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  #31  
Old 12-27-2012, 10:46 AM
Turp Turp is offline
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Originally Posted by KevWind View Post
Interesting to note also, that prior to the era of (reduced tax rates or perhaps better referred to as the era of "The Fiscal Hot Air Balloon") . The tax rates that were in effect (and will revert back to) coincided also with an era that was one of the most stable economic growth periods in US history and also was the last time there was a Surplus

Perhaps a good plunge is in fact what is needed.
I'll apologize for an off topic rebuttal but there's more factors playing into the current economic climate than tax rates and the era you mention wasn't most stable because of tax rates there was more to it.

I think one thing is we are experiencing a number of "bubbles" that can't be sustained and tax rates will not fix.

Two things I look at as average "Joe"
My Dad for many years has bemoaned the costs of certain products as compared to what average wage earners could afford; I believe Henry Ford had a statement about this. My Dad is a Baby Boomer, I believe the most productive of generations, they are retired and retiring, reducing their consumption. This was an entirely different case 20 years ago.

Secondly is credit influenced consumption. The dealers and guitar producers advertise FINANCING their products to make them more affordable. This is a nice consumer tool if used judiciously by both the consumer and seller, but the reality is that it can create inflated and artificial demand. The same has happened in housing and the automarket. I'm not saying that there are a lot of guitars sold this way but it must have an impact for them to offer it. If you finance a Taylor 814 or better your looking at a used car payment for a year even that's hardly affordable in today's current climate.

I'm waiting for Guitar Leasing
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Last edited by Turp; 12-27-2012 at 10:58 AM.
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  #32  
Old 12-27-2012, 11:00 AM
harmonics101 harmonics101 is offline
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Guitar Leasing ?

I think Turp might be onto something there.

With all this GAS and rolling over guitar after guitar, I'm thinking Guitar Leasing might be the answer to us Gasaholics

Harmonics101
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  #33  
Old 12-27-2012, 11:15 AM
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KevWind KevWind is offline
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Originally Posted by Turp View Post
.

I'll apologize for an off topic rebuttal but there's more factors playing into the current economic climate than tax rates and the era you mention wasn't most stable because of tax rates there was more to it.

I think one thing is we are experiencing a number of "bubbles" that can't be sustained and tax rates will not fix.

Two things I look at as average "Joe"
My Dad for many years has bemoaned the costs of certain products as compared to what average wage earners could afford; I believe Henry Ford had a statement about this. My Dad is a Baby Boomer, I believe the most productive of generations, they are retired and retiring, reducing their consumption. This was an entirely different case 20 years ago.

Secondly is credit influenced consumption. The dealers and guitar producers advertise FINANCING their products to make them more affordable. This is a nice consumer tool if used judiciously by both the consumer and seller, but the reality is that it can create inflated and artificial demand. The same has happened in housing and the automarket. I'm not saying that there are a lot of guitars sold this way but it must have an impact for them to offer it. If you finance a Taylor 814 or better your looking at a used car payment for a year even that's hardly affordable in today's current climate.

I'm waiting for Guitar Leasing
Yes absolutely there are multiple factors and contrary to popular misconception, although History may display some cyclic similarities. History never repeats itself, after all it's linear.

However I was merely alluding to the humor and irony in the notion that taxes increases (per se) spell an economic disaster. As you correctly state, there are far to many variables involved, to make blanket predictions.
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  #34  
Old 12-27-2012, 11:16 AM
guitom guitom is offline
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Really - the boogeyman isn't out there.
I wish you were right. But you're not.
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  #35  
Old 12-27-2012, 12:37 PM
Turp Turp is offline
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Originally Posted by KevWind View Post
Yes absolutely there are multiple factors and contrary to popular misconception, although History may display some cyclic similarities. History never repeats itself, after all it's linear.

However I was merely alluding to the humor and irony in the notion that taxes increases (per se) spell an economic disaster. As you correctly state, there are far to many variables involved, to make blanket predictions.
I shared the same thought about cycles and how we adjust.
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  #36  
Old 12-27-2012, 02:34 PM
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Guitar Center will head for bankruptcy, and the little, unsecured creditors will get squeezed out. That's another way the big boys make money. All part of God's plan.
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  #37  
Old 12-27-2012, 02:51 PM
Greg580 Greg580 is offline
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Originally Posted by usb_chord View Post
Guitar Center is doing bad. Many of us already heard about this, but. . . I'm a bit confused....

Is it true that Bain placed this 1.56 billion dollar debt burden on Guitar Center after they acquired them back in '07? If so, WHY?! Were they intentionally trying to sink them?
that's how bain capital makes their money, it was a leveraged buyout. They borrow a ton of money to buy a company, then charge the debt to the company, push it into bankruptcy, then sell off the pieces and cash out. They don't call them vulture capitalists for no reason.

read this: http://www.rollingstone.com/politics...pital-20120829
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  #38  
Old 12-27-2012, 03:05 PM
GHS GHS is offline
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I see this thread has taken its own course but could someone explain something to me. If GC goes out, which I really hope it does not, where then does one go to buy now that most of the small independent shops were closed out? Does some other corp assume their dept and pick up the flag and move on? Companies will still be producing and people like us will still want to buy. Not everyone buys online. We want to play our next guitar, maybe try something we have not even thought of. Brick and mortor stores will still be needed to buy a product as personal as a good guitar.
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  #39  
Old 12-27-2012, 03:10 PM
Dwight Dwight is offline
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They borrow a ton of money to buy a company, then charge the debt to the company,
The companies need to earn their way out of debt, those that can't don't survive. GC has a problem making money.
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  #40  
Old 12-27-2012, 03:21 PM
Ted @ LA Guitar Sales Ted @ LA Guitar Sales is offline
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Quote:
Originally Posted by usb_chord View Post
Guitar Center is doing bad. Many of us already heard about this, but. . . I'm a bit confused....

Is it true that Bain placed this 1.56 billion dollar debt burden on Guitar Center after they acquired them back in '07? If so, WHY?! Were they intentionally trying to sink them?
It's not that Bain placed a 1.5 billion debt on GC, they simply bought GC, Musicians Friend, Music 123, Woodwind and Brasswind, Harmony Central and what ever else is tied to GC for the sum of 2.2 billion dollars. They shelled out half a billion in cash and borrowed the rest thinking the economy is bound to improve which it didn't.

Folks like to point fingers of course, in this case towards Bain, but in reality GC wasn't doing that well before the buyout. A source close to the previous owners told me that for GC to keep offering the services it does, well stocked stores, long hours, 30 day return privilege and so on they need to sell guitars at MAP. With all the 15% off sales we've been seeing from Bain this year I'm guessing they didn't get the memo.
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  #41  
Old 12-27-2012, 03:35 PM
edman edman is offline
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The GC near me is always busy. It's safe to assume they generate most of their volume through their online stores (GC, MF, M123, etc.). I seriously doubt they will go out of business anytime soon.
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  #42  
Old 12-27-2012, 03:40 PM
tbp0701 tbp0701 is offline
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Originally Posted by GHS View Post
I see this thread has taken its own course but could someone explain something to me. If GC goes out, which I really hope it does not, where then does one go to buy now that most of the small independent shops were closed out? Does some other corp assume their dept and pick up the flag and move on? Companies will still be producing and people like us will still want to buy. Not everyone buys online. We want to play our next guitar, maybe try something we have not even thought of. Brick and mortor stores will still be needed to buy a product as personal as a good guitar.
That's one of the major downsides of this type of cycle. I think Borders is a good example of what can happen. Where I live, Borders opened large stores a short distance from those of a small, local chain. I believe they knew the market could't sustain both, but they could last longer and did. The local stores shut down, but eventually the market changed and now Borders is gone as well. The only remaining bookstores are a couple of Barnes & Nobles and smaller shops that found a niche.

A similar thing eventually could happen with GC. If it does, surviving local stores may expand, but many of us may just wind up driving further or ordering more from the internet. What I think would be interesting is that some of the larger manufacturers, such as Gibson, have strongly tied their sales strategies to GC, including licensing agreements which many smaller shops cannot afford. If GC would go, Gibson and some others may find themselves scrambling for an outlet.

But that's all if GC eventually goes under and the matter of what could happen. Bain intends to make money someway out of it, whether it's eventually spin it off publicly (the ideal would likely be an offering that would make Bain happy and GC's debt manageable), find another company that wants to try to make it work, carve it up into various pieces and sell it, keep operating it or something entirely different.
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  #43  
Old 12-27-2012, 03:47 PM
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Guitar Center is struggling and may go bankrupt. This was a major factor in Fender (who relies heavily on GC) failing to have a successful IPO (going public, selling stock). It's not that they aren't selling stuff or that they are poorly run. They just can't make enough to cover the interest on their huge debt load. Thanks Bain Capital..
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  #44  
Old 12-27-2012, 04:06 PM
cedarkoa599 cedarkoa599 is offline
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I won't buy a guitar from GC! When you walk into those shops I get so frustrated! I know more than those guys do! I like to go to a shop and 1 support them but do like that they know what they are talking about! I get great customer service! I hope that GC does go out because then the other shops where I used to buy my guitars may carry them again and then I don't have to travel almost 3 hours and yet if not for that store I would have to go to the next state!
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  #45  
Old 12-27-2012, 04:07 PM
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usb_chord usb_chord is offline
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Ted & Greg,

Thanks for the info.
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