Howard Davidowitz-Is he full of hot air or accurate? (credit card, mortgages, student loan)

[theS5]

"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."

[texdav]

He has a very radical view point.He is like alot of opinonated voices all over the world guessing waht will happen based on what they see as facts. otherwise they wouldn't be writing.

[Traderx]

Living standards will never be the same?

Never? Not even in 100,000 years from now?

My living standards haven't suffered from this have yours?
The national savings rate is headed on a bee line towards 10%. Are the people who weren't saving anything who are now experiencing a lower standard of living?
Are any of the facts he's spewing not already well known by just about everyone?
Isn't most of what he's saying just his opinion?
Aren't most people who've gone into forclosure or bankruptcy better off now than before when they were saddled with overwhelming debt?

Things aren't great and it will take some time for sure to mend the wounds. And no, 2005 isn't coming back..I hope. But the world isn't coming to an end either.

[chet everett]

Why tradex, didn't you rip out all your indoor plumbing so you could melt the copper and sell that on the commodity market and then build an out house and start a vegetable garden and slaughter the family pets for meat? That is the ONLY way to survive!