Pawning and banking in China

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On the same day that The Maui News reported that China opened bidding for the first five private banks in the country, online news source Quartz reported on the  boom in pawn shops there.

China is considered the birthplace of the pawn business, maybe 3,000 years ago, but the Communists suppressed pawnbrokers and today there are only about 7,000 pawnshops, half as many as in the United States.

Do I look like a teddy bear?

Do I look like a teddy bear?

But as Quartz reporter Nona Tepper explains, an American pawn shop is about as different from a Chinese pawn shop as a teddy bear from a panda bear.

While our Maui pawn shop, like most of the 13,000 others in the Unitd States, deals in gold chains and TVs and lends a couple hundred dollars or less to most customers, in China pawnshops deal in astronomically priced apartments and serve to finance business. That’s because China’s state-run banking sector is famously dysfunctional.

At Huaxia, apartments are the most commonly pawned item, luxury vehicles the second, and jade, expensive stones and watches make a close third. Compared to America, where individuals pawning jewelry and electronics worth about $150 are brokers’ most common customers, Huaxia looks more like a luxury department store gleaming with Cartier and rare jade statues.

Huaxiz upscale Peking pawn shop (from Quartz news story)

Huaxia upscale Peking pawn shop
(from Quartz news story)

Tepper then goes into some commentary on China’s “shadow banking” business. In the absence of established markets for commercial paper or most of the other numerous sources of business capital in the western world, especially short-term capital, businesses raise money on personal assets – largely residential real estate that is widely viewed (from outside China, anyway) as a bubble.

Should the long-expected crash in apartments come, the effects on China’s businesses would likely be disastrous.

American small business owners occasionally pawn Rolexes to meet a payroll, but this is not a way of life like it has become for China’s small (and not so small) businesses.

“There’s certain risks in regards to the shadow banking industry,” said Ismael Pili, head of financial analytics Asia at Macquarie Group. “1) It’s not well regulated, 2) There’s still opacity with regards to what’s going on and 3) It’s become a sizable portion of the economy.”

So the spirit of unregulated borrowing and lending continues. Today, shadow lending is the fastest-growing part of China’s financial sector, and JP Morgan Chase estimated that it accounted for 69% of China’s GDP—or 36 trillion yuan ($5.9 trillion)—in 2012.

Pawn shop treasure: Peace out

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In a sense, this is old news, but a Nobel Peace Prize discovered in a pawn shop is headed for auction in, of all places, Baltimore.

Identified as the Peace Prize, this medal is actually a Pulitzer Prize

Identified as the Peace Prize, this medal is actually a Pulitzer Prize

Old news, because the pawn shop discovery was made 20 years ago, when an alert collector recognized the hefty medal (nearly half a pound of 23-karat gold) in a pawn shop in some unspecified place. Presumably Argentina, where the medal was awarded to the foreign minister for helping to bring to a conclusion the Chaco War, a war fought over what turned out to be no oil.

You never can tell what will come into your pawn shop. From the story, it appears the pawnbroker may not have known it was a Peace Prize medal but knew enough not to melt it for the gold. At today’s prices (way up by the way, thank you Vladimir Putin), the metal is worth around $10,000.

As a collector’s item, the presale estimate is $50,000. That’s why at Kamaaina Loan, we say we will give you the highest amount based on either the metal weight, the artistic value or the collectible value.

Do we have too much aloha?

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The short answer is no. But a story at the National Pawnbrokers Association website got us to thinking about our experiences with reality television.

We have been approached four times by producers, and have done a “sizzle,” which is a short, hot pitch to be shopped around. Well, we are still sitting at the counter of Schraft’s, sipping on a malted and waiting to be discovered.

Our little Maui pawn shop is not alone.

Nancy Cejudo, the woman owner of Ben’s Pawn (yeah, Ben; she bought the business from a man), also had a look-see with a producer and, like Kamaaina Loan, was left waiting at the altar.

In an interview for the NPA blog, she declared the producer (also a woman) told her:

 “She’s just too nice.”

Not the worst kind of rejection note, but a rejection all the same.

The producer told her:

 

“Reality TV will continue to be exactly what it is. Some shows will be more compassionate than others.”

Probablky the best way to get picked would be to act like Jerry Springer and throw chairs, but we don’t plan on doing that. Farewell fame. It was nice to meet ya.

Just as well, maybe. The other day, we were looking at a reality TV fan site (www.tv.com) and reading the fan (if that’s the right word) comments on Hardcore Pawn. Now, we know the Hardcore Pawn folks and they are as nice as could be. All the nastiness on the tube is an act.

Some watchers don’t get it, which, we guess, the producers and advertisers count on. Anyhow, if this is what it would mean to get on the tube, maybe we’ll pass:

Ashley u r the worst person on the planet you rank right next to Satan that’s how evil you r

Next to Satan? Man, that’s harsh. The rest of the comments are just about as cruel. And, they don’t speak very well for the schools the Hardcore Pawn audience went to.

Greet each customer with a smile

Greet each customer with a smile

Keeping up with ‘Pawn Stars’

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First, according to formerly famous Alec Baldwin in his last interview in New York magazine, the autograph is dead. Not so, Alec, as we learn from this piece on “Pawn Stars” from the Ceres Courier.

(Ceres is near Turlock in case you haven’t ever been there.)

After indoor taping ended, Sarah and I were escorted to the Old Man’s office as Rick chatted in the hallway. He signed an autograph with few words and posed for a photo.

The rest of the piece is about a newspaper editor’s bid to get on the show. Did you know “Pawn Stars” is numero uno in Argentina?

We didn’t either.

The pawn business is almost universal.

Maybe we’re prejudiced, but we’d rather keep up with the Harrisons than the Kardashians.

Jeff and Sarah with Rick (Ceres Courier photo)

Jeff and Sarah with Rick
(Ceres Courier photo)

Bad press for pawn

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So, at Kamaaina Loan blog, we are quick to pass on just  about any news item that untarnishes (is that a word?) the widespread image of pawn shops as sleazy, predatory businesses. Fair’s fair.

Sometimes the old image crops up Paul Bunyan-size, as it just did in Flint, Michigan, where a pawn shop planning to deal in auto titles was denied a special use permit. (Pawning cars is not allowed in Hawaii; laws vary across the nation.)

liberty bell

 

The decision by the Flint Planning Commission was unconstitutional, a point we will expand on later, but first let’s look at some of the objections to the Cash for Keys pawn shop.

A preacher said,

“I’m against pawnbrokers and pawn shops,” said the Rev. Allen Gilbert. “I want to know: Who are they? Where did they come from? Is there anything in their background (that would be) a major concern?”

A citizen said:

South Flint resident Barbara Griffith Wilson said the proposed Cash for Keys Pawnbrokers would be another business that doesn’t help the neighborhood its in.
“We have an overflow of pawn shops and (gentlemen’s clubs),” Griffth Wilson said. “We should take a real microscopic look” at this business.
And while the comments on the All Michigan news site cannot have influenced the commission, they were as negative as could be:
They are businesses that the majority of their customer base is convicted felons. You’ve got to be a little shady to run one.
and

Pawn shops encourage criminal activity and cater to the desperate. It’d be nice to see them go. Most use them as a way to get quick cash after ripping someone off.

We need not go into the inconvenient facts, except to say that most pawn shop customers are not convicted felons. But quite likely some members of the commission think so, too.
Should the applicant have the resources to challenge the decision, she’ll win. Although we have not seen the contents of the decision and order of the commission, most of the testimony as reported by All Michigan was not germane. So what if the area has a lot of strip clubs? A pawn shop is not a strip club.
More to the point, there has to be a rational nexus between the action of any government body and the facts on the ground. Vague suspicions like those held by Rev. Gilbert don’t meet the test. Unless the applicant has a criminal record, character doesn’ count either.
Some places deny pawn licenses to convicted felons but most don’t. Even if an applicant was an ax murderer, the conviction might not rise to the level needed. If, however, she had been convicted to auto theft, that could be a rational reason to at least question her qualifications.
But, since she had operated a used car lot on the same site until recently, it seems unlikely she was boosting hot cars.
And there lies the real rational nexus. The application proposed to replace a used car operation with another used car operation. The financing of the deals would change, but not the use.
Pretty generally, equal protection of the laws don’t allow governments to discriminate on that basis. You cannot allow a Ford dealer on a lot but disallow a Toyota dealer because (for example), Toyota is a foreign company.
So it looks like we have an out-of-control planning commission in Flint. One wonders what the corporation counsel was doing. Nothing would be our guess.

To catch a thief — or several

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We have surveillance cameras at our Maui pawn shop, but we DO NOT do what Portland pawnbroker Mike Fink does:

Fink, who owns Guitar Grave, has been posting YouTube videos of customers who are trying to sell stolen items or have stolen from him.

Read more: http://www.wmtw.com/news/pawn-shop-owners-videos-help-police-fight-crime/24353626#ixzz2t8hddQU8

He does more than that. He posts videos from his shop about anything that strikes him as funny, and he is a humorous man. Some are what you might expect — stoners; but others are just Portlandians who seem to hear a different, more uncertain trumpet. You can watch a bunch of them by going here.

Portland Press-Herald photo

Portland Press-Herald photo

Fink also marries people. This is not that unusual. A number of pawnshops (but not Kamaaina Loan) will tie your knot. We have not watched all his  videos yet,  but our favorite so far is “A Very Guitar Grave Wedding.” The bride, Nikki Rae, who seems to be having a very good time, says, a few minutes after Fink ties the knot, “I want to be on top.”

For some reason a local radio reporter walked in during the ceremony and recorded it. It must have made for curious radio. He ended up being the witness for the marriage, too.

Guitar Grave is not the most obvious name for a pawnshop, but there’s a story behind that, too.

Fink says he started out selling games and was looking for a name. Marketing advice said to find something alliterative, so he started searching the database of available names for Game G-something.

Among the choices was Grave, and he picked that because it was the only one that his son, who was then 7, could spell.

Later, an employee persuaded him to expand into collectible guitars, and Guitar Grave was born.

Really, Kamaaina Loan (Hawaiian for “child of the land,” meaning native-born or, loosely, old-timer) seems pallid by comparison.  And nobody but a kamaaina can spell it.

 

 

The ‘lumpy incomes’ of the rich

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the last egg

the last egg

A little late — and a lot more illiterate than the predecessors — Barron’s comes to note the arrival of Suttons & Robertsons pawn shop for the rich in Manhattan. Kamaaina Loan blog has already noted the incursion of the newcomer a month ago based on reports in the New York Times and other publications.

In some ways, the Barron’s report is better. It points out that while S&R can claim to have been in business for 250 years, it is really a new enterprise, having been taken over by a much younger, bigger firm with dreams of globalizing a local brand, sort of like what happened to Krispy Kreme donuts, although no doubt DFC Global hopes not to repeat that fiasco.

We like DFC chief Jeffrey Weiss’s characterization of his target customers as people with “lumpy incomes” and intend to steal that. Most of our customers are rather less rich than his but the conundrum of lumpy incomes is just as pressing. On Maui, with the visitor industry pulsing through peaks and bottoms and sides and saddles, lots of working people find  that — just like investment bankers waiting for the year-end bonus — the bills arrive before the money does.

Another interesting factoid — of no obvious relevance to us in Maui, though — is that while the uber-rich keep about 9.5% of their richness in tangible things (Aston-Martins, spare houses), that rises to 18% in places like the United Arab Emirates, Saudi Arabia and China. It helps to have a handkerchief full of jewels you can stuff in your pocket when fleeing the revolution.

Pawnbrokers and second-hand dealers made a good thing out of the Russian Revolution, as the exiled aristocrats unloaded their Faberge eggs, jewel-encrusted ikons and silver-gilt tea services in Paris, London and New York. A La Vieille Russie (To Old Russia) moved from Kiev to Paris about 1920 and opened a branch in New York in 1934.

It’s still there, across the street from the Plaza, and as late as about 1970, you could still buy the sweat of Russian serfs, once removed; although after three generations the plunder of the oppressed had finally been processed through the digestive organs of the capitalist snake, and the last time we were at A La Vieille Russie, it was reduced to selling reproductions of Georgian furniture and there wasn’t an ikon in the joint. (There are some rather pitiful-looking ikons, no jewels, in their online store at www.alvr.com; but the goose that laid the Faberge eggs is just about dead.)

The article is in Barron’s “Pentadaily,” which is described as “Insights and advice for families with assets of $5 million or more.” It’s a shame Pentadaily cannot afford any copy editors.

We are considering adopting a slogan for the Kamaaina Loan blog. Maybe:

“Insights and advice for families with assets of hard work, lots of children and an Hawaiian heirloom bracelet or two.”

 

Pawnbroker heads for paradise

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From the headline

West coast pawnshop owner moving to Paradise

we thought we were going to get some more competition for our Maui pawn shop. But no. Newfoundlander Rod Lyver is just moving across the island to a town called Paradise. But it’s still in Newfoundland, where it’s cold!

Kidding aside, Rod’s story is inspiring, how a kid struck a deal with a local merchant to take over some unsold stuff, turned a slight ($32) profit and took off from there to create a successful small business.

Attaboy, Rod!

 

 

 

 

Redeeming a pawn the hard way

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So last week, we noticed a story from Nampa, Idaho, about police catching a burglar cutting through the roof of a local pawn shop. Nothing that unusual.

But now we find that he was a carefully focused burglar.  According to Kotaku website, he just wanted his Xbox back. If he didn’t have the money to redeem it, he could always have extended the loan, which no doubt would have been cheaper than what he’s going to pay now.

Why he was armed with an AR-15 is yet unexplained.

 

Being ‘female friendly’

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We have been in pawn shops that do look kind of like a man cave, but we think this story in the Tampa Tribune overstates the novelty of Lauren Myhre’s “female friendly” She Money shop.

Most pawn shops, including our Maui pawn shop, have something like a 50-50 split of men and women customers, if not an absolute majority of women. After all, most pawn customers are working people, and women are in the work force in equal numbers with men.

Still, it couldn’t hurt to cater to half your audience, and Myhre has gone extra steps:

Like most any pawn shop, She Money takes gold, silver and diamond jewelry, but the store accepts high-end costume jewelry, too. Most women don’t have the tools and other items that are staples of the typical pawn shop, but Myhre saw the genuine value in other items they do possess.

“Women don’t always have jewelry to pawn or sell,” Myhre said. “I take a lot of crystal, such as Waterford or Tiffany crystal, as well as designer handbags and sunglasses, figurines, hand-carved wooden pieces, art, sterling silver, pieces of fine furniture, high-end lamps, musical instruments and even high-end cars.”

 

At Kamaaina Loan, we take most of those things, too, without specially considering ourselves “female friendly.”  Cars are an exception as Hawaii law restricts that, but our retail store has sun glasses, art, designer handbags. Not many lamps, perhaps.

A lot of what any pawn shop accepts as collateral (or will purchase) is unisex. Game systems are an obvious example. We probably get as many Xboxes and Playstations from women as from men, and, in fact, a lot from moms accompanied by their children.