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Why Wal-Mart will save America

Posted Feb 25 2008, 05:44 PM by Anthony Mirhaydari
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What is probably the most-hated corporation in the United States is poised to become its private-sector savior.

Wal-Mart rang up monster sales last quarter as cash-strapped American consumers flocked to its stores for its famous "everyday low prices." Profit rose 4% to $4.1 billion as consumers redeemed holiday gift cards for basic necessitates like groceries and toilet paper. The company's stunning earnings report shows that during a holiday season in which its rivals faltered, Wal-Mart won by going on a price-slashing rampage, marking down more than 15,000 items by up to 30%.

This is how Wal-Mart will help the average American: By stretching the purchasing power of their dollars. While the Federal Reserve frantically stimulates the economy with liquidity injections and interest rate cuts, the dollar remain weak. This stokes inflation. And of course, continued economic growth in developing countries only adds to the pressure on food and fuel prices.

Wal-Mart, thanks to its vast scale and hard-nosed negotiating tactics, is shielding hapless consumers from price hikes by the likes of Kraft, General Mills, and Procter & Gamble. Also, through the addition of health clinics in its stores, it’s fighting rising health care costs too. Recent research estimates Wal-Mart saves the average family around $2,500 each year. That’s a pretty big deal when you consider the median household income is around $48,000. Simply put, Wal-Mart is reducing the nasty side effects of the Fed’s economic voodoo.

By acting as a disinflationary force, Wal-Mart is actually giving the Fed more room to maneuver by keeping published inflation measures lower than they would be otherwise.

Keep in mind that it’s absolutely critical for inflation expectations to remain low. If they become unanchored, and people start demanding higher wages, all hell would break loose. The Fed would be forced to return to its inflation-fighting congressional mandate, interest rates would go up, and the housing sector would be reduced to a smoldering crater. It’s not coincidental this has been a popular topic lately.

So, on one hand Wal-Mart is helping people live paycheck to paycheck as they suffer through an epic consumer-led recession. On the other, it’s helping Ben Bernanke and his cohorts juice the economy back into high gear. That combination should be enough to put a big happy face on anyone holding a grudge against Sam Walton’s baby.

Comments

 

an educated consumer knows were to shop .

Wal-Mart is what is CAUSING inflation.   We buy Chinese made goods at Wal-Mart, the dollars go overseas to China, which exacerbates the trade deficit, which causes the value of the dollar to go DOWN, which causes inflation to go UP as imported goods go up in price.  Geez, get a clue, writer!  

I tell you what, if all I had was WalMart to keep my little boat from sinking I would be in sad shape. The American people need to wake up and smell the java. When we live beyond our means we hurt everyone. You say Nay? Just take a good long look at the condition our society is in and prove me wrong.

Face it folks, we ARE in a world economy. We cannot isolate/ insulate ourselves from it, or we  will wake up with " American Pie " on our face.

So, Wal-Mart will be America's savior.  That statement is so utterly ridiculous I'm surprised anyone with any education in business would make it.  

Many years ago I was traveling extensively through Arkansas, Wal-Mart's home, and was astonished to see small towns everywhere that had lost all their local businesses and whose shops were shuttered and dark, all because there was a Wal-Mart a mile outside of town in the low-rent district.  How many hundreds of thousands of American small businesses have been put out of business by Wal-Mart?  How much pain and suffering have Sam Walton's greed brought upon these people?  How very much America has lost in its sense of community now that the people we used to know and with whom we traded regularly are gone, only to be replaced by greeters at Wal-Mart?

Then you must turn to those Americans who have lost their jobs because Wal-Mart buys little or nothing from America.  I still am amazed that Ronald Reagan gave Sam Walton the Medal of Freedom just because of Sam's fraudulent "Made in America" promotion, when right from the beginning he has been squeezing his suppliers for every nickel or penny he could extort from them.  When American manufacturers couldn't lower their wholesale prices any more or face going bankrupt - and, indeed, many did go bankrupt - Sam bought offshore, throwing tens of thousands of Americans out of work and hiring people from 3rd World nations to work at the fantastic rate of 50 cents per 12-hour day.

There there is this foolish notion that our economy will be bailed out by lower prices at Wal-Mart.  The U.S. Dollar is sinking because there are too many of them.  Just because we may have had a temporary reprieve in the prices we pay for certain goods because Wal-Mart is on the scene does not mean that we will continue to enjoy any such benefit.  In fact, now that Wal-Mart is buying from the 3rd World the 3rd World has begun to believe they can enjoy the same standard of living that Americans enjoy.  Now, there is no direct cause and effect here, but the point is well taken.  Foreign governments - particularly India and China - are propelling their citizens into the "1st World" by heavily  subsidizing the cost of energy.  This is accelerating the economic growth of the 3rd World at a time when the supply of energy is peaking.  That means that energy - fossil fuels - are going to become so expensive as to dash the 3rd World's hopes of economic growth, while at the same time it will cause so much inflation in the United States that the dollar will likely collapse.  

Look at the basic commodities, and how little of our cost of living is reflected in them:

Wheat - now $12 per bushel, an all-time high, up 26% in February 2008 and up 300% in the past 27 months.

Soybeans - now $14.66 per bushel, an all-time high, up 193% since 1/1/2005.

Copper - now $3.833 per pound, close to its recent all-time high, up 448% since 1/1/2003 and up 16% just this month.

Gold - now $959.70 per ounce, an all-time high, more than triple its price on 1/1/2002, and up 42% in the past six months.

Oil - now $101.25 per barrel, an all-time high, up 420% since January 2002.

There's your price inflation, and I can assure you that none of that is factored into Wal-Mart's prices yet.  The United States just yesterday began to acknowledge inflation when the Producer Price Index (PPI) rose 1% in one month, a 12% annual rate.  That's only the beginning, as we move into a time when Jimmy Carter-style "stagflation" is going to look tame.

Just for the sake of comparison, where is the dollar now?

The dollar index stands at 74.465, an all-time low, down 38% from its high in July 2001.  The dollar has lost more than 97% of its value since the Federal Reserve was created in 1913 and charged with the sole responsibility of preserving the value of the U.S. Dollar.

Oh, Wal-Mart has saved us all right - from taking responsibility for our own actions.  Wal-Mart helped let the genie out of the bottle, and it won't go back in this time.

Did you read the article recently in which Walmart sued to received some of the payout an employee received as part of an accident claim that left the employee crippled. Walmart cited they needed to recoup their own insurance costs paid to the crippled employee! How is that saving America? So you are wrongfully in an accident, left crippled, millions of $ lifetime of medical expenses remain, you win an lawsuit for medical costs and your employer, Walmart, sues to receive some of the awards... and they're not crippled. If you want to save the economy, stop shopping at Walmart. You'll save money at the pumps (gasoline). Walmart buys 90% of their cheap stuff from Asia. Guess who can afford cars & consumes more oil thus driving the cost of oil up. You save a quarter on a jar of pickles and spend $10 more dollars at the pump. That makes sense.

Finally someone has a clue to the reality of Wal Mart and their business. Your article exhibits a non emotional look at the real world.

At best, it is "little help".  Industry is what turned us around and got the average person off the farm so to speak and industry is leaving.  Walmart is not big enough to control that exodus but it does help us while it is happening.

Money is going where it can receive the most return. It's that simple.  Our standard of living will be falling with or without Walmart.  It's like thinking about the president instead of congress.  It is easy to look at one person and place blame for what 400 or are doing.  

It's just easy to blame Walmart.  It's only one entity.

Facts are facts.  Wal-Mart has the lowest prices where I live.  They always have people waiting in line to work there, so they can't be a bad place to work.  They provide many jobs.  The unions make a lot of noise because Wal-Mart has been successful at keeping them out.  That should tell the whole story.  The workers don't think they need a union so thigs must be OK.  If you think Wal-Mart is a bad place spend your money elswhere.  The store will be less crowded and they will have more products on the shelf for me.  Some people are easily led astray.

Wal-Mart has destroyed this economy with their tactics.  I have boycotted Wal-Mart for years, and will continue to do so.  Read "The Wal-Mart Effect" to get the true story of what Wal-Mart has done for America.  Shop at Wal-Mart,  and cost another American their job.  Want American made clothes?  Shop online like I do.  They can be found.  Try websites like Shop for America.com and Buyamerican.com.  Go to stores and demand they carry American made products.  If people just start demanding and start boycotting  foreign made products, eventually it will work.  WAKE UP AMERICA!  

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