Bike heist!

A couple of days ago the folks who run Giant Santa Monica went by to check on the shop only to find it had been emptied. Thieves had broken in through the roof and absconded with much of the shop’s high end inventory.

Although the merchandise was probably insured, and some of the bikes will surely be recovered, the scope of the theft sends a message to anyone who is paying attention: We are at levels of unemployment that we experienced during the Great Depression, and people are starting to feel the first pangs of the Great Desperation that comes with it.

At its peak, the Great Depression’s unemployment rate was about 25%. With yesterday’s newest unemployment figures, which everyone agrees are understated, we stand at about 18%. When the Dust Bowl was in full swing, in 1931, upending life for millions of rural America, the unemployment rate was “only” 15.9%, lower than it is now.

Which brings me to my question. Why aren’t we calling this a depression? If 2008 was the Great Recession, with a max unemployment rate of 9.9% in 2009, and a rate of 8.5% by 2011, still in the throes of recession, why aren’t we calling this a depression? It dwarfs anything since the 1930’s, and in less than a month it’s not far from the devastation that took four years to reach back then, when the 1929 crash ultimately maxed out unemployment in 1934.

Why aren’t we calling this a depression? The obvious reason is that we’re long past the era of calling things what they are. Here’s some mighty fine doublespeak for you:

“Nevertheless, we do still expect the unemployment rate to come down much more quickly than during a normal economic recovery, as temporary layoffs return to work once the lockdowns are lifted, so we still wouldn’t characterize this as a depression-type event,” he said.

https://www.cnbc.com/2020/04/16/us-weekly-jobless-claims.html

In other words, “We’re terrified that people will recognize how badly things are going.” There is zero cover for the claim that we’re not in a depression. A recession lasts 18 months, a depression for years. Every single person with any perspective on the effect that the 22 million unemployed are going to have on the economy and the effect of the quarantine agrees: It’s going kto take years to recover. Years, not months. Of course there are lots of rosy scenarios that include a quick vaccine, global vaccine distribution, borders reopening instantly, and unicorns farting six-figure jobs to all and sundry.

But a very modest, non-conservative, non-optimistic outlooks tells you what you should already know. This is a depression.

However, if the virus is not contained within the second quarter, and social distancing measures continue into the summer, McKinsey expects GDP could take more than two years to climb back up to its pre-coronavirus level.

https://www.cnn.com/2020/04/02/economy/recession-how-long-will-it-be/index.html

This is one expert’s frank acceptance that the term of economic recovery will be in years, and it ignores the troubling aspects of the ripple effect caused by huge contractions in the U.S. and China, not to mention our sealed borders which are the linchpin of trade and economic growth. China, remember them? That’s the economic juggernaut that bailed us out in 2008, and they’ve just reported their first contraction since, you know, ever. And by ripple effect I mean “the rest of planet earth,” because the old adage “When the U.S. economy catches cold, everyone else gets pneumonia” doesn’t have a corollary for “When the U.S. economy catches Covid-19 along with China and instantly flat fucking stops.”

As Baby Seal would say, “Shit’s about to come unstitched.”

Why aren’t we calling this a depression? The massacre of low-wage jobs and small businesses, and the government’s nose-thumbing at effectively bailing them out despite quickly pumping hundreds of billions into Boeing, the airline industry, and anyone named Megacorp, is already smashing people in the face along two vectors, food and rent.

I’ve written about the pathetic, self-serving members of the cycling and legal communities who still see hungry citizens as a marketing event, but I haven’t written about the second half of the misery, homelessness. Rent has been due now for millions since April, and they haven’t been paying. Do you want to talk about a depression? Do you want to talk about landlords unable to pay their mortgage? Do you want to talk about millions of Americans with no rent relief about to move onto the sidewalk?

More importantly, do you want to talk about what evictions are going to look like in sixty days? Because that’s when the moratorium on them is lifted in LA County, and evictions are something I know lots and lots about. I’ve defended hundreds of them.

Once the moratorium lifts, landlords are going to begin filing eviction lawsuits, a/k/a unlawful detainers, by the tens of thousands here in LA County. The courts will be overwhelmed and that’s just the beginning, because eviction defense lawyers will be advising everyone to file an answer and demand a jury trial. You see, in the U.S.A., or parts of it, when you are about to be turned out onto the street you have some rights. Not many, but some.

And when you have tens of thousands of people demanding jury trials, the courts have to give them trial dates. Newsflush: You could devote every courtroom in LA County to nothing but unlawful detainer trials five days a week when this thing gets going and you’d never scratch the surface of all the trials that are going to be put on calendar.

With the reality that criminal and family and civil courts will still exist, unlawful detainer courts will simply have to calendar the trials, and that means they will be calendared for 1-2 years out instead of the standard 20-days as required by law. Of course you can’t evict someone until you have a court judgment against them, and when the resident files an answer and demands a jury trial, everyone has to sit and wait. It can be a slog even for landlords even in the best of times, with UD jury trials easily costing the landlord $15,000 or much more.

Do you think the average mom-and-pop landlord has $15,000 to spend on each of his three or four non-paying tenants?

If the dockets clog and residents get a 2-year stay of eviction, the practical effect of waiting for trial during which time they will not be paying rent, shit is going to fall apart. If you think the residential real estate industry is going to sit idly by while renters occupy their premises rent free for two years, you were asleep during the Great Recession.

Of course some people would simply say, “Don’t worry. Jeff Bezos will eliminate poverty. Society works best when some people have almost everything and most people have almost nothing.” But the battle line drawn between renters facing eviction and property owners facing foreclosure will be unlike anything we’ve ever seen, as the current laws regulating the procedures for evictions did not exist during Great Depression I.

And for those who are big fans of limitless wealth and the way it naturally alleviates limitless poverty, don’t think that the residential housing market is run by little old ladies and men who have judiciously saved and plunked their dollars into a fixer-upper to rent out to a young family. The Great Recession devastated home ownership and Megacorp swooped in, scooped up the homes, and your landlord is now Wall Street. Do you think that Megacorp is going to sit back while poor people named You squat on their property?

Why aren’t we calling this a depression, or even giving it its proper name, Great Depression II?

The instantly destroyed poorest tier of labor, followed by a meltdown of housing for the working poor, followed by ballooning homelessness and hunger, followed by another tier of businesses that go away and never return, if this isn’t a depression, what in the fuck is? The massacre of fast food chains and small restaurants takes with it millions of jobs. Forever. And although Jeff Bezos and other people with limitless wealth will probably make it all better, when you read the fine print you understand whose pecker is really on the chopping block.

It’s the commercial landlords and shopping malls that house these mini-employment, industrial food factories. Yep, when the chain closes it fires a bunch of Mexicans. So what?

But then the white people who own the commercial real estate also go under. What? What? The panic isn’t mine because I don’t work in a fast food restaurant and I don’t eat out. The panic is theirs, in their own words, and shrieking in huge caps.

In a sign of the rising levels of distress, the National Restaurant Association, an industry chamber, sent a letter to President Trump on Wednesday calling for relief including tax credits and increased access to funding. The group sees a decline in sales by $225 billion in next three months, leading to 5 million to 7 million job losses. For context, it says it currently employs 15.6 million in the U.S. and is the nation’s second largest employer.

https://www.bloomberg.com/news/articles/2020-03-19/eating-out-may-never-be-the-same-in-the-u-s-after-coronavirus

Why aren’t we calling this a depression?

The biggest bailout in the history of anything anywhere for any reason at anytime, ever, ran dry thirteen days after the funds were released. Yep, that $349 is billion gone, inhaled, and if you read the fine print on the supposed bailout, it was only a couple months of LOANS for payroll and rent anyway, as if any small business is going to restart the engine, rehire the employees, and get things back as usual in a couple of months. Sillier, the idea that small businesses need debt to right the ship.

Why aren’t we calling this a depression?

Even with a libertarian, Reagan-esque governmental welfare program for Megacorp, who is going to be flying all these new Boeings that no airline is going to purchase? Who is going to be filling the seats of all these flights that no one has any intention of taking? Who is going to be buying all of the overpriced consumer products that no one can afford to buy anymore? And even if they can, who isn’t going to have in the forefront of every purchasing decision, “What if the virus returns? May I should wait a bit?” Who?

Oh, right. Jeff Bezos will, because he earns $4 million an hour, in between bouts of eliminating limitless poverty.

Why aren’t we calling this a depression?

Crime rates have plunged worldwide, but everyone agrees it’s because of the quarantine. In other words, there are less crimes when you are imprisoned. Buried in the article linked above, along with the fact that domestic violence is spiraling (not really a concern because women/children), San Jose police chief Eddie Garcia admits the truth of the matter.

“The longer we’re in a lockdown,” he said, “the more we’re playing with fire.”

https://time.com/5819507/crime-drop-coronavirus/

What fire could he be talking about? He’s talking about the crimes of the poor that are going to skyrocket because people are stuck in homejail with no money, work, or food. But it doesn’t take a degree in criminology to speculate that the real skyrocket is going to be when the quarantine ends and people are just as hungry and unemployed as they were during quarantine, and homeless besides. Hungry jobless people living on the street will break the law because hunger rules all.

As a nation we need to bail out the nation. Real people need real help, not fake, one-time, chump-change, campaign propaganda checks with the President’s name on it. We need to pump trillions not only into Boeing’s coffers but into the pockets of every man, woman, and child in this country’s borders regardless of what they do or how they got here. We need real welfare for real people, deep, profound, structurally altering welfare that gives people the food, health, work, and life security that Jefferson hinted at when he penned the words, “Life, liberty, and the pursuit of happiness.”

When we’re ready to put the bit between our mouth and strain on behalf of each other, we’ll find that we pull the rest of the world out of the muck with us and into a future that we can proudly bequeath to those who come after.

Otherwise, bike shop break-ins? Just the beginning.

END


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24 thoughts on “Bike heist!”

  1. I believe you are correct…it is a depression and that term will likely be applied in the future. It appears that tag is not applied until after the fact. Here’s a link to the FRB’s discussion of the two terms; its brief and its not painful to read (even though it was written by an economist). Whatever the tag placed on this event, it sucks and will suck more in the coming months.
    https://www.frbsf.org/education/publications/doctor-econ/2007/february/recession-depression-difference/

    1. Thank you for the link! I agree and understand about retro-tagging, but it’s the job of policymakers and economists to call things what they think they are going to be as well as to name them as historians. In other words, instead of talking about the impending recession, talk about the impending depression. And instead of comparing it to 2008, compare it to 1929. The name matters also because calling it a depression raises the question of “What is the government going to do to combat a depression?”, a much more serious question than “What is the government going to do to combat a recession?” The idea is that recessions require us to help businesses, but depressions require us to help people, so, keep talking about the recession. Otherwise people might think they’re entitled to relief.

  2. …….”The obvious reason is that we’re long past the era of calling things what they are.”

    1. So uplifting. FYI, out of the 6,000 plus apartments we manage, 90%+ of our tenants paid rent. Also, with the boosted unemployment payouts, many will make more than they earned before.

      1. What percentage paid rent in February? And what are your projections for May-August? What is the average income of your average renter? If this shutdown turns out to be a boon for the 22 million+ unemployed, then I will be happily wrong. Of course, where are those unemployment checks coming from and how long will they last? The rosiest projections say 1/3 of the 22 million will be re-employed once the quarantines end. What about the remaining 2/3?

        And I hope you are being sincere when you say uplifting. We can dig out of this with the same level of governmental help to people that is being provided to Megacorp. People deserve the same if not better welfare than paper entities. Right?

        1. 98-99% collected Jan-Feb. Average rent is just over $1,000 here. May and June will likely be worse but the second half of the year will be better as the economy slowly returns. I see rents dropping 6% or so year over year and it will take 18 months to 2 years to get back to 2019 levels.

          1. You may be right. Entities that own several thousand units will not be affected like people who own only a few.

            1. Entities that own thousands will be affected short term. REITs initially dropped 50% and now are down 20-25% so that should give you an idea how they will be affected. Ok for long term owners but anyone whose purchased in the last 3-4 years will be crushed. Especially the over levered.

              1. End of all bubbles

                Good luck with your optimistic thesis Mr. Slumlord. You’ll get wiped out just like everyone else.

                1. It’s unfortunate that the abject suffering of so many Americans has become the price that it will cost to transition to a new government

                2. Sorry pal, but I’m not in the slumlord biz. We’ve survived worse so not that worried but thanks.

  3. To support your comments, unfortunately, our arts district shoe store was robbed Saturday night. The police said the lockdown had been quiet until that night, when they suddenly had lots of “activity”.
    Regardless of how they label this situation, the government does not have my back. Our business is geared toward LA job creation, yet the SBA loans are not forthcoming and a $916 stimulus check is our reward for not taking a salary the past 3 years.
    Coronavirus is teaching us humans some hard lessons.
    Also, cycling.

  4. About 10 days ago I was in a “line” (hard to call spaced over 6′ apart a line) for a tool at the local Lomita Harbor Freight. Two in haste with a 200watt generator in a shopping cart breezed past and out the front doors, the cashier called out to them they needed to pay, they pushed on. Threw the generator into the trunk of a Honda, well not in as the lid would not close and tore away, trunk lid bouncing as they made the right out of the parking lot.

    I think images were taken. No real stopping them as is life and well being worth the company’s inventory?

    As sgt. Esterhaus would say, “let’s be careful out there”

  5. I knew a job counselor who was partnered with South Bay Workforce Investment Board back in 2008-2009. She told me that real unemployment during that DEPRESSION was 18-22%. Statistics are an illusion and today they are used to create panic and compliance with draconian directives. Have a Happy Day.

  6. Enforcing contractual commitments assume a progressive functioning well lubed court system. This is a reset. The Great Regression.

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