BlockBuster & The Land of Opportunity

Hello All,

Today started out with a report from Bloomberg of an impending Blockbuster bankruptcy. The bankruptcy came as no big surprise.  I am trying to pinpoint the last time I rented a video from a store.  I believe it was in 2005 in Bangkok.  And it wasn't so much a “store” it was more of a street cart that had hollywood knockoffs, some even before they were released.

Prior to that I had rented some videos in 2003 in Santa Monica, California.  But soon after that I found ways to download the movies for free, and very quickly off the internet and just decided it was silly to drive down to the video store in my car and pick up a hardware media device with digital data encoded on it and return to my house to watch.

And so, for me, BlockBuster died 7 years ago.

But what struck me as interesting is there was no mention from the overseers at the White House on this bankruptcy.  Blockbuster used to be a a very big player in movie distribution.  One could say that they were such a big player that they were too big to fail – that is, if you believe the fallacy of something being too big to fail.

Where was the impassioned, teleprompter speech from Obama stating how we could not let the renting of ancient videotapes and dying DVDs fail?  How the knock on effects of suppliers to Blockbuster, such as the companies who make the lifesize cutouts of movie posters and the thousands of third party “be kind, rewind” suppliers will also see massive layoffs due to the failure.

Many have grown up and entrusted their movie rentals to Blockbuster and it is unconscionable to let this fading dinosaur of in-store movie rentals fail.  Where are the taxpayer billions to keep the gawdy, florescent lights on, at all costs?  And the pleas to keep the good paying jobs employed?

Surely, in this respect, Blockbuster's biggest mistake was not allowing the formation of a United Videotape Rental Workers union (the UVRW) who could have spent millions lobbying government to ensure that no matter how unprofitable their jobs were, that taxpayers would cover the costs of ensuring that no jobs would be lost, no matter how unproductive.  As it is the jobs that are most important – and their subsequent votes for whichever politicians bailed them out, not the productivity of those jobs.

And why was Blockbuster CEO Jim Keyes not in front of Congress this week to explain the details of how the company failed and to warn that, if Blockbuster was not saved, it would mean major repercussions for not only movie renters, but all Americans who have a right to rent movies on VHS and DVD, no matter how antiquated the technology is.

But, surprise surprise, no such things occurred.  Blockbuster's business model has been an abject failure in the 2000s and management decisions, such as declining several offers to buy Netflix for a mere $50 million and instead inked a 20 year deal with Enron Broadband Services to deliver on-demand movies.

In fact, Blockbuster's decades of management miscues has resulted in the company being where it is today.  And, in a flashback to how business was done in the America pre-1990s, the company will go into bankruptcy and be allowed to fail in order to stop the losses it was recurring on a regular basis in order to free up its assets and resources to be put to more productive uses.  How quaint.


This a news report from one of the best sources of news on the internet, The Russian Times (RT). The report, as with anything wherein people find themselves broke and in a dire situation is sad.

But I found many of the details of the report more telling of the problems.

First, the video repeatedly states slogans such as “US Shanty Shame Exposes Dead End for Some in “Land of Opportunity””.

Mantras, usually stated by government propaganda can become ingrained and be taken as being fact even long after any possible validity to the claim  has long expired.  The US, almost certainly, at this point of time, is definitely not a land of opportunity.  It is a land of debt.  A land of corporate bailouts to those who have close ties to the government.  It is also a land of redistribution of wealth and a land of centrally planned economies through the Federal Reserve.

And after decades of this type of activity much of the wealth the US once had has either disappeared or fled the country.  Therefore, calling the US the Land of Opportunity is akin to calling Russia the “glorious kolkhoz peasantry–active builders of communism”.  Sure, that slogan may have made some sort of sense in the 1960s under the communist regime at that time, but to try to live your lives by an old, antiquated slogan nowadays is a sure path to failure.

What may be most interesting about this news piece is that many of the people being interviewed appeared to have Russian or Eastern bloc accents.  Given what  is going on in the world today, and how we commented that the USSA is turning communist/socialist while places like Russia and China are becoming more free-market capitalists means a sea-change is occuring in the world.  One that many people appear to not have awoken to.

Some of the Russian people living in the tent city in the US may not even be aware that the ‘land of opportunity' in today's day and age is just as likely to be Russia, China or Brazil than the US.

Yet it often take people months, years, and sometimes lifetimes to wake up to realities that are changing at a rapid pace in our now very interconnected, digital world.

The same can be said for investors.  The majority of investors I had been trying to persuade to buy gold over the last 5 years never listened to me.  CNBC told them that gold was a barbarous relic, or that it was already in a bubble.  And so they never bought.  And now, upon running into them on the street or via email, I ask if they have yet bought gold.  To wit, the answer is almost invariably, “No, I missed that one.  It's too late now I suppose.”

It's not too late.  We are nowhere near a resolution to any and all of the worlds financial system problems.  Alas, I will likely receive a phone call around 2013, with gold at $3,400 and silver at $100 and many of our stocks having gains in the thousands of percent and those same friends will be begging me for advice on how to get into this “sure thing” market.  Of course, at that time, the end will be near and I'll be looking to sell some of my precious metals to invest in the next great boom, whatever that may be at the time.

It is more important now-a-days, than ever before, to remain educated and always aware of the rapidly changing landscape.  Gold hit another all-time high today and our portfolio continues to power higher.   Why do we, and especially our top-notch Senior Analyst, Ed Bugos, always seem to be ahead of the trends and positioned for major gains well ahead of the public?  It's simple really.  Rather than believe mantras such as the US is the “land of opportunity” or “land of freedom” we spend our days researching what is real and not just what is the common wisdumb or what is being portrayed in the nightly news propaganda.

Roughly 90% of what the public believes is just generally wrong.  And, like the saying goes, it's not what you know that it is dangerous, it is what you know that just isn't true.

At TDV we question everything and do our own research.  Anything less is allowing yourself to be lead astray like much of the masses and miss out on the opportunities that are plain to see if you just are able to open your eyes.  Try our no-obligation $25/month full subscription to see what stocks we are investing in today – many of which have already made fantastic gains, but are set for much more in the months and years ahead.

Until tomorrow,

Jeff Berwick

Chief Editor