Depends where you’re looking, but the holiday season wasn’t very festive according to the spending reports that are coming out on ‘the day after.’ To be sure, Elaine and I didn’t even exchange gifts here at the ranch on Thursday. Just a nice, quiet dinner (turkey and the fixin’s), a little candle light, bottle of champagne and a couple of good movies…
We had earlier come to the conclusion there wasn’t much that we didn’t already have two (or three) of. Besides, the after-Christmas sales between now and my birthday in late February should give up plenty of opportunity to save 10-40% on pretty much anything we need.
To be sure, retailer behavior before Christmas was at times tempting. A couple of weeks back, I looked at a new computer for work – 6GB, 500/GB/Core Duo machine with 19″ monitor and for $649 at Office Depot. But, I went back in Tuesday to pick one up and the price had jumped from a sale price of $649 back up to $889. No, thanks, I could wait.
We’ve also been considering a new car. Used Porsche 911 prices are coming down. But that wouldn’t create too many jobs except for parts houses for maintenance items. So I dropped by the local GM/Pontiac store Tuesday and looked at a new Solstice. Unfortunately they didn’t have the new hardtop version in yet (pictures at the Motor Trend site), so looks like January/February sometime before they arrive. Elaine didn’t want a Corvette (“Can’t see over the hood – it’s too long, at least my last one was…”) and while I can get a 4/5/6-speed, she’s insistent on a hardtop. “Just a lot quieter.” And even though gas prices are presently cheap, there’s something in the back of my mind that says “Don’t trust Big Oil!!” Yeah, good point….
Maybe in January/February the zero-percent interest programs will stop excluding the really desirable cars. We’ll see. Another thing I’m waiting for is to see if maybe there will be a tax break for ‘buying American’ – something that has disappeared as a spending issue to some extent since the foreign carmakers have put up plants in America.
On the other hand, my friend the Bond Dude pointed out that over at The Tax Foundation’s web site, you’ll might be able to find the state-by-state breakdown of taxes paid compared to federal spending received on a state-by-state basis. “California wouldn’t even have a budget issue if they got anything near their federal tax dollars back,” he noted. “But did you notice how a lot of states, and states that had senators against the auto bailout were the ones which got up to twice as much money from the Federal government as was paid in taxes?” Ouch. I hate it when he brings up the obvious. The most recent version of the report I could find was 2006 (I reckon these things take time to collate) but even so, I can see where he’d conclude that with California getting only 79¢ on each dollar of Federal taxes paid, same as New York, that these states would not be in budget hacking mode if they could do as well as New Mexico where there’s $2 of federal spending for each dollar of federal tax paid.
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That may seem like it’s getting off into the weeds of finance, but there are some large-scale, long term trends about that constitute the river we’re all going down and it’s one that doesn’t get much attention.
But back into the morning’s headlines, the point is that whether you want to pay the problem of a sick Christmas for retailers at the feet of the feds or the greed in the real estate bubble burst makes little difference if you just look at the bottom lines.
“Fresh survey shows gloomy U.S. retail sales: report” headlines a MarketWatch piece that they goes into how MasterCard figures the season down 5.5% compared with comparables.
As for what was dropping, a Bloomberg story says it was luxury items down substantially.
Why, even online sales were down 2.3% says a CNNMoney report.
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So how do we fix the problem? Can we wave a magic wand and stop foreclosures? Heck no! Not when the bankster bailouts are soaking up all the money.
The National Retail Federation has an idea, though. How about a series of four tax holidays per year, about one per quarter so that people can ‘save the sales tax’?
I don’t know about you, but that would make buying some of the big-ticket items (cars, major appliances and such) a ‘no-brainer’. The savings (at 6.5% sales tax) on a $30,000 car would be a couple of thousand bucks roughly. Yeah, makes it a no-brainer. But, of course, t’ain’t gonna happen in time to get us off-track from the pending National Layoff Festival. That one, unfortunately is already baked in the cake.
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While it’s pretty easy to blow off reports of 100,000 people being laid off in India’s gems & jewelry sector, because that’s ‘overseas’. But, it’s quiet another when we hear rumors that Boeing may have a sizeable layoff early in the new year (10%) and that Microsoft could lay off 10% of its 91,000 employees.
Couple that with layoffs that will come in the auto industry despite the miniscule bailout plan (at least compared with the banker-sized bailouts) and the reasonable expectation is that housing prices will continue to fall and families continue to be pressed by falling incomes on the one hand and soaring expenses for ‘necessities’ on the other. Just this week I was reading now housing prices had taken their worst one-month fall in 20-years.
The difference between past recessions and what shapes up as the Second Depression should become visible around mid to late February. It’s around then, say our linguistic friends, that the global/circular nature of the collapse of the paradigm will become obvious and will become ‘bespoke’ in MSM. But, until the MainStreamMedia figure out that ‘same-old’ solutions aren’t going to work, we’ll just have to suffer through the auguring in process as the collapse becomes viral and self-reinforcing.
So whether you’re on your way to work today, or just out for a little good old-fashioned sport shopping on the ‘day after’, make it a point to count the For Sale signs on your normal travel route. I’ve always found that the number of signs is a good indicator of how America is doing. When you see a big uptick in the number of homes for sales and a corresponding decline in things like the Help Wanted sections of local papers, start battening down for worse times ahead.
Best I can reckon, that’s what’s next. If you’re not out of paper assets already, safety of principal in your retirement account seems likely to become the whole ballgame for the coming year. Besides a Treasury Direct account, what companies do you know of that has near certainty of returns?
So things will continue pinball-like fashion through the whole of the economy globally, not just here in the USA. Japan factory output has just reported the biggest fall on record.
Quick! Look surprised.
GM’s Christmas Present
GMAC LLC and IB Finance Holding Company LLC has been granted bank holding company status by the Fed. Fine print in part:
“GMAC has also requested the Board’s approval pursuant to sections 4(c)(8) and 4(j) of the BHC Act4 to retain its nonbanking subsidiaries that engage in certain activities that are permissible for bank holding companies under the Board’s Regulation Y, including certain credit extension, loan servicing, leasing, and related activities.5 GMAC has also provided notice to retain its foreign subsidiaries under section 4(c)(13) of the BHC Act.6 “
Wham: Approved. OK, boys, line for bailout dough is right over there…
Fed Info: It’s “Trade Secrets”
Good coverage of the ‘hide the sausage’ game being played by the Fed with the major news organizations that are trying to get disclosure under Freedom of Information Act rules. No, the Fed doesn’t have to comply as they are not a part of the federal government. Besides, now they are hiding behind the concept that the information is a ‘trade secrets’ - oh, this is so rich…don’tcha just love it?
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I wonder if the Fed’s PR folks have figured out that banker arrogance is why things like discussion of the “Federal Reserve Abolition Act” seem to crop up when banksters are busily having their way with the public purse? No? I didn’t think so…
Historical Markers
Four years ago today the Banda Aceh quake down thousands.
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Jazz great Eartha Kitt has passed.
Weather Matters
Washington State has a statewide weather emergency going after record (or near record) snowfall over the past week. Seattle is not using salt on its roads because it’s not good for the environment (some is potassium-based, not sodium-based, BTW).
Christmas weather, always a gamble to some extent, saw the Midwest being a big loser this year.
“What Gives?” Department
Noticed today that “Washington asks Israel to clarify first sale of spy drones to Russia.“ Hmmm….
India to React?
Pakistan has reportedly canceled military leaves, which has me wondering if India isn’t about to respond militarily to the Mumbai terrorist attack.
