According to an article in Crain’s New York Business, there are now 493 pawnshops in New York, up by 50 percent (when you include secondhand dealers) since 2010. The big growth is in high-end pawnshops, which cater to the pawn-my-Picasso set.
This from CNBC’s Robert Frank, who blogs about “Wealth.” He opines:
I could understand why the wealthy needed pawn shops in 2009 and 2010. But with stocks and other asset values so high, and with the wealth of the wealthy back to all-time highs, I’m having a hard time figuring out just who these cash-strapped “rich” are today.
Huh. He must not know many wealthy people. For every one who can plunk down cash for a McMansion, there’s another whose assets are tied up in lettered (temporarily unsalable) stock; stock options; real property; or otherwise something that they feel reluctant to liquidate.
Like gold. Gold has been rising for a few days (thank you again, Mr. Putin!), but it is still no higher than $1,356. While that is a pleasant $25 an ounce more than it was 30 days ago, it is an unpleasant $300 or $400 less than it was if you bought gold a year or two ago.
Lots of people (we surmise) who bought gold for the long term, and still expect that to pay off, would rationally be willing to pawn their gold to meet current obligations, rather than realizing their losses, and be able redeem it next month (or 2 months) and keep on keepin’ on with their long-term strategy.
Even people who bought gold last May when it dropped near $1,200 and would therefore show a profit if they sold today might still expect plenty of upside and be reluctant to sell out now and miss that.
The reputation of pawnshops as the resort of the desperate is not incorrect. In fact, our Maui pawn shop takes pride in being willing to help desperate people who no one else will deal with. But most of Kamaaina Loan’s customers are not desperate.
Typically, they are evening out cash flows. If you are a person who works for a fixed wage, life would be very different if you were in the visitor industry and saw your income yo-yo up and down with the seasons.
MECO bills tend to run around the same amount each month, and MECO wants to be paid each month, even if some months your tips or commissions drop to almost nothing.