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Signs of distress in U.S. economy

October 26, 2008

In your story, "Bad tidings in the retail realm" (Consumer Confidential, Oct. 19), you mention that many retail stores have closed. No kidding. Stores have been closing right and left all over the place, not only here in L.A. but in every city and town.

Why don't our brilliant economists take strolls into neighborhoods to see what is happening? This has been happening for a few years now. All they look at are figures in books and papers, but they are not aware of what is going on in Main Street.

Why didn't they notice that credit card debt reached $1 trillion several years ago?

Why didn't they notice that people were refinancing their homes to pay credit card debt over and over again?

Why didn't they notice that at major markets, such as furniture shows, attendance was dropping year after year?

I am a rep in the home furnishing industry and I knew something bad was going to happen, and that was four years ago. That's because I am out on the street.

Wallace Herman

Oak Park


Several years ago, a friend from Fresno told me enthusiastically about the housing developments that had replaced agricultural land, once the basis of the local economy.

When I asked about economic replacements for agriculture, he said, "Oh, we have many new stores." That is, people were selling to each other goods they had not produced. Booming mercantilism had created a domestic trade deficit.

Our consumer economy, partly enabled by free-flowing credit, has created an illusion of economic health. Shop till you drop!

Then drop in ways that you hadn't expected. It is not surprising that finance has nearly doubled manufacturing as a percentage of the GDP in our paper economy. Don't make; just trade on borrowed capital.

Inevitably, merchandisers will follow banks into collapse since our underlying problems are more basic and extensive than the bad financial practices that have made them more dramatic.

In what Andrew Bacevich has called our recent society of indulgence and profligacy, we have foolishly bought and sold and financed far in excess of risky home sales. They are but the first dominoes to fall and perhaps, in the long run, not the most basic ones.

We should expect many more shuttered stores that were never really economically justified.

David Eggenschwiler,

Professor emeritus

USC, Los Angeles

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