Howzit Howard

Swine flu: here ' s what we do next

Up to now, our plan to combat the 28% drop in Japanese arrivals has been to urge them not to take swine flu so seriously. But now it's time for a second step: we need to take it more seriously ourselves. Let's see if we can disengage the natural human tendency to try to classify everything as a big deal or not a big deal, and look clearly at the degree to which swine flu needs to be watched by all of us. Swine flu really is a milder form of flu than most. But the first confirmed swine flu death in Hawaii reminds us that you can die of mild flu if you have enough pre-existing medical problems. And let's not forget that even a mild bout of flu, in some respects no big deal, is more than a little inconveniening if you get it on your vacation. Furthermore, in Japan, where it is considered highly ignoble to let down your coworkers, you risk embarrassing yourself if you fly to Hawaii for a nice weeklong vacation, return to work, and sicken your colleagues. Japanese news media played up the fact that Japan's first confirmed swine flu cases were a couple of people just back from Canada, and the first cases in people just back from Hawaii, a few weeks later, also got big play in the Japanese press. It would help reassure the Japanese, and it would be good for us, if we got more serious about washing our hands and covering our coughs. A common vector for the spread of this or any flu is the hardy worker who sucks it up and goes to work, spreading his flu to his brethren on the job. This actually causes more sick leave than if he stayed home for a few days.

Ala Moana Center: even in recession, hugely profitable

When General Growth Properties, the nation's second largest owner of shopping centers, got into financial trouble last year, I suggested that a Hawaii hui try to buy Ala Moana Center. But the truth is, you can't afford it. I don't care how much money you have. U.S. News & World Reports, after studying a variety of public data to determine the nation's most and least profitable malls, put Ala Moana Center on its list of six super-profitable malls with annual sales above $1 billion. A Las Vegas mall may be even more profitable - Forum Shops at Caesars - but Ala Moana Center has been 95% occupied despite adding a new wing with 30 retail spaces. General Growth stopped urgently needing cash when it filed for Chapter 11 bankruptcy last year, and now all it really needs to do is hold on until credit markets improve.

How I celebrated my birthday (after the show ended)

You already know that on Friday I celebrated my 56th birthday by working on "Sunrise" as usual, where my colleagues got all the contestants for Miss Hawaii to sing "Happy Birthday" to me. But you don't know yet what happened to me after that. The Kona-Kohala Chamber of Commerce had invited me to keynote its annual meeting. I originally demurred on the grounds that Bernadette probably had something planned for me on my birthday. But they sweetened the pot with an offer for both of us to stay at the Four Seasons Hualalai. I'm not impressed by many-star resorts (I don't golf or get spa treatments so what's the point?) but I am impressed by nice people and the people at Hualalai are very nice, Old Hawaii nice. So I agreed. Then my father said he was flying out to visit. Now, my dad is 90 and deaf as a post, but he's still got all his marbles and we're close. So I decided to chip in some of my own money and bring him along. I told the chamber so they could let Dad see me give a speech. They were so great about it. And they bought me a birthday cake hat! We were cutting it close, getting from work to the airport and from Kona airport to the luncheon. So the chamber decided to send a car for us, then take me back to the airport later to get the rental car I had reserved. That's when my luck changed. My driver's license expired on my birthday! Looking back, I think they ought to have rented me a car for a few hours to drive to the local motor vehicle office to renew the license - one assumes the expiration happened at the end of June 26 rather than the beginning - but it didn't occur to me to ask. I was too flabbergasted. But the nice lady behind the counter suggested I work the phones and get them to fax over a temporary extension. "We do it for California tourists all the time," she said. The Dillingham office where I got my license clicked straight over to recorded music. Ala Moana satellite city hall was a busy signal every time I called. I tried another satellite office but no one answered. Finally I called the mayor's office, which answered right away and gave me customer service, which called me back fast and got me through to Ala Moana, where they said I did not have to call the Dillingham office, it would be okay to work through the office in Kona. I called that office and got an answer right away, from a nice lady who said Hawaii doesn't do faxed extensions, and the office was closing in 15 minutes, but if I came in Monday they could easily handle the renewal. Monday! If I had been smart enough to call the Kona office first, I would have had enough time to renew the license. Instead I wasted an hour making more than two dozen calls to people who didn't answer the phone or couldn't help. There was nothing for me to do but call a cab and slink back to the hotel. On the way back I told the whole story to the cabbie. "What a coincidence," he said. "What do you mean?" I asked. "The same thing happened to me once when I flew to Oahu for my birthday," he said. [Postscript: I renewed my license Monday at the Dillingham motor vehicle office and everybody was really professional and nice. These are people facing mandatory furlough days, mind you, and yet the line moved quickly. I cannot praise that behavior enough. HMD]

Ain ' t love grand? To Hawaii tourism it is

When TripAdvisor.com polled its readers on the qualities of U.S. cities, they voted New York best, Detroit worst, Portland, Ore., most underrated, Las Vegas most overrated, and Honolulu most romantic. Barring the odd box jellyfish, Honolulu is very romantic indeed. All of Hawaii is, with the possible exception of Mapunapuna. And that is a key factor in what's going to rescue tourism this year. The wrap-up report on May tourism from the state Department of Business, Economic Development & Tourism - DBEDT to its friends - shows plenty of bad news: the worst Canadian slump in five years, expenditures plunging, Japanese visitors down 15%. But we still got almost 5,000 Japanese flying here for weddings. And about 10,000 people flew here from the West Coast for honeymoons. Yes, Hawaii is romantic. And as long as the Matson ship captains don't strike and the toilet paper supplies keep coming, romantic it will stay. [Postscript: I took my dad to see Iolani Palace because he read a book about Queen Liliuokalani and regards her as one of the greatest ladies known to him either in person or by reputation. There are some majestically beautiful women working at the palace. This, too, is part of Hawaii's romance.] [Second postscript: I'm taking Bernadette to the Big Island this weekend. So addressing the Kona-Kohala Chamber of Commerce is also romantic.]

The SEC should investigate Steve Jobs ' liver

Apple didn't tell the whole truth about its CEO. It said Steve Jobs had a nutritional deficiency. The nutritional deficiency, we now know, was that he needed a new liver. I love my eMac, and I'm a fan of Jobs, not so much because he cofounded Apple as because he returned to the company when it was in trouble and made it great again. One success might have been luck; twice tells us this guy has something special. And it's been clear for years that Jobs is of special importance to Apple. He's more than just the CEO. That's exactly why the fact that he was dying was material to the company's operations and should have been disclosed. The fact that Jobs got a new liver and did not die is excellent news, and I wish him well, but this does not change the fact that Apple concealed something important to its affairs. The Securities & Exchange Commission does not specifically demand intimate medical details on CEOs, but anything material to the value of stock must be reported. For example, it does not specifically demand reporting of fires on company property, but if an oil company has a refinery fire it reports it right away. I'm guessing the SEC will let Apple slide on this one, but even if it does it is important for publicly-traded companies and the chief executives to be reminded that they have certain duties to their shareholders, and if a charismatic leader is on a waiting list for a liver transplant, his company needs to say so. It is emphatically NOT "nobody's business."

What the state employee unions are doing

Have you wondered why the unions for state employees are all filing separate but similar motions to have the courts review the furlough plan? Insiders in the Hawaii legal community say there is a simple explanation. There are several judges who could rule on the legality of the furlough plans, and it is reasonable to assume that lawyers for both the unions and the state have their own ideas about which judges, based on past ruling, would likely be sympathetic to their side. I wouldn't bet on their being right, mind you; most judges, especially the best ones, are unpredictable. But still. Judge Carl Sakamoto bit. He has agreed to give the issue a hearing on July 2, one day after the furlough plan technically begins and a few days before the first actual furloughs. And what will the legal issue be? The union lawyers say Hawaii is one of only five states with collective bargaining protections hard-wired into the state constitution. It's not clear to me that this precludes the governor cutting back hours due to lack of funding, because the last collective bargaining agreements specifically reserved to her, "the public employer," the right to "release" employees for lack of funds. But the point, at this point, is that the unions will argue that this should be decided by a judge since, as they will argue, it's a constitutional issue. The biggest fear that the unions should have is pyrrhic victory: a slapdown order killing the furloughs, leaving the governor with no option but to "release" employees altogether -- the layoff card. A more likely outcome is that the two sides, already in contract negotiations with a federal mediator helping out, will work out some kind of revised version of the current plan, possibly with the legislature raising taxes again, especially if lawmakers don't care about being re-elected.

Gas tank half empty or half full?

Crude oil has been at or near $70 a barrel recently. Compared to $40 a barrel late last year, it's a lot. Compared to $140 a barrel last summer, it's a drop in the bucket. I'll bet I know which way you think of it. We're all having trouble adjusting to the idea of paying more than $3 a gallon for something that cost 30 cents a gallon in the 1960s. But as I write this Tuesday night, I anticipate that AAA will put Honolulu average regular at $3 before I wake up in the morning, and if it doesn't do it Thursday morning it will do it soon. You may read or hear news reports which attribute rises and declines in crude oil prices to such factors as the recession, unrest in Iran, and trouble in Nigeria. The weekly Wednesday federal report on gasoline stocks can always be expected to have some effect one way or another. But these are ephemeral considerations. But we're back to market machinations, where the real driver is not just demand for oil but demand for oil futures, which some investors like to move to when the stock market is sketchy. In this respect it's about money rather than petroleum. There being only so many oil futures contracts, when more people want to buy them the price of them goes up. Last summer at that $140 a barrel peak, analysts estimated that everything north of $100 and some of what was below it was demand for oil futures rather than demand for oil. The easiest way to hedge your exposure to this, if other factors make this an option for you, is to replace your car (while prices are low due to dealer desperation) with one that is less thirsty than your current vehicle.

Father ' s Day, and some milestone birthdays

My son Sean and his wife Michelle reached me Sunday via Skype and gave me the Father's Day present of watching my grandson Jack in real time while he was a thousand miles away in Los Angeles. Jack has learned to reach out and "tickle" via Skype. Sean and Michelle both act and write and do improv and it's already clear that Jack, not yet two, will be joining the troupe. You know I use Skype to broadcast live from home on Tannya Joaquin's 5 p.m. newscast, but it was installed for me and Sunday was the first time I knew the picture could be enlarged to fill the screen. Usually I'm fixated on the dot that is the camera as I try to explain stuff to you. My own father, who called me before I could call him, confirmed he is flying into Honolulu for a weeklong visit that will be, in his own words, "my last hurrah." After visiting Bernadette and me, he will fly to San Francisco, rent a car, and drive home to Maryland cross-country. On March 31 my dad turned 90. He's hard of hearing and talks louder than some people would like, and he has a variety of medical conditions -- "Old age isn't for sissies," he says -- but he's still got all his marbles and actually feels better at 90 than he did at 80 because his doctor changed a couple of drugs that weren't good for him. I'll bet you know a senior or two with that complaint. Dad turning 90 is just one of three milestone birthdays in my mainland family this year. Sean turns 40 on July 4, and my daughter Leina'ala turns 30 on October 15. Bernadette's two daughters Lauren and Vanessa and son David are younger. Their milestone birthdays are still to come. One birthday I left out is my own. On Friday of this week I will turn 56. Even with my leg still healing from the infection that ravaged it in March, I feel a lot younger than 56. This doesn't surprise me since Dad feels younger than 90. Choose your parents wisely. Reaching "middle age" while still young can be confusing from time to time. For example, I work with several people who are younger than my daughter, but Leina'ala is still my little girl while the others are my colleagues. Sometimes I feel like the main character in Kurt Vonnegut's "Slaughterhouse Five," who lives his life out of order. The only practical significance of being older is having more experience, but what experience? I can tell Steve and Grace how things work on Capitol Hill and how to find your way back to San Marco in Venice if you get lost, but I've never surfed or golfed or been to Alabama, and there are a thousand other experiences that they have but I don't. Most days, being "senior" to my colleagues has little effect except that my age is one more things to make jokes about (they never do, which is kind, but I do, since I make jokes about everything) and sometimes I get some freedom to act as see fit that might not be extended to me otherwise. That's fun. I pity people who, by the time they get that respect, are too dessicated to enjoy it. Dad and Sean and I all enjoy life as it comes, understanding you need to live in the moment AND look forward to the future AND seek out the happiness we have saved from the past. I know Jack will. I hope you do, too.

Hilo Hattie, the St. Francis sisters, and the rules of bankruptcy

We had developments in two Hawaii bankruptcy cases Monday, both misreported by people who don't understand the complexities of receivership. Affected: ownership of Hilo Hattie and two hospitals. Hilo Hattie was reported as being sold. It's actually too soon to say that the new "owner" will be the permanent owner. He has a shot at it, though. Watch for more at a later court hearing. I'll explain in a minute how there is still a second bidder for the company. Hawaii Medical Center, successor to the St. Francis hospitals, announced that "the U.S. Bankruptcy Court today approved Hawaii Medical Center's disclosure statement for its plan of reorganization," and some people thought that meant a reorganization plan was all but done. It isn't. In both cases, it helps to remember that these companies are both in Chapter 11 bankruptcy. They are "Debtors in Possession," under control of the bankruptcy court, which works for the creditors, not for shareholders, and has broad powers to do things that indebted owners don't want. Hilo Hattie first. The well-known retailer expanded too fast, ran up lots of debt, then slowly imploded, closing mainland stores until it was left with seven Hawaii locations. Ted Nelson, owner of the Hawaii franchise of Fantastic Sam's, led a Los Angeles hui in buying Hilo Hattie last summer and almost immediately took it into Chapter 11, intending to restructure debt, open a new store in Royal Hawaiian Shopping Center, close the Nimitz Hwy. mothership and sell the trolleys. Instead, global credit dried up, he missed a payment to Royal Hawaiian Shopping Center, and the mall cut him cold. Hilo Hattie owes $23 million, adding about $1 million in fresh debt every two months. Among Hilo Hattie's biggest creditors are its biggest vendors, including Maui Divers Jewelry, which is owed $1.25 million, and Royal Hawaiian Creations, an apparel company owed $800,000. Vendors want Hilo Hattie to survive and keep selling their wares. They wouldn't mind being paid for past sales, but they'd like it even better if a healthy reorganized Hilo Hattie brought them future profits. Maui Divers offered to acquire Hilo Hattie in a reorganization that would leave the current owners out of the picture, common in bankruptcies. It is also part of a cabal of creditors that has formally requested the ouster of Ted Nelson as CEO. That is less common but not unusual. You'll recall that in the last Hawaiian Airlines receivership the biggest creditor, GE Capital, persuaded a bankruptcy judge to eject CEO John Adams and name a trustee. On Monday, a surprise. Ted Nelson negotiated the sale of the current owners' interest in Hilo Hattie to Royal Hawaiian Creations. He even stepped down to let them run the company. It is misleading to treat this as an outright and permanent sale, because in a matter of weeks or months the bankruptcy judge will approve a reorganization plan for Hilo Hattie, and if the acquiring party at that time is not Royal Hawaiian Creations, it won't mean diddly that Royal Hawaiian Creations got to run the company now. You'll recall the Liberty House bankruptcy, in which the debt was "bought" and then cancelled out in return for ownership, leaving the old ownership shares valueless. Maui Divers is still in the running, at least for now, having announced late in the day that it will keep its offer on the table at least until the next time the bankruptcy court meets on the matter. Maui Divers would have been a good fit for Hilo Hattie: unlike Ted Nelson, the management of Maui Divers still embraces the business model of trolleys taking visitors to a store outside Waikiki, and does very well doing things this way. They have competence at running the sort of company that Hilo Hattie currently is. But Royal Hawaiian Creations might be a good fit, too, and certainly it knows the inventory, having made much of it. For the bankruptcy judge, it's all about the creditors. He will support a reorganization plan that pays off the most debt. He also has the leeway to support a plan that offers fresh revenue to creditors who are getting only cents on the dollar for what they were supposed to be paid before. Since both Royal Hawaiian Creations and Maui Divers Jewelry are vendors that supply good merchandise to Hilo Hattie, whichever one gets the company will need to help the other one make a good living from the reorganized firm. Now Hawaii Medical Center. What the bankruptcy court accepted Monday was not a formal reorganization plan but a disclosure statement that is a necessary precursor to a reorganization plan. If Hawaii Medical Center was ready with a reorganization plan that was acceptable to all sides, it wouldn't be waiting six weeks until August 3 for a hearing on one. The company, a subsidiary of a Kansas City hospitals-for-profit outfit that took in more than 100 local doctors as minority partners, won the hearts of the St. Francis sisters by agreeing to keep the current staff and the mission of the hospitals. But within months of taking over and repeating its new layoffs promises to anyone who would listen, including me, they did a round of layoffs so large that it is hard to imagine how they could have failed to realize the eventual necessity of doing it while saying they wouldn't. They also reneged on their payments to the St. Francis sisters, and even accused the sisters of overvaluing the hospitals. This is a puzzling assertion. When you buy something as big as a pair of hospitals, you are supposed to be very careful indeed with your "due diligence," poring over the books and contracts to doublecheck all the financials. Caveat emptor and all that. After all, it wasn't a secret that the hospitals were losing money. It was in all the papers. Could it be that the buyers simply assumed that the sisters didn't know what they were doing, and that smart managers would breeze in and make a couple of adjustments and then rake in the profits? It seems a little strange for a grown-up to say he's in trouble because he was conned by nuns. The sisters, meanwhile, finally took off their halos long enough to suggest that perhaps it was just a wee bit unseemingly for the hospital administrator and his owners to blame the sisters for their own failures. Regardless of which side deserves the most blame for the financial state of these hospitals, and keeping in mind that it's not the sweetest economic environment for any enterprise these days, one hopes the two sides can reconcile their differences so that the hospitals can reorganize on a stable financial footing. It is a consummate irony that to mend these hospitals there will have to be some healing in the relationship between the old and new owners.

Those nasty lobbyists... and you ' re pretty nasty, too

Spoiler alert: farther down in this post I'll blame myself and you for what lobbyists get away with. But first, let's take a look at what those nasty lobbyists are up to. A study of the National Bureau of Economic Research finds that companies with lots of overseas manufacturing lobbied Congress for a tax break, promising to invest the savings in America to create jobs, then used it for dividends and stock buybacks. The study estimates that all the companies affected by the tax break brought back almost $300 billion and spent 92% of it on stock buybacks. According to its own SEC filings, Dell Computer, which lobbied especially hard, brought $4 billion back home as a result, and spend half of it on stock buybacks, but only $100 million on a new plant in North Carolina. (This was stupid behavior by Dell management, since it (a) paid more than twice what the stock is worth now, and (b) investing the money in research and development would have been a lot better for the company in the long-term.) A separate study finds that the oil industry is spending more than $44 million a year lobbying federal agencies and Congress, mostly trying to slow down incentives for alternative energy development. In both cases, what we have here is corporate lobbyists who are clearly urging lawmakers to do something which, no matter what the lobbyists say, is not in the public interest. So what are we going to do about it? The problem is that lawmakers kind of need lobbyists. No, seriously. Lawmakers are capable of passing laws with all sorts of unintended negative consequences, and lobbying can sometimes be a good thing, explaining to lawmakers before they act what they are close to screwing up. The problem, as I see it, is not the lobbyists, exactly, although if they had any sense of shame it might help the republic. The problem is that we in the media aren't giving you enough plain information on what they're up to, and when we do, you don't act on it. Lawmakers really do listen to members of the public, because they want votes and they wanted campaign contributions and they want volunteers. Regardless of whether they want to serve or they want the benefits of serving, they want to know what the public thinks so they can cast all or at least most of their votes in the same direction. But all too often, the public doesn't think at all, or doesn't express its will, preferring to sit back, let things happen, and then complain about it. For example, suppose Americans knew that U.S. companies with overseas manufacturing had screwed the nation with their unfilled promises to get a tax break. Suppose the late night talk show hosts made jokes about it and it was the topic at every bar. The letters and emails and phone calls would start pouring in on Capitol Hill. And some lawmakers would see opportunity in getting in front of all that anger, and would introduce new tax rules on those companies, and new reporting requirements, and when those companies protested, they would say, "You brought this on yourself, bucko!" If there was the same widespread awareness of oil company lobbying, members of Congress would be inundated with messages from constituents saying "Don't you dare stand in the way of these incentives for alternative energy, and I'll be watching." We who report the news need to make a big deal of stories like this. And you need to act, too. So I repeat the most important point of this post: lawmakers do want to hear from the public, they do want to know your views because they do want to be re-elected, and all you have to do is tell them. Don't accuse them, don't threaten them, just write them and say, "I heard about this, I don't approve, and I really don't want you or anyone else in Congress to stand in the way of alternative energies." Or even just, "I heard about the study that showed companies with overseas manufacturing lied to get a tax break and essentially defrauded Congress and America, and I hope you read the study yourself, because what those companies did is harmful to you, harmful to me, and indeed harmful to the rest of the business community." Postscript written Monday morning: Look for the hand of lobbyists in the proposed federal reforms of investments. The Wall Street Journal this morning blasted the White House for not cracking down on the three major credit rating services, which gave good ratings to risky investments. The New York Times this morning said there isn't enough regulations of banks.