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Frightening: Choking on Obamacare

By , Published: December 2

LOS ANGELES

In 1941, Carl Karcher was a 24-year-old truck driver for a bakery. Impressed by the large numbers of buns he was delivering, he scrounged up $326 to buy a hot dog cart across from a Goodyear plant. And the war came.

So did millions of defense industry workers and their cars. And, soon, Southern California’s contribution to American cuisine — fast food. Including, eventually, hundreds of Carl’s Jr. restaurants. Karcher died in 2008, but his legacy, CKE Restaurants, survives. It would thrive, says CEO Andy Puzder, but for government’s comprehensive campaign against job creation.

CKE, with more than 3,200 restaurants (Carl’s Jr. and Hardee’s), has created 70,000 jobs, 21,000 directly and 49,000 with franchisees. The growth of those numbers will be inhibited by — among many government measures — Obamacare.

When CKE’s health-care advisers, citing Obamacare’s complexities, opacities and uncertainties, said that it would add between $7.3 million and $35.1 million to the company’s $12 million health-care costs in 2010, Puzder said: I need a number I can plan with. They guessed $18 million — twice what CKE spent last year building new restaurants. Obamacare must mean fewer restaurants.

And therefore fewer jobs. Each restaurant creates, on average, 25 jobs — and as much as 3.5 times that number of jobs in the community. (CKE spends about $1 billion a year on food and paper products, $175 million on advertising, $33 million on maintenance, etc.)

Puzder laughs about the liberal theory that businesses are not investing because they want to “punish Obama.” Rising health-care costs are, he says, just one uncertainty inhibiting expansion. Others are government policies raising fuel costs, which infect everything from air conditioning to the cost (including deliveries) of supplies, and the threat that the National Labor Relations Board will use regulations to impose something like “card check” in place of secret-ballot unionization elections.

CKE has about 720 California restaurants, in which 84 percent of the managers are minorities and 67 percent are women. CKE has, however, all but stopped building restaurants in this state because approvals and permits for establishing them can take up to two years, compared to as little as six weeks in Texas, and the cost to build one is $100,000 more than in Texas, where CKE is planning to open 300 new restaurants this decade.

CKE restaurants have 95 percent employee turnover in a year — not bad in this industry — and the health-care benefits under CKE’s current “mini-med” plans are capped in a way that makes them illegal under Obamacare. So CKE will have to convert many full-time employees to part-timers to limit the growth of its burdens under Obamacare.

In an economic climate of increasing uncertainties, Puzder says, one certainty is that many businesses now marginally profitable will disappear when Obamacare causes that margin to disappear. A second certainty is that “employers everywhere will be looking to reduce labor content in their business models as Obamacare makes employees unambiguously more expensive.”

According to the U.S. Small Business Administration, by 2008 the cost of federal regulations had reached $1.75 trillion. That was 14 percent of national income unavailable for job-creating investments. And that was more than 11,000 regulations ago.

Seventy years ago, the local health department complained that Karcher’s hot dog cart had no restroom facilities. He got help from a nearby gas station. A state agency made him pay $15 for workers’ compensation insurance. Another agency said that he owed more than the $326 cost of the cart in back sales taxes. For $100, a lawyer successfully argued that Karcher did not because his customers ate their hot dogs off the premises.

Time was, American businesses could surmount such regulatory officiousness. But government’s metabolic urge to boss people around has grown exponentially and today CKE’s California restaurants are governed by 57 categories of regulations. One compels employees and even managers to take breaks during the busiest hours, lest one of California’s 200,000 lawyers comes trolling for business at the expense of business.

Read the rest here.

 

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EFFICIENT OR DESPERATE? Parents Can Rent XMas Toys At New Website

When you are a kid on Christmas morning, it’s all about volume. But when you are a parent, cruising the aisles of the toy-store in December, it’s about trying to balance a happy holiday with a reasonable budget.

Paul Reinsmith of Boston has found a great way to have plenty of toys under the tree, and all year, without breaking the bank.

Paul and his wife Pam discovered what they call the ‘Netflix’ of toys. It’s called Toygaroo, a website that lets parents rent toys for a fraction of what they would cost to buy.

READ MORE HERE 

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Factories stall worldwide, so crude oil bid higher

Don’t fight them. Go with them until the opportune moment.

LONDON/SINGAPORE (Reuters) – Manufacturing activity is contracting across Europe and most of Asia, data showed on Thursday, and a Chinese official declared that the world economy faces a worse situation than in 2008 when Lehman Brothers collapsed.

Factory activity shrank even further in the euro zone, reinforcing the view that the debt-strapped region is in recession, while British manufacturing contracted at the fastest pace in two years, raising the risk that the UK economy may suffer the same fate.

This has been the case for much of the developed world for several months, with the exception of pockets of better news from the United States. But the slowdown now appears to be spreading to economic powerhouses of the developing world.

Adding to the gloom, new U.S. claims for unemployment benefits rose unexpectedly last week, popping above 400,000 for the first time in over a month and reinforcing the view that the battered labor market was healing only slowly.

China’s official purchasing managers’ index (PMI) showed factory activity shrank in November for the first time in nearly three years, while a similar PMI showed Indian factory growth slowed close to stall speed.

Both China and Brazil eased monetary policy on Wednesday. It came alongside coordinated action from the world’s biggest central banks to try to prevent another credit crunch by lowering the cost of dollar swaplines.

“The big picture here is this is an unwinding of a 20-year debt bubble,” said Peter Dixon, global financial economist at Commerzbank. “It’s going to be painful, and it’s going to be nasty. What policymakers are aiming for is a smoothing of the path.”

But those policymakers appear to be getting more worried.

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China entering meltdown and scrambling to avoid it

The EU notwithstanding, this will be the biggest issue in 2012. I cannot see how commodities don’t go into a total meltdown if the Chinese armor cracks.

SHANGHAI (AP) — China’s leaders are reversing their two-year effort to cool the economy, seeking to counter slowdowns in manufacturing and property that are dragging growth lower and threatening to spur unrest.

In the latest sign the world’s No. 2 economy is weakening faster than thought, business surveys released Thursday showed manufacturing contracted in November for the first time in nearly three years.

That news came a day after Beijing moved to invigorate business activity by easing credit curbs, ending a long campaign to take some fizz out of rapidy expanding economy. China’s leaders had resisted easing lending curbs out of fear that opening the spigots might revive an outright investment boom and re-ignite inflation.

High living costs are risky for China’s communist leaders because they erode the economic gains that underpin the ruling party’s claim to power. But slowing growth is another peril: already news of labor unrest at factories in the south suggests that workers are being squeezed as exporters juggle tight credit and slowing demand.

The decision by the People’s Bank of China to reduce the amount of money that China’s commercial lenders must hold in reserve by 0.5 percent of their deposits “is a clear signal that Beijing now sees the balance of risks as lying with growth rather than inflation,” said Stephen Green, an economist with Standard Chartered in Shanghai.

The European debt crisis and feeble U.S. recovery have weakened demand in China’s biggest export market, while at home efforts to curb inflation by cooling the property market are hurting a wide range of industries heavily dependent on housing and other construction.

The worsening conditions are no surprise to Chen Xiaoyan, a saleswoman at the Cangnan Qianku Qingfeng Pet Supplies Craft Factory in Wenzhou, a manufacturing base that has been hit especially hard by tight credit policies, leaving many factories short of operating cash.

“It was hard enough to do business last year. This year is the hardest,” said Chen. “Our profit was 30 percent lower last year and it will be down another 10 percent this year,” she said. Materials costs have come down in recent months, but labor costs have not, said Chen.

Worries over erring on the side of too fast growth are being overshadowed by greater alarm over a deeper slump as conditions worsen overseas.

“They’re stuck,” Patrick Chovanec, an associate professor at Tsinghua University’s School of Economics and Management in Beijing said of China’s policymakers.

That explains a comment by Vice Premier Wang Qishan to U.S. trade negotiators last week that “an unbalanced recovery is better than a balanced recession,” he said.

The Chinese economy is one of the few still growing at a respectable pace, and Beijing’s leaders intend to keep it that way.

China’s economic growth eased to a still-robust 9.1 percent in the quarter ending in September from 9.5 the previous quarter. But indicators showing export industries and some other areas of the economy were cooling more sharply raised fears of job losses and possible unrest.

In the manufacturing sector, the activity gauge of the China Federation of Logistics and Purchasing fell an greater-than-expected 1.4 percentage points to 49 in November, well below the 50-level that signifies expansion. That was the first contraction in manufacturing activity since early 2009.

Another manufacturing survey by HSBC showed an even steeper decline, with its PMI dropping to 47.7 in November from 51.0 in October.

The property market also appears to have reached a turning point, at least in the biggest cities. New home sales fell 17 percent by transaction volume in China’s top 20 cities in July-September compared with a year earlier.

Sharp discounts by some property developers have angered home buyers who bought when the market was at its peak, with some staging protests or storming real estate company offices.

“They promised us the price of our apartment would never go down, that it would only increase,” complained Zhu Hongxia, a property owner in Shanghai who was standing with others outside the office of China Vanke, the country’s biggest developer.

“You can’t decrease the price suddenly by such a big amount,” Zhu said.

While many homeowners have been angered by the drop, the government is seeking to prevent prices from surging further out of reach of most families. Leaders say property curbs will stay in place despite signs the effort to deflate the bubble is reverberating throughout an economy that already was slowing.

The construction slowdown has prompted builders to cut jobs — losses that have fallen heavily on unskilled migrant laborers.

Beijing Xuanyu Construction Co. in Shunyi on the outskirts of Beijing, a subcontractor on apartment projects, has cut its workforce of construction site laborers from 100 a year ago to about 70, according to Liu Jun, a manager.

The core staff of about 200 engineers, project managers and administrators so far is unaffected, Liu said. He said bricklayers are paid about 200 yuan ($32) a day and lower-skilled workers at least 140 yuan ($23).

“The volume of business has declined,” Liu said. “Our workforce costs are too high.”

China is striving to shift its economy toward greater dependence on consumer demand, rather than construction investment and exports. But they remain key drivers in this developing economy, and the job-scarce U.S. recovery and Europe’s recent upheavals do not bode well: export growth has fallen steadily since hitting a peak of nearly 36 percent in March.

China’s monthly trade surplus with the 27-nation European Union fell 10.3 percent from a year earlier to $13 billion in October as countries that use the euro common currency struggle to contain a sovereign debt crisis.

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SIGN OF THE TIMES: Miami Locals Pose as Guests for Free Hotel Breakfast

​Times are tough, so many people are searching for hotels with free continental breakfasts.

Problem is, some of those eating aren’t guests, says Hampton Inn manager front desk clerk Alfonso Tobenas. That’s right. Folks walk into tourist hotels and pose as guests to gain access to morning chow. Who would do such a thing? Lots of people, according to local hotel insiders.

“It is what it is, bro, times are tough and they’re hungry,” Tobenas says. “They’re just trying to beat the system and save a buck. The first time you’re going to get away with it, the second and third time I’m going to ask you to leave.”

So how does Tobenas, who has worked five years at the hotel tucked away behind Dadeland Mall, spot the freeloaders? By the way they talk — they can’t hide that Miami accent — and by the way they dress. Tobenas can spot a real tourist from across the room.

Tobenas says some people even regularly rotate hotels for their free breakfasts, but he recognizes their faces after a while. When he spots them, he lets them eat free-of-charge so they let their guard down. Then he confronts them and asks for their room number. At that moment, they realize they’ve been found out and generally leave without incident.

If they keep coming back, he either charges $7.50 — the estimated cost of the breakfast per person for the hotel — or calls the cops and have them charged with trespassing, though not usually with theft.

STORY HERE 

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