How Far Down Is the Bottom?

Mar 10, 09 | 9:26 AM   byMichael Wolff
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The basic economic outlook for the last generation, from the deregulation boom of the Reagan years to the dotcom boom of the Clinton years to the real estate boom of the Bush years, has been to anticipate how high things will go. That’s what the venture capital business, with its focus on the next big thing, and the private equity business, with its anticipation of buyers bidding ever higher prices for companies, have been based on.

The inverse now occurs. The basic economic operation becomes about anticipating—and speculating on—the depth of the bottom. (The hype that helped urged things up now urges them down.)

It’s sort of a bubble in reverse. The Great Vortex.

Moody’s, the credit rating service that once boosted the reputations of a set of companies beyond evident reason, is now, with equal enthusiasm, vilifying a set. With its list of 283 companies it believes are among the most likely to default on their debt, Moody’s has started to imagine the new corporate landscape.

Here are a few who are going down: Allbritton, which owns lots of ABC affiliate TV stations; American Media, which owns the National Enquirer; Arby’s; Baker & Taylor, a major book distributor; Barneys; Brookstone, the vibrating chair people; Charter Communications, a big cable television provider; Chrysler; Citadel, a big radio company; Culligan (“Culligan Man”); Duane Reade (my drugstore); Kodak; Eddie Bauer; Emmis Communications, television and magazines; Ford; Freedom Communications, which owns 33 daily newspapers; GenCorp weapon systems; General Motors; Golden Nugget; Harrah’s; Jet Blue; Krispy Kreme; Media News, with lots of newspapers; Orbitz; RH Donnelley, the biggest printer; Reader’s Digest; Rite Aid; Sbarro; Sirius XM; Six Flags; and US Airways, among others.

(AP Image)

Brand theory holds that, through the science of marketing, value can be created on the basis of perception. If consumers come to believe in the value of something, it has value. Or, really, it is about consumers coming to believe in the inevitability of something—the strength, the clarity of purpose, the constancy, the very ubiquity of something. The modern economy is based on the brand value created by brand theory. What this theory has failed to account for is what happens when people stop believing in strength and inevitability, when weakness becomes the assumption and the sound you hear is the chipping of clay feet.

So, today’s best investor is the person who can most grasp the grimness of our circumstances, who can best imagine the extent and subtleties of the great undoing, who has the moxy to go ever lower in his estimates—who most truly understands that everything is vulnerable, susceptible, fleeting.

Make your own list.

More of Newser founder Michael Wolff's articles and commentary can be found at, where he writes a regular column. He can be emailed at

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