Holiday Shopping, 2014

It’s just about shopping season! Last year, 19.2% of all retail sales were holiday sales – the stuff outside of food, gasoline, and other consumables that took place in the 28 days between Thanksgiving and Christmas.  That’s a total of $597B. This year, there’s one more day in that period and retailers hope for a decent increase.

Will this be a good holiday season that finally shakes off the blues that have plagued retail for the last six years? We’re about to find out.

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Crude Goin’ Down

The sign out front reads $2.899 for a gallon of gasoline. Prices haven’t been this low for at least four years. What happened? Will the price stay this low?

The short answer is that a lot of things happened, some of them mysterious. And it can’t remain this low forever, but perhaps for a few months. It’s all about the market for oil and perhaps some pernicious politics that, as always, make oil prices a geopolitical game.

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Shadow Banking

In the old days, if you needed money you went to a bank. They might loan you money for your home, your car, or your business based on an interest rate slightly higher than the net paid out for deposits. They made their money on the “spread” between the two, matching up assets they had with liabilities (like you) outstanding. It was a quiet, conservative life. It was boring.

Today, most loans wind up not being held by banks in anything like the traditional sense. Nearly all liabilities are packaged up and sold to a “shadow banking” system where people buy these “asset backed securities” and make money based on the float. It’s a more flexible system that allows nearly all risk to be offloaded onto investors – who bear it as a system. It’s good for the borrower, it’s good for the bank – but the risk is held by the investment world as a whole.

That “brittleness” is the bane of the modern financial world – and the future. How we learn to manage it is the future of finance and the difference between a world that is stable and reliable or capricious and impossible to understand.

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Disruptive Philanthropy

“Change is now our constant companion and we can choose to be creative in our response to it, approaching it as an opportunity in partnership with each other.”

That was the message delivered by the Charities Review Council at their annual forum, “Disruptive Philanthropy”, held on September 30th at the University of St Thomas. Before that theme was elaborated in that quote from Executive Director Kris Kewitsch, however, the entire event was a demonstration of how disruptive change is not only inevitable but beneficial.

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What is Europe?

What is this thing we call the “Europe”? Is it an aspiration or a government? Is it a business agreement or a marriage? Is it simply a mass of land that many different people share?

While Ukraine fights a nasty civil war over the desire by many to join Europe, the UK is starting to question whether it belongs. Where the European Central Bank (ECB) has given its stamp of approval or withheld it for many important banks a scramble has taken place to comply at all cost.

Whatever it is, Europe has always moved in many directions at once. The last few months even moreso.

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Putin Losing the Real War

The devastation continues in Ukraine as the civil war shows no signs of ending. As many as 3,700 people have been killed as human rights abuses have been alleged on both sides of the conflict. Eastern Ukraine is in ruins.

But the real loser in this conflict may yet be Russia. Wars these days are fought not just with gunpowder but with money, and while Putin has generously given weapons to his allies in Ukraine he is sitting on a very weak nation that has been sealed off from the West. We can expect him to keep fighting, as would be his style, in both ways – but this could be an extremely long Winter for both nations.

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Credit Card System: Fail

As we head into the holiday shopping season, one thing that everyone is looking forward to is the flash of plastic sliding out of wallets all across America. It’s the make or break time for retailers everywhere and season for dedicated shoppers to show their prowess for hunting down bargains. All of it is fueled by credit cards, both online and in person.

But before you whip out the card is there someone waiting to give the term “swipe a card” a different meaning? You may think you can trust a retailer, but can you be sure that they aren’t already a victim of a hacker? The short answer is no, you can’t be sure of anything this year. And a series of high profile hacks throughout 2014 have shown us that the entire credit card system needs to be judged as insecure by everyone.

And hardly anyone in the mainstream media is talking in these terms, probably to avoid the reasonable panic that would ensue.

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