This from Taipan Daily:

We came, we saw, we ate too damn much.

(One of these days, I’ll ask my oldest daughter to translate that into Latin for me. She never did master the more common romance languages. But she’s the family whiz at Cicero and Caesar.)

The second phase of the “Great Annual Pig Out” (the first being the candy-fueled grotesquery that has swallowed All Hallows’ Eve and the third, the week-long debauchery that is Chanukah-Christmas-New Years) is now officially over and done with.

Under our belts, as it were.

We drove, we flew, heck, those who couldn’t avoid it might even have walked. We did the family thing – hugged some, shook hands with others, shuddered to myself at my nephew’s newest facial piercing, caught up on the details of each other’s lives (read as “gossiped”) and counted our blessings.

Then I napped.

The Best of Intentions

The plan was to glue myself to the couch till Sunday with a stack of good books, interrupted only by a brief descent to my home office for an hour or two to knock out this missive. And then: football on the widescreen!

But even the best-laid plans are oft put astray. On Thursday evening, my wife informed me that the malls would have all sorts of Black Friday sales on, and we ought to plan on being there for most of the day.

Oh the horror!

Putting a Sock in it

But I fooled them all, heh, heh, heh! (Evil laughter.) I set the alarm for five in the morning, and hit a single store, an off-the-beaten-track shoe store, for a single ½ price pair of boating moccasins. And some socks.

I was home enjoying a hot cup of coffee before the rest of my horde was even out of bed.

I share these hoary details with you for a reason. While I for one am most thankful I missed them, I don’t doubt that there were sizable crowds at our nation’s malls and shopping centers this weekend.

As I peruse the wire reports, I note that one particularly unruly throng actually destroyed the doors and killed the greeter at a Nassau County Wal-Mart, when he did not clear the entranceway swiftly enough. Shades of the “running of the bulls!”

The Gorillas of Retail Get Shaved

However excitable the crowds were on Black Friday, what they craved most was not quality or even quantity. It was discounts on a relatively small number of cheap gifts.

Initial word from such 800lb retail gorillas as Macy’s, KB Toys, Best Buy and Toys R Us note that while the crowds comparable to previous years, actual sales are nowhere near par. It seems that folks are actually doing pretty much the same as I did: buying only what they absolutely must, and at marked discounts to boot.

Interviewed shoppers are reporting that they have cut the size of their lists by some 15%. The larger (read as “profitable”) purchases, like TVs, PCs, et al. are languishing on shelves, as shoppers ponder instead just what color socks Junior likes best and whether Mom would settle for a new toaster.

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“No Bonus” For You (And That’s the Good News!)

There is certainly no mystery as to what’s holding shoppers back. Pollees all mention the same sordid reasons: unsafe jobs figured high on the lists, and even those who were relatively sure of continued employment were still coming up short on the monthly bills. Gas may have suddenly dipped have under two bucks, but five odd years of sky-high costs have still pushed the average family’s till to dangerously low levels.

Add a paltry Black Friday to the reports of October’s 1% drop in retail sales, and we are looking at a black season for retailers.

As I sit to write, the usual purveyors of dream stuff are trying spin “Cyber Monday” as the trade’s new savings grace. “It’s not that folks don’t want to spend, it’s just that they are too gorged on turkey to go out!”

This fantasy is being put over by the same shysters who claimed back in 2001 that “Gift Card Day” would be the savior of that year’s dismal numbers. Wasn’t true then and it won’t be true this year either.

Printing Their Way to the Next Bubble

I don’t doubt that those masters of the printing press in Washington will eventually succeed in creating the appearance of success. Forget about the Treasury’s beleaguered “TARP” program. All that talk of $25 billion or $50 billion for Detroit? Chump change.

Current figures out of the Fed (released on Black Friday no less! Who says that these guys have no sense of history, irony – or shame) have commercial banks borrowing some $93.6 billion per day, up from $91.6 billion per day the week before. Investment firms have also increased their borrowing from the Fed’s emergency loan program from $50.2 billion to an average of $52.4 billion a day.

And yet precious few of them have been convinced that they should in turn lend any of our capital (yes, it is our money after all) to anyone. They claim they are just too nervous that borrowers would not be able to pay them back.

Not to worry: The President-elect’s team is talking about printing and “lending” even more, and forcing the banks to lend it in turn to Washington’s “borrowers of choice.”

Retail Runs Out of Time and Money

Eventually, Washington will succeed in forcing the economy and markets into a semblance of life. Companies will appear to make a profit. Stocks will appear to go up (for a while anyway). And traders who can stand the stench will make profits off this farce.

But not retail. At least not this year. There simply isn’t enough time for Washington’s “free money” to trickle down to these bottom feeders. It’s still an easy short-side candidate. In fact, every time the dream spinners try to foist their shoddy lies on us, they become an even sweeter short candidate.

You can use the money to buy the kids some socks.

Source: Black Friday Crowds into the Red

As you likely know, my major theme for 2008 is bailouts . So far, so bad. I think the boys at the non-Federal non-Reserve have been hitting the peyote. Everything can be patched up by simply issuing more tonnages of green paper. Especially if you claim a bit of blue blood.

It wasn’t too long ago that Japan’s bubble burst from their 1980’s excesses. Remember when fear was rampant that the rich Japanese were going to buy up the world? Remember when their real estate was chokingly overpriced?

Quite predictably, the Bank of Japan responded to the bust by lowering interest rates in the early 1990’s. As you can see in the following chart they even held them at 0% throughout much of this decade.

Deflation tends to scare the fully loaded crap out of central planners. Even negative interest rates are possible. The motto is “please borrow and spend!” Otherwise, the whole system gets flushed.

This didn’t sit too well with traditional Japanese. They are thrifty savers. They tend to function just fine without Suburbans, spa treatments and vacation homes. You can make cheap or free money available but someone has to accept the loan. The Japanese didn’t take the bait.

A two-decade long deflation was the result. The Bank of Japan was completely impotent in their attempts to re-inflate and get the Japanese economy back on track.

Now it’s the US’s turn to stave off deflation. Sequential bubbles of tech stocks and real estate have seriously damaged the economy. By the way, the Fed caused these bubbles in the first place. They are now attempting to create a new credit expansion. They are a one trick pony. There is no Paul Volker and no dollar rescuing rate increases in sight.

US interest rates are now trending towards zippo. Is a 0% Fed Funds rate in the cards? I wouldn’t rule it out. Speculators are frothing at the mouth in anticipation of free funding.

Low interest rates are not what wring out excesses. Low interest rates are designed to keep the NY financial orgy going. Party on, Garth!

They still haven’t worked in the Japanese culture. Japan has yet to recover in a significant way. Will Americans take the low interest rate bait?

“Oh, hell yes, Baby, bring em on! You talkin’ free money? That’s a good thang, no?”

The US culture is saturated with the motive of instant gratification. Don’t expect many to turn up their noses at the Fed’s desperate offers. We will borrow and we will spend. There will be no lost decades around here.

In fact, I predict that a major trend will take place in the US real estate market in the coming decades. The reverse mortgage phenomenon will become a craze. My fellow Boomers will try to time their last breaths with their last home dividends. Is Doc Kervorkian still in business?

Invest Resourcefully,

Rusty

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