"Actively managing our portfolio of assets" - bloodless financial jargon of the Hidden Depression

The prepper side of my personality has always taken a somewhat abstract view of future catastrophe. I use the phrase "the zombie apocalypse" as shorthand for any of the "black swan" events that could unexpectedly hit us with hard or even catastrophic times. And my catch phrase description of those potential hard times that I use in conversation with my neighbors is "when the Walmart trucks stop running." By this I mean any economic or social disruption that interrupts the smooth function of the complex supply chains upon which most of us rely.

So that's my prepper tendencies talking. Then there's my "amateur economist" tendencies. I watch the news, I read stuff, I talk to people, and I think about what little I know. My brain wants to synthesize. And the synthesis it keeps coming up with is the niggling belief that this "unprecedented long recovery" after the financial crisis of 2008 is ... well ... a big fat lie.

There are some rich people in some big cities who are doing really damned well. It's inflating-bubble party time for them. But out here in the real world, things got tight in 2008, and for everybody I know, they never eased up. Consensus of my social circle is that shit got bad and then just kept (slowly) getting worse. When I read stuff online, I hear the same thing. When I talk to family members who inhabit very different circles and talk to a complete different set of people, they tell me the same thing. Out here in the real word, it's been a long LONG recession and there's no light showing in the tunnel yet.

A year ago, Walmart opened a Walmart Market in my little town. It kinda sucks but it was a substantial economic boon to my family; just by cutting out all of the "drive twenty miles to buy three items" errands, the financial savings in gasoline alone was very noticeable. (The same result could have been achieved with a bit of shopping discipline, but that's not a factor under my control, nor -- when eldercare and dementia are factored in -- was it completely within anyone else's, either.)

Now, about that long recession (which I am sometimes tempted to call "The Hidden Depression"): remember that the official statistics assure us it's no such thing. Indeed, in official terms we are "enjoying" an economic recovery boom of historic duration and extent. Only, nobody I know and nobody I can find on the Internet can feel it or taste it. Instead, everybody has less employment, less money, and less quality of life.

That brings me to today's news about Walmart closing 269 stores and laying off up to 16,000 workers. It just so happens that they opened six small-town "Neighborhood Market" stores in Oklahoma last year, and all six of them are included in today's closing news, including the one in my little town. This one will be closing exactly one year after it opened.

The New York Times attributes the closures somewhat vaguely to "turmoil" in retail generally:

The closures underscore the turmoil faced by brick-and-mortar retail across a variety of fronts. Web merchants are gobbling up a growing share of shopping dollars, their vast online catalogs rendering Walmart’s sprawling superstores increasingly less relevant. And consumers are spending less on traditional retail items like apparel.

According to one estimate, Amazon accounted for almost a quarter of all retail sales growth last year. Other retail stalwarts, including Macy’s, Sears and J. C. Penney, are also shuttering stores after a weak holiday sales season.

“Closing stores is never an easy decision, but it is necessary to keep the company strong and positioned for the future,” Doug McMillon, Walmart’s president and chief executive, said in a statement.

Walmart's own press release calls it a "sharpened focus on portfolio management" and continues on in the bloodless language of high finance:

In October 2015, the company said an active review of the portfolio was underway to ensure assets were aligned with strategy. Today’s action follows a thorough review of Walmart’s nearly 11,600 worldwide stores that took into account a number of factors, including financial performance as well as strategic alignment with long-term plans.

“Actively managing our portfolio of assets is essential to maintaining a healthy business,” said Doug McMillon, president and CEO, Wal-Mart Stores, Inc.

In my dark imaginings, some future black swan mishap might someday have disrupted the international supply chain or its underlying economics, with the result that the Walmart trucks suddenly or gradually stopped running. What I did not imagine is that a stealth depression would just get my local store "actively managed" out of existence.

It's a vision I did not foresee: The trucks don't stop running entirely, they just stop coming to your town.

And then the next town over. And then the town after that.

Planting vegetables. Yes. Now I remember why that seemed like a good idea. I guess I should "sharpen my focus" on that...

Dan,
I'm definitely not saying you're wrong, but the experience here in Michigan has been different.

We had it the worst (arguably) in the recession. Our industry, which is made up largely of manufacturing, is always subject to layoffs, having diligently worked toward a model of interchangeable workers for so long. So when it was time to lay off so many people, boy did they ever get laid off. (And their houses foreclosured, etc.)

I have an indelible image of the recession that sums up 2009 in the Rust Belt: I drove by a convenience store on a two-lane highway, a little building fifty years old and kind of dingy, with the big signs in the window giving you the price for Budweiser and Miller Lite... and a little red sign in the lower corner, they had taken the time to have a sign company make this, not just handwritten, this little red sign said, "NO APPLICATIONS NEEDED."

No applications needed. Not just the absence of "help wanted" signs (although they were sure as hell absent), but the job situation was bad enough that somebody felt it worth his time and money to get a sign that said, "leave me alone, you stupid job seekers."



So that was the recession in Michigan.

Fast forward to 2015. People are building houses, "help wanted" signs are in windows, the word on the street is somewhat cheerful. Here, at least, it looks to me like life for the average Joe changed and changed back again.

Now, this is just the perspective of one guy, but I'd say things have shaken out differently here than where you are.

But am I still going to try to be resilient against disasters of all scales from individual to national? Yes of course I am.

Thanks, Mike!

Upon re-reading my post in the cool grey light of dawn, I don't have trouble spotting bits of hyperbole and overstatement, which in a spirit of true confession I could perhaps blame on too much crab apple liqueur last night.

But what I take most from your response is the reminder of just how regionally disparate this country is. Here in Oklahoma the oil industry is a big employer, and that softened the "bust" in 2008 and is now, with low oil prices, eroding the benefits of the alleged recovery. Most of my contacts are here or in the west or in the south; the northeast and the genuine rust belt are no doubt underrepresented in my conversational circles. The result may be that where you are, the bust was a lot harder and the recovery (such as it is) consequently more noticeable.

I'm glad to hear that life is now visibly better in your parts than it was after the crunch. I am curious if, from where you sit, the gains look good compared to what life was like in 2006/2007? Or does it only look improved compared to 2009? I do hear lots of people in various places saying "yeah, it's finally a little better now, but still worse than it was before..." And some of that is probably the natural human tendency to romanticize the past, so it's hard to evaluate.

Around here, there are a lot of people who were solidly employed in 2007 who just aren't in the statistics any more. They're sitting in a trailer somewhere on family land, can't get a job, making do on a tiny check from somewhere or SNAP or the proceeds of day labor or buying and selling garage sale crap on some local Facebook group. They're not desperate exactly, because it's so cheap to live out in the country around here; but their lives are pretty squalid and the kinds of jobs they used to do just don't seem to exist any more and they don't seem to have the youth or health or mental resilience to retool themselves to get back into the fully-employed economy. The trends around here don't look at all positive for that rather substantial chunk of the "workforce".

Dan Boone wrote: They're sitting in a trailer somewhere on family land, can't get a job, making do on a tiny check from somewhere or SNAP or the proceeds of day labor or buying and selling garage sale crap on some local Facebook group. They're not desperate exactly, because it's so cheap to live out in the country around here; but their lives are pretty squalid and the kinds of jobs they used to do just don't seem to exist any more and they don't seem to have the youth or health or mental resilience to retool themselves to get back into the fully-employed economy.

I think that's what the zombie apocalypse is going to look like for most people. Even a relatively fast collapse, in historic terms, would not look fast - or exciting - to most people, in my opinion. I've experienced a change in my industry (showbiz) where people aren't willing to throw money at stuff the way they used to, so my income has plummeted. We live in the country, so it's pretty cheap, and we're actively enjoying our newfound freedom instead of moping about loss of income. But that may change if things get too dire, we might start stressing out about it and lose quality of life.

I don't generally follow financial news very closely. I know that there will be ups and downs that I have no way to control. Sometimes, I look at it comically. When they talk about credit card debt, idiots borrowing money for vacations or lyposuction, I just figure, lambs to the slaughter.

As individuals of modest means, a great strategy is to earn what we can during good times, and resist the temptation to spend it all. My personal economy has improved greatly since 08. This is largely due to changes that I have made, and not due to the economy in general. One strategy, has been to advertise extensively, but only for free. With more leads than one man can handle, I now turn down work that I would have jumped at, a decade ago. Customer training is part of it. Everything must be done exactly as I say, or I'm not interested in pursuing the job. Turns out that I know a lot more about demolition than my customers do, so doing things their way, serves nobody. This my way or the highway approach, is not for everyone. Some potential customers are put off and we part ways. Those who do choose me, tell their friends. No adds have been run since August, since I'm dealing with a backlog of referrals.

Another note on advertising. I disable emails on all adds. I've found that when someone sends me an email, there is about a 5% chance that I will ever show up at their house with tools. When people call me on the phone, there's about a 70% chance of getting something done. For me, email is a way of generating some very annoying pen pals.

Tyler Ludens wrote:I think that's what the zombie apocalypse is going to look like for most people. Even a relatively fast collapse, in historic terms, would not look fast - or exciting - to most people, in my opinion.

I am coming around to this view. The Walmart closing arguably prefigures that model of collapse. It's not that, for most people, the Walmart trucks in general will suddenly stop one day, it's that their "local" Walmart will get further and further away until it becomes just another one of those odd amenities of the rich people in their distant bubbles.

Tyler Ludens wrote:I've experienced a change in my industry (showbiz) where people aren't willing to throw money at stuff the way they used to, so my income has plummeted. We live in the country, so it's pretty cheap, and we're actively enjoying our newfound freedom instead of moping about loss of income. But that may change if things get too dire, we might start stressing out about it and lose quality of life.

Wisdom there too. My own situation is somewhat similar after a considerable reduction in the volume of money sloshing around in my industry. We have to actively remind ourself that life remains good; we live in comfort and plenty among people and animals who love us. Financial problems are real, but choosing to stress about them is, we have discovered, more destructive of happiness than are the problems themselves.

Dale Hodgins wrote:As individuals of modest means, a great strategy is to earn what we can during good times, and resist the temptation to spend it all.

Unless a person is very lucky, a lot of their spending is not temptation-based. A familiar pattern from hard times in my life is the pattern of cutting spending to the bone (well, my idea of the bone; no matter how frugal you are there's always somebody willing to use one less square of toilet paper) only to then get hit with unexpected and unavoidable expenses that exhaust the savings and overwhelm the income. You're out of money, but you didn't spend it all because of temptation and foolish choices; you spent it all because as you were driving home from the emergency root canal, some idiot took your car off the road with a side hit and then sped away laughing.

Of course, Dale, I'm not actually arguing with your strategy. The other leg that holds it up is the "earn what we can during good times" notion. Sufficient savings can be set off against moderate amounts of bad luck. But my impression of you is that you're willing to work harder and live in worse conditions that most people, if it keeps the money rolling in. I respect that enormously, even while suspecting I'm in the category of people you might privately consider to be hopelessly lazy.

No Dan, I don't consider most people lazy. I have judged many others to be sissies, as compared to myself. I have spent a good part of my working life,  living at demolition projects and other work sites, throughout Canadian winters. I have very seldom heated any building or vehicle. Life has been much easier, these last few years, due to that extreme frugality.  It was also a function of my natural cheapness. Sometimes a living allowance would have put me in a comfortable motel. "No, thanks.  I'll pocket the living allowance and charge you $50 for night security."

 On a few occasions I have had to defend the products of my labor, when people are stealing. I never physically attack anyone. Instead, I throw bricks or other ordinance at their trucks. This moves them along. I have never had any legal repercussions from these actions.

 Lately,  I've been working on getting some free time by raising prices. This strategy works, but it can only be accomplished if your advertising and referrals add up to more work than you can do.

The willingness to endure whatever hardship,  can go a long way in any venture. Then you must protect what is yours and hold on to it. I have a relative, who has gone through far more money in his life, than I have.  Reckless spending and investment have left him broke.  For a healthy, single male, I often consider renting an apartment to be in the category of reckless spending. If you absolutely refuse to live in a building that you don't own, a working guy without vices, can't help but get ahead in North America.  The whole society is structured around certain expenses.  Cancel or reduce the cost of things that most people consider absolutely necessary, and you will save money.

Dan Boone wrote:
Unless a person is very lucky, a lot of their spending is not temptation-based.

I'm not convinced this is true for people in the middle income brackets. My own family, all of whom make (not necessarily earn) more money than I do, seem quite willing to spend their money on things they want (for instance new furniture), not things they need (paying off debt). Yes, a medical emergency, major disaster with a vehicle, or loss of a job will hit a family hard, but most people don't experience one of these every year. Sorry, I guess I'm mostly grumpy about some irresponsible family members.

I think we are in a pretty good nose dive at the moment...but what I really wanted to talk about is SPEED...and the speed is slow. (relatively- seems pretty fast at the moment)

An Ah Ha moment for me was hearing the term "The Slow Crash" (as opposed to the fast crash ideology that makes fine movies and books). The term came from a 2005 article by Ran Prier - http://www.ranprieur.com/essays/slowcrash.html
The article is hit and miss...but insightful. It fundamentally changed HOW I prep. Prepping for a Slow Crash is substantially different than prepping for a Fast Crash. A slow crash is much worse...but you get used to it.
Mini crashes and partial recoveries adnosium.

A few insightful choice lines - "If that's all we get, the crash will be slower and more complex than the kind of people who predict crashes like to predict. It won't be like falling off a cliff, more like rolling down a rocky hill. There won't be any clear before, during, or after. Most people living during the decline and fall of Rome didn't even know it."

"In 2004 the price of oil doubled, bankruptcies and foreclosures accelerated, global food stockpiles fell to record lows despite high harvests, and we had record numbers of hurricanes and tornadoes -- and a big tsunami to top it off. If every year from here to 2020 is half as eventful, we'll be living in railroad cars, eating grass, and still waiting for the big crash we've been led to expect from watching movies designed to push our emotional buttons and be over in two hours."

I predict that by 2020 most people in the developed world won't be living in railroad cars eating grass. But they might still be waiting for the Zombie Hordes.

Tyler Ludens wrote:I predict that by 2020 most people in the developed world won't be living in railroad cars eating grass.  But they might still be waiting for the Zombie Hordes.

Who knew this would turn out to be the punch line??

On a personal level, this has turned out to be my best year in many years.  Unfortunately,  my victory is a very fragile one due to the economy in general and Covid more specifically. 2021, at this point, looks like an abyss.  

John F Dean wrote:On a personal level, this has turned out to be my best year in many years.  Unfortunately,  my victory is a very fragile one due to the economy in general and Covid more specifically. 2021, at this point, looks like an abyss.  

John, I feel much the same.  My spending is down due to staying the hell home, my online gig income has (more or less) held up so far, and I'm spending more time in my garden instead of going to garage sales and adding "treasures" to my hoard.  Covid hasn't touched anybody I know, because I'm a rural misanthrope with a very small extended family.  So far, not a terrible year, viewed selfishly.  

But {gestures helplessly around} it's all hopelessly fragile.  

I find people in general are doing worse and worse financially due in large part to a "I deserve it" culture reliant on credit.

If the world really does stop me and mine will likely starve. I planted a lot, not a whole lot will be harvested. We just don't live in an area that grows shit.

elle sagenev wrote:I find people in general are doing worse and worse financially due in large part to a "I deserve it" culture reliant on credit.

I would certainly be willing to agree that this was a substantial factor in the generally precarious circumstances most people were in, prior to the current economic shocks.  

But the demand shock caused by the pandemic (people losing fifty million jobs) and the loss of a third of our economic productivity (GDP) so far in 2020, are beyond my ability to overlook.  We are, objectively, much poorer; we are producing one-third less, so there's one-third less goods and services to divide.  Plus, a great many people have also lost their means of income.  If they were over-extended on credit before the shocks (and many were) that makes the misery worse, but it would still be misery even if everyone had started the crisis with a clean balance sheet.  Or so it seems to me.

I thought Ellie hit home with this comment:

“If the world really does stop me and mine will likely starve. I planted a lot, not a whole lot will be harvested. We just don't live in an area that grows shit.“

If nothing else, these first few months of the pandemic have hammered home how woefully underprepared I really am, and frankly makes me wonder if any of us is really prepared to weather a collapse, whether slow or fast.

Does anyone think they could last through the coming winter with what they have stored/planted?

Sure, I grow veggies, but am not prepared to preserve them in large quantities, do not have cattle or pig systems in place yet, and do not have solar systems in place yet. I do have 8 poults that are not yet laying, so maybe I will have eggs in the Spring, assuming I beat the squirrels and deer and bear to the acorns/ hickory nuts/black walnuts and survive till then.

Anyway, my point is that I had been pretty darn complacent, and somewhat smug about my foresight to purchase land and starting to get it established, and it wasn’t until I saw actual, long term shortages in the grocery and other supply stores that it really hit me. I have been dabbling, and am nowhere close to self-sufficient.  I have had five years to build my systems and get them up and running, albeit while working full time,  and I have a lot to do yet.

Dan, I also wanted to thank you for your pre-pandemic post around medical supplies. I was sorta seeing the wave building, and your post listing the things to buy prompted me to do so, and as a result, I had plenty of masks, gloves, sanitizer, toilet paper, etc... well before everyone else panicked and cleaned off the shelves.  You totally got that right, and I felt like a hero for having that all in stock for family and friends when things got real and everyone else was scrambling.  

Artie Scott wrote:
Dan, I also wanted to thank you for your pre-pandemic post around medical supplies. I was sorta seeing the wave building, and your post listing the things to buy prompted me to do so, and as a result, I had plenty of masks, gloves, sanitizer, toilet paper, etc... well before everyone else panicked and cleaned off the shelves.  You totally got that right, and I felt like a hero for having that all in stock for family and friends when things got real and everyone else was scrambling.  

Artie, you're so welcome!  I'm delighted to hear that it helped someone.  My mind at the time was primarily focused on the meds a person might need to survive a random severe respiratory illness at home -- we of course didn't know much about how rough this one would turn out to be -- and a lot of the more practical items were afterthoughts when I tried to reason through it.  But I, too, had to tap the supplies for family that didn't take things seriously until everything was shutting down.  

Artie Scott wrote:
If nothing else, these first few months of the pandemic have hammered home how woefully underprepared I really am, and frankly makes me wonder if any of us is really prepared to weather a collapse, whether slow or fast.

Does anyone think they could last through the coming winter with what they have stored/planted?

I think yes, but probably only because I have significant stores of a few cheap dried staples.  The diet would get VERY boring and by spring I would be the most motivated gardener anybody has seen since the Great Depression.

A lot of my free time and limited disposable income this summer has gone to enlarging my garden and improving my food storage.  A little bit of that has been buying in one or two extra staple items with every curbside grocery pickup, but more of it has focused on improving the security of our food storage solutions vis-a-vis bugs, rodents, and environmental threats.  (Better containers and shelving.)  Even now I don't expect any total collapses of supply chains, but it's easy to see shortages and price shocks becoming chronic.  I'm trying to shift into the mindset of "I truly need nothing but I have a long list of things to stock up on when/if available."  I've also identified a lot of weaknesses in my food preservation supplies, and am slowly working to remedy them.  Having enough salt, vinegar, sugar, pectin, spices, jars, lids, alcohol for tincturing and liquer-making ... the list goes on.  But a lot of these things help leverage the limited agricultural productive that I can manage now or might conceivably manage in a worse crisis.

Just the other day my wife went to make something nice for us and grew upset when she realized she didn't have any more boxes of commercial vegetable broth, which she was in the habit of buying at Aldi, where we have not gone since March.  She's usually not a big fan of my eccentric stored foods, which tend to have different textures and flavors from the reliable brand-name stuff she prefers.  So I was pretty diffident about reminding her that I have a whole case of quart jars full of different home-canned broths squirreled away.  "Would you like me to pull out the lightest-colored blandest vegetable broth?"  Hesitant nod.  In the end, she was happy with it, and used it to prepare her nice recipe for us.  Progress.