Correction

Well, now the Trib is reporting that PC Club is back in business, having been bought by an outfit called NAOC Holdings. I can tell you that the stores here in Utah are open again, but I can't tell you anything else, including whether PC Laptops is actually willing to take on PC Club customers. If I were a PC Club customer, though, I'd be inquiring, because something here smells like last week's diapers. I can tell you for a fact that if you file bankruptcy, you won't get to sell out within 48 hours (If anyone has definitive word on the bankruptcy filing, I'd like to hear it. Apparently the media couldn't be bothered to check it when they reported it.). Also, it is my considered opinion that, if you're about to sell your business, you don't hang a sign in your door reading, "Sorry, we've filed Chapter 7," and you don't have your website go dark with only a "Thanks for X years of business" message.

No Recession?

I read this morning that the Wall Street Journal, quoting experts of course, thinks we've headed off the recession. How's that again? I'm reminded of a poster of a '50s-style family gathered around the TV while the talking head says, "Experts agree everything is fine." Bankruptcies are up, foreclosures are up, repossessions are up, unemployment claims are up, food stamp use is up, and people are using their credit cards to buy bread, but we're OK. Who is "we"?

People, just because everything (And I mean everything. Food, fuel, goods, services, debt, equity, realty.) has been turned into investment vehicles and those vehicles have been hijacked by day-trading speculators who are currently pumping them doesn't mean everything is fine. It just means The Great and Powerful Oz is telling you to ignore the man behind the curtain.

PC Club Is Gone

PC Club, a computer sales and repair company with three locations here in Utah, slammed the doors shut and filed Chapter 7 bankruptcy yesterday. Chapter 7 is liquidation, i.e. "throw your empty wallet on the table and let your creditors fight over it." PC Club will not be back.

PC Laptops, as it has done for several other computer companies, has agreed to take over the warranty work on PC Club machines. Another savvy move by Dan Young; he adds another block of customers to his base.

If you have equipment at PC Club, though, you have a problem because your gear is locked up where no one's answering the phone. Get to work on this RIGHT NOW. PC Club's attorney is Robert Hsu in Pasadena, 624-584-7055, robert@rhsulaw.com. You'll probably have more success as a united front, and I'm willing to help you get in contact with one another if you contact me here or at KARife@RifeLegal.com.

You know you need a new PR person when...

...the local paper calls your current PR person about a hot story, and he tells them, "You don't deserve any reaction." That's what Russ Callister of Mecham Investments told the Tribune when it asked about the City demanding that Mecham do something about the great sinkhole it's created in Sugar House. See my entry today in The Real Estate Spot for my disclosure about once having officed in what is now a hole in the ground.

I honestly can't believe he said that to the paper. Folks, if you're going to be in business, you're going to want some publicity, and if you are a developer, being in the public eye is part of the game, so get used to it. Responding as Callister did isn't just unprofessional, it's stupid. It's acting like you're entitled to be in business, and believe me you aren't. Every day is a battle, and there's no entitlement to it. Why make your life harder by picking a fight with people who can spin your image any way they want?

Self-Defeating Complexity

I was reading today about farmers who consider themselves to be in dire straits because they can't hedge the price of their crops by buying futures. The modern farmer has grown accustomed to "insuring" the value of his crops by buying futures. The problem is that speculators have bid futures contracts up so high that mere mortals such as farmers can't afford them.

My grandfather, who spent his life running a corn-hog farm, would have heard this kvetching and said, "What the Sam Hill is this hooey?" First, he would have found it "unrealistic" (My euphemism. He would have said "nuts.") to expect some sort of guaranteed price. Second, he knew that, as the growing season went on, more cash grain buyers would come out of the woodwork to buy grain to fill those futures contracts. Finally, if the price didn't come around, he would feed the corn to the hogs and sell the hogs (frankly the best hedge there is).

Of course, there were certain bits of wisdom he practiced that supported these positions. He didn't leverage himself to the hilt and beyond in the belief that his grain prices were "insured." He kept good relations with the people who bought his grain and livestock. And he actually had livestock, namely Hampshire hogs, that he could feed corn to (and that provided a significant amount of "byproduct" that he used for fertilizer, thereby avoiding the cost of synthetic, petroleum-based fertilizer). In other words he kept things simple in ways that kept his costs down and his options open. Ways that modern farmers apparently can't be bothered with, and so they now find themselves caught in their own webs.

A cautionary tale for all businesspeople: Keep It Simple (not so complex it's), Stupid.

Small Business Capitalization

I was at an event at U.S. District Court the other evening, and the discussion topic turned to the federalization of criminal law and how just about everything is a federal offense these days. I remarked that, when clients approach me about raising capital, I tell them to deal cocaine; at least then they would know what they were doing wrong, and when they got caught, the punishment would be lighter than for a securities violation.

Nobody laughed. The problem was, it was no joke. The securities laws are so complex and draconian that it is virtually impossible not to run nastily afoul of them unless you spend all the money you raise on attorneys and accountants. I'm overstating, but I'm exasperated, and this is my blog. As for the so-called "safe harbors," they aren't safe; they're just less than certain death.

So if you own a business, squeeze it. Pare it down. Fund it with friends and family (although that will probably be subject to the securities laws too, so watch it). Maybe you can sell it to somebody else and let him worry about it. Just make sure you don't run afoul of the franchise/business opportunity regulations.

About that Costa Rican retirement...

...just how is that going to work now?

A lot of Americans have been planning on retiring overseas because the dollar traditionally has stretched farther in "developing countries," a major consideration for folks on fixed incomes. The game has changed, though, folks. The dollar has dropped against all other major (and most minor) currencies like a shot quail, and even those currencies that have traditionally pegged their value to the Yankee Dollah have been taking extreme evasive maneuvers to minimize exposure to this decline. That means your money is worth less, a lot less, just about everywhere. To put the value decline in perspective, just about the entire run-up in petroleum prices and the overwhelming bulk of the run-up in food prices have been the result of the declining value of the dollar.

If this continues, you folks who have been planning that cottage in Central America for the last 20 years may be compelled to conclude there's no place like home.