Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

LOWES - ALL IS WELL, ALL IS WELL

 
 
I was in the new Lowes in Hatfield PA yesterday afternoon. It was great. More employees than shoppers. Of course in this 120,000 sq ft mega store they didn't have a straw broom or a replacement spool for my weed eater. The experience was delightful, as I strolled down the huge empty aisles and had my pick of 10 empty registers. Excellent for me, bad for Lowes profits. The good news is that come September I will be able to teach my son how to drive a car in their ginormous parking lot that is 20% filled on a Saturday afternoon.

 
Here is how this plays out for Lowes. They will continue to be surprised as sales continue to fall for the next year. Eventually, when they slowly realize they built 100 more stores than they should have, the CEO will be canned. The new CEO will come in and announce a restructuring plan and will announce the closing of 100 stores and the firing of thousands of employees. Wall Street will rejoice and the stock will soar. The beautiful Hatfield store will be closed and ten years from now will be a weed infested eye-sore. Who could have predicted it.
 
Mr. Davidowitz sounds like he has been reading my articles. Only a fool would be conspicuously consuming at this point. Embrace frugality like grim death. He who dies with the most toys doesn't win. He who dies of starvation loses. 
 
 
"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
 
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."