Retail Bankruptcies Soar – Another Bubble Bursts

I’m sure many of us saw this coming last year, some saw it even before that. Struggling retailers across the country have already closed, are preparing to close their doors or are at a significant risk of defaulting on loans. Some of the more recent retailers in the news:

• Circuit City (120+ Stores)
• Goody’s Family Clothing, Inc. (287 stores)
• Against All Odds USA (64 Stores)
• Macy’s
• Linens ‘N Things (Vaporized 2008)

In addition, job losses continue to mount.

If major retailers are closing and small business is tightening its belt, where will the former employees of these firms go?

Answer: nowhere.

This is a negative feedback loop. As more people get laid off, even less people can afford to spend, thus causing further deterioration in the retail sector. Every time a retailer goes bankrupt and closes stores hundreds more are laid off.

Next, we should begin to see the implosion of the commercial real estate bubble. Management companies of Shopping malls, Shopping Centers and Strip Malls will begun to default on loans. They’ve held their ground thus far, but there have already been some default scares.

One thing is reasonably certain given our current econmic conditions: retailers are refusing to open new stores. As existing retailers close their doors, and no new retailers come in to replace them, it becomes much more difficult for malls to meet their loan obligations.

As if the sub-prime loans didn’t cause enough destruction, banks will now have to deal with a massive, nationwide collapse of commercial real estate.

The Super Bubble is still bursting.

Author: Mac Slavo
Date: January 11th, 2009
Website: www.SHTFplan.com

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