This page has been archived and commenting is disabled.

The Retail Death Rattle

Tyler Durden's picture




 

Submitted by Jim Quinn of The Burning Platform blog,

“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

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 01/20/2014 - 19:57 | 4349702 yogibear
yogibear's picture

I see people with top shelf cars shopping there. Don't know if they have money or their flat broke putting on a show.

Tue, 01/21/2014 - 00:08 | 4350556 Ward no. 6
Ward no. 6's picture

crazy as it is but a lot of ppl who go there do have money!

Some of the ppl I work with, who are finacially well off , shop there !!!!

I don't get it. I really, really don't

They are bargain shoppers even though they don't need to be.

I find it rather odd.

 

 

Mon, 01/20/2014 - 22:09 | 4350175 _SILENCER
_SILENCER's picture

You're right--real food, good clean food, is very cheap.

Watching people in grocery stores is fun. Whole Foods is the biggest fucking rip off in the food game. You see the most clueless asshats in that place.  Granted, that store does have some good shit (which you can also find at a good farmers market), but not nearly worth that assinine premium they charge so you can scamper around with your "Earth Friendly" bag as you load young Dakota and her soy-laden brother Barrington into your Obama bestickered Prius before hauling them to to Ipad fingerpainting class.

Hipsters shuffle through fuckstick central there like a viscous ooze made from knit hats and skinny jeans. Blown out botox broads desperate to turn their toxic blood chemistry around flood the supplement section, bleeding funds on $65.00 bottles of Dr. Shitwagon's Ultra C Blend tablets. A goddamn $39.00 six pound bag of goddamn dog food for some creature that shits everywhere, refuses to wash itself, and won't shut its mouth tumbles into her cart.  Prancing gay men flounce into the produce section and buy kale or whaever bitter leaf you're supposed to drink in an ass-loosening shake so you stay AIDS skinny without having to have the benighted plague.

It's quite the show at the Santa Monica whole foods.

 

 

Mon, 01/20/2014 - 18:23 | 4349326 CaptainSpaulding
CaptainSpaulding's picture

Retail update: Whole foods was super busy due to predicted 14 in of snow here on The island. Ahold (AH.AS) aka Stop and shop was super super busy. Next update on the 8's and 20's

Mon, 01/20/2014 - 18:21 | 4349373 chump666
chump666's picture

It's the Obama hustle with the Fed feeding the Treasury while the hole gets bigger.

 

 

Mon, 01/20/2014 - 18:30 | 4349411 Omegaman2211
Omegaman2211's picture

I can't tell if that K-Mart is still open for business or not.

Mon, 01/20/2014 - 18:50 | 4349469 ghostzapper
ghostzapper's picture

Creamers whiz kid that got SHLD going is looking to move into it.

Mon, 01/20/2014 - 19:22 | 4349592 yellowlight4570
yellowlight4570's picture

It must be open, see the plants growing out of the curb and the building

materials leaning up against the front windows. The kid probably got his 

new note book there too. Looks like he's heading to Micky D's to pay

for his online MBA.

Mon, 01/20/2014 - 18:43 | 4349449 ghostzapper
ghostzapper's picture

This is one of the best articles I've ever seen at ZH. good work.

Mon, 01/20/2014 - 18:53 | 4349487 kurt
kurt's picture

The simultaneous orchestrated gas price whip-saw monopolistic PRICE FIXING along with brain washing started the problem. The collusion started around 2005 and peaked late 2007 at the start of our orchestrated downfall.

 

The Audacity of Conspiracy

Mon, 01/20/2014 - 18:56 | 4349491 Hal n back
Hal n back's picture

Regarding the FASB: Congress threatened them back in 2009. From what I can piece together knowing some of the individuals in play, Congress said it would write legilation which then would make the accounting profession useless and at same time, hard to beleive this, threatened the leaders of the profession in other ways like tough IRS audits and making resuts public. So the accountign profession chose to go the way of least damage.

 

Thus was born mark to fantasy accounting. Now we have NON GAAP accounting to keep the party alive.

This entire country is a fraud. Taken to a higher level by President Jarrett.

Mon, 01/20/2014 - 22:54 | 4350327 therevolutionwas
therevolutionwas's picture

Yah, go listen to Ron Kirby at Greg Hunter's site.  The entire economy is a fraud.

Mon, 01/20/2014 - 19:18 | 4349568 lakecity55
lakecity55's picture

"Ah, Reggie, one day ALL of America will look like the K-Mart in this here article. It will be great!"
"Whatever, babykins. Pass me the joint."

Mon, 01/20/2014 - 19:21 | 4349581 Rockfish
Rockfish's picture

I Read this quote on ZH the other day and believe it needs repeating.

"Sooner or later everyone sits down to a banquet of consequences."

 

- Robert Louis Stevenson  

Mon, 01/20/2014 - 19:42 | 4349655 zippy_uk
zippy_uk's picture

So following this through logically...

- Companys selling less

- So companys either:

a) Cut prices, to encourage demand, consumers benefit

b) Return excess proffits to share holders

c) Invest in more efficiency or innovation (probably the latter, as the former has been done to death now).

Result - a) - give more consumer spending power - economy recovers

            b) - Share holders reinvest or spend the money given back - economy recovers

            c) - Companies spend money on investment - economy recovers

 

So the market will solve it.

Mon, 01/20/2014 - 22:05 | 4350162 nickt1y
nickt1y's picture

You can not sell anything to someone with no money. Gas prices Up, 0care premiums UP, deductibles UP, incomes FLAT or SINKING. FUBAR

Mon, 01/20/2014 - 20:10 | 4349756 razorthin
razorthin's picture

The good news is that perhaps enough time has passed that entropy will now repatriate the slavelandia workforce back to the good ol US of A.

Mon, 01/20/2014 - 21:04 | 4349930 Clowns to the l...
Clowns to the left_ jokers to the right's picture

This can partially be attributed to e-commerce but just as much to inflation sucking the life out of people's ability to spend/charge for things indiscriminately. E-commerce has affected the retail jobs market though, just as automation and outsourcing has affected manufacturing over the years. Both sectors used to provide jobs that were good enough to help support a household back in the day but generally speaking, that ship done sailed.

Mon, 01/20/2014 - 21:05 | 4349945 tweedle dee
tweedle dee's picture

 

This is the best ZeroHedge discussion I have seen in a long while. I am a baby boomer and do not fit the zerohedge mold. It is going to take everyone, all ages, working together to survive what is coming.

 

Mon, 01/20/2014 - 23:49 | 4350510 PrecipiceWatching
PrecipiceWatching's picture

Working together?

Sorry, but I don't see that happening, except in local small cadres of astute, like-minded, demographically similar, prepared and intelligent people.

This nation is splintering, and on balance, that may not be a bad thing.

 

 

 

Mon, 01/20/2014 - 21:55 | 4350106 _SILENCER
_SILENCER's picture

Credit cards are gone. I never use my checking account...I use only cash....I even pay my alimony in money orders, just to be a cock.

 

Bourbon...well, we certainly still speak.  But not like we used to.

Mon, 01/20/2014 - 21:59 | 4350125 BullyBearish
BullyBearish's picture

The information covered in this excellent article GUARANTEES the market will continue to go up...at all costs as they are ALL IN!

Mon, 01/20/2014 - 22:35 | 4350266 hooligan2009
hooligan2009's picture

key factoid completely omitted...there is a new retail beahvioral spending model...foot fall is down at stores...yes...but sales values are up..thats one part....shoppers go out to shop in stores, but surf the net first...and go to the store with the right price...stores are warehouses with smarmy sales assistants...aka..shelf stackers

the other part missed is a clear representation of margins for a) crap from where all those manufacturing jobs got exported to and b) luxury goods..which is expanding as sweat shops are used...but contracting as sweat shop countries take over brands like YSL, LVMH and umm Jack Daniels..

just saying

 

Mon, 01/20/2014 - 22:47 | 4350304 the6thBook
the6thBook's picture

Went to Dic's Sporting Good Store today to return something.  Person infront of me was returning as well.  What are the odds of that?

Mon, 01/20/2014 - 22:52 | 4350322 xavi1951
xavi1951's picture

YAWN!

Mon, 01/20/2014 - 23:13 | 4350395 Dre4dwolf
Dre4dwolf's picture

I predicted years ago that we would see in this decade the "death of american retail" ;) it only makes sense, as the economy continues its death spiral, retail outlets with over-head will not be able to survive, stores and outlets like JCPenny relied on Middle Class Wealth / spending......... as the middle class continues to get squeezed out of the picture (thrown into the upper class or lower class, mostly lower class) the spending directed towards these outlets will slow / die off.

 

JcPenny is a SELL SELL SELL, dump that shit like its out of style.

Look at BestBuy! 30%? - thats because no one ACTUALLY SHOPS at BestBuy, they go there to LOOK AT STUFF THEY ARE ORDERING ONLINE TAX FREE, WITH FREE SHIPPING.

 

;)

 

You can't sustain the 80s model of Mega-Retail backed by endless credit-cards, not with banks pillaging the consumer/american people/home-owner like they are today........its pretty much a free for all for the banks to steal everything right now...... the banks are going to steal all the money, the consumer is going broke and slowly the monetary system is going the way of the dinosaur , dollars wont exist in 15 years.

Tue, 01/21/2014 - 00:00 | 4350539 Yes_Questions
Yes_Questions's picture

 

 

well count on some "out of the box" proposals this election season.

and don't buy a thing any of em' got to sell you.

 

Branded politicians in this desparate era will promise far beyond promises of the past.

 

Popcorn, metals, ZH.

 

Hold your fire, for 'bout a decade and a half

Mon, 01/20/2014 - 23:22 | 4350433 Prometheus418
Prometheus418's picture

Radio shack was mentioned twice- and rightly so.  Don't get me wrong, they can do whatever the hell they want, but I went to one of thier outlets yesterday to buy a simple  push button switch and a pack of resistors, and they didn't have them.  As a perverse poke in the eye, they still had breadboards- but nothing to put on them, not even a grade-school crystal radio kit.

Just a bunch of plastic iCrap, so if they die, that's their own lookout. In an evitable downturn, they could have been feudal kings, but they lost their way.  Giving up on American ingenuity comes with a cost, and it would appear that they are ready to pay it. 

So, *ahem* Fuck Radio Shack.

Mon, 01/20/2014 - 23:55 | 4350528 Alananda
Alananda's picture

I confess I have read no comments.  I had an insight as I read Jim Quinn's article, connected it to a memory about DHS and owners of large stadiums.  What if the giant retailers have been building extra storage space for humans or other objects, should SHTF.  How many owners of other large facilities have already entered into agreements with FEMA?

Mon, 01/20/2014 - 23:57 | 4350532 dexter_morgan
dexter_morgan's picture

reaping what was sown.

ACA will fix it.

Tue, 01/21/2014 - 00:39 | 4350600 bagehot99
bagehot99's picture

My response to almost all (actual) news since 2008 has been "buy ammo".

Sadly, this doesn't change anything.

 

Tue, 01/21/2014 - 00:42 | 4350603 drendebe10
drendebe10's picture

If you like your retail,  you can keep your retail.

Tue, 01/21/2014 - 00:46 | 4350606 suckerfishzilla
suckerfishzilla's picture

Musical chairs bitchez! 

Tue, 01/21/2014 - 00:52 | 4350607 hangemhigh77
hangemhigh77's picture

Bring it on.  Hey bankster bastards soon we'll be welcoming you to the party, MOTHERFUCKERS.  And as a party favor we will build gallows and FUCKING HANG YOU. You can run, but you can't hide, bitchez!!!

Tue, 01/21/2014 - 00:53 | 4350622 hangemhigh77
hangemhigh77's picture

Lock & Load 99%

Tue, 01/21/2014 - 01:38 | 4350688 ZIRPThis
ZIRPThis's picture

1) Over/under on what triggers the meltdown?  Maybe somebody at Moody's or S&P grows a pair & deals a severe downgrade followed by their entrance into private witness protection, 2) how long do we have to save hard assets & survival goods before the meltdown, and 3) what level of EBT/NSA/Neo-Soviet fuckstate misery will we have to sink to before states or counties have the balls to start a nullification marathon, or to SECEDE outright?

Tue, 01/21/2014 - 02:16 | 4350751 kareninca
kareninca's picture

I would like to go shopping in a brick and mortar store.  Unfortunately the local Goodwll in Silicon Valley (my preferred destination) is so wildly popular, that it is almost impossible to ever find a spot to park there.  I've basically given up and now buy my clothes online, because Goodwill is too mobbed!!!  It is mobbed with customers even though it is an unusually crappy Goodwill; most of the best stuff that is donated somehow never makes it to the shelves.

A local developer was required, as a condition of getting a permit to build housing, to have a grocery store in the same location.  Several grocery stores have been tried in the location; they have all failed horribly.  This is in Palo Alto, CA, and the failed stores were fancy upmarket grocers with artisan breads and organic produce.  Anyone could predict they would fail:  there are too many such stores in this area.  Now, in desperation, the city council is holding its nose, and is allowing a store of the "dented can & funny lots of peculiar brand food & stale bread" variety.  They are even letting them have a monstrously big sign.  No sign so big and gaudy has ever been allowed before!  I can tell you that this store will be a wild success.  I personally know several people who are looking forward to checking it out.  In rich areas, there are typically loads of people who are either poor, or nearly poor, or who are well off but just like saving money.  As an aside, I have been to one of the store's other outlets in a nearby city, and it was pretty crummy of its kind:  but this upcoming store will be wildly popular anyway.  The demand is huge.

Tue, 01/21/2014 - 02:22 | 4350758 The Heart
The Heart's picture

Has anyone ever noticed that when things look bad for the real president, or if the poll numbers go way down for some reason, stuff happens?

Like, some sort of torrid distraction manifests, or God forbid, another false flag operation could happen any day in the coming months with the evil complicit media kow-towing the official lies along? Is not history filled with such examples? Can a monkey see, or do?

Ahhh...ponderations amongst the Mohicans.

Ze ship is a goin down. Will somebody please hurry up and arrest that criminal-puppet and ALL the rest of them criminals that are responsible for all the corruption and continuing cover-ups of the rampant gorgon corruption. Monkey see, monkey do.

http://www.youtube.com/watch?v=7bURYL4N_CQ

If one was an investor, how could it ever be possible to make any profit knowing that the govt is invested in everything, and the govt ship is sinking? How can that be? Corporatism/fascism.

 

Tue, 01/21/2014 - 03:00 | 4350800 dunce
dunce's picture

The big chains make the headlines but the same thing is happening to small stores every where. The figures are probably available from commercial realtors.

Tue, 01/21/2014 - 03:23 | 4350821 techstrategy
techstrategy's picture

CS: Best synthesis of the core problem I've read here.  I've spent the past decade trying to help folks commercialize real innovation, always against the tide because WS is always "investing" in consumer MOMO float jam scams.  Meanwhile, startups with game changing technology cannot get a couple million (less than one GS director bonus) to develop it.

 

Been posting on amazon YMB for years.  It will prove to be the Enron of this decade.  It's economics and "cash flows" are BS.  Amazon epitomizes what is wrong with our capital markets.  They are one giant predatory trading scam -- no value creation, just glorified theft.

 

Investment banking DOES create value when it is INVESTING in PRODUCTION.  Been a long time since that has been done...

 

I've taken a helluva hit the past decade after leaving McKinsey to work with science based startups, but at least I can sleep at night (most nights anyway :-)) knowing that I'm trying to change the dynamic.  What drives me crazy reading ZH is all the people that want to bitch about things, but don't want to sacrifice anything to change the dynamic.

 

Until people start voting their values with their wallets and redirecting investments fromfinancial assets (particukarly float jam trading scams like AMZN, NFLX, CMG, etc) and into productive ones (which tend to be illiquid and have REAL risk and REAL return), we are headed for certain decline.

Tue, 01/21/2014 - 03:57 | 4350868 FreeMktFisherMN
FreeMktFisherMN's picture

good post. CEOs being insulated from performance is not a market phenomenon; it instead is the mentality of flipping stock on short squeezes, etc, as opposed to a fundamental story. All of this is propagated by the Fed which through ZIRP and QE numbs people from assessing risk and making proper valuations. Everything is about the here and now. 

 

Other thing is corporations aside from ZIRP financed buybacks to goose stock prices, are doing well in some cases because only they have the ability to deal with compliance costs and all the red tape and 0bamacare, whereas would be competitors can't even throw their hat in the ring. Hence they just get bigger and bigger and swallow up competition; it's not market-based economies of scale but rent-seeking and political connections and crony capitalism, moats against competitors. So it's not surprising to see the big corporations doing relatively well. 

Just in general this whole Potemkin village paradigm will come to an end, and quite abruptly. My impression of a lot of i-banking is that there is a ton of group think and getting lost in models based on things like 'risk free rates, etc. that are taken for granted when bond prices being so high is not a market phenomenon but instead derives from QE and the Chinese continuing to import US inflation. These people take these finance courses about modern portfolio theory and have no reverence for risk and the magnitude these 'out of nowhere--who could have seen that' type events which thanks to a bloated economy are guaranteed to come as the Fed creates the business cycle. 

Only trading I care to ever do (unless markets actually have real valuations someday) is buying commodity ETFs (way beaten down in many sectors) or futures outright as they actually have intrinsic value (and mining stocks as basically lotto tickets--though carefully researched still as best as is available). 

 

There is of course indeed an integral role in a sound economy for M&A types who can identify potentially fruitful mergers and who can identify inefficiencies and arb things out so activity goes towards productive enterprise, but right now I see a lot of one off type mentality here and now vs. actual legitimate valuations. These banks have been the beneficiaries of the Fed (of which they are the shareholders) which rewards the reckless borrowers, and they don't even have to reap the consequences of lousy bets gone bad. Sure they hit on some nice M&A given all the emphasis on speculation in these types of environs, but this is far outweighed by the detriment of a financialized system that siphons away wealth through inflation and malinvestment. It is indeed predatory.

U.S. used to be envy of world for its citizens' industriousness and innovativeness, but now 'innovation' is spying and orwellian type activity, and American's 'prestige' is not via industrial powerhouse but through ramming the petrodollar down everyone's throat and intervening abroad.

 

Tue, 01/21/2014 - 04:14 | 4350881 TacticalZen
TacticalZen's picture

I call our current economy "The Great Crumble".  The trend is clear.  Down.  It is like gravity.  Ignore it at your own risk.  But it progresses slowly yet methodically, and you cannot tell when the next part will fall down and break apart.  I'm beginning to thing our "beloved leadership" might successfully keep dragging this thing out for another 10 years!  Can you believe it has been plugging along like this for over 5 years, with some negative trends going back 7-8 years?  We are already looking like the 1930's.  And we all know what it took to mend the Great Depression.  A little world war.

Tue, 01/21/2014 - 04:14 | 4350882 TacticalZen
TacticalZen's picture

I call our current economy "The Great Crumble".  The trend is clear.  Down.  It is like gravity.  Ignore it at your own risk.  But it progresses slowly yet methodically, and you cannot tell when the next part will fall down and break apart.  I'm beginning to thing our "beloved leadership" might successfully keep dragging this thing out for another 10 years!  Can you believe it has been plugging along like this for over 5 years, with some negative trends going back 7-8 years?  We are already looking like the 1930's.  And we all know what it took to mend the Great Depression.  A little world war.

Tue, 01/21/2014 - 09:33 | 4351200 AdvancingTime
AdvancingTime's picture

We are on the path to "Lost Decades" consider years ago before the "Bernanke has all the answers" era, many of us criticized Japan for failing to own its problems. Many people thought Japan should face up to the mess it had created and do the right thing. Broadly accepted was the concept that only by letting its zombie banks and industries fail could Japan clean out the system and move forward. As we measure the results of the Bernanke policy it seems thay may not be much different than those Japan embarked upon many years ago. The post below delves deeper into the details.

http://brucewilds.blogspot.com/2013/11/we-are-on-path-to-lost-decades.html

Tue, 01/21/2014 - 06:24 | 4350982 Obamanation
Obamanation's picture

Until someone overlays this with online spending, this is an incomplete picture.  It may or may not be true retail spending is declining overall but you can't deny that online spending is increasing market share rapidly.  Hell I don't go into brick and mortar stores anymore, I buy mostly online now and I'm sure a lot of ppl are moving that way.  Yet another way ZH has started to jump the shark when it comes to reporting "truth."  You used to be a contender.  

Tue, 01/21/2014 - 07:16 | 4351023 Hades
Hades's picture

70% is not retail, it is consumption, which includes other trivial items like healthcare (~17% of GDP and rising to cover half the population, i.e three times the cost of those evil socialist schemes in Europe where everyone lives a lot longer and doesn't look so grotesquely fat), but sounds good.

Now off to buy something on Amazon.

 

 

Tue, 01/21/2014 - 07:18 | 4351024 Notarocketscientist
Notarocketscientist's picture

This is the only graph that matters http://gailtheactuary.files.wordpress.com/2013/04/oil-consumption-by-par...

 

High priced oil destroys consumption - and the big consumer economies are being decimated - that is why energy usage is dropping.

 

China is building ghost towns with 15 trillion printed dollars and propping up consumption in the developing world.

 

The end of cheap oil = the end of the industrial age - I say that without hyperbole - this is not a Hollywood movie - there will be no hero there to save the day.

Tue, 01/21/2014 - 08:39 | 4351083 AdvancingTime
AdvancingTime's picture

Great article! The economic recovery that the media and talking heads have been bantering around does not exist and is just a myth. A manipulated stock market distorted by recent economic policy hides and mask the real truth, in many ways it is ground zero in the war to convince us all is well. The American people and Main Street will tell you they are far from convinced that it is smooth sailing ahead.

The huge weakness in the economy was confirmed recently by Ben Bernanke and the Federal Reserve when only recently did they cut back QE by even the slightest amount. Poor job creation and stagnate wages have left millions in a protracted state of financial weakness. Fact is if QE or the massive government deficit spending that props up our economy is removed it will fold like a cheap umbrella. More on this subject in the post below.

http://brucewilds.blogspot.com/2013/10/myth-of-economic-recovery.html

Tue, 01/21/2014 - 09:57 | 4351320 Notarocketscientist
Notarocketscientist's picture

How many hundreds of thousands of people use ZH in a month?

Do you hate the NSA?

Do you hate the Fed?

Do you hate Corporations?

 

Do you want to do something about it?  Did you know that retailers have a free return policy for stuff ordered online?  You want to fuck all these guys - without lifting your fat ass from behind the computer?  You have your answer.

Do NOT follow this link or you will be banned from the site!