According to SpendingPulse, a macro-economic report offered by Mastercard, retail and service sales from Nov. 1 until Dec. 24 showed retail sales down between 5.5 percent and 8 percent. Half of the decline in overall sales can be attributed to the 40 percent drop in the price of gas compared with December 2007. Excluding gasoline, sales were down 2 percent to 4 percent.

Their report concludes that 2008 was “one of the most challenging holidays shopping seasons in decades” with very few segments showing any strength.  E-commerce declined a meager 2.3% compared to apparel (19-21%) and electronics (26%), although I have to wonder how many of these numbers have to do with the declining prices on electronics and clothing in general.  The American consumer has come to expect 25% off day-to-day with sales starting at 50% or more, and it would seem that, at least for now, some retailers are going to respond or perish.

For our family – I would suggest that we spent moderately less this year, including less on our friends, co-workers, and charities that we’ve supported in the past.  Part in response to changing market conditions and partly because the media, the stores we shop in, and the services that we use are approaching things differently than in years past.  It’s as if they’re saying, “well, we know your money is short, so we expect you to buy less.”  Retailers are expecting to take a beating and it would seem as though they’re even asking for it.

Next year, I want fanfare, decorations, full-priced fare, and a season worthy of spending my hard earned money.  It’s about more than just gifts – it’s about the season, the spirit and the excitement of the holidays.  If retailers aren’t going to give consumers that excitement – I expect consumers aren’t going to give them their hard earned dollars.

Ranter

“Although the United States is likely to remain the single most powerful actor, the United States’ relative strength — even in the military realm — will decline and U.S. leverage will become more constrained,” says the report, which is the fourth in a series from the Intelligence Council.

Obviously, I don’t give the Intelligence Coucil a lot of weight, but I do believe that they’re on to something, noting that the the world will continue shrinking and natural resources will become increasingly scarce in the years to come. Their argument that the world is in the midst of an unprecedented “transfer of global weath and power” from west to east is sound and as we continue to transfer manufacturing, mining, and intelligence labor to other countries the United States will simply be a military force and holder of other people’s money.  It’s hard not to understand or see the logic in what we’re saying, and the reasons behind it, from this chair, are quite obvious.

Every other country in the world is working to improve their infrastructure and the education of their workforce.  The United States has been focused on increasing the size and influence of its military and banking systems while reducing infrastructure and education.  At the same time, the United States has focused its military to protect other countries and lost sight of the battles that should matter most to the world as a whole.  India and China, looking to become the next world super-powers are also the biggest polluters with the least amount of concern for our environment.  The American military and leveraged United Nations should have those environmental impact front and center, requiring China and India to make equal investments in protecting the environment as they are to spoiling it.

While all this is happening, and other countries continue to grow, they also become challengers for the earth’s limited resources (oil, oxygen, water, food, etc.).  The United States continues financial dependence on the rest of the world will create bidding wars that the US can’t win, resulting in Americans being unable to get or afford the most precious of earth’s resources.

Unfortunately, I don’t think anyone has an answer, but whatever it is, I can assure you that it starts at home.  The United States will have to consider reducing its protection of the world as it looks to protect itself.  We will have to continue investing in infrastructure (generating jobs and wealth) and education, which will enable us to remain competitive in the pharmaceutical, technical and energy sectors.  And, finally, we will have to protect our financial resources.  Consider letting foreign investors lose money (as in the case of AIG) and not bailout other countries at the cost of additional debt to America.  Just my two cents.

Ranter

Treasure Secretary Henry Paulsen Looks Very Worried ... and well he should.

My position has shifted from being angry about the $700 billion financial rescue program to downright scared.  Every day Treasurey Secretary Henry Paulsen (former CEO of Goldman Sachs) comes out with some new screwball plan to use the remaining dollars, but like Chicken Little, his whining reasoning is becoming less and less believable.  Today, for example, he’s suggesting to relieve pressures on consumer debt, including credit cards, car loans, and student loans, which he believes are “creating a heavy burden on the American people and reducing the number of jobs in our economy.”

Somehow I don’t believe that my student loans, credit card bills, or car payments are creating any undue burden on the American people, and I’m not sure how reducing or changing the terms of my agreements will significantly impact or benefit anyone.  For people that it will impact, I’m not sure that I agree this will be of any help to the long-term improvement of our economy.  Quite the opposite, actually, because the money will be spent and spooked consumers will be unlikely to jump right back into school, a new car, or even additional credit card payments.

I feel differently on the efforts to save people from losing their homes, because a place to live is fundamental to our survival as an economy.  And, unlike credit card debt or student loans, homes return value to the community through soft value like community driven events and by offering real, tangible tax revenue.  That tax revenue represents a long-term vision that is likely to allow the government to continue functioning as this crisis continues and sustain when the crisis ends.

It’s surreal to me that Paulsen, a product of the system that created this mess, or anyone else believes that Paulsen is the right man to get us out of this situation.  His use of the $700 billion to date is a prime example of why I feel he’s the wrong person entirely.  His first energies have been given to provide for his peers – the banks, financial houses, and insurances companies.  The money put to AIG alone seems wasteful, irrational, and without promise of any return or short-term benefit.  At the same time, he continues to preach that $700 billion is what we need to stabilize this situation.  Is that a guess or a commitment, because right now it isn’t clear what comes next, and if you don’t know what’s next how can you know what’s needed or enough?  The straight answer – you can’t – and neither can Henry Paulsen.

Ranter

Some experts contend, and I would assume that they are correct, that the 158 year old Citigroup is simply postponing the inevitible if things don’t change in the economy as a whole.  Of course, it will curb the ever increasing number of foreclosures, but until the underlying problems get resolved its impossible to know what the long-term benefits of this halt will be.

From my chair, the government’s bailout (still be referred to as only $700 billion) is focusing too much on bailing out the financial institutions, which isn’t going to help the economy or, as is becoming increasingly obvious, the average American family.  People can’t get loans, jobs are being lost, and there is a tremendous amount of fear about what is going to come next.  The Mortgage Bankers’ Association recently revealed that 4 million borrows are at least one payment behind and 500,000 are in the process of losing their home.  These are the people that should be benefiting from government intervention.  It’s not going to fix the banks or solve their problems, but it will certainly save homes and families while benefiting the economy as a whole.

Unfortunately, that’s a lot more work, and we already know how the government feels about work.  It’s much easier to sit back and help your cronies so you can keep your dead-wood-ass in office to continue bilking the American public of their hard earned money.

Ranter

Frankly, I’ve often thought of this as a double-edged sword.  Taxes are important for the government services that we want (demand) and yet almost everyone I know, at one time or another, complains about how much they pay in taxes.  What I never hear people complaining about is how those tax dollars are being spent.  Very few average, Joe six-pack Americans scream as loudly about waste, pork-barrel spending, and economics as they do about how much they’re paying into the system.  Stop that waste and it’s likely that taxes wouldn’t have to increase.

At the same time, our two main candidates have significantly different tax plans, and depending on who you believe Obama could significantly raise taxes for a significant number of people and small businesses.  The Republicans are up in arms about this potential increase, although that they’re not saying is that this is simply a 2% adjustment in the tax bracked for people making more than $250,000 annually – 2% of $250,000, with no deducations, is exactly $5,000.  Shitty problem to have, but I’d think those people can bear it.  Especially considering that most of the people we’re talking about are making well over $250,000 annually before deductions.

So, yes, I believe that Obama will raise taxes on the people that can afford it most.  McCain on the other hand will horde his money and protect the rich from having to open their wallets.  McCain actually favors tax cuts for corporate income tax and capital gains.  At the same time, it’s hard to believe, with his legacy, that McCain won’t take strides to bring spending in line with revenues and reduce the amount of waste and pork-barrel spending out there.  Obama just doesn’t have a track record – although it’s likely that he will make the same efforts.

At the end of today – only time will tell.

Ranter