From an article The Global Bet, in today’s Wash Post Business Section:

The Associated Press reported this week that “Oil giant Exxon Mobil topped its own record for the biggest annual profit by a U.S. company last year, racking up earnings ($39.5 billion) that amounted to $4.5 million an hour for the world’s largest publicly traded oil company.”

MP: What hasn’t been reported is the fact that Exxon will probably also set another notable record: the highest amount of taxes ever paid by a U.S. company, estimated to be about $30 billion for 2006. That works out to about $3.4 million in taxes paid every hour by Exxon in 2006!

Larry Kudlow says “Congratuations to Exxon. Profits are the core of capitalism and the wellspring of abundance in this great country. They are the mother’s milk of stocks and the economy. Expanding profits provide businesses the resources to enlarge production operations and hire additional workers. And that in turn is how incomes are created for family spending.”

It was announced this week by the Associated Press that “People are saving at the lowest level since the Great Depression, and that could be a problem for the millions of baby boomers getting ready to retire.” This is based on the Commerce Department’s report on Thursday that the “savings rate” for 2006 was -1%.

This is pure nonsense, as the WSJ points out today in an editorial:

“As a statistic, however, the official “savings rate” is nearly as useless a guide to prosperity as the trade deficit. In the government accounts, what is called the savings rate is literally income less consumption. But the government defines income too narrowly and consumption broadly. For example, “income” doesn’t measure capital gains (whether realized or not), the rising value of your home, or even increases in your retirement accounts.

Think about how you calculate your own personal “savings rate.” Do you merely add up what you make in salary in a year minus what you spend? Or do you sneak a peak at whether your IRA increased in value, or check the sale price your neighbor got on his home to figure out what you might be able to get for yours? By any normal definition, “savings” should include your increase in total assets — in other words, your gains in overall wealth.”

MP: As the WSJ points out, we should focus more on “household net worth” as reported by the Federal Reserve than the “savings rate” reported by the Commerce Department. From the most recent release by the Fed for 3rd quarter 2006:

1. Between 3rd quarter 2005 and 3rd quarter 2006, household net worth increased by $3.5 trillion to $54 trillion, a 7% annual increase. The $3.5 trillion increase works out to about a $12,000 per person annual increase in net wealth, or almost $50,000 per household of 4! The $54 trillion total net worth works out to $180,000 per person, or $720,000 for a household of 4!

2. During that period, household real estate and other tangible assets increased in value by more than $2 trillion, and financial assets like mutual funds held by households increased in value by $2.6 trillion. Liabilities increased by $1.1 trillion, resulting in the $3.5 trillion increase in net worth.

3. As the related graph above from the American Shareholders Association shows, the combined assets of mutual funds and exchange traded funds (ETFs) increased $1.63 trillion in 2006, an increase of 17.7% compared to 2005. Total mutual fund and ETF assets ended 2006 at almost $11 trillion.

Bottom Line: When you have an annual increase in U.S. household net worth of $3.5 trillion and the stock market is booming and keeps setting record highs: a) any comparison the Great Depression is a real strech, b) baby boomers have nothing to worry about, and c) a negative savings rate is meaningless.

Summary: As expected, the Federal Open Market Committee decided on Wednesday to hold the Federal Funds rate steady at 5.25%, where it’s been since June of 2006. In other reports, 4th quarter 2006 GDP grew at 3.5% and employment costs held steady. Consumer confidence remains high despite the continuing slump in housing. The Dow Jones Average set a record-high on Thursday of 12,674 before falling 21 points today to 12,653. The 30-year mortgage rate remained steady for the week at 5.85%.

Read the full report here.

From “Is $34.06 Per Hour ‘Underpaid’?” in today’s WSJ:

1. According to the Bureau of Labor Statistics, public school teachers earned $34.06 per hour in 2005, 36% more than the hourly wage of the average white-collar worker and 11% more than the average professional specialty or technical worker.

2. The urban areas with the highest teacher pay are famous for their abysmal outcomes. Metro Detroit leads the nation, paying its public school teachers, on average, $47.28 per hour. That’s 61% more than the average white-collar worker in the Detroit area and 36% more than the average professional worker. In metro New York, public school teachers make $45.79 per hour, 20% more than the average professional worker in that area. And in Los Angeles teachers earn $44.03 per hour, 23% higher than other professionals in the area.

3. Evidence suggests that the way we pay teachers is more important than simply what they take home. Currently salaries are determined almost entirely by seniority — the number of years in the classroom — and the number of advanced degrees accumulated. Neither has much to do with student improvement.

From today’s Detroit News:

“For the first time in recent memory, Ford Motor Co. fell to No. 4 in U.S. auto sales behind General Motors Corp., Toyota Motor Corp., and DaimlerChrysler AG’s Chrysler Group, demonstrating just how far the automaker has fallen as it battles to stop a decade-long decline in market share.

At the same time, the Detroit automakers’ share of the American auto market fell to just 50.6%in January as they narrowly avoided selling fewer cars and trucks than foreign makers in a month for the first time ever.”

MP: 1.09 million vehicles were sold in January, and 16.55 million vehicles were sold in 2006. At an average price per car of $20,000, U.S. vehicle sales in 2006 were about $330 billion. To put the size of that market in perspective, if the U.S. vehicle market were to be considered as a separate economy, it would be the 21st largest economy in the world, after #20 Sweden (GDP of $354B), and ahead of Saudi Arabia ($310B), Austria ($305B), Poland ($300B), Indonesia ($287B) and Norway ($283B).

From an article in the Chronicle for Higher Education:

“More than a quarter of the black students enrolled at selective American colleges and universities are immigrants or the children of immigrants, according to a new paper by sociologists at Princeton University and the University of Pennsylvania.

The finding suggests that native-born African-American students are even more underrepresented at selective colleges than is commonly understood. The paper is likely to add fuel to a long-standing debate about the meaning and purpose of affirmative-action programs.

Selective colleges have expanded their enrollments of black students by “increasing the number of immigrant and multiracial black students,” said Camille Z. Charles, an associate professor of sociology at Penn who is one of the study’s authors.

“If you’re a purist” — that is, if you view affirmative action as restitution for the harm done by American slavery and segregation — “then you’ll think that this is not in the spirit of affirmative action,” Ms. Charles continued. “But if you’re a diversity purist, and your idea is to expose everybody to as many different kinds of people as possible, then you’ll think this is great.”

From the IHT article “Corus takeover turns India euphoric”

“India, a former British colony, is discovering that it is far better to take over than be taken over.

India erupted with serves-them-right jubilation this week when Tata Group, an Indian conglomerate, won a bid for the Corus Group — the Anglo-Dutch descendant of British Steel — for more than $12 billion, the largest acquisition ever by an Indian firm. Headlines spoke of empires striking back, while pundits and industrialists said India had at last arrived as a world power.

The takeover of Western companies by Indians has struck many here as evidence of a delicious reversal of fortune: a once-proud civilization, having fallen to the humiliations of colonization, is now buying out the hallowed corporations of the West.”