Gene: I think you are painting a picture of excess productive capacity, not under-consumption. I read a book about 6 - 7 years ago, that predicted such a crash but on a grander scale. Can't recall the title or name of the author, who was writing for Rolling Stone (!go figure?) at the time. Evils of globalism, blah blah blah. It may turn out that he was partially correct after all :(
Fred Hickey shares the same over capacity - related bearishness:
grantsinvestor.com
The fundamentals are that bad?
Adjectives do not describe how bad this is. I cannot talk to anyone I know in the industry who says that this is anything but the worst they’ve ever seen. Nowhere close to bottom. The problem is obvious. Too much supply. That’s why we’re seeing such dramatic slashing of cap-ex budgets. With so much inventory, you obviously don’t need more plants. That’s the story, not just in PCs and semiconductors, but in cell phones. They were plan-ning to build over 700 million cell phones this year; expected to sell at least 650 million. Ericsson just admit-ted it now looks like the total could be as low as 430 mil-lion. That’s a tremendous oversupply. There’s likely to be negative unit growth in the U.S. PC industry. The worst in history — and getting worse going forward. Yet we have tremendous capacity, which is driving tremendous price wars. It’s going to take a long time to work through this capacity, so you’d better not be buying things at these prices thinking that we’re at a bottom. The only thing that will solve this problem is time. Yet investors are suddenly eager to look over the valley again. The funny thing is, nobody seems to notice that every time a company comes out with a positive state-ment, it announces laying off thousands of workers at the same time. Hewlett-Packard tripled the number of workers it’s laying off and said it was supposedly seeing a bottom. I don’t understand: if you see a bottom, why [do] you have to lay off so many people? Nortel sees a bottom. Why is it laying off 22,000 workers? Intel is lay-ing off thousands. No one wants to admit how bad things are. But watch their actions. They are writing off inventory. They’re laying off people. They’re cutting back capital expenditures.....
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