Plan B.....Pawning in the New Year
January 01, 2009
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From the WSJ:
PHILADELPHIA -- At Society Hill Loan, a pawnshop in a middle-class neighborhood here, a steady rain fell outside as a fashionably dressed young man parked his Cadillac Escalade outside. Looking around warily, he came in to speak with Nat Leonard, co-owner of the store.
The visitor was a 29-year-old engineer who was laid off earlier this year from one of the local chemical companies. Since then, he's been cleaning planes at the airport for less than half the salary he was earning a year ago. Now he needs a $2,500 loan on his watch -- a Movado Fiero with a diamond bezel -- to pay his mortgage note.
"I want to help," said Mr. Leonard. But unlike Rolex and a few other brands, "there's no market" for Movado in his pawn universe.
The young man, who didn't wish to give his name, left the store disappointed. "I'm not sure what I'm going to do," he said.
Typically, pawnshop customers have a household income of about $29,000, according to Dave Adelman, president of the 2,400-member National Pawnbrokers Association. But operators around the country say they are seeing a surge in new activity fueled in part by a different clientele: middle- and upper-middle-class customers facing ravaged stock portfolios, tightened bank credit and unexpected layoffs. In areas dogged by high unemployment and foreclosure rates, the pawn business is especially robust....
While some pawnshops -- like Beverly Loan Co. in Beverly Hills -- have discreetly served the wealthy for decades, more stores, such as Society Hill, are newly awash with furs, diamonds and other baubles from the bubble. At places like Society Hill, transactions are up by as much as 40% in recent months.
Even Beverly Loan has seen a shift in customer patterns. "We have had so many $50,000-plus loans and more businesses [as clients] than ever before," said Chief Executive Officer Jordan Tabach-Bank. Many business clients, he said, are "getting loans to meet payroll or other obligations because their lines of credit are frozen."
Lee Amberg, owner of AA Classic Windy City Jewelry & Loan in affluent Evanston, Ill., said he's been seeing Cartier watches, two-carat diamonds, David Yurman jewelry and pieces from Tiffany's. One client, he said, brought in a fur coat from Saks Fifth Avenue that retailed at $9,000. She told him she needed a loan to help buy private-school uniforms for her child.
Diamond Exchange USA is more of a hybrid store. In addition to selling its own pieces, it makes loans against customers' goods and purchases used jewelry too. Located on a major thoroughfare in Bethesda, Md., it has a constant stream of Mercedes-Benzes, BMWs and other luxury cars pulling into the lot. Virtually all of the clientele are women. Many come to sell their gold or diamond jewelry.....
"You have to have a Plan B," he said. "If you don't have one, you'd better find one fast."
It is clear now that marginal customers will have a very difficult time obtaining a loan from a bank. As gold, diamonds, and other luxury merchandise keeps piling up in pawn shops, it apprears prices for those items will continue to fall as supply rises. Could the theme for 2009 will be DEFLATION and falling prices? Since we are only a few hours into the New Year here in the States, we will have to monitor it accurately and closely.
Alstrynomics keys in on the analysis of actual data......and preferably data obtained from a variety of sources to increase the odds of accuracy. Now it is simply a function of dillegently digging the dearth of definitive destinations to distill the data into deliciously digestable doses.
Do you know anyone up for the task???........
It looks like if you are a consumer of goods, shares of stock, or most anything for that matter.......2009 could be a year for deals.............if you have US dollars of course. If you have gold, there are any number of pawn shops or jewlers who would be more than happy to convert it to dollars on very distubing terms.
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