James Howard Kunstler illustrates the connection between imploding debt and imploding rural America. From Kunstler at kunstler.com:
“May God save the country for it is evident the people will not.”
—Millard Fillmore, 13th POTUS, born this day, 1800
France has its Yellow Vests. Here in USA, we have a few poor shlubs hoisting the “Going Out of Business” signs on the highway in front of the K-Mart. The store in my little flyover town in upstate New York announced that it would shutter in March, and the sign-hoisting shlubs appeared out on Route 29 the first Saturday in January, an apt kick-off to a nervous new year. K-Mart’s parent company, Sears, is moving into liquidation, meaning anything that’s not nailed down must be converted into cash to pay off its creditors.
The store’s closing is viewed as both an injury and an insult to the town. There just isn’t anywhere else to buy a long list of ordinary goods, from dish-towels to tennis balls without a 17-mile journey west, which means an hour behind the wheel coming-and-going, plus whatever time you spend picking stuff up inside. And, of course, many people in town feel that this is just another way of Wall Street saying “…you deplorable, pathetic, tapped-out, drug-addled, tattoo-bedizened yokels are not worthy of a K-Mart….”
The K-Mart occupied the better part of a small strip mall at the edge of town, which also boasts a Dollar Store, which appears to sell stuff that fell off a truck. There’s another, newer strip mall beyond it with a supermarket, a drug store, and a Tractor Supply outlet that probably stole a lot of K-Mart’s business after opening a few years ago. There’s much speculation about what’ll go into Kmart’s soon-to-be vacant space, about 80,000 square feet of crappy tilt-up construction not far from the end of its design life, with a flat roof that has groaned under heavy snow loads for four decades. Nobody I talked to has a clue.
Probably not Neiman Marcus, for starters. I’m thinking: maybe an evangelical roller rink. It’s too big for a wig shop, or a motorcycle thug-wear boutique, the usual bottom-feeders in the declension of commercial collapse. More likely, nothing will replace it. The national chain retail model has fallen apart, along with new car sales. Something is up in this foundering land, despite all the heraldic trumpet blasts on cable news about the “booming economy.”
What’s up is the international implosion of the bad debt, and the fading illusion that it doesn’t matter. It has any number of ways to express itself, from store closings, to dissolving pensions, to stock market instability, to divorce, homelessness, and war. It’s what you get from a hyper-financialized economy that doesn’t really produce wealth but only steals it from somewhere else. It’s not the fault of “capitalism,” which, in theory just stands for the management of a society’s savings. America doesn’t save, it borrows. Zero interest rates made savings a mug’s game, and zero interest rates were necessary to extend the borrowing far beyond the credible boundaries of repayment. Debt isn’t capital, it just pretends to be for a period of time. Wall Street made its trillions off the time-value of that pretense and now time is up.
Even in the hardship economy we’re sailing into, people will need to buy and sell things and it is very hard to see how that fundamental process of exchange might be reorganized going forward. Back in the 1990s I attended many a town meeting (in many towns) where chain stores applied for permits to set-up operations. It was often contentious. There was always a contingent of locals — organized by the chains themselves — waving placards that said “We Want Bargain Shopping.” And there were the short-sighted town officials drooling over the real estate tax “ratables” that chain stores represented. Their adversaries feared that their locally-owned Main Street businesses would be killed, and that was exactly what happened, in very short order. You could see it coming from a thousand miles away. Now the Big Boxes are going down. Boo Hoo….
What will emerge out of the current disorder? Perhaps Generations X-Y-and-Z will recognize an opportunity to go into business — as an alternative to purchasing a degree in gender studies for $200,000 (at 6 percent interest). There will be lots of opportunities, even in a world with generally less shopping. But it may require a deeper collapse to sweep away the impediments, both practical and mental, before that awareness turns to action.