Wednesday, September 22, 2010

Has Walmart replaced the bread line?

I've seen Walmart's CEO make comments before on the timing of certain spending around the first of the month but it seems like it is a trend that continues to accelerate.

Courtesy of Bloomberg...

"You need not go farther than one of our stores on midnight at the end of the month. And it's real interesting to watch, about 11 p.m. customers start to come in and shop, fill their grocery basket with basic items – baby formula, milk, bread, eggs – and continue to shop and mill about the store until midnight when government electronic benefits cards get activated, and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher."

I'd be really interested to see this in action but there are only about 425,873 other places I'd rather be than at a Walmart at midnight.

As we get ready for another volatile political season I found Tom Friedman's piece in the NY Times today to be spot on.

"For the U.S. visitor, the comparisons start from the moment one departs Beijing’s South Station, a giant space-age building, and boards the bullet train to Tianjin. It takes just 25 minutes to make the 75-mile trip. In Tianjin, one arrives at another ultramodern train station — where, unlike New York City’s Pennsylvania Station, all the escalators actually work. From there, you drive to the Tianjin Meijiang Convention Center, a building so gigantic and well appointed that if it were in Washington, D.C., it would be a tourist site. Your hosts inform you: “It was built in nine months.”

In deliberately spotlighting China’s impressive growth engine, I am hoping to light a spark under America.

Studying China’s ability to invest for the future doesn’t make me feel we have the wrong system. It makes me feel that we are abusing our right system. There is absolutely no reason our democracy should not be able to generate the kind of focus, legitimacy, unity and stick-to-it-iveness to do big things — democratically — that China does autocratically. We’ve done it before. But we’re not doing it now because too many of our poll-driven, toxically partisan, cable-TV-addicted, money-corrupted political class are more interested in what keeps them in power than what would again make America powerful, more interested in defeating each other than saving the country."

From rebuilding at Ground Zero to updating our infrastructure we seem to be stuck in the mud while China races past us. Can we find any politicians with the backbone to make the hard choices for our country?

Speaking of hard choices, the nations pension plans still seem to have their heads stuck in the sand. Over the past ten years the US stock market is flat, treasury yields are next to nothing but pension funds continue to assume that they will earn 8% a year for the foreseeable future which is identical to their assumption back in 2001.

(To NY State's credit we were one of the first states to lower our assumptions but we only dropped it from 8% to 7.5%)

Why do these assumptions matter? "The Colorado Public Employees Retirement Association showed in its 2009 financial report the impact of reducing the rate. Using a 8% expected return rate, the plan faced a $23.4 billion deficit, based on market values, at the end of 2009. If the rate was cut to 6.5%, the shortfall would jump to $34 billion."

That's a 45% INCREASE in the pension shortfall based on cutting the rate of return by just 150 basis points.

Guess who gets to make up the difference? Joe and Jane taxpayer.

India seems to be having a bit of a problem of their own when it comes to developing infrastructure to support athletes coming to the Commonwealth Games as soon as latter this week. With the athletes en route only 18 of the 34 buildings in the Athlete's Village are complete.

Yesterday, some representatives of attending countries said that the condition of the Athlete's Village was not suitable and various athletes have begun to pull out of the games. It will be interesting to see how this shapes up.

Happy Fall!

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