14 April 2008

Monday Blue Streak

Colorado's Blue Laws

In about two hours, Governor Ritter plans to sign a law ending the "Blue law" that prohibits the liquor stores from staying open on Sundays (effective July 1, 2008). This will devistate the artificial market for 3.2% alcohol beer at supermarkets and convenience stores on Sunday when 80% of that abomination is sold, suggesting that a more than 75% drop in 3.2 beer sales is likely. It will also make my weekend far more convenient and will make Colorado the 35th state with Sunday liquor sales.

Supermarkets and convenience stores will try next session to win permission to sell stiffer alcohol. Given that the alcohol in 3.2 beer is the same as the alcohol in stronger beer, wine and liquor, there is on logical reason for making the distinction (and stores that sell stronger stuff, like the Supertarget store in Glendale show that it is not distruptive to the neighborhood), but liquor stores have established an entire industry based upon the exclusion of grocery stores from their market, so it would be a hardship to them.

The only notable remaining Blue law in Colorado will be the ban on Sunday car sales. Maybe next session. The car dealers have a far less convincing argument for a Blue law than liquor stores due, because few are family operations with no employees, because no one inclined to revering a Sunday sabbath considers buying a car to be immoral, and because shopping for a car takes far longer than picking up beer and wine which makes the one day of daytime shopping per week available under the current law to working families looking for a car far more of a hardship.

Snail Mail and Taxes

While ranting about time and hours, I should also take a moment to despair at the decline of light night postal service. The post office at 20th Street is now open only until 7 p.m. or so, and the only post office in the Denver area (and quite possibly in the state) that is open later is deep in a warehouse/postal sorting facility near North Quebec street between Stapleton and Dick's Sporting Goods field, the new soccer complex in Commerce City. It is open, at least, until midnight, but is a hike. Once upon a time there were two late hour post offices downtown, one of which was open until something like 11 p.m. The April 15th evening tax rush has grown increasing worse over time.

If the postal service wants to stay in business, it really needs to invest in little things like a handful of more convenient late night post offices.

I got my personal taxes done almost a week early this year (and Colorado's e-filing service is much improved and superior to the free service available from the IRS), but still have filings for entities that I am affiliated with to do.

Frontier's Bankruptcy

The holder of about 10% of Colorado based Frontier airline's stock, Yongping Duan, seemed surprisingly upbeat when interviewed for the Denver Post in a story that appeared this morning, going so far as to praise the CEO, saying "I think Sean is a good CEO so far." I wouldn't be so upbeat about someone whose decision just wiped out my investment of tens of millions of dollars in company (bankruptcy law cancels all outstanding common stock in a Chapter 11 bankruptcy in all but the most unusual circumstances). Perhaps Duan owns Frontier bonds as well (which often are traded for equity in Chapter 11, particularly in cases like this one where the debt is convertible).

The Rocky Mountain News coverage of the Frontier bankruptcy (and I must say that I greatly preferred my friend David Milstead's reporting at the Rocky much more than Kelly Yamanouchi's at the Post, I would like to hope based on merit rather than friendship), revealed some interesting facts about Frontier's finances. Frontier had about three and a half times as much (or more) debt secured by collateral (mostly airplanes) as it did unsecured debt (about $93 million). It had surprisingly little trade credit with its next largest debts each in an amount less than $4 million. Indeed, the amount of float Frontier receives from credit card payments between the time of payment and an actual flight, of more than $75 million, rivaled that of its entire bond holdings.

Frontier's employees, unlike those in many other recent airline bankruptcies, were also far less exposed to big losses (other than the risk of being laid off) from the bankruptcy, because Frontier has a 401(k) plan for its employees, rather than a defined benefit plan. Defined benefits plans look increasingly unattractive in the airline industry where bankruptcy seems to be the norm. Passengers also have modest risks because few people buy lots of tickets at once, and most passengers buy tickets with credit cards which provide refunds if the flights don't fly (the risk that First Data was allegedly hedging against, despite the fact that most flights go even in a bankruptcy, which is why the First Data demand was not listed as an unsecured debt).

My bankruptcy professor in law school once remarked that we subsidized the railroads with land grants, the highways with the interstate highway system bill, and the airlines with Chapter 11. As the Post explains, airlines ATA and Aloha are currently in bankruptcy, Delta, United, Northwest and U.S. Airways have all emerged from bankruptcy within the past two and a half years, and Continental, Eastern, Pan American and Trans World were all in bankruptcy court before them. American Airlines recently took a big hit when it had to cancel a good share of two days of flights for maintenance inspections. Delta and Northwest are allegedly on the verge of agreeing to merge, and United is also looking for a merger partner but has been waiting to see how the Delta-Northwest talks turn out. Negotiating seniority disptues between the pilots of merging airlines has been one of the biggest issues in these kinds of mergers.

A modest bond issue would be enough to secure funds to assauge First Data's concerns, given the several months that it takes to do a public issue of bonds, but that still wouldn't address the deeper problem of Frontier' mounting losses which reached a record high in the most recent quarter.

I've long wondered if a mutual company, in which passengers air the airline, the airline charges above market rate fares, and then the airline issues rebates to customers each year in proportion to purchases based upon the airline's annual profit, wouldn't be a more stable way to organize such a company than the third party shareholder model that currently dominates the industry. Similar approaches have worked in the farm sector, with credit unions, and in the insurance industry. In the finance and insurance sector, a major motivator was the desire to avoid the waves of consumer losses in bankruptcies that were common before the FDIC was established, and the co-ops in the farm sector were likewise partially a response to financial distress in the Depression era dust bowl.

Efforts at employee ownership at United contributed to United's bankruptcy, in part, because the multiple groups of employees who were owners had different priorities for the company. Transportation industries that have seen successful employee owned enterprises, like some mutual taxi companies, have been helped by the fact that all employees have had similar owners, and have typically not included mechanic's or dispatchers, for example, in the ownership structure. A mutual company owned by passengers, however, would not share these problems.

Coffee Shops

With Scooter Joe's gone, the question is where to go now. I'm currently experimenting with two independent coffee shops in my neighborhood.

Aviano's in the Beauvillion between 9th and 10th Street on Lincoln is a relatively high end shop with a particular attention to beautiful foam art, a thriving following with some interesting characters, and free Wi-Fi. It also lacks free parking.

Sparrow is at 7th and Grant. It has opened under new management. The grapevine has it that the previous owner simply disappeared one day leaving the fully outfitted shop in place mid-lease, and that this has been assumed by the new owners. It does a very light morning trade, but service is friendly and it also has free Wi-Fi with a password made available to customers. Sparrow has a wider food selection and some free street parking in the neighborhood.

Both shops are more appropriate for a sit down coffee than a "to go" as both are fairly slow in serving up their coffee.

Spanish

My wife and I have insisted that our children learn a foreign language while they are in elementary school when it is far easier to do so than at a more advanced age. Since it is offered as a tuition based after school program at their school (the Kid's Speak Spanish program also found in Boulder and some other DPS schools), Spanish was the obvious choice. My wife lived abroad in Spain briefly and took Spanish at an advanced level in college, so she is passable and gets continued practice in and around Denver and on Spanish speaking radio. As a result, she can give them additional practice by speaking in Spanish to them at home. A good share of the daily drill of chores and the like comes in Spanish at our house.

All this is good and well, except for one key issue. I was a dismal failure at languages. The language I did take, moreover, was French. It was my weakest subject in high school, and I limped through one more 200 level course in college, pass-fail, which I think that I passed mostly through regular attendance and diligence, as opposed to competence. My assignments always came back smothered with red ink. My Spanish, of course, is even more dismal than the average person who has received no formal instruction in the language.

The kids now run circles around me chattering away at the grocery store, beyond parental understanding and supervision. Their particular favorite game at the moment is to ask for purchases not on the list in Spanish. This is fairly harmless, as I always answer them with a "no" and I don't really mind. My kids are ethnically half-Korean and half-European-American by descent (hence my hyphenated name), which in practice means that they also have something of a Hispanic look, an impression accentuated through context when they speak Spanish. This isn't very notable in the central Denver stores where we usual shop, but I suspect it would pull some funny looks if we lived in the suburbs.

I still can't figure out, however, why foreign language instruction isn't a standard part of the curriculum in every elementary school. If one is going to offer language at all, elementary school, rather than high school or college, is the place to start. In the same way, I strongly support the notion of putting elementary schools on the early morning schedule, and high schools on the later starting schedule. Both moves are well supported by research. Changing school schedules is essentially cost free, and while language instruction certainly would cost money, the results would be well worth it. There are so few clearly proven ways to improve the quality of education that we should seize upon then when we can.

Vista Revolt Continues

The Denver Post today also notes a movement by Windows XP users to prevent it from being phased out in favor of Windows Vista, an inferior new Microsoft operating system. I continue to be stunned at the degree to which a technologically inferior company can be so successful financially.

Microsoft share prices have been falling since an October 2007 peak, but it is hard to tell if that has anything to do with Microsoft in particular, or is simply due to an overall economy that is weakening. Its recent efforts to acquire Yahoo don't seem to have had a notable positive effect on the company's share price.

Nepal

Maoists appear to have won a plurality in Nepal's first ever Democratic election after a prolonged period of absolute monarchy. (Nearby Bhutan is also doing something similar). Western political theorists still haven't come to terms with the notion that even a free and fair election like this one (or the one that put less democratic powers in place in Russia in the first place, who in turn rolled back democratic reforms there), can show that people don't really want a Western style democracy.

3 comments:

michaelmalak said...

Don't forget Wash Perk at Ohio & Emerson, in the spot of the old Heirloom Cafe. It opened for business less than two weeks ago.

Andrew Oh-Willeke said...

I had no idea. Thanks for the tip. The Heirloom, honestly, wasn't my style. Too much like my grandmother's parlor.

Anonymous said...

Andrew,

Hot a chance in Hell that you will be able to buy a car on Sunday anytime soon.
The car dealers' lobby is way too powerful.

,dave