Pink Slip Nation

Think just because you rent you're safe from all the foreclosure fallout going on around you?  Well, I won't tell you to wipe that smug smile off your face, but I would caution you to keep an eye out for some rental scams going around:

Once popular in the 1970s, tenants are conned into renting an apartment from a fraudlent landlord, only to discover later that the "landlord" doesn't even own the building.

The scam leaves renters homeless and broke as the con artist will get the first and last month's rent in cash, and is gone before the victims realize that their rental agreement was really phony.

Of course you are safe from having your house foreclosed on and all your stuff thrown in the street.  Unless of course, you rent from a landlord who is being foreclosed on.

In an effort to show how much he can relate to the everyday experiences of working Americans, McCain accompanied a mom and her child on a trip down the grocery aisle.  While dodging the present day perils of high prices and reduced volume sizes, they stop to pick up some applesauce in the most awkward grocery store experience I have ever seen.  Seriously, it was worse than if they had stopped to chat it up about Tampax. 

And then the apple sauce attacks him.  But his handlers were there to swoop in and protect the loafers, and remind everyone how completely out of place this man seems in a grocery store.

Imagine if this man is allowed to run the country.

McCant

Well, it may not be the mental recession McCain's camp foolishly touted the other week (and yes, I feel dirty linking to the Washington Times), but an advertising recession is emerging as companies slash marketing budgets to offset losses in sales.  Even the big guys, like Coca Cola and General Motors are making major changes to advertising budgets, which means that concerns over the economy continue to have a widespread effect. 

From the Financial Times:

Advertising weakness is spreading from newspaper and radio groups to the rest of the media and casting a shadow over a year that was supposed to benefit from the Beijing Olympics and a high-spending election season, analysts warn.

The biggest threat to the industry from big advertisers such as car dealers, banks, retailers and airlines, among others, as they tighten their belts.

Larry Haverty, portfolio manager at GAMCO Investors, said: “What we’ve got here is a recession in advertising. It started in local media – radio and newspapers – and is now spreading to TV.”

The latest red flags were reports that Coca-Cola and General Motors planned to target marketing budgets as part of cost-cutting efforts.

What does this mean for the average consumer?  Will we find ourselves suddenly less harassed or will companies make up their budget cuts with SPAM marketing campaigns looking to blanket the Internets?

Unfortunately, an advertising recession may have a larger impact than people might think.  Sure, it will hurt those of us whose paychecks depend, either directly or not, on advertising and media sales.  But it also signals that the economic troubles that started in the housing sector are continuing to trickle out into the larger economy. 

The idea that economic retrenchment in one industry will not affect another has been both naive and incredibly popular over the last two years.  First, residential real estate woes were dismissed in favor of a robust commercial real estate market, with no one seeming to make the connection that most of that increase in occupied office space stemmed from leases to, wait for it, residential real estate related services firms. Next we saw the financial markets rocked by all those securitized mortgage products and bank write downs and the fed having to come in to bail out and piece together deals to prevent large investment firms from tipping the market into a free fall.  Add to that today's announcement that banks are sharply reducing business loans, with the potential for an even wider impact across the economy.

I ran across this article earlier today at my Starbucks, but even with frantic internet searching it proved a bear to track down as no one seems to be talking about this today.  From the International Herald Tribune:

Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.

Two vital forms of credit used by companies — commercial and industrial loans from banks, and short-term "commercial paper" not backed by collateral — collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001.

The scarcity of credit has intensified the strains on the economy by withholding capital from many companies, just as joblessness grows and consumers pull back from spending in the face of high gas prices, plummeting home values and mounting debt.

The drying up of capital for business deals, even for sound businesses, is particularly troubling given concerns over credit card defaults and write downs and actions of firms like American Express to make preemptive moves to cut off business borrowers in troubled industries, even if their businesses are doing well.  And we're not talking about an insignificant hit to the economy:

"The exact words were, 'We're saying no to almost everybody,' " Greenblatt recalled. "This is why God made banks, for this kind of transaction. This is going to slow down the American economy."

Earlier this year, credit extended by banks to companies and consumers was still growing at double-digit rates compared with three months earlier, according to an analysis of Federal Reserve data by Goldman Sachs. By mid-June, bank credit was declining at an annualized pace of more than 6 percent.

That is a drop of nearly $150 billion, an amount much larger than the value of the tax rebates the government has sent to households this year in an effort to spur economic activity.

In all of this, the term "tickle  trickle down economics" comes to mind, only the contagion of economic malaise seems to me a much more cogent model than the bogus economic policy of wealth redistribution it sold.  In fact, in the case of advertising we have seen the local level impact on media trickle up--much like the wealth creation of the past two decades that have been built on productivity gains and the depression of wages.    

Back to advertising, this marked shift in advertising budgets signals that even the big guys are settling in for the long haul.  It also means that the fallout of the reduced services those firms use, in areas such as graphic design,  video production, editing, marketing research, media buying, etc., will prompt further reductions as those companies in turn have to reduce their staffs and spending levels: pushing the economic fallout into more and more industries.  Compound it with the credit crunch coming to corporate America, and we're in for a rough ride.

Flipper Bowl Sink with Subway Tile!

So remember when it seemed you couldn't blink without someone you knew, somewhere, putting in granite counter tops and one of those crazy bowl-shaped sinks?  Well, like all trends, this one seemed to jump the shark when the housing market finally slammed into the cold hard granite of reality.  Now, an article from the NY Times about high levels of radiation being emitted from said granite counter-tops.  Yuppies everywhere are cursing the lemming-like choice of materials they had expensively installed in their showroom kitchens:

SHORTLY before Lynn Sugarman of Teaneck, N.J., bought her summer home in Lake George, N.Y., two years ago, a routine inspection revealed it had elevated levels of radon, a radioactive gas that can cause lung cancer. So she called a radon measurement and mitigation technician to find the source.

“He went from room to room,” said Dr. Sugarman, a pediatrician. But he stopped in his tracks in the kitchen, which had richly grained cream, brown and burgundy granite countertops. His Geiger counter indicated that the granite was emitting radiation at levels 10 times higher than those he had measured elsewhere in the house.

...The granite, it turned out, contained high levels of uranium, which is not only radioactive but releases radon gas as it decays. “The health risk to me and my family was probably small,” Dr. Sugarman said, “but I felt it was an unnecessary risk.”

Thankfully, as one subject of the article so aptly points out, most of these people aren't spending much time in the kitchens anyway.  But that doesn't mean they aren't furious that their conspicuous consumption is threatening to kill them.

And for all you fashionable renters, relax: you can breathe easy as you wipe down that tile and go back to browsing Apartment Therapy.

California faces a looming budget crisis, but the economic trouble is more widespread than previously thought.  Consumer sentiment is turning particularly negative.

From a USA Today article by Justin Ewers

SAN FRANCISCO—An unprecedented sense of economic gloom has begun to settle over the nation's most populous state, according to a poll released in California today, confirming the worst fears of economists, who have been arguing for months about whether the country has entered a recession—and providing a dramatic backdrop to an expanding battle in this state's capital over a months-long budget impasse.

Fully 63 percent of California voters told the Field Poll earlier this month that they were financially worse off than they were a year ago—the first time in nearly 50 years of polling, experts say, that more than half of the respondents to a poll in this state have described their financial outlook so negatively. "These are the lowest measures we've ever seen," says Mark DiCamillo, the poll's director.

The trend line is apparent among the middle class, with even those making over $100,000 expressing a shared sentiment.

What's most surprising about this new poll, though, experts say, is the breadth of today's financial gloom. While nearly 3 in 4 low-income residents, who have been hardest hit by climbing food and gas prices and the ever expanding housing crisis, said they were worse off than last year, a surprising 66 percent of middle-income residents report being in similar financial straits. Almost half of those with household incomes of more than $100,000 agreed.

My friend Jennifer reminds us it's not all doom and gloom these days.  Check out her important post, Proof!  There Are Still Good Eggs In the World, with a link to the the following story from The Breeze about people coming together to help each other out.

While leaving a Torrance bank with an envelope stuffed with several thousand dollars cash in hand, the 70-year-old stumbled, sending 200 or so bills into a strong wind and all over a Sepulveda Boulevard parking lot, he said.

"It was gone in no time," Geier said. "I had flip-flops on and couldn't run that fast."

But almost immediately, about a dozen bystanders rushed to the Rancho Palos Verdes resident - not to pocket the wafting cash, but instead to help Geier retrieve it.

"People ran around and helped collect the money," he said. "They were very good. Kids and blacks and whites - you name it."

On a side note, Pink Slip Nation much prefers that it rain money, not men

Well, it's a start. I wish this book was all I really needed to know, but I think that would be too easy.  Still, if you are looking for a way to begin a conversation between your pocket book and your IRA, and you have no idea how to make "cents" out of any of the mumbo jumbo flashing across the ticker, this is a great introductory book.  

So many of us don't get started with saving and investing because we don't seem to know where to start, but with all that debt piling up out there, we better get smart.

I particularly like the easy, actionable advice Andrew Tobias gives about saving.  In fact, I like his simple steps and easy explanatory manner so much I wouldn't mind building a little more of his wealth by buying the book for some of my friends.

Full disclosure: My dad paid for this copy and gave it to me as a gift, but since he steered my right by introducing me to my favorite financial radio show (Financial Sense) I am a little biased on his judgment right now.  So BUY GOLD!!!!! J/k.  Maybe only if he is paying...

Watch out ladies, the Falafal king himself is on the prowl.  In response to John McCain's confusion over the fact that insurance covers Viagra but not birth control, Billo wants to know if he needs to buy you dinner before he sexually harasses you.  Isn't he a polite young man to ask?