This Week in Bank Failures

Could a cascade of international bank failures start in Russia or Greece?

There is concern in Europe about these two countries on the edge of the continent — Russia because the country has put the financial condition of its central government at risk in a desperate bid to keep its entire banking system standing, and Greece as it attempts to renegotiate the terms of its international bailout while large blocks of sovereign debt are held by the largest banks there.

The ripples of a banking system collapse in Russia or Greece would not reach far, however. Neither country is enough of an economic heavyweight to make much of a dent on Europe as a whole. In Greece less than half of the banking system is at risk of insolvency if Europe cuts loose Greece’s web of bridge loans. In Russia the central government has some experience in replacing failed industries. The Wall Street hedge funds that have bet heavily on Greece might go under, but this would barely be noticed by anyone not owning those shares; the two or three banks in Vienna that would take a hit in the event of a total banking collapse in Russia could be propped up with only a touch of support from outside that country.

Large depositors, though, have reason to worry, and deposit flight from the more troubled banks in the coming weeks is something to watch for.

Radio Shack Goes Into Bankruptcy With a Plan

The story floating around about Radio Shack’s bankruptcy plans didn’t quite make sense. What would Sprint want with another 1,000 stores? And why would Radio Shack shut down completely? The latest word, that Sprint will occupy only about a third of each store, with Radio Shack merchandise in the rest of the store, makes more sense.

Radio Shack filed for bankruptcy late today, and while all the details have not been worked out yet, it looks like one third to one half of Radio Shack stores will stay open. Most of the rest could close, though there are a few caveats. Radio Shack’s franchise locations, almost 1,000 of them, are not part of the bankruptcy and will stay open.

There continue to be reports that Amazon could end up with a few hundred of Radio Shack’s stores. There are several ways that could happen, and Amazon is probably still working on its plans.

The commentators who were ready to pound nails in Radio Shack’s coffin were not too far off. Radio Shack is obviously overextended, and it may end up with barely a third of the footprint it had a couple of years ago.

Staples Buys Out Its Imitators

Staples has reached a deal to buy Office Depot, news sources are reporting this morning.

Breaking: Staples to buy rival Office Depot for $6.3 billion http://t.co/jenkULbyz4

— TIME.com (@TIME) February 4, 2015

It’s a move that comes barely a year after Office Depot bought OfficeMax, so now the three large-format U.S. office supply chains will collapse into one — albeit a smaller chain and one that has a good chance of surviving. Consolidation is one of the surest measures of a declining sector, but you didn’t need consolidation to discover that office supplies were a declining category. With more computer documents viewed on-screen and fewer printed, there is not much need for paper, ink, and the related supplies that define the office-supply category. All three chains were in the process of closing stores, and that is a process that will have to continue.

No Time for Clothes

Bombfell is a sign of the time, I think. It’s a clothing subscription service that promises to save men most of the trouble and aggravation of shopping for clothes. I can’t mention Bombfell without a few caveats: at a price near $69 per item or $5,000 per year, it’s not for submillionaires; customers still have to try on all the clothing, so the promised time-saving is mostly an illusion; the range of styles is strictly inside-the-box. Still, an entire business built on the suggestion that you can avoid the inconvenience of clothes shopping is a measure of our collective time pressure.

This is, of course, a first world problem. “How am I supposed to find the time to go shopping for clothes?” is not a question that would easily occur to most of the people in the world, for whom just having clothing that fits and is not torn or stained is a mark of success in that department. Just the thought that you need new clothing every month is a cultural mistake that results in heaps of clothing being donated to charity while still in new condition. A better answer for most people who don’t have time to shop for clothing for a couple of years is to wear the clothes that are already in the closet. That, you may recall, became a fashion trend in 2009, much to the consternation of the fashion industry. That was more from financial pressure than from time pressure, but the effect is the same. There is no telling how many people have stuck with the no-new-clothing strategy for six years, since it takes longer than that for a closet full of clothes to start to look shabby. To sum this all up, if you really wanted to be practical, you wouldn’t be shopping for clothes quite so much, and it does seem as if shoppers are cutting back.

The failures of a series of fashion retailers this winter even as shoppers have more money to spend also hints that clothes shopping is wearing on us. Perhaps fashion has become too subtle or too complicated. Perhaps the tight link between clothes and success has been lost to other categories: food, exercise, mobile devices. Perhaps the decline of the department stores has left clothing retail adrift without an anchor. Whatever the reason, clothing does not seem to be winning our attention in quite the same way it did in the past.

Fukushima Focuses on Robots

Four years later, the Japanese government is trying to get people to return to Fukushima in spite of the elevated levels of radiation that linger throughout the area. The cornerstone of this effort is a planned robot development zone with associated tax incentives. It is fitting in a way, since robots might help with the reconstruction effort over the next decade, and new advances in robots will be needed to ultimately disassemble the damaged nuclear reactors. The story today at The Asahi Shimbun:

Robot development zone planned for Fukushima to accelerate residents’ return

The previously optimistic timetables for decommissioning the reactors have been set aside, and the operator is having difficulty meeting even the more pragmatic plans. It is two months behind in clearing contaminated water from onsite storage after a series of minor glitches, the kind that can be expected in any industrial operation. The contaminated water poses such a risk that the heavier work of taking the reactor facilities apart can’t begin for the time being. In such perilous work, it is safer to go slow and hope for the best than to rush ahead and suffer the inevitable errors that would result. The central government acknowledges now that work on the reactors will take at least until 2040. That is the kind of time scale that nuclear industry observers had been talking about all along.