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Are You Crazy To Continue Believing In Collapse?: James Howards Kunstler | Peak Prosperity

Are You Crazy To Continue Believing In Collapse?: James Howards Kunstler | Peak Prosperity.

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Sandra Cunningham/Shutterstock

Are You Crazy To Continue Believing In Collapse?

That it hasn’t happened yet doesn’t mean you’re wrong
by James H. Kunstler
Wednesday, March 5, 2014, 4:16 AM

It’s nerve-wracking to live in the historical moment of an epic turning point, especially when the great groaning garbage barge of late industrial civilization doesn’t turn quickly where you know it must, and you are left feeling naked and ashamed with your dark worldview, your careful preparations for a difficult future, and your scornful or tittering relatives reminding you each day what a ninny you are to worry about the tendings of events.

Persevere. There are worse things in this life than not being right exactly on schedule.

Two simple words explain why more robust signs of an economic collapse have hung fire since the tremors of 2008: inertia and fraud. Never in human history has there been such a matrix of complex systems so vast, dense, weighty, and powerful for running everyday life (nor a larger population engaged in it). That much stuff in motion takes a while to slow down. The embodied energy has kept enough of it running to give the appearance of continuity. For instance, agri-biz still sends its amber waves of grain and tankers of corn-syrup to the Pepsico snack-food factories, and the WalMart trucks still faithfully convey the pallets of Cheetos, Fritos, Funyons, and Tostitos from the Pepsico loading dock to the big box aisles of glory. The freeways still hum with traffic even though oil is pricey at $100 a barrel. The lights stay on. The gabble and blabber of Cable TV continues remorselessly in the background of life. All of that is due to inertia. It gives the superficial impression of the old normal carrying on. Things go on until they can’t, in the immortal words of Herb Stein

The fraud is present in the abuse and misrepresentation of official statistics used as metrics in government policy, in the pervasive accounting chicanery of that same government in its fiscal dealings, as well as in our leading financial institutions and corporations, including control fraud in banking, interest rate rigging, mortgage and title fraud, front-running, naked shorting, re-hypothecation, money laundering, pumping-and-dumping, channel stuffing, the endless innovation of swindles, and, most importantly, the fundamental mispricing of the cost of money, which reverberates through everything else, most particularly real estate, stocks, and bonds. Beyond that, in the shadows of the shadowland known as shadow banking, a liminal realm of secrets and intrigues, only a few are privileged to know what is going on, and you can be sure they only know their end of the trade — while immense sums of ever more abstract “money” slosh through the derivative sewers on their way to oblivion in the ocean of failed trust.

So, don’t feel bad if this colossal armature of folly still stands, and have faith that the blinding light of God’s judgment will eventually shine even unto the watery depths where failed trust has sunk. Sooner or later the relationship between reality and truth re-sets to the calculus of what is actually happening.

Meanwhile, the big questions worth reflecting upon are: What is the shape of the future? How might we conduct ourselves in it and on our way to it; and how will we think and feel about all that? It’s very likely that the journey to where we’re going will be rougher than the actual destination, once we get there. There is a hearty consensus outside the mainstream financial media and the thickets of academia that the models we have been using to understand the economy look more broken each month, and this surely adds to the difficulty of constructing our own mental models for how the everyday world of the years ahead will operate.

Some of the commentators in blogville and elsewhere like to blame capitalism. Capitalism is a phantom adversary. It isn’t an economic system. It isn’t an ideology, really, or a belief system. If the word means anything, it describes the behavior of accumulated surplus wealth in concert with the known laws of physics — the movement of energy through time and space — and the choices we make organizing society in relation to that.  The energy is embodied as capital, represented in money for convenience. Interest expresses the cost of money over time and the risks associated with lending it. By the way, interest rates work the same way under all political systems, despite attempts in some societies to criminalize it.

During the high tide of the industrial expansion, when fossil fuels were cheap and we accumulated the greatest wealth surplus ever in history, humanity made some very bad choices, squandering this possibly one-time bonanza. We fought two world wars, and lots of wasteful lesser ones. Russia and its imitators attempted to collectivize wealth under gangster government and only succeeded in impoverishing everyone but the gangsters. America built suburbia and Las Vegas. The one thing that no “modern” culture did was plan for a future when the fossil fuel orgy and the techno-industrial fiesta might wind down, which is exactly the case now. Instead, we opted for the Julian Simon folly of crossing our fingers and hoping that some unnamed band ofgenius wizard innovators would mitigate the problems of resource scarcity and population overshoot just in time.

The demonizers of capitalism propose to remedy our compound predicament by just getting rid of money. But the idea of a human society without money leaves you either up a baobab tree on the paleolithic savannah, or in some sort of Ray Kurzweil techno-narcissistic masturbation fantasy multiverse with no relation to the organic doings on planet earth. I suspect as long as there are human societies there will be things to exchange that have a quality we call “money,” and as long as that’s the case, some individuals will have more of it than others, and they will lend some of their surplus to others on terms. What most people call capitalism was a model of economy derived from a particular transitory moment in history. It seemed to describe reality, but after a while it didn’t because reality changed and it was, finally, just a model. Nothing lasts forever. Boo-hoo, Karl Marx, J.M Keynes, and Paul Krugman.

What’s cracking up first is the complexity and abstraction of our current money operations, sometimes loosely called the financialized economy. If we blame anything for our problems with money, blame our half-baked attempts to mitigate the wind-down of the techno-industrial cavalcade of progress by issuing ersatz surplus wealth in the form of debt — that is, promises to fork over hypothetical not- yet-accumulated wealth at some future date. There are too many promises now, and too few trustworthy promisors, and poor prospects for generating the volumes of wealth as we did in the recent past.

The hidden (or ignored) truth of this quandary expresses itself inevitably in the degenerate culture of the day, the freak show of pornified criminal avarice that the USA has become. It only shows how demoralizing our recent history has been that the collective national attention is focused on such vulgar stupidities as twerking, or the Kanye-Kardashian porno romance, the doings of the Duck Dynasty, and the partying wolves of Wall Street. By slow increments since about the time John F. Kennedy was shot in the head, we’ve become a land where anything goes and nothing matters. The political blame for that can be distributed equally between Boomer progressives (e.g., inventors of political correctness) and the knuckle-dragging “free-market” conservatives (e.g.,money is free speech). The catch is, some things do matter, for instance whether the human race can continue to be civilized in some fashion when the techno-industrial orgy draws to a close.

In Part 2: How Life Will Change, we sort out the new operating principles that will matter more in the future than the trash heap of current cultural norms. The society that emerges from the post-growth economy will surely require a new moral compass, a set of values based on qualities of behavior and things worth caring about — as opposed to coolness, snobbery, menace, or power, the current lodestars of human aspiration.

Click here to access Part 2 of this report (free executive summary; enrollment required for full access).

Are You Crazy To Continue Believing In Collapse?: James Howards Kunstler | Peak Prosperity

Are You Crazy To Continue Believing In Collapse?: James Howards Kunstler | Peak Prosperity.

BLOG

Sandra Cunningham/Shutterstock

Are You Crazy To Continue Believing In Collapse?

That it hasn’t happened yet doesn’t mean you’re wrong
by James H. Kunstler
Wednesday, March 5, 2014, 4:16 AM

It’s nerve-wracking to live in the historical moment of an epic turning point, especially when the great groaning garbage barge of late industrial civilization doesn’t turn quickly where you know it must, and you are left feeling naked and ashamed with your dark worldview, your careful preparations for a difficult future, and your scornful or tittering relatives reminding you each day what a ninny you are to worry about the tendings of events.

Persevere. There are worse things in this life than not being right exactly on schedule.

Two simple words explain why more robust signs of an economic collapse have hung fire since the tremors of 2008: inertia and fraud. Never in human history has there been such a matrix of complex systems so vast, dense, weighty, and powerful for running everyday life (nor a larger population engaged in it). That much stuff in motion takes a while to slow down. The embodied energy has kept enough of it running to give the appearance of continuity. For instance, agri-biz still sends its amber waves of grain and tankers of corn-syrup to the Pepsico snack-food factories, and the WalMart trucks still faithfully convey the pallets of Cheetos, Fritos, Funyons, and Tostitos from the Pepsico loading dock to the big box aisles of glory. The freeways still hum with traffic even though oil is pricey at $100 a barrel. The lights stay on. The gabble and blabber of Cable TV continues remorselessly in the background of life. All of that is due to inertia. It gives the superficial impression of the old normal carrying on. Things go on until they can’t, in the immortal words of Herb Stein

The fraud is present in the abuse and misrepresentation of official statistics used as metrics in government policy, in the pervasive accounting chicanery of that same government in its fiscal dealings, as well as in our leading financial institutions and corporations, including control fraud in banking, interest rate rigging, mortgage and title fraud, front-running, naked shorting, re-hypothecation, money laundering, pumping-and-dumping, channel stuffing, the endless innovation of swindles, and, most importantly, the fundamental mispricing of the cost of money, which reverberates through everything else, most particularly real estate, stocks, and bonds. Beyond that, in the shadows of the shadowland known as shadow banking, a liminal realm of secrets and intrigues, only a few are privileged to know what is going on, and you can be sure they only know their end of the trade — while immense sums of ever more abstract “money” slosh through the derivative sewers on their way to oblivion in the ocean of failed trust.

So, don’t feel bad if this colossal armature of folly still stands, and have faith that the blinding light of God’s judgment will eventually shine even unto the watery depths where failed trust has sunk. Sooner or later the relationship between reality and truth re-sets to the calculus of what is actually happening.

Meanwhile, the big questions worth reflecting upon are: What is the shape of the future? How might we conduct ourselves in it and on our way to it; and how will we think and feel about all that? It’s very likely that the journey to where we’re going will be rougher than the actual destination, once we get there. There is a hearty consensus outside the mainstream financial media and the thickets of academia that the models we have been using to understand the economy look more broken each month, and this surely adds to the difficulty of constructing our own mental models for how the everyday world of the years ahead will operate.

Some of the commentators in blogville and elsewhere like to blame capitalism. Capitalism is a phantom adversary. It isn’t an economic system. It isn’t an ideology, really, or a belief system. If the word means anything, it describes the behavior of accumulated surplus wealth in concert with the known laws of physics — the movement of energy through time and space — and the choices we make organizing society in relation to that.  The energy is embodied as capital, represented in money for convenience. Interest expresses the cost of money over time and the risks associated with lending it. By the way, interest rates work the same way under all political systems, despite attempts in some societies to criminalize it.

During the high tide of the industrial expansion, when fossil fuels were cheap and we accumulated the greatest wealth surplus ever in history, humanity made some very bad choices, squandering this possibly one-time bonanza. We fought two world wars, and lots of wasteful lesser ones. Russia and its imitators attempted to collectivize wealth under gangster government and only succeeded in impoverishing everyone but the gangsters. America built suburbia and Las Vegas. The one thing that no “modern” culture did was plan for a future when the fossil fuel orgy and the techno-industrial fiesta might wind down, which is exactly the case now. Instead, we opted for the Julian Simon folly of crossing our fingers and hoping that some unnamed band ofgenius wizard innovators would mitigate the problems of resource scarcity and population overshoot just in time.

The demonizers of capitalism propose to remedy our compound predicament by just getting rid of money. But the idea of a human society without money leaves you either up a baobab tree on the paleolithic savannah, or in some sort of Ray Kurzweil techno-narcissistic masturbation fantasy multiverse with no relation to the organic doings on planet earth. I suspect as long as there are human societies there will be things to exchange that have a quality we call “money,” and as long as that’s the case, some individuals will have more of it than others, and they will lend some of their surplus to others on terms. What most people call capitalism was a model of economy derived from a particular transitory moment in history. It seemed to describe reality, but after a while it didn’t because reality changed and it was, finally, just a model. Nothing lasts forever. Boo-hoo, Karl Marx, J.M Keynes, and Paul Krugman.

What’s cracking up first is the complexity and abstraction of our current money operations, sometimes loosely called the financialized economy. If we blame anything for our problems with money, blame our half-baked attempts to mitigate the wind-down of the techno-industrial cavalcade of progress by issuing ersatz surplus wealth in the form of debt — that is, promises to fork over hypothetical not- yet-accumulated wealth at some future date. There are too many promises now, and too few trustworthy promisors, and poor prospects for generating the volumes of wealth as we did in the recent past.

The hidden (or ignored) truth of this quandary expresses itself inevitably in the degenerate culture of the day, the freak show of pornified criminal avarice that the USA has become. It only shows how demoralizing our recent history has been that the collective national attention is focused on such vulgar stupidities as twerking, or the Kanye-Kardashian porno romance, the doings of the Duck Dynasty, and the partying wolves of Wall Street. By slow increments since about the time John F. Kennedy was shot in the head, we’ve become a land where anything goes and nothing matters. The political blame for that can be distributed equally between Boomer progressives (e.g., inventors of political correctness) and the knuckle-dragging “free-market” conservatives (e.g.,money is free speech). The catch is, some things do matter, for instance whether the human race can continue to be civilized in some fashion when the techno-industrial orgy draws to a close.

In Part 2: How Life Will Change, we sort out the new operating principles that will matter more in the future than the trash heap of current cultural norms. The society that emerges from the post-growth economy will surely require a new moral compass, a set of values based on qualities of behavior and things worth caring about — as opposed to coolness, snobbery, menace, or power, the current lodestars of human aspiration.

Click here to access Part 2 of this report (free executive summary; enrollment required for full access).

Central Bankers: Inflation is God’s Work – Ludwig von Mises Institute Canada

Central Bankers: Inflation is God’s Work – Ludwig von Mises Institute Canada.

Friday, February 21st, 2014 by  posted in Uncategorized.

Inflation is always somebody else’s fault. Ludwig von Mises called out finger pointing central bankers and politicians decades ago in his book, Economic Policy. “The most important thing to remember is that inflation is not an act of God, that inflation is not a catastrophe of the elements or a disease that comes like the plague. Inflation is a policy.”

In the fall of 2007, Gideon Gono blamed his country’s inflation rate of 4,500 percent on “the differences that Zimbabwe has had with its former colonial master, the UK,” and added, “we are busy laying the foundations for a serious deceleration programme.” Deceleration? A year later inflation was 231 million percent.

Money printing didn’t have anything to do with it according to the central banker. Droughts began to be more frequent in the 2000’s and Gono believed  ”there is a positive correlation between the drought and inflation.” Dry weather, he told New African magazine, has, “got a serious bearing on our inflation level.”

In Gono’s dilluded mind,inflation was about the weather, lack of support from other nations, and political sanctions. He had nothing to do with the hyperinflation in his country. “No other [central-bank] governor has had to deal with the kind of inflation levels that I deal with,” Gono told Newsweek. “[The people at] my bank [are] at the cutting edge of the country.”

These days in Argentina its not the weather and political sanctions causing prices to rise, its businesses engaging in commerce. President Cristina Fernández de Kirchner is urging her people to work “elbow-to-elbow” with her government to stop companies from looting the people with high prices. Two weeks ago the government devalued the peso by 20 percent but it is private businesses that are stealing from working people with price increases.

Posters of retail executives have been plastered around Buenos Aires. For instance, Wal-Mart Argentina’s president Horacio Barbeito has his mug on a poster with the caption, “Get to know them, these are the people who steal your salary.”

Kirchner’s cabinet chief Jorge Capitanich calls economists who point to government policies as inflation’s culprit “undercover agents.”  He implies that these economists are the tools of business. “Argentines should know that independent, objective economists don’t exist,” Capitanich claims. “I want to say emphatically that when unscrupulous businessmen raise prices it has absolutely nothing to do with macroeconomic variables.”

In 2012 the president of Argentina’s central bank, Yale-educated Mercedes Marcó del Pont, said in an interview, “it is totally false to say that printing more money generates inflation, price increases are generated by other phenomena like supply and external sector’s behaviour.”

So while its central bank prints, the Kirchner government has enlisted the citizenry to work undercover in the fight against rising prices. A free smartphone application is encouraging Argentines to be citizen-cops while they shop.

The app is a bigger hit than “Candy Crush” and “Instagram.” President Kirchner wants “people to feel empowered when they shop.” And, they do. “You can go checking the prices,” marveled Analia Becherini, who learned of the app on Twitter. “You don’t even have to make any phone calls. If you want to file a complaint, you can do it online, in real time.”

“Argentina’s government blames escalating inflation on speculators and greedy businesses,” reports Paul Byrne for the Associated Press, “and has pressured leading supermarket chains to keep selling more than 80 key products at fixed prices.”

However, businesses aren’t eager to lose money selling goods. Fernando Aguirre told Chris Martenson that with price inflation running rampant, “Lots of stores don’t want to be selling stuff until they get updated prices. Suppliers holding on, waiting to see how things go, which is something that we are familiar with because that happened back in 2001 when everything went down as we know it did.”

In his Peak Prosperity podcast with Aguirre, Martenson makes the ironic point that when governments print excessive amounts of money, goods disappear from store shelves. In a hyper-inflation the demand for money drops to zero as people buy whatever they can get their hands on. Inflation destroys the calculus of profit and loss, destroying business, and undoing the division of labor.

Aguirre reinforced Martenson’s point. Describing shelves as “halfway empty,” in Argentina he said,  “The government is always trying to muscle its way through these kind of problems, just trying to force companies to stock back products and such, but they just keep holding on. For example, gas has gone up 12% these last few days. And there is really nothing they can do about it. If they don’t increase prices, companies just are not willing to sell. It is a pretty tricky situation to be in.”

Tricky indeed.  “It would be a serious blunder to neglect the fact that inflation also generates forces which tend toward capital consumption,” Mises wrote in Human Action. “One of its consequences is that it falsifies economic calculation and accounting. It produces the phenomenon of illusory or apparent profits.”

Inflation is also rampant at the other end of South America.  Venezuela inflations is clocking in at 56 percent. Comparing the two countries, Leonardo Vera, a Caracas-based economist told the FT, “Argentina still has some ammunition to fight the current situation, while Venezuela is running out of bullets.”

Fast money growth has also led to shortages such as “newsprint to car parts and ceremonial wine to celebrate mass,” reports the FT.

Venezuelan president Nicolás Maduro is using the government’s heavy hand to introduce a law capping company profits at 30 percent. Heavy prison sentences await anyone found hoarding, overcharging, or “destabilising the economy.”  Hundreds of inspectors have been deployed to enforce the mandates.

The results will be predictable. “With every new control, the parallel, or black market, dollar will keep going up, and so will the price and scarcity of milk, oil, and toilet paper,” says Humberto García, an economist with the Central University of Venezuela.

Don’t expect the printing to stop any time soon. Central bankers believe they are doing God’s work. “To ensure that my people survive, I had to print money,” Gideon Gono toldNewsweek. “I found myself doing extraordinary things that aren’t in the textbooks. Then the IMF asked the U.S. to please print money. The whole world is now practicing what they have been saying I should not. I decided that God had been on my side and had come to vindicate me.”

It seems disasters wrought by inflationary policies must be experienced again and again, as “Inflation is the true opium of the people,” Mises explained, “administered to them by anticapitalist governments.”

The practice of central banking is the same around the world. The only difference is in degree. Before he destroyed the Zimbabwean dollar Gono looked to America for inspiration. “Look at the bridges across the many rivers in New York and elsewhere,” Gono told New African, “and the other infrastructure in the country that were built with high budget deficits.”

The Zimbabwe, Argentina, and Venezuela inflations may seem to be something that happens to somebody else. But Mr. Aguirre makes a point when asked about 2001, when banks in Argentina, after a bank holiday, converted dollar accounts into the same number of pesos. A massive theft.

“Those banks that did that are the same banks that are found all over the world,” Aguirre says. “They are not like strange South American, Argentinean banks–they are the same banks. If they are willing to steal from people in one place, don’t be surprised if they are willing to do it in other places as well.”

 

Douglas E. French is a Director of the Ludwig von Mises Institute of Canada. Additionally, he writes for Casey Research and is the author of three books; Early Speculative Bubbles and Increases in the Supply of Money, The Failure of Common Knowledge, and Walk Away: The Rise and Fall of the Home-Owenrship Myth. French is the former president of the Ludwig von Mises Institute in Auburn, Alabama.

THE RETAIL DEATH RATTLE « The Burning Platform

THE RETAIL DEATH RATTLE « The Burning Platform.

“I was part of that strange race of people aptly described as spending their lives doing things they detest, to make money they don’t want, to buy things they don’t need, to impress people they don’t like.” ― Emile Gauvreau

 

 

If ever a chart provided unequivocal proof the economic recovery storyline is a fraud, the one below is the smoking gun. November and December retail sales account for 20% to 40% of annual retail sales for most retailers. The number of visits to retail stores has plummeted by 50% since 2010. Please note this was during a supposed economic recovery. Also note consumer spending accounts for 70% of GDP. Also note credit card debt outstanding is 7% lower than its level in 2010 and 16% below its peak in 2008. Retailers like J.C. Penney, Best Buy, Sears, Radio Shack and Barnes & Noble continue to report appalling sales and profit results, along with listings of store closings. Even the heavyweights like Wal-Mart and Target continue to report negative comp store sales. How can the government and mainstream media be reporting an economic recovery when the industry that accounts for 70% of GDP is in free fall? The answer is that 99% of America has not had an economic recovery. Only Bernanke’s 1% owner class have benefited from his QE/ZIRP induced stock market levitation.

 

 

The entire economic recovery storyline is a sham built upon easy money funneled by the Fed to the Too Big To Trust Wall Street banks so they can use their HFT supercomputers to drive the stock market higher, buy up the millions of homes they foreclosed upon to artificially drive up home prices, and generate profits through rigging commodity, currency, and bond markets, while reducing loan loss reserves because they are free to value their toxic assets at anything they please – compliments of the spineless nerds at the FASB. GDP has been artificially propped up by the Federal government through the magic of EBT cards, SSDI for the depressed and downtrodden, never ending extensions of unemployment benefits, billions in student loans to University of Phoenix prodigies, and subprime auto loans to deadbeats from the Government Motors financing arm – Ally Financial (85% owned by you the taxpayer). The country is being kept afloat on an ocean of debt and delusional belief in the power of central bankers to steer this ship through a sea of icebergs just below the surface.

 

The absolute collapse in retail visitor counts is the warning siren that this country is about to collide with the reality Americans have run out of time, money, jobs, and illusions. The most amazingly delusional aspect to the chart above is retailers continued to add 44 million square feet in 2013 to the almost 15 billion existing square feet of retail space in the U.S. That is approximately 47 square feet of retail space for every person in America. Retail CEOs are not the brightest bulbs in the sale bin, as exhibited by the CEO of Target and his gross malfeasance in protecting his customers’ personal financial information. Of course, the 44 million square feet added in 2013 is down 85% from the annual increases from 2000 through 2008. The exponential growth model, built upon a never ending flow of consumer credit and an endless supply of cheap fuel, has reached its limit of growth. The titans of Wall Street and their puppets in Washington D.C. have wrung every drop of faux wealth from the dying middle class. There are nothing left but withering carcasses and bleached bones.

 

The impact of this retail death spiral will be vast and far reaching. A few factoids will help you understand the coming calamity:

  • 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.
  • There are in excess of 1 million retail establishments in the United States occupying 15 billion square feet of space and generating over $4.4 trillion of annual sales. This includes 8,700 department stores, 160,000 clothing & accessory stores, and 8,600 game stores.
  • U.S. shopping-center retail sales total more than $2.26 trillion, accounting for over half of all retail sales.
  • 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.
  • Total retail employment in 2012 totaled 14.9 million, lower than the 15.1 million employed in 2002.
  • 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.

 

The collapse in foot traffic to the 109,500 shopping centers that crisscross our suburban sprawl paradise of plenty is irreversible. No amount of marketing propaganda, 50% off sales, or hot new iGadgets is going to spur a dramatic turnaround. Quarter after quarter there will be more announcements of store closings. Macys just announced the closing of 5 stores and firing of 2,500 retail workers. JC Penney just announced the closing of 33 stores and firing of 2,000 retail workers. Announcements are imminent from Sears, Radio Shack and a slew of other retailers who are beginning to see the writing on the wall. The vacancy rate will be rising in strip malls, power malls and regional malls, with the largest growing sector being ghost malls. Before long it will appear that SPACE AVAILABLE is the fastest growing retailer in America.

 

The reason this death spiral cannot be reversed is simply a matter of arithmetic and demographics. While arrogant hubristic retail CEOs of public big box mega-retailers added 2.7 billion retail square feet to our already over saturated market, real median household income flat lined. The advancement in retail spending was attributable solely to the $1.1 trillion increase (68%) in consumer debt and the trillion dollars of home equity extracted from castles in the sky, that later crashed down to earth. Once the Wall Street created fraud collapsed and the waves of delusion subsided, retailers have been revealed to be swimming naked. Their relentless expansion, based on exponential growth, cannibalized itself, new store construction ground to a halt, sales and profits have declined, and the inevitable closing of thousands of stores has begun. With real median household income 8% lower than it was in 2008, the collapse in retail traffic is a rational reaction by the impoverished 99%. Americans are using their credit cards to pay their real estate taxes, income taxes, and monthly utilities, since their income is lower, and their living expenses rise relentlessly, thanks to Bernanke and his Fed created inflation.

The media mouthpieces for the establishment gloss over the fact average gasoline prices in 2013 were the second highest in history. The highest average price was in 2012 and the 3rd highest average price was in 2011. These prices are 150% higher than prices in the early 2000′s. This might not matter to the likes of Jamie Dimon and Jon Corzine, but for a middle class family with two parents working and making 7.5% less than they made in 2000, it has a dramatic impact on discretionary income. The fact oil prices have risen from $25 per barrel in 2003 to $100 per barrel today has not only impacted gas prices, but utility costs, food costs, and the price of any product that needs to be transported to your local Wally World. The outrageous rise in tuition prices has been aided and abetted by the Federal government and their doling out of loans so diploma mills like the University of Phoenix can bilk clueless dupes into thinking they are on their way to an exciting new career, while leaving them jobless in their parents’ basement with a loan payment for life.

 

The laughable jobs recovery touted by Obama, his sycophantic minions, paid off economist shills, and the discredited corporate legacy media can be viewed appropriately in the following two charts, that reveal the false storyline being peddled to the techno-narcissistic iGadget distracted masses. There are 247 million working age Americans between the ages of 18 and 64. Only 145 million of these people are employed. Of these employed, 19 million are working part-time and 9 million are self- employed. Another 20 million are employed by the government, producing nothing and being sustained by the few remaining producers with their tax dollars. The labor participation rate is the lowest it has been since women entered the workforce in large numbers during the 1980′s. We are back to levels seen during the booming Carter years. Those peddling the drivel about retiring Baby Boomers causing the decline in the labor participation rate are either math challenged or willfully ignorant because they are being paid to be so. Once you turn 65 you are no longer counted in the work force. The percentage of those over 55 in the workforce has risen dramatically to an all-time high, as the Me Generation never saved for retirement or saw their retirement savings obliterated in the Wall Street created 2008 financial implosion.

 

To understand the absolute idiocy of retail CEOs across the land one must parse the employment data back to 2000. In the year 2000 the working age population of the U.S. was 213 million and 136.9 million of them were working, a record level of 64.4% of the population. There were 70 million working age Americans not in the labor force. Fourteen years later the number of working age Americans is 247 million and only 144.6 million are working. The working age population has risen by 16% and the number of employed has risen by only 5.6%. That’s quite a success story. Of course, even though median household income is 7.5% lower than it was in 2000, the government expects you to believe that 22 million Americans voluntarily left the labor force because they no longer needed a job. While the number of employed grew by 5.6% over fourteen years, the number of people who left the workforce grew by 31.1%. Over this same time frame the mega-retailers that dominate the landscape added almost 3 billion square feet of selling space, a 25% increase. A critical thinking individual might wonder how this could possibly end well for the retail genius CEOs in glistening corporate office towers from coast to coast.

 

This entire materialistic orgy of consumerism has been sustained solely with debt peddled by the Wall Street banking syndicate. The average American consumer met their Waterloo in 2008. Bernanke’s mission was to save bankers, billionaires and politicians. It was not to save the working middle class. You’ve been sacrificed at the altar of the .1%. The 0% interest rates were for Jamie Dimon and Lloyd Blankfein. Your credit card interest rate remained between 13% and 21%. So, while you struggle to pay bills with your declining real income, the Wall Street bankers are again generating record profits and paying themselves record bonuses. Profits are so good, they can afford to pay tens of billions in fines for their criminal acts, and still be left with billions to divvy up among their non-prosecuted criminal executives.

Bernanke and his financial elite owners have been able to rig the markets to give the appearance of normalcy, but they cannot rig the demographic time bomb that will cause the death and destruction of our illusory retail paradigm. Demographics cannot be manipulated or altered by the government or mass media. The best they can do is ignore or lie about the facts. The life cycle of a human being is utterly predictable, along with their habits across time. Those under 25 years old have very little income, therefore they have very little spending. Once a job is attained and income levels rise, spending rises along with the increased income. As the person enters old age their income declines and spending on stuff declines rapidly. The media may be ignoring the fact that annual expenditures drop by 40% for those over 65 years old from the peak spending years of 45 to 54, but it doesn’t change the fact. They also cannot change the fact that 10,000 Americans will turn 65 every day for the next sixteen years. They also can’t change the fact the average Baby Boomer has less than $50,000 saved for retirement and is up to their grey eye brows in debt.

 

With over 15% of all 25 to 34 year olds living in their parents’ basement and those under 25 saddled with billions in student loan debt, the traditional increase in income and spending is DOA for the millennial generation. The hardest hit demographic on the job front during the 2008 through 2014 ongoing recession has been the 45 to 54 year olds in their peak earning and spending years. Combine these demographic developments and you’ve got a perfect storm for over-built retailers and their egotistical CEOs.

The media continues to peddle the storyline of on-line sales saving the ancient bricks and mortar retailers. Again, the talking head pundits are willfully ignoring basic math. On-line sales account for 6% of total retail sales. If a dying behemoth like JC Penney announces a 20% decline in same store sales and a 20% increase in on-line sales, their total change is still negative 17.6%. And they are still left with 1,100 decaying stores, 100,000 employees, lease payments, debt payments, maintenance costs, utility costs, inventory costs, and pension costs. Their future is so bright they gotta wear a toe tag.

The decades of mal-investment in retail stores was enabled by Greenspan, Bernanke, and their Federal Reserve brethren. Their easy money policies enabled Americans to live far beyond their true means through credit card debt, auto debt, mortgage debt, and home equity debt. This false illusion of wealth and foolish spending led mega-retailers to ignore facts and spread like locusts across the suburban countryside. The debt fueled orgy has run out of steam. All that is left is the largest mountain of debt in human history, a gutted and debt laden former middle class, and thousands of empty stores in future decaying ghost malls haunting the highways and byways of suburbia.

The implications of this long and winding road to ruin are far reaching. Store closings so far have only been a ripple compared to the tsunami coming to right size the industry for a future of declining spending. Over the next five to ten years, tens of thousands of stores will be shuttered. Companies like JC Penney, Sears and Radio Shack will go bankrupt and become historical footnotes. Considering retail employment is lower today than it was in 2002 before the massive retail expansion, the future will see in excess of 1 million retail workers lose their jobs. Bernanke and the Feds have allowed real estate mall owners to roll over non-performing loans and pretend they are generating enough rental income to cover their loan obligations. As more stores go dark, this little game of extend and pretend will come to an end. Real estate developers will be going belly-up and the banking sector will be taking huge losses again. I’m sure the remaining taxpayers will gladly bailout Wall Street again. The facts are not debatable. They can be ignored by the politicians, Ivy League economists, media talking heads, and the willfully ignorant masses, but they do not cease to exist.

“Facts do not cease to exist because they are ignored.” – Aldous Huxley

 

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