Saturday, July 17, 2010
(Mis)Leading Economic Indicators
The cheerleaders for the Government in the nightly news and the shells that remain of Time and Newsweek and our daily papers tell us that the recession is over and happy days are here again. I look around and wonder if they are in a different world than I am.
Sunday afternoon I went to my local Lowe's hardware/builders store and bought something I needed and a few things I didn't and came back home to do a little home repair. Lowe's and Home Depot are big box discounters who sell Chinese made plumbing and electrical supplies cheaply. So cheaply in fact that all of the hundred-year-old mom-and-pop hardware stores have had to either shut their doors or delayed that inevitability a bit by selling the same blister-packed Chinese junk for a somewhat higher price than Lowe's and Big Orange.
Tuesday morning I drove past and noticed plywood over the sign out by the road in front of Lowe's. My first thought was "damn vandals". I noticed the same on the other side and then looked at the building. The name was gone! Sunday evening after I took my ball-cock and went home to fix my toilet, the employees were all called together and told "That's it. Don't come in tomorrow." I guess they figured if I was only going to buy this home repair stuff and not remodel my entire home, they weren't going to waste their time on me.
The true irony was that as I was driving by, the news on the radio was reading a report from the Department of Labor of how "although the number of unemployed was up due to the release of the Census counters, the figures were actually good news because that was offset by the creation of so many jobs in the private sector."
But employment is only one part of it. Much has been made of the collapse of the home housing market. They call it a bubble. I think that to be misleading. If it were truly a bubble, the houses that were built would never have been occupied. They would have been overbuilt by quantity. These were overbuilt by quality. People fraudulently bought houses their income and station-in-life did not really qualify them for - janitors in half-million dollar McMansions.
And then the inevitable caught up with them.
There is something else hanging over our heads: The suburban landscapes is covered with the carcasses of big-box stores like this Lowe's, the remnants of the war of the drug stores of a decade ago, hundreds of small strip malls and office parks that were never full and now boast no real tenants other that the occasional dollar store and imitation Goodwill store. The fast food stores now house title pawn and "We Buy Gold" places. (How can they stay in business? Fool me once shame on you. Fool me twice, shame on me. Are there enough shameful fools out there to support so many of these crooks?)
This real estate is as leveraged as the housing market and due to the miracle of debt-backed currency and fractional reserve is poised as a sword of Damocles over our heads waiting to drop and wreak havoc on our unsound and fragile economic system.