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alstry (< 20)

Bye Bye Middle Class



April 07, 2008 – Comments (4)

MONROVIA - Pawnshop owners like Monrovia Mayor Rob Hammond are noticing the return of a regular harbinger of bad economic times - more white-collar workers in their stores.

Higher gas costs, lost jobs and other economic pressures are squeezing people higher up the economic ladder, owners said.

"We've been seeing more white-collar workers in the past six months," Hammond said. "There are two major reasons I'm hearing right now - one is the high cost of gas ... and we're hearing from more and more people that their hours were cut or their jobs were eliminated."

Pawnshops are always busy, Hammond added, but lately, they're even busier.

According to the staff at the family-owned West Covina Pawn, every day has been exceptionally busy since the economy started to tank.

A constant stream of customers crowded the store last week, hoping to get cash for their valuables, including jewelry and antique gold coins. Most said they needed the money to pay bills.

"The out-flowing money on loans has been exceptional," said Clint Toth, owner of Arts Jewelry and Loan in Whittier. "(We've seen) a lot of real estate agents, a lot of middle-class people."

Pawnshop owners said they often see the effects of a distressed economy before anyone else. When people reach the end of their ropes, they start taking out loans against their personal possessions or just selling it outright.....

One of the most alarming trends, he added, is the erosion of the middle class.

"It's very definitely a two-tier economy," Kyser said. "We're losing our middle class and nobody knows what to do to save or stabilize it."

Kyser said the sub-prime crisis has trickled down, impacting a broad range of people, including workers in the retail, auto, construction, mortgage and housing industries.

Folks, the down trend is just beginning.  The lay offs are just beginning.  And our President says to wait and see if $600 changes the economy.  HomeDepot is laying off.  California is laying off.  AMD is laying off.  Florida is laying off.  New Jersey is laying off.  Airlines are shutting down.  Finance companies are shutting down.  Construction companies are shutting down.  Auto companies are laying off.

And people are hoping for a second half recovery?  On what basis?  More budget cuts?  More bankruptcies?  More foreclosures?  More shut downs.  By the time we finish the first half, it could be too late.  You may want to watch this:

4 Comments – Post Your Own

#1) On April 07, 2008 at 7:48 PM, alstry (< 20) wrote:

The problems facing the middle class are the same problems facing corporate America and governments accross our country.  Namely rising cost without offsetting rising income.

Today, Alcoa's earnings announcement was reflective of this.  Costs are skyrocketing but revenues are not.  It is putting a squeeze on earnings and balance sheets.

The following is an excerpt from a Bloomberg article this evening:

April 7 (Bloomberg) -- Tribune Co. and Dole Foods Co. may need to draw down on bank lines to avoid default, causing a new drain on bank capital, according to Morgan Stanley analysts.

The companies currently don't have enough cash and committed credit to cover debt repayments over the next two years and may have to resort to credit lines or ``potentially face severe financial difficulty,'' said Greg Peters, the head of credit strategy at Morgan Stanley in New York.

For lenders including Citigroup Inc. and Merrill Lynch & Co., prospects that the 80 companies with revolving credit lines of more than $1 billion will start drawing them down threatens to further erode balance sheets that have been hammered by losses from securities linked to U.S. home loans. Banks are restricting lending after $232 billion of credit losses and writedowns from subprime-mortgage related debt.

Many other business face the above predicament.  We are seeing it everywhere.  Too much debt and too little income.  Without extending even more credit making a bad situation worse, America is facing the biggest restructuring in its history.

Unless incomes start rising very soon or expenses decline quickly.....distress is going to explode.

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#2) On April 07, 2008 at 8:08 PM, LordZ wrote:

Wow how about an original idea or sentence, all I'm seeing is cutting and pasting of others works, and whiney complainers...

 Get your sh*t together, stop being a slave.

Start being somebody.

I love owning stocks.... today was a good day for me :)

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#3) On April 07, 2008 at 10:28 PM, Imperial1964 (94.53) wrote:

Is it just me, or is LordZ starting to get a little obnoxious sometimes?

Anyone else catch the irony in complaining about "complainers"? Report this comment
#4) On April 08, 2008 at 12:40 AM, thebigjigga (23.58) wrote:

His optimism is pretty sickening.  A market cheerleader who is going to get burned.  It's ok to be an optimist, but at least have some reasoning to back it up.  He has nothing, just worthless market cheerleading comments.

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