STATE OF BUSINESS: Next: Reflation?

In full-page ads last week, Manhattan's downtown bargain store, S. Klein's, blared the message 100,000 DIAMONDS—EVERY SINGLE ONE PRICED AT LESS THAN DEALER'S ORIGINAL WHOLESALE COST. When Klein's doors opened, its Union Square store was besieged by milling throngs of diamond-hunters. By nightfall, some 6,000 shoppers had trooped in, and a large part of the $500,000 worth of jewels had been sold.

What Klein's experiment seemed to prove, amid talk of slow sales and mutterings of recession, was that there were still plenty of buyers—with plenty of cash—if the price was...

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