‘Bottom Feeders’ Will Seek Feast in Weak Economy

February 13, 2009

This article is included in these additional categories:

Agency Business | Europe & Middle East | Financial Services | PR

As the Obama administration’s stimulus package faces an uphill battle in resurrecting the US economy, global conditions continue to decline and could lead to skyrocketing prices, political instability, increasing public rage and the need for escapism, according to the 38th Annual Trend/Forecasting Report by The Dilenschneider Group.

The report, which was compiled from the communications consulting firm’s ongoing discussions with industry and policy experts, states that the months ahead could bring an estimated 15-20% drop in the standard of living around the world, fueled by cuts in virtually every arena of life.

Among other likely trends:

  • A significant increase in the prices for food, energy and other essential staples.
  • An emergence of “bottom feeders” who will take every opportunity to exploit the weak and win economic advantage.
  • A paralyzed global political leadership unwilling to work together and collaboratively with experts outside the political arena, despite the dire need to leverage the world’s best minds to develop solutions to collective troubles.
  • A mounting public rage that may result in political instability, particularly in poor nations.
  • A billion-plus new consumers entering the market and placing incredible stress on support systems.
  • A dramatic increase in church and sports attendance as people seek to find solace and escape reality.

Despite these forecasts of gloom and doom, the Dilenschneider Group predicts there will be opportunities for innovation among those who see a silver lining and can capitalize on potential commercial opportunities.

Global Ripple Effect

According to the report, the global economic ripple effect has reached tsunami proportions with four of the world’s richest nations:? The US, Japan, Germany and the UK are all facing? recessions, rising unemployment, slowed capital investment, reduced consumer spending and chaotic credit and equity markets. “There’s scarcely an advanced economy anywhere that has managed to escape the ever-widening ripple effect of what [has become] a global meltdown,” the report said.

Second Mortgage Disaster Looms

Although the new US administration may yet develop a feasible plan to stem foreclosures and isolate and contain the impact of so-called “toxic sub-prime assets” on the balance sheets of the major financial institutions, the report finds that the US is only halfway through the bursting of the real estate bubble. According to the report, there is still “a lot of pain” left to endure from more write-downs of mortgages likely to go bad – given the proliferation of existing option adjustable rate mortgages and a likely spike in monthly payments as teaser interest rates expire and are adjusted higher.

The study authors outline several recommendations for businesses to consider, given the economic conditions and the threat of deflation:

  • Do not plan on economic recovery any time soon. Keep costs and debt down, and stay liquid.
  • Those with cash surpluses should look to increase market share by buying distressed competitors – but only at bargain-basement prices.
  • Communicate aggressively with customers, investors, employees, boards and other key stakeholders to ensure? expectations are aligned with what the business can deliver.
  • Plan long term and position the company to expand when the economy eventually recovers.

About the report: The Dilenschneider Group annually reports on noteworthy trends based on its ongoing discussions with experts in diverse fields, including business, finance, journalism, the arts, academia and the non-profit sector.

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