Beggaring Your Customers

Today Linens 'N Things begins its liquidation, and of course I get some wry amusement out of hearing comments on the 'loss of value of inventories and brand names' that our business reporters were making on news reports yesterday. Chicago Dyke and I chatted this morning about this, and her remarks encouraged me to write more on the subject of excuses for this disastrous business climate, a subject that rankles with us both.

It's a bit harder to attract buyers for distressed businesses these days, but I really doubt that it's the inventories and brands that are the real reason there are no buyers. Try inability to buy the inventories and brands, an increasing factor when unemployment goes up and salaries go down. As I've posted previously, inability to buy is a direct result of the past eight years of taking from the poor and giving to the rich.

Paul Krugman made an interesting suggestion this morning about how the government can help.

Just this week, we learned that retail sales have fallen off a cliff, and so has industrial production. Unemployment claims are at steep-recession levels, and the Philadelphia Fed’s manufacturing index is falling at the fastest pace in almost 20 years. All signs point to an economic slump that will be nasty, brutish — and long.

How nasty? The unemployment rate is already above 6 percent (and broader measures of underemployment are in double digits). It’s now virtually certain that the unemployment rate will go above 7 percent, and quite possibly above 8 percent, making this the worst recession in a quarter-century.
(snip)
....there’s a lot the federal government can do for the economy. It can provide extended benefits to the unemployed, which will both help distressed families cope and put money in the hands of people likely to spend it. It can provide emergency aid to state and local governments, so that they aren’t forced into steep spending cuts that both degrade public services and destroy jobs. It can buy up mortgages (but not at face value, as John McCain has proposed) and restructure the terms to help families stay in their homes.

And this is also a good time to engage in some serious infrastructure spending, which the country badly needs in any case.

As I posted earlier this week, those CCC camps were a great impetus for recovery and kept jobless people from starving while they learned skills and built much needed infrastructure.

I sure would welcome more of a push to get the economy restarted by getting money back to the consumer, a suggestion that Dr. Krugman makes though he could have gone farther. There will be no increase in 'value of inventories and brand names' until the ability to buy is recognized, and developed, as the undeniable major factor in returning to prosperity.

That working class that made this a wealthy country has been beaten down, and our prosperity with it. The country won't recover until work has value again.

****************************************************

Please note that there is a Donation button on the right side of the screen. No, I don't plan to buy the entire inventory from our local Linens 'N Things.

In case you haven't read Diane's post earlier, the economy is so bad that her firm can no longer pay insurance, and she is in a bind. Your help will be appreciated.