In the same vein as Justin’s Signal Watch, or Mario’s In The Know, The Haul is kicking off an end-of-the-week Business Round-up for national business and economic news. Follow what I’m reading and make suggestions on Twitter. I’m also kicking off a local Biz Briefs column next week for Maine business news.
The joke this week is that Recovery Summer was probably the wrong name for the Obama administration to affix to this season, after news that existing home sales hit a 15-year low, and the economy grew at a rate of only 1.6 percent in the second quarter.
Obama was betting the slew of construction jobs set to kick off in June would jump start a stubbornly dreary economy. The fact they haven’t has provided fodder for critics as the country closes in on midterm elections.
But with an unemployment rate hovering near the 10 percent mark (still) some should take comfort in the fact that at least one group of people are doing well: rich folks.
The National Bureau of Economic Research this morning released data showing corporate profits are near their pre-recession peak. But as Charlotte Rampell of the New York Times points out, these profits haven’t exactly trickled down yet.
“…while companies may be sitting on mountains of profits, they have still been reluctant to use those profits to hire additional workers.”
Meanwhile, Ben Bernanke acknowledged this morning that the Fed plans to prop up the economy by buying longer-term debt, of which the central bank already has boatloads. The move is meant to stave off deflation, or a downward spiral of prices. According to the New York Times, Bernanke says there is no fear of fiscal policy causing inflation — for the time being.
“Because a significant further weakening in the economic outlook would likely be associated with further disinflation, in the current environment there is little or no potential conflict between the goals of supporting growth and employment and of maintaining price stability.”
A joint report by ProPublica, a nonprofit (though apparently high-paying) investigative news outfit and Planet Money, NPR’s economic news team, shows bankers knew exactly what they were getting into before the financial crash — they actually helped kick-start the biggest economic downturn since the Great Depression.
According to their report, nobody really wanted to buy the financial products they were peddling (collatoralized debt obligations, and other nebulous and nefarious products concocted using complicated physics.) But the bankers bought their own products to stimulate demand — sometimes buying others’ too.
But why read when you can watch a video? Enjoy:
Perry Mogul got off to a late start Tuesday.
The hot dog cart vendor said he suffered an asthma attack in the morning and had to use a breathing machine to recover before he could come to work. He normally opens for business around 10 a.m. at his regular spot near the DiMillo’s entrance on Commercial Street. But on this day he was still settling in at around 1 p.m. — and he wasn’t happy about it.
Another vendor, Lori Hillier, who also runs a hot dog cart, had set up at his spot before he arrived.
“That’s a high-visibility spot. This spot where I am today — I call it an afterthought,” he said of the location he had moved to, which was roughly 30 feet away on the same stretch of sidewalk near the entrance to DiMillo’s. “Why can’t she find her own spot and establish herself?”
Hillier said she doesn’t like taking other people’s spots, but a cruise ship pulled in around 10 a.m., and Mogul hadn’t arrived by his usual time. She wasn’t going to miss out on the hordes of tourists walking by the area Perry calls his.
Most pushcart food vendors will tell you there’s an unspoken agreement among the 23 licensed sidewalk restaurateurs currently operating in Portland: Find a spot, stick with it, and no one will mess with you.
But this agreement can at times clash with the official stance of the city, which doesn’t recognize street cart vendors’ seniority. And some vendors say that competition, especially on Commercial Street, can get fierce.
“It’s first come first served. And the problem I have is, I could come and take someone’s spot, but I feel bad about it,” Hillier said. “Which, I shouldn’t, because the property is owned by the city and it’s my right as a vendor to take that spot. But ethically it’s hard for me.”
After he had set up and served a few customers, Mogul settled down a bit.
“Am I disappointed? Hell yeah. Am I mad? No,” said Mogul. “I’ll just have to get up earlier tomorrow.”
* * *
The license to operate a food cart in town costs $295, but application or renewal fees and health department inspections of the carts’ storage spaces bring to total up to around $500 annually. According to City Clerk Linda Cohen, while the number of carts in town rose more than 50 percent this year — from 15 to 23 — Portland hasn’t seen a trend of more food carts in town. The year before there were 25; the year before that there were 20.
But vendors on Commercial Street say there are now more carts on the busy waterfront thoroughfare than there used to be. And Mogul says the city should do something about the spot-stealing.
“There’s a situation in the city of Portland,” the flamboyant salesman said last week from the perch of his cart. Unlike other vendors, Moguls’ cart is jacked up off the ground, providing a sort of stage from which he can pontificate.
“Vendors used to operate ethically and morally, where people respect your territory where you set up to do business day in and day out,” he said. “If somebody gets here before I do tomorrow, technically in the city’s eyes it’s first-come-first-served. I think that’s a difficult way to do business,” he said.
“Portland has been very competitive; it’s a saturated market,” said Hillier. “In 2005 when I started I had a cart down by Casco Bay Lines. At that time there was one other vendor on Commercial Street. Now there’s five of us right here,” she said.
Since most vendors in Portland sell the same sort of street fare — mainly hot dogs and cold drinks — setting up in a key location with heavy foot traffic is often the best way to set yourself apart from the pack. And with 75,731 cruise ship passengers expected this season to spill onto Commercial Street — a new record, according to the city — competition can be fierce.
“When a ship comes to town, it’s a free-for-all on the waterfront and all the vendors scramble and everybody wants a piece of the tourists from the ship,” said Mogul.
But Mogul said the mad dash is for naught: Most cruise ship passengers eat for free on the boat. He says he doesn’t really sell much when ships dock at the nearby pier.
Jill Bourgeois, who this year started her first season running the Burger Boat a block down from Mogul, said she has had run-ins with other vendors in the past, but for the most part, people are reasonable.
“I’ve run into a couple situations where I got here and a person’s set up and there was no talking with her at all,” she said last week. “I think her reasoning was someone took her spot so she didn’t think it was a big deal for taking someone else’s spot.”
“When I first got into it, I thought it would be kind of like a nice low-key, no competition kind of thing, but I’m finding out that as your spot becomes a little more popular, people want to edge in and get there ahead of you,” she said.
To ensure she gets her spot, Bourgeouis said she gradually started arriving earlier and earlier. She used to arrive at 10 a.m.; now it’s closer to 8 a.m. “I’m actually doing breakfast sandwiches now,” she said.
* * *
To stop people from poaching profitable sidewalk spots, Mogul proposes that the city grant licenses to vendors to occupy certain areas based on seniority.
Mogul said he sent a proposal to Portland Mayor Nick Mavodones and Councilor Cheryl Leeman last March and again in April. But Mavodones said he has no record of ever receiving a letter from Mogul. “If there’s fierce competition or any problem, I’m not aware of it,” he said Monday.
Mavodones said he wouldn’t support any measure to give street vendors dibs on certain spots.
“I’m not sure how you would ever manage that and the amount of time it would take to try to manage such a process,” he said. “Some of the other establishments who pay a lot more for rent and licensing and things become concerned about people having their own location. It’s almost like renting a place.”
But at least one local politician is interested in revamping the street vendor ordinance. Dave Marshall, city councilor of District 2 said he plans to rework the ordinance to be more in line with how carts are actually enforced. Vendors are not allowed to operate in parks, for instance, but Marshall points out that Monument Square and Tommy’s Park — two well-known areas for food vendors — are parks by definition.
Marshall also said he’d be in favor of allowing carts to set up right next to each other in a line, similar to the thriving food cart scene in Portland, Oregon. “I don’t understand the logic in dispersing the carts. I’m not sure that the 65 foot rule between carts is appropriate,” he said.
Ron Gan of Skinny Cart BBQ agrees. He says he’d like to see a sort of “food cart food court” in Portland, possibly down on the pier, with an array of vendors offering different types of street fare.
Some vendors are dubious of Mogul’s idea. Phil McBride, who runs a cart on Marginal Way, said sanctioning spots based on seniority would bar new cart owners from competing.
“I wouldn’t agree with that,” he said Tuesday. “It makes it hard for people that are just starting.”
Veteran hot dog cart owner Mark Gatti has managed to maintain the same spot for 27 years. But he recalled the “cart wars” back in 2002, when he said police were often called to settle territorial disputes among street vendors.
“People would get there real early something 5 or 6 in the morning, so there were some battles and verbal battles and the cops were being called a lot,” he remembered.
Gatti said that, like any other business, the location of a food cart is integral to success. He’s been at the same location in Tommy’s Park in the Old Port for 27 years and has managed to make a living doing it.
“It takes a long time to build up a clientele,” he said. “I personally don’t think the city is big enough to support a lot of stands. If you need to make X amount or if you’re supporting a family or if you have a rent or a mortgage, it’s kind of a tough town to have a lot of stands for everyone to make that kind of money. I don’t think it’s sustainable.”
Gatti’s statements echo those of other vendors, who say there are too many people trying to sell the same thing. Of the five vendors who regularly operate on Commercial Street, four sell hot dogs.
Ari Muca started her first season selling hot dogs this summer. She works at Jen’s Hot Dogs, which has two carts on Commercial. She said she hasn’t clashed with other vendors, but the lack of variety of street food on the street can drive competition.
“I guess in previous years it hasn’t been as competitive because there wasn’t as many vendors,” she said. “It’s better if there’s more variety. I know there’s a bunch of people that sell hot dogs or chili dogs. If there’s another [cart] that’s selling the exact same stuff it gets awkward.”
* * *
Since the scene on Commercial Street can get tense, some vendors have staked out less contentious spots elsewhere in Portland.
McBride, who sells — you guessed it — hot dogs, sets up his cart on the corner of Marginal Way and Preble Street Extension. McBride said he’s tried out Commercial Street a couple of times, but there are just too many people. He said he doesn’t want to compete for tourists.
“I’d rather build relationships,” he said.
To be fair, most vendors said the same thing. But there’s a marked difference between McBride’s spot and Commerical Street: mainly, there are way less people.
Joe Tucci of Graffam’s Classic Hot Dogs in Monument Square said he’s never had a problem with people taking his spot, but then again, he has a lot of slow days.
Tucci said he’d probably do better if he was in the Old Port. But he has no plans to move. His cart, which he took over several years ago when his brother-in-law died, has been in the same spot for 33 years, he said. “When he passed on he wanted me to operate the cart,” at that location, he said.
“It’s just like a good soldier, you don’t leave your post, you stick right there,” he added.
So I had a little conversation on Twitter last night with Alec Maybarduk about whether Darden’s move to raise their own rock lobsters would actually affect the price of lobster across the market.
This all came about when Alec retweeted our post on Darden’s and added “bad news 4 ME lobstermen.” I responded, “actually, they’re raising rock lobster, which don’t come from Maine. Darden’s said they’ll continue to buy ME lobster.”
To which he replied: “actually, langostino has already cut into maine lobster even tho it’s a crab, i see a real threat of downward price pressure here.”
When I asked Bob Bayer of the Maine Lobster Institute whether the aquafarms would lower prices, he said rock lobster is “not something that’s really competitive; it’s an entirely different lobster,” than the Maine lobster we’re used to. “It’s almost like a different market,” he added. Additionally, Darden’s spokesman said the company has no plans to stop buying Maine lobster.
I understand Alec’s argument: More lobster on the market — regardless of the variety — will naturally lead to lower prices in the aggregate. But the counterargument is that the demand for Maine lobster is relatively inelastic; it doesn’t matter what else is on the market, people will always want and need the iconic and irreplaceable clawed lobster.
What do you guys think? Will more rock lobster lead to lower prices for Maine lobster?
North America’s largest buyer of lobster is looking to set up overseas farms to raise their own rock lobster, ultimately reducing their demand for clawless crustaceans caught by fishermen.
The move is pretty far down the line and likely will have little effect on Maine lobstermen, said Rich Jeffers, spokesman for the Darden’s restaurant group, which owns Red Lobster, the Olive Garden and Long Horn Steakhouse, among others.
Darden’s is only planning to raise rock, or spine, lobsters — the clawless Caribbean cousin to Maine’s lobster. Rock lobsters are easier to raise on aquafarms because they can be grown in large groups and take less time to mature.
But the Orlando Sentinel reported that the farms could be a game-changer for the lobster industry.
“If Darden Restaurants can make its project work, it could revolutionize the way lobsters get to our dinner plates. Growing lobsters could make them a cheaper commodity, experts say, much like aquaculture did for shrimp and salmon. But it could also create hardship for lobster fishermen around the world.”
Bob Bayer, executive director of the Maine Lobster Institute at the University of Maine, disagrees.
“It’s not something that’s really competitive; it’s an entirely different lobster,” he said. Rock lobster has a much different taste, he said. “It’s almost like a different market,” he added.
Jeffers said Darden’s would “most certainly” continue to have a strong demand for Maine Lobster and added it’s unclear when and if the farms would get underway.
“That’s so unknown at this point. There’s no guarantee that this project will even get off the ground,” he said Tuesday.
Jeffers said Darden’s doesn’t disclose how much lobster they buy from Maine, but the company buys 100 million pounds of seafood annually, according to the Wall Street Journal. With roughly 1,300 restaurants, Darden’s has annual revenues of about $5 billion according to their five-year financial summary.
Is Northeast Patients Group really into South Park?
The California-based marijuana group, which recently got a green light from the Department of Health and Human Services to set up four marijuana dispensaries across Maine, is considering setting up a pot shop at the site of a former KFC in Waterville.
The group is also considering a vacant building at 10 Middle Road in Augusta as a possible location for a District 5 dispensary.
But the KFC location immediately brings to mind this South Park clip (which is definitely NSFW). South Park was making fun of a KFC in Las Palmas, Calif., that turned into a medical marijuana dispensary last summer.
(Hat tip to Matt Dodge for the link.)
After almost two weeks of deliberation and outside speculation as to how she would vote, U.S. Sen. Olympia Snowe, R-Maine, said Monday evening she would support an overhaul of the nation’s financial regulation system, giving Democrats the 60 votes they need to enact the most sweeping financial reorganization since the Great Depression.
Here’s her statement:
“To ensure we avoid another financial catastrophe such as the one that plunged our nation into the worst recession since the Great Depression, it is imperative that we implement an aggressive overhaul of the American financial regulatory system. And this effort must include real and substantial consequences for those whose reckless actions caused the crisis in the first place while guaranteeing the transparency and accountability of taxpayer dollars. After thoroughly reviewing the 2,315-page financial regulatory reform conference bill during the July 4 work period, I intend to support passage of the legislation when it’s brought before the Senate for consideration. I appreciate Chairman Dodd’s efforts during the conference process to successfully preserve the numerous amendments I had included in the initial bill to address the many unnecessary regulatory burdens on small businesses within the Consumer Financial Protection Bureau and preserve small businesses’ ability to access capital, particularly through seasonal loans. While not perfect, the legislation takes necessary steps to implement meaningful regulatory reforms, create strong consumer protections, and restore confidence in the American financial system.”
The bill would set up an independent consumer bureau within the Federal Reserve to protect borrowers from lending abuses, establish oversight of the derivatives market, and give the government power to dissolve failing financial companies.
There has been some concern that increased financial regulation could mean higher fees and less credit for bank customers, though it’s still too early to tell what effect the bill would have on consumers.
Snowe had added four amendments designed to protect small businesses and “temper onerous bank regulations,” according to the release.
Snowe joins fellow eleventh-hour holdout Sen. Scott Brown, R-Mass., who also announced his support of the bill today, and Susan Collins, Maine’s other Republican senator, who recently announced her support.
The Department of Health and Human Services on Friday awarded permits to the dispensaries that will be allowed to sell marijuana to those with prescriptions.
Well, most of them, at least.
Dispensaries won’t be opened in District 1, serving York County, because none of the six applicants met the criteria. Ditto for District 7, which covers Hancock and Washington counties. Cathy Cobb, director of the Division of Licensing and Regulatory Services said in a news release they plan to reopen the search and that those who were not accepted can reapply — after they make changes to their plans — by Aug. 20.
The applicants were scored based on criteria including security, record-keeping, convenience of location, prior business experience, inventory, quality control and whether they would remain non-profit in the long term.
Here are the dispensaries, with links to their proposals:
The dispensaries had to get a minimum score of 70 to be approved. Here are the score sheets:
The big winner here was Northeast Patients Group, a group with roots in California that set up in Maine following the passage of Question 5 last November. They were awarded permits in four of the six districts. Outgoing Cumberland County Sheriff Mark Dion is a co-founder of the group.
Cobb said that she will be meeting with the dispensaries’ chief executives to review their applications and to discuss the next steps. She anticipates it will take between two and four months for a dispensary to be open to patients.
Editors note: I play bass in a few bands in Portland. Michael Anderson is the drummer in my band, Loverless. Steve and I have played music together in the past. Steve agreed to speak with me on the condition that I would not take photos, reveal his last name, his job or where he parks his RV.
In a converted bus parked among the weeds in an industrial area just off the Portland peninsula, a man named Steve is living the good life.
“I live like a king,” he said last Friday, seated at the kitchen table of his converted bus, eating chips and salsa while country music played in the next room and the air conditioner hummed.
Steve has been living in this vehicle since last August. But he’s no stranger to the nomadic lifestyle. Before he bought the bus, Steve, a singer and guitarist who plays in local bands, lived in a former bread truck and two different Dodge cargo vans.
But his old homes don’t compare with the RV, which he shares with his cat, Wild Bill. Steve has a fridge, a stove, a television, running water, electricity, a full-sized bed and a shower. His cabin stays warm in the winter and cool in the summer, and he gets intermittent wireless Internet from a nearby business. Steve sometimes has people over for dinner. He also hosts band practices or plays guitar by himself, sometimes for three hours at a time.
Steve bought the RV from an engineer in New Hampshire who had converted it from a bus because it came equipped with a wheelchair ramp, which he needed for his wife. He and his wife used to drive it down to Florida in the winter, Steve said. Then she died and he put it up for sale.
While many people are driven to live in their cars out of necessity, Steve does it by choice. He makes good money at his job and could afford an apartment if he wanted to.
“The No. 1 reason for me is to avoid giving my money to a landlord. Rents are too expensive and you don’t get anything in return,” he said.
According to ApartmentRatings.com, a website that tracks rental prices, the average monthly cost of a one bedroom apartment in Portland is $868, while the average for a two-bedroom is $953.
Steve was inspired to live in a car in the late 1990’s, when a troupe of New Orleans street musicians called the Flying Neutrinos visited Portland on a raft.
“Betsy and Poppa Neutrino raised a whole family living on rafts, living in vehicles, doing basically anything they could to avoid the rent trap — the freedom that you lose by paying rent,” Steve said. “You sign a years lease, all of a sudden your apartment or whatever you’re dwelling in just turns into a locker room. You just get back there in time to rest up.”
“I don’t know what people do, they tune in to the X-Files or something to zone out at night, then they wake up in the morning and brush their teeth and go to work only to come home and do the same thing again. Then at the end of the week you give half your week’s pay to your landlord? That just seems like a bad deal to me,” He continued. “I’d rather live in a tent.”
In a country firmly rooted in free-market capitalism, which presupposes that each person rationally acting in their own self-interest leads to a better society on the whole, the decision to live in a vehicle can seem oddly rational.
While the initial purchase of the bus was expensive, Steve said he’d rather own his own home, as it were, than give his money to a landlord.
“It was $20,000, but I have a $20,000 asset,” he said. Steve rented a house in Portland the year before he bought the bus, and estimates he and his two roommates paid $15,000 a year in rent. “Granted we were splitting it, but there were also expenses involved in it,” he said. Currently, Steve’s only real expenses are diesel gas for the engine, regular gas and propane for the generators that power his appliances and $50 a month for a storage space in town. “The equivalent of my utilities are far less than heating a house in the winter time,” he said.
For Michael Anderson, 28, of Portland, the decision to live in his 1999 Ford E-350 was the result of good weather and problems keeping up with his bills.
“It just made sense with the weather getting nicer to live in the van,” he said Saturday evening.
“Rent has always been the same price for me for the last six years; it was never raised. But I haven’t been making enough money to really get ahead or do anything fun. So it just made sense for me to get out of the lease and live on my own.”
Anderson, a rock drummer in three bands, also holds several jobs. He’s a go-kart mechanic, a bouncer at a rock club, and he races and repairs vintage Alfa-Romeo cars. He said he’s so busy working that he rarely spends any time in his van. The only thing he misses about having an apartment are regular showers.
“There’s certain times when showers are key, but I’ve got friends and people that are willing to hang out and let me take a shower,” he said.
“I’m a rock drummer and I’m young and I’m trying to have the best time of my life so [I end] up partying pretty hard,” he said. “I’ll park it somewhere where I know it’s safe in town and then go ahead and party and not worry about having to drive or take a taxi home because I’m already here. Those nights are pretty fun. I just get drunk as I can and sleep in the van.”
Because of his hectic work schedule and inclination to imbibe, Anderson spends little time in the van.
“I’ve been so busy with work and music and now racing that it’s really just kind of an afterthought that I’m living in a van,” he said. “My parents think it’s a big deal, but honestly I don’t spend enough time in it to really get to enjoy it.”
Some cities don’t allow people to camp in their cars within city limits, but Lt. Gary Rogers of the Portland Police Department was unaware of any such ordinance in Portland.
“It’s nothing that I’ve ever had to pull out of the rulebook,” he said. “It’s not an issue that we deal with, just given the shelters that we have in the city. There are people that do live in some secluded areas. They used to camp out behind the county jail. It’s referred to as ‘hobo jungle’ down there,” he said.
“There are times when it becomes an issue — usually it’s property owner issues or when crime becomes an issue,” he said.
Neither Steve nor Anderson have encountered any problems with police.
“I think the trick is to not be somewhere where you’re creating a scene,” said Steve. “Don’t park your van that’s painted all up in paisley flowers on the West End in Portland.”
Both men said they didn’t talk with the few other people living in their vehicles in town. They both said they liked to “keep a low profile.”
“I move around a little bit. I’ve found a few places around where I’m welcome — friends that have property on the outskirts of town, things like that,” Steve said. “It’s a lot easier to find places the further out of town you go. When you find a sweet spot in town, you kind of want to keep it under wraps, just look like you’re parked.”
The Chamber of Commerce and other national business groups are planning a last-minute push to sway senators — including Maine Republicans Olympia Snowe and Susan Collins — into blocking the financial reform bill when the Senate reconvenes July 12.
Reuters reported that the Credit Union National Association and the American Bankers Association are also urging voters to contact the four senators who have been reticent to pick a side on the debate.
Democrats need Snowe and Collins’ votes, especially since the death this week of Sen. Robert Byrd, D-W. Va.
Collins has said she is inclined to back the bill, but Snowe has been more cagey. Collins voted for the original Senate version in May after her amendment to create impose stronger capital requirements was added. Snowe also voted for the original bill after changes were made to lessen the impact on small businesses.
Here’s Reuter’s description of the Chamber’s drive:
The campaign provides the chamber’s 3 million business members with online guidance on lawmakers’ public schedules during the recess, talking points and draft letters that cast the bill’s restriction on financial derivatives and consumer protection as dangers to small businesses and consumers.
The push also targets Scott Brown R-Ma. and Chuck Grassley R-Iowa, who are still on the fence. Maria Cantwell D- Wash., was also holding out, but said Thursday she would back the bill.
The bill, which cleared the House Thursday, would set up an independent consumer bureau within the Federal Reserve to protect borrowers from lending abuses, establish oversight of the derivatives market, and give the government power to dissolve failing financial companies.
As expected, today’s June jobs report from the Department of Labor held some bad news for the U.S. economy.
Overall, the U.S. shed 125,000 jobs in June. Only 83,000 jobs were created in the private sector in June. Though it was a major improvement from May’s 33,000, economists had predicted 110,000 new private sector jobs. The unemployment rate now stands at 9.5 percent, down slightly from 9.7 percent for May.
“Taking into account revisions to prior months, the U.S. economy added an average of around 150,000 jobs a month in the first half of 2010, a level that’s still not strong enough to bring unemployment down significantly,” the Wall Street Journal reported today.
The drop in the unemployment rate is deceptive. While a 0.2 percent decrease seems like a good thing, in this case, it means the work force is shrinking because people have stopped looking for jobs. The Bureau of Labor Statistics doesn’t count the “discouraged” workers who haven’t actively looked for a job in four weeks, nor do they count those who work part-time but want full-time employment.
If the BLS included those groups of people, the unemployment rate would actually be 16.5 percent.
Much of the loss came from the 225,000 temporary Census workers exiting their jobs. The Census added 433,000 workers in May, making it appear that the economy was doing much better than it really was.
More people are staying unemployed longer. The private sector is showing growth, but recovery may be contingent on government stimulus.