In a recent article in the Telegraph rap star 50 Cent spoke out about the recession. To 50 Cent economy apparently means selling his "old diamonds" before buying something new. Not to criticize his strategy, clearly 50 Cent has more money than I do, but it seems that selling off old diamonds to buy new pieces is one of the most financially foolhardy ideas around. Resale on diamonds (large rare high carat stones excepted) is notoriously low. Even if he is essentially trading in his pieces with the same jeweler it is likely a losing game. He may be able to resell some pieces at a decent price because of his name but quickly turning over jewelry and constantly getting new pieces is not a way to accrue wealth.

He went on to say that anyone who didn't lose money in this recession "didn't have enough to start off with." He shrugged off his losses and believes he is still a savvy businessman who could even advise President Obama should he need it. Big words from a man who is still in the process of trying to sell one of the great white elephant pieces of Connecticut real estate, Mike Tyson's former mansion in Farmington, Connecticut. Tyson's mansion has been nothing but a headache for Fiddy. He bought the home for $4.1 million (Tyson's ex originally wanted $25 million) and spent $6 million renovating it. He has been trying to sell the home since 2007 when he wanted $18.5 million for the property and it is now listed at $10.9 million.

I was having lunch with the colleague the other day, discussing the latest round of media layoffs. We both agreed that given a healthy savings account, the most sensible way to deal with a job loss in this economy is to wait it out, and the best way to do that is to travel.

Of course the economy wouldn't be in this mess in the first place if we all had healthy savings accounts, and so if you find yourself without a job and with a sadly diminished travel budget, the lovely Rabbit Hill Inn in Lower Waterford, Vermont has good news: its popular "Pink Slip Getaway" contest, which will go on hiatus for Fall foliage season, will continue through April 2010. Send your job loss story -- one page or less -- to Rabbit Hill by the new deadline of January 15th, 2010, and make it a good one. If your story is among the one a month selected, you'll get a two night stay with breakfast, one dinner and a rabbit's foot for good luck.

Do you know what happens during a feeding frenzy? Too many people arrive for chow and in the end there isn't enough food for everyone. Compounded with the fact that there is a diminishing amount of food, a real problem can arise. This is what happened with the watch industry. Things were looking so good for a few years that unwise minds thought that either the bubble wouldn't burst, or that they would get in while things were still good. Now people aren't buying as much luxury watches, and the overall industry is feeling the bite and trying to figure out what to do with all the extra unsold watches.

Before getting to the nasty figures, this situation is also a blessing in disguise. The last few years of the watch industry was almost a set-up for disaster. You had too many brands, too little realistic values, and way more watches than we had people to service them. Thus, there was going to be a major problem in a few years anyway. Now companies are realizing that they need to have actual back-end support on the technical and customer service side of things, and they are realizing that consumers are actually interested in the fact that if they pay $100,000 for a watch, it might actually be worth close to $100,000.

So, here are the numbers from the Federation of the Swiss Watch Industry in brief. Sales in all top 30 markets are down. Here is the damages in some key markets from one year ago. US down 43%, Hong Kong down 22%, Japan down 29%, China down 36%, UAE down 34%, Russian down 61%, and Singapore down 30%. Big hits all around, but remember these are numbers just for Swiss watches.

It may look as though people just aren't buying as many watches these days. This assumption would be wrong. Recall that Swiss watches are for the most part the most expensive watches. Almost all segments of consumers are reducing the amount they are spending on timepieces, but they are still buying watches. Thus, the Japanese and American owned brands aren't doing amazingly, but aren't hurting nearly as badly. Some brands are even likely doing better given the focus on less expensive brands.

The message to watch companies is to focus on value. Make sure a watch demanding $5,000 is actually worth that, and can be communicated well to the consumer. Otherwise they will need to focus on the sub $1,000 segment if they wish to see any retail space in the next few years. Lastly, watch companies must adapt to the times and embrace the Internet as a strong sales, distribution, and marketing channel. They can learn from Rolex, the most powerful watch brand in terms of value, which also spends the most money on advertising. Coincidence? I think not. Estimates see these trends improving over the next few years, but we shall see just how much, and in what way that happens.

Via FHS report (PDF).

Ariel Adams publishes the luxury watch review site aBlogtoRead.com.

To say that luxury watch sales are down in these difficult economic times is obvious, but the picture is not that simple. Some areas are actually doing quite well, while others are more or less not effected by the economic situation. For the higher end watches, a lot of people see the slow down in sales as a psychological reaction in the minds of wealthy buyers to not wanting to spend so much when the economy is down. Thus, the most effected segment of the market are roughly those watches in the $2000 - $50,000 range. Yes this is a big range, but across the board this segment is suffering - in two ways. First, people are going down a notch in price points when purchasing. If they would have spent $10,000 on a watch a few years ago, today they are spending $2,000 - $5,000. Alternatively people aren't buying watches at all in this segment, and waiting until things get better to buy.

One segment that is doing remarkably well is the $100 - $500 segment. Typically not really considered part of the luxury watch group, watches in this range are gaining a lot of momentum.. Buyers are looking to decrease the amount of money spent on watches, but still want to buy watches, which is why this segment is doing remarkably well. A major point of this finding is that people will always want watches, and the demand is still there. Although retailers are typically loathe to offer these lower margin watches, the economic reality of today is forcing them to amend their points of view on this price segment.

Bad news for the restaurant world, eating out has topped the list of a survey of what people are willing to give up during a recession. The survey, conducted by New York marketing firm GfK Custom Research last fall found that 82 percent of those surveyed could easily forgo restaurant time as their first cutback in a difficult economy. Forbes reports that the National Restaurant Association in Washington, D.C., predicts that Americans will spend $566 billion eating out in 2009 which is a small 2.5 percent increase over 2008. The good news for those still interested in dining is that the deals abound. All across the restaurant spectrum, from casual dining to some of the best restaurants in the U.S., discounts and special offers provide an incentive to let someone else do the cooking.

I won't say that Chopard is hurting, but they are anticipating an economic sting based on lower than hoped-for sales at Baselworld later this month.The independently owned watch and jewelry maker employs a total of about 1,800 workers. Chopard's Karl-Friedrich Scheufele recently stated that the company would be laying off 36 employees, from their manufacturing and administration arms. The cut does not represent an immense portion of their labor force, but such companies are not known for making hasty lay-off decisions. The move is a direct result of the poor demand for luxury watches in the current economic atmosphere. The lay-offs will occur in a month or two according to Chopard. Competitors such as the Richemont Group and Cartier have also experienced job cuts, or are considering them. Until the world economy is able to begin a recovery, the luxury markets will continue to suffer demand loss.

Via Forbes.

Ariel Adams publishes the watch review site aBlogtoRead.com.

The First Lady may outfit herself and her children in J. Crew (both Sasha and Malia Obama wore J. Crew coats to the inauguration), but all that free publicity hasn't spared the purveyor of preppy casual wear from being hit by the economy. The retailer has announced that it is eliminating 95 jobs in its New York offices and in distribution centers. The cuts represent around a 10% staff reduction. The company has also suspended matching 401k contributions and any merit-based pay raises.

The LA Times reports that J. Crew hoping to reduce its annual budget by $40 million. The cuts are inline with what has been seen at a variety of other retailers including the major department stores like Macy's, Saks and Neiman Marcus which are all wrestling with a decrease in consumer spending. Companies don't know when the economy will improve and shoppers will be back out in the streets so much of this is a preemptive measure to make sure that they are running as lean as is possible.

Why are sales of Cuban cigars down? The minute the subprime mortgage crisis turned global, of course, demand had no place to go but down. And, there's always the quality issue that has plagued manufacturers in recent years. So far, the damage hasn't been bad.

Habanos S.A., which makes the storied Montecristo, Cohiba and Partagas brands, moved $390 million in 2008. That's a drop of 3 percent from 2007. The company, a joint venture involving the Cuban government and Altadis, says that this hasn't affected profits significantly.

Unsurprisingly, Habanos blames smoking bans in France, Germany and the United Emirates (among others) in addition to the financial crisis. If you can't find a place to smoke, you aren't likely to do it as much (a trial I endured in Scotland last year).

But, economic conditions are still the main event, particularly when you consider the secondary effects.

International travel took a dive last year ... to the tune of 11 percent. What's that mean? American cigar dilettantes weren't able to piss away as much on Cuban sticks as they may have in the past. Duty free shops thus moved fewer cigars than usual, with total sales in these venues down 24 percent from 2007 to 2008.

Despite the slip in sales and claims that profitability isn't seriously impaired, Habanos isn't optimistic about the future. On the subject of the U.S. embargo on Cuba, typically a favorite topic of speculation, the company would only say that it has "much worse problems to deal with in the world."

[Via Latin American Herald Tribune, photo by Steve Zak]

Some unintended fallout from President Obama's economic stimulus package may be fewer donations to charities. Nonprofits have already been facing tough times in recent months, some because of their association with Bernie Madoff, some simply because of the economy. Those who are making less money are giving less money, a situation that could be exacerbated by the economic stimulus package which bars firms that accept federal bailout funds from paying their top earners exorbitant bonuses. The Wall Street Journal reports that Americans gave more than $300 billion to charity in 2007 and that much of that may have come from the big bosses on Wall Street. Some nonprofit leaders are worried that the financial restrictions imposed by the stimulus package could mean that executives will give less. Some of the richest executives also funnel money through private foundations. Even executives in companies that aren't accepting bailouts may feel less inclined to donate because of the fear that their own financial situation is far from secure. The trend isn't just affecting New York charities. In Detroit, museums, shelters and other nonprofits are struggling without the largess of the executives at some of the big auto firms. While the stimulus package will offer support for some nonprofits those who've been depending on the big salaries of others may be preparing for lean months ahead.

A couple of days ago, my colleague Jared Paul Stern reported that Chanel was pulling the plug on their fancy world-traveling global art installation designed by Zaha Hadid. It seems that's not the only penny-pinching the French luxury brand had in mind. According to the Guardian, Chanel is also cutting 200 jobs. The staff cuts are a direct result of declining sales, part of the overall slide in luxury spending that was not alleviated by the recent holiday shopping season. Among the jobs are 16 posts at the brand's boutique on rue Cambon in Paris. The jobs represent almost 10% of the company's production workforce.

The jewelry business is bracing itself for a rough couple of years. The results of the JCK survey of the jewelry industry show that more than half of the businesses in the North American jewelry industry have already been affected by the recession and most expect it to get worse over the next couple years before it gets better. Many are buying less new inventory and lowering prices. Jewelry retailers are being hit from both sides, squeezed by lower sales and by an increased difficulty in getting loans or credit to keep their businesses afloat. Some are sending back jewelry to the manufacturers sending ripples of distress around the industry. As a potential remedy, most jewelers are focusing on customer service, promotions and incentives to keep customers coming in.

Normally pawn shops are reserved for the seedy and desperate, and the occasional middle-class divorcee looking to unload bad memories and a diamond ring, but in these tightening economic times even some of the country's wealthier individuals are turning to pawn shops to keep their high-end lifestyles and struggling businesses afloat. Since the banks aren't lending, pawn-brokers are seeing increased business from upper class individuals seeking short-term loans to fund everything from elective surgery to business payroll obligations, and they're putting up their diamond jewelry, watches, and even boats as collateral.

That can't be a good sign.

Earlier this year the term "stealth wealth" kept popping up in reference to the trend in luxury markets away from big bold brand names and toward items with more subtle logos or even totally invisible labels -- it was cool to be so elite that nobody but a select few would recognize who you were wearing.

But now, just a few months later, stealth wealth has been replaced by stealth shopping. The economy has made times so hard for so many people that the wealthy are embarrassed when they are seen spending large amounts of money. Does that mean they stop shopping though? Heck no. They just do it in secret.

The principle of supply and demand has led to a throttling of production in many places. This week Daimler announced that it is reducing the working week at its largest Mercedes-Benz factory, the Sindelfingen factory near Stuttgart, Germany. BBC News reports that the factory will implement a four-day working week from January 12 until at least the end of March and there may even be some three-day weeks in the mix.

The AP says that Daimler has also announced a reduced work week at the Rastatt plant in southern Germany. Workers there will be facing four-day work weeks and occasional three-day work weeks from January 12 until the end of February. Daimler already expanded their Christmas wokr stoppage for all 14 German production lines. Although production has slowed, the workers have a labor deal that protects them from layoffs until 2011.

In a global marketplace, even Dubai isn't protected from the economy's frosty embrace. Although real estate giants don't anticipate a market crash in this tourist hot spot it has certainly slowed the rush to invest in Dubai down a bit. There may be a positive note in this unpredictable market as some believe the speculators or "flippers" will get weeded out and bring more stability. I don't pretend to understand everything about the effects of our economic issues but it's certainly disconcerting when Dubai is feeling the strain.