The Day After Tomorrow - the coming economic ice age

[Le Jacquelope]

Well, someone of "importance" has finally said it.

After decades of economic global warming caused by offshoring, falling wages and rising consumer debt, and the big three supercell storms (first the subprime collapse, then the business credit freeze, then the unemployment/hiring freeze), we've finally come to the next stage of this disaster: the consequences of the ongoing freeze on consumer spending.

The truth is, credit won't be so easy to come by in the future. And with jobs going overseas and wages not beating the rising cost of living, the math cannot be circumvented: consumer spending will drop.

That means the coming "recovery" will mean less jobs than before, because consumer spending cannot ever be as high as it has been before. The wages and credit limits - a reality for the last several decades - aren't there anymore to support it. With consumer debt set to shrink due to the decreasing amount of available credit, there's only one thing that can preserve America's standard of living: wages.

And offshoring has destroyed any hope America will ever have of raising wages. With many of the good paying jobs gone overseas, there's nothing left to bolster consumer spending. The jobs that will come from here on will pay less, and be fewer in number. How can there be more jobs when there's less spending?

Disagree with me all you want but bank your ass on this: America has reached its historical high point with regards to standard of living. You will not ever see things as good as they were before this crash.

Look to China surpassing the US as an economic superpower by 2050. Or sooner.


http://finance.yahoo.com/tech-ticke...ricans-Standard-of-Living-Permanently-Changed

"Worst Is Yet to Come:" Americans' Standard of Living Permanently Changed
Posted Feb 17, 2009 12:53pm EST by Aaron Task in Investing, Recession
Related: WMT, WFMI, FDO, ^GSPC, ^DJI, RTH
There's no question the American consumer is hurting in the face of a burst housing bubble, financial market meltdown and rising unemployment.

But "the worst is yet to come," according to Howard Davidowitz, chairman of Davidowitz & Associates, who believes American's standard of living is undergoing a "permanent change" - and not for the better as a result of:

* An $8 trillion negative wealth effect from declining home values.
* A $10 trillion negative wealth effect from weakened capital markets.
* A $14 trillion consumer debt load amid "exploding unemployment", leading to "exploding bankruptcies."

"The average American used to be able to borrow to buy a home, send their kids to a good school [and] buy a car," Davidowitz says. "A lot of that is gone."

Going forward, the veteran retail industry consultant foresees higher savings rate and people trading down in both the goods and services they buy - as well as their aspirations.

The end of rampant consumerism is ultimately a good thing, he says, but the unraveling of an economy built on debt-fueled spending will be painful for years to come.

 

[JAMESBJOHNSON]

When we've had a belly full of Washington-Wall Street elites, we'll shoot a few of them, and things will change for the better.

In many ways the present situation is like America in 1775. GEORGE III gave The East India Tea Company a monopoly to exploit the American Colony. Farming was about the only industry out from under the thumb of the tea company. There was nothing much they could do about locally grown produce people consumed for themselves, but everything shipped in or out of America was controlled by the tea company. Plus they printed the money and made all the loans.

So Americans smuggled and used Spanish coins. And the Brits taxed us to pay for the military force trying to stop the illegal trade.

The rest is history.

 

[Le Jacquelope]

And this bodes ill for retailers now, too. Those of you who own businesses like this, large and small, luxury or not, should take heed of what awaits you on the day after tomorrow.

http://finance.yahoo.com/tech-ticke...can-Retail-Goods:-On-Sale-Now----and-Forever?

American Retail Goods: On Sale Now -- and Forever?
Posted Feb 17, 2009 02:16pm EST by Tech Ticker in Investing, Products and Trends, Recession
Related: sks, ^gspc, ^dji, wmt, jwn, wfmi, cost

Everywhere you look, retailers are slashing prices. Such markdowns reflect a fundamental shift toward lower prices, says our guest, retail consultant Howard Davidowitz, chairman of Davidowitz and Associates:

* "70% off is the new 50% off," he says.
* Expect apparel prices to drop 30% -40% from a year ago.
* Consumers should actively bargain for lower prices for big-ticket items, especially furniture, jewelry, appliances and electronics.

Luxury retail may never be the same. The Wall Street Journal traced the beginning of the end for exorbitant prices to the fateful decision by Saks Fifth Avenue to slash prices by 70% on designer goods before Christmas:

"Saks's deep, mid-November markdowns were the first tug on a thread that's now unraveling long-established rules of the luxury-goods industry. The changes are bankrupting some firms, toppling longstanding agreements on pricing and distribution, and destroying the very air of exclusivity that designers are trying to sell."