Britney Spears, Facebook, Twitter and the Post Consumer World.

The July 24th Issue of USA Today Money page B1 had three interesting articles that are best read together. I will take the editorial license to combine them here. In Rally pits optimists vs pessimists the core argument was that the optimists see companies making profits by slashing costs as proof that the economy is recovering. If your revenue is going in the tank and you can increase profits continuously the argument goes, you can make lots of profits on no work. (Sort of like the mortgage industry was for a while) The optimists were gloating that the pessimists were "missing out on gains"

The second article was about the Candies ads with Brittany Spears that were not released on TV but were first introduced on "Facebook" and "BritneySpears.com", as well as to Britney's 2.5 M Twitter "followers" (as they are called) Isn't that what hey called Jim Jones disciples?

See this full article in USA today Back-to-school Pitches go social

Hidden in this article was a gem. Back-to-school spending is expected to be down 7.7% this year. That means your teenage daughter will still get the $199 Bebe jeans, but she just might have to cut down on her designer cosmetics to the tune of about $50. Or god forbid, have to wear something twice. My prediction, lots more teenage crime to get the stuff that they can't live without. Keep your eyes out on that trend.

A 7.7% decrease doesn't sound like much (I think it will be more) but it comes on top of last year's falls and precedes next year's fall in consumer spending. Something will have to fill that consumer need gap for our teenage and pre-teen children. I don't know what it is, but I sure am trying to figure it out.

On another note, in the same article Forrester Research predicts social networking advertising to children will rise from a paltry $455M in 2008 to $3.1Billion in 2014. That's a big bet, and predictably that's a necessary one for consumer products makers who are facing a real decline in available cash for discretionary consumer spending.

All things considered with education costs and health care and other non-discretionary costs rising and wages falling, discretionary spending for students will be heading south for a long long time.

The last of page 1B articles was about the increase of the minimum wage to $7.25. That news should be a counter to post-consumerism. More money for the masses to spend on stuff they don't need! Alas! a good portion of that article was about reduced hours for most minimum wage earners. they have more time on there hands and less cash to spend.

So this is what we should read. Page B1 in one run-on sentence.

The optimists think we can get back on track by cutting costs to zero to increase profits, marketers think we need to spend eight times as much on Facebook and Twitter to chase 7.7% less spending and the minimum wage is rising while wages are falling.

Sounds like a post consumer alert.

The Effluence of Affluence.

From The WiseGeek

According to the Environmental Protection Agency, the average American produces about 4.4 pounds (2 kg) of garbage a day, or a total of 29 pounds (13 kg) per week and 1,600 pounds (726 kg) a year. This only takes into consideration the average household member and does not count industrial waste or commercial trash.

If this sounds like a staggering number, you would be surprised to know that Americans are not the number one producers of garbage in the world. In Mexico, the average household produces 30 percent more garbage than in America.

http://www.wisegeek.com/how-much-garbage-does-a-person-create-in-one-year.htm

I think the reason that Mexico has more waste than we do is that they get almost all of our junk that doesn't end up endlessly recycled through "garage sales". The ultimate resolution of Reagan era "trickle down " economics.

My search for "garage sales" on Bing resulted in 30,7000,000 hits. Searching "yard sales" added another 20,600,000. There are approximately 110,000,000 households in the United Sates, then for every 2.05 household in the U.S. there is one "garage sale" or "yard sale" website.

One of the more interesting hits was the Henrik Bering review called "Royal Yard Sale" of The Sale of the Late King's Goods: Charles I and His Art Collection by Jerry Brotton.

The book and review describe the disposition of the art collection of Charles 1 of England. Who, it appears, acquired a lot of his work at a variety of distressed "yard sales" of his fellow monarchs.

When Charles fell on "hard times" he fell hard, culminating with his revolt against Parliament and his beheading on January 29, 1649. Parliament decided to pay for some important things with Charles art so the first recorded Anglo-Saxon yard sale took place. (I am sure there were earlier prototype but this is a good one)

• The sale commenced in October 1649. Things did not get off to a great start. By releasing enormous quantities of art all at once, they flooded the market. Some former royalists were naturally hesitant about the idea of buying their late king's possessions, while Puritans were not supposed to harbor such aesthetic desires. This did not prevent three enterprising colonels, acting on behalf of international buyers, from making excellent buys, snatching up some of the best pieces. Others just sat back and waited for prices to fall............ The sale petered out when Oliver Cromwell was installed as Lord Protector of the Commonwealth of England, Scotland, and Ireland in 1653. Cromwell was no fool. .......

http://www.hoover.org/publications/policyreview/4884421.html

The royal yard sale netted $26,500 pound (1649) a large sum but my guess is the appreciated value of some for this art in 350 years is staggering.

Another interesting hit was the Interior Design Institute of British Columbia they held a garage sale on June 20, 2009 http://www.salari.com/node/296. it was to benefit "Habitat for Humanity", but the idea struck me as interesting and I bet there were some very chic and over priced tchochkes on the tables.

I couldn't find any "institute", "organization" or other national or international agency for "garage sales" . The closest thing would be eBay but that's on-line and not "live performance" so there is a window of opportunity for a wise Post Consumerism Blog follower.

Another item I think deeply about, could we pay off the national debt by collecting taxes on garage sales. Would we tax the sale price or the "value price. (more on that later) I am not alone here

At a recent Longmont (Colorado) City Council meeting, councilwoman Sarah Levison was so concerned a local estate sale was not collecting sales tax that she called authorities to "go out there and figure out what was going on."

Levison voiced her concerns during a Tuesday's City Council meeting, which was exposed on the Longmont Advocate blog written by local activist Chris Rodriguez.

The councilwoman's words say it all.

"I noticed that they were not collecting taxes for the city of Longmont," said Levison. "I wonder if there is any system to check on when there are professionally run estate sales to ensure that we are collecting taxes. I hate to think that we might have lost several hundred dollars of tax income that day. I'm also wondering whether or not we could connect with the state to find out if they reported the amount of state sales tax and if we could go back and try to collect it. We need every dime we can get these
days."

http://facethestate.com/buzz/17184-longmonts-levison-digs-deep-tax-revenue

In my neck of the summer woods, in the Pacific Northwest we hold a 28 mile long Memorial Day wekend community garage sale. Lets say 5% of the community takes part or 150 homes. If each sale nets $1,000 and the tax rate is 8% that's $12K lost sales tax to the state.

If there are 110,000,000 home in the United States and 5% have annual garage sales that's 5.5 M homes times $80 tax or $440,000,000 lost revenue. Not enough to make a dent in our problem, but it's still spending money for government.

Back to the sale price or the value price issue.

Neither I, nor my wife, are garage or yard sales shoppers. We do buy most of our clothing and shoes on-line from trusted discount retailers with attractive return polices, like free shipping of return items. My wife sometimes orders two sizes and then returns ones that don't fit. She also likes to shop at second hand stores, and we both shop at the discount clothiers, but we don't normally do yard sales.

That said, I had decided to punish myself this summer (a very early American idea) after getting a $268 speeding ticket, by forgoing a new gas barbeque grill.

Our charcoal grill of 20 plus years is still hale and hardy due to an obvious manufacturing defect that made the steel too thick, to either rust out or burn through.

The other night, we were talking to our neighbors, who are wonderful and frugal folks. Amoung their recent yard sales purchases were two motor scooters with 160 kilometers on them, helmets included for $1000 (for both). Retail sale new about $2200. We were impressed. We mentioned that we might be buying a gas grill at a yard sale deferred until "next summer" due to my punishment.

A few days later they stopped by to say a yard sale down the street had a decent grill for $20 with a tank. Tanks retail for about $33 (plus tax) at your local home and yard store, so the grill was actually thrown in for free. I went down a few blocks and the price had been reduced to $15 and the tank was at least half full and the igniter still worked. The retail for this grill and tank is about $135 plus sales tax. My price at yard sale is about a 90% discount. I did have to power wash it though.

I must have the bug, but I will be careful. Saturday I was dropping my considerably less than 29 lbs of weekly garbage off at our compactor/transfer station and spied a really dirty outdoor chair in the "Freebie" area. Upon closer observation it was completely coated with dirt that a good power washing would resolve. Now I am the proud owner of a $15 lawn chair, perfectly good and clean.

My question is should I list this as income on my federal tax returns next year?

The BIGGEST POTLACH of all time.

Poltach is a ceremony or a series of ceremonies from Pacific Northwest Indigenous Peoples . During the ceremonial gathering, a family or hereditary leader hosts guests in his family's house and holds a feast for invited guests. The main purpose of the potlatch is the re-distribution and reciprocity of wealth.The host and his relatives lavishly distribute gifts to guests, who were expected to accept any gifts offered with the understanding that at a future time they were to reciprocate in kind.

Items ready for Potlach in the 1880's

Potlatching was made illegal in Canada in 1885 and the United States in the late nineteenth century, largely at the urging of missionaries and government agents who considered it "a worse than useless custom" that was seen as wasteful, unproductive which was not part of "civilized" values. The US ban was lifted in 1951, which means it was still going on underground well into the second half of the last century.

Potlach is still practiced by indigenous peoples today, as well as by registered Lobbyists and Congressional staffers. The Potlachs are planned in Washington DC and held at a variety of resorts worldwide.

If it was illegal due to morality issues, why did the United States just engage in the granddaddy of all Potlach. During the great depression we redistributed wealth to the poor, in the 2008/09 US Potlach wealth has been redistributed from the poor to the wealthiest corporations (shareholders and executives) on earth.

I recently heard a news report (unverified) that my portion of the Potlach to Citi Bank and others was $10,000. The politician, making the report, asked if I felt wealthier because of this redistribution of my wealth. My answer was, of course I don't, but the bankers probably think so.

A traditional Potlach between rival groups might involve extravagant or competitive giving and destruction, by the host, of valued items as a display of superior wealth. He who burns the most stuff must be the richest and most powerful. Based on that, the executives at Chrysler,GM, AIG, BofA, CitiGroup etc. must be pretty powerful to burn the wealth of a generation. Lets see, if AIG burned $80B of our wealth and GM burnt only $18B which of these executives should get the highest status?

If we follow the rules of Potlach to the absurd, AIG executives should have a higher status in the world than US Senators and the president (leader) of at least 150 countries in the United Nations.
Under the rules of Potlach is Bernie Madoff being unjustly incarcerated instead of feted?

One of the unstated rules of Potlach is that the receiver was bound to reciprocate in the gifting. Do you think Obama expects that GM will be delivering my gift car to my doorstep any time soon?

The potlatch ceremony involved dancing, feasting, and ritual boasting, often lasting for several days. This sounds a lot like the Congressional hearings on the "stimulus package, but I would go more for singing and dancing, drinking and eating.

The New Potlach for the United States.

My suggestion to congress: declare a new Potlach Day, May 30th, (for good weather most places).

Citizens are obliged to go outside singing and dancing in the streets. We can leave the ritual boasting to the President and the appointed loyal opposition spokesperson of the day.

The federal government feeds us all the surplus food they have stored up in silos. Lots of dried dairy products I'd bet.

At midnight every street has a big fire and we ritualistically burn all our clothing, furniture and electronics and smash our cars so that on June 1st we have to go out and buy new stuff with our credit, thus readying ourselves for next years Potlach Day.

Now that sounds like a fun governmental program, and also a way to avoid living in any kind of post consumer world.

Why we are enterring the post consumer economy.

This blog will be dedicated to musings (factual or fantastic) about why I believe we are entering a new "post consumer" economy and what it might look like.

I will post weekly, but just in the last few days the web has begun to sprout a considerable volume of "post consumerism" rhetoric (748,000,000 Google Hits) so maybe we will have more to say more often.

Why is the capitalist/consumer economy destined to change from a consumer product based system? and what will the replacement system look like?

The simple answers are: WE HAVE LOTS LESS MONEY TO BUY STUFF WITH, as to what the economy might look like, that's the subject for future postings.

I revisited the George Carlin monologue on "stuff" and its more relevant today than it was 25 years ago. To get into the correct mood for the new "post stuff economy" its worth re watching the master in his prime on YouTube. George Carlin on Stuff http://www.youtube.com/watch?v=MvgN5gCuLac




MY PERSPECTIVE

Beyond the issue of massive price losses in 401K's and home equity for individuals, and beyond the falling consumer outlook numbers, and beyond the real un and underemployment rates of 16-20+%. Two things strike me as essential data that supports a fundamental change in how our economy will work in the near and mid term future.

1. The historical pricing for housing suggests that housing prices will return to the norm after dropping below the norm. (Many of you have seen this Case-Shiller Chart . Oh! gosh this chart is a little misstated. If you look at the ups and downs the pricing needs to fall way below the average before it seeks steady state. The graphic developer kind of tapered the final dotted line out at the norm. That's not how a pattern would be repeated. To repeat the pattern you need to see a significant drop below the norm before it spikes up again, so read it and weep or worse. I think the worst is yet to come).











My guess, at least another 40% DROP IN THE PRICE of a single family home price, which will mean a lot more foreclosures based on the following WSJ article. This will bear out if the banks push the mortgage rates to 10% or above to improve their interest spread positions. Monthly mortgage costs will have the effect of pushing the cost of the houses down. Exactly the opposite effect that we have seen over the last 15 years as mortgage rates fell housing prices rose.

• New Evidence on the Foreclosure Crisis by Stan Lieboiwtz.....What is really behind the mushrooming rate of mortgage foreclosures since 2007? The evidence from a huge national database containing millions of individual loans strongly suggests that the single most important factor is whether the homeowner has negative equity in a house -- that is, the balance of the mortgage is greater than the value of the house. This means that most government policies being discussed to remedy woes in the housing market are misdirected.....
  
  From The Wall Street Journal http://online.wsj.com/article/SB124657539489189043.html

I have to admit that of the three homes I live in, I own two and the bank and I own one. The shared ownership one is upside down for both me and the bank, but I like it, and the mortgage is still bearable. I got one of the last pesky interest only ones based on LIBOR (which I knew was a lie in my favor) before the mortgage system collapse. However, that mortgage doesn't reset for four more years and we will be in the new "post consumer" world by then, and I can wait a little while to predict what that will mean to me. (See future posts)

2. The financial industry is squeezing credit and trying to increase the net interest spread between their cost of money and the price that they sell that money. In 2008 financial institutions have significantly cut consumer credit card limits. Financial instituions will continue to cut consumer credit limits., and raise interst rates.

Bloomberg.Com reported in March that credit card companies will cut $2 Trillion in consumer credit in the next eighteen months. http://www.bloomberg.com/apps/news?pid=20601087&sid=adCwmmkzFI3U

That's $2 Trillion less in "stuff' Americans and Europeans will be buying from around the world. If you adjust that for some cycling of funds, say 6 times a year or $12 TRILLION NOT SPENT on "stuff" in the consumer market.

What will this amount of spending be replaced with in the "post consumer" economy?

My guess we will have much smaller private consumer product buying and selling , and more public sector buying and selling. We might also see some of that "green energy" development for our investment of the money we will save by not buying "stuff".

The folks down the street won't be getting a swimming pool,. but they will be pushing City Hall to build one for the community.

We won't be buying new GMs Fords or Chrylsers, but pushing City Hall for more mass transit, or maybe keeping that clunker running a bit longer by using it less.

We won't be working overtime for more cash to buy stuff, but we will be pushing our employers (who are cutting wages and benefits) to cut back our work weeks or at least let some of us work at home or bundle our hours into fewer days of commuting.

We won't be buying more wasteful big plasma screen TV's and we won't be wasting more electricity in our homes, but we might by that "big ticket" photovoltaic system (PV) for our roof or wind turbine for our backyard. (I did.)

This is the first post and in future posts I will be covering things like.


Everything the bankers and economist's think they know about the recovery is wrong.
The definition of Potlach.
Who will be the new captains of industry in the post consumer economy?
The "Slow Money" movement.
Everything we do becomes local.
The resurgence of brands that don't change their look every time the wind blows.
Products for the "post consumer" economy.
Service industry for the "post consumer" economy .
Higher education in the "post consumer" economy.
Careers for the "post consumer" economy.
Living the good life in the "post consumer" economy (for some of us).

And anything that is suggested or comes up.