I haven’t read this anywhere, so perhaps I’m among the first to say it, but the effectiveness of the traditional seasonal sales is officially over or dying quickly. What I’m talking about are time-of-year sales like Black Friday, President’s Day Sale, Back-to-School, even Christmas Sales. They are no longer significantly meaningful to consumers. We now expect things to always be “on sale” (i.e., discounted)…somewhere. You see something you want, and you just know that you can get it cheaper by searching the Internet. C’mon, were the Black Friday sales limited to just the Friday after Thanksgiving??? No way. I continue to see “Black Friday” sales even now in the middle of summer. Hell, I’ve seen “Black Monday” sales!

Now, I’m not saying that they won’t continue to happen, because retailers love to name their sales events to give them meaning. I’m just saying that they are becoming ineffective as a marketing technique. It probably has a lot to do with the equalizing of the marketing playing field due to the Internet. I like it.

It’s similar to what has happened with TV shows. It used to be that ALL shows started in exactly the same week in the Fall. That is still somewhat true, but TV shows now start all the time. January. Summer. Whenever. Someone finally figured out–I think Fox started it–that launching a show when other networks were showing reruns or whatever was a good time since you didn’t have to compete with other new show announcements. Retailers have figured out the same thing. (

My cable modem was unable to connect yesterday, so I called techsupport. After about 15 minutes of holding and the obligatory check-the-lights-unplug-replug, I got an appointment THREE DAYS in the future! Later I went behind the TV and made sure the coax cables were fully screwed in…they weren't. The modem connected right up.

Now the point of my story. Unsuccesfully tried to find the local number, but ended up calling the national 888 number to cancel my appointment. Well, their automated system knew I had an appointment scheduled and had options to reschedule AND cancel! Holy freakin sh*t! I am very impressed. The front end of the techsupport process sux, but this was an unexpected surprise.

I friend of my daughter's works at her Dad's telemarketing company selling newspaper subscriptions. I learned some very interesting things about how they operate:

• When the computer dials, it waits until you say something. At that point, a light goes on and they hear a tone. They often aren't paying attention and that's why there is often a pause between the time you say “hello” and when they start their pitch.
• They will usually say anything within reason to get you to buy, like “we can get it to you in just 2 to 3 days.” In reality, they have no idea when the delivery will start.
• They have NO WAY to hang up. They have to stay on the line as long as you do. Obviously, it pisses them off if they know you aren't going to buy anything.
• They can mute you so you cannot hear them, but they can still hear you.
• They will try to fake you out and tell you they are hanging up so they can move to the next call. They are really hoping you hang up since they can't. They may mute you to make you think they have hung up.
• If you get 4 sales in a 1000 calls, that's considered good!
• Answering machines screw them up. Basically, their computers treat it as if a real person answered. If they get one, they have to call for assistance.
• Some people pretend to be answering machines just to see what the telemarketers say.

Fascinating stuff…

The general public always seeks to find a way to make a quick buck.
A lot of these people don't have the background–some might say
intelligence–to make sound investments, but invest anyways. They've got
some money to invest, or worse, borrow money, and it
has to go somewhere. A little blind success is often interpreted to
equal knowledge or talent. In the past decade, it's been tech stocks, then
real estate, and now commodities.

At the height of the tech bubble, you could throw a dart out the
window and hit a winner. I heard people brag about making a
killing on this or that stock. I know a guy who gave a kid some money because he had read a lot of
books and had made some money for others. He turned a little profit on
the first investment and, obviously, this kid–and I really mean a
kid–knows something and has a knack for this. The guy went all in on
the next round and ended up losing almost all of it. The wife of a
friend bragged about how easy it was to make a killing on tech stocks
and that I should really get into it.

A couple years ago, another fellow I know was bragging about his
real estate investment in Las Vegas. How the value had risen so much in
the short time he had owned it. He was looking to make another purchase
in Phoenix. I was floored because even at this time the Phoenix and Las
Vegas markets were showing warning signs. I questioned him and he
hadn't even been doing any research!

You know what the sign of the good investor is? Knowing when to get out. You have to be willing to give up some potential upside for cashing in on actual gains. What most people don't understand is that the real trick to investing is NOT knowing when to get in, but when to get out. How many investor friends do you know that have an exit strategy?

Well, commodities have all the makings of the next bubble. In
particular, I'm talking about oil, because that's the most visible to the common man. My
feeling is that for a bubble to be created, you need mass amounts of
investors. So that means you've got to go past the normal institutional
investors and hit the everyday Joes. For that to happen, the investment
has to be understandable to them. It's gotta have a direct impact on
their lives. Tech, real estate, and gasoline all meet this test. It's
gotta sound logical to them on a very basic level. You aren't going to see a bubble in esoteric areas like pharmaceuticals, rail roads,
shipping, etc. because the everyday Joe can't see the direct impact on
their life and, more importantly, a big quick payoff potential.

It's kind of like a pyramid scheme. For it to work, you need a lot of suckers…err…I mean people. The smart people, the original organizers, are at the top. These are the institutional investors. These people do it for a living and know what they are doing. As the pyramid grows you need more and more base people and that means you have to go beyond the real investors. Eventually you run out of people (or money) and the whole thing collapses, or in our case bursts.

I suppose the litmus test is when you see people that don't normally invest start investing. I haven't heard anyone around the office claiming to be making boat loads of money buying oil, corn, etc., so perhaps this bubble has a ways to go. In the meantime, all of us will have to pay the price at the pump.

On a side note, I think the high price of gas is a good thing. It's
the only way we are going to see alternative fuel development. Also, if the
price gets much higher, driving is going to become a luxury and that
has got to impact traffic (if it hasn't already).

I've had this theory that we will soon reach a point where rising gas prices will result in a significant reduction in traffic. The demand for gas is inelastic, yes, but not absolutely. Demand will diminish if prices get too high. The question is how high. The turning point will be when a significant number of people can't afford to fill their tanks as opposed to just grumbling about the price. I've witnessed people at gas stations giving the cashier only $20 and even $5.

The reason I bring it up now is that the LA Times just ran a piece that discuss this and, albeit based on anecdotal evidence, some feel that traffic has lessened. My gut feeling was that $5.00/gallon was the magic number. That would be $100 for a 20-gallon fill up. Once we start approaching and passing the 3-digit fill-up price, people on a large scale will start cutting back.

Unfortunately, I think we will soon find out if I'm correct. 

CNet has an article entitled “Days numbered for tax-free Net sales” The article declares that online sales will all be subject to sales tax very soon. Well, people have been saying that since the days of catalog sales (ie pre-Internet) and I’ve been saying no way for as long.

Writers that push this notion have no concept of how things really work. There are three reasons this will never gain traction in CA:

1. CA already taxes these out-of-state purchases under the Use tax laws.
2. CA has an army of auditors that shake out CA taxpayers for unpaid use tax. Although this is targeted mostly at businesses, that is definitely where the juice is.
3. Agreeing to an online sales tax will give these use tax dollars to other states 

It’s not a coincidence that the most populous states, CA and NY are not part of the efforts to come up with a national streamlined sales tax. They have the most ot lose and any uniform sales tax would cost them tons of tax revenue.

I also doubt the feds would pass something because sales tax law varies so much from state to state. Heck, some states don’t even have a sales tax. A federal law would cause kaos.

So rest easy Californians (and New Yorkers) your out of state purchases will remain tax free. 

I have been predicting this for many years. In my opinion, California (or any of the largest states) would never join the group trying to standardize sales taxes and, thusly, begin to tax Internet sales. Looks like, for once, I was right.

On the face if it, it sounds stupid for CA to not want a piece of the huge untaxed Internet sales. What people do not understand is that there is already state laws for a “Use” tax which taxes out-of-state purchases based on the “use” of the item in the state. There is even a space for it on your personal California tax return, which no one fills out.

California already goes after businesses that purchase out-of-state goods and makes them pay this use tax. If they were to adopt this uniform multi-state standardization they would likely lose tax revenue. Think about it: California has an economy larger than most countries. CA is not about to give up the right to collect use tax on that huge amount of consumption which it would under any type of multi-state standardization.  

Don’t expect the feds to step in either. This is a state matter. 

State walks away from Internet tax effort

Silicon Valley / San Jose Business Journal – February 9, 2007

by Timothy Roberts

At a time when California is trying to find money to balance the
budget, fund a statewide health-care plan and build roads and schools,
lawmakers have backed away from one potential source of money: the
Internet.

Eliminating that possibility was, in the words of Board of
Equalization member Bill Leonard, “a non-decision” that occurred last
year when the Legislature declined to fund California’s involvement
with other states in an effort to synchronize state sales taxes.
Simplifying the taxes charged by the nation’s 7,500 tax jurisdictions
is the first step before asking Congress for the right to require
sellers on the Internet to collect sales tax for local jurisdictions.

Organizers of the tax effort say California’s absence doesn’t doom
the effort, but without the nation’s most populous state as well as the
absence of New York, Texas and Florida, it appears unlikely that the 15
smaller states can prevail with the idea, although they plan to lobby
Congress this year for the taxing legislation.

According to the Board of Equalization, California forfeits about $2
billion a year in taxes by not collecting on out-of-state sales made
over the Internet.

The state does require Internet retailers who have physical stores
in California to collect sales tax on sales made to Californians. The
state also requires its residents to report purchases made over the
Internet and pay taxes on them. Apparently few people do. (There’s a
line on the income tax form, in case you’ve missed it.)

In 1992, near the dawn of e-commerce, the U.S. Supreme Court ruled
in a North Dakota case that states cannot impose their taxes on other
states. It would take Congress to overcome that barrier. Fifteen states
have joined a compact in which they agree to regularize their sales
taxes.

The number of states involved has varied over the six years that
they have been working on the issue. California got involved in 2003 at
the urging of then-state senator Debra Bowen, who is now Secretary of
State.

The number has dwindled, however, as the larger states began to
realize the changes they would have to make to conform to the wishes of
the smaller states. Each state has just one vote on the governing board
of the Streamlined Sales Tax Initiative.

At the moment, the largest states involved are New Jersey, Michigan, Indiana and Ohio.

Meanwhile, California, Texas, New York and Florida are on the outside, although Florida and New York are still looking in.

Washington, Wisconsin, Massachusetts and Hawaii are considering
changes in their tax codes, says Harley Duncan, executive director of
the Federation of Tax Administrators, an organization of all the tax
agencies of all 50 states.

“It would be good to have all the states involved,” he says.

Some states may be reluctant to make a move until Congress has
actually authorized the states to require the sales tax collection,
Duncan says.

“Until we can mount a credible effort on the hill, it’s kind of easy for states to say, what’s in it for me?” he says.

Two bills were floated last year, but they differed in how they
defined the term “small business.” That was important because in both
bills small businesses were exempt from collecting the sales tax.
Congress wanted the states to decide the issue before taking up the
legislation, says Scott Peterson, executive director of the Streamlined
Sales Tax Governing Board.

This year, the states will need to agree on the small business
definition and make another push on Capitol Hill. So far, however, the
Senate Finance Committee, which has jurisdiction over the matter, has
no hearing scheduled on the issue, and it has not caught the attention
of the House of Representatives either.

U.S. Rep. Zoe Lofgren, D-San Jose, who serves on the House Judiciary
Committee — which would consider the matter if it comes to Congress —
says the issue has many complications. For one, some taxing districts
could lose revenue, she says.

In a separate issue, Congress will consider renewing a moratorium on taxing Internet connections that expires in November.

“We need to enhance and accelerate the use of the Internet and broadband,” Lofgren says, “not tax it.”

California, which would have had only one vote among the smaller
states, would have had to give up power over much of its taxing
authority, and BOE members began to doubt the advisability of the move
when they began to realize just how out-of-sync the compact members
were with California.

The three big problems cited by Leonard were:

• District taxes, like the one for BART to San Jose and Santa Clara, would have to be eliminated or made statewide.
• Sales taxes would have to be uniform throughout the state.
• The state would lose much of its authority to choose what is taxable
  and what is not. Under the compact among the 15 states, for instance,
  juice, water and soda would have to be considered as one. California
  doesn’t tax water and juice, but it does tax soda. That difference
  would not be permissible under the joint state agreement.

“I don’t like giving up my sovereignty to some interstate commission to decide if we tax soda or not,” Leonard says.

 

It’s inevitable. Anyone who says it is not is uninformed or in denial. The OffBE.AT Los Angeles Housing Bubble Forum