Economy ???

[Passages]

How about THOWARD's 60C for only $309,000? I don't know him or his boat, but it sounds like a great price if it's in good shape.

Doug

Well, because it's not a 45-53. 60 will not fit the slip.

[thoward]

Well, because it's not a 45-53. 60 will not fit the slip.

That means you need pull in bow first and let a little hang over the dock.....

[Passages]

According to boating tome David Pascoe, the future of powerboating is grim. Hope he's wrong. Read & decide for yourself.
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DAVID’S BOATING TREND ANALYSIS
Finance, Fuel Prices, Economics, Boats, MarketsHome About MarineMax – First to Go?
By David Pascoe
Monday, November 19, 2007

Readers of Yachtsurvey.com are well familiar with my disdain for the Big Three boating cartel of Brunswick, Genmar and MarineMax. It is positively stupid to conglomerate an industry as marginal and financially unstable as this one. This is always the first of the discretionary spending industries to take the hit when the economy suffers a downturn.

But one must remember that old Patty Page song about fools rushing in where wise men fear to tread.

Alas, the world has no shortage of fools.

Frankly, I did not expect these companies to survive the 2001 dot.com crash which sucked $5 trillion of easy money out of the economy, but I underestimated Allan Greenspin’s penchant for generating money floods. This time will be different; the massive Ponzi scheme of the Wall Street-Washington financial axis has taken on all the characteristics of a gunman in an elementary school. Lockdown. Or perhaps more correctly, lock up.

An economy which functions on credit as easy as greased lightning just as quickly falters and begins to shutdown once the grease is removed. The lightning then becomes one helluva shocker. Credit is drying up. “We have not seen a nationwide decline in housing like this since the Great Depression.” Incredibly, those words came out of the mouth of Wells Fargo CEO John Stumph. Similar utterances came from Jan Hatzius, chief economist at Goldman Sachs, “The slump in credit markets . . . will [result] in lending reductions of $2 trillion.”

The first principle of survival in the marine business is diversification. MarineMax has done just the opposite.

MarineMax runs marinas and stores and is a boat retailer that is highly concentrated (46%) in Florida with 46% of revenue derived from high end yacht sales. While we hear about housing prices falling by 4-8% nationally, in Florida, like California, that number is probably closer to 40% (I estimate my own Florida home value down by that much.) But it doesn’t matter how much anyone estimates price declines when nothing is selling to back up those estimates. And if people aren’t buying houses or autos, they certainly won’t be buying boats. They won’t buy because they can’t get credit, even if they want to buy, which people don’t.

While I have no access to new boat sales Q-2 or Q-3, but I can confirm that used boat sales are at a complete standstill. I can only estimate that sales are off by more than 90%. Yet here’s the rub: used boat sales are normally 5-7 times the volume of new boat sales, so if used boats aren’t selling, it’s a certainty that new ones aren’t either.

A recent analyst’s report states that the MarineMax balance sheet has “some potentially debilitating weakness.” That analyst is being modest. “it’s only real strength . . . is that it has about $130 million borrowing capacity . . . “ The company has $103 million in cash and receivables and $434 million in current liabilities. Total assets are $600 million but nearly $500 million of that is in inventory, boats that it will be unable to sell, but must sell to meet its obligations. The proverbial rock and the hard place.

Says the analyst, “a swing into negative cash flow over the next two quarters would truly put the company on shaky financial footing, with potential for default not out of the question if the company fails to unload its inventory. If weakness in sales were to last beyond two quarters . . . MarineMax could be pushed to the brink of insolvency.” [1]

Keep in mind that we’ve not had a serious recession in more than 25 years because the Fed has doused the fires with floods of money. Previously, downturns began in the middle of the economy. Remember downsizing in the late 1990’s when it was the middle ranks of employment that suffered the brunt? Midsize boat sales took a hit, but small and large yachts did not. This time is different. With a financial meltdown in progress, the big hit starts at the top as the massive credit derivative wealth evaporates and hedge funds implode, padlocking the door of big easy money, a fact that clearly shows up in the huge ballooning of larger yacht listings in recent months. Mr. Fat Cat is on a force diet. This, of course, is rapidly filtering down to all income levels.

Add to this volatile mix sustained fuel prices above $3.00 gallon and there is not a lot of cause for optimism. Seen any trailer boats on the road lately?

MarineMax is poised to be the first of the marine dominoes to fall, but others will fall in rapid succession. This recession will be no one-quarter miracle as in 2001. The locked up credit markets due to abuses will take at least several years to unwind, far too long for any of these conglomerates to survive.

Special Note: This scenario, of which I am certain, leads to the obvious question of what will the future of the boating industry look like. We can confidently conclude that the shoreline will appear radically different five years from now, bearing in mind that the age of cheap oil is clearly at an end. Red Sails in the Sunset, perhaps. I will be exploring these possibilities in the coming weeks, so stay tuned.

[1] Source: MarineMax on Shaky Ground
at Seeking Alpha (Mon, Oct 1) via Yahoo Finance
The figures do not reflect the 4th Quarter and fiscal year 2007 ended 9-30-07.
November 19, 2007 - Posted by David Pascoe | Marine Industry | boating industry, HZO, Marine Industry, MarineMax | No Comments

[thoward]

I am really hoping this will bring down the dockage rates in Fl down a little. I think the growth down here needs to slow down. Prices are getting insane. It will also be interesting to see if this brings down the cost of 4 stroke outboards.

When it comes to R/E, lenders are going to have no choice but to work with homeowners going in to default. If someone bought a home in '05 they paid too much and can not sell it for what they paid for it. The lender can foreclose and take a large hit now or work with the borrower to keep them paying reduced payments allowing time for the market to rebound.

[Passages]

Father Pascoe seems to be getting more bearish by the day:

http://davidpascoeblog.com/2007/11/2...-loans-lousey/

[Passages]

Interesting as it is to read Pascoe's take on the economy, let's face it, he's not a financial analyst.

It just so happens that this morning, I went to Fidelity to talk to a REAL analyst on how my portfolio should be rebalanced. Well guess what? Fidelity is scared. For the first time EVER - they recommended I put 10% into GOLD! Now think about that - the guy recommeded picking up a bag of Kruggerands for which he would get ZERO commission.

His words " We're in for a rough ride."

[krush]

Is there anything Pascoe doesn't know? LOL

Edit: But, almost any moron can see that there are hard times ahead. The underlying fundamentals are pretty simple even if the creative sleezy financial engineering that lead to the meltdown is very complicated.

The economy for the past many years has been strong to do massive consumer spending...consumer spending driven by CREDIT! The piper has to get paid eventually.

[CARL GUZMAN]

Many people know the internet has made all buyers more informed on there choices and has helped many , now the people who want to make the easy money on the poor and stupid can't do it like the old days ... no more fine print etc. most have caught on now and they have to change there game. It's easy to tempt the worker bee's with reward and have them pay later untill they see the honey is not so sweet , everything should be done in moderation ,
My saying is : If you party like a rock star for 4 years your going to have a hangover for 4 years...***

[Trojan]

Quite buying from China. Free trade is what is killing this country. Until our wages drop to the same as China. Or China's wages equalize to ours. NOT. We will continue on the down hill slide. If you want to see how our country is going to look like in 5-10 years just look at South America. The rich and the poor. Zero middle class. Notta. Until our fat cats in congress start loosing there asses, we will continue on this down hill slide. It's a picture I don't like to paint. It's a real messy picture for our children to look at. Not everyone can work in community services. But it will easily open the door for socialized government. IT SUCKS. We need a real president. NOW. We need a poor man in office. Someone that's been there. We are no-longer a powerful country. This down slide is only the tip of the iceberg. Stock up on ammo, Your going to need it. There already asking for more gun control. A little here and a little there. Armed robbery is on the rise and will continue to go up. I sure hope I'm wrong. Make sure your firearms are registered so they they can collect them from you when the time comes. Thank God I'm a redneck. Step back and look hard at the big puzzle. The pieces are starting to come togeather. We are going to need more than God to help us out of this mess and everyone is setting on there duff. Thinking when will this end. HELLO! HELLO.....................

BILL

[Boatsb]

I just received the global economy dissertation from my cousin with the sub prime ARM on his house. He just got a masters in Finance too. Maybe I am oversimplifying it but what the hell.

If a company wants to move operations like manufacturing to another country they will need to pay import duties. Any items coming in need to be taxed enough to equalize the cost with making them here. Not only would it be less attractive but we could use some of the money to retrain or support the AMERICAN workers.

If a company wants to move services out of the country like outsourcing call centers they get ZERO tax benefits and are no longer able to apply for Government work.

The practice of nationalization of items brought into the free trade zones intended to be shipped out to other countries needs to stop. Why should you be able to legalize an imported product for 10% of the original import duties.

Illegal Aliens must be punished. Anchor children must be stopped. Anyone wanting to help these people can do it with their own money not the taxpayers ( do you hear that hollywood?)

Voting for a check needs to be changed to a more productive alternative. Not to take away the right to vote but we need to look at the way it is abused. Should recipients of public assistance give up their right to vote for the year?

Accountability is never on the list of the big shots. If your company made bad investments don't come to the government for help. If you can't pay your bills because you bought a house costing twice what you could afford it's not my problem. I am living with my decisions good and bad you need to do the same.

Oh yeah for the younger ones out there. My friend is an attorney that deals in cases of discrimination. Like for age, race or religion. There is no definition of discrimination for you looking like or dressing like a ??????? Piercings and tattoos do not help in your career search.