The Evil Empire?

About two or three years ago, I had a little extra money in an online investment account. I looked around at the available options for investment, and didn't know a lot.. but I figured, it's only a couple of hundred dollars. I looked and looked, and saw KMART. A struggling company - their stock was down significantly over the last few years. Rumors of bankruptcy were abounding. But, looking at their stores, and the significant changes their management was making, I thought, why not? I purchased 50 shares or so, at what I thought was a bargain price. Somewhere around $1.50 per share, so I was only out $75.00

At about the same time, I saw another stock, an airline stock, that had the same patterns, way down after 9-11... A virtual bargain, although not as cheap as the KMART by any means. I purchased 40 shares of that stock, as well.

Within 6 months, my brokerage statement showed a '0' balance for both stocks. It seems both companies declared bankruptcy, wiping out all or most of the debts in one fell sweep - including writing off outstanding stock shares held by investors. I guess my bargain-hunting, in this case, did not turn out for the best... the good news was that I didn't spend a lot of money....

Now jump ahead two years. I take a look at both of those companies. One of them, the airline, is still struggling... trying to stay alive. Day by day we hear news of their struggles to keep employees paid - albeit with lower salaries, but still employed. The other... KMART... hmmm.... they just bought out Sears.... for about $11,000,000,000 (yes, eleven billion).... Excuse me? Now... something is wrong with that picture.

I don't really have a problem with the davaluation of the airline stock... That company is still facing hurdles. But how can a company be in such financial turmoil that they write off all their common stock, not to mention a lot of other debt, and then just a few months later buy out a much bigger company - for eleven billion dollars? The share price of KMART Holdings (KMRT) recently? About a hundred dollars a share. If my 50 measley shares were still alive, I'd have about $5000 in company stock - not a lot to most people, but surely a lot to me....

I live in the modern America. Where even the penniless can spend money, thanks to freely available credit. Yes, I am guilty of having some maxed out credit cards. Way too much debt to be able to pay off anytime within the next few years, unless - maybe - my home value increases at a much faster rate than it has in recent years.

Perhaps... perhaps I should follow the path to wealth that works for corporate America. Just say, I am overwhelmed with debt... Sorry - can't handle it. File Chapter something or other bankruptcy... write off all of my debts, and then go on with my life, with a clean slate (minus the credit report... but who needs credit if they have no debt?). There have been a lot of lessons learned over the years... We've learned that it's not a good idea to buy on credit. Instead, save it up then pay in cash. Not too hard, unless your monthly expenses are already exceeding your income.

But yet, somewhere in the back of my mind, nags the question of conscience. Who spent all that money? Should I just 'write it off'? Basically, that's like saying, sure I'll do that... and then walking away and never touching it. It's a lie. So, I guess I'll continue to struggle... maybe find another source of income to make ends meet.... I am not the cold corporate giant who has no conscience.

My friend refers to one big computer company as 'The Evil Empire', but I think... companies like KMART, who can play financial games that hurt the public in addition to their investors... maybe they are representative of the true 'Evil Empire'. Yes, all levels of corporate America play those games, but at least some companies attempt to be somewhat ethical in their practices.