There’s no respite in sight.
Another retailer is heading for bankruptcy. This time Aeropostale, with 800 teen-clothing stores, after three years in a row of losses. It’s “preparing to reorganize under a Chapter 11 bankruptcy, and could file as soon as this month, according to people familiar with the matter,” Bloomberg reported today.
Upon Bloomberg’s propitious report, Aeropostale shares plunged 28% to 15 cents. It has been a penny stock since last September. The New York Stock Exchange, which had threatened the company with delisting, removed the stock before 2 p.m. today, and trading of the shares has been suspended.
Aeropostale is trying to work out a loan to finance its operations during the bankruptcy process, according to the people. A deal to avert a filing or find a buyer also could still emerge, they said.
Which is what just about all collapsing retailers are valiantly trying to do. And often to no avail.
In March, Aeropostale had already announced that it would “evaluate strategic alternatives.” It hired Stifel Financial Corp. to work on a sale or restructuring. According to Bloomberg, it’s also working with law firm Weil Gotshal & Manges LLP and FTI Consulting, “people familiar with the matter said last week.”
As in so many cases, there is a private equity angle. PE firm Sycamore Partners owns a large state in Aeropostale and is its main lender. But they have been embroiled in a feud. Sycamore also owns Aeropostale’s key clothing supplier, MGF.
In 2013, when Sycamore acquired its stake in Aeropostale and lent if $150 million, it obtained two seats on the board and set up the supply deal with MGF. Bloomberg:
At the time, Sycamore was seen as possible savior for the troubled chain. Some investors expected the investment firm to eventually acquire the rest of Aeropostale, helping redeem a stock that has been declining since 2010.
But that didn’t work out. These hopeful investors lost their shirts. Sycamore’s two directors left Aeropostale’s board. In March, Aeropostale said that MGF has stopped delivering merchandise in violation of the terms of its agreement, leaving the retailer short on merchandise. MGF, as Bloomberg put it, said “it was merely seeking protection from Aeropostale.”
There are numerous other 1990s and 2000s brands that didn’t quite make the transition in the relentlessly tough US retail environment of squeezed consumers, fickle and picky teens, smart women, shoppo-phobic men, inscrutable millennials, and a brutal shift to online sales.
And now their bankruptcies are hailing down on the US economy with increasing intensity. Here are a few standouts in 2016 and 2015. Note the PE firms behind many of them:
April 16, 2016: Vestis Retail Group, the operator of sporting goods retailers Eastern Mountain Sports (camping, hiking, skiing, adventure sports), Bob’s Stores (family clothing and shoes), and Sport Chalet (general sporting goods), filed for Chapter 11 bankruptcy. It will close all 56 stores and stop online sales.
In the filing, it blamed the going-out-of-business sales at “certain Sports Authority locations,” plus the weather, which had been too warm, and trouble with switching to a new software platform. It’s owned by private equity firm Versa Capital Management LLC.
April 7, 2016: Pacific Sunwear of California, clothing retailer with nearly 600 stores and derailed ambitions of skate-and-surf cool, filed for Chapter 11 bankruptcy. PE firm Golden Gate Capital, a lender to the company, agreed to convert over 65% of its loan into equity of the reorganized company and add another $20 million in financing. Wells Fargo agreed to provide $100 million of debtor-in-possession financing.
March 2, 2016: Sports Authority filed for Chapter 11 bankruptcy. It said it would close 140 of its 450 stores, including all stores in Texas. In 2006, it had been taken over in a leveraged buyout by a group of PE firms led by Leonard Green & Partners [Another Private-Equity LBO Queen Bites the Dust].
February 2, 2016: Hancock Fabrics filed for Chapter 11 bankruptcy, for the second time. It closed 70 of its retail sewing and crafting stores. Its inventories are being liquidated with going-out-of-business sales at the remaining 185 stores.
January 16, 2015: Wet Seal, teen fashion retailer, filed for Chapter 11 bankruptcy.
October 2015: American Apparel filed for Chapter 11 bankruptcy, after years of all sorts of sordid turmoil – and losses since 2009.
In 2014, hedge fund Standard General entered into a deal with the company’s “controversial” founder and former CEO Dov Charney. The deal raised his stake to 43% but gave the hedge fund a big block of the shares as collateral. The hedge fund and some other investors also own a big part of American Apparel bonds and thus control the bankruptcy negotiations. The hedge fund expects to emerge owning about a quarter of the restructured company’s debt and about 5% of its new equity.
September, 2015: Quiksilver, surfwear retailer, filed for Chapter 11 bankruptcy. In January, 2016, it emerged from bankruptcy and is now controlled by PE firm Oaktree Capital.
June, 2015: Anna’s Linens filed for Chapter 11 bankruptcy.
April 2015: Frederick’s of Hollywood filed for Chapter 11 bankruptcy
February 2015: RadioShack filed for Chapter 11 bankruptcy. In May 2015, Standard General took control of it in a bankruptcy auction.
February 2015: Cache Inc., women’s dress and formal-wear retailer, filed for Chapter 11 bankruptcy.
January 2015: Body Central Corp, women’s clothing retailer, after announcing it was exploring a Chapter 11 bankruptcy, ended up not filing, but closed its 265 stores under a Florida process called “an assignment for the benefit of creditors.”
These are the ugly skid marks of the “end of the credit cycle,” as it’s called, an era when defaults and bankruptcies suddenly re-materialize, and when investors get to eat big losses in what they thought were conservative investments.
In March, total commercial bankruptcy filings by corporations of all sizes and other business entities jumped 25% from a year ago to a total of 3,351, with the two biggest culprits being energy and, well, retail. Read… US Commercial Bankruptcies Suddenly Soar
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Next up to bat , K-Mart/ Searshttp://www.usatoday.com/story/money/business/2016/04/21/list-sears-kmart-stores-closing-across-us/83356912/
That’s not retail. It’s a hedge fund who happens to look like retail :)
I am old enough to remember Eddie Lampert being praised to the skies. I think his net worth has almost halved since then.
I can’t believe how long this has been going on. They close more and more stores, they get smaller and smaller, and they keep eating up investor money, and when it runs out, they get more. And the stock still trades above zero, amazingly.
Who ARE these people that buy the stock or lend the company money? Oh wait, I just remembered…. Bill Gates. $500 million.
Sears is very poorly run. The Main Street store in downtown Houston was once surrounded by low income housing. Now it’s surrounded by blocks and blocks of high income rentals and condos and it’s within 5 minutes of the trendy Montrose/Westheimer area. And THIS is still what it looks like:
They don’t even know who shops there anymore.
If they had any sense AT ALL they would remove the corrugated wrapping and bring out the once beautiful art decco design: http://www.chron.com/entertainment/article/Lisa-Gray-Sears-eyesore-hides-an-Art-Deco-delight-1763773.php
People would flock to the store….
Amazing that they would cover up an Art-Deco building with this corrugated material. But even if the Art-Deco exterior were restored, it would still be a badly managed out-of-money Sears inside.
retched style over solid substance seems the norm here in America……
……tis a pity…..
It’s not money. It’s “credit”.
I feel bad for all of these retailers. Tell me where to find one of each of their stores and I will go there and buy a pair of socks to help them out.
They are called: “AMAZON”.
I was in a J.Crew last week and a men’s cotton tee shirt was $45. Guess who’s next.
For a Canadian reading this, the size of these operations boggles the mind- 600 locations??
And that’s just one.
It seems almost inconceivable that after the largest stimulus in history ( except maybe for China’s but they have three times the population) the US could be heading for a good old fashioned inventory recession.
It’s like trying to recover from pneumonia and catching the flu.
The market bulls are a puzzle. Do they expect negative interest rates, helicopter money??
God I just read again- 800 locations??
I am guessing that there are 800 slowly dying malls, each with an Aeropostale store in them.
Your guess is correct. A mall a mile from my house is close to the end game. The Sears anchor store closed at the end of 2014. Last month, Macys closed. Many of the smaller spaces in the mall are also empty. There are more geese in the parking lot than cars. And this is probably one of the more affluent areas in the country. If Sears, Macys and Aeropostale can’t make a go of it here, where can they?
The mall concept is dead since the Mall concept was based on the successful Demographics of 1955 America.
Malls were social places. Places to laugh, and walk, and flirt, and meet your friends. To meet people you knew from school, work, church, local sports teams, etc.
These Malls were not just shopping destinations. They were social destinations built on 200 years of Social Capital.
The changes in 1965 changed the Social Capital. Those who “have eyes that can see” know what I am talking about (and will remain silent) while the rest of you have know idea I am talking about.
Sell any interest you have in the Mall concept, the “Down-Town Concept” and look very, very closely at the Demographics of any Municipal Bonds you are exposed to.
(P.S. Go to youtube and listen to the song “Down Town”. See what we have destroyed? petula clark downtown)
The wonders of capitalism – we go from Dark Satanic Mills to Dark Satanic Malls!
This is Murica. “We don’t go quietly into the night”. When we go down, we go boom. Remember 2007/2008? We kinda did it. But then again we’ve heard of this nice housing party up north. Perhaps you guys can lead the way next time.
One of the largest Toronto developers Urbanco with one thousand units under construction has just filed bankruptcy- our equivalent of Chapter 11- protection from creditors.
What amazes me is how most American suburbs look so much alike with all the same stores. You can go to Bakersfield to Phoenix to San Antonio to Bend Oregon and there are all the same stores and restaurants and Verizon stores and either Walgreens or CVC on ever other corner. Everywhere looks just like everywhere else.
I wonder how this happened? How did America become so anti individual? So anti small business? We have lost our unique identity. No wonder there is an employment problem. Where do you work? At one of the many corporate franchises or replicas? We allowed our rulers to sell off much of our manufacturing and expand the retail.
And now we have reached the point where the workers income is not adequate to support all this retail. So stores will close and fewer people will be purchasing merchandise and the contraction continues.
It is all such a slow bleeding to death as the parasitic Vampire Squid system sucks us all dry. The rulers are so stupid though as they are going to find out.. When the host is dead, they will also die. Greed is only good to a point, then it is bad. We passed that point a few decades ago and the Vampire Squid is so big it will die either way so it just keeps sucking.
I read that the Donald will fire the FED President if elected. That in itself could be a reason to vote for The Donald!
First of all, IF Donald attempted to fire the FED President (which he can’t) he will get a bullet in the back of his head just like Kennedy, Lincoln and all those going against the banking Families.
Second. how did we get into this boring retail mess? WE did it. You, your family, me and mine. We were lazy and had not understanding of the BIG PICTURE, thus pulled into McDonald’s rather than seek out a unique interesting “mom and pop” cafe. WE DID IT.
The large corporations have limited power. WE the consumers give them the power when we are too stupid, lazy or trusting.
100% of American cities look 90% like all other American cities since 90% of the population feels & thinks the same. Actually, they don’t THINK much at all but FEEL the same.
You feel different now? Maybe you will begin to think different and SEE.
Centurion, You aren’t talking about me. I have always driven the back roads and stopped in the small cafes and restaurants. I love the variety. I also do my own thing. I built my own home and developed my property to be fairly self sustaining. I compost and grow much of my own food all while holding down a demanding job running a small real estate office in a small community.
I don’t know if it is laziness as much as fear. People have been made fearful since the 1950’s when we were all taught to crawl under our desks and put our hands over our ears… As if that would have really helped during a nuclear attack… We were told to be fearful of the Commies, who didn’t have enough competent personnel to run their own countries.. But people seem to be born scared and full of fear.
So people are afraid to go into a mom and pop place because they are fearful of what they might get while they know exactly what they will get at the great fast food circuses. And it is about omega 6 fatty acid that comes from fats and corn. It is addicting and is one of our biggest health problems but people know that they can get their fix at the fast food circus.
America is an addict and fearful of not looking right.. which means looking just like they are told to look.. Afraid to not have a degree… even though it puts them over their heads in debt and most are virtually worthless.
Only now they can no longer afford their addictions.. But there is still credit to buy with.. for many.. for now.. although this is starting to also fade….
We got into this boring retail mess with a lot of help from the mass persuasion industry. We sat in front of the TV and flipped through those magazines desirous of things, of ease, of elegance that was not ours by birth. When they showed us how we could have it all, we believed them.
Now, we know better. Now, it’s a little tough to be wanting the easy life, when so many find life so tough. Now that so few can have it all, it chic, to be different.
“What amazes me is how most American suburbs look so much alike with all the same stores. You can go to Bakersfield to Phoenix to San Antonio to Bend Oregon and there are all the same stores and restaurants.”
Ever been to Australia?
Same situation: same stores, same brands, same everything.
Same food in the Chinese restaurants, same menus in the pizza places, same high prices and low quality.
Geez, I miss those aspects of Japan: high quality food, reasonable prices, different types of food in the various prefectures, all sorts of small shops……………….
At least the scenery in the USA varies……….
Lee, when you were first commenting on my prior site (TP) back in 2011/2012 (?), it seems you were still living in Japan – or did I get this wrong? I’ve always wanted to ask you, Why the move?
OH, and brace yourself for another article on the Aussie housing market – this time US-style mortgage fraud.
If you ever get a chance to visit Portland Oregon you’ll find thousands of food carts and small mom and pop restaurants from all over the world. I haven’t been in any other city quite like it. Lots of great food and plenty of diversity.
I was in Australia a few year ago and you are right out in the burbs but in the old part of Sydney there was plenty of options including small places in and around the subways. But the pretty much the same kind of food every where. What I thought was funny was the lack of public wifi and very limited access to the Internet. Seemed kind of backwards in a way for such a modern country. And they don’t seem to like the dark beer there either? What’s with that?
I’ve been in Australia since 1995 and visited Japan back in 2011 after the earthquake. We were thinking about moving back to Japan and spent 5 weeks there to check the place out.
We wanted to see if we could ‘adapt’ to life in Japan again.
If I had my way we’d be back there ASAP. Australia has a very good lifestyle, low crime rate, generally decent weather and of course no big earthquakes and no typhoons where we are.
Unfortunately, being a ‘mature’ age worker here and losing your job (The company I worked for shut its doors) means that you have no future. My job sucks, the hours suck, and the wages suck. I paid more in income tax at my last job than I make now. At least I have a job and savings.
Combined with the huge cost increases in everything from food to electricity to housing means that the economic situation has changed quite a bit in the past 20 plus years.
Japan and Australia have switched places as far as cost of living is concerned.
As far as RE is concerned there are moves here to screw the foreign buyers by increasing the stamp duty on purchases.
The RE market in our little neck of the woods is doing very well. I know of only two houses on the market in the area. One is the house that never sells (Three times now and no sale!!) and one down the road.
Townhouses are selling like hotcakes and are now more expensive than houses with twice the land size.
Thanks, Lee, for the update.
One only has to drive around to see what is really happening. Some parts of my city are littered with empty retail. Other parts have been expanding with new retail spaces. This applies to commercial office space as well.
Michael: Same in my town of 100,000 in central Alabama, USA. I do not get it. Maybe we are different or maybe this time it is really different. I’m just a lost ball in high weeds.
Same thing in Orleans, Ontario where I live (a suburb of about 80,000 souls on the eastern edge of Ottawa). On Innes Road, new retail spaces are going up all the time, and this has been going on for 12 years now. Meanwhile on St. Joseph, a parallel street 5 minutes away and former main thoroughfare of old Orleans, retailers can’t stay open. The only true shopping mall – Place D’Orleans – can’t find a new anchor tenant to replace the Target that closed over a year ago. Other perfectly good buildings and retail fronts remain vacant for years.
It’s mind boggling that existing buildings and malls (presumably fully capitalized and depreciated) can’t hold a functioning business, yet a 5 minute drive away they can’t build new retail space fast enough. I chalk it up to yet another massive misallocation of resources caused by insanely loose monetary policy. Low interest rates have created a massive commercial property construction bubble. There will be an enormous price to pay for all this, but when?
I think it’s the same all over the world, except for France, where dead big box stores and shopping centers are usually demolished in a matter of months after closing down.
The main driver behind this madness is not merely financial, but political as well. Malls and commercial space are big money for municipalities, from Italy to China: if the muni owns the land, there’s the land sale, then the “urbanization fees” and finally property taxes and junk fees, which tend to be from higher to much higher than residential.
Sure, revitalizing a dead mall makes far more sense, but the muni will only collect a relatively small fee for renovation works, no matter how extensive. Most munis would be in Chapter 11 if not 7 if they applied the local version of GAAP/PCG for privately owned enterprises. They need quick cash all the time, preferably a lot of it, just to stay afloat.
A good friend’s father recently ran for mayor in his hometown: he ran on a platform centered around stopping a second mega mall being built there. The present one was sold to voters on the assumption the money from it would be used to remedy a very serious flooding problem resulting from, you guessed it, a previous building plan which destroyed drainage.
Ten years later they are still getting flooded on a regular basis and the muni claims there’s no money to carry out the works… hence to provide funding a second, bigger and better mall is the solution.
I seriously wonder how these local politicians avoid being pelted with rotten vegetables every day when leaving home, let alone how they keep on getting re-elected.
And this is to say nothing of the extra traffic (no new roads to service the mall were built), how quickly present roads deteriorate (obviously no money for repairs as well) and the extra expenses of fielding extra police during weekends to attempt putting some measure of order in the traffic.
True enough. You don’t get developer fees or any new property taxes from repurposing or redeveloping an old property. You get plenty of both from new buildings. Munis basically have zero incentive not to promote massive over-building.
It is the competition of the PEs and VCs. They all are looking for something to invest in, then sell.. there seems to be no analysis of the business prospects just easy access to money and many investors looking for some sort of return. Promises are cheap and so is the money. Why bother to do a business analysis or plan when promises are so much easier.
As you are driving around LOOK at the demographics.
Those with the empty retail spaces are, believe it or not, different from those areas with new retail spaces.
Very, very, very disturbing when you Awaken.
My town just added more shopping- 2 Walmarts in a county of 140,000 people. A Sports Authority with no one in it. An Ashley’s Furniture whose parking lot is always empty. What are they thinking? No one I know is spending any money, but we have a brand new freeway cloverleaf for the shopping crowds, when they do come…….
You forgot EMS and Sports Chalet. Note that I’ve watched several small hobby type stores in my area go under in the last ten years.
People have less money but also less time. Instead of spending the time building a plastic plane with your kid you throw him a video game and say ‘have fun’. If you can’t build a model then you certainly don’t have time for camping in the mountains or water sports.
I didn’t forget Sports Chalet or EMS. They’re part of the April 16 bankruptcy of Vestis Retail Group, which owns them. The first one on the list.
And whose fault is that? You, the dad.
Put down your remote and get away from the useless “sports”.
Don’t blame society, Hillary, Donald, etc.
At this point, it’s a race between American Retailers vs China. Who’s gonna go down the drain faster?
So glad to see these places going down the tubes. This economy is in desperate need of deflation and restructuring.
The fed, wall street and the American main street workforce are a bunch of luddites!
Given that the consumer is “tapped out” due to 6-8 year car loans, student debt, rising rents and a static to falling median inflation adjusted income [even more so when loss of job benefits such as defined benefit pensions and fully paid health care are considered] what else can be expected?
Additionally the demographics have changed such that the fraction of the population that these stores were created to serve is diminishing.
We also have the problem of disappearing leisure time to enjoy the items being sold. If I am working 2, even 3, jobs, time for camping, clubbing, etc. is limited, and I am more interested in rest/sleep.
We have killed the goose that laid the golden eggs, i. e. the consumer by bleeding them dry.
citizens first !! ……..
you forgot to mention the biggest elephant in the room–soaring health care costs. How convenient Obama leaves office just as the biggest wave of premium increases hits his signature legislation.
Going out, and shopping, and having lunch, and enjoying the day and the MALL are so “50’s”.
When my wife, and her friends, won’t go to the MALL, due to the FEAR of robbery, “knock-out game” (look it up) , face slashings (look it up) and the Polar Bear Hunting “sport” (look it up)…… then you know the enclosed Mall concept is dead.
So, the Real Estate Investment Trusts, have come out with the concept of the huge Box-Store open Mall? Fine, for awhile, but my wife, and her friends STILL rush from the store’s entrance to their cars so as to avoid those youths standing around acting very strange, with their pants at their knees, or the youths hanging around a Sea Green Metal-flake Chevy Low-rider blaring a music my Wife has never heard in her life, unless she had traveled out of racist America and visited what racists call “Third World Countries”. Such an insulting term, right?
Now, she, and her friends, shop on line where they can relax in their home and know their husbands are around with a closet full of ammo.
This is scary, nowhere to hide?
You are not alone. visit sbpdl
Frederick’s of Hollywood, too? Things really are bad…
Time to head out for another barbie!
Hey maybe them retailers should of raised the workers wage to 15 an hour!
I can assure you, LG, if consumers at the bottom end of the income ladder made more money, they’d spend every dime of it, and retailers would sell a whole lot more stuff and would be in much better shape and could therefore pay their employees better.
Growing income keeps a consumer economy vibrant. But real income (adjusted for inflation) at the lower 80%, including real minimum wage at the bottom, has been declining for years.
If you want to raise consumption, pay consumers more!!! It’s not rocket science. Retailers would thrive!
Wolf: Agreed. Henry Ford knew that. If, as a country, we had wanted to grow the economy after 2008, the money should have been pumped in at the bottom of the economy; not the top. At the top it is just money to pervert the markets. At the bottom and middle it is money that creates markets.
You can’t put money in at the bottom or top of a barrel if it is leaking out the sides faster than you pump it in.
Without good paying middle-class jobs all the new money is just going into the pockets of those that don’t need (or deserve) more money.
For Henry Ford, raising wages was also tied into increasing productivity at his factories. The rising wages were tied into lowering unit costs of his cars- increasing value-added per car.
It is this “value-added” that we have off-shored by letting our crooked politicians accept bribes. And it is the reason this economy is mired in quicksand.
“If you want to raise consumption, pay consumers more!!!”
Every dollar spent on wages has to come from somewhere, i.e. that’s a zero sum game except for the marginal propensity at the lower end of the wage scale.
The real problem is the loss of “value-added” jobs, especially in manufacturing and all the secondary jobs that flow from servicing manufacturing. Without value creating businesses to underpin increasing wages there cannot be a consumer recovery
I think they would spend money, but issues of where to put the stuff are going to buy. Housing is unaffordable to many due to the housing bubble. People’s houses are already full?
The people at the bottom will buy things they need.
Better shoes, and warmer clothes, along with better food, for their children. Followed by, beds, pillows, and blankets, of better quality, for the same.
Then similar for them selves, none of that stuff is cheap, if you buy anything above junk quality.
If those handing out the Helicopter funds use their heads (Highly Unlikely) they will spread the dispersal over time, to get a lift instead of a spike in the economy.
The people who need the money, and will spend it, do not have full houses.
The % of workers that make minimum is 2 – 4% The rise in the min wage does more to help those who already make marginally more than the min wage, since they must now have their own wages boosted.
It’s my opinion that there are many who are out of work or only working part time that are not being captured in all the statistics. There are parts of Houston over the past few years that have a number of unemployed loitering in certain areas. More people than I had ever seen prior to the early 2000s. That is not a good sign.
In the economics I learned, you don’t really add much by trading dollars around you actually need value added productive enterprise to be able to pay people more. It is called increased productivity and not the kind whereas the only ones who benefit are the Vampire Squid either. Maybe if the Vampire Squid would take a significant pay cut (deflationary to them) that there would be more for the employees but that seems a remote probability.
If you want to sell something IN America, you should be required to make it IN America.
Also, abolish the Income Tax on wages, especially on all income from your labor. That is really not “income” it is a trade of your labor for wages.
Tax interest, dividends and capital gains which are not “income” from your life. Taxing what you body produces is nothing more than State Sanctioned Slavery.
Just from your article Wolf, back of the envelope math puts the store closings between 2,100 and up to 3,700 individual outlets.
Little wonder that the “Bureau of Lying Statistics” adds all those “seasonally adjusted, birth/death model” waiters and bartenders week after week!
The loss of all those retail jobs have a huge knock on effect. Well, things will go on, until they can’t.
SUNE filed Ch-11 also, another alternative energy default.
How much of the overprice crud these chains were pushing was made in Asia if not china.
china has stolen all the basic jobs reduced the wages by 90% and now complains nobody is buy its good’s????
china has done things like this to the west with their money printing, Wealth hoarding, and unfair trade practices before.
They did not learn them.
They probably wont learn this time either, The majority of the west dosent seem to have.
Since N Bonaparte the west has been told. Beware the dragons breath, It has not listened.
You can no more find young Americans (or Canadians) to produce that cheap crud (mostly budget clothing, toys etc.) than you can to pick lettuce or, as the Mexicans call strawberries, ‘the crop from hell’
Actually strawberries are avoided by most Latino Mexicans, the job is often done by Mestizo Indians based in Mexico, probably the most exploited people in North America. The typical white kid lasts about two hours.
I like to focus on the amazing growth in public sector numbers, wages and pensions for the missing gravy. A number of US cities including San Jose ( ya that San Jose) have been literally bankrupted by fire, police, etc, salaries and pensions.
In my city, Nanaimo, BC a fire fighter gets 95K after five years, with no post secondary education required.
This is not a prosperous city- the average private sector income might be
Incredibly our mayor said it seemed high but there was no point taking it to arbitration because of course, only public sector fire fighting salaries can be used for comparison.
Of course it should be well paid but at 60-70 K you would have a thousand apps for every opening.
But isn’t it dangerous? ( the perennial claim of cops and fire)
Not on average-If there was a state funeral every time an electrician died you’d think that was dangerous too.
Talk to a life insurance guy- the cop and fire biz is some of the best risk out there.
Law enforcement’s ability to intimidate local governments into granting sweetheart contracts continues to amaze me. Added to the high salaries, early retirement and great benefits are limited work weeks.
Here in LA cops can apparently work 12 hour shifts three days a week. Period. That leaves five days a week for those cushy side jobs guarding the craft tables on film shoots. Leaving aside the goldbricking, how could you work a 12 hour shift three days in a row and do a halfway decent job? Or even stay awake? Maybe consuming uppers? Which could explain the hair-trigger temper that seems to produce so many unprovoked police shootings.
It just did the math with my special algo… 12 x 3 = 36. They only work 36 hours a week?
They ‘coop-up’- sleep in the car. Or at least this has been known to happen and that term is a cop invention
And the intimidation can be literal- in Montreal Quebec, Canada, a city notorious for its feather bedding and corruption, the fire fighters stormed a meeting of city council and trashed the place.
And were they ever surprised when in a VERY rare stiffening, a few were charged and fired.
Of course the union appealed the firings and acted all amazed that a mere act of vandalism aimed at the civic government should be taken seriously.
I don’t know but it wouldn’t surprise me if they were reinstated.
Actually – I think I’m going to try and find out.
Let us know!
Status of Montreal firefighters vandalism case:
Hundreds of municipal workers, mainly firefighters, broke past security and rampaged through city hall on that day during a council meeting, tossing papers and posting stickers to protest legislated changes to their pension plans. Some tried to break into the mayor’s office.
Afterwards, 54 firefighters and 11 blue collar workers were charged with mischief and illegal assembly. Six firefighters were fired by the city and 57 municipal workers suspended without pay.
Those charged will be tried at a megatrial to be held at the Gouin Courthouse, normally home to trials for members of organized crime, the Journal de Montréal reported Friday. The trial will only take place in April 2018 and is expected to last three months, with 78 witnesses and dozens of videos to be presented. Lawyers for the defence said a megatrial was a questionable forum given the relatively minor gravity of the crimes.
PS: this happened in 2014 so it’s not exactly swift justice.
Re: the pension plan changes, a whole bunch (80) took early retirement and the presumably sweeter deal.
PPS: many wonder why the unionized police who stood by and watched were not also charged or at least disciplined.
They work an added 8 hour shift every other week to make their total of 40/week
Re. the rest of your remarks. It’s a high stress job where there is a fair chance that you’ll be physically injured. The stress is incredible. The demands of the legal system, coupled with more sophisticated criminals and less general respect from the citizenry while having to function in an insane bureaucracy make for a very stressful job.Cops from major crime ridden metro areas live an average of five years following retirement. Don’t make the mistake of thinking what you see in movies is the way it is.
Bill: I don’t envy cops their job. I think fire is a WAY better job- for one thing it’s a more defined job- cops deal with a huge variety of crap. In one US city that had to downsize both cops and fire were in the same union (or something) and there were ‘bumping rights’ It turned out that way more cops preferred fire than vice versa.
I work four days a week and put in 9 1/2 hours a day. That leaves me with a three day weekend every week. No overtime. When a holiday falls on a Friday I “lose” my day off and get no holiday pay. I lost 5 paid holidays in the past year. My wages are low and suck. Being a mature age person I have no hope of ever finding a good paying job here in Oz again regardless of my qualifications which are useless because of my age.
At the end of each day I am beat. I hit the sack early. At the end of my work week I am beat. I spend most of my Fridays just trying to recover.
It leaves little time to consume or go out. I spend what little time I have in the garden when it is daylight.
Who would have ever thought that it would end up this way…………..
At least I have a job though.
We already have partially empty shopping malls in the US. How long before the ghost cities like in China? The big difference will be in China, they built them but nobody came. In the US, everybody will just leave.
“In the US, everybody will just leave.”
This is happening in more than the US, property values are rising to the point where ordinary wage workers, can no longer afford to pay the taxes on the freehold house they they have lived in all their lives, they are forced to sell and move.
There are not enough rich people to fund these citys which means they will implode. As service workers will not be able to afford to live or rent in them.
We had to move out of south Florida because the rental market pushed us out. We are now in a lower cost area, sort of. Everybody we left behind wants us to keep in touch and tell them if we are in a better place, because they want to leave too. I expect the large corporate rental companies in south Florida to implode in the next couple of years. The only thing I can see saving them is a Trump presidency making Palm Beach the second WH.
Last year my husband was in NYC. He tells me that all the old factories along the Brooklyn Queens Expressway have been gentrified. Driving by at night he said they were new, expensive looking, and empty. Chinese ghost cities are already here.
Petunia- I thought with the housing crash in the US, including a lot of Florida, shelter, (owned or rented) would be affordable. A lot of Canadians bought down there, and I guess did OK.
Where are all the new immigrants living? They seem to have no problems? I drive in the eastern part of my town and there are homes after homes, affordable, where thousands of “immigrants” live.
How do THEY manage to do it? Huh?
WHY are they leaving?
Yeah, but look at the bright side.
Oops. That went dark too.
As long as we have a Federal Reserve that believes, through artificial stimulus, an inflated stock market makes for a vibrant consumer driven economy the downward progression will continue. Of course, even though more than half of Americans have less than $1,000 combined in their checking and savings accounts, the debt advocates are always ready to sell their side of the story that consumers don’t need savings because they have access to credit.
The FED doesn’t believe any of this nonsense. The FED is run by some of the most brilliant Sociologists and Psychiatrist that the Bankers can find.
The FED is not there for the people of the countries they are based in. They are owned by the major Banks and Banking Families.
They know exactly what they are doing. You, are the one, who doesn’t and they want to keep it that way.
The Federal Reserve is a useful tool to strip assets of the small and hand it to the members of the Financial Cartel/Deep State.
All the slight-of-hand about aggregate demand, etc., is but a shell game for those that wish it weren’t true.
I just saw an article that said healthcare cost will explode in 2017. Perfect timing for O! The good news is that it is all going to be dumped into Hillary’s lap!!
Bill you mean Trumps lap? That woman will be in leavenworth hopefully before November
Hasn’t the BLS been reporting strong job ‘growth’ in the retail sector?
As to the ‘zombies’ Sears and J.C. Penny might there be some kind of extend and pretend financing taking place? Extending a little credit to keep those stores open might be cheaper than having them close and having to write off an entire Mall!
Rue21 next…debt has fallen from 75 to 59 in a month.
Thanks, Charles, for bringing it up. I almost forgot. Bank in September 2013, I warned about rue21:
“It could be an aberration. Or it could be the first visible crack in the insane leveraged buyout craze that has spread across the country: JPMorgan, Bank of America, and Goldman Sachs could get hit with a combined loss of up to $156 million on the $780 million in junk debt they pledged to sell to fund the buyout of teen-fashion retailer rue21. With consequences for investors.”
These things take time. Creditors are still all too willing to pretend-and-extend.
And this too is a private-equity deal. Here is the piece:
I see the term ‘teen fashion’ keeps cropping up. No doubt you can sell them the look of the week at exorbitant profit until the look changes. Then you are stuck with a bunch of stuff that makes then go ‘ewww’ -only Mary would wear that!’
“Women’s fashion” shows up a lot too….
Under “women’s fashion” I’d include bebe as the next to fail. Stock price has fallen from near $7/share in 2014 to $0.25/share two months ago. It has rebounded to $0.60/share after two rounds of mass firings; the second one included the CEO (and unfortunately also my daughter). Marketwatch lists bebe’s earnings per share as -$0.50. http://www.marketwatch.com/investing/stock/bebe‘
Thank you for this article, Wolf. I sent my daughter a link.
Sorry to hear that your daughter also got caught up in the mass firings. If you work in brick-and-mortal retail, the current situation is really, really tough.
The WSJ just printed a similar article. http://www.wsj.com/articles/department-stores-need-to-cull-hundreds-of-sites-study-says-1461520952
“There’s no respite in sight.”
Of course not. The policies are succeeding. So it will only get worse.
The very existence of a prosperous middle class is an aberration of history, which had been characterized by a wealthy ruling class dominating a mostly poor and disempowered general population – until socialists got the upper hand in the 20th century.
Corrections are underway and the normal course of history will be restored. All in good time.
UK. Shops are my field. Advising retailers is how I earn my crust. What is happening in US the same in Uk. I predicted it years ago in my missives for clients and contacts. The era of the mass market is over. Too many retailers, too many shops, too many wrong places, operating costs and overheads obese. Insufficient demand to offset the avalanche Tough on the workers I know but that is the risk the direction of a business is out of sync with customer priorities.
So much for being a service based economy!
For most of retail it is a zero sum game – for example clothing sales are growing at maybe a 2% annual growth rate in line with population growth.
The problem for the Wet Seals/Aeropastales/Pac Sun’s isn’t the economy and credit and all that it is that one of the most disruptive forces in apparel retailing is increasingly coming in the US which is the explosive growth of fast fashion retailers like H&M, Zara, Forever 21. For example in its latest quarter H&M sales in the US grew 11%. that is a market share gain so someone is losing.
Another area gaining share is off-price. TJX (which owns Marshalls/TJ Maxx/Home Goods) had an 8% increase in sales.
AND, consignment stores, garage sales and school “bazaar” (where parents and teachers have a huge “fair” and everybody brings in the clothes to small for their kids and everything is no more than 1 year old (those little snots grow like weeds), etc.
Why go to “JUSTICE” and pay $40 for a really nice glitzy girls T-Shirt when at the “fair” you can fight everybody off to get it at $5.?
So this is NEWS? Sears, K-mart, Hancock Fabrics, and Radio Shack are going bust, or have? Add in retailers, who miss the mark on fashion, or fail to understand demographic demand?
Not News. Not important. Not ending anytime soon.
The ‘news’ is that the trend is accelerating.
And the chickens come home to roost. After decades of catering to fickle teens who have the attention span of a gnat and the shopping discrimination of a hungry vulture, now we have stores that have catered to that teen market for years. No woman, not even a teen in the prime of fitness, can look or move her best in clothing so tight that her arms look like sausages and her buns heave and drop with every step. So all of the teen clothing, which has gotten progressively cheezier in recent attempts to solve price issues, has resulted in throw-away fabrics and materials on clothing that would be skin tight on a snake. Where is the discretionary money in our economy and who does most of the shopping? People 55+ years have worn their existing wardrobes year after year to demonstrate disgust for the hip hop fashion choices made available in most stores. Older women look ridiculous in skin tight clothing, even the actresses who believe their stretched facial skin fools others into thinking they’re hot. They’re not. They simply have bought into one of the various themes perpetuated on the public…. clothing celebrating thug life, drug life, and male fantasies. They deserve to go out of business and might want to consider hiring marketing so-called experts who acknowledge more than one age group of consumers. Some of us vote with our dollars.
uh…………….just what’s wrong with “buns heave and drop with every step’………..an old man like me NEEDS a reason to go to the mall………..
Haha, I’m 60 and still have a Levi’s, sherpa lined, corduroy jacket that I got in 1974! LOL Those companies would all be belly up if they depended on me
This isn’t a bankruptcy…yet. But Forever 21, whom is always mentioned as the reason other retailers are not doing well, is now a slow pay to it’s suppliers and is closing 2 of it’s megastores in CA. Same store sales are negative, too many stores too fast, etc. Let’s face it….nobody can shop like the good ole days pre 2008.