2010 is on the horizon. This is where all good bloggers provide their predictions for next year. Hey – who said I was a 'good' blogger? Besides, every e-discovery blog in sight (get it – insight?) has already done a fine job predicting what we'll see next year. I'm going to do something else. I'm going to give you my macro-economic view. I'll preface this by saying I'm not an economics expert by any means. This is my ear-to-the-ground view. Continue reading at your own risk…
I do not hitch my wagon to those who claim the economy is improving. Sure, it's improving – if you factor in trillions of dollars of stimulus cash and incentives – but those forces wont last forever. And all it really accomplishes is, shifting the debt from one entity to another (the Federal government). I see a waterfall of foreclosures coming onto the market in 2010 – and look for a disaster in CRE (commercial real estate). The entire banking crisis we've experienced is rooted in the mortgage crisis – and not only is that crisis not over, I believe it will accelerate. When would I consider buying real estate again? Not until about 2013.
The last time I saw this amount of risk at the beginning of a new year was 2000. We may get through the first quarter unscathed (some stimulus programs remain in force into Q1), but it's hard to see that happening when you consider we have new credit card regulations taking effect in February followed by tax time April 15th (yes, I know tax time falls into Q2). How many of you have received letters from your credit card company changing your terms in advance of those new rules and raising your interest rates substantially? And what great timing! For the most part, they let you run up the Xmas bills first.
A lot of the numbers trotted out to make the economy appear to be on the mend are backward-looking. Yes, housing improved, but Q3 numbers include summer months, always more robust no matter what the economy is doing. And unemployment? Yes, the economy is hurting, but companies still ramp up their temporary Xmas hiring.
Personally, I believe 2010 has the potential to be much worse than 2009. I will be taking defensive positions this coming year. I realize I'm in the minority on this, but you come to this blog to get my views – not to necessarily agree with them.
So, why am I telling you this? Simple. If I'm right, this will heavily affect the people and companies we rely on for revenue. Take it from me – behemoth companies may know they need e-discovery services, but if the money isn't there, trust me, management will say "Screw it; we'll take our chances."
I'm not taking any chances in 2010…have a safe & happy new year…and let's hope I'm completely wrong!