Friday, November 28, 2008

Black Friday Prelude to Gloomy January

What has become a new tradition in America, Black Friday, was celebrated today with predictions of the worst Holiday Shopping Season in years which is too optimistic. On the first day of the unofficial beginning of the Holiday Shopping Season shoppers were greeted with steep discounts on selected merchandise. Retailers desperate for cash after some very dismal months are willing to cast their inventories to the wind at any price even if their margins turn negative just to generate some cash during this crucial shopping season. The frugal shopper will be served by waiting till the end of this Holiday Season to really capture the best prices. As the end of the Holiday Shopping Season nears an end retailers will be panicking to remove inventory from their selves and will drastically mark down prices to bank as much cash as possible during this shopping season.

With consumers still reeling from high energy prices that are just beginning to wane and feeling the pinch of deflated housing prices causing them to loose a vital source of accessible credit, and with the average consumer carrying an unplayable burden of debt, retailers will see the bargain orientated shopper in over thirty years. Many retailers are just looking to dump as much inventory as they can before the inevitable filing of Bankruptcy in January. Because of the worst retail year in decades and a dismal outlook for the year end Holiday surge, retailers will closing their doors in record numbers in the first quarter of 2009 which will put pressure on the already fragile Commercial Mortgage obligations currently held by already distressed Financial, Insurance and Real Estate Investment Trusts. With the closing of tens of thousands of retail outlets in 2009 the Real Estate Holding Companies will be hard pressed to maintain their mortgage payments with such an extraordinary amount of vacant space. Will the Federal Government be willing to fund another round of bailouts for banks collapsing under the weight of Commercial Real Estate Mortgage defaults. Will they even have the ability to cope with another round of bailouts of the banks?

The exorbitant amount of retail closures will lead to a quick jump in unemployment followed by large numbers of the recently unemployed joining in with the long term unemployed in failing to meet their unsecured debt obligations. As consumer credit card defaults mount more pressure will be put on the already stressed financial institutions. The new Administration appears to be preparing for the financial problems that are clear today, are they also preparing for the next couple of waves of financial obligations that will go into default. The Commercial Real Estate Mortgages represent a phenomenal number, but the 14 Trillion Dollars of unsecured Credit Card Debt currently carried by the American Card Holders may be the final insurmountable number that the Treasury and the Federal Reserve will not be able to deal with.

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