Mastercard (NYSE: MA) has a little unit that looks at consumer spending every month. The view from there is pretty ugly.

According to The Wall Street Journal, "MasterCard SpendingPulse says luxury sales dropped 20% in October from a year earlier." Put another way, the rich are getting poor. Spending on all goods costing more than $1,000 dropped considerably.

The rich are supposed to be able to keep a little money on hand for the holidays. In all likelihood that money was in the stock market. Or, some of the people who drive BMWs lost their jobs as Wall Street has downsized.

What do the numbers say about the middle class and poor? One can guess, that with personal income running flat to down, they will not even be able to buy coal to put in their stockings this holiday.

Santa may as well stay at the North Pole.

Douglas A. McIntyre is an editor at 247wallst.com.

While big ticket luxury may be a bit of a stretch for many investors right now, small luxuries are still within reach. Rocky Mountain Chocolate Factory (NASDAQ: RMCF) stands ready to provide sweet relief from bitter financial news. RMCF manufactures an extensive line of premium chocolates, fudge and other confectionary marvels. It also franchises stores to spread temptation far and wide. The company reported 1Q 2009 record sales of $26.6 million, up 2.4%. Net earnings declined by slightly more. The end results is flat diluted EPS of $0.16.

RMCF continues to expand its franchise model. The company opened 8 new franchise locations in 1Q alone, and plans to open a total of 35-40 new franchise locations in FY2009. Franchise, royalty and marketing fees helped counteract the negative effects of sharp cost increases for chocolate and sugar. The company has no current plans to increase franchise fees given the tough times in the retail sector. Nor will the company provide FY2009 guidance, citing macroeconomic uncertainties. The company did declare its 20th straight quarterly dividend of $0.10. The stock trades right around $9, down 50% from its 52-week high of $18.04. RMCF may be a viable stock for bargain investors. No matter the state of the economy, chocolate is NOT a discretionary purchase for some people. Just make certain that due diligence includes extensive sampling of the entire product line. Expand your portfolio and your waistline at the same time.

Shares of companies like Coach (NYSE: COH) were flying high when more people than ever were flocking to waste their money on stuff they couldn't afford.

Right at the top of the market, predictably, all the lower-end retailers thought they'd get into the act. Gap (NYSE: GPS)'s Banana Republic introduced a high-end line, and so did Coldwater Creek (NASDAQ: CWTR), Cache (NASDAQ: CACH) and AnnTaylor (NYSE: ANN). According to the Wall Street Journal (subscription required), the economic downturn gave the companies a strong rebuke. Cache is closing some of its Cache Luxe stores and Coldwater Creek is giving up on its high-end aspirations.

But I don't think it's the economic downturn that doomed these product launches. Luxury clothing is in a tough spot, but it's certainly fared a lot better than upper-middle market companies like Liz Claiborne (NYSE: LIZ) and Coldwater Creek. Rather, I think companies are using a pretty familiar tactic: blame failed strategies on the economy and minimize the impact of tactical errors made by seven-figure executives.

Here's why the strategy failed: taking a brand and raising the quality/price-point is extremely difficult. The reverse is easy, but trying to convince people to pay Coach-like prices for Banana Republic clothing -- even if it's of similar quality -- is a strategy that's destined to fail. Banana Republic has established itself at a certain price point and while people would be thrilled to get the brand at a lower price, most people willing to pay more will want a bona fide luxury label.

The conventional wisdom is that luxury couturiers tend not to be impacted much by broader economic woes. The high-end consumer they cater to isn't likely to be impacted to the point that they cut back on their Coach, Inc. (NYSE: COH) and Louis Vuitton.

But that not be so true anymore. As luxury goods have found a wider audience, the financial status of their average consumer has declined. Now a lot of people are buying this stuff who can just barely afford it, or can't afford it. If you called Suze Orman on her "Can I afford it?" segment and asked if you could put a Coach bag on your credit card, she'd probably use her magical powers to have you struck by lightning. Unfortunately, it seems that many people are buying luxury goods this way.

MarketWatch reports that "After three consecutive years of double-digit percentage growth, retailers that cater to those shoppers are suddenly dealing with leaner forecasts. Now their sales are on track to rise only 4% to 7% this coming holiday season, according to the Luxury Institute, a New York-based research group."

This is great news. You have to be a complete moron to be buying Coach bags if you earn $60 thousand a year, the average household income of the lowest quarter of the company's shoppers. Apparently people were getting high off of soaring home prices and, now that they're declining, they're realizing that the party is over.

The shift in recent years toward a larger group of less affluent shoppers buying luxury items changes the profile of these stocks. They're no longer something you can count on to stay strong in the face of broader economic weakness.

The rapidly developing economies led by China, India and Russia, are making the folks at jeweler Cartier salivate with even grander plans to promote themselves as the world's premier jewelers. They have unveiled bobbles and bangles suitable only for the super wealthy. In the past, this might have been the territory of the U.S., Western Europe, Japan and the Middle East. But the game has changed.

Cartier is not the first luxury house to look east. A Japanese or Chinese aesthetic has starred in collections from Giorgio Armani to Aquascutum, while the craze for embroidery and pattern filling runways owes a debt to India. ... The reasoning is clear: the wealth of the world's richest people -- who have at least $1 billion ready to invest -- rose to $32.7 trillion last year, up 11.4 percent, with China and India leading the way, the latest Merrill Lynch Cap Gemini World Wealth Report showed.

It's a sad tale. According to a piece in today's New York Times, hedge fund managers and private equity titans aren't spending big for palatial mansions like they did just a few months ago.

The problem? The threat of increased taxation on private equity could mean a sharp decline in paydays. In addition, hedge funds have provided lackluster returns of late and there is a growing realization that the enormous fees make it very difficult for most to outperform the market.

The recent draw-downs have shaken the confidence of some managers: When your fund is trailing the market, you might feel weird going out and buying a $70 million penthouse. Even though they're still fabulously rich, their confidence and swagger is gone: it's a psychological thing.

Some large funds even have psychologists/psychiatrists there to help their traders/managers!

I know, you're all waiting eagerly for the release of the iPhone, Apple Inc.'s (NASDAQ: AAPL) long-awaited mega phone. Or maybe you've decided you're an upscale type and are willing to wait even longer for the U.S. release of LG's Prada phone (currently sold in Europe for about $800 USD, and to be offered on the Verizon (NYSE: VZ) network), expected in "late summer" 2007. Didn't you realize there's a third option for the status-hungry, dripping-with-money types?

For only $300,000, or thereabouts, you could be dripping in mobile phone-ness with the Vertu "Signature Cobra," pictured here. Only eight of the phones -- encrusted with 439 rubies and wicked emerald cobra eyes -- will be produced, but you'll have to special-order. Vertu is known for its excessively fashionable technology; its phone service features a "concierge" button which connects you to personal assistance for travel, restaurants, and events.

While the concierge sure beats the Apple iPhone's ability to Google "Starbucks" and then call and order 4,000 lattes (haha Steve! you're such a funny one), I think I'd rather have yummy technology than eye-popping jewelry. And wouldn't it suck if you left your phone in a cab?