PG&E Introduces the “Rolling Blackout”

Special Report from The Chief

In case you missed it, PG&E is bankrupt; however, they are allowed to continue to operate while the state regulator figures out whether to let them re-organize or partout the company. PG&E has been wallowing for about a year now, trying to convince legislators to overturn the “inverse condemnation” law that forces them to repay any damage done by their equipment in the event of a wildfire. This has gone nowhere and predictably the utility has responded by saying they are going to implement “rolling blackouts.” The policy, as explained by the utility, is that PG&E will attempt to reach out to affected customers within a day or two of the scheduled blackout. Such blackouts are contemplated when high winds are in the forecast. They will send out a warning, and then cutoff all power to the area. The company goes on to add, the power will be restored when danger of their equipment causing wildfire is no longer imminent. The spokesperson added that some customers could be without power for days.

Under intense scrutiny from regulators and an unsympathetic federal judge, the utility Wednesday rolled out a fire-safety plan for 2019 that calls for shutting power to vast chunks of its territory when winds kick up and other fire perils abound. It’s designed to curtail the type of deadly wildfires that drove PG&E into Chapter 11 bankruptcy last month.

…PG&E is still evaluating the criteria it uses for blackouts, which are based on heat, lack of humidity, high winds and other factors.

In any event, he said the company is committed to a system that, when blackouts are imposed, will spread the impacts to much wider areas than before.

Link: California wildfires: Get ready for bigger, broader PG&E blackouts this summer

On one hand I understand why the company is doing this. If the windstorm knocks over the power lines causing a fire to spark, they are on the hook for all damages. Easiest way to prevent said liability? Cut the power! If you happen to live in an area where a wildfire could start if their equipment is knocked over? Too bad, so sad. Have solar on your roof? Thanks for your service….but your power is still being cut. If you’re thinking about buying a Tesla emergency battery generator…in addition to reading some of Williams articles, just understand that battery could either catch fire….or not last long enough to generate power for your dwelling. In addition, if you live in a rural area, you are automatically a low priority for having your utility service restored. So if you live in the sticks, or a tee pee like me, you could be without for several days. The battery power generator you are buying will only work for a few hours at most, keep in mind most houses in rural areas tend to be much bigger than a standard tract home in the city or suburbs.

Who Decides

The scariest part of this is that you are at the mercy of a very corrupt and morally bankrupt PG&E. It’s frightening that their “meteorologists” (no doubt overseen by a team of lawyers) will determine when the power should be cut and restored. It’s alarming to be at the mercy of the only utility on the planet whose carbon foot could be seen last summer with the naked eye from the International Space Station.

Camp Fire Satellite Image

In California where the utility pays for all damage caused by their equipment, you can rest assured your power isn’t being restored until everyone is certain the storm has more than passed. Even more worrisome are the practical ramifications of this policy. While hospitals and maybe assisted living centers will have a backup generator, it will not power the facility very long. The entire community, city, or region will be without power meaning no street lights, gasoline or other fuel sales, restaurants, stores, everything will be down.

Summary

Thanks to Pacific Gas and Electric, this summer you can relive the glory days of Governor Gray Davis and simultaneously live like the folks in Venezuela. From now on, in the PG&E service area, electrical service is a privilege not a right. What’s the old saying, “Forewarned is forearmed”? Unlike the Gray Davis era, in the enlightened age of Gavin Newsom, they’ll let you know when it’s convenient to provide electrical power. But remember, you only get billed for what you actually use.

As an added bonus, PG&E could now consider letting their union workers have holidays like the Fourth of July and Labor Day off. This will save them having to pay double and triple time to their union employees working on legal holidays and it won’t inconvenience many customers because most folks are eating out of their ice chests and picnic baskets during these holidays.

There is Hope

Despite these ominous threats, fear not fellow Californians. Our leader of the republic, Gavin Newsome, has committed $75 million to the cause. No word on what that money will be spent on. We wait patiently to hear more about the other added millions later in this process. Newsome added he is “scared.” Well rest assured sir, your house in Fair Oaks is in SMUD’s service area, and chances of a wildfire causing your power to be cut are NILL. In addition if your power were to go out, I’m sure you won’t have to wait in line like the rest of the unwashed masses, his majesty will have power turned on far before any of us.

Stripping PG&E’s Carcass

In related news: The City of San Francisco has begun discussions to look into buying the local SF portion of PG&E during the bankruptcy process.

As PG&E (PCG) continues to emerge from Chapter 11 bankruptcy protection, the city of San Francisco is reportedly considering offering a deal to the utility for some of its power assets.


The multimillion-dollar deal is expected to happen within the next few months as Mayor London Breed told PG&E back in March that a formal bid would come if it proves feasible for the city, Bloomberg reported.


San Francisco is looking to purchase PG&E’s electric distribution system in the city, which it estimates “in the range of a few billion dollars,” according to Monday’s report from the San Francisco Public Utilities Commission.

Link: Why Would The City Of San Francisco Purchase PG&E’s Power Assets?

I’m unsure of what they are thinking because the city would be liable for any equipment damage causing a resulting fire. In addition, does anyone know what infrastructure is even located under the city’s streets? Also, where do they plan on getting the power needed for their city? As William pointed out, there is precious nothing as far as electricity generating assets around the City, please don’t think Hetch Hetchy is capable. Maybe using the methane from their own citizens “deposits” found all over the town’s sidewalks? I know liberals want to send us to a Dark Age with all the green new deals; however, it seems like PG&E wants to do one better and send us to the Stone Age; less the ability to wield fire.

You have been warned.

The Chief

Warren Buffett is at it again!

The Oracle of Omaha, AKA the world’s best investor ever, AKA rich Uncle Penny Bags pulled off a move this past week that will make anyone jealous.

As always, the context of the story first…. a company called Anadarko Petroleum accepted a takeover bid by Chevron, with Chevron offering to pay to buy the entire company and merge the two together.

Another oil and gas company, Occidental Petroleum decided to join the bidding as well. Chevron being much larger than Occidental meant Occidental needed to find big pocket investors to outbid Chevron. Enter Penny Bags, stage left.

Buffett, through his investment vehicle Berkshire Hathaway, offered to lend Occidental 10 billion in return for 8% interest. In today’s world of low interest rates, why not go to an investment bank? While the oil patch had a rough go for several years, things are looking brighter, and I have a feeling someone would have lent them the money far cheaper. Just to give you an idea of how great Buffett’s return is, experts in the investment world consider 7% returns a year being good, well Buffett is getting that, plus 1% essentially risk free. I say risk free because if the corporation goes bankrupt, Buffett is in line for payback far before the shareholders are. But as the guy pitching Ronco Knives on late night TV infomercials will say, “But wait, there’s more”! Buffett added a deal any of us unwashed masses can only dream off; he gets a signing guarantee fee, meaning if Occidental does or doesn’t end up buying Anadarko, Buffett gets $50 million. That’s right folks, there you have it…literally risk-free money! Chevron got in on it as well, since they get a 1 billion breakup fee if Occidental does in deed buy Anadarko as well.

Just to summarize, when I bought my house, the interest rate I took was 4.125%. I got the best rate possible at the time. Why on God’s green earth would anyone take 8%, when alternatives were available? I’ll explain more later, but this is usury on Buffets part, and I think it should be investigated. He is essentially making a payday loan to Occidental and holding them and their shareholders hostage for a ransom, win or lose. Keep in mind that Occidental has a very clean balance sheet and could have issued more stock or even done a bond offering for quite less then Buffett’s offering but oh well.

Buffett’s imprimatur is apparently valuable to Occidental Chief Executive Officer Vicki Hollub: The 8 percent that’ll be paid out on the preferred shares is more than twice the average coupon on Occidental’s debt.

Link: Warren Buffett tosses a $10 billion bomb into Chevron-Occidental bidding battle

Now here is where Elon Musk makes Occidental look foolish. Tesla borrowed 1.6 billion in the form of a convertible bond (can be exchanged for equity in the company) issued by investment bank Goldman Sachs (one of the best in the business mind you) for 2%. By the way, Goldman is currently telling investors to sell Tesla; at least that’s what their analysts say publicly. So just to break it down here, Occidental a well-run oil company, and a good balance sheet got the money for 8%. Whether they win the bid, they have to pay 50 million. Penny Bags gets his cut up front win or lose, yet Tesla who lacks any business acumen is able to get the money from Goldman for 2%? I guess in the weird world we live in–William has done a fantastic job lighting Musk on fire–but here Musk comes off as a winner. Occidental CEO Vicki Hollub comes off as a very aloof Chief Executive. I guess in the next 90 days we will find out who won.

The Chief

Editor’s Note: Buffett’s intervention appears to be tipping the scales away from Chevron and toward Occidental Petroleum. I guess Wall Street wants Buffett to do for the petroleum industry what he has done for Kraft Foods.

State Representative John Rogers of Alabama…..You’re an idiot!

First some background of this certified bozo. John Rogers represents Birmingham in the Alabama state house, but in reality, if you are the scum of the earth…congrats he represents you too! Rogers, like any other politician looking for 5 minutes of fame, went on a rant about why mothers should have access to an abortion. He said “Some kids are unwanted, so you kill them now, or kill them later. You bring them into the world unloved, unwanted, and you send them to the electric chair, so you kill them now or kill them later.” Wow, a lot to unpack there.

To be fair, he was talking about abortions, more specifically a bill that if signed into law would outlaw all abortions, unless the health of the mother (or do we call them a more binary “carriers” now?) would be impacted. Obviously this is a very highly charged issue but Rogers wasn’t done yet. He added “some children facing abortion could be retarded or half deformed.” Wow!

Despite his valiant argument for its defeat, House Bill 314 passed 74 to 3. Later, other principled Democrats weighed in too:

When HB314 passed the House only three representatives voted against it. A number of Democrats who had left the chamber have since changed their vote to no, so the updated vote is 72 to 26.

Folks think about it. Those words that you and I take offense to; namely, “killing them now”, caused 23 more Democrat legislators to join with John Rogers! Let that sink in for a moment.

But wait there is more… Donald Trump Jr called him out saying he made Virginia Governor and Blackface aficionado Ralph Northam (no friend of the unborn mind you) look like a moderate on the issue, as compared to Rogers who wants a master race.

Saying “Trump Jr. is proof that mothers ought to have access to abortion because he is evidently retarded or crazy.” And further “I know there’s something wrong with that boy,” Rogers said. “I look at him and I can tell there’s something wrong with him. That’s the best defense I have for more abortions right there looking at him.” This is sick, disgusting even.

Donald Trump Jr.

I will say this, Trump Jr definitely lacks in moral department due to his leaving his wife and children for the former first lady of San Francisco Kimberly Newsome er Guilfoyle er Trump….I don’t know. Whatever she calls herself.

Kimberly Guilfoyle Newsom Trump

That being said, Roger’s statements are becoming far more mainstream in the Democrat Party. While the anti-abortionists are slowly winning the battle, Roger’s reaction is off the charts crazy. The scary part is not so much his opposition to the bill, which is his right, its being so out of touch.

First of all I doubt this country executes more than 100 people in a year. Truth be told, only a handful of states have the death penalty and carry it out anyway. Planned Parenthood, on the other side, aborts many times that number in a single hour in our state alone, let alone nationwide. Ironically the customers are mostly the same color as Mr. Rogers. Adding insult to injury, Rogers would rather call Don Jr a name, and an offensive one at that. However his words, when taken in full context, are cringe worthy. He talks of aborted fetuses as throwaways not fit for this earth, even going farther to correlate a stay on death row and outlawing abortion, are somehow related. Then he makes a statement that if a fetus is deformed or retarded they should be killed as well…ouch! What is more upsetting is the Democrats are radio silent on this one.

Mr. Roger’s Neighborhood must be the most frightening place imaginable.

This guy is not your father’s Mr. Rogers

The safest place a child should be is with his mother, but this guy wants it to remain the most lethal. This Mr. Rogers is all about human trafficking of the worst sort, murder for hire. The “fit” deciding who is “unfit” (to live). In exchange for reducing the black population of his state, his masters provide him with money and power.

Rogers is now serving in his 10th term in the Alabama House of Representatives, representing the city of Birmingham. He is 78 years old.


Rogers is a professional photographer and according to his bio on the state Legislature’s website, is the director of minority affairs for the University of Alabama at Birmingham.

Lest you think his comments are out of context, try this quote:

We were looking for clarification on his remarks and his thoughts on the national response, but our political analysts say anyone who knows Rogers and Alabama politics knows his comments aren’t unusual.


“If you Google John Rogers, you’ll find a whole bunch of ridiculous statements,” said Dale Jackson.


“He’s a very colorful man to say the least,” said Waymon Burke.


Our WAAY 31 political analysts, Dale Jackson and Waymon Burke, agree that remarks like this from Rogers are nothing new.

Link: Alabama Rep. John Rogers’ ‘unwanted child’ comments gain national attention

In conclusion, this guy Rogers should star in a film about why we no longer use lead paint in this country. No word on if he was popping Tide Pods or huffing glue between sentences.

John Rogers hands out breath mints like these to his constituents

Add Roger’s comments to those made about Obamacare and what a world we would live in. Your grandmother who has a cold…sorry ma’am we have no treatment options available. But get knocked up after a night of drinking and cut to the front of the line. We’ll take care of this problem for you! Service with a smile! Heck, if we were in Washington State, we’d even compost the little rascal for you. Given more time, Democrats will probably make abortion tax deductible. If you aren’t indoctrinated by our school system or way of life…I guess you should have been aborted as well. What a harsh thing to say, but this has been going on in our country for years now so I guess this is what it has come to.

People like Rogers are the worst, enjoy your lead paint and Tide pods this weekend Rogers!!!!

“The Chief”

Why is Socialism/Bernie Sanders so Popular?

A question I am asked all the time is “How come young people like Bernie Sanders so much?” I guess they ask me because I am young…allegedly. The answer is actually quite simple, it just requires outside the box thinking. Yes, he is very old, and quite frankly looks so disheveled some days I wonder if he is being fed a constant flow of opioids just to stay upright! However that being said, he is offering a message that is very different from other politicians. In a sense Obama started this, (Hope and Change) then Trump had one (Make America Great Again) and Sanders has one (Socialism). People have a tendency to gravitate to something new, and all 3 drew record crowds for the most part. In a way all 3 are similar, as the premise of their campaigns were vague.

Bernie brings gifts to his voters

Back to Sanders, a reason he is so very popular with young people is they see him as Santa Claus. An old man with a big bag of gifts from which you know something in that bag is for you. If you’re illegal, its protection from ICE; if you’re Black, its reparations…which just to add some commentary, none of them deserve…if you’re young, its student loan forgiveness, if you’re unemployed/poor/old free medical coverage, throw in a minimum salary and voila! You have a cult following, as long as you are perceived as able to come close to delivering on said promises. As I stated earlier, there is something in that bag Bernie is holding for you, it’s just a matter of what. Bernie, much like Obama and Trump, speaks directly to the groups he wants to help the most, and they are hearing exactly what they want to hear. I’ll explain this more in depth.

Imagine you’re a 33 year old, you’re toiling away sometimes working 2 jobs just to try to make a student loan payment of which you still owe $100k. You are living at home because you cannot find an apartment to rent that fits your budget.

Living in mom’s basement

You hear the “jobs report” was great, yet you can’t find work and you have come to realize your degree in liberation theology, anthropology, psychology, etc. is worthless. Your parents tell you apply for more jobs…etc. but you find nothing of substance with a wage that allows you to break even. You have a car loan, but we will ignore that since you need a way to get to work. You have 2 maxed out credit cards, and we won’t talk about your frivolous spending on any and everything trying to impress your also broke friends. You go to a party with your parents, and everyone is talking about their new car/boat/house/pool or their 401k and pension or early retirement and you are embarrassed because you have none of those and retirement isn’t even in your vocabulary…enter Sanders!

Those student loans, credit cards, and unaffordable housing? He will handle it with the stroke of a pen. What compassion! Finally a guy who understands the rotten hand that you’ve been dealt. Unlike Trump, he cares. He will create good jobs…or give you a guaranteed salary a month. He will break up those evil corporations and make college free for everyone. Not only will he make rent control widespread, he will roll-back the prices to something you can afford. This guy is literally the Messiah in your eyes, you hear him speak, and you nod your head up and down so much people start mistaking you for a bobble head.

The promise of socialism

While your parents, the Republican Party, and others may try to convince you this is not sustainable….news flash to them, you don’t care! As it’s not your money, and you have been indoctrinated to believe corporations and the rich have ruined your life. Just think how much better your life would be if your debts were all gone and you had a minimum salary each month sent out by the government? Even better, the government will give you a voucher for affordable housing and free meals! Where do I sign up? As far as how do we pay for all of this? We’ll tax the rich, and corporations that’s how. They created the mess you’re in so let them fix it.

Tax the rich…at least ’til they’re not

Of course, I do not support Sanders, I am just laying out a case most of our readers already know. The thing everyone ignored last Presidential primary cycle was Bernie has a major following and his base could care less about anyone else in the race. Had Hillary not already cornered the market on the “super delegates,” in a fair fight, Bernie very well could have been the nominee.

Trying to explain what things cost in the future is fruitless since the people Bernie speaks to have no assets, job or income; they simply can’t relate. Bernie people live in the now, the future isn’t worth planning for if you’re not going to be part of it.

Who has time for the Future?

Also notice how little coverage there is of the crisis in Venezuela right now? That is because Bernie wants us to be Venezuela; a socialist ruled, one-party country, where you get in line for your government rations and when the supplies run out you grab food from the back of the garbage truck. Even chief Kool-Aid drinker Jorge Ramos pointed out his dismay about how the country is being run.

Looks like a fair exchange to me

The 2020 election appears to be offering many American voters what they say they want, the ability to view socialism firsthand.

San Francisco poop map as of this week

If you can’t wait then visit San Francisco.

The Chief

PS in a capitalist society the bread waits for you

….in a socialist society you wait for the bread.

The Ballad of a Jerk

The Chief takes another scalp in this real-life story of how a jerk reacted to not getting his fries piping hot at a local Red Robin Gourmet Burgers in Elk Grove.

The jerk was unhappy about not getting his fries piping hot as described above, so how does he react? Well like any other irrational prick would when complaining on the Internet; he fills out the online survey attached to his receipt and proceeds to light both the store and his waiter on fire. I guess it makes him feel better. After doing so he said he didn’t want a coupon…a first for him, didn’t want free food, also a first, and said he will never go back because the experience was so bad. Keep in mind he paid $10 for a burger, fries and coke, and left no tip.

For those unfamiliar with Red Robin, they are a sit-down place not a fast casual order at the counter place. Leaving no tip is the ultimate jerk move, especially when you ordered the loss leader and complained about your order not being adequate.

The only comments I’ll make on Red Robin is they never have a consistent experience. I have always loved their burger, but the fries run the gamut of being piping hot; lukewarm, and soggy; and being almost straight out of the freezer cold. However, since they are “bottomless” I just order another basket and move on.

Bottomless fries–your temperature may vary (a lot)

I have always found the food to be decent. If a complaint is warranted, it would be they don’t have a niche market and are trying too hard to be all things to all people. All you can eat fries draws a certain crowd, high priced entrees draw a different crowd, just like a dollar menu draws its own crowd. Pick a lane, decide what customer you want to attract and go from there. There is a reason if I go to a fast food place that I go inside to order and eat. I’ve gotten short changed at the drive thru too many times! I never once felt like lighting the store up.

This however wasn’t even the best part of the story. Literally a week later, he spoke about wanting to go back to the same Red Robin for the same deal! Hubris? Holy smokes man, the embers aren’t even out yet, and here you are wanting to go back? For what? A chance to light them up again? Little does the jerk know, he paid with a credit card so the transaction has time and date stamped, so the store knew what he ordered and who his waiter was. Suffice to say the waiter was likely “axed” the question a few days later and terminated for having a horrible complaint filed. Like I said now you’re going to return to the scene of your 1-star service experience?

At least Steve Martin is funny, but not this jerk

The jerk doesn’t get it, and likely never ever will. The jerk consumes more television in a week than William and I combined in a month. He knows very little about current events or history, but knows everything going on, on every reality TV show or soap opera…. all while claiming that he watches no TV mind you. He embodies the millennial generation in a nut shell. He lit both the business and his server on fire, and then believed he could just walk on in and all will be forgotten? Sorry dude, your credibility goes out the door with me. A complaint would be justified if a trip to Morton’s or Ruth’s Chris was subpar, but a local chain restaurant? I also believe the jerk lacks cognitive ability to reason. A rational human looks at the experience and says, well I have never been here before, didn’t know what to expect, came in the door for the cheap meal, and left saying I won’t be back…no negative review needed or necessary. Alternatively, a rational person who is a regular might say he is disappointed but is willing to reserve judgment until a future trip can confirm said slippage of service and product. However, this would require far too much from your reality TV aficionado.

It’s Red Robin not Ruth’s Chris

It takes a very special person to light-up a waiter who buy the way, is likely doing this while attending school trying to eke out a little spending money on the side. Your complaint likely got him terminated, and likely got the manager a call from corporate about poor customer service.

PS Truth is I visit Red Robin maybe 4 times annually, and I know what I am getting as a result, I ignore the noise and tune out poor experiences.

Kraft Heinz Co is Melting Down

Kraft Heinz Co reported earnings February 21st and the results were well, not great, Sales were up, but they literally cooked the books as far as compliance goes, slashed the dividend, and wrote down the value of their products.

Before I break down that long sentence I’ll give a little background. Heinz was bought out by Warren Buffett and his Berkshire Hathaway Investment arm back in 2013 for 23 billion. He partnered with a Brazilian PE Firm 3G Capital and gave them a mandate to cut expenses. 3G obliged and what used to be a great place to work and make a living turned into hell on wheels at Heinz.

Gordon Ramsey–Hell on Wheels who unlike Buffett tried to help people

Manufacturing plants were closed, employees could no longer have free products or a mini-fridge at their workstation. To make a copy, employee’s had to ask permission from their supervisor; plus, they couldn’t print in color and were required to print double sided. Essentially employees were made to feel like they were back in school, under a ruthless teacher.

Cost cutting class is in session

Every expense was questioned and if unjustified, it was denied. Executives installed by Buffett and 3G used to scold employees saying there is no work/family balance, you should devote all your time to Heinz. Layoffs were plentiful and executives were never afraid to swing the axe. After about 2 years of doing this, and out of ideas they bought Kraft. Buffett & friends, combined the companies and well…lather, rinse, repeat the same process. The combined company now loaded with debt, was aggressively trying to dig its way out…then the problems occurred.

Kraft Heinz fell victim to a corporate profit mentality. They are run by people who have zero experience in the consumer packaged goods field and the results show it. Jim Cramer of CNBC said it best, “Look at these products they make. They are tired and old and not healthy for you. Don’t believe me, look at the ingredients, could win a lot of scrabble games with some of those words!”

Jim Cramer–Mad Money Man

In today’s health conscious society people are reaching for products that are “organic, no antibiotics ever, and even buying the farm to fork lie.” Sadly this company offers nothing as far as those choices go. That being said, the advertising and development budget was essentially cut to zero, so I guess it’s a race to see how many bottles of Heinz Ketchup one can sell each quarter?

This the editor’s go to combo for eating mac and cheese, lots of ketchup

Kraft Heinz also competes in way to many segments where competition is stiff. Just a couple examples: look at the salad dressing market, it’s basically a race to the bottom, look at the competition and there is no more pricing power. The point I’m making is the store brand is selling for $1, it’s very hard to sell your product for $3. While the brand may be worth something, once you taste the cheaper brand and you see there is not much quality difference it’s not hard to make a switch. As a result Kraft Heinz was forced to lower their price to $1, and the margin on products sold for a dollar cannot be very high, likely you see a couple pennies in profit. The company has lost its way.

On to the disaster quarter. They cut the dividend 40%! Keep in mind, while people like Buffett get rich off this money, many retirees depend on it to subsidize their lifestyle. In addition Kraft Heinz was viewed as a stable company, not flashy, but stable in a sense they weren’t going broke like Sears. Also, heck everyone has at least 1 Kraft or Heinz product in their house. Kraft Heinz also wrote down the value of Oscar Meyer and Kraft by 15 billion, essentially saying the brands they paid for aren’t worth near what they thought they were. So in essence they loaded a company with unsustainable debt and now the brands aren’t even worth much anymore. Even more concerning was the report that they are being investigated by the SEC for accounting irregularities. I will say one thing, I don’t want the SEC investigating me for anything because they are not just a regulator agency; they can literally bring your company to their knees. To add insult to injury, the NASDAQ stock exchange has filed a report that the company is not in compliance with their rules after failing to file a 10-K report at the end of the calendar year. Ouch. Employee morale no longer exists, as evidenced by a 20 percent employee turnover rate annually. Also they have explored the idea of selling brands to try to pay down debt.

How to fix the company

If I were in charge, I would ask Buffett to buy the company outright. I would urge him to take us private and then we could work on the accounting and legal issues without being under intense scrutiny. There would be no dividend being paid out so that money could be put toward debt extinguishment. I would ramp up innovation and advertising dollars because it has become clear the brand power is no longer selling itself. Kraft Heinz has exactly two new products they have launched in the past decade, both were successes; Devour frozen food, and Just Crack an Egg by Ore Ida. This shows the company still has it when it comes to innovation. I would raise employee pay and while this may take a short term hit on profitability, I want employees productive and not looking to jump to a competitor. 20% employee turnover is something only a jerk would be proud of. Also there would be a moratorium on closing plants. Employees are the life blood of the company. I would create an incentive plan to bonus all workers based on production and quarterly sales goals.

As far as selling products for a dollar, that is gone. Advertising should be poured in to make our products worthy of customers trading up for value as opposed to buying it for a dollar because it’s on sale. When it comes to Oscar Meyer meats chock full of bad ingredients, the damage is done, I would create a different brand, with clean, simple ingredients and market it and price it as such. Regarding the current product mix, I would eliminate/sell several. Look at the barbecue sauce aisle alone; Kraft BBQ, Bull’s Eye, Heinz BBQ, and Jack Daniels line are all sold by the same company! In essence you are competing with yourself! Holy smokes, even the most uneducated will tell you they will reach for the cheapest one. Look at this example. Say the Chief kills a wild boar and brings it to Williams for a BBQ. William won’t care what kind of sauce I brought unless it’s a horrible tasting or very obscure one. Eliminating brands will go a long way to simplification and increase profitability. Paying down the debt and increasing employee morale, rather than looking for the next acquisition will go a long way toward getting back to prosperity.

The Chief

The Chief is Really Right Again!

Earlier this week brought great news (as predicted in this space) regarding Bob Kraft–the Patriots owner who “allegedly” solicited a prostitute at a Florida massage parlor. Headlines announced that Kraft would get off.

Link: How Patriots owner Robert Kraft could get off in prostitution case

Horrible pun there but anyway, the prosecutors are offering him a deal that the charges would be dismissed but he would have to admit that he would have been found guilty if it went to trial. Isn’t that the same as pleading “no contest?” Essentially you are saying, “I’m not admitting guilt, but the evidence shows I would have been convicted?” Honestly I’m not quite sure I understand why the offer is so great that he should take it. Kraft isn’t married so it’s not like you have to be publically shamed and your marriage essentially ruined. If I am Mr. Kraft, I’d do the same thing he did with the Patriots when they were accused of spying on the opposing team and using deflated footballs, he did not plea or admit guilt choosing to fight his fines and suspensions each time!


Without going into additional details, Kraft really didn’t do much wrong in my eyes. He paid for a service and a consenting party agreed to the terms. As far as the women being held against their will, I’m not seeing much in the form of arrests. This is hardly the crime of the century but he happened to be a big fish, and sadly (as chronicled in this space), if you have a DA on a rampage looking to be elected to higher office, Bob Kraft is a great fish to get on the line. Now with the case unraveling the DA was forced to offer a “deal”.

The prostitution case against Patriots owner Robert Kraft linked to a Florida sex-trafficking ring could be a long shot for prosecutors — partly because the women he was caught on video with are the 45-year-old spa manager and a 58-year-old licensed masseuse, according to legal experts.
Kraft is charged with two misdemeanor counts of soliciting prostitution after twice visiting Jupiter “rub and tug” massage joint Orchids of Asia Day Spa. Police say the business has ties to an international human-trafficking and prostitution ring, and some of the women at the Asian spa and five other affiliated Florida properties are sex slaves from China.
But it appears Kraft was caught on camera getting services from two women who are not victims of human trafficking: the 45-year-old manager of the spa, Lei Wang, and 58-year-old spa employee Shen Mingbi, also believed to be an operator of the business — both licensed masseuses and Florida residents.

My advice (keep in mind I have just 2 law electives under my belt) do not take the deal. No plea bargain. If you are offering to drop the charges you have no case! Clearly Kraft can run out the clock on this very weak offensive.

Final Thoughts:

This is merely a last ditch effort by a District Attorney desperate to save face, hoping Kraft agrees to the deal, and he can celebrate a “would have been conviction.” As said before, I tend to be more libertarian on these sorts of issues, and Kraft just got very unlucky in a sense it was a brothel under investigation by the police. Just drop the charges and quit wasting taxpayer dollars on this type of frivolous prosecution that is only being brought to advance a political career. If the prosecutor had a solid case he wouldn’t have made such a limp opening offer the Kraft.

By the way, did anyone see the look on Kraft after he heard the charges would be dropped…likely hasn’t been pleasured that much since…..well never mind.

Kraft Singles in action.

If I can offer some unsolicited advice to Mr. Kraft it would be this: avoid BJ’s Restaurant. While you may think they offer a certain something, they don’t; however I’ve heard some members of the wait staff can get you a “wet n reckless.” While some on this blog may wish to engage in a “wet and reckless” with employees at a local salsa bar, this particular “wet n reckless” leaves you broke and dry.

I’m starting to get tired of being right all the time…how about you William?

Robert Kraft is Unfairly Targeted

News broke Friday morning (02/22/19) that New England Patriots owner and essentially a villain to all football fans Robert Kraft was arrested for soliciting prostitution at an Orchids of Asian massage bar in Jupiter, Florida. There was a large press conference, and the police department made it seem as if years of detective work finally took down the Sopranos. Additionally there are way more names to be released and Kraft wasn’t even the biggest customer of this place.

Authorities charged at least 173 people with crimes, including human trafficking and soliciting prostitution. Six people are charged with running the ring.

Link:

Victims of alleged human-trafficking ring that ensnared Robert Kraft were forced to live in massage parlors and perform sex acts, according to police

First of all full stop, this is not the first “massage bar” to be busted by the police as a human trafficking ring, and is far from the last. A Massage Envy in Elk Grove, CA had the same thing happen to it. These places are a hot bed (no pun intended) for this type of activity, a massage place that just opened near my office has a sign when you walk in “We offer no additional “services” do not even ask.” It’s even a big running joke with most guys; oh I’m going to a massage parlor, looking for a happy ending.

Robert Kraft expects “Happy Endings”

SO in total about 200 names are going to be dropped, with charges forth coming and I don’t really know why. Let me lay out my case….

First of all Kraft just like any other man decided to engage in a sexual activity at a business, and it sounds like it wasn’t his only trip, I don’t see an issue here. Before you play the morality card, let me add Kraft is obviously in a weird state of his life. His wife died about 7 years ago, he has partied with strippers, hung out with rappers, and even started wearing a gold chain….he is clearly self-destructing. He went to this place for a little rub and tug, and while definitely he has no sense of morality, I don’t see a crime. This won’t play well but I see a nothing burger here, move along and focus on the real criminals in this case.

While he may have engaged in the sex act, it took 2 to tango and sadly this is the part the media doesn’t want you to hear. Kraft is widely seen as a villain, his Patriots have won like 20 Super Bowls in the last 21 years, so he is a manufactured villain. Time to take him down. I remember these conversations in my childhood, ‘life isn’t fair”, “takes 2 to tango”….however that doesn’t apply today, the generation in charge now including the police chief, DA and others in South Florida are ignoring the bigger picture to snag the “big one.” How come no charges have been announced against the owner? What about charges against those holding the girls against their will? The girls were supposedly kept there and not let out, and silence? Your detectives installed cameras, but you didn’t try to save the girls? Just catch Robert Kraft, a pro golfer, the head of Citibank’s banking division, and so far a bunch of no names? This is the type of backward thinking that has become common over the last 10 years, it’s not about identifying the criminal; instead, it’s about ensnaring the biggest catch. I guess public relations is a path to better funding next fiscal year.

The problem is Police, District Attorneys and judges have far too much power, and it is not more obvious than this! Actually I hope someone has a good answer for why surveillance went on so long. If you think people are in danger you get them help ASAP. If you’re wrong, apologize, pay a sum to settle and move on. In this case, how come we haven’t arrested the human traffickers? Many men are behind this, and a few women too. It’s a horrible crime but it doesn’t feel right making Bob Kraft out to be the bad guy here. The crimes are no laughing matter but seriously? This is how low we have stooped as a country? Completely ignoring Jussie Smollett and his half-baked crime?

I just see an old man helping out a local small business. Kraft also makes for great headlines, Spygate…Deflategate….now……Tailgate? Additionally, why does everyone say they “look forward to their day in court?” People actually look forward to that? When I hear that I mark down guilty.

Kraft also openly supports President Trump so I wonder if this is political payback for his support of Trump. Clearly, the league favors the other party.

UPDATE
It has come to the attention of this blogger that there is a movement underway to make Mr. Kraft sell his team.

Regardless of the eventual outcome in the investigation in general or Kraft’s case in particular, this is an opportunity for the NFL to live up to the moral standard it touts so fervently. Sports writer Jane McManus called on Saturday for the NFL to ban Kraft from the league if the allegations are true…

Link:

Robert Kraft’s arrest is a chance for Roger Goodell to show the NFL is serious about its morality policies

Apparently we live in Soviet Russian where the governing powers can just force you out with little notice. I think there is a racial element at play here. 90% of the NFL players are black, the owners are overwhelmingly white, and players can be suspended for conduct such as DUI, domestic violence, drug/gun charges and the like, owners really cannot be. This reeks of a way for the players to punish someone who is without a doubt is one of the most popular owners in football with fans in the “New England Area.”

Stay tuned folks,

“The Chief”

Carma-geddon or Car-mageddon?

William, the Blog Father, and I met for lunch a couple years ago and both us had our “tin foil hats on” according to the cheerleaders of this disaster of an economy. A ton of issues were discussed but one item I brought up could reign supreme very soon, the topic of the car loan market. More specifically I spoke about the fact that the market was being flooded with subprime auto loans (not standard loans, think the No Income, No Job, No Assets, No Problem loans for homeowners during the meltdown a decade ago).

For a time, my prediction seemed baseless and unsubstantiated. There was nary a word from any media at all, until Wednesday, when CNBC had an article about it. As predicted at our lunch many years ago, its jaw dropping folks. William runs this site and perfection is not asked for, it’s demanded. We stand behind our predictions, and in this case I wish I was issuing a retraction. Here are some brutal highlights from the article:

  • 7 million American borrowers are at least 90 days behind on their car loan
  • 1 million more than 2010, when we went through the credit crisis
  • Total auto loan debt has increased by 584 billion, the highest levels ever recorded by the FED

Link: A record number of Americans are 90 days behind on their car payments

When I digest these numbers, even I myself, the “Nostradamus” of this crisis, am somewhat dumbfounded….aren’t we told that we are in a period of major economic growth and expansion? I am told the stock market is making new highs almost weekly; wage growth should be keeping up as well right? Problem is while most of the above is true, the results say otherwise. We have had economic growth, largely due to low interest rates; this carries over to the stock market increasing to all-time highs. What I am saying is you cannot earn a decent return in a savings account so as a result you invest the money, driving the market up. Corporations, can make loans on the cheap through a bank to finance a large acquisition, like Kuerig buying Dr. Pepper Snapple, or Pinnacle Foods being bought by Conagra. I cannot blame these corporations just like the ones who borrowed money just to juice earnings returns, but back to the car aspect of this blog.

During the last 9 years, banks were able to borrow money from the Federal Reserve Bank for 0% interest. Subsequently, they lent it out at far higher rates of return depending on your credit or FICO score. To sum this up, the bank is taking zero risk, and you the borrower are at their mercy.

So how does this pertain to the above article? Well you walk onto a car lot or dealership because you need a means to get to work. Just like that, you are circled by the vultures posing as car salesman. I say posing because they don’t care about you, they see you as a sale not a person. Don’t believe me then go see for yourself. These dealers will literally hire anyone. Still don’t believe me, these people make money only when they sell, not so much when they are standing around, so when they find a live warm body, you’re dinner! You’re literally their meal ticket because they are on commission and without selling to someone like you, they don’t eat.

Since you need a ride to get to work, they don’t want you to see the affordable compact commuter car. Oh, you have a family then you need that SUV, or crossover, or full size car….think about going to the beach, or snow, or grandma’s house then get our all-wheel drive car over there! You test drive several, and you make a decision. You decided to buy a little more car than you needed but it’s ok because it will pay off in the long run. The sales guy made you feel like a million bucks, sadly, you don’t have said millions so you finance the purchase.

The finance guy (known as “The Closer) sets up a payment plan…0% APR right? Isn’t that what the ad said? Well not in your case but we can probably do it for 15%. Then he runs your credit. You can’t make the payment over 48 months, so….let’s make it 72 months, and maybe it becomes 29%, but you need to get to work and the payment works so you sign. Congratulations Chief, you are now the proud owner of a new car or used car. It’s a ton of payments but we know you can afford $475 a month. Read the last part again. You got taken but you don’t realize it yet. You whip out the credit card for the down payment, you need the car now but it won’t be ready until tomorrow.

Excitedly, off you go in your new vehicle. Typically you get 45 to 60 days before the first payment is due. The first couple payments are a bit of a struggle but you make them. Eventually a life event happens or other bills just increase as they always do. (Seen what rental prices are doing lately?) All of a sudden a couple years into the loan, you realize you bit off too much but too bad. The car sales guy, he may or may not work there anymore, the finance person, ditto however both got paid up front. Keep in mind there is no fiduciary duty law in this business.

Paul Blanco Auto–got a pulse, get a car

A local car dealership (Paul Blanco) literally runs ads saying we will get you in a car even with bad or no credit…and hence we have this auto loan issue. Frantically you call seeking to work out a payment plan…sorry the car is worth less than you owe, no refinance options exist Chief. Surely your credit union/bank can do something for you, you have been with them for years…negative Ghost Rider. Sadly your car is worth more repossessed even if you keep making payments on it. Surely this is usury or something, there has to be a way out…sorry, no one can help you. By the way, your car will be repo-ed and they will sell it again to another sucker, lather, rinse, repeat.

“Whatcha gonna do when they come for you”

If you pursue legal action, you have no leg to stand on since you signed the papers. You also will find out the law firm hired by the finance company is Dewey, Skrewem, and Howe…while the in-house finance company hires law firm Howie, Keepum, Kurent. You were took, and are now on the hook, just another statistic in the actuary’s book. The sad cold hard reality is you need a car to get to work, you bought too much car, and got saddled with a high rate loan on a vehicle whose value depreciated tremendously upon leaving the lot. We never learned our lesson from 2008, and we are going to repeat it yet again, in a way that is going to be cataclysmic to the economy and credit markets. As pointed out earlier on this website, you won’t be getting that large tax refund to bring your payments current.

In this case I do wish I was wrong, however I was Really Right.

Financial Literacy is at an All Time Low

While conversing with an old college friend the topic of money and debts came up, my degree being in finance I offered to lend a hand. My friend also graduated with a degree in finance from the same college I did. My friend told me she was barely making ends meet. She is single and lives in the Bay Area and makes a decent salary of about 60k a year. She had amassed 35k in credit card debt, and has about $150k in student loan debt; credit card debt notwithstanding this is about normal for a young professional in their 30’s nowadays.

We are told Credit Cards are the way to happiness

We cannot focus much on the student loan debt, because truth be told, without that degree you cannot even apply for a job at most places. This person is gainfully employed, so they have a paycheck going in their favor. What is the credit card debt about? This was a very painful discussion that initially ended with me saying if you’re not going to be forthcoming, the discussion would move on to another topic.

She began to open up. She revealed that she doesn’t cook so she eats out twice a day. The cardinal sin isn’t so much she is eating out, it’s that she is going to happy hour. Happy hour involves alcohol, and salt filled appetizers at a great teaser rate. I know this too well; you grab a tall one, then order up the wings, egg rolls and chips and salsa for just $11.99. Then upon finishing your appetizer you want another tall beer, then maybe one more, before deciding you probably better order food because its dinner time now…..$15 happy hour just became $70, possibly more with tax and tip……don’t worry just put it on the card! You get up tomorrow morning and need something to cure the hangover so you grab fast food, and spend another $10…lather rinse repeat. Those charges add up.

Reluctantly she went on that she spent quite a bit of money trying to keep up with the Jane’s and Kardashians of the world. I cannot relate to this, I am a guy, and as William can attest I usually have the same shirts, jeans or whatnot until it is ready for Goodwill…but I digress. In addition, I found a premium cable package, gotta watch the soaps every week, and binge watch on weekends. A home phone? ….if you’re under ago 60….lose it ASAP. A brand new iPhone, with a cancellation proof guarantee of a three year contract built in. A gym membership……where she went one time. This friend was in desperate need of help, I was there to advise, but I told her she isn’t going to like what she hears, but it’s got to be done.

The truth of the matter is she doesn’t need a diet, she needs a lifestyle change, and poor decisions have begat more poor decisions. A couple notes prior to me telling the advice that I gave her; she drives an old car and lives in a decent area, by no means high rent district. No car payment, and it’s not my place to tell a girl to live on skid row or somewhere not safe in order to save a buck.

My advice to her was her ditch the gym membership and commit to going for a walk during her break or lunch and park near the back of the parking lot at work. Ditch cable and the home phone. If you don’t think you can live without cable, try Hulu or Netflix or both. The cell phone is problematic however you have agreed to a contract so maybe try to negotiate a lower plan or something, this is the danger of brand new items. Take cooking classes, watch YouTube cooking videos, or I guess if you keep cable watch Food Network. The amount of money you spend eating out daily ads up quickly. What you spend in the course of just one week would likely covered groceries for a month. The key here is McDonald’s dollar menu seems cheap, but the food is loaded with chemicals that make you crave it for lunch, then dinner and a possible late night snack. Your waistline will thank you as well. In addition don’t think eating out for healthy food is the answer either. Salads cost more than $11. Subway may sound good and in some cases can be healthy but costs can add up quickly. The goal here is that we found quite a bit in monthly savings and we could apply this to debt service, starting with the 25% interest rate credit card debt. In her case the student loans were subsidized at 5.5% and honestly the least of her worries.

We found a potential of $800 per month in savings if she can implement the lifestyle changes that we discussed. This doesn’t sound like much but if she remains diligent, it will substantially cut into the credit card debt. Contrary to most people’s opinions, I told her keep the cards, do not cut them up, and in fact keep using them. Dave Ramsey won’t agree, but the way I see it, cash has a way to disappear with no accountability, with a credit card your charges are all itemized out each statement cycle. This is a way of keeping yourself honest, while also paying down the balance.

This plan is a roadmap to achieving a level of financial freedom and other people may have issues with the particulars but if the plan is maintained, it will work. I have to give my friend some kudos, she had her degree, and even found some additional work to provide a little more $$$ on the side. However this is where the kudos end, and cold reality of the world we live in sets in. The plan was not followed….well it was for about 6 months. Reality is a doozy in this case, but well here is the rest of the story as Paul Harvey used to say.

Paul Harvey

In the case of my friend, she reduced her credit card debt to $17k in just 6 months’ time, everything was going well, then she went back to her old ways. It’s true, you aren’t going to meet anyone to form a relationship with sitting at home eating a can of chicken noodle soup, just like it isn’t true living like a miser will make you happy. However if going out to the bar is recipe for eternal happiness I would rather die alone. Credit card debt maxed out now at 45k and the issuer is having no part of a deal involving reduced payments or more credit extensions. All the while rent in her area has skyrocketed and goes up about $150 a month twice a year, further constraining a budget, now the minimum payment cannot be made! That car…well it’s systematically breaking down and becoming a large money pit, you have no option but to keep sinking money into it. The rent issue? Well you need a roof over your head, so you have to keep paying. The student loans? While you don’t have to pay, you cannot discharge these through bankruptcy. She does not have rent money for next month….adding insult to injury, the complex manager is looking for the last 3 months rent. She is at the end of the treadmill of debt…it’s now over, decisions she made and subsequently have continued to make have finally come home to roost. Even worse rather than seek out help or try something productive, she gambles at the local Indian Casino, and plays the lottery, essentially falling for the lie that the easiest way to double your money is betting it all on black. Suffice it to say, she blames me for telling her to keep the credit card, we no longer have a relationship.

Now I will add some commentary. I prefer using my credit card to track my spending and purchases, maybe it was not a great idea, but ask anyone who is a waiter/bartender/valet, cash tends to disappear quickly and there is no paper trail. While I firmly believe in separating needs and wants, the bigger issue is you can be seduced by a want, and you could convince yourself it’s a need….you need a budget. Make a shopping list wherever you go, grocery stores love it when you insist on going up and down every aisle, it’s easier to trick your mind by those fancy SALE stickers. By the way ever notice those sale prices are not as good as the actual sale prices a week later? Impulse buying perhaps?

When it comes to tackling your debt, pay off largest balance/highest interest rate first. The one that costs you the most needs to be paid down first, then apply additional money to next highest interest rate etc. until paid off in full. Take advantage of local non-profits that are there to help/guide you, ditch that “financial advisor” eager to pitch their latest product to you. Suze Orman and Dave Ramsey are two of the best on the radio, free! They also offer classes for a nominal fee and it is well worth it as blogged about earlier. Additionally, this idea of hording a bunch of money in a savings account, when you have existing debt is ridiculous. Just think about it, your credit card issuer is charging you 30%, your savings is earning 2% at best if you use an internet bank…..William said it best, the house always wins. Having a rainy day fund is ok but deal with your debt.

Playing the lotto and gambling is even worse because the atmosphere is created to make you addicted and play more.

If you need to file bankruptcy and start over, so be it, but understand the difference between dischargeable debt (mortgage, credit card, auto loan) and undischargable debt (student loans). Perhaps worse, she started reading a tax website and decided to start looking into buying a house….get this…..for the mortgage interest deduction. Yes, she thought spending $$$ on a house payment each month and getting a bigger tax refund would get her out of debt. Then worse yet, she joined several dating websites ($$$) looking for a special someone. Again seduced by a child tax deduction and a marriage tax break…news flash the marriage tax break is double that of a single one, however your taxable income will be higher. The goal of marriage is not to share the misery of your past mistakes by expecting someone else to fix them so you can double-down on continuing to make stupid life choices. Truthfully, what guy worth having would willingly enter into a relationship with someone carrying all your financial baggage?

The bottom line is that my friend has no chance anymore, except bankruptcy, and even then the road back will be rough. Good luck living anywhere decent. You won’t be driving a new vehicle for a while and worse your credit will stink for many years. However there is good news, we have some of the most generous bankruptcy laws in the world, so fear not in about 7 years you will get to start all over again! I have a customer who’s family is doing just that, they owned a really nice house in my parents old neighborhood, went into foreclosure, filed bankruptcy, and now they are right back at it 7 years later. Bought a house in that same neighborhood, also near the peak of the market, by the way, bought a huge new boat, 3 new cars, and I’m sure this story will once again end poorly soon, but hey it’s America! By the way didn’t Citibank used to have a catch phrase of “Live Richly?”

Buy now, pay later

I guess I may be missing out?