As much as I hate some of what retailers have done to the holidays, there are aspects that create a frenzy that may help inspire consumers to shop more. That frenzy – for good or bad – wasn’t there this year and for the most part, retailers are to blame. Just looking at the decorations made it quite obvious that this year wasn’t the same as years past. Fewer people and companies were going all out to one-up each other like in years past, and by the 15th every ornament, tree, and blow up lawn decoration was at least 50% off, if not more. In San Jose, Trader Joe’s market was giving away wreaths by the truckload on the 20th! Well before the season died on its own.
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.
Another new report – another obvious conclusion. A government report released today paints a somewhat disconcerting new picture of an unstable America and reduced American influence as India and China continue to grow.
“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.
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.
Amid increasing turmoil, the financial sectors continue to get battered with ever worsening statistics, facts, and losses. Even once steadfast companies like Citigroup are seeing lines of of defaulting homeowners looking around for help and their share of the bailout. In what may be good news for some of these homeowners, Citigroup has announced that they are putting a temporary moratorium on foreclosures for all clients who are willing to work in good faith to restructure and repay their mortgages.
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.
With the economy worse off now then any time in recent history, it is quite obvious that Americans are buckling down and worried about their future. For many that also means that they’re worried about their finances and about the potential for any increase in taxes. It’s obvious to me that regardless of who is elected into office – taxes are going to change. They will either change in how much the average American pays or how the dollars are used once they get collected. Either could be good or bad.
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.