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alstry (36.02)

10 Steps to Owning America

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April 08, 2009 – Comments (16)

1.  Intentionally drop interest rates to levels a generation has never seen before.

2. Loan money to a bunch of people that can't afford to pay you back but convince them they can.  Charge them excessive fees so you make sure you can report HUGE profits at the outset of the loan.  After you report HUGE profits, make sure you take HUGE bonuses because you know that your company may be bankrupt in a few years when the borrowers start defaulting.

3.  As people start borrowing at levels never seen before, watch prices for debt related assets start to skryocket as almost everyone can qualify to buy what few qualified to buy in the past.

4.  Make sure you loan even more money against those inflated assets because you want to make sure your borrowers keep borrowing to stay current on their loans so you can keep your bonuses flowing by the billions.  And just to make sure people borrow as much as they can, convince them to take out adjustable rate mortgages and other exotic products which infect them with debt that normally they wouldn't qualify to receive.

5.  As asset prices keep soaring, and people start buying and selling, flipping and tripping, watch realized gains soar and tax revenues explode.  Make sure you loan lots of money to municipalities who think the tax revenue gravy train is going to allow them to service an ever growing debt burden.

6.   After you have loaned tens of trillions to consumers, businesses, and municipalities and infected them with debt levels unserviceable at existing income levels, jack up interest rates seventeen times to force some into default.

7.  As borrowers start defaulting, and you have pocketed billions in bonuses, act surprised and tell others that now you can't loan money to anyone.  Then you may even giggle out loud as you watch your borrowers start to squirm, develop stress related illnesses, and families ripped apart as they can no longer meet their debt obligations.  Then pretend to get really mad at them and take back their homes, cars, and other assets just to show them who is the boss. 

8.  As people are forced to liqudate assets to pay you back, watch the values of ALL assets collapse as many are forced to sell similar assets at the same time.  You can start laughing even harder because you get to grab even more of your borrowers assets as fewer and fewer can afford to pay you back.  Caution: make sure you continue to act surprised and tell everyone that no one could have foreseen this as you count your billions in the bank....you don't want anyone to know the real story as they may get mad at you.

9.  By now you are laughing really hard, because the longer the process takes, the lower asset values drop.  Here is the kicker that only you really know....it is mathematically impossible for your borrowers to ever pay you back because you know your borrowers collectively have only $6 trillion of dollars in your banks but they owe you over $30 Trillion.  So if you are not one of the first to pay off your debt completely.....it will be impossible for your to ever pay back your debt as the economy collapses to a prune and your income and asset values evaporate.

10.  And to add insult to injury, make sure everyone thinks it is a credit crisis so you can get Trillions of free money from the government and the borrowers get nothing......this way you can continue to get bonuses and take everything your borrowers own as well.  In a relatively short period of time, money evaporates from the economy and the economy collapses since almost all available dollars is going to pay back debts that should have never been made in the first place.

Currently, the majority of citizens, businesses, state and local governments, school systems, hospitals,  and universities are collectively infected with too much debt.  There is not enough money in the economy to pay back the debt.  Anyone with any vision could have seen this process coming....Alstry did and developed Alstrynomics.  Now debt exceeds savings by over 6 to 1.......and as assets continue to collapse in value....the gap will widen and GDP will shrivel to practically nothing.  Until we restructure debt.......we will continue to contract in a process Alstrynomics has called Concentric Contraction....as practially no asset class is safe.

So next time someone on CNBS calls this a credit crisis.....you can sit back and laugh just like Alstry.....because now you know the rest of the story....it is a debt crisis and the calling it a credit crisis only makes the debt crisis more symptomatic.

The Key:  Pay off your debt early or you will never be able to pay it off and why Alstry has warned you to PREPARE....Don't Fear.....because if we continue down this road without restructuring debt....pretty soon things are going to get really really difficult.

16 Comments – Post Your Own

#1) On April 08, 2009 at 10:52 PM, Imperial1964 (97.81) wrote:

A friend of mine once told me there is a reason the term "bond" is associated with debt.  It is a form of bondage.  Economic slavery.

Personally I don't want to spend all my time working so that most of my paycheck can go to the bank.  That's why I've never borrowed from one.  Next up: finding a way to ditch the 9 to 5.

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#2) On April 08, 2009 at 11:12 PM, alstry (36.02) wrote:

A BIG problem exits even if you didn't borrow....if you are living in America......you likely live in a city that borrowed money, and a county that borrowed money, and a state that borrowed money....and shop at businesses that rely on borrowed money who locate within centers that borrowed money and deposit money in banks that borrowed money etc......

as the process unwinds.....the money eventually runs out.....and when the city, or county, or state runs out of money....guess who they are coming after.....

Here is a snipit from tonight's WSJ:

A free fall in tax revenue is driving more state lawmakers to turn to broad-based tax increases in a bid to close widening budget gaps.

At least 10 states are considering some kind of major increase in sales or income taxes: Arizona, Connecticut, Delaware, Illinois, Massachusetts, Minnesota, New Jersey, Oregon, Washington and Wisconsin. California and New York lawmakers already have agreed on multibillion-dollar tax increases that went into effect earlier this year.

Get ready...fewer and fewer will have any money....and more and more will need money as the FU virus spreads to epidemic proportions.

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#3) On April 08, 2009 at 11:22 PM, SharpSEO (69.21) wrote:

Local governments didn't just borrow money, they entered into crazy-ass derivative deals they didn't understand (with JP Morgan, among others). Why the HELL are local governments getting involved in complex securities like this? It's insanity.

These articles detail how JP Morgan took advantage of local governments in bond/derivative deals. Recommended reading:

http://www.bloomberg.com/apps/news?pid=20601109&sid=aIL9gsK5wG40&refer=home

http://lolfed.com/2008/10/28/jp-morgan-soon-to-repossess-your-airport-sewer-system-and-soul/

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#4) On April 08, 2009 at 11:43 PM, Imperial1964 (97.81) wrote:

Yeah, Altry.  Yesterday I voted against the increased sales tax in Illinois as well as a couple of local tax increases.  I guess we don't get to vote about the 50% income tax increase.

Illinois is so bad that the state was beyond broke when the economy was good.

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#5) On April 08, 2009 at 11:54 PM, alstry (36.02) wrote:

Imperial...in the end we are all broke....

collectively we only have about $6 trillion in savings and collectively we owe the banks over $30 trillion......NOT including Federal debt.....

If you took the richest 1 million Americans and applied their entire net worth to paying off debt of the remaining 299 million.....we would still owe trillions.

As more and more Americans are being forced to apply a greater and greater percentage of their income to pay down debt....the economy MUST continue to contract...which will lead to more and more job losses and less and less revenue to government.  The process continues until we are all broke or we restructure debt.

The banks know this little fact....why do you think they want you to think it is a credit crisis???.....now the question is simply a political one or until we are all broke.

In the end, it is really pretty easy to see.

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#6) On April 09, 2009 at 2:20 AM, alstry (36.02) wrote:

Here is a perfect example of banks starting out loaning money at low rates and jacking up the rates midstream while taxpayers are bailing out the banks.......

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=178028&t=01002372784553349910

You think all this toxic assets nonsense is in large part because people simply can't afford to pay double digit interest rates.

As long as you keep believing this is a credit crisis....the banks will eventually own everything you have because we don't have enough to pay off the banks.

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#7) On April 09, 2009 at 7:59 AM, kaskoosek (37.21) wrote:

SharpSEO

Derivatives are not the problem.

They might have created a safety-net causing more lending, but if we take derivatives out from the equation now the losses are still the same.

Instead of GS loosing money or going bankrupt, we have AIG going bankrupt.

Loose lending is the cause of the problem. American people are addicted to debt, this is the only way they can survive.

God forbid they start producing some thing to pay of their obligations.

There is an imbalance between nations as a whole and not between the citizens of the same nationality. Most of US citizens are already underwater.

 

That is where I disagree with alstry here. I do not think that the Government will tackle this situation by letting the people and companies go bankrupt, but rather by giving them more "free money" .

The trade balance will not be corrected, so foreign crediters will have even more supply of these IOUs.  At some point the house of cards will collapse, causing the holders of these IOUs to flee.

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#8) On April 09, 2009 at 9:25 AM, rofgile (99.42) wrote:

Alstry:

 Good post!  Part of the story that you should add is the rise of credit cards.  Nowadays most 10-20 year olds have credit cards.  At the same time, public schools don't teach any real economics/finance.  

 This is another big part of the rise of debt. 

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#9) On April 09, 2009 at 9:39 AM, outoffocus (23.21) wrote:

The Key:  Pay off your debt early or you will never be able to pay it off and why Alstry has warned you to PREPARE....Don't Fear.....because if we continue down this road without restructuring debt....pretty soon things are going to get really really difficult.

I agree with you 100%.  Thats what I'm doing and that's what I advise other people to do.  Dont buy into this BS that "inflation will allow you to pay off debts with cheaper dollars".  That only works if your income goes up with it and we all know thats not going to happen.

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#10) On April 09, 2009 at 11:27 AM, jgseattle (30.48) wrote:

Just an idea.  If all of Alstry's predictions do come true which would you rather be -

1)  Debt free with no cash in hand?

2)  Loaded with debt with a lot of cash in hand?

I would rather be the second because thousands if not millions of people will be walking away from their debt with minimal consequenses.  Also, lets assume, maybe, that Alstry is wrong and the government over stimulates, prints to much money, the result will be inflation.  In this case you want to be in debt as much as possible and in gold and PM. 

I am not sure which way we will go but debt is going to work either way to some extent.

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#11) On April 09, 2009 at 11:52 AM, alstry (36.02) wrote:

Interesting JG:)

Unless of course the consequences are not minimal.......

You BIG concern right now should be why are so many lying to you??????????????????????????????????????????????

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#12) On April 09, 2009 at 1:16 PM, jgseattle (30.48) wrote:

Alstry -

I was in CA in the mid 1980's when CA experienced a real estate down turn.  (I was in the military and not invested)  At the time my girlfriend was earning a good living and owned a house.  She wanted a bigger house and purchased one.  Her old house was underwater and she sold it for a loss.  However, she did not pay the loss the bank took it.  Not sure how this affected her credit but she already had her new house and has done great since then.

Years later she told me so many people were just walking away that when she worked with the bank, in selling the house, they were so glad to close the short sale.

Me currently - I own a home that is maybe underwater, not sure, with other assets of about $250k.  If I walk on the house my other assets are protected since the loan is non recourse and most of my assets are in retirement accounts.

I guess my statement about the lying is so what.  I cannot affect the behavior of others just take care of myself.  So if some CEO is going to steal ok, is some politico is going to give billions maybe trillions to the CEO's so what.  Can I affect this?  And do not give me that one vote bullshit because the politcal system is flawed in that politico only want to be re-elected not do what is good for the country.

So what i can do is read articles, blogs and educate myself and hopefully position myself for what is coming.  For me this is -

1) Building up some wealth outside of banks.  (gold & silver)

2) Starting to do some shorting

3)  hold some case in banks

4)  Purchased my first 9mm in 20 years.

5)  manage cashflow - reduce spending increase earnings.

I have asked you some questions in the past about the direction the US economy is heading and like your ideas.  I am not as sold on the deflation as you are but consider it a possibility.  That does not mean I am going all in on deflation when i still think inflation is also a possibility and the investments are so different.

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#13) On April 09, 2009 at 1:49 PM, OleDrippy (32.58) wrote:

I agree with #7.. The gub'ment is going to print our way out of this.. Problem is it could take awhile.. I wouldn't be too excited about holding onto dollars right now..

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#14) On April 09, 2009 at 5:52 PM, abitare (37.54) wrote:

"If the American people ever allow private banks
to control the issue of their money,
first by inflation and then by deflation,
the banks and corporations that will
grow up around them (around the banks),
will deprive the people of their property
until their children will wake up homeless
on the continent their fathers conquered." by:Thomas Jefferson
(1743-1826), US Founding Father, drafted the Declaration of Independence, 3rd US President Source:in 1802 in a letter to then Secretary of the Treasury, Albert Gallatin

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#15) On April 09, 2009 at 6:39 PM, bostoncelitcs (44.11) wrote:

Nobody "owns" America.......we the effin people do!!.......Go to work, pay your taxes, go to the ball park, enjoy your family!!

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#16) On April 12, 2009 at 7:42 AM, TDRH (99.51) wrote:

Glad the medication is working.   Great post.

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