The rise of the dollar store – catering to a disappearing middle class with shrinking incomes has made dollar stores prosper in the last decade. In last decade Family Dollar grew by 62 percent in store count while U.S. population only went up by 8 percent.
Dollar stores for most Americans carry an odd sort of stigma. In the past, these locations were seen as shopping hubs for the poor only. Yet as we all know many in the once strong American middle class were thrown off the prosperity treadmill and into lower income brackets. While companies struggle with growing dollar stores have found a niche in this climate. A shrinking middle class means more customers. All we really need to do is examine the growth in employees and in store numbers for a couple of large dollar stores in Family Dollar and the 99 Cents Only Store. These businesses have done well in this economy for a variety of reasons but the number one reason is a shrinking pocketbook has taken away the stigma of shopping for less. Austerity is back in fashion.
Manias, implosions, and financial disasters – the unsustainable nature of our current debt based financial system.
Trying to induce inflation to reduce accumulated debt is not a modern invention. Dr. Carmen Reinhart and Dr. Kenneth Rogoff trace this kind of financial crisis and others back to the Dionysius of Syracuse during the 4th century. The debasement of currency also occurred in the Roman empire and Byzantine empire and as usual printing money or devaluing your own currency does not usually lead to beneficial outcomes if we are to use history as any guide. We need to be upfront about what is going on here and that is the globe is reaching a peak debt situation. Think of the recent problems we have seen in Iceland, Ireland, and Greece. Yet these are simply tips of the visible iceberg of financial mania in our current system. Europe has many issues to contend with especially when looking at Spain, Italy, and Portugal. Here in the U.S. the Federal Reserve and U.S. Treasury are doing everything they can to ignore the reality of our current situation. Politicians are unable to make the hard choices and bankers simply want to extract productivity from the working classes. Our current predicament is not unusual in the books of history but the size and global interconnectedness is.
A brave new banking system – while public is told banking system is healthy FDIC quietly grows troubled bank list by 180 and adds over 1,600 employees in the last two years to deal with bank failures.
The banking system in the United States rests on a very thin layer of faith and that faith has been shaken by the current financial crisis. The retail banking system is largely a facade that now latches on to taxpayer bailouts to fund speculative investments through their investment banking divisions. The repeal of Glass-Steagall has been an absolute failure for allowing this commingling of financial functions. I find it interesting that while we get a public stance that all is well on the banking front, we find that the FDIC keeps adding employees to handle bank failures and the number of problem institutions continues to grow. Of course this is the kind of information that is buried deep in websites and financial statements while most of the press focuses on distractions.
Working for less – Aggregate hours worked in U.S. economy from all workers moves back to February 1999 levels. 25 million Americans out of work or looking for full-time work as middle class continues to shrink.
The economy continues to sputter along and the weak employment report only adds more doubt for a summer recovery. As if the American worker was in a position to support more economic bad news? Many are now looking at new methods of measuring employment in our economy since the headline unemployment rate has failed to give an accurate picture of what is going on. If we were to add all the hours worked in the economy we would find that we are now back to levels last seen in February of 1999. Now think about this for a second. We are talking about the aggregate hours of all workers in our economy. Of course, this figure is startling because it fails to account for population growth and also the expansion of the workforce. The economy is struggling more than the headline unemployment rate is leading many to believe.