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Must See: Howard Davidowitz Destroys The Recovery Illusion, Debunks The Consumer Renaissance
Today's must see TV comes from the following interview of Pimm Fox on the consumer and the economy with retail expert Howard Davidowitz, who in 10 minutes provides more quality content and logical thought than we have seen from CNBC guests in probably all of 2010 (except of course for that one time when Erin Burnett kicked out Mike Pento, but that's a different story). Where does one start? Probably at the end: "I am not surprised by the strength of retail sales, because i knew that 30% of consumers are responsible for retail sales, and these 30% did much better because of the performance of capital markets. I don't think it is indicative of anything going forward. I don't think the economy is going to get any better. If you look at our fiscal and monetary policy, we went two trillion in the hole last year. Two trillion... to produce this... and unemployment went up to 9.8%! We've spent two trillion we're printing money we're going bananas. Our balance sheet, we've got $2.6 trillion on there, and what;s on there government securities, and MBS." And here is the kicker for the world's biggest hedge fund, which at least one person besides Zero Hedge appears to get: "If interest rates go up a point Bernanke's bankrupt. Everything he's bought is underwater. All the MBS are underwater, the whole country is underwater." Does anyone see the issue now with why rising interest rates, aside from predicting a "recovery", may also, courtesy of its now $2 billion DV01, "predict" the insolvency of the Federal Reserve?
Some other observations on the retail "renaissance":
- Walmart is 10% of US retail sales, has 150 million customers, and its stock it is down 6 consecutive quarters;
- Sears is the largest department store in America: "their stock is terrible"
- Best Buy had a huge earnings miss
- Toys'R'Us loss increased last quarter
- A&P filed bankruptcy
- Loehmann's filed bankruptcy
- Charming Shoppes is going to close 100 stores
- TJMaxx just liquidated AJ Right
And in addition to dissecting the collapse of Sears, Davidowitz observes what should be a loud glaring alarm signal for the likes of Ackman and all those who are betting on the resurgence of the US mall storefront and the likes of General Growth: the bulk of store traffic is moving online (where incidentally the only jobs created are those of packagers and QC line people either in China or in soe warehouse in TX, CA or FL). To wit:
Online sales have to lead you to question the whole retail selling strategy. We have 21 square feet of selling space for every man woman and child in this country. We already have double of what we need. With the explosion of online sales, what happens to all these retail malls and shopping centers which are marginals? Huge changes are going to be taking place as people continue shopping online.... In the end what do you do with the retail space...This is going to be a huge question for retail in the next ten years, that's why Walmart is starting to build smaller stores, that's why Walmart is building more overseas than they are building here. It's going to be the biggest retail change that we've ever seen."
The biggest losers: commercial real estate landlords. Read REITs:
Landlords better start figuring it out pretty quick because they already have occupancy problems, rent problems and everything else right now. I don't think the CRE problems are fixed by any means. That's why we are going to close hundreds of community banks going forward, we are going to close hundreds more. Those CRE debts are coming due and they will not be able to be rolled over. We've got lots of problems still coming up in the banking system, and the problems in the real estate issue is here for a long time.
In other news, Kool Aid to be served in aisle 5 of the next door Sears box from now until permanent closing time.
Full must watch video after the jump (we are looking for an embeddable version).
h/t etrader
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2 trillion+ pieces of cake.
This interview is being actively censored by Bloomberg. First the link no longer works. If you search the Bloomberg site they list his past interviews and say some results have been ommitted. If you search for the date and find the interview it abruptly terminates before he describes the assets bought by the Fed and says if interest rates go up a point we're bankrupt.
Meh, I watched it today at this time and I saw the part you mention, un-omitted.
There is hardly a better form of censorship than the self-censorship, ignorance, and apathy of a population of complicit, dependent drones.
Also... he said the Fed would be bankrupt if IR's went up. Not anyone else (coincidentally, everyone else is already bankrupt, Ponzi style). The Fed would be bankrupt.
But that is of course nonsense, because the Fed never need have pre-existing funds to loan out or trade out funds. As Chris Martenson puts it "When you and I write a check, there has to be money in the account we draw from. When the Federal Reserve writes a check, there does not have to be." Adapt that a little and you get: "When a hedge fund buys a bunch of bubblegum wrappers at top-tick prices and loses billions in market value on the trade, it runs the risk of going under water into bankruptcy. When the Federal Reserve buys a bunch of bubblegum wrappers at top-tick prices and loses billions in market value on the trade, it has no less power to do business as usual than before."
The Fed is the banking cartel's magic machine, and the cartel designed it. It will always be there to trade millions, billions, and thousands of billions of dollars of new money for bubblegum wrappers from the banking cartel.
He may be the only person who I agree with 85% or more of everything I've ever heard/read him say.
Whether that's a good or bad thing for me, I do not know.
I do know development and commercial real estate, and I've already bet substantially on a thesis nearly identical to his.
But for those paying attention to the details, we've already seen two of the largest mall developers in the country (Taubman and Simon Properties) literally use jingle mail to give the keys back to the banks on entire malls, strategically defaulting (non-recourse loans, too) rather than continue to pay the monthly or quarterly nut.
And then there's General Growth Properties, once a 60 dollar a share mall developer/operator, reduced to pennies, and fighting for its life with Bernanke's 'Maiden Lane' assistance.
Um, GGP is trading at $15.70 per share with a $15 billion market cap.
I am wrong. Pro forma for restructuring old shares are $15.70 X .0983. Sorry.
Real men aren't afraid to admit a mistake. Well done.
Just start at 11:28. That's the moment where giddy/shocked emotion takes over the professional posture that was intended throughout the interview.
(queue: "two trillion")
I want his face on a t-shirt!
"Two Trillion Dallahs!!"
this guy was on cnbc the day the bailouts were announced back in 08 and said that the bankers just wiped out the gold jewelry in tiffanys that day.
I'm in CRE. In late 2008, I read a Deutsche Bank analysis of CRE market, in which they called for an overall **40%** decline in US CRE values. I found a decline of that magnitude simply hard to believe. 40% decline leaves most CRE loans well underwater. But it happened, and the mess continues to worsen, IMO.
I'm following some CRE locally with an eye to a possible investment, but mostly out of morbid curiosity. The rare deals are being closed at 40%-50% off the 2008 valuations. We have a vacant strip mall where the for-lease sign faded to illegible, the wood posts rotted and one day it finally blew over.
Howard is great, with first-class style.
Re Atlantic & Pacific (A&P) -
Jim Sinclair of JS MineSet, has suggested that the bankrupt A & P will be merged into Stop & Shop, and the new company will now be the Stop & P.
+++ LOL
I choked on my olive!
+
I dropped my cigarette peabody choking on an olive
That was the only "dirty joke" my Grandmother ever told...thirty years ago.
Thanks for the memories.
Don't forget Centro:
"which manages $18.6 billion of shopping centres in Australia, New Zealand and the US - put its assets up for sale two years after its acquisition spree in the US backfired as the world's largest economy contracted and debt costs soared."
http://www.heraldsun.com.au/business/centro-assets-ripe-for-the-picking/...
Lost 98% of its Value - 17c /share
Blackstone will choke because of the lack of maintenance carried out in the last 2 years.
This company is walking dead (zombie)
Somethiign many folks, even those steeped to their gills in "alternative" world-views neglect to understand is that many of these "decisions" to put vast sums or money into enterprises that any fools with 15 minutes of study could see are rotten to the core, are nto made by fools.
In fact, they are made by highly intelligent people, who rode to their places of vast wealth on the same smarts.
or wait, is it really like that?
In reality, all these big moves are decided by the same small group of people through their willing minions. It's three card Monty on a global scale. All this shifting of money, often huge amounts of PE money covers things like:
1) Money Laundering
2) Tax evasion on a global scale
3) Returns of favours for losses previously inflicted
4) Propaganda for sheeple
5)....... fill in the blanks.
ORI
http://aadivaahan.wordpress.com
I've covered this topic left and right, since 2007 after warning that GGP was insolvent and bound to crash. I got into a tit for tat with the CFO who called my research "garbage". A year after that comment, they filed for bankruptcy. See the whole story and over 700 pages of analysis at "GGP and the type of investigative analysis you will not get from your brokerage house"
Most recently, we went throught the true weaknesses in the entire retail business, not just from the real estate side. This is a note that a BoomBustBlog reader sent me over the summer…
Reggie:
I took a screen shot of my play money account and the shorts from the four part series on why the consumer isn’t coming back. Consumer retail has been nailed since May and from the 4 stocks you picked, here are two I chose to follow.
This is an example of exactly what we were talking about in our subscription documents regarding the ridiculous run up in consumer discretionary shares when taken in context of the American consumer and the stress born from the Pan-European Sovereign Debt Crisis (click the link for our detailed analysis). You can find the earlier articles in this consumer mini-series as follows:
There are still a couple of mall REITs that have been levitating above water, but have but so much time left. I will be commenting on them in detail soon.
In addition, there was at least one other guy on CNBC who spit the truth, hence I must take exception to Tyler's comment...
Also Must See: Mirror, Mirror on the Wall, When is the Next AIG to Fall? | Marc Faber http://www.youtube.com/watch?v=H0sS6a9RW2E
An excellent lecture.
Anyone paying attention knew CRE was going down...pretended and extended but the bills are due and growing.
Anyone paying attention also realizes the SDS will only be allowed as long as it continues down. Not if, but when it should explode to the upside, the SEC will shut her down. And a few other undesireable short funds about the same time.
How dare they speculate against the people!
The Fed (all central banks really) has been insolvent for a long time, it's just that it has been in the peculiar position of being able to dictate the money markets, since the money markets have been more or less denominated in its own credit.
That said, they are not gods, they cannot really turn water into wine by wishing it to be so.
It's sad that Howard still believes that the 'real world' really matters any anymore with respect to CRE and leveraged finance...pathetic loser.
It may not matter as much over the short term, as monetary policy has a way of ramping even the ugliest stocks, like REITs up, but you can be assured that quarter after quarter of declining foot traffic, and more importantly, sales per square foot (the holy grail of retail), will ultimately doom brick and mortar operations for exactly the reasons he states.
There will be a few that adapt and thrive, and services will always need a brick and mortar presence to conduct the business exchange, but I'd be pissing my pants if I sold a commoditized product available on Amazon or its many iterations.
Services to consider for transformation: homeless housing, massive massage parlors (to counter the stress), huge child care facilities, and adult services (all, of course, subsidized by the Feds). They could probably offer cross employment!
And citizen re-education centers...
"Luxury" Prisons
Isn't that another name for mortgage? :P
" It's sad that Howard still believes that the 'real world' really matters any anymore with respect to CRE and leveraged finance...pathetic loser. " .......... now, now .... be nice. I adore HOWARD .......... he's everyone's favorite retail analyst !! HOWARD is in a class by himself, he's super cool & he is the man !! ...... besides, he's super-fun to listen to !!
Howard's great. He's one of the few mainstream analysts who sees through the smoke and mirrors and calls out Bernokio on all of his money-printing bullshit.
If interest rates go up Bernanke is bankrupt?
What's the average duration of his portfolio?
Whats his cost basis for the same portfolio?
If you have no cost how can you loose money?
When the PD's have nothing more to sell who does
the Fed purchase from?
Can this go on indefinitely?
I love the way Howard always leaves his interviewers dumbfounded and bootlipping after he pummels them with a dose a reality, and he always does it with a big smile.
Yes, that was the best part...the host's response. The look on his face is as if Howard let loose a bunch of expletives!
Too right, he panicked and said 'Times up!' pronto before he got a spanking from upstairs.
I just happened to stroll through one of the larger malls in one of the larger towns in our neck of the woods. I didn't actually count but I'd guess that about 20% or 25% of the store fronts were boarded up with "space available" signs. One helluva recovery.
sunny
I was in Phoenix recently, and got a chance to see the speculative office, industrial and commercial real estate built at a time when 68,000 residential building permits were being issued annually just for the Phoenix city limits (not including Glendale or the other sub-cities of Phoenix, which also were booming).
It was incredible to see brand new, first class (class A), completely empty buildings everywhere.
It wasn't just individual new buildings that were empty. Whole industrial and office parks in excess of a million square feet were 100 percent empty. Some had the names of Fortune 500 companies on or near the gate, in anticipation of occupancy at one time (and no doubt for marketing purposes), but they were completely empty, with not even a guard at the gatehouse.
It's one thing to read about it, and quite another to see it.
Here in Nor Cal I good show you malls with gold leafed signs and palm trees just sitting half done. And I'm not talking strip malls I'm talking the big kahunas, nothing spared. Endless strip malls completely empty other then the CVS or another anchor store. Automalls with empty dealerships and grass growing up from the parking lots. It is a total retail bust and guess what? They are building more???? Nobody seems to get it, they just think everything is going to miracously spike back to the 06 highs. Watching new housing tracts go in next to an existing 240 unit plan that only have 10 homes built is also quite amusing.
you must be talking about Palladio in Folsom. Whole Foods is opening up soon, and that will drive a lot of activity.
I don't personally understand why people flock to a new whole foods each time like it's the second coming of Christ, but people do it. It's odd, they sell the same crap for a boatload, and people act as though they've never seen a Whole Foods before.
You remind me of Buckeye, AZ, a community west of Phoenix. Three years ago, I was pitched participation in bank resi development loans there. Passed of course. So I googled Buckeye, and found this!: http://www.youtube.com/watch?v=7leEg5ENW0Y
Glad you had the wisdom to pass. I was born and raised in Maricopa Co. AZ and have lived in Buckeye since 1992. I have a small farm and so live in the agricultural part of town. It's still a great place to live with little pollution, traffic or crowding and only 30 miles to downtown Phoenix but the development like your link showed were quickly on their way to ruining our bucolic lifestyle. Now the beautiful agricultural areas are littered with the dead and rotting corpses of failed master planned communities. Many people here still think things are going to turn around and land prices will skyrocket again but they're wrong. I'll just be content growing alfalfa, dates, pecans and citrus!
fertile agricultural land, always had value, always will
"I'll just be content growing alfalfa, dates, pecans and citrus!"
Man the world sure could do with a lot more of the likes of you around these days...
Say I didn't have any FRN's handy; would you be willing to part with a portion of those tasty comestibles for the appropriate mass of silver or gold?
(Disclaimer: assuming that such an exchange was endorsed and certified by our ultimate supreme being leaders and masters of time, space and dimension; all the appropriate taxes were paid and hoops jumped through with dotted t's and crossed i's, of course.)
GoinFawr,
Thank you for the kind words. I would certainly barter some of the fine produce for the fine metals. By the way, they're the finest Medjool dates in the western hemisphere!
sort of like in China - brand new empty buildings [cities]
between the colorado dam system silting up and rising fuel costs, phoenix has a few decades left. it will be a ghost town and monument to delusion. i look forward to the desert reclaiming that hellhole.
TO: TruthInSunshine
on Thu, 12/30/2010 - 18:58
#838740
i'm very familiar with the phoenix market and know more than a little bit about the build out side of the cre biz. the wretched excess and monumental over-reach that occurred was obvious to any one with any understanding of the history of the industry. in the late 1980's, arizona was ground zero for another real estate depression that took out every locally owned lender in the state. nobody remembered that when it counted, though.
not only is cre in deep trouble but the entire urban sprawl paradigm is suspect. we have stranded untold trillions in an unsustainable model based on legacy transportation costs that can only escalate.
if you are in real estate, core and infill are the essential location concepts going forward.......
Yep.
I am seeing more redevelopment projects in older, densely populated areas than ever before, with many such developments using 'brownfield' and other local, state and federal tax credits to re-develop even older retail properties (something not contemplated when these statutory tax programs were put in place).
These areas were 'unmentionables' back in the 2000 to 2006 period, as everyone was focused on the "the high per capita income outer suburbs."
In fact, I am seeing older, community malls being redeveloped into 'power center' retail sites, anchored by big box stores, and strip center on the ring road.
I will be out your way in May, for the ICSC Conference in LV. There were about 1/3 the attendees last year compared to the head count in 2007, but I still like attending anyways.
Stop it. You're scaring the troll.
Pimm Fox is not a koolaid clown. He asks hard questions of everyone in front of him, and he understands the material and asks for elaboration for whatever position the interviewee is taking.
I've seen him do this with inflationists and deflationists both. He's solid and as objective as his managing editor will let him be.
Underwater, bitchzes!
GeZz. It's been 2 years of these stories added to the same ones 2 years before that. It's time to let it go. It's news but the guberment has kicked the can so far down the road its hard to see.
I don't see the point anymore.
As for his core strategic point, sitting oil aside for just a moment, the question arises of what transactions cannot take place online.
Luxury clothing will always need to be tried on.
Food. One word there. Food. If someone figures out a business model that will let that happen online, fine, but it just is not out there yet.
Physical plant repairs -- residential or otherwise.
Health care -- though I put this in a food category in that maybe someone will work up the necessary automation for blood tests and other measurements.
Leisure and travel -- though the holodeck will destroy those industries too.
There's damn little in the brick and mortar space that has a bright or even visible future.
My theory is that delivery tubes - like the pneumatic ones you sometimes see at drive-thru banking windows - will eventually connect most homes in America to centralized distribution sites. Anything that can be fit into the tube, or broken down into pieces that fit, will be delivered this way nearly instantaneously. Order online - groceries, clothes, toys, medicine - and it gets placed into a bar-coded tube and whisked off to the customer through the network. It's simply a logical extension of the packet-switching concept (examples: the Internet and intermodal truck transport) applied at the retail consumer level. Buy online, receive instantly, stay home.
Except teleporting, that's indeed the only way available to make this possible. It's the rightful continuation of Roman acqueducs and contemporary oil pipelines. But the infrastructure cost would be astronomical (a lot more than the cost of the electrical, water and telephone supplies already installed). I'm also concerned on the size limitations and the energy needed.
Huge energy requirements, but none of that nasty gas or diesel! That will make it at least look 'clean'. Also, it may be closer than ever.
http://www.foxnews.com/scitech/2010/12/17/beam-teleportation-years-biggest-breakthrough/
When I was a child in New Jersey, ca. 1954-64, the local hardware store had a pneumatic tube system for validating checks and cash payments, as well as personal accounts. It had been in existence since the 1920's. This was already an outmoded technique, but I found it fascinating.
In 1975, I moved to France to work. The French Post Office still had pneumatic tubes for "instant mail" in Paris. That ended shortly thereafter.
This technique is still used in banks because of the extraordinarily small surface area required, and it also more or less ensures a certain degree of safety. It is prohibitively expensive for larger surfaces, even if the infrastructure already existed, which it does not.
You are literally talking about a pipe dream.
Did that theory come to you while watching the movie "Brazil"?
Twenty five years ago we laughed at the antics in that movie. Now we're living in it.
Funny (or not as it were) isnt' it?
One of my all-time favorites! Only have a handful of DVDs, and this is one of them! I think that everyone should watch this movie.
Keep wishing... This country can't figure out how to get houses wired for fiber optic internet connectivity ("the last mile"). Verizon has all but pulled the plug on FiOS - http://gizmodo.com/5503428/verizons-fios-rollout-drawing-to-a-close
Maybe when cities get the nerve to replace their aging water lines and sewer lines, they will trench for some "tube" too.
No. Look at someone's bi-weekly Walmart shopping trip results (20 or so miscellaneous purchases) and try to duplicate those purchases online. The shipping/handling charges and time shopping will demonstrate that the Walmart shopping trip was the better strategy.
I buy a lot of food products on Amazon. I don't pay shipping, and the food is cheaper than I can get it for at Walmart. Of course, you can't get fresh food this way, but they are rapidly expanding their selections. Of course, it means a lot more planning ahead, but that is smart anyways--helps prevent impulse purchases and subsequent overeating.
Consider using Amazon's "Prime", $80.00 per year, all purchases eligible for Prime are shipped "free" with two-day delivery. Now, perhaps get some extended family, friends/neighbors to join in, even just one or two.
I shop Walmart also, but my online purchases are besting them. Depends on one's diet, of course, so if you are high-carb, ....
Appliances. Just bought a refrigerator, wouldn't have dreamed of buying in online - need to see it in person, measure it, etc.
We just purchased a refrigerator online, and it was delivered and installed (I insisted on a copper line hookup to the ice/water dispenser - I had the materials and everything prepped anyways) the next day.
I simply had to ensure that there was enough rear and side clearance in the opening that was dedicated for the refrigerator, which I did before ordering.
It took me all of 5 minutes to do that and order the refrigerator.
And I don't even hook up the ice/water dispenser because it's always the first thing to break.
Another example. A few years ago I bought a new acoustic guitar (a Washburn); my local dealer had a model I really liked, I'd stopped by a few times to play it (because once again, I wouldn't dream of buying a guitar I couldn't actually see/hold/play). Then I went and bought it online at Musicians Friend and saved a bundle.
The guitar shows up with poor fretwork, actual burns on the fretboard (the one I saw in the shop was fine); a pain in the arse but not enough of one to actually go through the hassle of sending it back. Bottom line, though, it wasn't the guitar I played in the store. And then, about 2 years later - the local dealer closed his doors.
Bottom line, your mileage will vary on this but there are certain things I couldn't imagine buying without at least having the opportunity to kick the tires first. Though maybe my kids won't feel that need, who knows
well, they do publish the specs/dimensions online. So, go ahead, visit the box store, write the model down and get home and online to check pricing.
Food. One word there. Food. If someone figures out a business model that will let that happen online, fine, but it just is not out there yet.
There is and has been for a while - Fresh Direct.
In New York City, we have Fresh Direct for groceries. Very good quality, reliable delivery, huge selection, excellent website, very well respected even by professional chefs. They operate out of a single massive plant with a very smart and forward-thinking business plan. Their trucks are everywhere, and they deliver in a tight two-hour window. Delivery is about six dollars, and their prices are pretty close to the prices you'd pay in a local market. Convenience and quality is everything.
I think the business model works best in a densely-populated urban environment. The trucks park in mid-block in Manhattan and they can service 15 or twenty homes at one stop. It also works in the outer boroughs as well. I'm not sure they'd work too well in a suburban environment with long distances between stops.
Just visited the outlet mall in Anthem (North Phoenix). I have been there many times over the past 13+ years. I have never seen it so empty- I would guess that there is between 30-40% of the retail space that is vacant, which is odd for a so-called recovery. Places like Phoenix/Vegas are going to be destroyed with any additional collapse of retail spending and reduction in physical retail presence. All these places have done is create $10-15/hour jobs in retail for the past decade. Can you say another 10-30% decline in real estate in the next several years in these locations as even more (marginal) jobs get lost?
I really like that man....
Howard's a corker, always a great time when Howard espouses the fugly truth. Pimm and much of the Bloomberg Media staff gets it, and they're very accessible via texting. I pulled the plug on CNBC over a year ago, and my trading results have been much better. Don't get me wrong, Bloomberg does have their share of estabishment appologists on the show, but they have an equal number of genuine guests that don't have a CFR spin.
That Tom Keane on the morning BB radio show is a Keynesian assclown in my opinion.
He and Kudlow getting into dress-buying decisions is just too much for me.
One other point on all this.
There is a rush to the altar to worship online sales, but while there are fireworks and noisemakers held up high about double digit growth rates, the numbers I have seen say less than 20% of total US retail sales are online.
And as I recall, **MUCH** less than 20%. No one buys food or gasoline online.
Well, you can buy food online - Peapod, and even non-perishables on Ebay, if you're willing to get raped on the prices, but essentially you are correct. VERY small % of foodstuff purchased online.
I've indeed always wondered why food commerce online was not more developed. The possibilities offered by the Internet are enormous, reaching far beyond the commerce of movies, clothes and electronics.
The ideal will be a giant unified marketplace - not the eBay crap - where everything can be sold and bought (scrap metal by the ton, broken computers, precious metals, oil, everything).
I know Alibaba.com explores the idea, but this site isn't very satisfying and does not propose auctions.
The economic and recyling consequences of this marketplace would be tremendous.
Or maybe I'm just playing too much to Fallout:New Vegas, where every buyer accepts your scrap metal and scrap electronics for a few caps.
Non-perishables might work, like canned goods, but I'd imagine the storage and distribution costs are too high for perishables and things that need to be refrigerated.
They tried it in the late 90's with things like Kozmo but I don't think the numbers really work.
Amusing how art magnifies life. FRN's/nuka cola caps, people will assign worth to just about anything to facilitate trade.
Indeed. That's why I think that even though PMs will outperform every asset class on both nominal and relative terms, it is not granted they will again be used as a currency by common people, even during a shit hits the fan scenario.
They will take the most practical thing at hand - just like cigarettes were sometimes used in war territory.
By the way, I wonder if Fallout's developers are somehow libertarian or monetary aware. There's some interesting things in New Vegas about the NCR creating "inflation and taxes", and the competition between the three forms of money. In any way, it's a great game. I choosed Mr House's side. I just liked the man. Reminded me of Howard Hughes.
I'm sure you can order a pizza online, but otherwise yeah, the local 'Food Flood' will still be around for awhile yet; unless of course Monstrous Santa finds a way to genetically modify us so that we can all survive on Tang. Not quite there, yet, but I am sure someone is working on it.
And PM's 'performance' doesn't really matter as far as them being used as a currency (after all they will always at least represent the value inherent in the effort it took to procure them): if a big enough slice of any nation's population has in its possession even a small amount, sees PM's as money, is willing to use them as money, and considers them more fungible for goods and services than FRN's, well guess what: Robert's your father's brother.
We actually tried out Peapod for a while. Very convenient for busy people, but costly. In our case the convenience didn't outweigh the cost. I think Peapod is still in business though, very occasionally I will see one of their trucks about town. Are there any other online ordering/delivery services such as Peapod that anyone is aware of?
I agree - seems like food commerce would be much further developed though there is the problem of perishables to deal with, and people like to eyeball and handle produce and melons and stuff that aren't food commodities (canned/dry goods). I will say though, the produce we received from Peapod was excellent - not like they threw the crap in there.
Grocery stores are already very low margin businesses with most employees doing exactly what they'd be doing if the store were online. There's no potential of "creative destruction" in that space for an online model to succeed.
Also, predictions of disruptive new technology always forget that the old businesses learn to use the new technology, too. My local grocery now has scanners to replace the union clerks.And if they need to compete even more aggressively, they'll start doing food and wine pairings, menu planning, joint ventures with coffee bars ---oh, that's already happening.
Finally, most of the readers here probably don't like to shop and fantasize about a future where all there needs are met automatically and remotely. At least half of the population feels otherwise.
in NYC freshdirect.com is pretty huge. maybe it only works in a very dense urban environment, but the model can work. use it all the time.
and yet i still see STRIP malls being built here in Mall of New Jersey......even with my own eyes, its IMPOSSIBLE TO BELIEVE !
That kind of stuff almost always has some kind of gov't stimulus funding in play.
When will HarryWanger be in here debunking all this? That dude's business is rocking he says.
the Harry Wanker sells online porn - he dresses it up by calling it "discretionary consumables"
Just ask him to name anything specific. It's fun.
Thuth tellers are an endagered species these days. This market is going to have the correction from hell some day soon!
Why?
Outside financials there is no violation of traditional FASB standards. The earnings are accurate. The financials are all crap reporting, but they will be allowed to hide behind FASB mark to hope standards . . . let's just accept it . . . forever. There will never again be a mark to market requirement on banks. Oil depletion will starve us all before any such thing is imaginable.
So . . . why? The enormous cash totals on company balance sheets is from selling corporate debt in huge quantities at 0% interest rates. That cash is like a floor under their stock prices.
The way this ends is visible but unpredictable. Their revenues will die because they won't be able to afford to ship anything as oil grinds them to rubble. But until that happens, the earnings are real.
At the end of the video, the interviewer suddenly shuts Davidowitz down just as he really gets going. Look at Davidowitz' face at that point. He suddenly realizes that the guy interviewing him doesn't want to hear this message. He gets it! He realizes that this is not a welcome discussion or news. It's not part of the agenda.Great vid. I posted it on my own blog. Thanks!
I wonder why they didn't talk about Quill Corp vs. North Dakota since they spent a lot of time talking about online sales, and doomed commercial real estate, especially malls. Seems like the loss of revenue by the government from real estate will be found again in "Fairness".
http://ndretail.org/News/Retail%20News%20Summer%202010.pdf
......and this adds to the local and state revenue problems with reduced property taxes (empty malls get devalued) and 0 sales taxes from those on line sales....
Prescient. Sell your REITs while you still can.
...and another chimes in on the Fed. going BK:
"Jim Rickards continues to illustrate that he is one of the truly brilliant and original thinkers in today’s financial world. Jim’s latest piece exclusively for the King World News blog is a must read. Here Jim discusses the Fed going bankrupt, “Right now the Fed’s balance sheet shows about $57 billion in total capital. Current assets are about $2.3 trillion. The current money-printing plan will take total assets above $3 trillion. At that level, it only takes a 2% decline in asset values to wipe out the Fed’s capital. Put differently, it only takes a 2% drop in the average value of assets on the Fed’s balance sheet for the Fed to go bankrupt. And this is in an environment where various markets frequently go up and down 3% in a single day.” King World News
That's quite an observation he makes there. I guess the first question that comes to mind is who is marking assets to market these days?
Oh, and didn't the FED just print the money to buy those assets in the first place? What's the restriction the FED has on money printing these days? What impact on the world would result if the FED was a trillion underwater on assets it held on it's books?
I just don't see why a congressionally sanctioned criminal institution would care about such a development.
I hold bonds primarilly and experience .5% daily volatility
much more often than I would have ever dreamed. My average
duration is about five years. This stuff is not supposed to
swing that much in a day. Swings of .1 or .2% in a day OK
but not .5%. The Fed has a shorter duration and therefore
it would take more than a 2% decline in bond prices in
one day to bankrupt them. It may take two days. Having said
that I think they are buy and hold investors.
Cheer up ZH bears, 2011 isn't all that bad:
http://www.chron.com/disp/story.mpl/metropolitan/7359848.html
Mandatory unpaid furlows in big H town. My, my. What days we live in. Houston is broke.
Not that I'm necessarily surprised, but interesting to note that revenue-generating positions will continue as normal. I wonder if folks understand the motivation here? Why accept the bill for non-revenue generating gov't employees in the first place?
Yeh I read that in the Houston Barnacle about the revenue generating positions will continue on. Heck , I guess that means cops will continue writing tickets. Ha ha
Who's bearish? With Zimbabwe Ben at the helm I'm quite confident he can ruin the dollar enough to get me big notational gains. QE4EVER and ZIRP4LIFE!
Leo, advertisement is a great way to shift the herd.
Let's review reality.
Aggregate outcome of the 2010 EU wide stress test exercise coordinated by CEBS in cooperation with the ECB
http://stress-test.c-ebs.org/documents/Summaryreport.pdf
Here is a great infomercial for you..
Shake Weight™ - OFFICIAL VIDEO AD
http://www.youtube.com/watch?v=xXHUdvvHTkw
+ Debbie Does Dallas
Well its year end. Can a gold bug compare his gross profit on investments to Leo"s investments to see who came out on top? Oh nooooooooooo !!!!!!!!
@Leo
Didn't watch the vid, but the chick in the yellow bikini has no ass just like you got no brain. That's for adding so much to the discussion here.
I love this guy. Enough said.
Short strip malls!!
Go long strip clubs!
I love the mixed message of sound vs what was on the screen.
As Howard was saying the gvt spent $2T, the economy got worse and unemployment went up. On the screen you see "Retail sales up 5.5% during the holidays."
If interest rates go up 1%, everything the FED owns is underwater.
If interest rates go up 1%, everything the FED owns is underwater.
If interest rates go up 1%, everything the FED owns is underwater.
If interest rates go up 1%, everything the FED owns is underwater.
If interest rates go up 1%, everything the FED owns is underwater.
If interest rates go up 1%, everything the FED owns is underwater.
True. That's why they're trying to keep the rates low. This country is so FUBAR.
If that's the case, who's gonna know?? Just askin'.
Every other country in the world. And since our currency is a federal reserve NOTE, a note from a private bank who's capital reserves are worthless, there will be a problem.
Exactly. This is what Jim Rickards was saying on KWN couple weeks ago.
At such near zero rates, any rate increase is like napalm to value of bonds
The Fed has painted itself into a corner. This was a one way trip for the FR.
I think they're moving the HQ for WRC to the IMF
+100% confident the Bernanke can control this /snark
Nothing to see here. We're in a f*cking Depression.
I am so sick of people saying recession or double dip.
Stop the lies, you a-holes.
Pimm Fox is a nitiwt.
Howard Davidowitz, HarryWangjob's arch nemesis!
Howard ROCKS!!
Au,Ag, both up nicely...and oh,,,Howard ROCKS !!!
Asia loves gold.
Dallas had 3 furlough days last fiscal year. This year there is 8 mandantory civilian leave days with higher paid city workers taking additional pay cuts. I don't know about other locations, but NorthPark Center was very crowded over the Christmas season.
Right and on top of that OT has been cut for EVERYONE - including police and fire
I would like to see a survey, or some google imagery, of every mall in America showing the number of boarded up spaces...
http://deadmalls.com/
That is just sad & depressing.
For anyone in their late 20s to 30s, don't you remember when malls were the place of social interaction for youth (for better or worse - and we all know now with some wisdom, it was for worse)?
The mall as 'social exchange' phenomena, with 'Fast Times At Ridgemont High' being a cultural inception of the trend?
When I waas young, everyone lived within 3 miles of the town center (suburb of Boston). Everything was downtown; movie theater, pharmacy, jewelry store, grocery store, etc. There were only 2 malls in all of Eastern Massachusetts; it was like going to Disneyland.
When oil goes to $10/gal, maybe we will have to go back to local stores again, riding bikes and walking, taking a bus. No more Big Box stores, no repetitive strip malls. How many friggin Chinese Restaurants or Dollar Stores do we need anyway. For the first 20 years of my life, there was only a handy no name burger joint, one liquor store, and one shop each for men's or women's clothes.
It wouldn't bother me to revert to this lifestyle; fewer choices, but simpler way of living.
The only problem with your fantasy is that all the merchandise will be secondhand sold out of dilapidated buildings. You will be exchanging a can of chili for some used underwear until we can get our manufacturing sector rebuilt. China will seize all of "our" manufacturing equipment in lieu of treasury bond redemptions.
In Ohio, when Rubbermaid was forced to merge with Newell, who do you think was there at the liquidation auction of Rubbermaid's capital & equipment?
That's right: Chinese buyers, from Newell's China wing, nearly exclusively. They bought tons of pristine equipment, including state of the art plastic injection mold and extrusion machines, hauled them to waiting ships, and sent them to China.
When they got to China, they unpacked them, hauled them to newly built factories, and began producing the same style rubbermaid containers for Walmart.
What preceded all of this?
Walmart refused to cave into Rubbermaid's U.S. division's demands for a price increase, as they were losing money on every unit sold to Walmart. So Walmart lined up alternate production with Newell in China, forced Rubbermaid to outsource production to Newell in China, and the shit got made on the same equipment anyways, and sold to Walmart even more cheaply.
In reality, Rubbermaid was constrained because of relatively high labor, regulatory and other costs in the U.S.; costs that were obviously much cheaper, or non-existent in China.
So the U.S. employees lost their jobs, the factory in Ohio closed, and everything just shipped over to China.
And that is a factually true story.
"Walmart refused to cave into Rubbermaid's U.S. division's demands for a price increase..."
Actually, it was Rubbermaid who was unable to meet Wal*Mart's demands on price.
No one makes demands on Wal*Mart. No one.
You are absolutely correct.
I should have written that 'Rubbermaid foolishly & naively refused to capitulate to Walmart's demand to reduce its wholesale unit pricing,' which it should have known would have resulted in the loss of 88% of its revenues instantaneously, and the consequent collapse of its revenue model and ongoing solvency.
Such is the power of Walmart, or any retailer/distributor, when they own something anywhere near 88% or anyone's target space (no pun intended - or is there?).
http://www.rubbermaid.com/Category/Pages/Category.aspx?CatName=shoponline
http://www.pacificviews.org/weblog/archives/000714.html
Suppliers have been forced to cut their prices if they wish to supply WalMart and this has forced the closing of numerous American factories and opening factories in China, all so the supplier can meet WalMart's price requirements.
http://www.newellrubbermaid.com/public/index.aspx
You cannot compete with slave labor.
No one can.
The only response is to starve them -- underway this moment.
An example of the relationship between predator and prey in nature. The predator can starve to death. The correlation between Walmart and there customers is interesting .
http://books.google.com/books?id=iECjpLvkK6QC&pg=PA172&lpg=PA172&dq=can+...
Got sheep?
(d)
Well.....although I agree with Howard's points the Fed is caught in a no win situation with rising interest rates. Even if China revalues the Yuan to market value it will simply mean a transfer of somewhat manageable inflation from China to unmanageable inflation to the US. Will the Fed then sell its toxic assets to the open market or instill hyperinflation by printing more money? The two choices facing the Fed are dammed if you do and dammed if you don't.
It was never about recovery. It was about bailing out the states, it was about bailing out the bankers, it was about bailing out the auto unions. If it happened to cause some recovery, fine. And you know in some perverse, stumbling, unexpected way it may actually cause one. Bugs_ checks his watch - well actually I should check the calendar in the Deflationist's lounge (I wonder if we'll have to pay extra for the 2011 calendar?)
"Wal mart has been down 6 straight quarters"...."46 million on food stamps".........
I don't GAF who this guy is; if you fact check the first couple minutes of his spiel (I didn't waste my time watching beyond that) he's wrong about almost every figure he quotes.
The power of the blogs is that folks have the say-so to call BS & I call BS on this guy big time.
He might be sincere, but if you go on TV & quote a bunch of incorrect stats - you should stay home instead & get fatter. Probably, his wife doesn't call him on his BS.
Chinaguy - I don't think he means the stock price. I think he means some metric such as same store sales.
A little respect for the great Howard is in order IMO. There's a reason why he gets on these shows. He's no Dick Bove. He actually knows his stuff.
And the Ponzi moves forward as like a shark it must move or it dies.
yah, and good for chinaguy for challenging stats, but chinaguy is wrong. I just did look up same store sales for walmart and a simple google is strewn with articles over the past year announcing decline.
The interviewee is right on this. chinaguy is wrong, but thumbs up on the challenge.
I think the foodstamps number is also accurate per the latest data.
yup http://www.reuters.com/article/idUSTRE6465E220100507