Black Friday & the Walking Dead

SUBHEAD: “Consumers” gutted by 30% interest rates and staggering debt, are becoming zombie shoppers this year. Image above: Boston Zomboe Walk 2009 in the Prudential Center. From By John Schettler on 25 November 2009 The Writing Shop - ( So here we are, another year older, another turkey gone to the gut, but that warm satisfied feeling we usually associate with the day after Thanksgiving may have a hollow quality to it this year. They call it “Black Friday,” because the retailers wait all year for this day to push their profit/loss ledger into the black. From here on out they make most of their annual profits, or so we are told. But this year it was just a little harder to get those “doorbusters” specials going. It was a little harder to convince us with those “Save Big!” signs aimed at prying open our wallets. We finally figured out that you save by not spending, no matter what the price is. Analysts predict the average person will spend much less this year, and if that were true it would portend the worst retail Christmas in decades, down from last year’s worst Christmas in decades. The consumer of 2009 is a chastened, leaner animal this year, hungry, to be sure, but without the means of hitting the malls in force. We may see the usual crowds this year at the malls...and a lot a sight seeing and window shopping. Just 24 months ago, in those halcyon days of 2007 we had pundits claiming: “The consumer is programmed to buy right now. They see bargains like they’ve never seen before!” Sigh…Programmed to buy? All the talk about deep discounts pumped out by the media was undoubtedly part of that programming. Realize, of course, that the media exists primarily to keep the cash registers ringing in our nation’s stores. This is its primary reason for being. One woman reportedly made a statement, according to Bloomberg: “My children would not be able to get half of what I’m getting them without Black Friday,” so the customers come out expecting the bargains, and the retailers cut cards with the devil and forsake profit just so they can recover the money already spent to buy the inventory. This year there is even a new website tracking all the sales and “doorbuster” specials so you can zero in on your item of delight. Well, the programming is still intact, but the gift lists will undoubtedly be shorter. The consumer may be out in force again this year, but so many have been gutted by this recession that they will be walking zombies. Home equity is gone, credit cards are maxed out, card limits have been drastically cut, interest rates are at an all time high. It remains to be seen if the spending this year is the typical gadget rush or if the dollars end up being spent for more practical things. Reports are that flat screen TVs and BlueRay disk players are hot items. Americans love their TV and movies, now in 1080p high definition. You can see every wrinkle behind the newscaster’s makeup at that resolution! Years ago I urged buyers to start thinking “need” instead of “want.” As the season of frivolous shopping finally begins in earnest, we’ll see if ‘consumers’ roll out all that money they sat on throughout the year r when retail sales went off a cliff with the banks, stocks, and investment portfolios. The Spartan sales could have just been penny pinching for Christmas. Americans love to spend, and it may again look like a bona fide Black Friday as the zombies trample and claw their way through the doors of our Big Box dream stores again this year. Call it capitulation buying, if you will. Those that still have jobs will stock up now while the going is still good, and while their dollar still holds value. Assessing the damage done thus far to the economy, Ambrose Evans-Pritchard quoted a banking insider for the UK Telegraph: “This gamble (by the world banks) was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold. ‘They are throwing the kitchen sink at this,’ said Tom Fitzpatrick, the bank's chief technical strategist. ‘The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed though into an inflation shock. Or it will not work because too much damage has already been done, and we will see continued financial deterioration, causing further economic deterioration, with the risk of a feedback loop.” That’s pretty dire stuff coming out of an insider banker’s mouth, eh? Yes, the world is not going back to normal after the magnitude of what they have done, and Mr. Fitzgerald can count himself in the group he calls “they.” We have had a good life in this country, perhaps the highest standard of living for the average person that the human race has ever known. Most people alive today were born at the outset of, or sometime within, the upward leg of the great petroleum curve, where energy was cheap and plentiful. If you’re reading this now, I’m willing to bet that things are probably not all that bad in your life. You have a computer, and it’s probably inside a home, and the house has heat, electricity, phone and cable service, fresh water and reasonable sanitation. You’ve got a host of appliances, and food in the fridge. You probably have a car parked outside. You probably still have a job, which means income, so be thankful for that. Count your blessings! Half of humanity has no access to electricity, and a huge percentage don’t have a home either. Hundreds of millions will struggle with hunger, even in this country, where 40 million have a problem putting food on the table each month. Only about one in ten in the world will have their own personal computer, to browse the Internet. Africa is regularly plagued by mass migrations of humanity, as people are forced to flee from violence, famine or disease. Let’s face it, we’ve had it made in the proverbial shade here in the good old US of A, but the easy life will be one reason why harder times will be more difficult for us to imagine and weather. Even the Europeans have memories of a time when their whole continent was reduced to piles of smoking rubble during WWII. We have never endured anything like that. The toughest period in our modern history would be the Great Depression, and now a lot of analysts are saying that we’re about to have the sequel. Time Magazine is not betting on a rosy Christmas shopping season. “‘By the end of 2009, the number of retail players will be down by at least 25% and could be down by as much as 40%,’ says Britt Beemer, chairman of America's Research Group.” So let’s call it “Grey Friday,” this year and let’s remember it as one of the last reflexive expressions of the old consumer culture we’ve been living in the last 50 years, an echo, a shadow of a life we may not see again for years, if ever. Looking Back at Black Friday 2009 A year from today we may not believe the circumstances we find ourselves in. We’ll look back at this day, when we sat at our Thanksgiving table with the rumble of failing banks and the roar of government liquidity cash bailouts in the background, and we’ll say to ourselves: ‘We had it good back then. Food was getting more costly, but it was still plentiful. Gas prices were the lowest we had seen all year, and we could still drive most anytime we wanted to. The electricity stayed on all the time, and we almost never had power outages. The airlines were working and we were still ‘free to move about the country.’ A few retail chains were falling into bankruptcy, but the worsening economic climate made for some real good deals in the malls. Hey, remember the big malls? Remember how they would hang those massive Christmas decorations, roll out the sale signs, offer to gift wrap our gadget haul in the kiosks on the promenade? Remember how we would buy jewelry, perfume, iPods, cameras, and those big flat screen TVs? Hey…remember credit cards? Remember how we could just swipe the plastic and haul off anything we wanted, whenever we wanted? Man, we had it good back then. We could see things starting to slip and fall, but the layoffs were only just starting in November of ‘08. They would get so much worse in 2009. And that year, bemused by the illusion of an imminent “recovery” the zombies hit the malls one last time. Yes, it was the last year when America served up the dream at 40% to 70% off. We had it good…’ Meanwhile, housing prices are still plummeting, foreclosures are still rising and a massive wave of commercial loan defaults and Option ARM resets is foaming up just off shore. Banks are still teetering on the brink, technically insolvent but kept open by accounting rules changes and taxpayer money. Unemployment persists in double digit pain. Thirty million Americans are already on food stamps, (1 in 10), and food banks are complaining about growing stress on their already meager inventories. But things are still holding together in some semblance of the life we have known for decades. The crash is already underway, like a slow motion avalanche, yet most people fail to really understand it, much less face it or plan how to deal with it. Banks Are Worse Than You Think The banks are in trouble, worse than the media will let on, but they are still open. The shock of something like a “bank holiday” has not yet hit Americans in this generation. The word “holiday” was always associated with spending of one sort or another. When the banks have a holiday it means no spending at all! This entire crisis was self-made by the banks. Subprime lending was a nice scapegoat, and you’ll notice that the little guy out there will be the first punished by decapitated credit, high fees, usurious interest, no access to capital. It has always been so. Paulson and Bernanke poured trillions into the economy at the top, about $60,000 for each person in the US, $200,000 per average household, if distributed at the bottom. Brother, that would have insured a healthy Black Friday, Saturday, Sunday, Monday and probably Tuesday, Wednesday and Thursday as well! You think Chrysler and GM would be having trouble selling cars if each American household had received the bailout money instead of the banks? I suppose the idea of giving it to the multi-millionaires at the banks instead is that they know better what to do with it—sit on it, pay out bonuses and dividends for their staggering investment failures, stage half-million dollar meetings at resort spas, use it to buy up the wreckage of smaller institutions who didn’t get the cash, invest it in yet more derivative schemes betting on which assets will be recovered safely from other ‘troubled institutions.’ My, how the rich amuse themselves. The point of all these bailouts is supposedly to get the economy moving again, but all it is really doing is insuring the wealth and efficacy of the private banks and the elite that control them, an enormous concentration of power all to be paid for with public money. The government demands 40% of our income in taxes, then they give it to the private banks for free. The Banks then brand each of us with a FICO score and squint at loan applications trying to decide whether or not they’ll lend us back the free money we gave them. Some call this “free market capitalism.” I call it the fleecing of America. I guess the theory is that it will all eventually ‘trickle down’ to Average Joe. Don’t hold your breath waiting for it to arrive. If it ever does, the dollars poured on at the top will be worth far, far less when they reach the bottom, down on Main Street. You think these Wall Street Gurus didn’t know what they were doing with the securitized casino they created? They set up loan sharking boiler rooms in the thousands, cranked out millions of loans on badly overvalued homes, took out insurance against loss in a “credit default swap” that pays off bigtime if the ‘homeowner’ defaults, and therefore actually favors foreclosure. Susanne Trimbath, Chief Economist of STP Advisory Services, explains the scheme: “A conservative estimate is that $9 worth of CDS “insurance” has been sold for every $1 in mortgage bond. Therefore, someone stands to gain $9 if the homeowner defaults, but only $1 if they pay. The economic incentives favor foreclosure, not mortgage work-outs or Main Street bailouts.” That’s assuming the insurers can pay, and in this light the purpose of the bailout money is obvious. See why AIG keeps coming back to the Treasury Department for more and more cash? The money they pay out to settle these CDS deals is again going right into the pockets of the same broker/investor sharks who set up the whole scheme! It’s a nice little ‘Rich Dad’ game that is now playing with public money, and all this is happening right under the noses of a clueless Congress. Real Life Monopoly It’s like one of your rivals in a game of Parker Brothers ‘Monopoly’ is able to just reach out and take as much money from the bank as they desire! While you follow the rules and patiently wait to collect your $200 bucks as you pass Go, they reach in as scoop up thousands from the public trust. If someone lands on one of their properties, and can’t pay the rent, that poor player normally sells off any deeds he or she still holds and is out of the game. The property holder takes the loss in unpaid rent. But not in this game. This time the Rich Dad has a credit default swap and gets to make up for any unpaid rent by just taking it willy nilly from the bank...nine times! This is, in effect, what the bailouts are doing. It’s nothing less than criminal fraud, and the most amazing thing is how this Rich Dad player got everyone else in the game to agree to these rules, the Treasury, the Fed, the Congress and the People they’re all supposed to represent. Is it really that amazing? The Treasury and the Fed are all run by Rich Dads too. Writer Tom Eley reminds us of Balzac’s maxim that: “behind every great fortune lies a great crime.” It may yet prove a fitting epitaph for American capitalism. A recent survey by the Wall Street Journal reveals that CEOs at major US financial and real estate firms converted tens of millions of dollars of overvalued stock into cash prior to the eruption of the current financial crisis, even as many of their corporations approached the precipice.” Nothing like insider stock trades, eh? Well… this is the last Thanksgiving that will in any way resemble the old life here in America… Have some turkey, get out and buy something at 70% off and enjoy yourself. The years ahead will be leaner yet. See also: Ea O Ka Aina: Giving thanks for our harvest 11/25/09

1 comment :

Mauibrad said...

"The government demands 40% of our income in taxes, then they give it to the private banks for free. The Banks then brand each of us with a FICO score and squint at loan applications trying to decide whether or not they’ll lend us back the free money we gave them."

Wow, that's good, description I mean. Accurate too.

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