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I just read this post, Walmart to Chileans - “We Can Only Spare A Dime” from John Perkins, author of Hoodwinked over at the The Huffington Post and thought it was interesting, and poignant, enough to share here. Check it out:

Walmart to Chileans - “We Can Only Spare A Dime”

“They used to tell me I was building a dream, and so I followed the mob,
When there was earth to plow, or guns to bear, I was always there right on the job.
They used to tell me I was building a dream, with peace and glory ahead,
Why should I be standing in line, just waiting for bread?”
(Yip Harburg, lyrics, “Brother Can You Spare A Dime")

My prayers go out to the Chilean people during this time of crisis. I also feel it’s incredibly important in light of Walmart’s announcement yesterday that they would be donating a million dollars in aid, to provide some perspective on this “corporatocracy” in action.

On January 23, 2009, barely a year and a half ago Walmart’s press release touted “Walmart Confims Successful Tender Offer for D&S - Investment provides major foothold in key South American market.” While most North Americans, financial analysts and journalists did not take note of this announcement, those of us tired of being “hoodwinked” certainly did.

D&S at the time of the acquisition was Chile’s largest food retailer. Walmart’s Executive vice president and CEO of the Americas, Craig Herkert said, “Partnering with D&S, with its strong brands, and its position as Chile’s largest food retailer, is an important step in implementing Walmart’s international strategy. We continue to focus on portfolio optimization, global leverage and winning in every market.”

Walmart, because of this acquisition, now owns 58.2 percent of the issued and outstanding shares of D&S, while the Chilean owners now only hold 40.1 percent, with the remainder 1.7 percent being held by the public.

In both my books, HOODWINKED and THE SECRET HISTORY OF THE AMERICAN EMPIRE, I’ve noted Walmart as a one of the companies that has avoided a true commitment to environmentally or socially responsible operations.

Walmart, Monsanto, De Beers, Exxon Mobile, Adidas, Ford, and GE are just some of the companies that exploit labor forces and destroy the environment in the name of enhancing their “portfolio optimization, global leverage” and greed-driven bottom lines.

When I read the announcement of Walmart pledging an initial one million dollars to aid grief-stricken Chile on Saturday, I could not help recalling the lyrics of Brother Can You Spare A Dime. Written in 1931, today it continues to herald the great failure of the predatory form of capitalism I write about in HOODWINKED.

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After three infants suffocated to death due to faulty hardware on cribs, the CSPS has issued yet another recall for more than 500,000 cribs. Back in November, the CPSC recalled similar drop side cribs, and then, just a few weeks ago, the CPSC issued a second recall on cribs. That makes this the third major reacll on cribs in four months for a total of 3.2 million cribs. All the recalled cribs were sold at Walmart and other retailers.

As news of this recall hit, we read a few pretty gruesome stories that highlight how important this recall was. Here is a story from the Newark Advocate, for instance:

“On July 4, 2007, Isaac Grove was found dead after he had rolled in between the drop side of the crib and his mattress on the first block of Simms Avenue, said Dr. Jeff Lee, Licking County deputy coroner and chief forensic pathologist.

The crib had detached because of a broken plastic stop tab on the lower track, according to a U.S. Consumer Product Safety Commission news release.

Isaac Grove’s chest was squeezed and the infant suffocated within minutes, Lee said.”

This is clearly a major issue, and we think it’s simply disgraceful that any stores would allow products like this to be sold on their shelves.

Walmart, in particular has a history of dangerous products on their shelves. This is the 58th recall of Walmart products since the begining of 20008. Walmart can use its size and clout to push suppliers to produce at a lower cost, forcing them to cut corners to meet Walmart’s price demands and still make a profit. One of the areas that suppliers could cut corners is product safety. Walmart has repeatedly carried products that have been identified as unsafe or dangerous by reputable consumer safety organizations and the CPSC.

But just as Walmart uses its size and clout to push for lower prices from its suppliers, Walmart could instead push its suppliers to produce impeccably safe products. Just recently Walmart announced that it would penalize companies that delivered products to its warehouses too early or late. Imagine if Walmart threatened to penalize companies who manufactured unsafe products, or stop carrying the companies goods all together. Somehow I think the companies would take notice, and everyone would be better off.

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The Consumer Product Safety Commission has recalled two ‘Princess and the Frog’ charm necklaces today due to high levels of Cadmium, a dangerous heavy metal. The necklaces are sold exclusively at Walmart stores. It may sound like many other recall stories, but this is actually the first time the CPSC has recalled anything for containing Cadmium. The metal was spotlighted in a recent Associated Press investigation which discovered high levels of Cadmium in many pieces of children’s jewelry.

Cadmium, like lead and other heavy metals, is a known carcinogen and can cause stunted brain development in children.

The Associated Press found that Chinese factories had started using Cadmium in products after they stopped using lead due to scrutiny from the US government during the last product safety scare.

In our opinion, it is no coincidence that this first Cadmium recall happened at Walmart, either. First because the use of cadmium seems to be linked with Chinese factories, at least so far. More than 70% of Walmart’s goods come from China, making it likely that these toxic metal products could end up on Walmart’s shelves. Second, Walmart has a history of using its size and clout to push suppliers to produce at a lower cost, forcing them to cut corners to meet Walmart’s price demands and still make a profit. One of the areas that suppliers could cut corners is product safety.

We think it’s pretty irresponsible for Walmart to be selling cadmium laced children’s necklaces, or anything else with highly toxic chemicals, for that matter. That’s why we launched a campaign over the holiday shopping season demanding that Walmart remove dangerous products from its shelves. Obviously they haven’t listened.

You can read more about Walmart’s dangerous products and sign an open letter to Mike Duke demanding that he take responsibility for consumer protection here.

The official CPSC press release about the Disney ‘Princess and the Frog’ necklaces is here.

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By this time we should all be aware of the controversies surrounding credit companies - in addition to increasingly complex and confusing options for credit applicants, credit card issuers have been raising interest rates and fees for many current borrowers, many of whom were in complete compliance with their card holders’ agreements when their rates were raised. This is a major reason behind the call for continuing credit card reform.

What many people might not be aware of is the struggle between credit companies and the retailers at which their cards are used. As Bloomberg explains, this could end in a giant Visa vs. Wal-Mart rumble:

Lawmakers are promising new rules to bring down the interchange fee, a charge on purchases sometimes topping 3 percent that’s split by the two banks serving the customer and merchant. Supporters of the legislation include the biggest retail chains, restaurants and small businesses, which say the fees erode profit and inflate prices...Interchange is the second-biggest cost after payroll, Target said, and merchants want to negotiate lower payments collectively without running afoul of antitrust law.

The issue has become such a hot topic, the Government Accountability Office has been ordered to study the effect interchange fees have on both consumers and merchants. The “interchange fee” is the fraction of every credit card transaction that the card’s issuer retains. When combined with additional smaller fees levied by a retailer’s own bank (to which the retailer first submits the transaction), interchange fees can cut into retailer revenue - especially important for those retailers with slim profit margins.

Interchange fees have risen over time - interesting, since technological advances would suggest the cost of such transactions should go down - and the result is a growing battle between retailers and card issuers. Wikipedia provides a surprisingly simple example of how the fees work:

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As the rest of the country slides into recession, Wal-Mart continues to ride high. Retail Metrics, a retail research firm, projects that Wal-Mart will post a record profit of $13.7 Billion this year - higher than the country’s next three retailers - CVS, Home Depot and Lowe’s - combined.

According to my calculations, it would take an average Wal-Mart worker making $10.86 an hour 144,008 years (working 24 hours a day, 365 days a year) to earn 13.7 billion dollars.

US Retailers Looking At Losses For 2008, With 4Q Not Helping [Dow Jones Newswire via Wall Street Journal]:

At least two dozen publicly traded retailers are on pace to show a loss for 2008, with the fourth quarter, usually the industry’s best period of the year, in many cases contributing to the red ink.

Saks Inc. (SKS), Dillard’s Inc. (DDS), Pacific Sunwear of California Inc. (PSUN), Talbot’s Inc. (TLB), Borders Group Inc. (BGP), and Zale Corp. (ZLC) are all seen posting earnings deficits for their current fiscal year, according to Retail Metrics, whose data are based on analysts’ estimates.

Rite Aid Corp. (RAD), which is contending with heavy debt as well as management turnover, is projected to show the biggest loss in the Retail Metrics group, at almost $1.5 billion for 2008.

Circuit City Stores Inc. (CCTYQ), now operating under Chapter 11 bankruptcy protection, is second, with analysts seeing a $314 million loss for the year. Building Materials Inc. (BLG) is pegged for a $154 million loss.

The diverse group also includes Saks, Talbot’s, Dillard’s, Pacific Sunwear of California, Zale and Borders Group and all are expected to see a loss for 2008.

The projections for significant red ink illustrate how deep the morass is for the retail industry, with fourth-quarter results projected to be soft and raising questions about just how bad next year might be.

“There isn’t much good news out there, and conditions are not improving,” said Ken Perkins, head of Retail Metrics.

Of the 40 retailers that Retail Metrics tracks, just 16 are expected to post a profit for 2008, which for most of the group is a fiscal year that concludes at the end of January.

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The biggest oil company in the world and the biggest retailer in the world are loving life as the economy sinks.

Wal-Mart stock has risen 20% since the start of the fiscal year. Exxon Mobile just posted the largest quarterly earnings in American history- to the tune of 14.83 billion dollars.  The recession has done wonders for both companies; the volatile price of oil, puts Exxon Mobile in the position to capitalize on futures from supply-wary market analysts, while Wal-Mart continues to post double-digit profits because of the high number of price-conscious consumers who are forced to trade down - even if it’s against their will.

Many more-upscale retailers, such as Target, are not doing quite as well during the recession.  BusinessWeek reports that looking at the most recent quarter over the past year, Wal-Mart’s same store sales are up 5% while Target’s are down 0.4% and K-Mart’s are down 5.6%.

But these days are numbered. Wal-Mart knows that the recession won’t last forever. This week, they unveiled plans to focus more on renovating existing stores next year than opening new stores. Wal-Mart realizes that when the economy turns up again, many of its new customers will want to shop elsewhere - and they’re trying to stop it. The question is: will it work?

Wal-Mart Wins Big During Downturn [BusinessWeek]

These are heady times for Wal-Mart (WMT). The Bentonville (Ark.) retailer has been enjoying double-digit profit growth and strong sales as bargain hunters crowd its aisles. Its stock is up about 20% since the start of the year. And shoppers like Sal Garcia of Downey, Calif., are joining the growing ranks of loyal customers. “Look,” says Garcia, 52, putting the last of 10 shopping bags into the trunk of his Lexus, “all that for $54!”

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According to Chinese media, Wal-Mart’s latest international failure might be Wal-Mart China - which, within its 12 years in China, has failed to become profitable.  One article notes that Wal-Mart’s “market share has retreated in defeat” and that Wal-Mart’s lofty sales goals are extremely “distant” figures.

Even according to data from China’s Department of Trade Wal-Mart’s rank within the retail sector has dropped from 17th in 2003 to 20th in 2004—and in 2005, Wal-Mart dropped again to an astonishingly low 30th.

To analysts, Wal-Mart China’s financial failures may be a significant factor in why Wal-Mart decided to abandon its Wal-Mart Asia headquarters in mainland China.  However, Wal-Mart Asia chairman and CEO Vicente Trius makes clear that China remains important to Wal-Mart’s global purchasing.  At the same time, though, Trius also states that locating the Asia headquarters in Hong Kong will preserve the “independent nature” of the Chinese operations—perhaps a hint that Wal-Mart wants to isolate the damage.

At any rate, it looks like Wal-Mart China has interesting times ahead of it.  See both articles below for more details.

No Opportunity for a Wal-Mart Asia Headquarters in Shenzhen [Finance and Economics]

Wal-Mart, who entered China 12 years ago and still has not made a profit, announced on September 3 that it will establish its Asia headquarters in Hong Kong.  Before this, it was widely spread that Shenzhen, Wal-Mart China’s headquarters and Wal-Mart Global Procurement Center, would be Wal-Mart Asia’s headquarters.

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