Earthside Comments: Here is your reality check for today. The financial institutions are in trouble: too much debt, too many bad loans, too many incompetent and greedy CEOs and managers, too much gambling with other people's money.
Then, while the Bushites and Dimocrats work together to bail-out the stockholders of Fannie and Freddie, the cost of feeding yourself and/or your family continues to rise.
It is time for fundamental changes in our behavior -- now is the time to weigh all purchases very carefully, the frivolous, impulsive consumer economy is going to have to end -- do your part and preserve your own financial situation at the same time.
Link: Wachovia Loses $8.86 Billion; Slashes Jobs, Dividend | Reuters
Wachovia Corp on Tuesday posted an $8.86 billion second-quarter loss, slashed its dividend and announced 6,350 job cuts after losses tied to mortgages soared.
Link: American Express 2Q Profit Tumbles 38 Percent | Associated Press
American Express Co. said Monday its second-quarter profit tumbled 38 percent, well below Wall Street's forecast, as consumer spending slowed and the number of loans that had to be written off as unpaid increased beyond the lender's expectations.
The company, known for catering to some of America's wealthiest consumers, said the effects of the weakening economy were evident even among its more established members with excellent credit.
Link: Key's Loss Worse Than Expected | Cleveland Plain Dealer
KeyCorp today said it lost $1.13 billion, or $2.70 per common share, in the second quarter -- worse than analysts had expected. That compares with profits of $334 million, or 84 cents per common share, in the second quarter of 2007.
Link: Grocery Bills Going Up -- Again | Chicago Sun-Times
It started in the cereal aisle, and it's spreading.
Food manufacturers, under pressure for months from higher costs for everything from product ingredients to the packaging, are confessing to new plans for price increases. Most already have gone through at least one round of price hikes this year.
The biggest companies in the cereal business, General Mills Inc. and Kellogg Co., said in late June they were raising prices by a few cents per ounce. General Mills, citing a 17 percent drop in profit during its most recent quarter, said it needed to make up for cost increases that it expects will total 9 percent for a fiscal year that runs through May 2009.
Now other companies are raising prices for their cookies, coffee, meats, cheese and baked goods, betting that shopping habits and brand loyalty will improve results for the balance of 2008.
Northfield-based Kraft Foods Inc., which in the spring implemented an 8 percent price hike on many products, expects to tap the consumer again. A company spokeswoman said Monday that Kraft is faced with "unprecedented" pressure in commodity costs.
"We expect costs to be up about $1.7 billion or about 12 percent for the full year," said spokeswoman Lisa Gibbons. She said Kraft is reducing expenses while investing in product quality and marketing.
Kraft's brands include Oscar Mayer meats, Philadelphia cream cheese, Oreo cookies and Wheat Thins. Some experts say recent price hikes have yet to drive many shoppers to try the generic products.
Weak dollar is part of it
The Financial Times said Sara Lee Corp. will raise prices by 20 percent later this year for its meat products. The Downers Grove company produces Jimmy Dean sausages and Ball Park Franks, among other products.
The paper attributed the pricing information to Sara Lee Chief Operating Officer C.J. Fraleigh. A company spokesman could not be reached for comment.
One positive sign for shoppers is that crop prices are falling in the futures markets. The price of corn, for example, has declined from record levels for 10 or the last 13 sessions at the Chicago Board of Trade.
Traders said better growing weather since the June floods in the Midwest will increase yields.
But a weak dollar and high global demand for American crops are expected to keep prices high.
"Experts agree we are seeing a fundamental shift in today's commodities markets, rather than a short-term cyclical bump," said Kraft's Gibbons.
Overall grocery prices are expected to rise 5 percent to 6 percent this year. But some categories are projected to post higher increases, such as eggs, fats and oils and cereals.
A report by the Food Institute, a research group for manufacturers, predicted 2008 increases of at least 9 percent for those products.
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