There has been another instance of a person using a intercom to make a racially charged statement. This time it was at Whole Foods.  I have frankly been trying to get my hands around what crime was committed the 1st time it happened at Walmart.

To refresh my readers on the facts, in March  a teen boy was able to access the intercom in a New Jersey Walmart and put out the following announcement:

“Attention Wal-Mart customers: All black people leave the store now.”

An investigation was conducted by law enforcement, The teen has been charged with bias intimidation and harassment.

By charging this teen with those two crimes, we are attempting to punish speech, not conduct. This is something the 1st Amendment frowns on unless very narrow exceptions criteria are met. It must fit into a specific class of speech that takes it out of the realm of 1st Amendment protection. We do not punish people for simply using racially charged hate speech with nothing more. Some examples of speech that does not have protection are speech that incites others to imminent violence and fighting words.

Bias intimidation is an enhancement crime.  A person can not be guilty of bias intimidation without being guilty of an underlying crime which is in this case harassment.

The issue becomes whether in engaging in the offensive speech in asking blacks to leave the Walmart does the harassment charge comport with the 1st Amendment.  The New Jersey Harassment statute reads as follows:

Except as provided in subsection e., a person commits a petty disorderly persons offense if, with purpose to harass another, he:

a.Makes, or causes to be made, a communication or communications anonymously or at extremely inconvenient hours, or in offensively coarse language, or any other manner likely to cause annoyance or alarm;

I have 3 issues with the statute. The 1st is the use of the phrase “communication or communications. It is sweeping in all types of speech including political speech and other speech which would enjoy 1st Amendment protection. The 2nd is the phrase “extremely inconvenient hour”  One person’s inconvenience is anther’s normal work day. If I make an anonymous 7am call to my state representative who voted for Health Care reform and drop a couple f-bombs have I violated the harassment statute?  A lot of people are probably guilty of harassment in this country right now.

The 3rd thing that bothers me is the phrase “likely to cause annoyance or alarm” What does that mean?  It is vague.  Moreover, it seems there would be existing laws that could have just as easily been used to prosecute this boy such as trespassing or possibly criminal mischief.

As despicable and offensive as the teens speech was, I believe the New Jersey Harassment harassment statute is void on its face as being unconstitutionally vague and unconstitutional in its use to punish the speech of the teen.

Today I  took a trip to Atlanta, Texas to celebrate Thanksgiving.  Atlanta is an East Texas town of about 6500 people.  As I drove through “downtown” Atlanta it was clear that that any resemblance to its namesake in Georgia was in name only.  It was named after Atlanta, Georgia because many of the early settlers were from that area.

It was a typical one street downtown as I have seen in other small Texas towns such as Olney, Boyd and Archer City where the classic movie The Last Picture Show was filmed.   Streets like you would see in any “Route 66” town across America.    As is standard in small Texas towns, there is a barber, candy shop, bank, hardware store, bakery, sporting goods store, few antique stores, a Dairy Queen and of course a huge, bustling, Walmart.  The staples of  life that can be cut and pasted to countless small towns across America.

There were also numerous boarded up storefronts.

The Atlanta Chamber of Commerce Web Site states:

“Atlanta exemplifies small town America. Warm smiles and warmer greetings reflect a friendly and progressive community.”

What Atlanta and other small towns all over the country never envisioned when they were formed (Atlanta was founded in 1872)  was that small town America would one day be synonymous with the arrival of Walmart.

Today in Atlanta as I lay in a turkey coma on the couch watching The Dallas Cowboys dismantle their opponent in their new stadium dubbed “The Death- Star”  I casually mentioned that it was sad that there were so many boarded up stores. Out of the depths of my turkey fog I heard a voice in the room yell out”

Walmart Did This To Us!

It then occurred to me.   Many in small town America may look at  the arrival of Walmart as the invasion of Evil Empire and its own type of economic Death-Star

Darth Vader, who was unmasked many years ago, didn’t initially destroy these towns with his death ray. He arrived with the promise of peace and prosperity. The Death -Star then set down in the middle of town,  touting every possible convenience a person could want at cheaper prices, with greater diversity and quantity.  Unfortunately no Jedi Knights ever came to the rescue.  They were to busy fueling up their Starfighters at discount prices.

Now, instead of seeing the sign “Victory Tonight And Free Haircut Tomorrow” if the high school football team or basketball team wins, we see, “Going Out of Business Liquidation Sale.”

How can the “It’s A Wonderful Life” dream of small town America possibly compete with the neon lit entrance to the Death Star just a block away?  Instead we see “The Last Picture Show” at the local theater just before it closes for good to be transformed into a Walgreens.  The residents of Atlanta, Texas leave the theater and disappear into the Death Star never to be heard from again by the local merchants.

©2009 Brian Cuban

Sears Holdings(SHLD) chief Eddie Lampert just announced that they would be closing 12 under-performing stores outside of Illinois.  Sears continues to plummet in almost every possible metric. The stock has dropped from a 52 week high of 139  to its current trading price around 50 plus or minus a few points.  This translates to a market cap valuation drop in excess of 4 billion dollars. That’s the good news.  As we approach what should be on of the biggest holiday “non-spending” seasons since the Great Depression and an expected demand plunge in the retail appliance sector, the plummet should continue.  IMHO we will see Sears trading in the 30-40 range bye the end of the year.

The most recent stock plummet while more dramatic than others has followed the trend of most other retailers in these troubled economic times.  Word on the street is the Sears actually puts itself in as better positioned than the likes of Target and Walmart due to a hefty cash on hand surplus.  That is the biggest slight of hand since Houdini.   A cash surplus hoarded while your company goes under is not a positive asset.  Sooner or later, sales do not keep up with expenses and that cash will have to be used.  You can only close so many stores.  Pretty simple math.   Walmart, Target and Loews are well run companies.  People who shop there will continue to shop there even if they are going less frequently . They are not going to suddenly decide to switch to a poorly run Sears with outdated stores and a less desireable inventory with the exception of a very few brand that inspire loyalty such as Craftsman.  The Sears free-fall is only accelerated.  Not only do they have to deal with  reduced foot traffic as a result of the current economy, they are still the same poorly run company they were before the Wall Street meltdown. The same retail decision making fundamentals will continue to plague them apart from these troubled times.

Word on the street is that Sears is locked in on their lines of credit(although I hear they had one reduced). If this is true Lampert may be able to continue to sit on his cash surplus while spending none of it to improve infrastructure and most importantly get someone in who knows retail and will actually be allowed to speak out with authority to get things done.  If it is not true and credit continues remain  tight throughout the holiday season, we can expect Eddie Lampert to have to part with a lot of that cash surplus to keep things going.  I also find it interesting that guys like TheStreet.com’s Jim Cramer have consistently spoken positively about  about Sears.  Have we been looking at the same company?  Jim seems to consistently fall back on Sears strong balance sheet and their EBITDA.   I am not sure what that has to do with sound company fundamentals going forward.  It is no secret that  Jim has  been “in the tank” for Sears.  His friendship with Eddie Lampert dates back to their Goldman Sachs days.   This in a vacuum does not mean Jim can not be objective but it does get to the point where you look at his Sears analysis and recommendations and say WTF.

There is a huge differene however between the drops of Sears as compared to Walmart, Target and some other retailers.  While they will also suffer as a result of depressed spending and severely tightened credit, they are still fundamentally well run companies.  Even in these ridiculously tight credit enviorment, while they may pay a little more for their money, the banks will still renew their lines at comparatively favorable rates.  Their custmoers may show up less frequently but they will still show up.  Business will continue as usual. Sears will continue to lose market share through these tough times.  Credit will be harder to get. When they do get it the money will be more expensive.  Eddie will be forced to use cash surplus.   When the cash is gone will there even be a Sears?

I recently took a trip to Atlanta, Texas. Atlanta is an East Texas town of about 6500 people. As I drove through “downtown” Atlanta it was clear that that any resemblance to its namesake in Georgia was in name only. It was named after Atlanta, Georgia because many of the early settlers were from that area. It was a typical one street downtown as I have seen in other small Texas towns such as Olney, Boyd and Archer City (where the classic movie The Last Picture Show was filmed. Streets like you would see in any “Route 66” town across America. As is standard in small Texas towns, there is a barber, candy shop, bank, hardware store, bakery, sporting goods store, few antique stores and of course a Dairy Queen. The staples of life that can be cut and pasted to countless small towns across America. There were also numerous boarded up storefronts.

The Atlanta Chamber of Commerce Web Site states:

“Atlanta exemplifies small town America. Warm smiles and warmer greetings reflect a friendly and progressive community.”

What Atlanta and other small towns all over the country never envisioned when they were formed (Atlanta was founded in 1872) that small town America would one day be synonymous with the arrival of Wal-Mart. Some would compare it to the arrival of the Evil Empire and its Death Star. Darth Vader, who was unmasked many years ago, didn’t initially destroy these towns with his death ray. He arrived with the promise of “we come in peace”. The Death Star then set down in the middle of town, touting every possible convenience a person could want at cheaper prices, with greater diversity and quantity. Unfortunately no Jedi Knights ever came to the rescue. They were to busy fueling up their Starfighters at discount prices.

Now, instead of seeing the sign “Victory tonight and free haircut tomorrow” if the high school football team or basketball team wins, you see “Going Out of Business Liquidation Sale.” How can the “It’s A Wonderful Life” dream of small town America possibly compete with the neon lit entrance to the Death Star just a block away? Instead we see “The Last Picture Show” at the local theater just before it closes. The residents of Atlanta, Texas leave the theater and disappear into the Death Star and are never heard from again by the local merchants.

As I drove through downtown Atlanta, the town seemed dead. I do not mean dead in the lack of people. I mean dead in spirit and any vision of a brighter economic future. It was as if a death ray was fired out of space vaporizing a once-thriving small town and replacing it with boarded up stores, liquidation sales and a stagnant economic future. It was an almost ironic predatory invitation for its own residents to pick off the bones of what they had built over decades. I stopped a local resident walking down the street and asked what she thought about the future prospects of Atlanta, Texas. Into my ear came the deafening yell, “Wal-Mart did this to us!” I thought about it and it made perfect sense. What are the economic consequences of the Wal-Mart Death Star landing in virtually every small town in America? For every action there is a reaction.

Wal-Mart is the world’s largest retailer – with 1,489 Mega-stores, 1,397 Super Centers, 532 Sam’s Clubs, and 56 neighborhood markets in the U.S. alone as of 2003, and close to a thousand more abroad from Argentina to Germany. Wal-Mart is now the single largest private employer in the U.S. with 1.1 million “associates” and higher earnings than the gross national product (GNP) of 150 countries! In 2003, Wal-Mart sold 19% of all groceries in the U.S. and recorded $9 billion in profits.

A study of small towns in Iowa revealed a loss of over 7,300 businesses from 1983 to 1993 due to a radical shift in consumer spending to chain stores like Wal-Mart. Five years after a superstore opens, small towns within twenty miles experience a 19% decline in business. For every 100 Wal-Mart jobs created, it is estimated another 150 jobs are lost. Is low-cost competitive pricing destroying the very entrepreneurial spirit that built this great country?

For every action there is a reaction. When Wal-Mart is offering $4 prescriptions as an action, I think the law of physics is pretty clear that “Joe’s Soda Jerk Shop and Pharmacy” that has been there since 1932 is going to suffer. They will hang a sign on the door stating they they lost their home so others could have the cheaper prescriptions they no longer afford.

Are Sam Walton and kin the Darth Vadars of the one-stop shop? I wouldn’t go that far but I did start thinking of the moms and pops who put their blood, sweat and tears into those shops dating back to the Great Depression. They’re now bankrupt, can’t even afford the new $4 prescriptions, and are too proud to enter the Wal-Mart Death Star. People who at one time had a dream are becoming so desperate that meth labs are now outnumbering local retail shops in some of these small towns. There is always welfare. I have yet to see Wal-Mart advertise that they are handing out any discount welfare checks.

Does Wal-Mart bring positives to a community? You can ask ten people and get ten different answers. What’s yours?

©2008 Brian Cuban