"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying Attention

[BankruptPinoy]

May 15, 2009

The green shoots story took a bit of hit this week between data on April retail sales, weekly jobless claims and foreclosures. But the whole concept of the economy finding its footing was "preposterous" to begin with, says Howard Davidowitz, chairman of Davidowitz & Associates.

"We're in a complete mess and the consumer is smart enough to know it," says Davidowitz, whose firm does consulting for the retail industry. "If the consumer isn't petrified, he or she is a damn fool."

Davidowitz, who is nothing if not opinionated (and colorful), paints a very grim picture: "The worst is yet to come with consumers and banks," he says. "This country is going into a 10-year decline. Living standards will never be the same."

This outlook is based on the following main points:

With the unemployment rate rising into double digits - and that's not counting the millions of "underemployed" Americans - consumers are hitting the breaks, which is having a huge impact, given consumer spending accounts for about 70% of economic activity.

Rising unemployment and the $8 trillion negative wealth effect of housing mean more Americans will default on not just mortgages but student loans and auto loans and credit card debt.

More consumer loan defaults will hit banks, which are also threatened by what Davidowitz calls a "depression" in commercial real estate, noting the recent bankruptcy of General Growth Properties and distressed sales by Developers Diversified and other REITs.

As for all the hullabaloo about the stress tests, he says they were a sham and part of a "con game to get private money to finance these institutions because [Treasury] can't get more money from Congress. It's the ‘greater fool' theory."

"We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out," says Daviowitz, who opposes bailouts for financials and automakers alike. "The bailout money is in the sewer and gone."

by Aaron Task
Yahoo! Finance

http://finance.yahoo.com/tech-ticker/article/248398/%22The-Worst-Is-Yet-to-Come%22-If-You're-Not-Petrified-You're-Not-Paying-Attention?tickers=^DJI,^GSPC,DDR,XLF,GM,RWR

[walkthaplank]

Is the economy finding footing or is it merely encountering atmospheric resistance as it approaches terminal velocity?

Our political leadership needs to learn the lesson that just about everybody HERE on this forum has figured out. You can't spend your way out of debt. There is no way to spend so much money that it somehow turns into a new kind of money that means you don't owe the old money anymore.

We need to bolster our own manufacturing sector, we need to take the self imposed restrictions off of our natural resources. We need to look at our spending habits as a nation and trim it to the bone. We are beyond the need to cut back a bit. If it isn't absolutely necessary, it needs to be cut. We have become a nation of entitlements rather than a nation of people. A full time congress with lavish pay and benefits needs to be one of the first things to go. That is at the state and federal levels. There was a time when it was a privilege to serve, not a career choice. We need to focus on the principles that made this country great, not continue down the path to ruin we seem to be focused on now.

There was an OP/ED piece in Pravda (yeah, THAT Pravda) that just cut to the bone. American Capitalism gone with a whimper. There are some irrelevancies tossed in, but the basis of the piece is spot on and it really should slap us back to our senses.

[Nick9075]

Seems to me that most people are in denial. I move from the NYC area to right outside of Boston. Seems like most people are living in this fantasy land just spending money on expensive cars and going out drinking every night. Unemployment in this area is even higher than in NYC but you see kids driving $40,000 Acuras & $60,000 BMW's.

Consumers are not 'hitting the breaks', no where near curtailing spending even on this board which is a BK forum it isn't even apparant. For most it takes a major life 'event' or disaster something cataclysmic like a $500,000 medical bill, no income for two years or longer before they even think of cutting back. Being proactive when you are working and saving even a little -- unthinkable for most

Next, neither Obama, congress or anyone has told us where they expect job growth to come from. Other than make work stimulus jobs where are the high paying jobs so one can afford todays lifestyle where the average grocery bill for one person is about $100 a week not even considering eating out. Income comes before credit and banks aren't and shouldn't be 'lending' again to people without a proven & demonstrated ability to repay.

[JRScott]

You're right folks aren't cutting back yet as much as they need to, especially those used to a more affluent lifestyle even if they've lost their jobs now. The poor actually adjust better than the rich or middle classes.

Also Obama will never create the amount of jobs he claims he will, and you just touched on why, he has no idea where they will come from. They use things like 1 million jobs saved and some such but they'll be no way to prove it or not. In fact since he took office we've shed 2.5 million more jobs.

If we wanted long term jobs then we'd be investing in manufacturing including changing trade treaties etc, whatever it took but he's abandoned all that since taking office. He's even adapted the rhetoric Health Reform this year or never. Not because it couldn't be visited later, but because he wants to put fear into Americans that they'll let something pass we cannot pay for and they have no idea how to pay. This so they can say hey we did it, and when the next guy comes in and has to reform or eliminate it he can say well I gave it to you and they took it from you. It's just one big game to Obama and the national politicians.

What we really need to do is 2 things.

1. Repeal fully the 16th Amendment.
2. Repeal fully the 17th Amendment.

Repealing the 16th Amendment means no more income taxes. However the nation could do a national sales tax or similar fair tax still.

Repealing the 17th Amendment would restore the balance of power between the states and the federal government. It would break the power of the Washington lobbyists. No longer could you just go to one city and lobby folks far from their states out of site, but you'd have to lobby them in their home states in full view of everyone since the Senators would be elected by the State Legislatures.

[BankruptPinoy]

Hi walk. Thanks for the link. I'm gonna post it below.

Nick, you talk about fantasy land. I'm here in Athens, Georgia. We play count the BMW's game. Because I cannot understand all the college kids that driver new BMW's, and spend all their money partying and on greek life, and Thursday nights through Saturday nights are party nights downtown, and on $400,000 condos or $1200 a month apartments. Where do their parents work????????????

Hey JRScott, talking about the lies about jobs saved and the real unemployment rate, it reminds me of the quote, "liars figure and figures lie."

[BankruptPinoy]

27.04.2009

It must be said, that like the breaking of a great dam, the American decent into Marxism is happening with breath taking speed, against the back drop of a passive, hapless sheeple, excuse me dear reader, I meant people.

True, the situation has been well prepared on and off for the past century, especially the past twenty years. The initial testing grounds was conducted upon our Holy Russia and a bloody test it was. But we Russians would not just roll over and give up our freedoms and our souls, no matter how much money Wall Street poured into the fists of the Marxists.

Those lessons were taken and used to properly prepare the American populace for the surrender of their freedoms and souls, to the whims of their elites and betters.

First, the population was dumbed down through a politicized and substandard education system based on pop culture, rather then the classics. Americans know more about their favorite TV dramas then the drama in DC that directly affects their lives. They care more for their "right" to choke down a McDonalds burger or a BurgerKing burger than for their constitutional rights. Then they turn around and lecture us about our rights and about our "democracy". Pride blind the foolish.

Then their faith in God was destroyed, until their churches, all tens of thousands of different "branches and denominations" were for the most part little more then Sunday circuses and their televangelists and top protestant mega preachers were more then happy to sell out their souls and flocks to be on the "winning" side of one pseudo Marxist politician or another. Their flocks may complain, but when explained that they would be on the "winning" side, their flocks were ever so quick to reject Christ in hopes for earthly power. Even our Holy Orthodox churches are scandalously liberalized in America.

The final collapse has come with the election of Barack Obama. His speed in the past three months has been truly impressive. His spending and money printing has been a record setting, not just in America's short history but in the world. If this keeps up for more then another year, and there is no sign that it will not, America at best will resemble the Wiemar Republic and at worst Zimbabwe.

These past two weeks have been the most breath taking of all. First came the announcement of a planned redesign of the American Byzantine tax system, by the very thieves who used it to bankroll their thefts, loses and swindles of hundreds of billions of dollars. These make our Russian oligarchs look little more then ordinary street thugs, in comparison. Yes, the Americans have beat our own thieves in the shear volumes. Should we congratulate them?

These men, of course, are not an elected panel but made up of appointees picked from the very financial oligarchs and their henchmen who are now gorging themselves on trillions of American dollars, in one bailout after another. They are also usurping the rights, duties and powers of the American congress (parliament). Again, congress has put up little more then a whimper to their masters.

Then came Barack Obama's command that GM's (General Motor) president step down from leadership of his company. That is correct, dear reader, in the land of "pure" free markets, the American president now has the power, the self given power, to fire CEOs and we can assume other employees of private companies, at will. Come hither, go dither, the centurion commands his minions.

So it should be no surprise, that the American president has followed this up with a "bold" move of declaring that he and another group of unelected, chosen stooges will now redesign the entire automotive industry and will even be the guarantee of automobile policies. I am sure that if given the chance, they would happily try and redesign it for the whole of the world, too. Prime Minister Putin, less then two months ago, warned Obama and UK's Blair, not to follow the path to Marxism, it only leads to disaster. Apparently, even though we suffered 70 years of this Western sponsored horror show, we know nothing, as foolish, drunken Russians, so let our "wise" Anglo-Saxon fools find out the folly of their own pride.

Again, the American public has taken this with barely a whimper...but a "freeman" whimper.

So, should it be any surprise to discover that the Democratically controlled Congress of America is working on passing a new regulation that would give the American Treasury department the power to set "fair" maximum salaries, evaluate performance and control how private companies give out pay raises and bonuses? Senator Barney Franks, a social pervert basking in his homosexuality (of course, amongst the modern, enlightened American societal norm, as well as that of the general West, homosexuality is not only not a looked down upon life choice, but is often praised as a virtue) and his Marxist enlightenment, has led this effort. He stresses that this only affects companies that receive government monies, but it is retroactive and taken to a logical extreme, this would include any company or industry that has ever received a tax break or incentive.

The Russian owners of American companies and industries should look thoughtfully at this and the option of closing their facilities down and fleeing the land of the Red as fast as possible. In other words, divest while there is still value left.

The proud American will go down into his slavery with out a fight, beating his chest and proclaiming to the world, how free he really is. The world will only snicker.

by Stanislav Mishin
PRAVDA

http://english.pravda.ru/opinion/columnists/107459-0/

[musicbum]

I would hardly call 70 years of Marxist rule a test. This guy is still stuck in the mindset that it is east versus west. The entire globe is now connected, for better or worse. We are all in this together, certain nations have insulated themselves more than others. It is fortunate for the Russians that Russia's government collapsed twenty years ago. Perhaps it is part of a larger plan to have a relatively isolated, former superpower calling the shots after the global economy crashes. We'll see how free the Russian people are when their government is perhaps the only one left with an abundance of natural resources per capita and a large nuclear arsenal to defend them. After all, America was in a very similar situation after the fall of the Berlin Wall, and look at where we are now.

Putin used to be in the KGB, that is a fact. The head of their "free" government used to be an operative in an organization that would shake down Russians for their freedom and national treasure. I'm not one for religious references, but this author shouldn't be casting stones in his glass house.

The religious references are interesting. Now that the Communists are in the closet and religious expression is tolerated to a greater extent in Russia, I wonder if the Russian Orthodox faith will be pumped for patriotic energy to rekindle the Russian Imperial spirit, like Christianity was used by America and Spain to conquer the New World. This guy is already condemning homosexuality, usually the ones that do have incredible anger about it have issues with themselves and use religion as a shield against self examination.

Spiritual people who are satisfied with themselves as individuals respect someones right to live as they see fit and either love them for who they are, or disagree with their choices and believe that it isn't their place to judge them, as they themselves will be judged by a higher power someday.

It's funny, we've all changed hats. The Americans are now the Marxists and the Russians are the Wild West capitalists, but the dance goes on. The money and power is still flowing to the top.


All the world's a stage,
And all the men and women merely players:
They have their exits and their entrances...

-Bill Shakespeare

[shabam]

The thought that we are turning Marxist like is a little extreme. Well very extreme actually. The rich have been exploiting this country for years now. Exploiting its people for their own selfish gain. We are a country where people and our rights come first, not the rich.

Communist Russia is the extreme, so using it while ignoring the countless other countries who not only have a higher GDP per capita but a fantastic lifestyle is wrong. Anyone who brings up the Marxist theory always ignores, fails to mention, the countless countries who are socially responsible for their people. Where you can still become rich, but not on the backs of by exploiting their citizens.

I don't know about others but I sure as hell do not want to live in a King/Queen (third world) style nation where the rich are mega rich while everyone else is dirt poor. I want an equal playing field for all. A place where people have the opportunity to earn trillions but not at the expense of paying their workers $6 an hour or receiving a tax break for exporting jobs overseas.

Extremism fails a society not matter what angle you look at it. Communism is just as devastating as ultra capitalism (jungle rules), where it's everyone for themselves.

[banca rotta]

Hi walk. Thanks for the link. I'm gonna post it below.

Nick, you talk about fantasy land. I'm here in Athens, Georgia. We play count the BMW's game. Because I cannot understand all the college kids that driver new BMW's, and spend all their money partying and on greek life, and Thursday nights through Saturday nights are party nights downtown, and on $400,000 condos or $1200 a month apartments. Where do their parents work????????????

Hey JRScott, talking about the lies about jobs saved and the real unemployment rate, it reminds me of the quote, "liars figure and figures lie."

Good game! I play it too The best is when the kids you are describing and their parents sooner or later are welcomed to this forum calling cc companies eveil, blaming a political party or a previous president, etc. for their situation.


As for the unemployment situation the "underemployed" mentioned above is as scary if not scarier. Just imagine all the talent stuck flipping burgers right now. It's bad for a lot of college grads and hurts the country as a whole.

[kenshirley]

I told my kids and their spouses, 3 of which worked in admin for the real estate industry, to find another field of work well over 2 years ago as this had to come to an end someday.
All those phony no equity loans that people could not pay and did not care if they walked away. That and the adjustable rates loans they were shoving down so many peoples throats combined with the phony appraisels that they were doing just made no sense to me.
And then came high gas prices and many that live payday to payday have no room for increasing costs.
It had to come, and it's not over by a long shot. I really hope that the present administrations efforts help but I am not going to hold my breath.
Hang in their folks, I think we are in for a bumpy ride and I too am a victim of this mess.

[banca rotta]

I told my kids and their spouses, 3 of which worked in admin for the real estate industry, to find another field of work well over 2 years ago as this had to come to an end someday.
All those phony no equity loans that people could not pay and did not care if they walked away. That and the adjustable rates loans they were shoving down so many peoples throats combined with the phony appraisels that they were doing just made no sense to me.
And then came high gas prices and many that live payday to payday have no room for increasing costs.
It had to come, and it's not over by a long shot. I really hope that the present administrations efforts help but I am not going to hold my breath.
Hang in their folks, I think we are in for a bumpy ride and I too am a victim of this mess.

You touch on something that always amazed me.

Never in my life has there been an issue such as the b.s. housing boom that so many of us ordinary folks like you and I had predicted would melt down to where it is now.

While no one can tell the future, this housing bubble and these bad deals were so obvious to the common person years ago. We all knew it wasn't a matter of if but more a matter of when.

I just wish I had the ability to profit from the crash since it was the one thing I was sure of since 2005. I will say however I didn't think it would drag the rest of the system down with it.

That took me by surprise I have to admit.

[Flamingo]

I have worked in the corporate world for many years. Our country is made up of the haves and have nots. The haves have what they have cause they know where and how to get it by whatever means and bring in their buddies/family/friends/coworkers, etc. to feed at the trough. The have nots have no clue cause they didn't have the means or ways to educate themselves to move into big business or be part of the haves. The have nots want what the haves have so bad the haves invented ways to give that to the have nots knowing they could profit immensely. It doesn't take a PHD to realize how all this came about or how it all works. The haves got so greedy at the extreme profits they were making, that when it all collapsed, the have nots realized what was going on, realized their own stupidity at being duped and the haves ran withi their tails between their legs pointing fingers at one another or commiting suicide. When the mortgage market started to collapse, a major subprime lender President jumped off a bridge in the NJ area cause he knew what was coming in the next few days.

The greed train has not yet slowed down as there are still many "haves" out there as we all notice. There are no declines at stadium events, Nascar races with the seas of motor homes, planes are full with travelers, etc. These folks either have the money or are in debt up to their eyeballs. What the have nots have to learn is that if they don't have the money to begin with, they cannot borrow their way into being a have. The haves took advantage of that and profited tremendously from it.

[JRScott]

Actually professional sports including NASCAR have had lower attendance this year than in previous years. So there is an effect there. There are I agree still to many trying to live a lifestyle they cannot truly afford.

The problem with Obama's stimulus is the money will run out. There is no provision for permanent jobs from it. So what will happen is it may well see some improved economic numbers but we'll crash afterwards again.

Approximately 1 in 6 people in the United States are living either by paycheck, subsidy, welfare etc from the government dole. We simply can't maintain that. In his speech in Cairo the President was quick to quote passages on the goal of peace in each, it is a shame that he didn't turn to the other major condemnation of all three religions he quoted.....debt.

[Flamingo]

Actually professional sports including NASCAR have had lower attendance this year than in previous years. So there is an effect there. There are I agree still to many trying to live a lifestyle they cannot truly afford.

The problem with Obama's stimulus is the money will run out. There is no provision for permanent jobs from it. So what will happen is it may well see some improved economic numbers but we'll crash afterwards again.

Approximately 1 in 6 people in the United States are living either by paycheck, subsidy, welfare etc from the government dole. We simply can't maintain that. In his speech in Cairo the President was quick to quote passages on the goal of peace in each, it is a shame that he didn't turn to the other major condemnation of all three religions he quoted.....debt.

I guess you did not attend the Nascar Event at Dover Downs speedway last weekend. Everyone in the State of NY and PA must have a huge motorhome and the place was packed. I believe the event was sold out this year but there were some empty seats last year. The racino in the main building was packed with people gambling away. We spoke to many people who told us they were doing well and many used inheritances from parents to purchase their motor homes and pay off their bills and they were still working to save to offset funds lost via retirement savings. I said to my hubby - there is no recession; look at this place.

[JRScott]

That's good to hear for them there, but I know at several southern tracks they have complained about lower numbers and revenue due to the economic slowdown.