December 4, 2008
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News: The Plight of Our Retailers
Now the retailer industry is heading into collapse. Just another domino in the continuing Bush economic legacy. All began with deregulation, then loss of good-paying jobs, then the housing market crisis, then the job market crisis, then credit card market crisis and the retail industry crisis is the next domino in a line that began shortly after the 2000 election. Of course there are many more dominos left to fall. Ramifications always bleed over. We haven't even mentioned health insurance/care crisis, which is much worse than most people imagine. But, right now, we're seeing the immediate effects of the credit card industry crunch. With the loss of good paying jobs, consumers (unwisely) remained optimistic that the problems were just temporary. So they compensated the loss in pay with the use of credit cards. Seemed reasonable and brought our economy more time (as the invisible tidal wave gather strength).
The fist big wave to reach the shore was the job market crisis, then the economy collapse followed shortly by the housing crisis, but there were many more to follow. The next one to strike was the credit card crisis – and here we are. Now that consumers are aware of the original sin of Mr. Bush allowing industry to ship millions of good paying jobs overseas for nicer CEO packages, the optimistic consumer bubble has burst. The jobs aren't coming back. This credit card dependence could become detrimental.
So, responsible credit card consumers are doing the right thing by policing themselves and borrowing less. Critical and essential for personal financial wellbeing and the credit market. But spelling "curtains" for many major retailers like Circuit City, our nation's second largest consumer electronics retailer.
Seventy-five percent of Circuit City's transactions were typically made on credit cards. This is typical for retailers whose typical merchandise runs into the hundreds of dollars. As consumers began policing their credit habits more responsibly, Circuit City sales were decimated. The real kicker is that the consumers were right and Circuit City was also right by normal standards. What was wrong was the Bush economic policy and it's associated ‘fairytale' optimism ("Fundamentally strong"). It all comes down to good paying jobs, not tax beaks. People must have incomes first.