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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (27890)	3/5/2005 1:42:49 PM
From: orkrious	Read Replies (2) \| Respond to of 110194

here's a situation which mish would describe as deflation. but since the money supply isn't falling, it's not. it's brutal competition brought about by a misallocation of capital. I belonged to this health club for the last 13 years. franklinclub.com it's a high end club in the detroit suburbs. when I joined, it was the nicest, cleanest, club in the area. it was definitely a meat market. it was known as "the" singles club. in fact, I met mrs. ork there 10 years ago. when I joined franklin I paid an initiation fee to of roughly $200, and an additional $60/month in dues. every year since then they have raised the dues, most of the time by a few dollars. but about five years ago, they got up to the low $80's per month, and a lot of the single women left. for the last five years, most businesses couldn't get away with price increases, but Franklin raised their prices a few dollars a month anyway. there was little competition. the monthly dues are now up to $115/month. four months ago, Lifetime Fitness sent out flyers that they were going to open a club in my area. it's about five miles from Franklin and my home is halfway between the two. Lifetime already had a few clubs in the Detroit area, but until now none was within 10 miles. Monthly dues at Lifetime are $59. Tired of paying Franklin's high prices, I signed up, and the place opened today. lifetimefitness.com The place is massive. it's 109,000 sq. ft., and they have over 400 machines. I can't imagine that they would be building these places and only charging $59/month to belong if they didn't have easy access to the capital markets. as I was leaving the parking lot an hour ago after working out, my cell phone rang. it was Franklin. they want me back, and they will charge me $60/month and reimburse me for the $120/initiation fee I paid lifetime. But I have no interest in going back. Lifetime is a much nicer place. Lifetime is going to destroy Franklin, and it's all because of cheap, overabundant capital.