The media and economists are doing their best to hide from us that the economic fundamentals of our country are weak and flawed.
Remember John McCain claiming in 2008 that “the fundamentals of our economy are strong”? If he ever had any chance of winning the presidency that bit of mindless denialism ended it. Because a Democrat was running after eight years of a Republican presidency, the media was willing to tell the truth about the economic fundamentals for a brief time.
So, while the media and establishment economists insist we are in a recovery, we keep getting news like this:
Sears Holdings Corp. suffered its worst stock decline in six weeks after acknowledging “substantial doubt” about its future, raising fresh concerns about the survival of a company that was once the world’s largest retailer.
Sears added so-called going-concern language to its latest annual report filing, suggesting that weak earnings have cast a pall on its ability to keep operating. The 131-year-old department-store chain, which has lost more than $10 billion in recent years, was cited last year by Fitch Ratings as a company carrying a high risk of defaulting.
“They’ve got all kinds of issues,” said Noel Hebert, an analyst at Bloomberg Intelligence. Though the company has enough cash to get through 2017, there are plenty of troubling signs, he said. Its declining payables-to-inventory ratio, for instance, shows that vendors have been increasingly reluctant to keep the retailer stocked.
So why is this happening to Sears? USA Today endeavors to explain it to us. They list four reasons. Can you guess the first reason?
Wow, now I understand so much more!
The fact is, none of their proffered reasons for the decline of Sears and Kmart (which merged with the company awhile back) explains much of anything.
Online purchases? Yes, that might explain a reduction in sales, but that doesn’t explain bankruptcy. The shopping mall has been a destination for lots of reasons. It is a social outing with friends and family, a place where everyone can find something to eat, and often a place to see a movie. If one of the major retail outlets was Sears, why wouldn’t people stop by and try on clothes?
Answer: because they don’t have as much money to spend.
Remember when the economy sustained both Circuit City and Best Buy? Or Borders and Barnes & Noble? The impact of Amazon.com doesn’t explain all the economic destruction we see. People can no longer afford the shopping experiences they once purchased. That’s why Sears is now perceived as “out of style,” not the other way around as USA Today wants us to believe. It became “outdated” because people stopped shopping there and (perhaps more importantly) stopped enjoying being there. Sears didn’t “keep up with the … habits of shoppers” because the shoppers couldn’t financially sustain the habit of going to Sears.
But everyone lies about it. Mike Shedlock, in blogging about a collapse in the used car industry, shows how obvious it is. He quotes from Bloomberg and adds emphasis:
“Auto we think is going to slow down because people will stress on credit,” Jamie Dimon, chief executive officer of JPMorgan Chase & Co., said at the company’s investor day on Feb. 28. “You’re going to see some issues there, but it’s not systemic.”
“Not systemic.” Jamie Dimon is John McCain in 2008 mindlessly promising that the economic fundamentals are strong.
If need information on the real state of the economic fundamentals, this interview with Peter Schiff is on point: