An “I Told You So” Moment

I’m no economist, but this is a prediction I made about a year ago.

General Motors’ Bob Lutz was quoted this weekend concerning fuel efficient autos.

“We can’t sell small cars right now,” Lutz said. “People are buying trucks again.”

I’m no economist, but this is a prediction I made about a year ago.

Weaning ourselves from OPEC will take short term pain. Are we willing? Lutz’s words imply the answer is “no.”

Yeah, It’s a Recession

People will feel guilty about conspicuous consumption and cut back.

IANAE–I am not an economist.

We are in a recession.

OK, I’m not 100% on that. However, it doesn’t make any difference. We’re acting like we’re in one. That’s all that matters.

I have been through these before. They suck really bad. A lot of good people are about to get hurt.

Helaine and I looked at a house on-the-market while we were in Palm Springs. It’s still for sale. They’re asking 70% of the original price. That’s what you see in a recession.

People will feel guilty about conspicuous consumption and cut back. Those employees who serve the consumers will be hurt. Foxwoods casino laid off about 100 middle managers today.

A recession, unfortunately, feeds upon itself. Cutbacks affect sales which cause more cutbacks and on-and-on. Entering your first recession, it looks like there’s no way out. There is.

As the number of businesses shrink the remaining players find themselves doing better. The recession ends as those businesses restock and rehire.

This time, we have other underlying problems. Much of the American economy, built over the last sixty years, has moved away. We don’t make things here. I grew up at a time when workers in retail or manufacturing could own a home. No more. That will slow recovery or make the actual recession deeper.

Many businesses are at a crossroads. Broadcasting, my field for nearly 40 years, is increasingly being marginalized by small players taking tiny fractions of our audience. It’s like being eaten by fleas, or so goes the old saying. It’s worse in print media and autos and banking and airlines&#185. There are whole sectors of our economy that seem to have no long term prospects.

This recession will be deeper, but we’ll come out of it. I picture an American economy more along the lines of the European economy. Our days of being the World’s engine of economic growth are over. We will probably pull back our global military reach and step down as the World’s superpower.

We have been defeated by technology and techniques we developed. Sad.

&#185 – About the airlines. Except for Southwest, you have turned us into packages moving through your system. For years you touted your exemplary service. We allowed you to be deregulated with the implied promise that wouldn’t change. Then you pooped on us. Your loyal employees have been hung-out-to-dry by putting them in contact with us after you’d changed all the rules. I have no sympathy for your plight.

Par For The Dollar

Back in 1980 I was working in Buffalo. My Philadelphia friend, Lucy, invited me to join her for a weekend at a family owned compound in what is referred to as “Cottage Country,” north of Toronto.

On a frigid, crystal clear lake, reachable only by their classic mahogany power boat, it was pretty close to heaven. For that weekend I was part of her family, joining them for every activity. I even went to church with them (and throughly enjoyed that experience too).

While driving up, I got hungry and stopped along the road for some food. I bought a sandwich and a Coke, handed the clerk a US $20 bill and got $22 Canadian change… plus my food!

What a country!

Actually, all that meant was, the US dollar was worth a lot more than its Canadian equivalent. As of today, they’re of nearly equal value. I think the proper term is, they’re at par.

I’m not an economist, but I’m pretty sure the value of a nations currency is directly tied to the strength of its economy. Our dollar is weak.

Over times, things tend to even out. A weaker US dollar makes our exports more reasonably priced overseas… at least it does with those things we still make here. Conversely, imports continue to cost more. That’s an incentive to buy American, here and abroad.

Still, having the US and Canadian dollars at par troubles me on an emotional level. Our dollar being more valuable has always been a given. It’s the first time in my life it’s not.

I don’t personally see signs of a weak economy, but obviously, others do. Our cheaper dollar is screaming that to anyone who will listen.

My Trashy Story

Every week, on Friday, our trash goes to the curb. Every other week it’s supposed to be accompanied by recycling. It doesn’t work that way in our household.

Whether it’s our distance from the curb or the amount of recycled newspapers we have (we subscribe to both the New Haven Register or New York Times) or maybe all the boxes we get because of online shopping, going to the curb bi-weekly doesn’t work. So all of this recyclable material piles up in the garage. A few times a year we stuff it into the SUV and I drive it to the transfer station.

Transfer station, what a lovely phrase. It’s so much more genteel than town dump.

I drove up to the transfer station this morning only to find the new policy – no newspapers. I had an SUV full of recyclables, and of course, the supermarket bags of newspapers were on top!

I unloaded the 20 or so bags of newspapers to get to the cardboard and other material underneath. At this point the transfer station folks took pity on me and found a place… a transfer station loophole if you will… that allowed me to drop the papers off. From now on it’s newspapers to the street, I suppose.

I want to be a good citizen, but it is increasingly difficult to follow the rules. In fact, it would be much easier to hide the newspapers and cardboard and bottles with our weekly trash. I’m sure a lot of people do just that. It also always strikes me as a little ironic that the two most talked about recycled products are made from sand (glass) or grow on trees (paper).

I know this is supposed to be good for the environment, and I’m for that. But, is it really? Is this just a feel good exercise with no payoff… or negative payoff?

From “Recycling Is Garbage” – New York Times Magazine, June 30, 1996:

Every time a sanitation department crew picks up a load of bottles and cans from the curb, New York City loses money. The recycling program consumes resources. It requires extra administrators and a continual public relations campaign explaining what to do with dozens of different products — recycle milk jugs but not milk cartons, index cards but not construction paper. (Most New Yorkers still don’t know the rules.) It requires enforcement agents to inspect garbage and issue tickets. Most of all, it requires extra collection crews and trucks. Collecting a ton of recyclable items is three times more expensive than collecting a ton of garbage because the crews pick up less material at each stop. For every ton of glass, plastic and metal that the truck delivers to a private recycler, the city currently spends $200 more than it would spend to bury the material in a landfill.

I don’t know what to think. I want to do what’s right, but I am really not sure. Until I know otherwise, I will follow the rules.

In the meantime, part of our recycling life at home will have to change. Newspapers to the curb. I can hardly wait for the first really big rain on a Thursday night.

Continue reading “My Trashy Story”

I Am Not An Economist

Let me repeat the title of this entry: I am not an economist. I’m just making sure no one is confused that I might have some expertise as a I ponder the plight of Wal-Mart.

To call Wal-Mart the world’s largest retailer is to underplay their significance in our economy and the economy of the rest of the world. They are the 500 pound gorilla. It’s not tough to look past them – it’s impossible.

Don’t let Wal-Mart’s country bumpkin beginnings fool you. This is one sophisticated retailer. Everything that’s sold in any Wal-Mart store is accounted for within a few minutes on massive computers at their Bentonville, Arkansas headquarters. Wal-Mart distribution system is second to none. Stores are restocked, items are re-ordered with minimal human intervention.

With all this going in Wal-Mart’s favor the revelation that their Christmas season sales lag the rest of the retail sector is stunning&#185. What’s going on?

Is it possible that Wal-Mart has become a victim of the recent spate of bad publicity surrounding the retailer’s practices? Within the last year there has been labor unrest in Southern California where other stores blamed their problems on Wal-Mart’s wage and insurance policies. Then CNBC and Frontline (PBS) both did long form documentaries on Wal-Mart – not all positive. Then there’s the objections raised in many communities when Wal-Mart came to town.

A backlash – even a small backlash would be enough to account for what’s going on. Meanwhile we still have 3 weeks until Christmas and it’s possible that Wal-Mart can make up what they’ve lost.

It will be interesting to watch.

&#185 – It should be noted that early season data is very sparse but some credit card numbers have shown an exceptional growth in sales.