Zero visibility and taxes brings business to a halt!

Morning folks!

I heard a very good description of where we are economically the other day.
Jack Welch, the former CEO of General Electric said that we are in a fog. As far
as business is concerned there is zero visibility. What that means is conditions
are so bad companies can not even plan or project 30-60 days out. They are on
day to day and that is just one of the reasons why the economy is so bad and
getting worse.

Then add the layoffs and what that does to the morale of a company and how
that down draft has the power to destroy that company. Reorganization takes time
and opportunities are missed.

You may ask why am I writing about the economy more than domains? It is a
simple answer. If you have the most beautiful suite on the Titanic and the ship
is going down and you are busy redecorating, you are in serious trouble. You
have the wrong focus. You also need to read yesterday's post as well as previous ones. There is a thread and theme that runs throughout.

I also like being on record. I am willing to stick it out and believe what
I say and think. Does not mean I always get it right. But time and the record
have proved more often than not. My posts about what is HERE now started 1-2
years ago and just kept intensifying. The reason, the numbers just did not add
up and it was just a matter of time before numbers trumped the bullshit. People lie, numbers don't.

Last week I wrote about the lack of confidence and how that is the
epicenter. Well, now there is much more confidence. More confidence that things
are going to get much worse. That is the only thing I can see any confidence in.

How you handle these troubled waters is going to determine many years of
your life from this point forward. So it has nothing to do with your cabin and
everything to do with the ship. If you have $10 million and hyper inflation
comes (And we are certainly planting the seeds for that to happen) you are
broke. So things can change quickly and drastically. Things can truly spiral out
of control. This is no drill. This is the real thing. We are witnessing an
economic disaster so much bigger than 1929 that I don't have a calculator that
will even go that high. The good thing is that it is worldwide. The bad thing is
that it is worldwide. Riots, unrest and governments falling has the power to
overshadow the economics at some point. War becomes inevitable.

Right now we are in a deflationary phase. When something is deflated you
try and inflate it. The here and now is deflation, but you can't be blind to the
other side. We are getting both, just don't know the timing. What's important is
being AHEAD of whatever happens. One step ahead and things are fine, one step
behind and your world can come crashing down. It's tough to make money. It's
even harder to keep it.

A lot of things are going to happen in the next 90 days. The next 60 could
be the worst we have seen until this point. Tax time is getting closer and
unless you are in Congress, we all need to pay that tax and that is where the
first true test and bottleneck happens. That is going to determine where we go
from there. Likely some minor relief followed by the very darkest days we have
ever faced.

That's what I see coming. Cover your eyes and hide or be proactive. I have
been preparing for this for a very long time and I am still not ahead of it.
Nobody is really ahead of it. The quality of life as we know it is in jeopardy. The fallout has
yet to even materialize.

Cash is king, but income generating domains can become more valuable than
cash. The payouts will adjust to the market and inflation. They are down now
because of deflation. Accept it. Don't dwell on it. The market is working. The
reward for them will be most evident when that inflation comes.

Have a GREAT day!

Rick Schwartz



11 thoughts on “Zero visibility and taxes brings business to a halt!

  1. Danny Pryor

    Okay … the deflation affects some areas, but at the grocery store prices are going up, not down. And that continued loss of equity in the real property market is nasty. There’s less money available, leading to deflation. BUT the Fed loosening monetary policy at the beginning of January was a HUGE mistake … this is the time to tighten monetary policy. The infusion of $800-billion could drive inflationary pressure the likes we haven’t seen since 1980 and ’81, and I remember those days well. Jelly that was 50-cents last week would cost 65-cents this week … ad nauseam. Talk about being in a cipher … those who don’t know how to navigate these waters will know the true meaning of being caught between Scylla and Charybdis. This is a good time to set up partnerships, make new alliances and support fellow and friendly businesses and entrepreneurs whilst the shakedown continues. And First National Mattress … what a great name, Rick.

    Reply
  2. Troy

    Rick,
    I think you are absolutely correct.
    While deflation is what everyone is talking about it is only the tip of the iceberg.
    Deflation comes along when people are scared to spend money.
    People are scared to spend money when they have no confidence in the system.
    When people have no confidence in the system the government responds by flooding the market with cheap money
    When the government floods the market with cheap money you have INFLATION.
    Now if the government had ANY type of intelligence and if they cared more about fixing the economy then they do about being popular and reelected then they would just let the economy work itself out, with all the pain that it would include.
    You are right on. It could be time to buckle up and make sure you are 3 steps in front of everyone else.
    Troy

    Reply
  3. Steve

    It’s good to see all the new articles here, lately.
    Most domainers crave good reading that’s related to the industry.
    It’s not easy to come up with articles on a regular basis. I’m enjoying it while it lasts.

    Reply
  4. Jim

    Rick, what can we do, the world has over produced everything for the past 10 years. Take homes for instance, today it was reported 20 million are lying empty in the US. The same across the westernized world. Check out Spain, UK, the same. Average three residents per home and you have a capacity for 60,000,000 people more that do not exist!!!!!
    Same with cars, in the late 80’s, early 90’s a car was good for 6 years max but today a car witout hesitation can look and work well up to 15 years later. Yet in the US up to 16 million new vehicles are added to stock piles each year. Then there are another selection of vehicles which are almost ageless like your jeep wrangler etc, classsic models etc that are just adding to the stock of drivable vehicles. If the US never produced another single car for 5 years, the US population would manage.
    Lets face it we all have computers around the house that if pushed would not need upgrading for another 5-10 years. Over-production again, everybody stocked up when stuff was cheap. How many more TV’s do we need? We have exhausted ourselves as a whole for we want for nothing. OK china and India’s middle classes are expanding but they plan on doing so with $20 netbooks and $2500 new cars. Same with every product for the last 10 -15 years, it was overproduced.
    The point I am trying to make is the”Production Revolution”(1980’s to 2010) like the Industrial revolution before it is now over. For when is the US or any other country going to have expand it’s production output anytime soon?
    While certain amounts of people from all trades and professions will be needed, technological advancements has made huge gains that has made the need for workers far fewer. Usually after every historical bust whether it is financial or war related there is a boom.
    But there is not going to be a new boom, we have every single thing we need at our fingertips and the contraction we are feeling right now is the over production contraction. Supply and demand will have to level out some stage later this year or next but will stagnate at those levels for years to come or even contract further as westernized populations get older and decline. Let’s face it demand is declining rapidly in the western world.
    We need a new Economic model, a complete departure from the existing one, one that takes into consideration that full employment will never happen again.

    Reply
  5. domain guy

    oh… oh.. our domain visionary sees a colapse coming and warns us all!!!it will be severe but lets remember
    everyone is rowing in the same direction,world leaders,banks politicans all want to get the economy going again,governments will use and invent all types of tools higher interest rates to combat inflation.whatever it takes will be done.there will be aprice to be paid for bushes term.we have already seen a 40% global markdown on valuations..across the board.next thing we know the domain king will be selling candy.com and buying a peremenant cabin on a cruise liner and vacation on the ship from around the world using different curencies as value.
    and please inform us all when you see an uptick in the environment.love ricks candor.

    Reply
  6. Anunt

    If all you guys think that the economy is going to get so soooo bad, then why don’t you guys put all your money where your mouth is and short stocks like crazy…this will make you money in a down market.
    I know the economy is bad…but it’s still going to be okay for the people who have extra cash and are not fully invested.
    Rick, you are making it sound like the whole world is dead. There are tons and tons of people out there on vacation such as myself enjoying the world…the world is NOT dead!

    Reply
  7. Johnny

    Well….I agree with Rick on this.
    It’s much easier to buy into panic than it is calm….as I have done it before, but this time is different.
    The ramifications of what is happening now will reverberate for years to come.
    I was a young punk in the 80’s and it was generally a good decade for most Americans. In the 1990’s all of a sudden everyone started upgrading to very, very expensive homes. The same folks that were living in 100K to 200K homes began to upgrade to 300K to 700K homes. I can remember repeatedly telling my friends that I just simply don’t see how this many folks could have wealth like this all of a sudden. Everybody was”rich” all of a sudden. They had new SUV’s, houses, TVs, going to overpriced sporting events and music shows (Insane $$$ for the Superbowl or the expensive music of The Eagles anyone!). All kinds of jewelry for the wife ; all kinds of toys for the husband. It goes on forever the crap we spend money on…… LifeLock for you identity, pesticide for the lawn, credit card payment protection, IAMS for your dog, cell phones for everyone in the family, $100 cable bills, etc…. The expenditures just never stopped and now we are in a freakin’ sand trap and many of us will be eaten by the ugly black spider, a few will climb out of the hole, and some will manage to hold on the side by carefully maneuvering.
    It really is this bad. Most folks and companies don’t want to just admit it. I personally believe, there is some kind of denial psychology going on. By not admitting it a person will feel better in their daily routine. Admitting it means possible panic….and most cannot handle that notion b/c it will crush their world. Imagine telling your wife that she can plan on living on 20% of what she used to. No guy wants to say that as that would destroy the mood in the house…so the whole family lives in a state of make-believe.

    Reply
  8. Jim

    To give you an idea of how bad things are I was talking to a realtor the other day. Supposedly prices are down by 30% in an area near me. That is what the newspapers are reporting. But that is not the actual truth at all because when I asked him he said even if you reduced the price of properties by 70% there are no buyers there. The 30% figure only comes from the average of the price drops recorded not actual sales. But as the months go by this figure will keep droppping to eventually where cash buyers may enter the market. But even then thety will be few and far between.
    Up till this point I had always thought that there was no way that property prices would go below rebuild costs. Not the case. Demand is dead, credit is switched off because it doesn’t exist anymore and negative equity for anyone who purchased at the height of the boom is likely to be 70% within 3 years.
    What Rick mentions above is not an attempt to bag a bargain in the domain world, it is a reality that is coming to everybody soon. Johnny points above exactly most of the reasons that created the problems in the first place by us all as a collective buying in to over supply for the past 20 years or so.
    And i seriously think we ain’t seen anything yet!
    Some say shorting stock is the way to go, the only problem is when you reach the bottom, will the banks be there to pay out. There is massive contagion going on in business confidence.
    Rick and others have realised this. This is not a dooms day predicament just a cold harsh reality that is hitting most of us all.

    Reply

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