Retail Bailouts & Bankruptcies
Now that the financial institutions have received all of their pre Christmas bailout money and now that the automobile industry is getting a down payment on their billions, with Christmas over, is it time for the retailers to get their share of the hand outs, bailouts, or whatever you want to call them? After all, Christmas is 30-50% of some retailers entire year sales.
U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years. Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. You read that right! 73,000 stores may close!
More unemployment.
More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.
“You’ll see department stores, specialty stores, discount stores, grocery stores, drugstores, major chains either multi- regionally or nationally go out,” Flickinger, managing director of Strategic Resource Group, a retail-industry consulting firm in New York, said today in a Bloomberg Radio interview. “There are a number that are real causes for concern.”
Retail Metrics Inc.’s December comparable-store sales index will drop an estimated 1.2 percent, or 5 percent excluding Wal- Mart Stores Inc. Retailers’ fourth-quarter earnings may fall 19% on average, the seventh consecutive quarterly decline, according to Ken Perkins, president of Retail Metrics, a Swampscott, Massachusetts-based consulting firm.
This is dire news no matter how you cut it.
Probably 50,000 stores could close without any effect on consumer choice, Gregory Segall, a managing partner at buyout firm Versa Capital Management Inc., said this month during a panel discussion held at Bloomberg LP’s New York offices. Only retailers with healthy balance sheets will survive the recession, according to Matthew Katz, a managing director at consulting firm AlixPartners LLP.
I bet Obama can’t wait to get back to the mainland to begin solving all of these bankruptcy problems. Oh yes, and the war in the Middle East between Israel and Hamas.
Ernie Fitzpatrick
http://www.articlesbase.com/economics-articles/retail-bailouts-bankruptcies-701778.html
10 Responses to “Retail Bailouts & Bankruptcies”
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is bad job market and US consumer reluctance to spend the cause for bad economy?Consumer spending has come to a grinding halt. Nobody except for fools are spending money on shopping, retail or new cars. Many retailers, car dealers, restaurant chains etc etc are going bankrupt on daily basis and thousands lose their jobs daily. October alone saw a loss of 240000 jobs.
But how can the consumer spend, when there is no job security anywhere? A lot of recent college graduates continue staying unemployed despite high GPA of 3.5 or beyond. A friend of mine who has bachelor in math with 3.5 gpa is unemployed and a second friend with bachelor in finance with 3.7 gpa is unemployed too. And they both are thinking of filing bankruptcy. This is how bad things are.
And the bailout does not improve job market and neither does it address the problem of how to make the consumer spend more. So then how will economy be fixed?
Giving $700 billion to failed companies does not do anything because they will fail again, since consumer spending is very low now. Fannie Mae, AIG again reported billions and billions in losses despite being bailed out. If General Motor is bailed out again after few months it would need second bailout.
Why don't they get it that bailout is not the answer to the economic crisis?
I think it had something to do with business' being greedy. They screwed over consumers, so then they wouldn't buy their products, which meant that their stocks dropped.References :
No it's because the democrats and Obama lied about what Fannie May and Freddie Mack true status was and ACCORN forcing bankers to except loans they new were not backed by eligible clients.References :
http://answers.yahoo.com/question/index?qid=20081112212848AAQaHzs
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The government spending more than a trillion tax dollars they don’t have didn’t help either.
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That’s exactly how I was seeing it…
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http://answers.yahoo.com/question/index;_ylt=AtboailmEpNklMWd3VYMwfDsy6IX;_ylv=3?qid=20081110120658AAzTQak
It does not help it.
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Yes. It’s hard to buy products when you have no job.
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No no no – those two things do not CAUSE an economy to fail, they are merely the end symptoms!
The rest of your thinking is correct. You are right on the money about the bailout. It scares me how gleeful Nancy Pelosi is about spending 300 billion more on bailouts, never giving a thought to the long term consequences (more of the same crooks running businesses). And the libs talk about BUSH favoring big business???? The Dems are leading the push to bail everyone out! The thing is, as you point out, this will do nothing to help the middle class at all.
This is what would have helped the middle class and everything else in the long run: Allow big business (like the big three car manufacturers and American Express) to fail, and have to die or restructure into a more responsible entity.
But under the likes of Pelosi and Obama, they will all be bailed out for irresponsible lending and spending, meanwhile the Dems will be depleting social security and medicare to bail out their buddies. The average homeowner, however, will not be bailed out.
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The bailout destabilizes the economy and is one of the last steps to communist take over. It is being done in conjunction with a government that has been voted in and has made false promises of greener pastures and a socialist form of government, that is considered the last step. This has nothing to do with them trying to make the economy better that is a lie they want us to think. It has to do with globalization of the banks and the elite banks owning the world and controlling the governments and the people whom they do NOT represent. The first step was of course demoralization through teaching socialistic ideology for a generation (meaning 20 years). The cold war ended not because they gave up but because a New World Order was developing and getting solidified, the banks were forming the Euro and have already started a Lisbon Treaty to control all the countries in Europe usurping national governments constitutions with a continental government that does not represent the people. In other words the cold war ended so that we would not be polarized in the idea of fighting off communism and socialism and would grow more accepting of it. Be careful, if we do not stop them many of us could end up dead.
This will explain it better:
http://www.dailymotion.com/video/x32cxf_yuri-bezmenov
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