Category: Economy

Long time no blog out of me. Like most I have been busy, but also prices have gone up so much at local eateries that I am going to have to re-evaluate my criteria for judging businesses.  However, I have killed the local Dickey’s “BBQ” joint for what may be the final time.

You may recall my initial review of Dickey’s that led to the franchisee trying to coerce me to “take down my review” in the comment section here.  That franchisee subsequently closed down his restaurants, and re-branded as “Side Burn BBQ” which was essentially a copycat of Dickeys but with different names on the menu.  He claimed he never read his franchise agreement with Dickeys, was sued and his concept was shut down.

The place re-opened as a Dickey’s again under a new franchisee. 

Just a quick reminder of Dickey’s, I reviewed it again after it re-opened.  Dickey’s is supposed to be Texas style BBQ that was going to go country wide.  It’s a franchise model so you pay a fee, buy equipment, and must source the food from the local supplier, ala Sysco or US Foods.  The menu is standardized and prices are set by Dickey’s corporate but “may be higher in select markets.” 

They serve the usual BBQ faire, brisket, pulled pork, ribs, chicken, turkey, sausage and it can come as a plate, small or large sandwich.  They also offer salads, and large baked potatoes.  Their signature feature was that you got as many large pickles as you want, and a free soft serve cone as well upon leaving.

As for the BBQ itself, it was average at best, with a five-star price tag.  NO smoker or BBQ on site, food was pulled from a warmer, wrapped in shrink wrap, cut, re-wrapped and returned to said warmer.  This place had all the tell-tale signs of pre-made BBQ from a supplier, flash frozen/cooled and revived in the store.  It was odd really, the place never smelled like BBQ, kind of like a Subway never smells like a deli.  That being said, when I asked about how the meat was cooked, the worker opened a cabinet revealing a rotisserie type cooker with multiple shelves holding product. I’m guessing this was their version of a smoker. On my only visit when the place re-opened, the pulled pork on my sandwich had to be soaked in sauce to have any sort of taste.  This place was not going to last.

But enough about the products.

I am stunned by this bankruptcy filing, here are the details, I am using the names because they are listed in public records.

Elk Grove, Calif. franchisees Miguel Zarate Ortiz and Maria Zomeno Sevilla filed their petition in the U.S. Bankruptcy Court for the Eastern District of California on Dec. 8 listing only $17,987 in assets and about $1.04 million in liabilities, the Sacramento Business Journal reported.

Most of the liabilities are debts owed to the Dallas-based parent company.

The Elk Grove franchisee did not state a reason for filing for Chapter 7 bankruptcy in its petition. The restaurant’s listing on the Dickey’s locations page reveals that the store is closed, and the phone number listed is not operational.

I had to do a double take, how on God’s green earth can a franchisee owning a single store have 1 million in liabilities owed?  While Dave Ramsey would spontaneously combust upon hearing this, I want to examine it a little more.  I actually have no issue with folks taking out a loan to start a franchise or small business.  The way I view it, you do not own the store, or the concept, so why invest a lot of your own cash?  While I would never own a franchise, I can see the draw. As a franchisee, you use a concept that already exists and is easily duplicable, use their menu, and use their supplier for food.  I do not see how you can run up a million in debt.

Allow me to explain.  Owning a franchise is an “asset light” model.  Think of it like owning a Dominoes Pizza.  You buy their oven, the decorations, the shelving, cooling units, ice machine, etc.  These products cost money but not any amount touching 1 million.  In the case of Dickey’s sure you have that smoker type thing, a cooling unit, a warmer unit, the ice cream machine, soda fountain is likely leased from Pepsi/Coke, the machine that butters/toasts the bread, and that’s really about it.  Again, I’m not seeing 1 million dollars here.  Nowhere close.  I guess it could be they are not paying the franchise fees assessed monthly, but I cannot verify that.

Buyer beware, but my God in Heaven, you must be one crappy owner/operator if you somehow ran up that kind of debt. I do not think this store has been in operation under the new owner for more than 6 years.  Sad!

How is it a bad thing you ask?  Easy, credit counseling, not credit interest rate cuts are needed.  One thing I do agree with Sen Elizabeth Warren on is banks and credit companies take advantage of some of the most downtrodden and down on their luck individuals.  They also prey on folks who should not even have a card to begin with.

Folk’s it may sound anti-business, but I do not think it’s right for a credit card company to be on a college campus hawking its products.  Students, by and large, do not have an income, this is purely designed as a trap.  Give them a card with $500 or so limit, get them to charge a bunch of fast food and booze, then tell them the minimum payment is all that’s required.  Then when they hit the limit, either raise it, or charge over the limit fees.  Then the higher interest kicks in and the minimum payment doesn’t even touch the principal.  Countless lives have been ruined by these cards.  Adults, families, and college age people by the way, credit cards do not discriminate. 

So why is it bad to lower interest rates?  It’s temporary relief, not the answer to the question.  We are, in essence, rewarding bad behavior. I know some folks will be able to pay these cards off, but many more should also be closing them out. Pay in full and close them out? HA.  This feels like an excuse to keep people spending once paid off, due to low interest rates compared to what they were paying.  Not everyone needs to go to college and not everyone needs a credit card.

What do people need?

Credit counseling.  Its not allowed in school as part of a budget class because it was deemed racist by the older generation.  Not sure how budgeting is racist, but that maneuver has created a massive issue with the younger and some older generations.  Credit cards, especially store cards, are far too easy to come by.  While I do not think the interest rate should be allowed to touch 35%, I am not sure what the maximum should be.

On cards, I stick to what Dave Ramsey says; in essence you do not and should not need one.  If you get one or more, like I have, be sure to pay them off in full each month, never spending more than you should.  Differentiate between a need and a want.  Sure, the points or miles are cool, but no one has gotten rich of credit card points… no one.  Sure, it’s nice to earn a couple few hundred a year, but I do not have credit cards for that reason.  Yes, its true people who get credit cards often overspend to earn extra “points” just remember folks 5% in rewards is $.05 per dollar spent, it’s not like you are coming out ahead.

My bigger issue is Donald Trump cannot do what he wants to do legally.  Sure, he can sign an Executive Order, but will it stand the test of time?  It appears to me to be blatantly unconstitutional.  Time will tell, I guess.

My final thoughts are why do we no longer teach people about credit?  Dave Ramsey is spot on when it comes to this.  It’s the same with pay day lenders, pawn shops, and hard money lenders.  Folks need to know what they are getting into, in the form of a class, via the internet or in person.  Folks need to know how these financial vehicles work and what they could end up paying, not in the form of legal mumbo jumbo on their bill.

The Chief

So, the Federal Reserve Board of Governors agreed to lower interest rates yesterday for the third time this year.  If you are wondering what this is about or how it affects you, congrats you are in the right place.

In cliff note terms what this means is the following: Banks borrow money from the Federal Reserve; they pay the rate the “fed” sets as interest.  Then the bank turns around and loans it to “you” in the form of a car loan, home loan, line of credit etc.  You pay higher terms then the bank and they make money on the “spread.”  So, for example, when rates were zero about 10 years ago, I got a home loan (mortgage) my interest rate is 4%.  So, the bank borrowed the money for zero from the government and loaned it to me for 4% so they make 4% on the money I borrowed. 

As a result, mortgage rates will drop as will vehicle loans etc.

Why is this stupid?

Fed Chair Jerome Powell didn’t do this on his own volition, President Trump has been saying he will fire and replace him with someone who will lower interest rates all year.  The fed is independent of the presidency, but this president doesn’t adhere to that.  Simply put, Trump wants what he wants and will stop at nothing to get there.  He wants interest rates to go back to zero, basically where they were during his first term.  The fed controls interest rates as a check to keep inflation in order, most would agree inflation is still very high.  We also have economic uncertainty, layoffs are up, and consumer spending (credit cards) is at never-before-seen levels. 

Again, why is this stupid?

It helps out very few people actually.  Sure, if you have a mortgage that started about 7 years ago or less, you likely can refinance to a lower rate, that’s a good thing.  Ditto for auto loans and home equity credit lines.  If you are a saver, you get whacked as your bank will lower interest rates paid on your savings account.  To be fair no big bank pays much as far as savings, but my online bank has gone from 4% to 3.3% in the span of 3 months.  Don’t cry for me, listen to my point in the following paragraph.

Trump wants corporations and the government to refinance their debt, not pay it off.  Trump’s corporation has billions in debt. Look it up, as it comes due corporations do not pay it off; instead, they simply “recast” it and refinance at the going rate at the time. For the last 7 years or so, it meant much higher interest rates. Lowering interest expense means more to borrow, more to expand that hotel, or build that casino, or buy a competitor.  It benefits corporations, not you the individual.  Large corporations have popped up in the last 10 years buying up single-family homes and renting them out.  Avalon Bay, and Invitation Homes are two of them.  Very low-cost debt allows them to pay over asking price, and there are no contingencies.  It’s hard for a person to buy a starter house when these corporations exist largely to buy up entire communities of homes.  Sure, you could get approved for a lower interest rate to try to buy a home, but good luck.

If you are a saver, aka you follow the Dave Ramsey, Caleb Hammer, FIRE etc. movements, you lose purchasing power as the interest you earn in the bank will be a rate far lower than inflation.  The destruction of the savings rate is exactly what Donald Trump wants. It’s a way to discourage this behavior. There is no benefit to the economy of me having $85,000 in the bank earning what will eventually be about 1% a year. 

So, what is my point here?

Trump’s big thing is the stock market. He, like many others who are addicted to the TV, thinks the stock market is the economy. When it goes up, its great, when it goes down bad.  90-day guy believes stocks only go up, and Republican administrations are the best for the stock market.  Think again, it’s the opposite. You’re better off in a Democrat presidency, Republican congress time.  The problem is the only place to get a return of any kind when interest rates are that low is the stock market.  This is dangerous because in most circles, folks believe the market has major external forces that dictate returns for those in the know.  Why do you think people like Marjorie Taylor Greene go to congress flat broke and emerge as millionaires several times over?  If you think they have good luck, God bless you! Just to add, for every Marjorie Taylor Greene or Nancy Pelosi, there are quite a few big losers in the market.  Buyer beware… pun intended. I strongly oppose investing every dollar into the market, always keep money in a savings account, but to each is own.

In closing, please consider this word of warning. What about Donald John Trump screams he has your best interests in mind when it comes to money and budgeting?  Think about it, I’ve mentioned his corporate debt, how about the spending while he was/is president?  Doesn’t inspire much confidence huh?  He loves debt, and cheap debt at that. You do not have as much money as he or his family does, rates will eventually go up again.  Ask Rite Aid or any other corporation that went bankrupt. Nothing is forever and you don’t have the knowledge or insider status to compete in the stock market with these folks.  Look at the number of billionaires in Trump’s cabinet, or any cabinet of past presidents for that matter.  They know more than you and have more connections than me and you.  In the long run this “great bull market” will run out of gas. 

Beware of the prophet seeking profits.  Also, know that a fool and his money are soon parted, don’t risk more than you can afford to lose.

PS. Anyone think it’s odd that folks you don’t know to be financially literate are now speaking about investing in crypto and other whacky things like meme coins?  These are folks who never spoke about investing in the past. There are several in my circle. It has me worried.  I understand the 90-day types being happy. They consume so much TV they live in a self-induced echo chamber.  But what worries me is the folks who are not investor types starting to get into the game, especially some of the folks I know who are not exactly smart.

The Chief

The CEO of Ford recently held a conference where he made remarks to his employees about a future with Ford.  He revealed he had a personal “epiphany” about “essential economy.”

Most people I know that have an “epiphany” either found God, their soul mate, or came to a realization of something later in life they wish they knew.  In the case of Farley, it was this half-baked nonsense below.

Speaking with Bloomberg’s David Westin at Michigan Central Station, Farley said he came to this realization during the United Auto Workers strike of 2023, when he was especially struck by stories from young factory employees. Many of them said they could not support themselves by working at Ford alone. “When I met with my entry factory workers, they were saying [they] had to have three jobs.” He said they would also work at places like Walmart and an Amazon fulfillment center: “‘You know, I get six hours of sleep, and I got three jobs.’”

This would be a surprise to no one who is a millennial and below, but to those like Farley and the older generations, it’s a foreign concept.  Working multiple jobs just to eke out a living is very common now, it shouldn’t have to be this way.  Its neither a Democrat or Republican issue, it’s a bipartisan one. 

To further enhance my point about Farley’s generation, check out this verbal diarrhea.

In the short term, Farley said, Ford’s signature element in its new labor agreement was to get full wages to entry-level workers. But beyond that, he began looking at the labor shortage in trade work, starting with technicians. Farley described a revelation about the erosion of what blue-collar work used to represent—stability, pride, and a single income that could support a family.

A signature element!  There you have it folks, he wants full wages to entry level workers!  My goodness, stop the presses.  He now cares about the labor shortage for trade jobs?  Interesting, I’ll address this a little later.

Farley was blunt about the nationwide labor shortage. He estimated the U.S. is short roughly 400,000 technicians and a similar number of factory workers, repeating talking points he has been citing in his push on the essential economy. He warned that millions of well-paid jobs are going unfilled because they require specialized skills. Putting the salaries for these jobs at $100,000 and above, Farley argued that they require training. “You can’t work on a diesel F-150 if you haven’t been trained for five years, at a minimum five years,” Farley noted. It’s not a demand problem—there’s plenty of work—but a dire shortage of young people choosing and staying in the trades.

More verbal diarrhea. This Farley dude must have the worst breath in history.  Those jobs start at 100k?  I highly doubt it.  Sure, they require skills but why would it take 5 years to be trained on this?  Why not start out with an easy area, and progressively build up to more difficult specialized work?  This is something Farley cannot compute.

As for a solution, Farley offered a nothing burger.

Farley called out declining investment in skilled trades, poor productivity, and bureaucratic hurdles as key obstacles facing the essential economy. He challenged large employers and community leaders to act, advocating for more robust apprenticeship and vocational education programs, and lamented the lack of progress at federal levels despite President Trump’s push to de-emphasize four-year degrees in favor of trade schools.

“I see a lot of momentum with mayors, county leaders,” Farley said. “They get it. But they’re in the same boat we are. They don’t have a lot of resources. They’re struggling to get these projects done.” He said there’s a general attitude of frustration, a sense of “How the hell do we fix this?”

More bunk.  Community leaders do not wish to act. If they did, why not get rid of needless and useless red tape, environmental reviews, committee hearings, permitting, community meetings, and NIMBYism prevents investment by communities.  No one wants a factory near them.  Worse yet, the process in certain states takes years to even be close to shovel ready! 

As far as large employers, well Farley, fat cats like you have eaten up all free cash flow by mandating “dividends and share buybacks” as ways to juice returns for yourself and shareholders.  Simply put, you have no capital to deploy so you count on a city or municipality to do so!

As far as vocational school, apprenticeships, and trade schools; your generation is the reason for these jobs going unfilled.  For years in High School, 20 years ago for me, I heard your generation telling us if we didn’t go to college that we were failures.  Turning a wrench or working in a factory was for screw ups.  What did we get? A generation with 6-figure student loan debt and worthless job prospects.  We all work in government jobs as paper pushers.  Hence permitting takes forever.  We told our kids “learn how to code” now those jobs are going away.

Even if you work in a factory, you are not viewed as an asset, you are a liability.  If you are actually a worker not a contractor or vendor, you do not make 100K, I guarantee it.  Your healthcare is likely watered down garbage, and you are likely pressured about working harder and faster constantly.  When the economy slows down you get “laid off” or the plant might be idled.  Worse yet, due to zero investment by the company in the factory you work in, one bad quarter means it could be shut down, and your job shipped 3 states over or to a whole other country.  Gotta keep the investors happy!  While the county or city suffers due to a loss of working-class jobs.  But hey, Amazon is hiring at $20 an hour plus benefits!

Farley and his generation have screwed this country up so badly and now they are trying to quickly cover their tracks. Ha! What a joke!  This will be part of a series that I will dive deeper into.  The 90-day calendar is killing us.  We are suffocating our own future generations for nothing but higher bonuses and salaries for Farley and his ilk.  If you work at a factory, do not believe Farley for a minute, they will shut the plant down if it saves money, they could care less about you having to work 3 jobs to get by.

Just for those who are doubting my political allegiance I do support President Trump’s attempt but he is doing it all wrong.  Sadly, this isn’t totally on him, it’s his generation and they are out of step with today’s Americans. 

His “all or nothing” day of liberation approach backfired tremendously.  It’s been said to me, “it’s not hard to herd a couple cats, but herding 10 is challenging, herding 300 is impossible”.  Trump went after literally every country in his bizarre press conference.  The best approach would have been to get our closest allies on board first, then work out from there.  South Korea, Japan, and Mexico would have been my starting point.  South Korea needs our military backing, ditto for Japan (tourism as well), Mexico is a little different but if they don’t want to negotiate add a 3% transaction fee to every US Citizen sending money via wire to Mexico and believe me, they would come to the table quickly. 

I left Canada off that list as relations with them are low, he stupidly keeps saying he is going to annex Canada and is calling them the 51^st state.  Saying Wayne Gretsky should be their next governor is equally stupid.  Canada, as a result, has been reaching out to other countries and offering to help make up the difference if the US stops trading with them. 

I would have gone after Vietnam, Philippines, Malayasia, and other southeast Asian countries next.  These countries have a low skilled workforce (for the most part), are typically poor, and like China, rely on slave labor to manufacture goods on the cheap.  I wouldn’t threaten a tariff, I would say we want to invest American dollars in modernization of your production, warehouses, supply chain etc. with the goal being China seeing this and reacting.  China does not want to lose its monopoly on most manufacturing of things, and their close proximity to China, and USA support causes a threat.  Instead, Trump got into a d**k measuring contest and now China is lobbying those countries not to listen to us.  Again, it’s the way he did it, not why he is doing it.

The European Union should have been the second easiest sell, it backfired as well.  Some of this is due to his picking fights with NATO as most countries in the EU double as NATO countries.  The EU has also turned to Canada and China to help fill the void.  In this case I do heavily blame Trump, the EU is very similar to the US in that it has a very aging population not interested in working in factories, this should have been an easy deal to close. 

In closing Trump may think he is the greatest deal maker of all time, his problem is his bullying persona rubs people the wrong way.  He showed his hand in his first term and now other countries are prepared for it.  The bully does his best work picking on the smallest and most vulnerable and moving on from there, it creates fear and apprehension.  When you try to pick on everyone at once, if someone(s) stands up to you, most of the rest will follow suit and then you are stuck.  His tit for tat with Canada looks really foolish now, and while warranted, his comments regarding NATO and the Ukraine/Russia war are doing him no favors.  He has been reduced to begging Xi Jinping to call him to get a deal done just to save face. 

He got played because he never realized he didn’t have a card hand to bluff with.  Other countries know America is a deeply divided nation we tend to go back and forth between which party controls the White House/Congress nothing is forever here.  In the current climate of Executive Orders, if the other party takes the White House, the predecessor’s orders are erased before lunch is served on Inauguration Day!  Most politicians only desire to be re-elected, not pass legislation, company executives only care about cutting expenses and stock prices, and no one in America wants to work in a factory!  Also, our employment/wage laws are arcane compared to other countries.  Look at CA alone, $20-hour minimum wage in fast food, mandatory overtime after 8 hours in a day, double time after 12, anything over 40 hours a week is overtime, mandatory breaks and lunchtime.  Compared to slave wages and labor in other countries, the input price won’t get lower here.  Also check out our environmental laws compared to most countries we are trying to barter with?  It’s a lose/lose proposition. 

I hope this works, but even if he negotiates a better deal, I just don’t think we will see the benefits.

Sadly, NAFTA and environmental/labor laws killed any chance of the jobs coming back.