"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 banks and the automakers. "The bailout money is in the sewer and gone."
This outlook is based on the following main points:
- Unemployment - unemployment rates are rising into double digits... and there's millions more that are "underemployed" in jobs paying half as much as their previous. Consumer spending accounts for about 70% of economic activity and Americans aren't spending like they used to.
- Housing - The $8 trillion negative wealth effect of housing means more Americans will default on mortgages... as well as student loans and auto loans and credit card debt and any other kind of loan they managed to get.
- Commercial Real Estate - More consumer loan defaults will hit banks and commercial real estate is also headed for a crash... remember the recent bankruptcy of General Growth Properties? This is a huge deal.
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