[patience]

From what I see, the locals are only driving their SUV's because they can't afford to trade them off. Lots of them sitting in front yards here, with FOR SALE on the windows, and the prices are WAY down.

[shortonsense]

$this->bbcode_second_pass_quote('patience', 'F')rom what I see, the locals are only driving their SUV's because they can't afford to trade them off. Lots of them sitting in front yards here, with FOR SALE on the windows, and the prices are WAY down.

[mcgowanjm]

The really sad thing. That people actually believe
the AgitProp that a Recovery is underway.

Wait a year. You can buy a 35 HP JD for $5000 . Something
that can actually do something.

[mcgowanjm]

$this->bbcode_second_pass_quote('mefistofeles', 'Y')eah that's what I'm going to tell my gold dealer the next time I try to buy a Kruggerand or a round of silver. Wait you're charging me too much haven't you heard there's deflation. Or maybe I should use the same argument when I fill up and have find myself spending $3.50+ per gallon. This is too much haven't you heard we're in a deflationary climate.

[mcgowanjm]

$this->bbcode_second_pass_quote('', 'H')ere's a few choice bullet points from the reports that came out this week:

* Job losses for September, according to the Bureau of Labor Statistics' U3 calculations, were 263.000.
* This brings the U3 unemployment rate to 9.8%.
* While the U6 rate reached 17%.
* The household survey by the same BLS indicates that employment fell by 785,000.
* An alternate view at the household survey suggest 995,000 fewer people were working in September than in August, while the labor force contracted by 1,262,000 people and the number of people "not in the labor force" rose by 1,516,000.
* More than a half a million people dropped out of the labor force
* 551,000 initial jobless claims were filed.


I don't know about you, but I assure you that I have a hard time seeing the forest through the trees here.

[threadbear]

Check out biflation. Deflation in housing and credit sensitive items, inflation in everything else.

[hardtootell-2]

In Canada at least, this article positively screams deflation between the lines- but not one word of it in the article.

Yikes!

http://www.theglobeandmail.com/report-o ... le1319343/

[patience]

Chris Martenson has some insight here:

http://www.zerohedge.com/article/guest- ... be-missing

He asks what is the effect of collapsing bad loans if nobody adimts they exist?

Quote:
"The hot topic of the day is "Inflation or Deflation?" and the camps are firmly divided into the inflationistas and deflationistas. When asked which camp I am in, I reply "Yes." Some would say that puts me in the confusionista camp, but I actually have an explanation for why are living in a world of 'both.'

From a technical perspective we are absolutely in one of the most powerfully deflationary periods in history, yet besides housing prices and a few over-produced consumer goods, we find that stocks, bonds and commodities are all well bid at the moment.

While we can ascribe some of this to the artificial wall of liquidity (come to think of it, is there any other kind?) being thrown into the financial market(s) by the Fed, it leaves hanging the question of why that money is not being completely swallowed into the bottomless black hole that the deflationist camp says lies at the heart of our current financial system.

And they are right; there is a black hole at the center. If we treat the credit doubling (from $26 to $52 trillion) that occurred between 2000 and 2008 as a normal bubble that will follow the same pattern of decline as numerous historical bubbles, then we might reasonably predict that some $26 trillion of debt will somehow "go away" over the next 6 years. This is indeed a massive black hole.

Yet everything just keeps perking along. What gives?

The answer, I believe, requires us to ask a Zen-like question along the lines of "what is the sound of one hand clapping?" That question is, "If nobody recognizes a defaulted debt on their balance sheet, does it exist?"

Suppose, for the sake of argument that a world exists where banks are allowed by their regulators to pretend their default losses simply do not exist. And, even more outlandishly, some of these banks are allowed to sell heavily damaged loans to their central bank at nearly their full original price.

What does "deflation" mean in such a world? Not much, as it turns out. At least from a monetary perspective, because money is not being destroyed at nearly the rate that would be expected or predicted by the size and rate of the defaults.

This is the world in which we currently live. Trillions in probable and provable losses quietly exist out of sight on the balance sheets of the Federal Reserve and other financial institutions. If they ever come out of hiding and onto the books, I think the deflationists will be proven correct in spades."
snip
"My current outlook calls for productive capacity to continue to fall out in the real world even as the Fed conjures more money into existence in the make-believe world of 'high finance' (what are they smoking over there?).

Is this not a recipe for eventual inflation? More money but fewer goods and services? History says 'yes.' "

In a word, we can have both at the same time. sort of.....

He ends with this:

"All that said, I would not disagree with the notion that there's another year or three of grinding along as stock and bond prices are concerned, possibly down but maybe not, before the monetary/goods imbalance comes charging out of the chute ready to throw off the unwary and trample them in a blistering round of inflation.

But it could be sooner than that. Or later. The point here is that we really don't know and because our monetary system operates on faith, it means that we have to be prepared for the fact that a shift could happen at any time. Nobody can predict when a school of fish will suddenly turn to the left. Who knows what final trigger will cause a critical minority to suddenly determine that they'd rather hold things than paper?"


I feel vindicated in my confusion over these many months!

[JJ]

the manager of the grocery store for which I work told me last night that starting Nov 1, the grocery chain for which I work is going to pour tens of millions of dollars from last years profits back into the store to lower food prices (ex: t-bone steak will drop from 6.99 a pound to 3.77 a pound) in order to hurt Wally World.

(my thought was why don't we just load the groceries into a cart free and roll them out to the customers car, but we already do that with Texas Star).

[pup55]

The Kroger company operates a lot of grocery stores under various names all over the country and competes with the wallymart most of the time. They had sales of $76 billion, which is roughly 1/6 the size of the wally mart. Their gross margin, that is, sales minus the cost they pay for the food, was 23.6% in their last annual report, versus wally mart's 23.5% for their most recent period.....

So, on a gross margin basis, they are not making really all that much less money than the evil wallymart. I suppose if they are paying a slightly higher price for rice krispies, they are just passing this through to the customers.

Now, the Kroger Company bottom line is only about 1.6% of sales, which means that the difference between 23.6 to 1.6%, or 22%, is their overhead, management, distribution costs, and salaries of their managers. They did pay $3.5M to their managers for running this company which had about $1.7B in profits.

The wally mart overhead is about 16% of sales....

So, I suppose it is plausible that a company like Kroger would cut their prices, thus lowering their gross variable margin, in order to pick up sales from the wally mart, but that's not their problem is it? Chances are, storewide, the pricing between Kroger and Wallymart are pretty similar. It is probably not at all difficult to go and find some items that are more expensive at wallymart than they are at Kroger.... Maybe I will do a bit of comparison shopping and give you examples....It's that wally mart's store costs, distribution costs and administration are lower than Kroger's.... It is possible that the Kroger can lean on its suppliers to give them the friendly Wallymart price..... which would take away any difference in gross variable margin....

But, the management ought to be asking why their store costs are 6% less efficient than Wallymart's......

You may not work for Kroger, but I would say that the other participants in this business are in roughly the same boat.

Either way, this is a plausible strategy and you can calculate how much the sales volume in your chain will have to increase in order to make up in volume for the reduced income that is caused by the lower prices.

I hope it works out for you.

[url]
http://www.thekrogerco.com/finance/docu ... tement.pdf[/url]
http://walmartstores.com/sites/AnnualReport/2009/docs/fr_summary.pdf

[JJ]

thanks for posting that. No. I don't work for Kroger. Good explanation though. (Interestingly, another employee was talking about Kroger yesterday evening. Her husband worked for them; he was in a severe motorcycle wreck in which he lost both legs, head injury, etc. Kroger dropped his health insurance immediately; she had all bad to say about them.) The company for which I work paid the 249,000 + for my brain surgery (sub-arachinoid aneurysm burst). My co-pay was 100.00 Now to be fair, we no longer have that insurance (I'm no doubt probably part of the reason why, as we were self-insured). Now we have BC/BS, 90/10 for employees with more than two years history with the company, 80/20 for employees in the last two years.

[patience]

I wonder how wallyworld's insurance compares?

[JJ]

$this->bbcode_second_pass_quote('patience', 'I') wonder how wallyworld's insurance compares?

[Outcast_Searcher]

$this->bbcode_second_pass_quote('JJ', ' ')-- snip --
is going to pour tens of millions of dollars from last years profits back into the store to lower food prices
-- snip --
in order to hurt Wally World.

(my thought was why don't we just load the groceries into a cart free and roll them out to the customers car, but we already do that with Texas Star).

[frankthetank]

We have 2 superwalmarts, 2 big Festival Foods (popular, very clean, expensive), a Woodmans (best grocery store on the planet?), and ghetto Quillins (they'll go under soon) and a food coop (my fav...almost all organic...they carry some real oddball stuff, but the pricing is good..not like a Whole Foods)

I've compared Woodmans to the grocery stores out in Omaha, the ones in MSP and the ones in Miami area and it kills them on pricing, assortment... They pay their employees well for around here. A cart boy starts at $9/hr (my nephew worked there) and some of the cashiers have been there for 10 years (since they opened) and the manager works like 24hrs a day. The only problem is the store is HUGE ...like a SamsClub, but bigger and the lighting is very dim and they have so many items that if you don't watch it, you'll buy something that is expired. They also clearance out their produce (.79 for a big bag of say bananas) and their meats (i bought fresh (it was at one time!) salmon for $4/lb not long ago).

Food seems cheap up here. Even organic stuff is reasonable, if u shop the deals.

I hit a grocery store almost every day...i eat a lot of fresh stuff (fruits/veggies)...plus i have the dark chocolate addiction.

[oxj]

Ghetto Quillin's? The Quillin's on Mormon Coulée is certainly not ghetto. I can go in there and buy Amy's vegetarian meals for lunch at $1.79 and they will even microwave them for me gratis. Sure, I've met the occasional schizophrenic in their seating area. But LaCrosse is a city, and meeting a hoodie simply reminds me of that. The store is otherwise clean, has avant guard food, hardly ever do I wait for a cashier, and they are polite.

Regarding cheap food, milk in Wisconsin is $3.00! per gallon. (And bananas are currently generally 50-70¢ per pound, whereas back in 2007 one could find bananas for 20-40¢ per pound.) Back in 2007, when prices rose from $2.00 to $4.00 per gallon, so did the remuneration to the dairy farmer, at $22 per hundredweight. But now milk still costs $3.00 per gallon but the farmer makes $10 per hundredweight and many are going out of business. Is it really the cost of transportation fuel that amounts to the increase? No, fuel is not the reason, convince yourself of this by considering the recent posting about food mile costs per size of vehicle. Rather, it's generally considered that they are trying to destroy the family farm: automatic farm registration, increased tagging requirements and decreasing compensation, all of which are controlled by political or commercial entities, in the background of rising production costs will destroy small farming.

The above discussion dissecting WalMart's business model versus Kroger's doesn't really dig deep enough. We all know the reasons that WalMart is supposedly more efficient, two of which were mentioned above: lower health care costs and lower taxes. Their efficiency is not dependent upon something internal, such as a higher quality work force or a drastically more efficient distribution system. In fact, the workers at WalMart to me are generally disgruntled. But there are other costs, such as lower pay, and as a comparison for example, Wegman's of NY is considered one of the best places in the country to work, probably because of better pay. There are a lot of other reasons, and that is what this depression we are in is all about. It is about the destruction of living conditions in America to match that of third world countries. This is the exponent of capitalism.

Giving food away to the ultimate destruction of your company is, in fact, the capitalist answer to this, because there is no way to fight the arithmetic of WalMart besides politically changing the taxation and labor laws to create a level playing field.

[pup55]

$this->bbcode_second_pass_quote('', 'T')heir efficiency is not dependent upon something internal, such as a higher quality work force or a drastically more efficient distribution system.

[MarkJ]

$this->bbcode_second_pass_quote('', 'R')egarding cheap food, milk in Wisconsin is $3.00! per gallon. (And bananas are currently generally 50-70¢ per pound, whereas back in 2007 one could find bananas for 20-40¢ per pound.) Back in 2007, when prices rose from $2.00 to $4.00 per gallon, so did the remuneration to the dairy farmer, at $22 per hundredweight. But now milk still costs $3.00 per gallon but the farmer makes $10 per hundredweight and many are going out of business

[hardtootell-2]

Hmm, it seems like Japan is the epicenter of any deflationary vacuum...

http://finance.yahoo.com/news/Japan-war ... et=&ccode=

I'd be interested to hear about local signs of deflation near you.