A Very Corporate Thanksgiving

Someone out there has something to be thankful about.

NY Times: American businesses earned profits at an annual rate of $1.659 trillion in the third quarter, according to a Commerce Department report released Tuesday. That is the highest figure recorded since the government began keeping track over 60 years ago, at least in nominal or noninflation-adjusted terms.

While others aren’t so lucky.

Even amid the most turbulent economic conditions since the Great Depression, US corporate profits are at an all time high, according to a Tuesday report (PDF link) by the US Bureau of Economic Analysis.At the same time, America’s poor and middle classes are under siege, with a mostly stagnant job market that has shown only marginal signs of improvement.

In spite of meager growth in some sectors, the real unemployment rate remains high, at approximately 1 in 5 Americans.

Somehow it’s hard to square these stats with the picture in my head of all those who made off like bandits in this economic crisis, a catastrophe largely of their making, and watching them look up from their Thanksgiving feast to say, “pass me some more tax breaks and deregulation.”

Can’t they even say, “please”?

Chris Farrell in Business Week: “The rise in income inequality is well-documented. Median income began stagnating in the early 1970s, and income inequality started to surge in the early 1980s. The benefits of America’s economic growth since then have mostly gone to a wealthy minority, while the majority of workers have seen their earnings stagnate at best and decline at worst. The long-term trend is toward a small group of financiers, chief executives, professional athletes, entertainers, and other earnings titans pocketing much of the wealth generated by society.

Happy Thanksgiving to the rest of us!

Is it PNM’s turn for a bailout?

If you pay enough attention to what’s been going on as of late, you’d figure that PNM is about to be swimming in money. Not money from profits based on their energy production (in fact, PNM posted losing quarters all of last year), but in “help” from state and federal sources.

First off, PNM has been given free rein when it comes to rate increases.  Last year the state Public Regulation Commission approved PNM for a 4.4% ($24 million) rate increase. That was big, but not quite the $82 million PNM originally wanted. PNM also requested a fuel clause, which would have given them the ability to adjust their rates to adjust to fuel costs. Many spoke out against this rate clause, saying it was simply a thinly-veiled rate hike designed to help PNM make up some of the $58 million that they didn’t get in the rate increase. It was determined that there wasn’t a need for the fuel clause and PNM’s request was rejected.

Now there’s word of another rate increase at the beginning of this year. PNM recently announced they will impose a 9.7% or $77 million rate increase starting in July. According to PNM’s CEO Jeff Sterba, the increase “is the latest step in our ongoing efforts to ensure adequate recovery of PNM’s costs and restoring shareholder value.”

Funny, I thought the reason PNM sold their gas holdings and got a credit line increase (increased to $300 million) last spring from the PRC was to improve PNM’s profits (and thus decrease how much they pass on to consumers) and help improve PNM’s credit rating.

One has to wonder whether last year’s profit losses, the large costs paid out to upgrade PNM’s San Juan Generating Plant, and the recent $7 million fine for emissions from the San Juan plant have anything to do with PNM’s recent request for a rate increase.

But now PNM is taking it to the federal level.

Continue reading

It’s the economy, clearly

Most economists are saying that the earthquake that struck the United States’ financial markets hasn’t even hit us fully yet. It’s like a rumbling from deep in the earth’s core – it’s coming towards us, gaining velocity, and all that we know for sure is that there’s going to be a hell of a lot of trouble ahead.

There are a few things that we do know for sure, though. Continue reading