Outrage

"I have been a public servant all my life." - Tim Geithner

So making tens of millions a year at Goldman Sachs is public service now?

People had better start educating themselves, put down the twinkies and pay attention.

Movie Gallery May Close another 1,000 Stores

Closing more than a third of its stores? Just a warm up - unfortunately for Movie Gallery employees and the landlords this business is shot. The united states has more than three times the retail square feet per person than any other country in the world. When the price of gasoline rises, which it will, shipping to suburban strip centers in secondary markets becomes even more difficult than filling the family suv up to take a 30 minute trip to the closest regional mall.

Video-Rental Chain Movie Gallery Weighs Second Restructuring

Hollywood Video chain owner Movie Gallery Inc. could close about 1,000 stores as it embarks on its second major restructuring in a little more than two years, people familiar with the matter said Thursday.

The video-rental chain, based in Wilsonville, Oregon, operates more than 2,700 locations across the U.S. It is struggling under some $600 million in debt and a continued decline in the store-based video-rental business.

2010: Proceed With Caution

There is a split between economists as to whether the greater threat is from staggering deflation or hyper-inflation. What they can all agree on, however, is that the long term health of the dollar is under fire.

Uno Bankrupt

Note to self: retailers and restaurants with inferior products and heavy debt loads will go bankrupt.

Deep Dish Trouble: Owner of Pizzeria Uno Files For Bankruptcy Detection

Massachusetts-based Uno Restaurant Holdings Corp., owners of the Pizzeria Uno restaurant chain, filed for Chapter 11 bankruptcy protection Wednesday. As part of its restructuring, the company has agreed to convert $142 million in senior secured debt into a 96% equity stake in the company, giving it what Uno's website refers to as the "resources to invest in its growth opportunities."

While this may sound like good news to fans of the chain, the truth is a bit more complex: Based on recent expansion moves, it looks like further growth will not improve the quality of the pizza.

When Uno emerges from bankruptcy court protection in 90 to 120 days, its financial future looks optimistic. It has reached an agreement with bondholders and is seeking court approval for $52 million in debtor-in-possession financing from Wells Fargo (WFC). While it claims that lowered discretionary spending and higher commodity costs resulted in a 2009 loss of $22.2 million, the company still had impressive revenues of more than $286 million. At the same time, Uno also launched a massive expansion late last year.

In fact, part of Uno's $142 million debt is attributable to its bright prospects: In 2005, an investment firm, Centre Partners Management LLC, assumed the debt as part of a plan to consolidate ownership of the company. Under the bankruptcy, however, Centre Partners' interest in the chain will be eliminated, as will Uno Chairman Aaron Spencer's part ownership.

One big question is how the Uno bankruptcy will affect the pizza. After all, "restructuring" and "expansion" often go hand-in-hand with cheaper ingredients and lowered standards. Chicagoans, who tend to be rabid in their support of the brand, don't have anything to worry about: When Florence Sewell, wife of the original owner, sold the chain in 1992, the buyers had to agree that they would not change the pizza at the original four Chicago locations.

Hayek's Road To Serfdom

The Big Picture

Funny That D.C. Still doesn't get it as D.C. Hands out $15M In Bonuses Despite Recession, Budget Gaps and we have sick stories like Soldiers Still Waiting for Tour Bonuses

Buy American

Seventeen years later it's not difficult to see that the United States is in worse economic shape (its industrial capacity is severely diminished) and in dire financial straights as the deficits continue to stack up and the overall mountain of debt and unfunded liabilities becomes parabolic - post NAFTA (North American Free Trade Agreement). NAFTA was to be "a good deal for America" according to Al Gore. Driving through Detroit, Cleveland, Gary, Cincinnati, New Orleans or most of the United States it is evident that things did not go according to plan...at least the one he spelled out.

The time for political dogmas and more of the same is past. The time for relying on those who led us into the problems is over.

Today is the time to buy American when possible. One example of an easy purchase is New Balance shoes. The only major manufacturer who still makes their product in the United States of America, I can personally attest to the quality of the product and its competitive pricing. What's good for main street is good for America.

PIIGS (Portugal, Ireland, Italy, Greece & Spain)

"Based on historical precedents its very likely the US and Japan will default." - Marc Faber

It's difficult to imagine that it has taken folks so long to wake up to the idea that the level of debt and unfunded liabilities in nearly all Western nations has become overwhelming to the point that it is constricting economic growth. Capital which was once re-invested in business and infrastructure is being siphoned off to creditors. It has been reported by some that the amount of federal spending since 1776-2008 in the United States is approximately equal to what has been spent and committed in 2009. This will not be without consequence.

Dollar Crisis Looms If US Doesn't Curb Debt

The United States must soon raise taxes or cut government spending to curb its debt, and failure to act will risk a crippling dollar crisis as investor confidence ebbs, a panel of experts said on Wednesday.

"It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States.

President Barack Obama's administration will present his budget for fiscal 2011 early next month amid intense pressure to live up to election campaign promises not to raise taxes on middle class Americans, while confronting a record deficit.

As a result, Obama is expected to focus on long-term fiscal discipline, while maintaining policy support for an economic recovery in the near-term as the country rebuilds after its worst recession since the Great Depression.

The two-year study by the panel, assembled by the highly respected National Research Council and the National Academy of Public Administration, said that the White House had some time on its side to restore growth, but must then act.

"In the next year or two, large deficits and more borrowing are unavoidable given the severity of the economic downturn. However, action ought to begin soon thereafter," they said.

The Writing On The Wall

The rate of job growth for major US corporations is increasing - overseas. The article below highlights one of many recent developments in major job creation taking place outside the United States: Hospitality provider Starwood Hotels announced Tuesday that it plans to create 12,000 new jobs worldwide in 2010, increasing its staff by more than 8%, with about half of the new positions located in the United States.

Another interesting part of the article which indicates that there were more than 10,000 applicants for 400 positions in its new W Hotel in Washington, D.C.

GM, a company which has accepted more than $15 billion will be planning on up to 1/3 or more of its future growth overseas in China, Mexico and South Korea. Afterall, according to GM: China Sales May Eclilpse US Soon.

Starwood To Add 12,000 New Jobs
The hotel company employed 145,000 people at its corporate offices, hotels and resorts as of the end of December 2008. Starwood has cut jobs in the past year amid waning travel demand from companies and consumers.

"After a year of hunkering down and cutting costs, companies are driving their topline again," Chief Executive Frits van Paasschen said in a statement.

U.S. unemployment now stands at 10 percent, according to Labor Department figures released last week.

Starwood noted that there has been strong demand for positions at its hotels. For example, more than 10,000 people applied for 400 positions at its soon-to-open W Hollywood Hotel & Residences.

There were also more than 10,000 applicants for 300 positions at the W hotel in Washington D.C.

Shares of Starwood were down 1.5 percent to $37.15 in late morning trading on the New York Stock Exchange.

Footlocker, Macy's & Wal-Mart Closing Stores

Don't worry, retail sales were strong this past winter - wink, wink. The hits just keep coming, and coming, and coming for retail landlords. Reference earlier post, Dawn of the Dead Malls for co-tenancy clause discussion and the potential knockout punch each closure can mean for a retail landlord. Award of the day goes to Target for Target Buys Smith & Hawken Brand. On the cheap, this should be a positive move for long term merchandising as they pick up a perceived higher end home and garden brand to departmentalize their store and differentiate themselves from competition. Look for this trend to continue. They should have purchased the Circuit City name as well to create a perceived specialized destination in 10,000 sf of their stores - providing a major leg up on competition. When Sears goes under/get's bought out Kenmore & Craftsman are similar quality brands that can bring the consumer in.

Macy's To Close Five Stores

Wal-Mart to Close 10 Sam's Club Stores, Cut 1,500 Jobs

Foot Locker To Close 117 Stores

Foot Locker Inc. said it expects to close 117 stores this month and cut 120 corporate jobs as part of a plan to combine the Lady Foot Locker chain with the footwear retailer's three other brands.

The closures, affecting mostly Foot Locker and Lady Foot Locker outlets in the U.S., would bring to 190 the number of shutterings for the fiscal year ending Jan. 30. The company had 3,601 stores as of Oct. 31.

Aside from the economic downturn, the athletic apparel and footwear chain has been hurt by a longer-running fashion shift toward casual shoes and away from sneakers. Foot Locker has reacted by lowering costs, closing stores and weeding out poorly performing products.

Richard Johnson, president and chief executive of Foot Locker Europe, will take on the same role for the company's four brands, which also include Kids Foot Locker and Footaction. Lewis P. Kimble, managing director of the company's Asia/Pacific division for the past four years, has been promoted to succeed Mr. Johnson.

Foot Locker President and Chief Executive Ken. C. Hicks said the consolidation "will allow us to sharpen our focus on the female consumer, as we look to improve the coordination of our women's merchandise assortments and marketing strategies across each of our Foot Locker brands.

He said the move is a part of a "new, comprehensive strategic plan" that the company will announce in coming months.

The company expects annual savings of about $10 million and a charge of two cents a share to its fourth-quarter results.

Bankstergate

What does this all mean? Why did Goldman Sachs and a French bank alledgedly"secretly" receive 100 cents on the dollar for "toxic assets" where others received mere pennies? Judge Napolitano & Ron Paul explain.

Rep Issa Seeks e-mails Showing NY Fed Link to AIG

Rep. Darrell Issa (R-Calif.) on Monday asked the Federal Reserve Bank of New York to turn over "all e-mails, documents, and other records and communications" regarding payments that bailed-out insurance giant American International Group made to numerous trading partners.

The request followed the release last week of e-mails, obtained by Issa, that detailed the New York Fed's role in advising AIG to limit its disclosures about billions of dollars in counterparty payments during the height of the financial crisis. The e-mails highlighted lingering questions about the government's handling of the AIG bailout and prompted Rep. Edolphus Towns (D-N.Y.), chairman of the House oversight committee, to schedule a hearing later this month.

Towns is seeking testimony from New York Fed General Counsel Thomas C. Baxter Jr. and from Treasury Secretary Timothy F. Geithner, who headed the New York Fed at the time. Baxter has asserted that Geithner "played no role in, and had no knowledge of, the disclosure deliberations and communications referenced in those e-mails."

Devaluation Day

The premium on gold and silver in Venezuela will be shocking - another reminder that devaluation can happen anywhere at any time. Having food on hand at all times (perhaps even freeze dried), cash and some gold and silver are prudent courses of action no matter where you live around the world.

Devaluation Sparks Chaos in Caracas

CARACAS -- President Hugo Chávez's decision to devalue Venezuela's bolivar and impose a complicated new currency regime may paper over some growing cracks in the economy, but it is also setting the stage for bigger problems down the road for the country's oil-rich nation and its populist leader.

Over the weekend, there were signs that Mr. Chávez's slashing of the "strong bolivar" currency could create as many problems as it solves in Venezuela's economy, provoking a wave of anxiety that sent Venezuelans scurrying to spend cash they feared could soon be worthless.

At Caracas's middle-class Sambil shopping mall, lines at cashiers reached 50-deep. Carmen Blanco, a 28-year-old accountant, waited to buy a 42-inch flat-screen television she doesn't need because she already has one at home.

"It doesn't make any sense to keep my savings," Ms. Blanco said Saturday. "I'd love to see how things work in a normal country."

On Sunday, Mr. Chávez vowed to fight speculation and price increases that could result from the devaluation, which raises the price of imports.

Harried by recession and sliding popularity, Mr. Chávez on Friday weakened the bolivar to 4.3 per dollar from 2.15 in a bid to shore up government finances, which have been hit by weaker oil prices, and to stimulate economic growth ahead of key elections.

In order to protect the poor, his main constituency, from the move, Mr. Chávez announced the creation of another exchange rate of 2.6 bolivars per dollar for imports of food, medicine and other essential goods. Those rates will compete with a black-market rate, where the bolivar had plunged, forcing the official devaluation. On Friday, that black-market rate stood at about 6.25 per dollar.

Retail Rumblings

Trans World will be completely out of business in the next 18-24 months. The consumer has zero tolerance for premiums on media, are shopping less frequently at regional/super regional centers and are downloading their music and movies.

Trans World Entertainment Closing 161 Stores

By End of January, TransWorld's Fleet of Stores will be Half the Size it was in 2006

Trans World Entertainment Corp. continues to whittle down its store fleet. By the end of its fiscal year (the end of this January), Transworld expects to have closed 161 stores during the prior 12 months, according to the Albany Business Review. This follows 101 store closures in fiscal 2008. Following this latest closure effort, Trans World would be left with 553 stores. Trans World hit a peak store count of 1,091 in 2006, following its acquisition of Musicland.

The majority of Trans World's stores are F.Y.E., but its portfolio also includes Saturday Matinee, Coconuts, Spec's and Wherehouse Music. According to CoStar Tenant, the typical F.Y.E. store is 3,000 square feet and located in an enclosed mall.

Confessions of an Economic Hitman

Give me your tired, your poor, Your huddled masses yearning to breathe free, The wretched refuse of your teeming shore...

As serious as the credit crisis is around the world due to a drought of capital, the food crisis is sure to be much worse. The draconian fuel efficiency laws (for the consumer...oil supports this because they charge the same amount for quanity of an inferior product) which force fuel companies to incorporate ethanol into their product (byproduct of agriculture) diminish the quality and lifetime of the fuel down to 2-3 months and cause a diversion of agricultural products away from subsistence farming and towards sales to big oil . In nations like Haiti where it was difficult enough to provide food for everyone, it is now becoming downright impossible as mud pies become the dish du jour.

In perfect storm fashion, the ethanol induced shortages, the droughts of the past several years teamed with the unusually wet summer and cold winter are devastating to crops. With food prices rising on average of 10-15% per annum over the past several years - 2010 and 2011 could be multiples worse and devastating the world's impoverished. Immigrants seeking greener pastures in Ireland or elsewhere may be looking East for the first time in a very long time.

Ireland Facing Potato Crisis as Frigid Weather Grips Nation

As Ireland faces the prospect of ten more days of freezing temperatures, potato farmers in Ireland are facing a very uncertain future as they can’t harvest their crops.

Between the floods around the country in November and the subsequent freeze in December and now January, potato farmers have been left frustrated as either water or ice has prevented them from getting potatoes out of the ground, and that could result in a loss of around €15 ($21.6) million to Irish potato farmers.

Thomas Carpenter, the National Potato Committee Vice-Chairman of the Irish Farmers Association (IFA), said that 6,000 acres of potato files have been unharvested because of the inclement weather.

Now I've Seen It All

Yet another example of the disconnect between retailers and the consumer and a brazen disregard for the bottom line. A Peeps Store? Why invent the overhead of having a retail operation when you can sell your product at any grocer or pharmacy in the country...and no, this is not a shopping and educational destination like the Apple Store. Marketing they may say? Not so much in Oxon Hill, MD - it sure isn't times square. We are entering the twilight zone of retail and the twilight of household brands like Macy's & Sears for starters.

Marshmallow Peeps Get Dedicated Store in Maryland

Just in time for Christmas, an iconic Easter candy got a dedicated retail store in Oxon Hill, Maryland.

Marshmallow Peeps, largely associated with Easter, are available for Valentine’s Day, Christmas and Halloween in shapes such as hearts, gingerbread men, black cats, Christmas trees and snowmen. And now Peeps fanatics have a retail location to satisfy all their Peeps-related shopping needs. Peeps & Company (often abbreviated to the Tiffany-eque “Peeps & Co.”) opened a Peeps shop at National Harbor in Oxon Hill, Maryland on Thursday.

In addition to everything one could possibly want that is Peeps-themed, the store also carries merchandise related to Hot Tamales and Mike & Ike, products of the Just Born line of candies. In a statement announcing the grand opening of the location, Just Born indicated the store would offer ” an array of high-quality branded items such as apparel, gear, china and toys within a fun, branded retail location.”

Where is Rock Bottom?

Brown's Chicken Bankrupt

Prepare for further retail bankruptcies - another kick in the teeth for Chicago. This with the Ski Market bankruptcy foreshadow a difficult year for local and regional businesses. The credit is simply not there for non corporate interests.

Word in the retail industry is that Christmas sales were at best the worst since 1979 and at the worst game over for some household names.

Brown's Chicken Files for Chapter 11 Bankruptcy

Brown's Chicken & Pasta Inc. filed on Tuesday — two months after a DuPage County judge ordered the company to pay more than $800,000 to a former vice president and minority shareholder who'd filed a wrongful termination lawsuit.

"They couldn't pay the judgment," said the company's attorney, Richard Golding, who said that $300,000 of that amount was due by Tuesday of this week. "It would have made the company insolvent."

In its petition for bankruptcy, the Elmhurst-based company said that while it had assets between $100,000 and $500,000, it also had 50 to 99 creditors and liabilities of as much as $10 million.

The filing is the latest in a series of setbacks for Brown's. Once boasting as many as 150 stores, Brown's has seen that number dwindle to about three dozen since seven employees at one of its restaurants in Palatine were murdered in 1993. Their bodies were found in a walk-in cooler.

"It had a marked impact on their business, the constant barrage of publicity which seemed to implicate, perhaps unintentionally, Brown's as something evil because that's where these murders took place," said Golding. "It kind of started a downward spiral."

The story was front page news around the country for days and in the Chicago area for months. It also continued to make headlines for years, with stories about the hunt for suspects, the arrest of two men years later and their convictions on murder charges, the first years ago and the second two months ago.

Meanwhile, said Golding, though the company successfully defended a number of lawsuits in the years since the slayings, the cost of doing so, and the time executives spent on the lawsuits, took a toll on the company.

"It was very difficult," he said.

Cui Bono? Current Events Form Future Trends

Like the Federal Reserve Act, passed the day before Christmas Eve in 1913 - the unlimited funding to Fannie & Freddie was done under the cover of darkness. This guarantee is tantamount to a nationalization of both institutions throwing another $5 trillion onto the parabolic pile of debt & unfunded liabilities.

The explosive price of copper and oil together is more than coincidental (copper is a huge component in bullets) and where does the world get a huge amount of its oil? The middle east of course. Turbulence in the ENTIRE region and war/attacks in Yemen, Iraq, Iran, Afghanistan & Pakistan continues to spin out of control...continue to watch the price of WAR contractors.

US Promises Unlimited Assistance to Fannie, Freddie

The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress.

The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama's current term.

But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009.

The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac's chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.

Hypo Alpe Adria - 40 Billion Euro Crash

Austrian giant Hypo Alpe Adria was nationalized to the tune of 40 billion Euro. Heavily invested in the Balkans, they are one of many international banks facing steep write offs.

Greece, Spain, Austria, Portugal, Ireland are an absolute disaster, to name a few. The see-saw of dollar/euro will continue to bounce up and down to see who hits rock bottom first.

At Austrian Bank, Settling Haider’s Account

When Hypo Alpe Adria bank, the Austrian arm of the Bavarian bank Bayern LB, was nationalized on Monday for the symbolic price of three euros, it was the logical end of a long, ambiguous relationship the lender had with the government, and with one of Austria’s most flamboyant politicians, the late Jörg Haider.

Mr. Haider, who died last year in a car accident just as he was poised to return to the national stage at the head of a right-wing party, was the governor of Carinthia, the southern Austrian province where Hypo Alpe Adria was based.

Hypo, the sixth-largest bank in Austria, expanded rapidly into the Balkans during Mr. Haider’s return to office in Carinthia, which began in 2000 and ended only with his death. According to the Austrian central bank, Hypo and other Austrian banks can expect at least 10 billion euros in write-downs in the next two years, largely from Eastern Europe, and possibly twice that.

Bayern LB, the regional bank that announced Monday it had come to an agreement to transfer its majority stake to the Austrian state, is taking a 3.75 billion euro write-down on the deal, after buying into Hypo Alpe just two years ago.

Horst Seehofer, the minister president of Bavaria, called the situation a “debacle” that could not be glossed over, and acknowledged that damages were being claimed against former board members of Bayern LB, including erstwhile ministers of his party, the CSU.

But the roots of the debacle are south of Bavaria. State prosecutors in Klagenfurt, Austria, where Hypo Alpe has its headquarters, have been investigating the bank officials for breach of trust and fraud for some time. Finance Minister Josef Pröll of Austria, who led the push to nationalize Hypo Alpe rather than let it go bankrupt, said a special committee would begin an inquiry, and that “every document, every procedure and every liability would be brought to light.”

Under Mr. Haider’s leadership, Carinthia sank ever deeper into debt, with its borrowings expected to hit 2.5 billion euros next year, a record for an Austrian region. It was also under Mr. Haider that Hypo Alpe, then half-owned by a government holding company, embarked on a number of dubious domestic investment projects — a sort of stimulus package without a crisis to justify it, the Austrian version of pork barrel projects. One was Schloss Velden, a huge chateau resort backed by Hypo Alpe, which still loses money.

But even Schloss Velden is fairly innocent compared to the deals that have gone sour in the Balkans. In just one case of supposed shenanigans, Hypo Alpe Real Estate has been accused of financing about 250 million euros in transactions with the ex-Croatian general Vladimir Zagorec, who was extradited from Austria to Croatia in 2005 charged with the embezzlement of 5 million euros in diamonds.

The lender is also accused of having paid a 2004 ransom when Mr. Zagorec’s son was kidnapped, to the tune of several hundred thousand euros.