets) by people from whom the money is no longer being collected - maybe your neighbor down the street whose taxes will be lower going forward because he will be paying less for your family's benefits."
No, sometimes it means that $2,000 is able to be spent on outsourcing a local job to an out-of-state (or even overseas) contractor. The Alabamification of Wisconsin continues.
(h/t Uppity Wisconsin).
This is exactly the sort of thing I've been trying to point out to people who say that cutting the public sector payroll doesn't remove money from Wisconsin's economy because taxpayers will have more money in their pockets. I think RS is pretty sharp about a lot of things, but he really missed the boat when he said (about halfway down the list of comments to his post): "Your wife is paid with funds collected by government from the public as a whole. If your wife takes a $2,000 hit, it doesn't mean that $2,000 disappears from the economy. It means that $2,000 is simply able to be spent (on newspapers, and cars, and Brewers tickets) by people from whom the money is no longer being collected - maybe your neighbor down the street whose taxes will be lower going forward because he will be paying less for your family's benefits."
No, sometimes it means that $2,000 is able to be spent on outsourcing a local job to an out-of-state (or even overseas) contractor. The Alabamification of Wisconsin continues.
Thursday, February 17, 2011
Something else you can do
If you do find your compensation slashed by the budget repair bill and need to trim your household budget, you might start by not purchasing goods or services from the companies who are represented on the Board of Directors of Wisconsin Manufacturers and Commerce.
Familiar retail outlets and products include Menard's, Lakeside Foods and Ashley Furniture.
Familiar retail outlets and products include Menard's, Lakeside Foods and Ashley Furniture.
Friday, February 4, 2011
Will Trek Really Lose Money on B-Cycle?
Madison's Mayor claims that it's OK to give Trek a no-bid contract with money out of the city's contingency reserve for a bike-sharing program because their subsidiary B-Cycle will make no profit on the deal.
In 1997, Elton John remade his hit song "Candle in the Wind" to honor the late Diana, Princess of Wales. He donated all of his royalties from "Candle in the Wind 1997" to the Princess Diana Memorial Fund. However, sales of the song also boosted sales of Elton John's back catalog, which made quite a bit of money for the singer, as well as introducing him to a whole new audience.
The McDonald's Corporation sponsors the very worthy Ronald McDonald House charity. However, it spends more money on ads promoting its link to the charity than it does on the charity itself.
My point is that charitable endeavors by corporations often have a hidden marketing motive. I have no doubt that the B-Cycle balance sheet will show the program losing money for Trek. However, that balance sheet will not show increased sales of Trek bicycles resulting from increased bicycle ridership in general and exposure to Trek bikes in particular.
Trek is not eager to do this because they want to give back to the community. Corporations have a fiduciary responsibility to their shareholders to make a profit. If Trek could not justify the program to its shareholders, it would not exist. Nor are they the only bike company capable or interested in such programs.
I agree with Paul Soglin on this one.
In 1997, Elton John remade his hit song "Candle in the Wind" to honor the late Diana, Princess of Wales. He donated all of his royalties from "Candle in the Wind 1997" to the Princess Diana Memorial Fund. However, sales of the song also boosted sales of Elton John's back catalog, which made quite a bit of money for the singer, as well as introducing him to a whole new audience.
The McDonald's Corporation sponsors the very worthy Ronald McDonald House charity. However, it spends more money on ads promoting its link to the charity than it does on the charity itself.
My point is that charitable endeavors by corporations often have a hidden marketing motive. I have no doubt that the B-Cycle balance sheet will show the program losing money for Trek. However, that balance sheet will not show increased sales of Trek bicycles resulting from increased bicycle ridership in general and exposure to Trek bikes in particular.
Trek is not eager to do this because they want to give back to the community. Corporations have a fiduciary responsibility to their shareholders to make a profit. If Trek could not justify the program to its shareholders, it would not exist. Nor are they the only bike company capable or interested in such programs.
I agree with Paul Soglin on this one.
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