Archive for September, 2008

Another Day, Another Financial Crisis

So Wall Street has gone careening into an iceberg, a few more banks decided to close their doors, whether you agree with it or not the government isn’t going to bailout the banks (at least not yet, I doubt we’ve seen the last of that proposal), and now multiple states are having fuel shortages due to the hurricanes in Texas. I doubt you could ask for a better recipe for disaster.

My first thought is that if there is fuel shortage in one area of the country it’s only a matter of time before it affects a larger area. Supplies have to be diverted from one place to another and that small pocket of suffering is going to expand outward. Diesel fuel (for truck deliveries) shouldn’t be affected for some time, but consumers will be hit directly. You can read dozens of reports of people waiting in line for hours, flared tempers and some cases of rage that have broken out. For the Southern states already feeling the gas crunch, people are staying home whenever possible, and are spending more time in gas lines that grocery lines. It’s only been about 2 weeks, but you can already read the dozens of scathing commentary from citizens left without gas.

When gas was spiking over $4 a gallon businesses felt the hit as people had less money to spend on other goods and had to budget much more for gas. While it isn’t any cheaper scarcity is now an issue. Not only do people have to budget for the cost of the gas, but they have to actually plan their trips or cancel them so they can get by with the limited fuel they have. Convenient trips to the store are going to have to wait and I’ve read where school sports have been cancelled because parents can’t afford to make all the extra trips to practice and games.

Not to mention that banks are starting to collapse people are going to be even more concerned with how they spend their money or if it’s even secure. Although we aren’t quite to the point of massive runs on the bank, I do see that people will be moving money around to protect themselves and cut their losses. No, I don’t think they will simply remove money from the banks and stuff it under their mattresses, but I do feel people will be much more frugal in what they spend their money on. If anything people may actually start to act like we’re in a recession; less trips, more cooking at home, buying in bulk.

The other part that has me concerned is how this whole bank fiasco will affect small business. And on the other side of the coin, how they are going to treat those of us who used to be in business but now owe them money. As I mentioned before Bank of America ended up buying out my debt and the interest rate has been increasing ever since they did. Now that they have a whole slew of worthless paper, I wonder if they will continue to keep raising the rates. They seem to have bought up more debt than what financially makes sense. I’m fearful that in order to try and get a quick influx of cash they may make the payment schedule and interest rate unmanageable. Then again, if they aren’t going to get bailed out by the government maybe they will be a little more reasonable. It’s no secret, I don’t like Bank of America, I never asked to be a customer of theirs and I certainly don’t trust them.

But the other part is what will small business owners do for loans? I doubt anyone is going to be too anxious to hand out loans or working capital. If some stores are struggling from a slow summer (not just MA) and they need a few bucks just to make it through the holiday season are they going to be able to float a loan?

It seems the financial problems are coming to a head. For most small businesses that usually rely on the 17-22 year old crowd for help, it seems they aren’t going to be able to pay enough for them to come to work, or they are going to have some hard times paying potentially higher interest rates from the bank or larger minimum payments. At the very least I don’t see new businesses getting a lot of help when it comes to purchasing new equipment or expanding their endeavors. Of course this leads me to wonder how new franchise owners who are in the middle of the build out process or are just about to start are going to be able to complete their plans. The uncertainty of getting the store open and then the uncertainty of whether the customers will even show up at the door would have me under a great deal of stress right now.

Dow posts worst-ever point decline

I’m sure everyone has seen this by now, but of course the big question is, what happens next? The Dow can drop a few hundred points that really isn’t the end of the world. The bigger question is, will there be another attempt for the bailout and what are the banks going to do in the mean time? Bank of America is already buying out Merrill Lynch for $50 billion, for a whole slew of reasons I’m not sure I understand and now Wachovia has announced they will sell themselves to the highest bidder. Shaky ground indeed.

Will the banks be able to work out these problems amongst themselves? Is another bailout in the works and is it even necessary? And if the bailout does come, will it just spread things too thinly and will the slightest hiccup in the economy bring the whole thing crashing down anyway?

NEW YORK – Wall Street ended a stunning session with a huge loss Monday, with the Dow Jones industrial average plunging 778 points — its largest point drop ever — after the failure of a House vote on the financial bailout plan.

Wall Street started tumbling as the vote was shown on television Monday afternoon, sending investors fleeing to the relative safety of credit markets, worrying that the financial system would continue to sink under the weight of failed mortgage debt.

Dow posts worst-ever point decline

Almost Comical… Almost…

Although my adventures in seeking out oil went unfulfilled
last night, through dumb luck I managed to strike it rich and find an open gas
station this morning. And one that didn’t have a line 5 people deep. Even
though I only got half a tank, it was still quick a shock to the bank account.


I guess I was one of the lucky ones since I hear from
several people I work with who went out prospecting for oil during lunch, that
they came up empty and once again the gas stations have shut down the pumps due
to lack of fuel. So, within a 20 mile radius there is no gas to be had.


I understand the hurricane has caused a decrease in the
amount of available goods, but wouldn’t this be more of a case of people taking
more than they need just because they don’t want to go without? A guess we have
a run on the banks and the gas stations…


are starting to get a little desperate, might have to invest in some
two-wheeled transportation.

Diesel, Diesel Everywhere, not a Drop of Unleaded

This gas crunch is really starting to take its toll. Not only is the price still uncomfortably high, but now I can’t find any. Every gas station within 15 miles of where I live has their pumps covered and closed down. Now they have signs posted asking people to moderate how much gas they buy and it’s pretty common to see police officers standing by to make sure pumping gas doesn’t turn into fist-o-cuffs. I’ve actually started to see articles where fights are breaking out because people feel others are taking more than their fair share.

Diesel on the other hand, while not cheap, seems to be in relatively good supply. Several stations have a pump or two for diesel in case you are lucky enough to be able to use it. But for the rest of us it looks like you either have to wait in a long line in the hopes of getting gas or drive around to parts unknown to look for some little out of the way station which might have a few gallons to spare.

I thought it was bad this morning at 7:30am when I saw people lined up to get gas, I have to say it’s getting worse when at the end of the day the pumps are dry and stations are closed because they have nothing left to offer. Certainly seems like we are heading right back towards the gas crisis of the 70’s.

Even though the diesel supply might be ok for a little while longer, I have to wonder how this hurricane is going to affect food prices in the long run.

Make & Take, franchisees battle in court

There are several parts to this article which are distressing.

Sadly, the earnings claim is nothing new. This has been raised by many owners and is certainly at the heart of the lawsuit against Dream Dinners. I wouldn’t be surprised if we see more of these as time goes by.

And I’m sure we’ve all come to expect that franchisors don’t think they can ever do anything wrong and when owners lose millions that it’s their own fault and legal action is frivolous.

But what about this claim that Make & Take wasn’t even licensed to sell franchises? That certainly makes me curious. More than just overselling your product, that kind of behavior is downright illegal. There are allegations they even circumvented the laws just so they could sell franchises.

“In addition, Einbinder says, Make & Take was not registered with the state to sell franchises when it dealt with the franchisees in the lawsuit.”

SYRACUSE – Three former franchisees of Make & Take Gourmet say they lost large sums of money on their stores after receiving false information concerning potential earnings from the company.

The franchisees are owners of former Make & Take locations in Camillus, Baldwinsville, and Clifton Park (in the Albany-Schenectady area). All three stores closed earlier this year.

The franchisees’ accusations are included in a lawsuit they filed against Make and Take Gourmet Holding, LLC and the company’s owners, Michele and David Bellso. The group filed the suit in June in Onondaga County State Supreme Court.

CNYBJ: Make & Take, franchisees battle in court

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