“Hello, yeah, it’s been awhile…” I’d Really Love to See You Tonight, England Dan & John Ford Coley

Hi Tom-

As you know, the Abyss is a fan of the genre called Popular Music. And while over the last few months the US economy “turned around,” “seemed to have improved,” “finally reached bottom” or whatever the .gov instructed the Mainstream Media to disreport, the Abyss took a sabbatical to review your sector—Popular Music.

Now at first blush, Tom, I need to be candid that your sector, in the terminology of the .gov, is “somewhat challenged in its fundamentals.” Specifically, the annual occurrence of the jaw-dropping plunge in the sales of your physical product is a bit of a warning sign, I think.

In fact, as horrible as a 13% yearly drop sounds, if Sony Music had not had the foresight to have the biggest star in the history of music die in such a grandly salacious way that it makes Tiger Woods wish MJ could have held on at least until he could admit to the world that he likes the ladies, the number would have been closer to 14%.

And had Sony not had the laser vision to sign and painstakingly develop and nurture homely, middle-aged warbler Susan Boyle (a tried-and-true recipe for big chart-topping dominance), maybe the number edges close to 15%. But it’s hard to teach that kind of A&R these days it seems, so next year could be way worse. Just a heads up.

“I won’t ask for promises, so you don’t have to lie…”

So, anyhoo, while I was kicking it with your peeps in LA, I noticed an alarming general decline in all things Tinsel Town, like roads, traffic, business, fire dept schedules, employment, real estate prices, commercial building occupancy, etc.

And it made me wonder: Could LA be as bad off as the Banana Republic of a state it is the starring attraction of?

Economist Mike Shedlock thinks LA might be somewhat challenged in its fundamentals:

Mayor of Los Angeles Says “Bankruptcy is Not an Option”

«With city officials declaring that “bankruptcy is not an option,” Mayor Antonio Villaraigosa released a long-term plan for the city’s finances Thursday, including several billion dollars in potential savings and possible layoffs of 1,000 workers.

In a letter to City Administrative Officer Miguel Santana, the mayor and City Council leaders called for the start of steps needed to make layoffs and perform studies on dealing with this year’s continuing shortfall of $200 million and the projected $400 million deficit for next year.
“This mayor has no interest in going down the road to bankruptcy,” said Deputy Mayor Matt Szabo, who has been assigned the task of developing the overall financial strategy for the city.»

Gotta say, Tom, when LA has north of 12% U3 unemployment and maybe 20% U6 unemployment, and a foreclosure crisis in its signature upper-middle-class homes just really picking up steam now, not to mention way worse holiday retail numbers than expected, it sure seems that your city might just be the center of the solvency crisis facing California.

Or as Shedlock put it:

“When a politician says something is “not an option” that generally means it is (or soon will be). Sometimes it means it is all but certain. By the way, LA is bankrupt, all we are talking about here is whether the city realizes it or not. The mayor’s statements prove he does not fully realize the gravity of the situation.”

Big Power Lunch and Rhinoplasty Kisses,

The Abyss