R.O.I.
By BRETT ARENDS
Load Up the Pantry
April 21, 2008 6:47 p.m.
I don't want to alarm anybody, but maybe it's time for Americans to start stockpiling food.
No, this is not a drill.
You've seen the TV footage of food riots in parts of the developing world. Yes, they're a long way away from the U.S. But most foodstuffs operate in a global market. When the cost of wheat soars in Asia, it will do the same here.
Reality: Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster.
"Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs." (Full disclosure: I am an investor in Quaker Strategic)
Stocking up on food may not replace your long-term investments, but it may make a sensible home for some of your shorter-term cash. Do the math. If you keep your standby cash in a money-market fund you'll be lucky to get a 2.5% interest rate. Even the best one-year certificate of deposit you can find is only going to pay you about 4.1%, according to Bankrate.com. And those yields are before tax.
Meanwhile the most recent government data shows food inflation for the average American household is now running at 4.5% a year.
And some prices are rising even more quickly. The latest data show cereal prices rising by more than 8% a year. Both flour and rice are up more than 13%. Milk, cheese, bananas and even peanut butter: They're all up by more than 10%. Eggs have rocketed up 30% in a year. Ground beef prices are up 4.8% and chicken by 5.4%.
These are trends that have been in place for some time.
And if you are hoping they will pass, here's the bad news: They may actually accelerate.
The reason? The prices of many underlying raw materials have risen much more quickly still. Wheat prices, for example, have roughly tripled in the past three years.
Sooner or later, the food companies are going to have to pass those costs on. Kraft saw its raw material costs soar by about $1.25 billion last year, squeezing profit margins. The company recently warned that higher prices are here to stay. Last month the chief executive of General Mills, Kendall Powell, made a similar point.
The main reason for rising prices, of course, is the surge in demand from China and India. Hundreds of millions of people are joining the middle class each year, and that means they want to eat more and better food.
A secondary reason has been the growing demand for ethanol as a fuel additive. That's soaking up some of the corn supply.
You can't easily stock up on perishables like eggs or milk. But other products will keep. Among them: Dried pasta, rice, cereals, and cans of everything from tuna fish to fruit and vegetables. The kicker: You should also save money by buying them in bulk.
If this seems a stretch, ponder this: The emerging bull market in agricultural products is following in the footsteps of oil. A few years ago, many Americans hoped $2 gas was a temporary spike. Now it's the rosy memory of a bygone age.
The good news is that it's easier to store Cap'n Crunch or cans of Starkist in your home than it is to store lots of gasoline. Safer, too.
Write to Brett Arends at brett.arends@wsj.com1
Friday, April 25, 2008
Sunday, April 20, 2008
Why the U.S. cellphone system is un-American
Why the U.S. cellphone system is un-American
Any TV you buy will work with any cable or satellite TV service you have. Any PC you buy, even a Mac, will work with any Internet service provider you use. Any landline phone, wired or cordless, will work any phone company's landline service.
Duh, duh and duh, right? So can you buy any cellphone you want regardless of who your carrier is? Of course. Unless you live in the United States of America. Why? Because the FCC is a wuss and a monopoly enabler and can't even follow its own rules.
More on this after the Continue jump.
Earlier this month in Las Vegas, FCC chairwuss Kevin Martin announced his intention to dismiss a year-old Skype petition, which called upon cellphone carriers to completely open their networks and allow us to buy and use any handset we want, approved by the carriers or not.
The carriers have announced their intention to open up their networks, thanks in large part to pressure from Google's Linux-based open operating system, Android, and the resulting Open Handset Alliance. So Martin figures no additional government action is necessary.
Not surprisingly, the carriers haven't taken even a baby step to follow through on their announced open-network intentions. Without FCC jabbing, why should they? The only ones who agree with Martin's active non-action are the carriers. Everyone else in the industry from handset makers to retailers, along with Democratic FCC commissioner Michael Copp, think Martin's laissez-faire lethargy is loopy.
Soul Stealer
Why should you care? Because you're being cellphone short-sheeted, that's why. Take, for instance, the Samsung Soul. This beautiful metallic slider has a "magical touch" navigation pad with backlit touch controls that change depending on the application — play, fast forward and rewind icons for music, + - x ÷ symbols for the calculator, etc — but that's not the cool part. The Soul has a 5MP camera, collects data at 7.2 Mbps, and is just half an inch thin.
But your Soul is lost, along with dozens of the other advanced cellphones I saw in Vegas, because no U.S. carrier has agreed to carry them. The same happens with applications and services. Verizon, Sprint and AT&T Wireless each have their own music and video services. Theoretically, someone could develop a Rhapsody-compatible cellphone, but no carrier would carry it. The iPhone is the exception that proves the rule, since no handset maker has Apple's juice.
Several handset makers such as Kyocera are shut out from the major carriers, and many of Sony Ericsson's models are "unlocked," meaning they will work with any GSM carrier's network but are hard to find because U.S. carriers don't carry them. It's funny how Apple gets elbowed for its closed iPod/iTunes ecosystem, but the cellphone carriers and the FCC get off scot-free for perpetuating this stifling near-monopoly.
Law & Disorder
It's not like the FCC can't and shouldn't do something about this. On June 26, 1968, the FCC made what is known as the Carterfone Decision, which established the right of consumers to attach any device to the Bell telephone network, as long as said device did not harm the network. This precedent gives the FCC the legal cattle prod it needs to force the carrier doggies to move along.
In some ways the FCC has even more jurisdiction to cajole the carriers. Unlike the Bell System's arguably quasi-private landline network, cellphone spectrum belongs to you and I. Like TV broadcasters, cellphone carriers are granted slices of this free public spectrum, which they then use to strangle competition. I think the technically term for that is chutzpah.
There are those who argue open networks would have a deleterious effect on the market. Carriers would have no incentive to invest and improve network infrastructure. Without the revenue from services it sells, rates would go up. And without carrier subsidies — discounts and rebates you get when you opt-in to another two years of service just to buy a new phone — handset prices would jump like LeBron James for a backhanded stuff.
Bells & Whistles & Balls
These arguments, of course, are demonstrably wrong. Open networks and handsets in Europe and Asia are far more advanced than they are in the U.S. And increased competition amongst the various U.S. carriers and handset makers would keep prices for both devices and services if not low certainly not sky-high.
Even if prices do rise, we'd be compensated by a far wider selection of exciting both hardware and software. But bringing the carriers to heel will take more than logic and evidence. It will take balls, something the FCC clearly lacks.
Any TV you buy will work with any cable or satellite TV service you have. Any PC you buy, even a Mac, will work with any Internet service provider you use. Any landline phone, wired or cordless, will work any phone company's landline service.
Duh, duh and duh, right? So can you buy any cellphone you want regardless of who your carrier is? Of course. Unless you live in the United States of America. Why? Because the FCC is a wuss and a monopoly enabler and can't even follow its own rules.
More on this after the Continue jump.
Earlier this month in Las Vegas, FCC chairwuss Kevin Martin announced his intention to dismiss a year-old Skype petition, which called upon cellphone carriers to completely open their networks and allow us to buy and use any handset we want, approved by the carriers or not.
The carriers have announced their intention to open up their networks, thanks in large part to pressure from Google's Linux-based open operating system, Android, and the resulting Open Handset Alliance. So Martin figures no additional government action is necessary.
Not surprisingly, the carriers haven't taken even a baby step to follow through on their announced open-network intentions. Without FCC jabbing, why should they? The only ones who agree with Martin's active non-action are the carriers. Everyone else in the industry from handset makers to retailers, along with Democratic FCC commissioner Michael Copp, think Martin's laissez-faire lethargy is loopy.
Soul Stealer
Why should you care? Because you're being cellphone short-sheeted, that's why. Take, for instance, the Samsung Soul. This beautiful metallic slider has a "magical touch" navigation pad with backlit touch controls that change depending on the application — play, fast forward and rewind icons for music, + - x ÷ symbols for the calculator, etc — but that's not the cool part. The Soul has a 5MP camera, collects data at 7.2 Mbps, and is just half an inch thin.
But your Soul is lost, along with dozens of the other advanced cellphones I saw in Vegas, because no U.S. carrier has agreed to carry them. The same happens with applications and services. Verizon, Sprint and AT&T Wireless each have their own music and video services. Theoretically, someone could develop a Rhapsody-compatible cellphone, but no carrier would carry it. The iPhone is the exception that proves the rule, since no handset maker has Apple's juice.
Several handset makers such as Kyocera are shut out from the major carriers, and many of Sony Ericsson's models are "unlocked," meaning they will work with any GSM carrier's network but are hard to find because U.S. carriers don't carry them. It's funny how Apple gets elbowed for its closed iPod/iTunes ecosystem, but the cellphone carriers and the FCC get off scot-free for perpetuating this stifling near-monopoly.
Law & Disorder
It's not like the FCC can't and shouldn't do something about this. On June 26, 1968, the FCC made what is known as the Carterfone Decision, which established the right of consumers to attach any device to the Bell telephone network, as long as said device did not harm the network. This precedent gives the FCC the legal cattle prod it needs to force the carrier doggies to move along.
In some ways the FCC has even more jurisdiction to cajole the carriers. Unlike the Bell System's arguably quasi-private landline network, cellphone spectrum belongs to you and I. Like TV broadcasters, cellphone carriers are granted slices of this free public spectrum, which they then use to strangle competition. I think the technically term for that is chutzpah.
There are those who argue open networks would have a deleterious effect on the market. Carriers would have no incentive to invest and improve network infrastructure. Without the revenue from services it sells, rates would go up. And without carrier subsidies — discounts and rebates you get when you opt-in to another two years of service just to buy a new phone — handset prices would jump like LeBron James for a backhanded stuff.
Bells & Whistles & Balls
These arguments, of course, are demonstrably wrong. Open networks and handsets in Europe and Asia are far more advanced than they are in the U.S. And increased competition amongst the various U.S. carriers and handset makers would keep prices for both devices and services if not low certainly not sky-high.
Even if prices do rise, we'd be compensated by a far wider selection of exciting both hardware and software. But bringing the carriers to heel will take more than logic and evidence. It will take balls, something the FCC clearly lacks.
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