Neiman Marcus, a Symbol of Luxury, Files for Bankruptcy (nytimes.com) 207
Neiman Marcus on Thursday became the first major department store group to file for bankruptcy protection during the coronavirus pandemic. It's a stunning fall that follows the collapse of Barneys New York late last year and comes as shadows gather over chains like Lord & Taylor and J.C. Penney. From a report: At the end of March the coronavirus pandemic temporarily forced the closure of all 43 Neiman Marcus stores, as well as its two Bergdorf Goodman stores and Last Call outlets, all but stopping sales and crushing revenue. But while that may have been the immediate cause of Neiman's filing, its problems had been building for years. The company took on an untenable amount of debt as part of two leveraged buyouts by private-equity firms, and Neiman's did not respond quickly enough to changes in shopping habits. Together, those developments left the group in a precarious position even before the virus hit.
The pandemic has been disastrous for the already weakened retail industry. Last month, sales of clothing and accessories fell by more than half. Those numbers are only expected to get worse in April, because many stores were open for at least some of March (e-commerce, a relatively small contributor to total sales for most store chains, is not enough to save them). Earlier this week, J. Crew filed for bankruptcy. Retailers have furloughed employees, slashed corporate salaries and hoarded cash in a desperate attempt to make it to the end of the shutdown. But there is widespread acknowledgment that Neiman Marcus is not likely to be the last retailer to face the brink.
The pandemic has been disastrous for the already weakened retail industry. Last month, sales of clothing and accessories fell by more than half. Those numbers are only expected to get worse in April, because many stores were open for at least some of March (e-commerce, a relatively small contributor to total sales for most store chains, is not enough to save them). Earlier this week, J. Crew filed for bankruptcy. Retailers have furloughed employees, slashed corporate salaries and hoarded cash in a desperate attempt to make it to the end of the shutdown. But there is widespread acknowledgment that Neiman Marcus is not likely to be the last retailer to face the brink.
Our economy is a house of cards (Score:5, Interesting)
When I was a kid there was a place called Mervyn's. Nice place, sold stuff a little better than K-Mart. It was where you shopped when your dad got a promotion and your mom finally finished that correspondence course in accounting.
They owned their own buildings, so even though Wall Street was still crashing the economy every 10 years like clockwork they endured.
Then somebody noticed all that property they were sitting on. And the cash they kept on hand to deal with short term disasters like this COVID thing.
They were bought out, loaded with debt, their property was sold off and leased back to them and the first problem they ran into they collapsed.
We need to ban leveraged buy outs. We need to ban venture capitalists from the practice of gutting firms. This shit needs to stop or we're all gonna end up broke except a handful at the top.
Re: (Score:2, Insightful)
This problem is never going away.
And NO, your precious Bernie Sanders would not change this. Money makes the world go round and even "Bernie" dances to its tune, just like everyone else. Bernie just wants to control it like every other politician making you a bunch of promises they know they could never fulfill because other politicians will block it. Like a form of Political Virtue Signaling. It's safe to support something when you know it won't happen.
People literally want to unmake reality without ch
Re: (Score:2)
That's pretty much impossible without some way to see into the future with 100% accuracy.
Which means you'll have to settle for a little inflation. Because slightly positive inflation is better than slightly negative inflation...
Of course, the people (for which read: politicians) who benefit from inflation don't really want minimal inflation, because they'll look like idiots when they can't pay the bills
Re: (Score:3)
Because money is a store of value, and letting it fluctuate introduces distortions. Under positive inflation, someone who is making the same salary or pay is actually getting a pay cut every year, and your savings are being constantly nibbled away bit by bit. Under negative inflation, any loan you take out is automatically made more expensive to pay back with each passing year.
There are still reasons to have a mild (only a few percentage points) positive inflation--most notably the automatic pay cut helps
Re:Our economy is a house of cards (Score:4, Funny)
No. Your local bank doesn't "whamo" create new money.
Are you channeling noted economist and congresswoman Alexandria Ocasio Cortez?
Re: (Score:3)
No. Your local bank doesn't "whamo" create new money.
Actually, yes, the bank (or, somebody) does create more money. If the goods and services in the economy doesn't change, but the price of everything rises (inflation), then there is more money in the economy. Somebody created that more money, whamo. (in the old metaphor, they "ran the printing press," but of course physically printing money is unnecessary now.)
If you want to, you can think of inflation as a tax on money. Whether that is good or bad depends on what you think of a tax on money. It does e
Re: (Score:3)
It's called 'fractional reserve banking'.
Re:Sure it is (Score:5, Insightful)
"Bernie lost but the movement didn't."
If a leader of a movement falls then the movement takes damage. Sure it might recover but that is still a loss of some kind.
" Education is increasing, making it harder to fool people."
This has never been true. Education does not stave off foolishness, it only staves off ignorance and that comes with the assumption that someone that we consider to be educated, is actually educated. You may have received an education but it does not mean you have become educated.
The universal laws of stupidity outline how serious of a problem this is. Most people are smart in only narrow areas of life. This narrow specialization makes them well informed there... but it does not mean they are less easier to fool in other areas their specialty does not address. And another thing... education has a worse effect of people along the lines of the Dunning Kruger effect... they were taught something... and that little bit leads them to often over value their insights making them even more foolish than they would be otherwise.
"(no, Bernie is not extreme, he's very moderate)"
This is relative... Even Hitler would have been considered moderate by some folks. Extreme is only something that is far away from YOUR positions and means nothing else by comparison to someone that views Bernie to be extreme.
"The country will, by this time next year, have a President who believes in science and is following a "Pandemic Playbook" that will contain the virus."
Even countries that "Believe" in Science as you phrase it got fucked. What proof do you have that changing from Trump would have changed anything? And that is not a defense of Trump... that is an attack against your BS logic. It's a Pandemic... not a USA TrumpDemic! Get a grip will ya?
"By by and large we will get through this and get things back on track."
They always do... after people die... or enough of them die to force people to understand that what was being done was wrong. Then after a short time and memories fade... we go right back to doing it the wrong way again. The Pendulum endlessly swings back and forth.
Re: (Score:3)
Birth rates are declining, making each individual human less and less disposable.
What does the birth rate have to do with that if the overall number of people is still increasing. I wouldn't use the number of people as a way to determine their relative or individual value anyway, but until the absolute number of people starts to decrease that isn't going to happen even if we use your basic system of measuring value. Next year the world will have more people, as it will the following year, and that pattern will continue for the foreseeable future. Average disposability increases if you j
Re:Sure it is (Score:4, Informative)
Short term the DNC and Joe Biden will likely win and get us National Vote By Mail plus Automatic Voter Registration. Election turnout will increase by about 3-5x.
LOL, where do you get this stuff? Do you just make it up? Voter turnout was 138,847,000 [wikipedia.org] for the 2016 presidential election. Three times that would be 87 million more than the entire population of the US.
Re: (Score:3)
Education is increasing, making it harder to fool people.
LOL. Sadly, you are not well informed enough to see how your post contradicts this assertion.
Re:Our economy is a house of cards (Score:5, Interesting)
But wait there is more
The US (and more and more the Global) economy is based on Consumerism, and the idea that Americans spend more than 98% of their income (in many cases spending MORE than 100% of income by taking on debt) in order to keep the gogo economy going.
What this means, is that if consumers stop spending at high rates, the economy stagnates. A clear example of this is the extremely slow recovery in Japan from recession decades ago. This slow recovery is due to Japanese households traditionally saving 10% of income
Americans are just learning that they do not have to constantly spend money to be happy, and the longer the lockdown continues, the more deeply ingrained spending less will become.
It is an existential threat to "modern" US economy, and it has been a long time coming
Re: (Score:2)
I dunno if that holds up 100% true or not.
I mean, of course, those out of work have stopped spending, BUT.....what are the numbers on people that have kept their jobs and still are working and living mostly normal?
Those that make decent $$, may just be ordering online and especially if bored or needing things to do at home, may
Re: (Score:2)
Who is living mostly normal?
I mean, ever since this pandemic began gaining small traction we just stopped any planned spending that wasn't groceries or household necessities. I don't think we've had more than 10 "take out" meals, and half of those were cheap pizzas or drive-through fast food.
I haven't yet cut off streaming, but honestly I'm getting way more value out of Netflix and my HBO Amazon channel than I ever did before, and obviously internet. Cell service seems like something that could be pared b
Re: (Score:2)
"Who is living mostly normal?"
I am. Very little has changed for me despite all of this.
Re: (Score:2)
Yeah, as long as mom keeps stocking the house with Mt Dew, Hot Pockets, and Cheetos life just goeas along as normal for youo I guess.
Re: (Score:2)
lol... I have a job, own my own home and unfortunately mom lives 2+ hours away... but yea that would be great to have! Thankfully the wife does keep the house stocked with DP, Pibb, and Fudge Rounds. My son is a big fan of those!
All I have to do is bring home the bacon and fix shit... can't win them all I suppose.
Re: (Score:3)
Any economy requires that people spend money. An economy is basically "people doing stuff" and "money getting spent" is our abstract accounting metric for "people doing stuff" (the people spending money aren't the ones doing the stuff, the people getting paid are).
The problem with consumerism is that it involves people spending money on things that don't create weath. Even a lot of saving (really investment) these days seems to be in things that don't create real wealth. Instead of buying so much stuff we d
Re: (Score:2)
"luxury" ultimately drives the economy. Yes when Joe Potato farmers wife bought a spinning wheel, one could argue that it means she can create some additional wealth. Ultimately though it comes down to someone wanting to wear cloth rather than skins.
Fundamentally what wealth means is the ability to consume at a level beyond subsistence.
Re: (Score:2)
So in today's world I should already consider myself rich if I can actually buy stuff beyond the bare physical needs?
When did we arrive at medieval times levels again?
Re: (Score:2)
Agreed. Saving has become a dirty word for many. Even though "investing" is good there's still tons of pressure to invest in riskier stuff like stocks and focus only on short term gains. We can even see how the governments have messed up here because they didn't do any saving, putting money away in good times to help in bad times, instead surpluses get spent on tax refunds (Republicans) or on more programs (Democrats). Putting money aside is rare and governments who have done it are in a better shape.
So
Re: (Score:2)
And the Millennials have been broke for ages. We were going to be dealing with this problem soon. If anything the large influx of stimulus cash is going to put it off a few years.
Seriously? We just increased our national debt by 20% in a handful of weeks, and now that the politicians have popped their "Trillion Dollar Spending Bill" cherry, expect to see spending go up even more.
Question: Who's buying all the debt to back that spending?
Basically, there's plenty of money, food, shelter and even healthcare. The reason it doesn't look like there is is because of how we value things. A BMW weighs 5000lbs and costs $80k. You could buy 5000lbs of Broccoli for about 1/40th that. The BMW is nice and all, but it won't keep you alive. Point is, when folks talk about "how we can afford it" we can easily, even without prioritizing the basics, we just have to be willing to.
I honestly have no idea what you are talking about - how does the price of a BMW compared with Broccoli (neither of which I would choose to eat, by the way), prove that we have "plenty of money, food, shelter, and even healthcare"?
Re: (Score:3)
Re:Our economy is a house of cards (Score:5, Interesting)
The same thing has played out in multiple industries. We're witnessing the supply crisis in meat brought on by COVID-19, but really the result of the old model (that had persisted, one way or the other, for thousands of years) of small local slaughterhouses buying animals for farmers in the area, and then distributing the carcasses to butchers. Large commercial interests come in, either buy out the slaughterhouses or just outright price them out of the market. And now that we've centralized slaughtering and even butchering (which is why grocery stores have meat cutters, and not butchers), and those giant processing plants have hundreds or even thousands of employees basically working eyeball to eyeball, a pathogen comes along and guarantees that these facilities become breeding grounds that have some of the highest infection rates outside of senior's homes.
We've built an economy of such extraordinary centralization of what I consider core industries that we've been massive bottlenecks and fragility that along comes a highly contagious pathogen, and suddenly we're looking at fast food joints possibly pulling burgers of their menus.
To my mind, if the pandemic is teaching us one thing, when it comes to the very core industries of civilization; in particular food production and basic manufactured goods, bigger is only better for big time Wall Street investors, venture capitalists and the like, and are in fact outright damaging to the real economy where that economy is supposed to be working to the benefit of the populace at large. And since investment interests have absolutely no interest in the public good at all, I agree, I think this is an example of where government needs to get involved.
Re: (Score:2, Insightful)
"We've built an economy of such extraordinary centralization"
This is what too much regulation does. We humans build centralize power structures because they are convenient. It's there in every family, there is always one person that gets the most say. We build it into all of our power structures... we all want 1 throat to choke and that process causes centralization. We want, expect, demand that 1 person be the end all/be all of something and never allowed to make a mistake and are expected to be so vir
Re:Our economy is a house of cards (Score:5, Insightful)
>>This is what too much regulation does.
Not really, monopolies have historically formed in unregulated capitalist environments, and much regulation in the 20th century was aimed at breaking up monopolies and preventing them from forming
The republican party has made huge strides in subverting regulation and allowing the growth of lightly regulated monopolies in the past few decades.
Re: (Score:2)
much regulation in the 20th century was aimed at breaking up monopolies and preventing them from forming
Alternatively the size and scope of government grew MASSIVELY over the course of the 20th C.
Last I checked there is only one of those. As the population gets larger each of us gets proportionately less representation. Never mind the fundamental structural problems that insulate much of government accountability to the their constituents. We traded one monopoly for another.
Re:Our economy is a house of cards (Score:5, Insightful)
Funny how you turn mean when people see through your spin
Read what is actually taught in schools, not spun by people who are just trying to confuse the issue [stanford.edu]
The societal and economic dangers of monopolies are clear. To combat the effects of these large corporations, the government has tried, through both legislation and court cases, to regulate monopolistic businesses. Though the strategies that the US has followed have varied, the aim of curbing market hegemony has been relatively constant. Though examples of attempts at government regulation are widespread, three stand out from the rest: railroads of the 19th Century, Microsoft, and IBM.
Most regulation in its early history revolved around the railroad industry. At first, the responsibility of control of public industries fell on the individual states. However, the ineffectual legislation that was passed and the inability to control railroad monopolies made the need for federal regulation painfully apparent. The passage of the Interstate Commerce Act in 1887 created the first interstate regulatory committee. Though this group was not extremely effective in curbing the practices of the railroad, the precedent for federal regulation had been set. Later legislation, such as the Sherman and Clayton Anti-Trust Acts had more of an effect on large businesses. The latter bill created the Federal Trade Commission, which is the major regulatory body of monopolies today.
The important question that arises from regulation is: Why does the government feel that it must control big businesses? Does this not violate the principles of freedom outlined in the Constitution? Indeed, the government never tried to stifle a corporation simply because it was strong. Instead, regulation exists to preserve competition and the freedom for smaller companies to enter the market. If one company controls the market share, smaller groups will never be able to flourish. For example, the dominance of Microsoft in recent years has raised the question of whether its practices are monopolistic. Because the corporation controls the majority of the market in nearly all of its markets, there is an overwhelming social pressure for regulation.
The earliest regulatory measures were not as focused on competition, however. The goal was to protect the consumer. For example, the Grangers (19th Century farmers) felt that they were being oppressed by unfair practices of the railroads. There was great social unrest in this population because of the practices of large corporations. To avoid revolt and turmoil, the state government passed the Granger Laws. This group of legislation was essentially an attempt to appease the troubled farmers. It was not until the end of the 19th Century and the beginning of the 20th that regulation made the turn toward preserving competition.
Another trend in regulation is the unfortunate tendency of legislation to have little effect. Most of the laws created to control railroads were simply ignored by the large corporations. Similarly, the action of the Federal Trade Commission against Microsoft is often viewed as a trifle. Judge Stanley Sporkin rejected the June 1995 decision regarding the Microsoft monopoly, saying that the ruling was a mockery and that stricter control must be taken. Most attempts at federal regulation have been mediated, modulated, or amended until they lose much of their original bite.
Clearly social and governmental history has shown an ever-present desire to curb the growth of corporations. The dangers of allowing one company to assume supremacy over a market have frightened the government into regulation. Though, in many instances, the legislation fails to achieve its original goal, governmental regulation has become a standard in interstate and international commerce. America was founded on the principle of free trade and freedom of competition. Therefore, the government has assumed the responsibility of preventing the formation of monopolies and curbing unfair practices of large corporations.
Re: (Score:3)
Probably the biggest problem with monopolies, apart from how they distort markets and ultimately affect consumers, is that monopolistic organizations dedicate some part of the vast pools of money they accrue to political influence. When governments finally do swing around to trying to control or carve up monopolies, these companies, or in some cases industry groups (what normal people might call a commercial cartel) swoop in and rain down vast amounts of cash. Think about how the tobacco lobby spent decades
Re: (Score:3)
Bingo... everything you just said is spot on. And judges hold stocks too and they have friends that talk in their ears and get their family members jobs for favorable rulings or proceedings. It is a vast an interconnected world and big interests have big rolodexs.
Regulations do not fix much but they can certainly radically shift the goal posts making many people falsely believe a problem has been solved when often times, it rarely has been.
Smart regulation is necessary with very strong anti-trust and anti
Re: (Score:2)
"Seriously, spend a bit on google. The world is a scary place and the things you believe were carefully crafted for the benefit of billionaires."
And they will make sure that your educational institutions teach you the ideas necessary to keep things in their benefit by dangling the idea that you too can become rich like them!
"It was propaganda. Plain and simple."
Everything is, what I am saying, what they are saying, what you are saying. Tis all propaganda... the question is... who is right.
Right now, we are
Re:Our economy is a house of cards (Score:4, Insightful)
Hey, don't let reality stop you keep going. You are only going to lose your wealth and make your children and grand children suffer for it.
Regulatory agencies like and bless monopolies. Yes the republicans like them as well, but to act as those they are the only party wanting them is the lie. The other lie is that Republicans are against regulations... they are not... they are just for different regulations than you want.
You fell for the "Regulate/Deregulate" farce moron.
When republicans say they are deregulating, what they are actually saying is that they are "changing" regulations, often times to the disadvantage of consumers and when democrats say they are introducing regulations... they also, are often times to the disadvantage of consumers. They both parties turn around and blame the failures of those regulations on the other side. And then... morons like you buy it!
Regulation is the inevitable end-state of monopolies, and monopolies are an inevitable product of deregulation. It takes an unregulated market to create a monopoly and, once that monopoly is created, it is in a position to purchase/lobby/create (bad) regulation to secure it's position. The solution is to start out with (good) regulation to keep monopolies from forming in the first place.
Re:Our economy is a house of cards (Score:4, Informative)
And this is why I say businesses LOVE regulations...
LOL, have you ever run a business? I'm guessing no. The only businesses that LOVE regulations are the ones big enough to write their own. The other 99.99% of businesses don't love regulations one little bit.
Re: (Score:2)
The only businesses that LOVE regulations are the ones big enough to write their own.
Oh the irony - the very ones that theoretically need regulating the most because they pose an actual threat to a functioning market place.
Re:Our economy is a house of cards (Score:4, Interesting)
How has regulation created this phenomena? If you're referring to food safety regulations, well I think those are pretty darned important for public health. But the reality is that large commercial interests swooped in to both the farms and the production facilities, bought out or drove out the small producers. Regulation didn't make that happen, the tendency of capitalism to create large monopolistic entities with the cash and political ammunition to make it impossible for smaller producers to survive, is what made this happen.
What we need is to apply some of the good old fashioned Trust Busting. Since food security is probably the most fundamental aspect of civilization, and thus should be a core mandate for government regulatory directives, it's time to bust up the large monopolies that have come to dominate how basic staples are produced and distributed. This is as much a matter of national security as border protection.
The model change was mostly to bust Unions (Score:5, Insightful)
Anyway the way they killed off the unionized butcher was to just fire them. in the mid 2000s they just stopped having butchers in super markets. You could no longer request specific cuts in a specific way, you got pre-packed stuff. I knew the guys at my local store pretty well and remember them talking about losing their jobs...
Of course this meant, like you said, everything is centralized and prone to breaking down. But it did radically increase profits by turning a decent middle class job into a McJob.
The theme is this: extract everything from business and society and leave it teetering on the edge of collapse, then jet off to your private island.
Re: (Score:2)
bigger is only better for big time Wall Street investors, venture capitalists and the like, and are in fact outright damaging to the real economy where that economy is supposed to be working to the benefit of the populace at large
I don't disagree with all of what you are saying here; but I suspect if you look at how often you are able to enjoy meat in terms of form and quantity compared to even your parents generation, that centralization has been quite good for you right up until this moment too. (provide none of you grew up on a cattle ranch or something)
Leaving inflation adjustments out of it (because food is such a big part of that adjustment) consider the price of cheese burger as percentage of average house hold income. Hint M
Re: (Score:3)
"every scrap of value is extracted by private equity firms from businesses leaving a hollow shell ready to collapse at any minute. "
Yep. A leveraged buyout is akin to a mugging where the victim beats up and robs himself.
Re: (Score:3)
Great analogy, and in politics they just "vote" for the person that beats them up and robs them instead, so it really is effectively the same, they are just outsourcing the work in that case.
Re: (Score:2)
No. No one consents to being mugged, but businesses to consent to leveraged buyouts.
Re: (Score:3, Insightful)
Companies are bought out and gutted because they are doing poorly. No sane business would allow hostile takeovers or leveraged buyouts if they could do something about it. But if you're willing to sell your shares of the company because they're going to be worthless in the long run, you have to sell to the guy giving you pennies on the dollar.
A lot of companies are simply not nimble enough to compete. They're the department stores that grew so large and slow they didn't have a website till the late 2000's.
Re: (Score:2)
You are kind of ignoring the history of activist investors like T Boone Pickens who mastered the leveraged takeover.
Basically, any publicly offered company (and even those with poison pills in place) can be threatened with a leveraged buyout, particularly when courts will hear cases against executives brought be investors.
Re:Our economy is a house of cards (Score:5, Insightful)
My understanding of LBOs is that they follow this scenario:
a) LBO/private equity "investor" sees a firm loaded with cash. Share price is $10. This firm is economically doing well: good book value, plenty of assets, low liabilities, stable profit stream, pays regular nominal dividends of 2%. Not a ton of growth, but it provides value to society.
b) LBO/PE puts together a package offering $20 buyout for the shares. $10 profit for everyone holding shares. This includes executive management at the firm (probably director-level and higher). They take out a loan to make this offer.
c) Executives + investors in firm are happy and take the buyout. (In fact, investors would likely file a shareholder lawsuit if the board didn't approve the buyout.)
d) LBO/PE brings in management staff that takes out even bigger loans backed by the firm to repay the original loan for the buyout, and then some for hefty profit to LBO/PE.
e) LBO/PE lets firm rot and the people/banks that lent money to the firm take the haircut on the bonds and employees are furloughed as the firm is eventually shuttered.
There is literally nothing in the above scenario that provides any sort of value to society. None at all. It's legalized theft from the rank and file employees in the firm and the people/banks that lent money to the firm after the LBO. Note that in the above the only people acting (economically) irrationally are the lenders that take the eventual haircut, because they are either suckered by the LBO marketing or haven't done their due diligence or both.
Re:Our economy is a house of cards (Score:4, Interesting)
Why don't banks get wise to loaning money to private equity firms whose strategy is to cash out a business and then file bankruptcy, thus stiffing the bank? It's just a way to borrow money and not pay it back. Or at least, run a high risk of doing so. So why do the banks play along? Does this just not happen as often as it seems to? Or are the bankers who got their commissions for closing the deal just long gone by the time the borrower goes bankrupt? Or what?
Re:Our economy is a house of cards (Score:5, Interesting)
Here's my question:
Why don't banks get wise to loaning money to private equity firms whose strategy is to cash out a business and then file bankruptcy, thus stiffing the bank? It's just a way to borrow money and not pay it back. Or at least, run a high risk of doing so. So why do the banks play along? Does this just not happen as often as it seems to? Or are the bankers who got their commissions for closing the deal just long gone by the time the borrower goes bankrupt? Or what?
The banks still get paid. They are preferred creditors in the bankruptcies. But the regular stock holders, the employees, the vendors, they all get stiffed. But the important people stilled get paid which is why this kind of thing is allowed to happen. And it's taken down several big names: Toys R US, Sears(taking KMart with it), and now Neiman Marcus. It's a vampiric relationship, designed to do nothing more than strip it for everything it's worth and move on, leaving an empty shell.
Re: (Score:2)
Re:Our economy is a house of cards (Score:5, Informative)
I'll rebut.
Regarding your title: Our economy is NOT a house of cards. The vast majority of workers in the US were forced out of their workplaces over the last month or more. Businesses closed. Some outright failed. There are not riots in the streets. There is no mass looting. There have been no runs on banks. The stock market and housing market is still well-inflated beyond what they should be. People are simply doing their best to go into financial hibernation because everyone knows that when it has been deemed sufficiently safe to get back to work, earn money, and spend money. The ramp up will be slower-going than the lock down, but no one really doubts that there will be a ramp-up.
If the economy were a "house of cards", one would have expected a full collapse by now. Instead, weaker business is are faltering early. Stronger companies are surviving. That says nothing about the "value" of the companies-- we need low-profit companies for many reasons, but it's not as though ALL companies are filing for bankruptcy. Mom-and-Pop businesses aside, what we're seeing on the large corporate level are investors abandoning sinking ships in which they don't see potential. Some sinking ships are being propped up by investors (profitless unicorns, for example).
Regarding leveraged buy-outs, I agree. I think it's absolutely irresponsible for the health of the economy to debt-finance the take-over of a company with the intent to flip it or liquidate it. That's predatory, sadistic, and almost never benefits anyone in the long-term except for the buyers-out.
Re: (Score:2, Interesting)
Most of those workers are in retail and restaurant. Then there's a large number of smaller businesses. Essential businesses, which cover anything to do with food, medicine, etc were and are still humming along (meat packing plants are getting hit hard because of unsafe work conditions, but, well, they're going to force everybody back to work soon...).
Point is, none of the essential machinery of our economy is down. Our entire economy is in free fall because a bunch of Karens can't get their
Re: (Score:2)
Re:Our economy is a house of cards (Score:5, Informative)
every scrap of value is extracted by private equity firms from businesses leaving a hollow shell ready to collapse at any minute.
When I was a kid there was a place called Mervyn's. Nice place, sold stuff a little better than K-Mart. It was where you shopped when your dad got a promotion and your mom finally finished that correspondence course in accounting.
They owned their own buildings, so even though Wall Street was still crashing the economy every 10 years like clockwork they endured.
Then somebody noticed all that property they were sitting on. And the cash they kept on hand to deal with short term disasters like this COVID thing.
They were bought out, loaded with debt, their property was sold off and leased back to them and the first problem they ran into they collapsed.
We need to ban leveraged buy outs. We need to ban venture capitalists from the practice of gutting firms. This shit needs to stop or we're all gonna end up broke except a handful at the top.
While your comments regarding leveraged buy outs might be true, Mervyn's is a bad example. Mervyn's was privately owned. The owner of Mervyn's cashed out by selling it to Dayton for $300 million.
Re:Our economy is a house of [spam] (Score:2)
Nice perspective, and I even remember Merwyn's, though I didn't know what happened to them. Been away for a bit. Nor can I see this as directly relevant to the "You are great and wealthy" scam that was Neiman Marcus. Merwyn's was targeting the other end of the demographics.
I see this story as a case of somewhat delayed justice for a prominent spammer. Unfortunately, for every spammer than goes down, three fresh quasi-legit spammers pop up. Plus six pure fakers spamming with the corpse's name and residual re
Re: (Score:2)
The "benevolent" cashed out. (Score:2)
They were bought out ...
In other words senior management was not as benevolent as you claim. They *willingly chose* to cash out and let whatever happens happen. Private equity can not do a damn thing without willing partners on the other side.
Re: (Score:2)
Neiman Marcus fucking themselves over in addition to equity firm activity in no way negates all the great points he made moron!
I miss Strawbridges. (Score:2)
I hope no one ever thought JC Penney was a luxury brand, lol.
Symbol of Luxury (Score:4, Insightful)
Filing for bankruptcy is also a symbol of luxury.
Re: (Score:2)
A friend of mine is a bankruptcy attorney and there actually is a phrase "too broke for bankruptcy".
Re: (Score:2)
Re: (Score:2)
Filing for bankruptcy is also a symbol of luxury.
Yeah. Tell that bullshit to the other 30% of small businesses that will likely be filing for "luxury" in the next 3-6 months.
Idiot.
Re: (Score:2)
Re: (Score:2)
We all know the real reason (Score:3)
a lot of it was fake luxury (Score:2)
same stuff you can buy online but in a snobbier setting and with better help in store. basically for clueless old people.
some stuff was the same as your dollar store brands but in fancier packaging and a higher price tag
Businesses have been running too thin. (Score:3)
This has been a problem lingering for generations, but business have been operating too much on debt, and near break even profits.
I get why they do this, the more money you can keep moving the faster you can grow your business. However, this also has the side effect that if something goes off, they will go bankrupt.
Toys R Us for example. pre-COVID-19 went out of business not due to lack demand, however they had put on a lot of debt to try to grow their business, while the likes of Amazon hindered their growth rate, so their profits couldn't pay off the debt.
A company really should have enough Cash on hand to keep operational for about 1 quarter. But this will effect their growth opportunity, as that is a lot of money that they are sitting on is a mostly liquid state. Giving them time to retool and adjust to the changes that they haven't planned for.
Post 2008 Financial Meltdown. The feds had kept interest rates very low, to help the economy. When we were doing very well, the rates should had rose a lot higher to prevent as much debt collection to make sure business don't grow so fast that they cannot change course.
Re:Businesses have been running too thin. (Score:5, Interesting)
This has been a problem lingering for generations, but business have been operating too much on debt, and near break even profits. I get why they do this, the more money you can keep moving the faster you can grow your business. However, this also has the side effect that if something goes off, they will go bankrupt.
The problem was the "leveraged buy-out". This innocent-sounding word means that predators who didn't have enough money to buy the company borrowed money to buy it, using the company as collateral to pay for it. Which saddles it with all the debt that they took to purchase it. So they raid the company's cash to pay themselves, and leave the company with the debt, with the company itself as collateral to the lenders.
Re: (Score:2)
Lots of this in this thread.
While I'm not a fan of LBOs in principle (for a given customer base, they usually result in higher costs/lower service levels... though it's not clear if this is a function of the LBO or the purported turnaround) I do have to point out that this is not magic money that comes from nowhere. As you note, someone is lending the money and the company is collateral. If the LBO doesn't pan out, this is who is ultimately on the hook for the losses. Presumably, these lenders are doing
Re: (Score:2)
Lots of this in this thread.
While I'm not a fan of LBOs in principle (for a given customer base, they usually result in higher costs/lower service levels... though it's not clear if this is a function of the LBO or the purported turnaround) I do have to point out that this is not magic money that comes from nowhere. As you note, someone is lending the money and the company is collateral. If the LBO doesn't pan out, this is who is ultimately on the hook for the losses. Presumably, these lenders are doing their due diligence and coming to the conclusion that the investment is a good bet and are comfortable with their exposure.
Sure, but the whole point isn't to run a successful company in an LBO. The whole point is for the new owner to come in, purchase the company using very little of their own capital, siphon off as much value as possible (like the Sears fiasco of selling their real estate-to a holding firm owned by the LBO purchaser- and leasing it back: from the Sear Wikipedia article "Seritage Growth Properties is a real estate investment trust that was created and spun-off by Sears Holdings to act as owner of the spun-off
Re: (Score:3)
Re: (Score:2)
> Toys R Us for example.
Toys R Us in the US. In Canada it's still going.
Re: (Score:2)
It isn't the same Toys R Us. Another Company had bought the Trademark to the name.
Re: (Score:2)
Toys-R-Us, on 'clearance', was more expensive than the Walmart across the street.
It's not a disaster for retail! (Score:4, Interesting)
Target's stock is up, almost back to peak price. Costco is doing well. The companies that people actually like will do quite well. I feel bad for the laid off workers, but the cruel fact is that if Neiman Marcus, Bergdorf Goodman as well as low-end retailers no one goes to like JCPenny, and Sears completely fold, who would really be surprised? They're relics of a bygone era.
And fuck luxury. I was never a fan of that sector and won't miss them one bit...but I'm a nerd, so I'm not the target audience. The real estate could be better used for other things. It's like Circuit City...does anyone really miss them? Best Buy and Microcenter/Fry's always did a better job. I think once the luxury retail sector shrinks, no one will really miss them...like VHS tapes or rotary phones.
Re:It's not a disaster for retail! (Score:4, Funny)
Telemarketing wouldn't be the problem it is today if those things were still the only way to place phone calls.
Re: (Score:2)
Telemarketing wouldn't be the problem it is today if those things were still the only way to place phone calls.
I feel compelled to point out this is wrong. ;-)
I wrote a pulse auto-dialer for my Commodore 64 + modem back in the 1980's. Pulse dialing wouldn't stop telemarketers, as the dialing could and would still be automated.
Re: (Score:3)
The problem is the luxury sector will bounce back the quickest. Fools who go to Tiffany and spend $1000 US on a tin can:
https://www.tiffany.ca/accessories/decorative-accents/everyday-objects-sterling-silver-tin-can-60559139/
are exactly the sort who have been chomping at the bit during lockdown and will open their wallets and throw gobs of cash at these places to buy overpriced garbage they only buy to show how much excess disposable income they have to the world at large the moment the stores reopen and th
Nailed it. (Score:2)
Neiman-Marcus target demographic was always the sillier variety of rich customers and their boomer base are dying off.
Re:It's not a disaster for retail! (Score:4, Interesting)
You are making something that is not a problem into a problem that should be solved.
No, do not fuck the Luxury Goods Sector. The presence of it is just fine and is a good sign of economic prosperity. The problem is that it is always usurped as a "Status Symbol" making folks like you into a bunch of incels getting pissed off that they cannot afford to project a status symbol themselves... Hint that means you are just like those you hate.
As long as they are allowed to fail and are not bailed out, there is balance. Just wave bye as they go and wave hello when they return.
Re:It's not a disaster for retail! (Score:5, Funny)
Only idiots buy there.
I think you'll find a large part of people who buy luxury goods are not idiots as much as they are clever people able to either a) accumulate wealth, b) screw others out of wealth.
That's the thing about luxury goods, your first reaction is "what kind of an idiot would buy a diamond encrusted iPhone?", but the immediate second reaction should be, "I wish I could be in the position of that idiot to do so".
Only idiots spend $500 for a shirt that's pretty much the same as a $50 one.
Well I spent $8000 on a wristwatch and it keeps worse time than an $8 Casio. I guess that makes me an idiot. But hey, what else was I going to spend the money on, another house?
Also saying that $500 shirt is the same as a $50 one shows that you haven't worn a $500 one before.
And fuck luxury.
According to my country's lockdown plans the sex clubs re-open in September, so that will have to wait.
Re: (Score:2)
Only idiots buy there.
I think you'll find a large part of people who buy luxury goods are not idiots as much as they are clever people able to either a) accumulate wealth, b) screw others out of wealth.
That's the thing about luxury goods, your first reaction is "what kind of an idiot would buy a diamond encrusted iPhone?", but the immediate second reaction should be, "I wish I could be in the position of that idiot to do so".
Only idiots spend $500 for a shirt that's pretty much the same as a $50 one.
Well I spent $8000 on a wristwatch and it keeps worse time than an $8 Casio. I guess that makes me an idiot. But hey, what else was I going to spend the money on, another house?
Also saying that $500 shirt is the same as a $50 one shows that you haven't worn a $500 one before.
And fuck luxury.
According to my country's lockdown plans the sex clubs re-open in September, so that will have to wait.
I can definitely say that, if I had the money to spend, there are plenty of things I would spend the money on that others would call idiotic. Of course, those idiotic things would still be investment-grade items that shouldn't lose value.
Re: (Score:2)
Fry's will almost certainly be gone by the time this is over, they were on their last legs before this started.
The one that disappoints me is Sears. If they had stayed true to their origin their catalog tradition could have easily morphed to online shopping, instead they were managed into the ground. They manufactured their own lines of medium-quality medium-priced tools, bicycles, chain saws (and a moped that used the chain saw motor), and more, which management spun off for short term gains to bump up t
Re: (Score:2)
The one that disappoints me is Sears. If they had stayed true to their origin their catalog tradition could have easily morphed to online shopping, instead they were managed into the ground.
Sears could have been a powerhouse in the internet age but they threw it all away. Their web site was slow, shopping in their stores was even slower. Every one I went into seemed designed to make you leave as quickly as possible. Then they cheapened their Craftsman tool line. It makes one wonder if bankruptcy was the goal. They sure did everything they could to make it happen.
Re: (Score:2)
The mall? We had several in my city. They still stand, mostly empty. All oriented toward the buyer who was upwardly mobile. Some were for the rich, others were positioned slightly above Kmart in terms of their quality image. All were meant to be attractive to the shopper who sought slightly better products than their neighbor.
Many of my friends and neighbors made frequent trips to 'the mall' and after years of observing this it dawned on me that I wasn't going there. Why? There just wasn't anything there I
This is not about luxury (Score:2)
..it's about debt
Leveraged buyouts are a major cause of business failure
Just modern life (Score:2)
We've seen similar in the UK, well known high street chains that have been in business for more that 80-100 years, they never adapted to the online retail world simply thinking that shoppers prefer to excitement of a store visit. I'm nearly 50 my Dad is in his 80s, we're both old, we remember times when it was nothing but high street shopping, ( granted we're both men so shopping is boring! ) but we both prefer shopping for everything online now be it clothes, food, luxury goods, whatever we need.
Working ag
Leveraged buyout by a private equity firm (Score:2)
Re: (Score:2)
So it has nothing to do with their business model of exceptional customer service and very expensive retail locations that have been shuttered for 6 weeks now with no end in sight has nothing to do with it, it's Private Equity's fault?
They were already failing. COVID swept the leg. (Score:3)
It's only a big story because, culturally, shopping at Neiman Marcus was a goal for some to attain. "We made it! Look at my Neiman Marcus shopping bag!! #LivingMyBestLife".
When Sears and JC Penny's finally complete their bucket-kicking, it won't be a surprise either. Again, culturally, it will be a big deal because MOST Americans over the age of 20 can recall shopping at a Sears or JC Penny's at a shopping mall at least once. There will be an accompany story about shopping mall anchor stores and the dominance of online shopping. Jobs in retail will be compared to jobs at an Amazon warehouse. The viewers will be reminded of the various accusations against Amazon by its workers regarding working conditions in the warehouse and delivery sectors.
People will watch, say, "This is horrible! Amazon sucks!," and then order their new super thin, but layerable, shirt that looks *just* like what they had aspired to buy from Neiman Marcus one day direct from Amazon for only $22 with next-day Prime Shipping.
I think LBOs are the real problem (Score:2)
Correct - only a "symbol" - same goods as Target (Score:4, Interesting)
Neiman Marcus is (was) known for exception customer service but that is not enough anymore.
Oblig. Sesame Street (Score:2)
Neiman Marcus [...] Barneys New York [...] Lord & Taylor and J.C. Penney.
One of these things is not like the others.
One of these things just doesn't belong.
One of these things is not like the others.
Tell me, can you guess which one?
It's Really Quite Simple (Score:3)
While it's great that everyone can agrue about sophisticated economic theories and (of course) relate this topic to their preferred Presidential Candidate, the simple answer is, Neiman Marcus was built around offering an exceptional in-store experience, facilitated by staffing their stores with well-compensated staff that catered to the whims of their wealthy, paying customers. When they were forced to shut their doors, they were "stuck" sitting on expensive inventory and (for all practical matters) no ability to sell their inventory. Their business model doesn't translate to "web sales" in any meaningful way, without the in-store experience, why shop at Neiman Marcus?
If fashion sales you have to buy next season's inventory at least one season before you need it - how many stores were just stuffed with spring collections just before they were forced to shutter their stores?
Re: (Score:2)
Einstein was Jewish.
Re: (Score:2)
Einstein married his cousin.
Also, to really get things going, it was a Jewish person who got the ball rolling with the covid-19 infection in New York. This the same group who had the largest portion of the measles outbreak last year.
Re: (Score:2)
Canada is smart enough to keep Murdoch Media (Fox) out of their country
Respect!
Re: (Score:2)
Funny how many Canadians watch Fox News from the US.
Personally I don't like the idea of a government in the business of excluding content they don't like.
Ideological litmus testing the media by the government seems like a bad idea - perhaps the Canadian media market is not worth going into - as I recall Canada has a Canadian Content requirement.
Pension Plan mistake (Score:2)
Wow. Glad I'm not one of their pensioners.
Re: (Score:2)
How many nerds shop there?
Did they sell computers or electronics?
Are you a nerd? (I'm guessing not, based on this question)
Have you ever considered shopping there, or has it been a recommendation by fellow nerds?
For FUCKS sake, what kind of morons are hanging around a "News for Nerds" forum?
Re: (Score:2)
How many nerds shop there?
Probably not that many. But there's a good chance a lot of nerds' wives, mothers, and grandmothers shopped there.
Re: (Score:2)
How many nerds shop there?
Did they sell computers or electronics?
As a matter of fact yes. Neiman Marcus offered for sale the first computer in history for home use [wikipedia.org].
Re:Everything is in lockdown (Score:4, Insightful)
The rule of politics is that you must FIRST create a problem so you can then campaign against them.
The first step to all problems is to make them bigger than they are and make them look like a nail that you supposedly have a hammer for.
Politicians are professionally paid con artists. They get you to like them as they take from you and give little back.