Howard Davidowitz: Decline and fall, grim and gloomy, delivered good and hard

Dig this clip of Howard Davidowitz, chairman of Davidowitz & Associates, and you'll know why the Motley Fool calls him "Davidodelicious!!!!!!!!!!!!"

Gist of the Jeremiad: "We're in a complete mess and the consumer is smart enough to know it. If the consumer isn't petrified, he or she is a damn fool… The worst is yet to come with consumers and banks. This country is going into a 10-year decline. Living standards will never be the same."

If Davidowitz seems like a guy you could catch a heart attack from, it may be because he's a consultant to retailers, who have particular reason to believe Americans are not going to reinflate the debt economy using money they can't pay back from jobs they don't have. Maybe there are some big tranches of data I'm missing, but it seems like all talk of a stabilizing economy is drawn from cockamamie measures of confidence or feeling. Take a look at actual transactions, at the rate of people buying items large, medium or small, and you will probably agree that the idea the economy is stabilizing is "preposterous."

Comments

[Alan Vanneman]

"Stablizing"! Ha, ha! "Stablizing"! Ha, ha! OK, I actually disagree with this posting on substance. In fact, I can't spell "caffeine" without SpellCheck. And I drink 6 cups of coffee a day! Which is probably why I think things will shape up in 5 years max.

[R C Dean]

it seems like all talk of a stablizing economy is drawn from cockamamie measures of confidence or feeling.

You are correct, sir. The market euphoria of the past two days is based on data showing the housing market is still only a major disaster, not a total disaster, and that we only lost 580,000 jobs last month, not 600,000 as expected, or somesuch.

[Tim Cavanaugh]

Thanks, Alan. Anybody with two i's can see the economy is not stabilizing.

[No Name Guy]

"We're in a complete mess and the consumer is smart enough to know it. If the consumer isn't petrified, he or she is a damn fool... The worst is yet to come with consumers and banks. This country is going into a 10-year decline. Living standards will never be the same."

Only those dip shit consumers who spent like drunk 22 y/o pieces of trailer trash who just won the lottery need to be petrified.

Consumers who, you know, actually spent less than they earned (aka are debt free) are going to be doing GREAT. Hell, as prices drop and people scratch for my business, I'll get more for less.

Besides - ANY one, on any subject, who makes the assertion that (fill in the blank) will never be the same is a bullshit artist pushing their agenda for some reason.

All that will happen (over the 5 to 10 year term) is folks will buy crap when the have the money, instead of getting it now and paying later. Painful transition as that consumption is delayed: Sure. End of world or the American way of life? Nope.

[Barack Obama]

Consumers who, you know, actually spent less than they earned (aka are debt free) are going to be doing GREAT. Hell, as prices drop and people scratch for my business, I'll get more for less.

In the spirit of fairness you will be subsidizing the future consumption of those unfortunate enogh to lose life's lottery.
Prices must rise in a stable manner to avoid deflation.If prices fall,clearly the market has failed.It is time for government to step in and increase prices with a reverse subsidy.

[Brandon]

The root causes of this mess - thousands of mortgagors who can barely make their payments...and then can't - are still out there, like landmines yet to go off. Why would things get better before they've all exploded?

[shecky]

Doesn't that guy post here?

[Wheelock]

Off topic but FYI, you guys are loading a flash ad with an infinite loop running. Freezes up the site until ended. ( Not sure which one )

[Lester Hunt]

Damn! I'm not familiar with this guy, but he sure is convincing. Too bad he doesn't have any good news for us.

[FFF]

No worries, soon everyone will need new stuff because their current disposable stuff will get old (dishwashers, cars, etc.). Then the economy will 'look' like it is coming back. Then people will start spending again. Then the economy will actually start coming back. Then people will find something to cause a bubble. Then we'll be back here.

[JB]

"Borrowing his brains out..."

What brains? The fool admitted he is the Special Olympics President.

[hi]

lol, some jew is lying about being against handouts to other jews!

[val]

I'll have to disagree on the whole economy not stabilizing thing. You all seem to expect that the stabilization will look like a 180 degree turn back into growth. However stabilization will come in the form of slower and slower decline, eventual flattening out, and then in the much longer term into growth again. As far as I can tell so far, the previous free fall plummet has become more of a slide down, which could indeed be an indicator of an eventual stabilization.

[Tim Cavanaugh]

As far as I can tell so far, the previous free fall plummet has become more of a slide down, which could indeed be an indicator of an eventual stabilization.

The concept of stabilization is itself the problem - and not just because, as I've shown, it's hard to spell. A stable economy is what you had in the middle ages. What Geithner and Co. are selling is something that produces all the benefits of a dynamic economy, but is still stable enough to be managed by people like themselves.

Beyond that, I'm skeptical of the very thin reeds these guys are gathering to show that the rate of decline is slowing. You'll recall that the voluntary foreclosure moratorium created a foreclosures-are-slowing-down news cycle, which ended as soon as the moratorium ended and the rate of foreclosures came back worse than before. All or most of the supposed uptick in real estate transactions has been created by distressed sales, and as one of the links in my post indicates, even distressed sales are weak. Nationwide debt-reduction and some of the increase in the apparent savings rate have been created by banks writing off their bad loans, not because Americans have become savers again (and why should they, at less-than-1-percent rates on a savings account?). As for unemployment, those figures go up and down as people do or don't seek benefits, and as the MSM likes to note, "some job-seekers have simply given up looking." (That's not even mentioning the dubiousness of unemployment figures in the first place.)

Alls I'm sayin' is that there's a lot of reason to think things are going to keep getting worse. And the people saying things are getting better (or at this point, that things are getting worse at a slower pace) have a clear motive to soothe the masses, and no motive at all to tell the truth.

[Art-P.O.G.]

A stable economy is what you had in the middle ages.

Nice equine joke, Mr. Cavanaugh. 😉

[val]

Alls I'm sayin' is that there's a lot of reason to think things are going to keep getting worse.

Well I wont necessarily disagree that things are going to get worse still, I just think they wont be that much worse than they already are. If the slide is already hunting for the bottom than investors will being reentering the market, and there have been relatively positive news coming out of the markets in a last little while. For instance major Canadian banks, which admittedly have weathered the storm better so far, have nearly doubled their price since March. Is that an indicator? I don't know, but it is the banking sector after all, and the Canadian economy is tied to the US by the navel.

One of the main issues still looming on the horizon are GM and Chrysler, once things clarify there we should be able to see more stabilization, and by stabilization I mean a more predictable, pattern following general trend.

Does that mean people will once again by a boat load of ipods? Probably not in the short term, but is that a cause of the decline or just a laggy indicator? I think that many overcautious people will miss their chance to make quite a bit of money by sitting on their cash while the market bottoms out and eventually begins its recovery.

[R C Dean]

If the slide is already hunting for the bottom than investors will being reentering the market, and there have been relatively positive news coming out of the markets in a last little while.

Not counting the 25% bear rally of the last couple of months, of course.