Readers here know that I’ve been repeatedly saying things will get much worse, regardless of any one-day swings in the stock market. I’ve been saying for many, many weeks that we are going to see very big problems come the holiday season–the more important time for retailers and other businesses to bring in sales. And, here you have it:
Retailers Report a Sales Collapse
Sales at the nation’s largest retailers fell off a cliff in October, casting fresh doubt on the survival of some chains and signaling that this will probably be the weakest Christmas shopping season in decades.
The remarkable slowdown hit luxury chains that sell $5,000 designer dresses as badly as stores that offer $18 packs of underwear, suggesting that consumers at all income levels are snapping their wallets shut.
Sales at Neiman Marcus, the luxury department store, dropped nearly 28 percent in October compared with the same month last year. Sales fell 20 percent at Abercrombie & Fitch, nearly 17 percent at Saks, 16 percent at Gap and nearly that much at Nordstrom.
Note the word in the headline: "collapse". Not slow down or decline. COLLAPSE.
This should not be a shock. It is the natural next step after a two-decade wage depression. Credit cards are maxed out. Home equity is gone, poof…so where are people going to get money? Not from their paychecks.
My friends, this is really bad…
And there is more:
Here’s what just came out today:
The American economy lost another 240,000 jobs in October, the government reported Friday morning, the 10th consecutive monthly decline and a clear signal that an accelerating slowdown is assailing households and businesses.
The unemployment rate climbed to 6.5 percent , the highest level since 1994 and up from 6.1 percent the month before.
Adding to the gloom was a steep downward revision in payroll numbers for September. The Labor Department said that employers slashed 284,000 jobs that month, far higher than the 159,000 that was initially reported.
Since August, the economy has lost 651,000 jobs — more than three times as many were lost from May to July. So far, 1.2 million jobs have been lost this year.
And, from The Wall Street Journal:
Ford Motor Co. announced wide-ranging cost cuts after burning through $7.7 billion in cash in the third quarter, as revenue plunged in a rapidly deteriorating auto market.
The Dearborn, Mich., auto maker hopes to improve the cash position in its automotive business by between $14 billion and $17 billion by the end of 2010, through a mix of job cuts, reduced benefits, lower capital spending, divestiture of noncore assets and new financing measures.
Burning through $7.7 billion in ONE QUARTER? Shit. And GM is also floundering.
Also, though I have no sympathy for the hedge fund business (also from today’s Journal):
Hedge funds are selling billions of dollars of securities to meet demands for cash from their investors and their lenders, contributing to the stock market’s nearly 10% drop over the past two days…
One of the biggest hedge funds, $16 billion Citadel Investment Group, is being asked by several major banks to post additional collateral to cover big losses on its investments, according to people familiar with the situation.
Citadel, which is run by Kenneth Griffin, was until recently considered a possible savior for troubled Wall Street firms. But his biggest hedge fund has fallen nearly 40% this year, prompting the firm to hold conversations with lenders including Goldman Sachs Group Inc., Deutsche Bank AG and Merrill Lynch & Co. that finance Citadel’s trades.
When the hedge funds are imploding, you know that cash is drying up everywhere and people are in a panic.
This is what the greedy bastards running the financial system have done to decent, working Americans–and people around the world. It makes me pine for some hanging judges…but, of course, that’s my animal instinct talking, not my policy mind…or is it?
