Indianapolis Star sneaks in 30% delivery increase

The day after the Santa holiday, I received an odd phone call at home. The caller identified himself as being with the Indianapolis Star and wanted to know whether we had paid our bi-monthly subscription bill. Caught a little off guard - this was a first - I said I'd check, but we'd only recently received the bill. He was very courteous and said not to worry, he was just checking.
Thinking this all a bit strange, I went to our bill stack and opened the Star invoice. Inside, I was more than a little surprised to read this computer-generated note: "Due to rising costs associated with delivering the newspaper, The Star implemented a rate increase."
A rate increase? Try a 31% percent rate increase! This little unannounced rate increase amounts to more than $100 in annual delivery costs for a newspaper that has precipitously declined in size and coverage over the past few years. Plus, I - like a few others - have noticed that the price of gas has declined considerably over the past month or so, which one might think would lower the cost of delivery.
Also featured was a strange little extra charge of $1.42, noted as a "Thanksgiving charge." Huh?
Included in the bill were three different promotions offering me the opportunity to convert payment from a traditional check method to my credit card. Perhaps if the amount just showed up on my monthly credit card statement, I wouldn't notice the increase so much. Plus, conversion to online billing would likely mean that I would stay a Star subscriber to matter what.
To be sure, I like the Star and based on the profitability reports profiled in Indiana Legislative Review, the Star appears to be doing okay in an era where daily newspaper reporting staff is disappearing left and right. To its credit, the Star has taken its fair share of this and openly acknowledged its challenges as the Millennial generation abandons printed newsprint for free digital content.
I am paying the bill this morning ($77.08, up from $53.47) and will continue to support the Star through daily delivery. However, I would humbly suggest that Gannet take a fresh look at customer satisfaction principles (particularly during a major recession). Of course, one chief principle is not to surprise your customers in an unsavory way, lest they react adversely, including public blog entries like this one.

JC Penney and Saatchi & Saatchi Team Up to Produce Annoying Stereotype Advertising

Allison Linn of MSNBC sums up this advertising disaster in their "Ads of the Weird" coverage (http://adblog.msnbc.msn.com/):

"Here’s a recipe for an annoying commercial: take all unpleasant stereotypes known to man (and woman) and mix in a predictable plot.
For extra credit, make the commercial really, really, really long.
That just about sums up the strategy that is apparently at work in JCPenney’s new holiday campaign, "Beware of the Doghouse."
The name of the Web-based campaign pretty much says it all. The video starts with a man giving a woman a vacuum cleaner for an anniversary gift, after which he is marched unceremoniously to a doghouse/dungeon.
There, he joins other men who have made the kind of stereotypical "bad husband" mistakes you mostly see on really cheesy 10-year-old sitcoms, such as giving one’s wife exercise equipment and hinting that she could lose a few pounds.
As punishment for their misdeeds, the men have all been consigned to the dungeon, where they must do things like fold laundry and eat quiche out of dog bowls. Keeping with the torture theme, a tape playing in an endless loop also encourages them to "speak less, listen better," "offer to change diapers" and "stop checking out other women in restaurants."
The only way to get out? Buy your wife jewelry, of course.
Adding an element of real-life public humiliation to the mix, JCPenney is even offering real women the option of putting their significant others in the doghouse, via a Web site that will send your partner an e-mail -- and then post his name and, if you choose, picture, on the company’s public Web site.
We’re not sure who should be more offended by this campaign: Men, who are painted as sexist, clueless dolts, or women, who are shown as mean-spirited and materialistic, willing to mete out menial punishment but swayed by glittery things.
We’re not saying men and women don’t have their share of differences, particularly when it comes to their idea of the perfect holiday gift. There are, however, funnier, more subtle and more modern ways of playing those differences for a laugh, and a potential sale.
Particularly in these tough economic times, we wonder how well a throwback to the "diamonds are a girl’s best friend" way of thinking will play."
Click here to watch video and see the Web campaign.

Superb Summary of Current Credit Crisis

Jack Schultz, founder of the Boomtown Institute (which helps rural towns revitalize and grow), has a remarkable financial background and penned the following summary of the causes and contributors to today's credit crisis. Read on:

Credit Crisis 2008

"Even though virtually everyone in Washington, D. C. and on Wall Street talks about the massive $800 billion bailout bill as help for Main Street, I'm still not buying it. I can't find any evidence that Main Street was a major player in the paralysis of credit markets. Here is the chronology of events that I've found that led to the bailout of Wall Street.
December 5, 1996-Alan Greenspan utters words "Irrational Exuberance" for the first time. Congress comes down hard on him, not wanting an end to the .com elevation in stock prices and jobs created from those high flying stocks. Greenspan doesn't increase margin requirements for stock trading....bubble grows in .com stocks....bubble bursts in early 2000.
1998-Credit Default Obligations (CDO) begin to be used to offer insurance against credit losses. AIG makes the biggest bets, most on the premise that housing values can only move upward, reaping huge premiums and inflating its earnings. Massively wrong bet. CDO market explodes to $60,000,000,000,000 ($60 trillion) by 2008. Buffet calls derivatives like CDOs "Weapons of Mass Destruction."
1999-Congress repeals Glass-Steagall Act from Great Depression which separated commercial banks from investment banks. Big commercial banks enter investment banking with a vengeance.
2000-When .com bubble bursts, Fed floods markets with cash. Fed Funds rate drops from 6.25% in 2000 to 1.00% in 2003. Cash begins flowing into real estate, especially in CA, NV, AZ and FL. "Flipping" no longer refers to hamburgers but to houses.
2002-Mortgage lending standards are reduced by Freddie and Fannie. The key requirement is no longer whether a borrower can repay their loan but can the loan be sold by Wall Street to unsuspecting buyers worldwide. Reverse amortization, ARMs and other derivations from traditional mortgage lending become widespread. By 2006, 17% of home loans are made with nothing down.
2004-Leverage requirements are loosened. Large commercial banks go from 10:1 debt-to-equity ratio to 20:1. Investment banks and hedge funds go from 20:1 to 40:1 and higher. At 40:1 ratio, you can only make a 2.5% mistake or your capital is wiped out. That means that a hedge fund that buys a $100 stock can only afford to have it fall to $97.50. Hubris rules the hedge fund and investment world. The "rocket scientists" with their black boxes supposed to dominate risk management learn of "black swan" events when $100 stock falls in half.
2006-Housing values hit their peak and start to fall. Even though housing only accounts for 3% of USA GDP, the house of cards built around ever increasing housing values begins to topple.
2008-Credit markets seize up. Banks don't trust each other. LIBOR interest rates soar. Treasury puts together $700 billion bailout plan. Congress loads up with another $100+ billion of earmarks for wooden arrow manufacturing, Hollywood film producer tax breaks, new NASCAR race tracks, etc. etc. etc.
2008-Treasury panics and increases money supply from normal growth/contraction of +/-10%, to over 250% growth in November, 2008. Bubble in housing that started in 2000 will reemerge in another sector because of the huge amounts of cash sloshing around. Inflation begins to skyrocket in 2010 as a result of the unprecedented growth in M1 money supply, after deleveraging which begins in 2008 comes to an end.

That's our take on it. Problems lie on Wall Street and Capital Hill. I hope that the hard work of Main Street can help to eventually fix these problems that they've brought us."

For more information about Boomtown, go to: http://rs6.net/tn.jsp?e=0015vA8X1IfeC_ZjapNfLTy-RIbDmjzwnbOV4i6cVAi0DVofbH9ElDBRaIMZjP-WnVf8S_2u_aht1QNe6YnE-IJT9zXbJGJQzvkBIt0meDuELP6dD293n5FglOAUyxTnCGU