#economics

Aunt Jemima name to be removed. The history is more interesting than the syrup

Quaker Oats announced on Wednesday that it recognizes that “Aunt Jemima’s (syrup) origins are based on a racial stereotype.” For context, the term “Aunt Jemima” is sometimes used colloquially used as a female version of the derogatory label “Uncle Tom”. The question is did the term predate the syrup or not? Or was it related at all?

Presumably, those that like Aunt Jemima syrup must be racists too. Or could it be they just like the taste?

If it was a purely commercial decision to change the name because sales of the brand were plummeting that would be one thing. What will Quaker Oats do if there is a sudden rush on the remaining stocks of the brand? It is rank hypocrisy based on appeasing the mob. Pathetically weak. Quaker Oats had no issues promoting the brand for decades while all this “systemic racism” was at play.

Well well, what do you know?

Anna Short Harrington began her career as Aunt Jemima in 1935. So she could support her five children, she relocated from South Carolina with her family to Syracuse, New York and began to cook for a living. Quaker Oats discovered her when she was cooking at a fair and signed her on.

On August 5, 2014, her descendants filed a lawsuit against plaintiffs Quaker Oats and PepsiCo for $2 billion. They accused the companies of failing to pay Harrington and her heirs an “equitable fair share of royalties” from the recipes Quaker benefitted from. They lost.

Before the woke mob seize on the racism card, isn’t it interesting that her descendants had no issue with the brand name whatsoever. They had an issue with the economics of it. Imagine if the cancel culture were ahead of the curve. We imagine the descendants might have pushed back.

Return of the State-Owned Enterprise

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A new investor to Japan once asked CM how to categorise corporate behaviour in the land of the rising sun. CM replied, “Japan is not capitalism with warts, but socialism with beauty spots.

Latest reports confirm the Bank of Japan (BoJ) has now become a top 10 shareholder in almost 50% of listed stocks. In a sense, we have a trend which threatens to turn Japan’s largest businesses into quasi-state-owned enterprises (SoE) by the back door. The BoJ now owns $250bn of listed Japanese equities. It is the top shareholder in household Japanese brands such as Omron, Nidec and Fanuc. At current investment rates, the BoJ is set to own $400bn worth of the market by 2020-end.

The original reason for this move was to boost the ETF market and hope that Mrs Watanabe would pocket her winnings and splurge them at Mitsukoshi Department Store to increase consumption. Sadly all she has done is stuff it under the futon.

Although the government has been very public about the drive for good corporate governance, a stewardship code that drives to unwind cross-shareholdings, improve liquidity and lift returns, sadly the BoJ essentially reverses free-float and confounds the ability of companies to be attractive investments. What will happen if one day the BoJ announces it needs to pare its balance sheet back or that its holdings become too noticeable? These stocks will crater and Mrs Watanabe will become even more gun shy.

We shouldn’t forget that behind the walls of the BoJ, there is discussion to buy all $10 trillion of outstanding Japanese Government Bonds (JGBs) and convert them into zero-coupon perpetual bonds with a mild administration fee to legitimise the asset. Global markets won’t take nicely to wiping out 2 years worth of GDP with a printing press. Such a reckless experiment has yet to hit the Japanese Diet for discussion because such a move will require legislation to approve it. If it happens, the inflation the BoJ has now given up on will turn into a tsunami.