Economy? Is Retail in a Tailspin

The Economy, we are all in it together
The world of forecasting is part art and part science.
It is often easy to take a wild goose of a guess on what is going to and when it is going to happen when we all look forward.
Logic uses a real world “Logical Approach” to estimate what will and when will the economy see some changes that will effect the livelihoods of us all.

Sale it, Flip it, Turn it
What we are seeing in the American economy is a correction true, and actual healthy retraction of the over indulgence from the past 12 to 15 years of eased credit, open credit, refinance ease, and a clouded myth of what being rich actually, no wealth is.

The biggest economic bubble since 1929-1933
Logic has been in deep uninfluenced study of economics since 1983.
Staying clear of the hype that markets generate and remaining very opinion-aided about spending habits, trends, and the belief that investors have, that when houses, stocks, domain names included, commodities, or anything else rise for no fundamental reason and how those that are holding onto these investments justify the rise in them to artificially build on their confidence that these investments will not correct is truly amazing to experience, listen, and learn from.

Welcome to the beginning of the second worst of economic times
No we do not think this is anything like the Great Depression of the late twenties and early thirties, but it will be the worst since then as we all return to fundamental basics for America and with no choice, but to follow suit the rest of the world.

America’s actions will and do effect the world
Most of the world provides products to Americans and if Americans begin to realize that those million dollar homes, 100,000.00 dollar cars, 16,000.00 dollar watches, 800.00 dollar bottles of wine, 400.00 dollar purses and on, and on, and on are not being bought then the remainder of the world will be forced to down size their manufacturing of these goods.

How the rest of the world is looking
We are all seeing in China mass layoffs brought on by factory down sizing and in India reductions in off shore services like software development and tech support centers. It is now highly possible that this down sizing might lead to civil unrest to the likes that we have never seen.

Viper Logic sees a lot of foreign activity
How many calls should a small software development company like Viper Logic receive from a foreign country each day pleading for work at any price, because we are emailed and called upon each and every day from these countries. This is a clear sign that times are getting tough and are sure to get a whole lot tougher before any correction is to take place.

This is not the end of the world
Americans are getting real smart in realizing that if you forgo the purchase of these products that there is no shortage of, and never will be, and in fact we always say around here at Viper Logic that for each year Logic waits to buy a new car then the car Logic buys will be a newer one.
Americans really are smart and intelligent people that are realizing that the urgency we all feel pray to by having to have all we wanted, and wanting it now then financing it today, so we could show others how well we are doing did not impress anyone. In fact because homes, cars and credit cards were so easy to obtain it made all of these usually rare sightings into commodities, meaning that it became the mainstream norm. It lead to the no big deal and it ultimately lead to the now not impressed.

Americans return to saving
If we are correct in believing that Americans have learned their lesson about overindulgance and begin to understand that rich is not wealth and that all of those high priced commodities got them no where (though we will admit it gave us all a temporary feeling of satisfaction that was short lived) and begin saving their money realizing because Americans are intelligent that they are going to begin feeling a whole lot better then those temporary good feelings.

Save your money and sleep better
There is greater satisfaction in having good money invested in our retirement or in having enough money for those rainy days that will allow them to sleep a whole lot better at night. Hey even if you still need to show how well you are doing then we have a great idea here on how to express this to others.

Wear your wealth
You could buy a t-shirt and have an impression of your bank statement or investment account printed on the back of it so others will see how well you are doing. We mean what is the difference in driving or living in more then you need, and printing your savings and investment efforts onto a t-shirt for all to see as well. Why is one ok in our sociaty and the other frowned upon?

Retail is in a TAILSPIN
The economies worst is coming to a retailer near you.
We discussed the forecast on this blog encouraging sales people at large to consider alternatives in gaining knowledge and skills in another trade here Working in Sales? Should you be worried? and the time to do a carrier review and change is now.
Looking at retail as an overall industry that includes real estate, cars, coffee shops, clothing, restaurants, and etc. the amount of growth in the past 12 to 15 years was the largest expansion perhaps in the history of retail.
From these findings and looking at the reduction in consumer spending it is clear that there is not only going to be the largest amount of available retail space in retail history, but the largest reduction in employment as well.

Retailers begin to down size
We only have to look at the worlds largest coffee shop operator to see that the growth worked during the consumer comfort zone period of overindulgence to realize this could have never been sustained. This coffee shop operator announced the reduction of 600 locations today and the reduction of 12,000 employees marking the beginning of major corporations reducing there size to start matching the demands for their commodities.
Logic is not in any way going to bad mouth this CEO because he is really great for being and avid domain Name Investor just like Logic and Catnip are at Viper Logic.

A mad Logic shares an economic forecast
Logic is really clear on the information here as it comes from the street level. See Logic has friends, a lot of friends and I did not buy them either. What we are seeing looking forward is a clear picture of when the bottom will hit the economy and when we will see the signs of gaining traction coming out of these adjustment times.

Logic disclaimer
We are in no way always correct all though we get some of the predictions right on the money.
We predicted to the month the beginning of the housing down turn. We have had our fair share of bad stock picks, bad estimates, and wrong product releases in regards to timing. So even though we are writing this today we have been discussing this forecast with friends and family for several years, and now within this blog as well for a while now.

Employment Forecast
The employment forecast is the most important part of our forecast because we are all humans and Logic loves humans.
Unemployment will rise (again in our opinion) in 2009 and into 2010 to a financial news reported 25 percent and we always add 15% to the current reported numbers for those that are not filing claims, or have come off of the list because their benefits have run out or they stopped looking for work. This estimate is going to come about from any and all sales positions as mentioned above.

The stock market is tricky
We have to really think about this one because the market is running just shy currently at just under for the Dow 12000 (Dow Jones Industrial Average) and looking into the end of 2010 we predict the Dow to be at or near 8000. This is in part because along with an economic correction of this magnitude the stock market is going to correct as well.

Oil prices are over forecast
We are staying out of this one because this appears to more of a political maneuver then a real demand driven issue. Also the speculators are the biggest players here driving up these prices. Because of a personal connection to oil money Logic wants to thank these political and speculator people and let you know to keep up the good work because Logic’s mom needs a new pair of shoes.

Real Estate may recover
It is said that real estate is the best investment one can make, yes and a diamond is forever.
Logic has a problem with these statements. Look back to what Logic thinks is the 1940’s 50’s and 60’s to see what we are going to say about real estate. 

Logic growing up in a track house development remembers the late 60’s through the 70’s and through the 80’s and never seeing (in the urban neighborhood I grew up in) a house for sale sign, and if I did then it was all the neighbors would talk about the usual neighborhood gossip of Why, Where, Who, and When even questions like did so and so die is this why the house is for sale? (Thank you Catnip for pointing out this from our past.)
Back then (and hey we know times change so we are not stuck in the past here. It is just our prediction for the housing market) a person or a family usually bought a home that fit the family and it was just a place to live and work towards paying off your mortgage over 30 years and save money up as well to allow for a safe and comfortable retirement.

Welcome in the largest selling sector of the current housing market foreclosures
Welcome to the 90’s and the 2000’s where along with the McMansion speculation and credit ease caused one of if not the largest run up of real estate in the history of man kind at least in volume. Easy credit played a large roll in this as well as uninformed real estate sale personal that would tell you what ever they could to get you into these houses, and they did just that. Then the banks and mortgage companies went right along with this and a family making next to nothing after still raising 3 children worth of expenses owned their first home. Speculators figured out how to make more money by having 6, 8, 12 homes all running off of the commissions of selling other homes or flipping them, and again easy, look the other way credit because do not worry in a worst case scenario the houses all of those the speculator financed would continue to rise no less then 20% per year depending on the location of course.

Hedge Funds and the Mega Wealthy
Hedge Funds are a wealthy persons play ground and truth be told they kind of caused what will become of the hedge funds future.
These people (fund managers) make more money per year then any CEO does on the planet and this made them wealthy as well or certainly put them in the Mega Rich category from our chart below.

In our Opinion
This new easy money commission is what might have began to cause the hedge funds to start to not look really good. The wealthy persons flooded in as the market was rising, but then the funds began to tumble. It was going on unseen by these fund managers in large part because of them being to far removed from the real world themselves.
See these hedge fund managers and we do not have a problem with a fund manager making 300 to 800 million dollar a year if they are capable of living on the street with the Employed Person, (stay tuned into reality) but we think that while they are traveling between one of their mega houses to another one of their mega houses aboard their private jet or mega yacht they are never engaged in a conversation with the Employed Person from our chart. We call this living in a bubble and the results is and out of touch manager.

In touch with reality at all times
To stay in touch with what the Employed Persons on the front line might share with you to allow you the fund manager to get a heads up on the general economy might be just the edge, and early retreat mechanism, you are needing to stay up with to maintain those high rates of return required to be attractive for the risk your wealthy clients are taking with you.

Bad times effect all, just not equally
Do not think for a minute that only the Employed Persons are the only one to be effected by the Logic prediction, The type of projected down turn we envision will effect us all and in fact here is a small and simple breakdown of the money train of those to be effected.
Employed Persons Under 1,000,000.00 dollars net worth.
Middle Class Rich Over 5,000,000.00 but under 10,000,000.00 dollars net worth.
Mega Rich Under 100,000,000.00 dollars net worth.
Wealthy Over 100,000,000.00 but under 1,000,000,000.00 dollars net worth.
Mega Wealthy Over 1,000,000,000.00 dollars net worth.
Including primary residence.

Down turns affect us all
This is a good time to talk about what is relevancy in ones net worth.
Look back at the time that Ted T. went from the Mega Wealthy person to the Wealthy even though Ted was not going to go hungry he had to be feeling sad or really defeated. We are sure Ted is doing better these days, but you can see how these down turns effect us all. Maybe because Hedge Funds are for the Mega Rich on our list and up, and given the fact that Hedge Funds are a risky bet that can bring in larger returns, but face a higher risk some if not most of all the players from the categories are going to be hit and no matter how much money one has you still did not work that hard only to see someone take part of it away that you put out in the risk area.

Shared the wealth now share the pain
Logic just wanted to make this point. However we realize that the Employed Persons like Logic cannot take much of if any of a hit as most of the Employed Persons are only a pay check or two from being out on the street. This means that the masses which make up the lions share of the consumer spending when faced with a prolonged down turn like we are all in with increasingly higher cost of goods like gas, food, services, and energy along with the fact that their number one investment? their home can no longer play the roll of a piggy bank, as well credit cards are tightening and reducing the available credit balance directly takes away from their expendable income and is what is putting us all on the road to the worst economic times since the depression.

Banks and Mortgage firms
Like oil prices and oils impact the banks and mortgage companies have been way over talked about and there is nothing to forecast in this area due to the clear understanding that the end for these people is so far away Logic would need a fortune teller to help them see the light at the end of there ride through the tunnel of love. No fowl here, as Logic does not own a house have a mortgage or owe any bank loans what so ever. Not even a car payment.

Municipalities will fail
Signs that your favorite city or county might be already in a financial bind is apparent even here where Logic live in Southern California.
Cities and counties, they have the numbers in front of them about new development starts, fees, and tax income, but maybe like the lone home owner who has had his home on the market for the past two years with a two year old price tag on it believing that the market is going to turn and you can get out of the projected debt is right around the corner, the good news here is if you are operating a time machine you can go back and sale that house.
Cities and counties have a past, neaning many have seen these down turns before will file for bankruptcy and need emergency assistance to maintain the most median of city needed to function operations.
This will more then likely hit cities and counties in the latter part of 2009 and be well viewed by the city and county residents in early 2010.

What is it all going to come down to?
Logic realizes without corrections we cannot enjoy prosperous times. Corrections are great for returning to value in investments, even cars that we buy become more of a privilege to have instead of the norm.
We all especially American will come out of these times shining well, and if we have called this right then American per household savings will begin to rise agian, and along with saving and having money in the bank instead of money in more stuff.
Your health will be better and a little secret, families get along better when there is money in the bank reducing those financial strains thus this is a key ingredient in living longer, happy and staying well.

Economic recovery will come
Yes America will rebound between 2010 and 2012 and by 2014 (we all need staying power) the Employed Person like Logic will see the good times return only this time you and us will come into these better times with money in the bank as a proud saver and the power of having money is one of the most important things in our life right after our health.