Search This Blog

Tuesday, January 21, 2014

Talkin' Dope while Rope A Dopin' on the Economy

Yesterday the President spoke on the need to legalize marijuana, expanding upon comments he made to that effect in an article to appear in the New Yorker magazine.

This nation's economy is collapsing all around us and he chose to speak on that..  on Martin Luther King Jr's birthday..

Priceless.

As for us at A&G we will continue to focus on the relevant and germane.
As we said before, this nation's economy is collapsing all around us and one only needs to look at the retail sector interconnected with the life (and near death) of the local mall.

Sears and J.C. Penney are both losing hundreds of millions of dollars each quarter, and both of them appear to be caught in the grip of a death spiral from which it will be impossible to escape. 

Sears specifically have posted losses for 27 consecutive quarters (almost 7 years) and recently announced it expects to lose between $250 million to $360 million for the quarter that will end on February 1st.
J.C. Penney has been a dead man walking for a long time.

In some ways, it is in even worse shape than Sears.  Amazingly, they actually lost $586 million dollars during the second quarter of 2013 alone --  That is in a three month period of time!

Once upon a time, Sears was actually the largest retailer in the United States, and even today Sears and J.C. Penney are "anchor stores" in malls all over the country. 

This week the CEO of Best Buy admitted that sales declined at his chain during the holiday season and Macy's recently announced 2500 workers laid off and 5 stores to be closed..

So why does it matter what's going on with retail stores like Sears?
Fact:   The U.S. shopping-center industry directly employed over 12 million people in 2010 and indirectly generated another 5.6 million jobs in support industries. Collectively, the industry accounted for 12.7% of total U.S. employment.

In addition,  for every 100 individuals directly employed at a U.S. regional shopping center, an additional 20 to 30 jobs are supported in the community due to multiplier effects.

Fact:  There are approximately 109,500 shopping centers in the United States ranging in size from the small convenience centers to the large super-regional malls.  

This is known as commercial real estate and when this collapses due to businesses leaving and few stores to replace, it will have dramatically adverse affects for everyone including a drying up of local taxes which property owners will have to make up and overall devaluation of communities where there's an influx of barren businesses.

Fact:  U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.   This is how states, cities and counties collect their sales taxes..

The reason for the death spiral is simple..  The bottom 99% were never helped after the 2008 crisis.. only the top 1% .  They and the banks got the 0% interest so they could make money off their money.. Everyone else were still paying 15-24% APR on their credit cards..

So why the recent spike in shopping over the last few years then you may ask?

Simple:  The advancement in retail spending was attributable solely to the $1.1 trillion increase in consumer debt provided vis a vis by credit cards and the trillion dollars of home equity extracted from thin air (2nd mortgages, speculators flipping houses, etc..)  
Real median income today is 8% less than in 2008 yet prices keep going up and jobs if lucky to find, purposely underpay their workers because... well, because they can.

So less income, higher prices and more access to credit (debt) means more purchasing..   When the credit well dries out and the personal debts must be repaid, then something has to give..

Gasoline.. milk.. bread.. the highest its ever been..  

Utilities.. Rent.. Vehicles.. just keep going up, up, up.. as wages remain stagnant..

And one can't keep going bankrupt every 2-3 years...  The law says you got to wait about 10.
There are Real problems in this country..  

Problems that are not even beginning to be addressed, much less fixed.

And we have a drug problem in this country that is utterly out of control bringing upon hopelessness, crime, violence upon innocents and massive urban and rural decay with marijuana being the gateway drug to all that misery..

And Obama wants it legalized??  

Yep..  Priceless