"The Worst Is Yet to Come": If You're Not Petrified, You're Not Paying Attention
Posted May 15, 2009 09:31am EDT by Aaron Task in Investing, Recession, Banking, Autos, Housing
Related: ^DJI, ^GSPC, DDR, XLF, GM, RWR
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."

J. Patriots thoughts:
Well this does not surprise me in the least that’s what the NWO wants to do drive our economy down into the sewer. The Federal Reserve is behind most of the debacle of the US economy, and they want to bring down the living standard of the American people. Then they will yet again have another excuse to declare martial law on the American people when the time comes. First they will break us economically then they will act as our saviors when they introduce a world currency for their One World Government. Second well you guessed it martial law, which they have been getting ready for. One example of getting ready for the upcoming police state as that all Law Enforcement Officers are required to take FEMA classes in case of an emergency or a terrorist attack. I was required to take these classes, which teach in case of a national emergency we, as Law Enforcement Officers are required to follow orders not from my Sheriff but from FEMA or Homeland Security. I of course disagree with following orders from FEMA, and Homeland Security but it’s for getting Law Enforcement ready for the police state to come. The economy plays a major role in their plans to destroy America by design, and they really have their foot on the accelerator now