Dressed for Distress

A friend of mine (my very Web-master) here in Los Angeles was browsing about for “buys” on houses across the U.S., since even with this meltdown, Los Angeles is still pricey by comparison… even as the State faces a nose-dive into governmental poverty hell. He found a “pretty nice” house (3 bedrooms, 2 baths, good-sized living room, dining area and family room) in Detroit for $10 grand. Pictures online looked good too. Google Earth produced a different view of that house: a solitary structure in a neighborhood that had otherwise been bulldozed into rubble. That’s “Managed Depression 2008+” Detroit style.

With General Motors and Chrysler in bankruptcy and restructuring for the next few months, the rarest assets on earth appear to be good jobs. You can’t give away for free some of the Riverside/San Bernardino housing tracts built for the subprime buyers – starter home far away from anything you’d like to do or anywhere you might have to work.

In my own business, media and entertainment, we’ve seen over 60,000 lay-offs with more coming. Construction cranes hover motionless over partially constructed office towers in various part of L.A. On the other “coast,” I hear you can get some quality “alone time” at mid-day on Wall Street… on what they used to call a “work” day. OK, the Goldman bankers are still raking it in, and advisors in the distressed properties business are locked in fits of smiling ecstasy.

But one of the hardest hit sectors of our economy is luxury goods. If you’re mega-rich and didn’t invest with Bernie, maybe your billion is down a couple of hundred million, but that shouldn’t crimp your style. But for those parading on the edge of “lookin’ and actin’ wealthy” while they are “livin’ on the next big deal” (let’s just call that “ Hollywood ” for short), you can’t pimp your style when the next big deal is neither big nor next. Since a huge component of high-end luxury goods are purchased by people with expectations of riding to the next level, when the ride gets shut down, the first to go are those shimmery threads.

I’m not feelin’ your sympathy, but maybe you’re not focusing on where the sympathy should, I believe, be given. It’s not to the shoppers – that’s for sure – but without their dollars, stores are folding right and left, owners are filing for bankruptcy, clerks making almost nothing are going to make even less. The manufacturers are cutting back, tailors and seamstresses are being let go, fabric orders are way down, and even top designers are folding their tents. The May 28^th NY Times: “Christian Lacroix, the French couturier whose artistic and exuberant pouf dresses propelled him to fame in the 1980s, became the latest victim of the global financial crisis …when the fashion house bearing his name filed for court protection from creditors. [the French equivalent of Chapter 11]”

Some of the “top shops” remaining on Santa Monica ’s chi chi Montana Avenue are experiencing 60% drops in sales. Dozens of empty stores line the once-impenetrable boulevard. Trendy Melrose Avenue is mirroring the process. Barney’s can get plain silent in the middle of the day. The shoppers’ll be back… ok some of them might be back.

And let’s face it, whether reasons of corporate frugality, government mandate (hello TARP!) or just ‘cause they’re not in a partyin’ mood, life’s getting’ really tough out there: “For Randy Fuhrman, a Los Angeles event planner whose clients have included Barbra Streisand, Steven Spielberg and Walt Disney Studios, business began heading south last October. Private and corporate clients canceled holiday parties that had been months in the planning, in some cases forfeiting thousands of dollars in venue deposits. Even now, Fuhrman said, some customers who have money despite the stock market dive seem too embarrassed to spend it.” June 2^nd Los Angeles Times.

In the end, the suffering of those who have fallen sends a small but very nasty shiver of delight down the spines of many who always wondered “why not me?” But when you think of all the people up and down the line, who work hard for an honest living that hardly qualifies as much more than ordinary, well… we really are all in this together.

I’m Peter Dekom, and I approve this message.