The SIPA

Obama may have put retailers in peril

I’m going to be totally honest here and let you know that I tend to be a traditionalist when it comes to the Christmas season. Each Holiday has its own special place and time when it should begin and end. That’s why I get annoyed when I see Christmas sale commercials starting the day after Halloween. Are these stores nuts? I awoke the day after Halloween with candy corn and Butterfinger fragments lodged in my gums and these people are already running Gingerbread house commercials and pushing 30% off all Christmas ornaments? Haven’t these retailers ever heard of a little tradition we call THANKSGIVING? I like to spend the month of November contemplating important decisions like whether to smoke the Turkey or if I should boil it in animal fat like they do in parts of the south. They call it peanut oil but trust me its whale blubber they are boiling it in or whatever else they can find laying around the farm that can produce oil. Each year the x-mass shopping season has gotten longer but this year is different in many regards. Its one thing to sprinkle a little tinsel and holly into an ad about your store but already we are seeing hardcore commercials and promotions being disseminated by the big retailer and to me this year could be a case of survival. 30-40 % of the retail revenue comes from the Christmas shopping season and this year will be critical to gauge consumer confidence…or will it?

The economy has been in the toilet since 2007 and although everyone keeps saying “the 2^nd half of next year we should see a rebound” the stark truth is that there is no rebound in site and anyone saying differently is either a shill for the government or an absolute moron. The Financial Reform Act which was thrust down the throats of Financial Institutions and taxpayers will be the “Grinch that Stole Christmas”. The theory behind the Financial Reform Act was good for public relations of the Obama administration. The big bad credit card companies and Banks ‘FORCED” honest and totally innocent Americans to take out second and third mortgages and to activate 15 credit cards and rack up credit card debt . The Credit companies have all been punished by President Grinch, I mean Obama and now all will be well in the USA right? Well just like the movie the “Nightmare before Christmas” there are unintended consequences to good intentioned motives.

The financial institutions have sucked dry the consumers of all available credit and there seems to be no let up in site. Credit limits are being reduced with each payment and in many cases even pay in full credit card holders are having their credit reduced or eliminated. The impulsive x-mass shopper who decided to buy the perfect gift even though it’s a little pricey may be forced to buy coal instead because unless they have will not have the credit in their wallet to charge it. Now I’m not saying this is a bad thing because for too long many Americans have lived way beyond their means. However, when an economy is on life support and there is no shopping at x-mass time that means really BAD profits for the retail sector. A really poor showing for this shopping season will lead to not just temporary employee layoffs January 1^st but permanent employees will be shown the door as well. This may well go down as the worst holiday shopping season in decades. In past years shoppers who may have been having a cash crunch or were uneasy about their jobs would convince themselves that they will be able to pay off their credit card in a couple months when they get their tax refund. Today these shoppers will not have that choice because their credit has been eliminated. When you consider how many Americans are also out of work or are worried about their jobs, this shopping season could be a disaster for the retail section. Maybe if it’s the blood bath I’m expecting, the administration can offer TARP or a Bailout for JC Penney’s and the other retailers? Here’s hoping I’m totally wrong on this and the Grinch will come riding in on the sleigh to save the retailers.