70% off HOME PRICES?

Homes that sold for $275,000 in 2006 are selling for $80,000 now.

The problem is there's still loads of inventory on the market at these unbelievably low prices.

Read the Forbes article by Matt Woolsey HERE

Who's Going To Pay For All This?

We are, that's who!

This weeks must read article, from the New York Times.

"Cities Turn To Fees To Fill Budget Gaps"

Essentially it lists things that are usually paid for with our tax dollars, such as street lights and emergency services response teams, being charged to us directly. 

Please take the time to read the article HERE

Opposite Day!

I spent the better part of last week listening to everyone on television and the newspapers telling me "we have reached the bottom!"

Since I was juggling so much over the past 10 days or so, I had no opportunity to ensure that the people that dwell in reality remain firmly grounded in the facts.

It seems that whenever the Dow Jones goes up, and it went up plenty last week, the bobble heads all start talking the "everything is alright" crap!

The reality is, as Nassim Taleb so brilliantly points out in The Black Swan, the stock market is not a snapshot of American economic health. Besides, I don't know very many "common" people that are still in the market these days, beyond your (required) 401k, I mean.

Here are a few of the Headlines you may have missed while collective noise from the Wall Street cheerleaders overwhelmed you:

1. Retailer Gottschalks is starting it's liquidation.
   
2. Ritz Camera starts liquidation on this Saturday.
   
3. General Growth Properties, the nations largest shopping center developer, is nearing bankruptcy.
   
4. Bankruptcy filings are up across the country by anywhere from 27% to some 86%, year over year, during MARCH!
   
5. 10% of the nation is NOW ON FOOD STAMPS! That's over 32 million people, and there is evidence of another 6-7 million being refused due to barely being above the poverty threshold.
   
6. Pier 1 announced it will close an additional 20 stores by the end of the month.
   
7. The City of Chicago is closing all it's mental health facilities due to budget shortfalls (Hey it worked for Reagan).
   
8. Blockbuster Video is near insolvency, with many (self included) seeing them fold before 2010.
   
9. Nevada based casino Bally's closed their Sports Book (operation for taking sports bets) last Tuesday, March 31, without warning...even to employees.
   

Now on a much more local note, Ethel's Chocolate is closing 5 of 6 "boutique's" BY THE END OF APRIL! With plans to close the last by the end of the year.

Lot's of bad news, I know, but it is only to ensure you keep your nose to the grindstone. The economy is literally just starting to reveal how far away we are from the bottom, not the bottom itself.

April began the "Period of Revelation", a three-month period of time, in which how badly scarred (or healthy) retailers are after a tough Holiday period and the worst 1st Quarter in roughly 40 years. Those that are in trouble will no longer be able to hide, as there is massive debt repayments due at the end of April and lots of capital needed for 4th Quarter purchases. Non-performers are not going to be able to secure loans and will summarily have to take a bow.

As earnings start rolling in at the end of the week, I will try to keep you abreast of the score.

Maybe I have had one too many "crabby-patties", but I think this is only the beginning.

Please Listen to Nassim Taleb

He is BRILLIANT!

I really cannot believe he is making the television rounds. 

Please note the music played over his voice for the last 90 seconds:

I Am Legend

Before we start, I promised a very helpful young lady that I would let my readers know about Lord & Taylor's free shipping for online purchases of $99 and more (click HERE). Since free shipping is New Economy, I have now done so.

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I took a trip to a Chicago-area shopping mall last night with with a friend and, as you can imagine, I was moved enough to write about it. What you cannot imagine, is why?

We headed over to the Old Orchard Mall in Skokie, Illinois, just about 7 miles northwest of the Chicago city limits. This outdoor mall is a notoriously busy shopping destination (especially on warmer days), as it houses the most complete collection of stores, entertainment and dining options that serve Chicago's monied North Shore suburban communities, such as Lake Forest, Winnetka, Wilmette, Kenilworth and Glencoe, as well as the MASSIVE population center of Evanston, IL.

The 10-15 minute drive from Chicago's Rogers Park neighborhood and ample public transportation make Old Orchard's many luxury destinations (Tiffany, Nordstrom, Subway) a desirable option for many city residents as well.

So, taking what you now know (or knew, if you you are an area resident) about Old Orchard Shopping Center and it's surrounding communities into account, you can understand why the following observations were so stunning to me and my counterpart.

1. We arrived at 7:00 pm, on a cool Friday night and immediately found parking (less than 45 seconds after entering the parking lot). The spot, second from the door of THE FOOD COURT, had two additional spots right next to ours, with very few other cars driving around looks for openings.

2. The food court was virtually empty, with over 60% of those eating having ingested, or were in the process of ingesting, Subway. $5 foot long is sooooooo New Economy. As a matter of fact, from this point forward, $5 foot long is the official meal of the New Economy! If someone can top it, I am open to suggestions.

3. No lines at any of the theaters (with the highly anticipated "I Love You Man", a new Nicholas Cage film and the first starring role for Julia Robert's in 4 years all opening last night), a virtually empty Barnes & Noble (less than 15 people inside), not one restaurant had a wait time for tables and much fewer than 1oo people encountered in the entire mall during our 2-hour trip.

4. Macy's was having one of those head-scratching sales where you cannot believe they are "giving away" the stuff for such low prices. For example: Table(S) of Ike Behar, Ted Baker and Ralph Lauren neckties, which all retail in the neighborhood of $125, were all $8.99!, racks upon racks of clearance at 75-80% off everywhere and 11 racks of men's shoes at 65% off. Yet, not a soul was shopping. 

Perhaps you think I am saying not many people were shopping the sale? I am not saying such a thing. I am saying exactly what I witnessed: NOT A SOUL WAS SHOPPING!

I talked to 3 sales people, who separately verified that "nobody is buying anything these days" and, based on the generally immaculate presentation of the sale tables and clearance fixtures, evidence suggests they were telling the truth.

Wandering past the women's areas of the store on our way out, we noticed no less than eight double-sided, 10-foot long clearance fixtures with $4.99 signs atop them. These fixtures were stuffed to the gills with merchandise. As I told my friend last night, perhaps that was the most telling sight of the evening: If QUALITY $4.99 dresses, blazers, jeans, sweaters, shirts and skirts do not get people into your store, what will? 

I truly believe America's shopping habit (sic, pricing threshold) may have changed for the foreseeable future, by which I mean the next 5-10 years, or so.

If you price a suit at LESS THAN a $5 foot long and nobody budges, you are experiencing the New Economy from a front row seat. 

To close out the Macy's story, they are in TROUBLE. Way over inventory, no customers and unable to find a pricing strategy that agrees with their customer's idea of fair value = retail molotov cocktail!

6. No Teens at the mall. I say this with great trepidation: If teens are opting out of spending time at the shopping mall (I counted 5 total last night) most, if not all, major shopping centers will be in bankruptcy by mid-June/early July. There will be no recovering from this development. It will take minimally 5-7 years to climb back from such a blow.

7. Every mall store had posted closing hours of 9pm, however, as we walked by stores at 8:15, we saw many a light out, with doors locked. By 8:35 most stores, save the large department stores, were locked and vacated. 

I am not saying this was the wrong idea (in fact it was exactly the right idea). What I am saying is, for this to be the general practice of the entire mall, my notes regarding the lack of shoppers during this trip is not out of the norm, and has had to be the case for quite some time. 

Lights out at 8:30 on the first day of spring at a major shopping center is not normal. As a matter of fact, it's unheard of!

So as we made our way through the mall, back to our car, I could not help identifying with Will Smith's character in the movie "I Am Legend", wondering if "anyone is out there?"

In the movie, after he has had the question answered in the affirmative, the larger question consumes him as the screen goes black and the titles begin to roll....."Can we (humankind) come back from this?" 

In short, I don't know?

Now that's how you let the beat build.

A Big Black Eye

This is a story you may, or may not, know about, but it is certainly something you should know is going on...and on it's way to your city (if it has not already arrived) once the weather breaks.

America is certainly better than this.

During the beginning of the Depression, several people wandering the nation in search of work started erecting, shanty-like, permanent shelters in large cities. These were comprised mostly of men, many of whom had left their families behind, with the understanding that once work was found, they'd be sent for.

As the Depression deepened, more shanty and tent communities started popping up all over the country, to the point where it was no longer looked upon as abnormal to see them. Because President Herbert Hoover was generally viewed (then) as the person responsible for ignoring the plight of the common-folk, thus allowing their situations to drift into such horrific conditions, these makeshift towns were named "Hoover-villes."

As more people started losing their homes and farms, ultimately being displaced from their longtime residences, the "cities" started to include entire families. 

Naturally the conditions in these camps were preposterous when compared with any standard of modernity. There were few schools, no plumbing, and mice, rats, cockroaches and mosquitoes only added to the miasma residents fought to overcome around the clock.

With this background in mind, I was floored when I saw this youtube clip:

The video you just watched was posted in January of 2008, who knows when it was actually filmed. 

Now, a year later, some major medias are starting to touch the subject. The only reason I want you to watch the following clip from the today show is to grasp how the subject is being dealt with. 

Any normal human being that viewed such circumstances probably wonders, first, "how did this happen", followed closely by "how can I help." The Today Show piece below focuses in on, well you make your own determination. I just cannot beliee Matt Lauer decided to end the piece, after looking at deplorable living conditions of his fellow countrymen, by saying (paraphrasing here), "people were living above their means"!?!?!

Well Matt, are they at their means now? And if so, does that make you sleep better at night?

Just a stupifying display of arrogance and indifference. It brings to mind a quote from the great architect and humanitarian, Charles Luckman"

"The trouble with America is that there are far too many wide-open spaces         surrounded by teeth."

Thousands of people saw the horror of this situation and decided to help, bringing food, money, bottled water and other goods to these unfortunate people, which is what I knew the American people would do. 

If you would like to send a donation to aid these people, the Fishes and Loaves organization in Sacramento has been assisting the residents of their tent city for months. 

Info for them is HERE.

This is development is not exclusive to Sacramento, California. Here are a few news articles I dug up on "Tent Cities" in other parts of the country if should you want to investigate the matter further:

Tent City In Pinellas Seeing More Recently Unemployed Homeless

Bad Economy = Many Living in RV's in Venice Beach

The more fascinating articles come form sources that may explain why this has been swept under the rug until very recently. These are from news sources outside of the country and they are writing in a more stunned, disbelieving tone. To the readers of these publications, America has always been more than a country, it has been an idea.

Sacramento tent city is just one of dozens in an ailing America

America faces new Depression misery as financial crisis worsens

The credit crunch tent city which has returned to haunt America

If this economic downturn has not yet altered your habits, as well as your thinking, I hope this post has brought you one step closer to reality. Preparedness is not everything, but this is going to be a tough time for this country, so it cannot hurt any more by your being so.