Currency manipulation leads to unintended consequences

Switzerland’s decision to lift the cap on the franc’s value against the euro has had unexpected consequences – in the form of intercepted pizza deliveries.

Swiss people looking for a bargain have been dialling up restaurants across the border in Germany, but now the authorities have had enough…

Uli Burchardt, the mayor of Constance, which borders Switzerland to the northeast, told the publication that German vans have been stopped by Swiss customs officials after it was discovered they had been delivering up to 60 pizzas at a time. And fast food is not the only thing the Swiss have been seeking elsewhere, as people cross the border to do their weekly shop and even visit the dentist.

Cripes. There are dentistas in Mexico who have public school contracts in Arizona and California.

Following the decision to lift the €1.20 cap last month, the franc shot up by 40 per cent against the euro. The franc also rose 30 per cent against the dollar and 15 per cent against sterling. In short, the Swiss can now get more for their money.

However, there is concern that businesses will be negatively impacted by the strong franc. Eurozone companies that buy their products in Switzerland are at risk of being priced out of the market, while Swiss businesses situated on the border may find themselves passed over in favour of their perceived better-value eurozone counterparts.

Interesting – and eventually acceptable when the situation stabilizes. Not out of line with long-term commerce in cross-border towns along the US-Canadian border or the US-Mexican border.

Of course, hypocrites in government can’t pass up an opportunity to whine for domestic political advantage. So, both the White House and Congress whine about so-called Chinese currency manipulation when the biggest fraud in Asia comes from the Bank of Japan. As it always has.

Why visit your boyfriend in the slammer when you can chat online?

Arizona mother Cathy Seymour’s 16-year-old son was arrested in August 2013 for allegedly shooting a detention officer to death and was charged with first-degree murder as an adult and held in a jail.

Now she uses her laptop and a video link to spring him from maximum security detention in the 4th Avenue Jail in downtown Phoenix, take him on a virtual tour of some of his favorite places and visit with family and friends.

“If there’s Wi-Fi and you have a laptop, you don’t have to stay in your home,” she says of the recently installed pay-per-view system that links a video terminal in the jail to her laptop at a cost of $5 for 20 minutes.

“His favorite spot is McDonald’s, so we went to McDonald’s … I’ll show him, like, the street … He gets to see other people … He gets to see my mom and dad and church,” said Seymour, who spoke to Al Jazeera America on the condition that her son not be named.

She is among thousands of family members nationwide using pay-per-view video chats to connect with loved ones who are incarcerated. The technology is gaining traction in jail systems across the U.S. in a push by the for-profit prison industry to monetize inmate contact.

At the end of 2014, 388 U.S. jails — about 1 in 8 — offered pay-per-view video visits, and the service was also available in 123 prisons, according to a study by the nonprofit Prison Policy Initiative (PPI).

Since the report was published in January, the PPI has become aware of at least 25 additional jails that have implemented the technology. Once video visitation systems are in place, most jails eliminate in-person family visits, securing a captive market for private firms. Seven companies dominate the market, and for 20 minutes, they charge from $5 in Maricopa County, Arizona, to $29.95 in Racine County, Wisconsin…

For Seymour, the pay-per-view video visits help her maintain a relationship with her teenage son, with whom she shares as many as four video chats a day. “He’s in an ugly place now … I don’t agree with the sheriff on much, but there is benefit to it,” she said of the system…

The boom in for-profit video visitation is also transforming the way lawyers work with their clients. Some criminal defense attorneys, like Marci Kratter in Phoenix, find much to like.

Before the system went live in November, Kratter had to drive to a jail, park, sign in and go to a visitation area to wait for her client in what she described as an “at least a two-hour ordeal.” Now with video visitation, “it’s 20 minutes. You do it from your desk … As far as rapport building goes and trust, when you can check in with [your clients] every week, they know you’re thinking about them.”

RTFA. Many variations on the theme – as you would expect. A predictable number of jailers are more interested in vacuuming every last greenback from the wallets of relatives, friends, lawyers. Some are more interested in security. You ain’t smuggling in smack or a cell phone over an internet connection.

There is a lawsuit started by defense attorneys in Travis County against Securus, the sheriff’s office and other county officials. It charges that video visits were used to illegally record attorneys’ confidential calls with their clients…using the info gained against clients and other prisoners. I’d be shocked, shocked I tell you – if something like that actually happened.

Y’all know how deeply we trust law enforcement in America. Right?

Wal-Mart discovers that treating employees like serfs doesn’t work

Last week, we learned that Wal-Mart was giving the lowest paid of its hourly employees a raise. In a blog post, Wal-Mart Chief Executive Officer Doug McMillon said that as of April, the company will pay a minimum of $9 an hour. That is $1.75 more than the federal minimum wage of $7.25, which has been unchanged for almost six years. Next February, Wal-Mart’s lowest hourly rate will rise to $10. All told, about a half-million Wal-Mart workers in the U.S. will be affected.

There has been lots of theorizing about why the nation’s largest retailer did this: See this, this and this. But I have a much simpler explanation: The Wal-Mart business model is broken.

As in any complex situation, there are many nuances and wrinkles: This was inevitable; state minimum-wage laws had already mandated those minimums (or higher) for at least two-thirds of the employees in Wal-Mart’s stores. In the years since the last federal minimum-wage increase, many of Wal-Mart’s employees had fallen below the poverty level and the strengthening economy has made it harder to attract and retain employees.

There is also the issue of the negative PR generated by Wal-Mart’s low, low wages. As we discussed back in 2013, many of its full-time employees receive a full array of federal and state welfare. Wal-Mart has become the nation’s largest private-sector beneficiary of taxpayer-supported public assistance (see “How McDonald’s and Wal-Mart Became Welfare Queens”). Indeed, the U.S. taxpayer has been subsidizing the wages of this publicly traded, private-sector company to the tune of $2.66 billion in government largess a year.

Although many factors contributed to the move, the simple reason for the increase is because Wal-Mart has stopped growing. Same-store sales have been little changed or declining for some time now. When we look at the underlying causes, the company’s workforce, and how it is managed, are the prime suspects…

Labor is seen as a cost driver rather than a sales driver. Managers do not have much direct control over sales, almost never making decisions on merchandise mix, layout, price, or promotions. But managers do have control over payroll costs and are evaluated regarding whether they meet weekly or monthly targets for payroll as a percentage of sales. At times these pressures have been such that Walmart managers have put pressure on employees to work off the clock.

With a bonus structure designed to drive down labor costs, guess what Wal-Mart managers did?

Cutting on salary and benefits, however, didn’t necessarily lower costs. About 44 percent of Wal-Mart’s hourly staff turns over each year. That’s a lot of people, because the company employs 2.2 million workers worldwide. Hiring replacements is a costly and time consuming process.

Consider competitors such as Costco: It has average hourly wages of $20 and a turnover rate of “17% overall and just 6% after one years employment,” according to the Harvard Business Review. HBR estimates the full cost of “replacing a worker who leaves is typically 1.5 to 2.5 times the worker’s annual salary.” That is no small chunk of change.

My favorite Recovering Republican, Barry Ritholtz…always my first read at Bloomberg news sites.

Behavior rooted in the attitudes and analysis of 19th Century Republican royalty ends up unproductive pretty consistently. Enjoying the fruits of the economic crash provoked by the financial-real estate band of thieves and frauds, Walmart was able to draw its serfs from the supersized pool of unemployed, underemployed and maybe-never-again-employed made accessible by free market economic ideologues.

But, just as those who don’t study history are doomed to repeat mistakes, those who don’t include economics studies as part of understanding history are doomed to repeat the biggest mistakes before their competitors. How much time do you spend shopping at Sears, Borders or Radio Shack? Driving there in your Oldsmobile.

Not paying your employees enough to shop at your own store is a second-order issue. One that Republicans couldn’t care less about. An example of pig-headedness masquerading as fiscal conservatism.

Walmart appears to be trying to enter the 20th Century – if not the 21st. Anyone think the Walmartians in Congress will learn from their example?

First genetic test submitted by 23andMe approved by the FDA

A test for Bloom syndrome carrier status, a rare condition seen mainly in Ashkenazi Jews (and uncommon among them as well), was approved by the FDA — remarkable primarily because it’s the first time a direct-to-consumer test for a specific genetic condition has won the agency’s OK.

The decision was also notable because the test will be sold by 23andMe, the company that initially began selling a panoramic health-risk test directly to consumers and was slapped down by the FDA. The agency told the firm that it had to seek formal approval for each and every specific component of the test, with proof that the tests were accurate, that consumers could provide proper samples, and that they could understand the results and their health implications.

Although the FDA was widely criticized for discouraging innovation and preventing people from getting access to their own genomic data, 23andMe promised that it would comply with the agency’s demands.

First out of the box for 23andMe was the carrier status test for Bloom syndrome, which is marked by short stature, extreme sun sensitivity, and increased cancer risk. About one in 107 people of Ashkenazi Jewish ancestry carry the gene, two copies of which are needed to cause the clinical syndrome, according to 23andMe…

Additionally, 23andMe conducted a “user comprehension” study with its results report to confirm that individuals understood them and the implications for family planning decisions.

Good news for everyone interested in easy access to knowledge about their genetic factors particularly as they relate to inherited conditions. Easy – in that you needn’t cave to the medical-industrial complex. Good news especially because it looked from the start that the FDA was out for a classic bureaucratic shutdown of an entreprenuerial challenge to the status quo.

Good science seems to have prevailed. Maybe reason and understanding are next. I hope.