Stupidly Blaming Amazon

Mish brings some common sense to big retail analysts idea that somehow Amazon is to blame for the sales funk in USA retail.  But even Mish misses the core reason.  First read the article and see the graph.

Yes, Nordstrom is in a funk too, but it does not belong in that list with Kohl's, Macy's and Walmart.  Walmart is dying because malcredit, the oxygen of the dinosaurs of the last forty years, cannot be invested in anything dinosaur-grade that can make a payback.  It does not matter if we are in deflation and the banks will in effect pay you to borrow malcredit, the revenue stream from the investment with the borrowed malcredit will not cover the amount you borrowed.  Income drops but the debt remains on the books, in effect growing relative to all other assets as it cannot be reduced.

One reason Walmart grew so amazingly is its customers were not as foolish as Macy's cardholders.    This is how the real world works.  Macy's and Walmart goes to the exact same factories and buy the exact same jeans for essentially they same price, but with their own respective labels.   Walmart buys for $7, sells for $19 in a cash transaction.  Advantage Walmart shopper.

Macy's buys for $7, lists at $45, on sale for $29.  People whip out their Macy's cards and after paying 50% more (29 instead of 19) pay 20+% interest on top of the overprice.  Macy's benefits from a slight boost in sales as their competitors who played the same game died.  No there is no one else left to die, so Macy's is the last man standing.  No one from which to gain a boost in sales.

And by the way, I am a cast iron cooking gear freak, and I check out Goodwill for pots and pans fairly regularly.  I cannot imagine ever buying kitchenware from anywhere else...  Goodwill's supply is massive and very good quality dirt cheap.  Macy's managed to be the last man standing based on their amazing kitchenware departments in the 1980s and 1990s.  I was there. That's over.

Take any Macy's department.  For those who love people, open a retail store to compete directly with that Macy's department.  Buy fashion forward new and for the time being sell used whatever alongside.  The secondhand goods will compete with what is on Macy's shelves, and your testing out the new items will make you a destination shop.

There have always been upscale second hand stores.   You can merge new and used together.  Get month to month rent, refuse a lease.  In fact, cut a deal where the landlord gets only 6% of the top line as rent. so he makes money only if you do.  Refuse triple net lease as ludicrous, insulting.

And work closely with Goodwill or your local version.  You'd be surprised what they are up to.  With maybe 80% used, to start, and 20% really cool new new,  bury Macy's and have Nordstrom VPs visiting your store to figure out how you are taking their customers.

The dinosaurs are dying, because their system is over. Those into lifestyle over personal accumulation will very much enjoy the next 40 years.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Another Amazon Fail at Web Marketing

If you are putting a dime into web marketing, you are betting you are smarter than Apple, Victoria Secret, Safeway and Amazon.  Amazon tried and ended their version of Groupon (from $26 to $3, laying off people, gets a stick bump by suing IBM over patents) and now ending its version of Eulily.com, MyHabit:

As many of you may already know, MyHabit is closing on May 20, 2016 and as of May 15, 2016 we will no longer pay any advertising fees for sales referred to MyHabit. However, your visitors have unrestricted access to shop similar brands from Amazon Fashion [http://www.amazon.com/b?node=10445813011]—backed by Amazon's award-winning service, free shipping and returns, and exclusive benefits for Prime members.

So at what point will people begin to at least test the premise online marketing pays?  Anyone who is training in that field, or works in that field, needs to understand massive unemployment ahead if all of the leaders cannot make it pay.  Any belief that online marketing pays is pure social conditioning.

Now you have a choice: go back to school and take on another $50,000 in student loan debt to get a false economy job, or start your own business.  You'll have to forget everything you paid for in school,  and there the people who fooled around and never learned a thing have an advantage over you, but take your losses and move onward and upward.

The reason in my book in 2001 and one I could an online based business was a doubtful prospect is because I had read Ogilvy.  If you plan to work in business, or for a business, and certainly if you plan to be customer-employed, step one is read Ogilvy.



Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Rethinking $15 an Hour

Walmart and the Fast Food joints pay low and the taxpayers make up the difference:

The researchers note that the largest classification of temporary manufacturing production workers—assemblers and fabricators—earn a median wage of $10.88 an hour, compared to $15.03 for those hired directly by the manufacturers.
Half of all manufacturing production workers hired through temporary staffing agencies are enrolled in at least one public assistance program – a rate just below the 52 percent of fast-food workers who rely on public assistance.

In effect people making $15 pay taxes to those making less. so the boss can pay them less.  One nice effect of $15/hour minimum wage is workers lose many of those benefits, so they might make more working, but they lose welfare payments because they now make too much.  All in all, if true sounds good.  A one-off burger joint has higher expenses than McD, but at $15 and hour, at least wages will be the same.  (But McD will go robot and a local place needs people power.)

I stopped eating at burger joints a long time ago, even small specialty ones, since the meat is dry, no fat, not like the good old days.  Fat is healthy and flavor.  Hope to see dribbly greasy burgers make a comeback, with health meat.

Anyway, the solution is not $15/hr min wage, which is solely designed to give lower level government workers a huge wage increase (after which their betters in govt will get a bump up too), the solution is to get rid of minimum wage laws,  corporate welfare and personal welfare thereafter, so market prices drive market decisions.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Kiva Zip: Mark Sent Me $1.39!

Received a loan update notice from Kiva Zip:

Mark sent you a $1.39 repayment!

I have no pension, paycheck, nor property.  Got rid of it all.  With my children all growed up and established, I am now free to do what I want.  So I am doing what I always did, because I love my work.

No pension?  Never wanted one.  My retirement plan is to grab my chest mid-sentence and drop dead in some trade show booth or in a classroom lecturing.  "Tag 'im and drag 'im."    Paycheck?  I am employment proof, and by the grace of God I find plenty of work to do every day, and sometimes it pays!  Property?  I am an American Indian when it comes to real estate, no one should own property.  Lease for 99 years?  Sure, that is a good foundation for all real property rights laws.

What to do with excess cash?  Loan it out.  A loan is always a charitable event, unless the intent is to advantage oneself and harm others by lending it out at interest.  I am not a financial advisor, but if you want to keep assets safe in the coming years, lend them out.  Especially to non-interest lending orgs that make microloans, like Kiva Zip that mediates between small farmers and people with money to lend.  Mark just made a payment above, to me and no doubt 199 others who all kicked in about $50 each to front Mark the money to expand his sales presence.  I am encouraged by Kiva Zip to roll it over into a new loan.

Now, as a matter of economics, since we are in deflation, I am getting back more buying power with the credit I extended then I lent.  Nothing I can do about this, except when I re-lend tis excess, it will go farther.  Too bad for Mark, and the rest of us who owe anything.

Kiva has an interest-loan division, so be careful.  Here is the no-interest section:

https://zip.kiva.org/

I am not a financial advisor.  neither is Kiva zip.  But if i wanted to keep a million cash away from the hegemon's grasping hands, and it does not matter who wins, it must be taken from you, I would not hide it in cash in a safe-deposit box or bury it in the back yard, I would not put it in Canadian gold stocks with physical certificates in hand, I would not buy gold and put it in a floor safe in the basement. I'd lend it all out in $50, $100, $500 increments to small enterprises all over the world.  It would be so atomized he hegemon would never get around to stealing it.  And I could practice layering, that is have micro-repayments layered in such a way that they come back to match any foreseen expenses or opportunities, and in any event, I'd have an asset (accounts receivable) against which my credit would be good since I have a reliable income stream.  If unneeded, just roll over the payment from Mark and off it goes, back to an atomized free field.

With a pension, there are so many rules regarding how much you must take out and when, and what age and how much you can work or this penalty happens.  Why live for the hegemon?  So you can defer taxes? Ha!  There are dozens of ways to tax, and since when does the hegemon keep the rules?

Once you reject usury,and live "interest-free (both ways)" the alternative ideas come pouring in.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Mall Surprise

It's been a few years since I went to a mall, and I visited a tier 2 mall Saturday.  It had a Nordstrom, Macy's JCPenney and a Sears.  I was looking for "wife-beater" undershirts (what are they called otherwise?) and I was happy with the Macy's house brand, Alfani, from a few years ago.  They were extra long compared to others around. Nonetheless I checked out the other stores for academic purposes.  First this:

Sears is suffering from the steepest decline in operating performance since 2006 among its rivals, according to a new report from research firm Green Street Advisors. Based on the firm's operating performance index, which measures same-store sales growth by gross margin percentage, Sears has seen a decline of more than 50 percent, compared with about 10 percent for Nordstrom and Macy's.

Well, that says a 50% reduction in "sales growth by gross margin percentage." Why do they use such narrow complicated metrics?  Sears top line sales have been dropping for years.  Everything else is massively complicated financial engineering.  Sears is a dinosaur with a brain too small to adjust to the environmental changes facing it. Visiting the store it was was clear they are in distress.  The inventory was sparse, it looked like Sears figured how to source from North Korea, and I don't think I saw an employee anywhere.  I moved on to JCPenney.

Here again the pickin's were slim, and a big sign told me "the line forms here."  Well, I came looking for undershirts, not lines, so that was off-putting, and I think they'd be lucky to have a line.   On a Saturday afternoon they did not. Not much on offer, looks like they skipped bringing in new inventory.

So finally to Macy's where I found the undershirts, same price as a few years ago.  Macy's looked ok, although the style was uninspired, and near impossible to tell adult from children's clothes.  Also, there were discount bins with goods clearly left over from the Christmas season (Ugly Christmas Ties, as a gag gift item.)  In May? The clerk offered me a 20% discount if I acquired a Macy's credit card on the spot.  No thanks, that costs too much.

Since I am disinclined to spend time at malls, I did not check out Nordstrom, I left having acquired my shirts.

Come to find the Macy's shirts are at least 15% shorter now than the last time I bought.  Fie!  Like everywhere else, quality nor quantity is being cut to maintain price.  We are becoming so third world.  That Macy's brand just lost me as a customer.  But who cares, Macy's exists to trap people with usury, which keeps their stores open, for now.

(Update: So after a week of wearing these shirts and cleaning and wearing, if find the whole shirt is a size smaller, not just a shorter tail.  What is being marked large today is what was medium a few years ago.  The problem is the same, just a difference in tactic.)

A smaller but consistently profitable fruit packer once told me the key to success was pack to grade and consistent quality.  You'd think that would be the standard, but it is not.  Many packers try to cheat on this, and offer lower price.  A brand get associated with quality.

If I am right, and Alfani was the best value in 100% cotton undershirts, then if someone was into that product area, they could easily put their brand on the same thing from the same factory in (is it Pakistan?) and then maintain the standards no matter what. Maybe the weave could be a bit denser. Of course never sell to Sears, Macy's, etc (they would not buy from you anyway).  Sell to specialty small retailers, which will be reviving now that these dinosaurs are dying.

At a bus stop I was conversing with an American of African ancestry, which means the odds were better than even he was an ex-con.  He complimented my jacket, and noted how his ghetto inspired outfit was perfect, not an element out of place and everything first rate quality.  He said he was a musician on his way to a gig, which he usually did for free, hoping for break.  I suggested with his care for sartorial perfection he might open a menswear store.  We discussed that a bit.

Gumps got started selling mirrors to saloons in San Francisco during the gold rush.  Big Business.  Mirrors were necessary to get more light into spaces before electricity, and frontier bar fights often yielded broken mirrors.  Seattle's post war premier women's fashion house, John Doyle Bishop, got his start dressing hookers in Alaska, and went legit in Seattle when the war ended.  Every saint has a past, every sinner has a future.

A key to this is rents dropping.  Sears smartly spun off their real estate holdings and sold them at top dollar.  Well, a smart guy in the center did so, selling off the REITs to guess who, school pensions.

The damage is done during the boom years.  The bust is just where it is decided who pays for the damage.  If you have property, paycheck or pension, you are a sitting duck.  Right now, pensioners are being hammered, suffering daily, and not a peep.  Maybe people are making noise, which explains Bernie and the Donald.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

Hong Kong To Become a USA Territory?

O dear... someone has been stirring the pot.

Yet another example of political hallucination masquerading as intellectual expression has emerged in Hong Kong recently in the form of a suggestion that the special administrative region should become an overseas territory of the United States.

Although the people have an independence little known in the world today, China is a world superpower and a decision to end that freedom could not be protested.  Indeed, the "one-country, two systems" policy ends in a mere 30 more years, 20 years of the 50 having flown by.

But a USA territory?  Absurd.  As much as the people of China may worry about China, the people of Hong Kong are Chinese, and have little interest in be ruled by USA.  Cui bono?  No one.

Now Hong Kong has a unique pedigree: sociopolitical ideas lost with the fall of Rome were rediscovered by Islam, which in turn shared them with the Christian European conquerers in Spain.  The Spanish scholastics worked out free markets, and the French philosophes came up with laissez faire which by the time it got to Scotland, the UK in the late 1700s was looking for administrators for their undermanned colonies in the Americas and Asia.  Hong Kong and what was to become USA were informed by the same philosophies and the same people (Scotsmen) at the same time.  It took a century to take hold, but sadly, the USA kept evolving and Hong Kong, a city state with the ideal 7 million inhabitants, remains much like it was 250 years ago: quite free.

That a few dozen Scotsmen could plant such seeds is not a tribute to them, or the Americans, or the Chinese.  The ideas are universal and work wherever tried.  That a Hong Kong is allowed to thrive under communism, and not capitalism, is a lesson for all to learn.

AS the writer notes, Hong Kong as a USA territory is not even contemplated, let alone possible.  What is possible, and worthy of contemplation, is a New Hong Kong in USA.

The USA has some unfinished business vis a vis its treaties with American Indians.  In Hong Kong no one is allowed to own land, as it was anathema to Indians.  In Hong Kong the currency is issued by competing firms, as it once was in USA but is now forbidden.  In Hong Kong taxes are negligible, if due at all, as it was among Indians.  Good works through charity is far more efficient than through tax and spend.

This is not to fall for the noble savage fantasy, just that given an opportunity to restart, and demonstrable human impulses, and a working model, the port that the Puyallup Indians already own in Tacoma, Washington could become its own country.  If earlier treaties were to be honored as well as the newer undisputed amendments, there would be certainly room for 7 million people and a world class airport south of Tacoma.

Instead of talking about Hong Kong becoming a new USA territory, how about the Puyallups gaining their treaty agreed independence?  Hong Kong could be a big help as a model, and another 50 years pf freedom as a competitor a benefit to the world.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post

A Degree, Not an Education: Enslaved By Student Loans

I was pulling in an easy $50,000 a year on the side teaching and publishing, spending less time on that than most people spend following sports. The work itself was rewarding, but the money was amazing.  I say "was" because things changed after 2008.

The people who knew what was going on called the crash in 2008, and it was clear the economy would not recover.  The powers-that-be could, and did after 2008, goose the stock market, but if you were unemployed, it is a depression going on.  I decided to show others how to do what I was doing as well, especially since 2008 it became clear no one unemployed over 50 would ever work again.  Help out my cohort my cohort, and all that.

I wrote  book and marketed a class to schools in essence "Go back to school, but as the teacher!" showing how people could teach write and consult on their favorite topic and keep themselves on the cutting edge while they road out this economic depression.

Well, fresh upon making student loan debts unbankruptable, the powers-the-be pointed to the bailed-out goosed stock market as proof the economy was doing well, and also claimed all you needed was more education, and "we'll loan you the money!"  Well, what was loaned was malcredit, and at interest, and student loan debt went from $500 billion to $1.5 trillion.  People found it easier, as always, to borrow malcredit than create their own benecredit.  By the way, I had two children graduate from college after 2008, neither with a dime of debt.  I simply forbid it, and we found other ways.  You are never obliged to cooperate with evil.

The decade it took to borrow that money and enslave themselves diverted them not only from my world trade start-up seminars but from my "teach and consult your way to publishing" seminar.  And that massive group is not inclined to spend any more now that they moved into mom's basement, now realizing the economy was false all along.

Now comes this from Canada, as the writer notes, no difference with USA

As money is siphoned from academic programs through attrition, it is channelled into a host of middle-management positions.From 1979 to 2014, central administration and staff ballooned by three and a half times, while the size of the faculty merely doubled.Parents, students, and governments keep supplying them with capital, assuming there will be a genuine return on investment. But since the institution no longer produces anything, no such return is forthcoming.

Not unlike USA. Mish has these comments on a new report.

Over 40 percent of those in student loan programs have stopped making payments. Many borrowers have never made any payments.
The department of education (a useless body that I would eliminate in one second if given the chance), cannot figure out why this is happening.
“We obviously have not cracked that nut but we want to keep working on it,” said Ted Mitchell, the Education Department’s under secretary.

Well, Ted, if there were jobs one could take upon graduation, in which the income covered the cost of the student loans plus a susbsistence, then no doubt these people would start paying.  But they find there is not.  Probably the biggest mistake a person can make is to believe his own PR.  I agree an education is the path to freedom, but does Ted really believe a college degree represents an education?

malcredit offers a fantasy wealth effect, "ther is money for me to get an education and a better job in this excellent economy.  Wrong on all counts.  not money, credit, not and education, a socialization, no jobs, and a false economy.

Although I think anyone who is in these dire straights was self-deluded and desrves no breaks, I do believe all student loan debts should eb forgiven, for one simple reason:  People will fill my seminars again.

What will happened to the 2.7% to whom these people owe that $1.5 trillion?  I don't care.  Their wealth is based on a false economy and a scam, and just because the played the winning side of the scam...  well... let's look where they are headed anyway... wealth effect.

Economists talk about the “wealth effect” that occurs when asset values go up. If your stocks, real estate, or other assets gain in value, you derive no immediate benefit unless you sell them. Yet you feelwealthier and more confident. That confidence changes your behavior, so you spend more freely. You’ll buy that second home, nicer car, or diamond ring. You’ll take more risks with your investments.
The wealth effect is a real phenomenon, and it has economic consequences. In a consumer-driven economy like the United States, higher spending from asset-wealthy people lets businesses expand and create jobs. Politicians and Fed officials tout the effect as a beneficial consequence of their genius plans. Yet they seldom remind us of thenegative wealth effect that occurs when asset values decline.
When your perceived wealth contracts, you cut spending and turn cautious. Your altered strategy also has macroeconomic consequences – but sometimes they aren’t immediately obvious. I recall reading back during the 2009 recession that lawnmower sales had spiked higher. That seemed odd at first, but then I understood: affluent people who had lost jobs or income fired their yard services and started mowing their own grass. A good move for them, but terrible for yard workers.

I no longer offer the seminar, although the book is on Amazon.  Do I recommend you get the book?  No.  It is valid, but not relaible.  Now I work at teaching online on a new model.  Pay me only if my seminars work for you.  This model is fine for me since the teaching always was a gratifying sideline. But not if you need the money.

Feel free to forward this by email to three of your friends.

Bookmark this post --- Email this post