are you shopping this christmas

[jbird]

I have heard some people say that they are not doing much for christmas this year, do think thats around the board or hit and miss. wondering if I should keep making stuff to sale for this season.

Josh

[Crystal]

That's an interesting thought, Josh. There was something on tv the other evening and it was the same general question. It was answered with something to the effect that parents are going to be cutting back on spending for themselves, but not for the children.

Crystal

[calanneh]

I am making stuff out of the leather that I have already purchased. Afterall, it ain't doing any good rolled up just sitting there.

However, I do not plan to buy any more leather or supplies for Christmas unless I have orders for it.

So to help answer your question, I ain't making items for stock, just finishing up what I already have with stuff I know I will sell sooner or later.

William

[UKRay]

Pretty much every year we hear the same old stuff, Josh. Everybody says they are cutting back on Christmas expenditure and the high street spokespeople say numbers are down but each year the stores announce record profits - go figure!

My opinion (for what it is worth and that ain't much!) is that people need to cheer themselves up this Christmas. They won't have the money to spend on big expensive gifts so they will spend more on smaller 'impulse buys'. I am concentrating on making relatively low cost gift items like lighter cases, phone cases, belts and pouches with a few carved and tooled bags (purses) just in case I get a high roller or two LOL.

The economy on both sides of the Atlantic is pretty dire but people in work still have money to spend. It has to be worth the effort to provide them with something to buy. Just my 1p worth...

[jbird]

well belts are my thing and right now I have three custom orders for belts hope that keeps up any way I like the small stuff idea.

[celticleather]

Pretty much every year we hear the same old stuff, Josh. Everybody says they are cutting back on Christmas expenditure and the high street spokespeople say numbers are down but each year the stores announce record profits - go figure!

My opinion (for what it is worth and that ain't much!) is that people need to cheer themselves up this Christmas. They won't have the money to spend on big expensive gifts so they will spend more on smaller 'impulse buys'. I am concentrating on making relatively low cost gift items like lighter cases, phone cases, belts and pouches with a few carved and tooled bags (purses) just in case I get a high roller or two LOL.

The economy on both sides of the Atlantic is pretty dire but people in work still have money to spend. It has to be worth the effort to provide them with something to buy. Just my 1p worth...

Ray and I seem to have a number of parallel opinions, and this subject is another example!

My mind's ear hears the high street megastores bleating about poor sales in the run-up to Christmas (in its third month of running already!), and my mind's eye sees the post-Christmas headlines heralding record sales despite the economic worries.

For many people, the gift-buying trend in recent years has tended towards things that bleep, squeak, have built-in lasers and far-eastern labels . . . anything less is not good enough. It would be good if gift-buying were to become a less expensive exercise, with the accent on smaller gifts of better quality, and I'm sure this would benefit the leatherworking and other crafting communities.

I sell bought-in leather goods in my shop, as well as all the stuff that I make myself, and this year I'm determined to buy as much English-made leatherware as I can afford. It will cost quite a bit more to stock, and the customers will have to pay more for it, but it will be top-quality, and I have a feeling that this year may see a movement in that direction. Time will tell!

Please add this 1p worth to Ray's - see - 2p already!

[jbird]

Ray and I seem to have a number of parallel opinions, and this subject is another example!

My mind's ear hears the high street megastores bleating about poor sales in the run-up to Christmas (in its third month of running already!), and my mind's eye sees the post-Christmas headlines heralding record sales despite the economic worries.

For many people, the gift-buying trend in recent years has tended towards things that bleep, squeak, have built-in lasers and far-eastern labels . . . anything less is not good enough. It would be good if gift-buying were to become a less expensive exercise, with the accent on smaller gifts of better quality, and I'm sure this would benefit the leatherworking and other crafting communities.

I sell bought-in leather goods in my shop, as well as all the stuff that I make myself, and this year I'm determined to buy as much English-made leatherware as I can afford. It will cost quite a bit more to stock, and the customers will have to pay more for it, but it will be top-quality, and I have a feeling that this year may see a movement in that direction. Time will tell!

Please add this 1p worth to Ray's - see - 2p already!

I think you guys are hiting the nail on the head , I am glad to see that you are going with qaulity and not grabing up the cheap garbage you see in most places.

And I am not sure how much a pound is but two is better than one.

Josh

[UKRay]

I think you guys are hiting the nail on the head , I am glad to see that you are going with qaulity and not grabing up the cheap garbage you see in most places.

And I am not sure how much a pound is but two is better than one.

Josh

Sadly Josh you only have a couple of pennies! (p) However, a pound (£) is worth about 1.57 dollars (as of 7.15pm UK time today). I, on the other hand, would have more than a few £s if I could convince CelticLeather to buy his Christmas shop stock from me... <grin!!!>

[jbird]

Sadly Josh you only have a couple of pennies! (p) However, a pound (£) is worth about 1.57 dollars (as of 7.15pm UK time today). I, on the other hand, would have more than a few £s if I could convince CelticLeather to buy his Christmas shop stock from me... <grin!!!>

I guess that was a bit optimistic of me i just thought you guys thoughts were worth more LOL.

Josh

[UKRay]

I guess that was a bit optimistic of me i just thought you guys thoughts were worth more LOL.

Josh

Not me Josh - completely worthless!

[Go2Tex]

Well, if Ebay is any indication of buying trends, this is gonna be a very bleak season. Nobody is bidding on anything other than the really cheap crap that one usually sees. High priced, quality saddles, and there aren't many right now, aren't selling.

I think next year is gonna be very bad for anyone trying to sell something. I just read that DHL is laying off 9600 jobs. Pulling out of intra US shipments. GM is literally going under and begging for a government bailout. Personally, I hope they don't get one. The unions ate the company alive like a cancer and it's time they paid the price for their greed. Looks like we're headed for record high unemployment. No jobs, no money, no sales.

This ecomomy is bad and getting worse by the day and the Democrats have no answers except to raise taxes on the very people that have the capitol to fund a recovery. It's the same old scheme of the Left. Take from the rich and give it to the poor who then throw it away on lottery tickets and beer. It never works, but the Left never figures that out. The fact of the matter is, they don't care if it works, it still gets them votes. Amazing.....

[celticleather]

Our government in the UK is talking about reducing taxes . . . though they don't really seem to know where the money's going to come from to allow it to happen! It will probably be the usual case of giving with one hand and sneaking it back with the underhand!

Don't know if this may help to raise your spirits . . ? http://uk.youtube.com/watch?v=jHPOzQzk9Qo

[Go2Tex]

Don't know where the money is going to come from? How about trying this novel idea. LOWER SPENDING!!!!!!!!!!!!

[ttownfire]

We are cutting back this year... mostly because I think the next two years are going to be horrible. This is long, but its a good summation from a pal on a market board to which I'm a member and email I just sent out to some of my customers and family. A lot of people listen to media as their sole source of economic news. The problem is a lot of those in the media don't really understand the complex nature of the markets (stock, bond and credit markets). I studied Econ. at the Univ. of Arizona and I read/write on many things economic... I hope this doesn't come off negative as I like to call it; Reality based opinion.

-------------

I'm writing now because there are a lot of forces at work in the US economy whose outcomes seem mysterious... but are actually quite certain (the effectiveness of the bailout), and some that seem certain whose outcomes will be determined by what actions we take (outcomes like whether there IS a recovery at all).

I think a widespread understanding of the difference is the only chance we have at navigating through the near future successfully. But I will tell you my conclusion up front: There will be loss, The Government will eventually have a viable solution, but by competing with the market now it will make the problem worse. And it has only a limited supply of financing... using it too early will mean that nothing will be available when it's needed.

The first key to understand is that this situation is different from those situations in the past. It's different from the Great Depression because the US was a creditor nation then and could have used that status to lighten the blow. It's different from the early 70s because, now with so much debt and so much default, we can't "cause inflation" to keep unemployment reasonable. It's different from the early 80s because we're not combating inflation in a frenzy of liquidation. It's different from Japan in the 90s because we can't export nor lend to the rest of the world to compensate for our popping bubbles.

It's truly a unique time with unique problems.

The first thing to understand is that all Money Is Debt. You create money by taking out a loan, and you destroy money by paying that loan back, and you destroy even more future lending capacity by defaulting. I'll leave it at that for now. I'll explain it as a footnote maybe, but please take it for fact in the meantime.

The foremost problem we face is the total amount of debt owed by everyone (called Total Credit Market Debt by the Federal Reserve). It stands at around $52 Trillion. The real problem is that if all money is created from interest-bearing debt, the only way to pay the interest is by loaning out enough NEW money to pay that interest. I don't know of a figure that indicates aggregate interest rate on the $52 T, but at 5% it's about $2.5T per year. The PROBLEM is that our debt origination has plummeted to well under that. Just $1.1T annualized in Q2, and even less currently (probably negative).

In that context it is easy to see why the government is so publicly insistent on banks to use their bailout money to create new loans. It's to encourage people (on the aggregate) to take out loans to pay their interest!

Once you can't generate enough money to pay down interest, you reach a state of Guaranteed Default. Suddenly banks shy away and thus EVEN LESS loan money is generated, at higher interest rates, and the problem gets much worse (less money available to pay down more interest). And the *rate* at which the problem gets worse is proportional to how bad the problem is. Math calls this a "differential equation" and the solution is almost always exponential.

With $700B, the banks actually have plenty of capital against which to loan enough money to keep the borrowing game sailing along for a few more years... so why don't they?

So Why Don't They?

The problem is the type of debt. There are two types-- "self-liquidating" which means that the money was borrowed and used to generate an income stream that will pay back the debt AND the interest. This is how business functions. In the context where incurring debt is borrowing from your own future productivity, self-liquidating debt is using the money for that duration to make enough *extra* money to pay the interest. For instance, if you stopped paying the loan at any time, in theory the bank could seize your enterprise and its income stream would be sufficient to pay back the debt + interest.

And then there is "non self-liquidating debt" which is either consumed at a productivity deficit or tied up in an asset in which it doesn't generate sufficient additional income. Like taking out a car loan for a nicer car than you need. Happiness is not an income stream unless it can potentially be realized by renting out. Lately, we've all enjoyed a great deal of consumptive happiness!

Well, what we've been doing as a nation is incurring debt to build up greater and greater asset-price gains (mostly in house prices), but then we've borrowed against those assets to generate "income" that we spent on imports! So not only did we incur non-self-liquidating debt (since rents on houses haven't risen much), but we used that as collateral on loans for imported consumption. It's no wonder a bank wouldn't want to lend until mortgage payments fall in line with tax-adjusted rents.

But then there's the additional problem of the income stream. What income may be net-flow-positive while overall money is expanding can go underwater in a hurry while debt contracts. Banks, so recently burned aren't going to front-run speculation on income streams or asset prices.. that's what borrowers with down-payments are for! (So lending standards over-tighten)

So What's Inevitable?

Let me fast-forward past the near term to the inevitable... Banks won't lend again until debt collateral on the aggregate is self-liquidating, or near enough that there is sufficient down-payment to make up the difference. Unfortunately for houses, which made up a great deal of the debt expansion since 2000, that is a long way down. BUT it will be even longer if....

High Interest Rates

It will be even longer if interest rates go up. Now, let me dispel a common misconception about interest rates. The Federal Reserve does NOT set them. Interest rates are correlated by many things-- inflation expectations, risk premiums like counterparty default and currency depreciation... but only one thing CAUSES rates-- supply and demand. Interest is the COST of money. The demand is the amount of people who want to borrow, supply is the amount of people who are willing to lend. End of Story. And the debt market dwarfs our government... the debt market is where our government goes to borrow its Trillions.

There are two major points to make about interest rates:

Debt markets lend to our Government for the same reason that banks lend to people: the expectation of that debt to be repaid by a revenue stream. For foreign participants like Japan and China and OPEC who have lent our government a great deal of money, part of that revenue is our consumption of their exports (revenue for them, though). Another is our ability to repay the debt with increasing tax receipts, where the government spending goes toward projects that benefit our economy. And ultimately, our military is a potential revenue stream of last resort (well.... sometimes not last, and usually not positive, but its threats *ultimately* can be persuasive).

All three streams have become impaired recently, but interest rates remain pretty stable because another funding source has revealed itself... Fear. A flood into "safe" US Gov debt from fear, because the rest of the world is much less stable economically.

But make no mistake-- the funding sources I spoke of, Japan China and OPEC, they are all in deep trouble and will start being forced to spend their reserves internally. Certainly, we can still fund most of the debt required for the $700B bailout, but we should treat that like it's our last water-stop going into the desert of higher interest rates.

Point #2 about higher interest rates: Government intervention in debt markets.

Many nations, Ireland, Australia, Spain, and many weaker ones have "guaranteed" the debts of their banks now to encourage an inflow of capital (or discourage a panic outflow). The US has bought up the $6T "balance" sheet of Fannie and Freddie. The Federal Reserve has bailed out Bear Stearns, AIG, and is providing guaranteed commercial paper funding (like private loans to some big businesses). Whereas in the past, only Government debt was "guaranteed" by the full faith and credit of America, we've now wildly distorted debt markets with guarantees and bailouts. The problem is that these guarantees have targeted the worst, most dysfunctional enterprises only because they were the "Worst, Most Biggest" immediate threats of collapse. And now it appears GM will be next.

The problem is, the government backing attracts funds, unintentionally making debt funding for healthy companies (the self-liquidating kind that goes toward hiring people and building profitable business infrastructure) much more expensive. For instance, Verizon, American Express, Altria, GE, and Pepsi have all very recently been paying 8-10% on 5-10 year issued bonds! That's more expensive than some teenagers pay on their credit cards... on long term debt! It's absolutely unbelievable, and those high rates literally mean fewer jobs and lower wages, and it's specifically because of the sudden, giant "government guaranteed" sponge waiting to soak up all the available funding.

So... the conclusion. That $700B *can* jump-start the economy out of recession/depression, but not yet. Non self-liquidating debt will be flushed, which means house prices will fall. Stock-prices that were built on unrealized revenue-streams will plummet, pension funds will fail, and every state and company will be pleading for a bailout. These things are inevitable. We have another $15 Trillion to go, I would figure. Throwing money away on the failed remnants of consumption-driven America only impairs our ability to create a healthy sustainable and profitable America.

The conclusion is that EVERY SINGLE CENT of government money must be spent on generating an income stream from tax receipts. It's the only path. ANY deviation and interest rates will destroy the private sector. Say we want to spend our little money on public transportation infrastructure, that's fine, if it helps people get to jobs where they earn higher wages and pay for the tax that brought that wage.

This is reality. It's not new. It was just deferred.

Edited November 11, 2008 by ttownfire

[jbird]

wow! good heck that's a lot of knowledge for one guy but it opens my eyes, do you give class LOL.

Josh

[Go2Tex]

......."The first thing to understand is that all Money Is Debt. You create money by taking out a loan, and you destroy money by paying that loan back, and you destroy even more future lending capacity by defaulting".......

Well, I didn't study econ but even I know that all money is not debt. If I EARN money and put it in the bank, it's NOT debt, it's MONEY, cash. And if the guy that paid me the money had to take out a loan to do it, then, yeah, maybe that's debt, but in most cases, he didn't. He worked and was paid that money himself. There is, of course, a lot of debt out there, and in that respect, you're right. All that debt is, in fact, debt and a lot of folks have been living pretty high off the hog for a long time on all that debt but that's about to come to a screeching halt.

True, it's a very complex subject but let's not make it even more difficult to understand by saying things like "all money is debt". It's not. Money represents work, life energy, worth. Debt is created by the absence of money. If I don't have money, I must borrow it and thus I have created debt for myself. I haven't created money, I have created debt. The money theoretically already existed in some form and merely changed hands.

[JRedding]

Well, if Ebay is any indication of buying trends, this is gonna be a very bleak season. Nobody is bidding on anything other than the really cheap crap that one usually sees. High priced, quality saddles, and there aren't many right now, aren't selling.

I think next year is gonna be very bad for anyone trying to sell something. I just read that DHL is laying off 9600 jobs. Pulling out of intra US shipments. GM is literally going under and begging for a government bailout. Personally, I hope they don't get one. The unions ate the company alive like a cancer and it's time they paid the price for their greed. Looks like we're headed for record high unemployment. No jobs, no money, no sales.

This ecomomy is bad and getting worse by the day and the Democrats have no answers except to raise taxes on the very people that have the capitol to fund a recovery. It's the same old scheme of the Left. Take from the rich and give it to the poor who then throw it away on lottery tickets and beer. It never works, but the Left never figures that out. The fact of the matter is, they don't care if it works, it still gets them votes. Amazing.....

"take from the rich and give it to the poor who then throw it away on lottery tickets and beer" that has to be the most belligerent statement I've ever heard anyone babble. You've just insulted everyone on this forum who's tax return doesn't categorize them as wealthy. How about this one "it is better to remain silent and be thought a fool than to open your mouth and remove all doubt"

[UKRay]

"take from the rich and give it to the poor who then throw it away on lottery tickets and beer" that has to be the most belligerent statement I've ever heard anyone babble. You've just insulted everyone on this forum who's tax return doesn't categorize them as wealthy. How about this one "it is better to remain silent and be thought a fool than to open your mouth and remove all doubt"

You said that so well...

Edited November 11, 2008 by UKRay

[jbird]

"take from the rich and give it to the poor who then throw it away on lottery tickets and beer" that has to be the most belligerent statement I've ever heard anyone babble. You've just insulted everyone on this forum who's tax return doesn't categorize them as wealthy. How about this one "it is better to remain silent and be thought a fool than to open your mouth and remove all doubt"

A well used mark twain qoute jim.

[Go2Tex]

"take from the rich and give it to the poor who then throw it away on lottery tickets and beer" that has to be the most belligerent statement I've ever heard anyone babble. You've just insulted everyone on this forum who's tax return doesn't categorize them as wealthy. How about this one "it is better to remain silent and be thought a fool than to open your mouth and remove all doubt"

Well, you misunderstood my point, because I naturally did not mean to include everyone who isn't wealthy, whatever that is. It's understandable how you might have been confused because the term "wealthy" seems to be a moving target these days.

I'm really sorry for bringing politics to this forum, but a frank discussion of the economy and how it is affecting our leather industry is going to touch on, if not center on politics. I don't know how we can avoid the subject. If I have to be politically correct and avoid anything that might be interpreted as remotely aggressive or hostile to someone else's belief or class, then I'll just refrain from the discussion.

[jbird]

no one has to refrain from discusion we are all vauled members of this fourm, and we can have a discusion on any thing one would hope but with out degrading any class of people showing respect for every one. Because we all spend are money the way we think is best and very few are going to blow there money on lottery tickets. This a place were the leather comunity needs to pull together and give are vauled advice to each other and good frendliy discusion is what we need.

Josh

[ttownfire]

......."The first thing to understand is that all Money Is Debt. You create money by taking out a loan, and you destroy money by paying that loan back, and you destroy even more future lending capacity by defaulting".......

Well, I didn't study econ but even I know that all money is not debt. If I EARN money and put it in the bank, it's NOT debt, it's MONEY, cash. And if the guy that paid me the money had to take out a loan to do it, then, yeah, maybe that's debt, but in most cases, he didn't. He worked and was paid that money himself. There is, of course, a lot of debt out there, and in that respect, you're right. All that debt is, in fact, debt and a lot of folks have been living pretty high off the hog for a long time on all that debt but that's about to come to a screeching halt.

True, it's a very complex subject but let's not make it even more difficult to understand by saying things like "all money is debt". It's not. Money represents work, life energy, worth. Debt is created by the absence of money. If I don't have money, I must borrow it and thus I have created debt for myself. I haven't created money, I have created debt. The money theoretically already existed in some form and merely changed hands.

Sorry senor... You are free to call money/debt/credit anything you want. It will not change the fact that it is what it is.

Credit (debt) and money are fungible - they spend identically in the economy. Can a store tell the difference between a $50 dollar bill and $50 dollars of credit? NO, other than physical properties and other agreements there is NO difference. The $50 bill or credit spends the exact same. That is because the $50 dollar bill IS in fact credit (debt); it is a bond of indefinite duration carrying zero interest written against the aggregate wealth and production of The United States.

I'm not trying to over-complicate things, they are what they are. As a country we need to pull our collective heads out of the sand and learn. We have been duped into thinking financial markets are overly complicated, the powers that be want you kept in the dark.

[celticleather]

Quod erat demonstrandum.

[Hilly]

Quod erat demonstrandum.

In laymans' terms, please?

[UKRay]

Nice summing up Michael, I enjoy an articulate man's opinion - and good on you, Josh; IMHO that is exactly what the forum is about.

..and was that another 1p worth from you CL? - Ole' Josh is going to end up a rich man at this rate! (oops...)