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alstry (35.28)

70-90% of America Bankrupt!!!! or soon to be bankrupt???

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May 13, 2009 – Comments (8)

SAN FRANCISCO (MarketWatch) -- California Treasurer Bill Lockyer asked U.S. Treasury Secretary Timothy Geithner on Wednesday to authorize assistance for his state from the federal Troubled Asset Relief Program, warning that depressed tax revenues may cut into basic services and halt the building of infrastructure.

In a letter, Lockyer asked Geithner for TARP assistance for California and "other financially strapped states and local governments which face a severe cash flow crunch."

"If we cannot obtain our usual short-term cash-flow borrowings, there could be devastating impacts on the ability of the State or other governments to provide essential services to their citizens," Lockyer wrote.

In particular, Lockyer cited fire and police protection, education and social services.

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In addition, Lockyer warned in the letter that California's cash flow problems may lead to trouble accessing the long-term bond market, which could "eventually even halt our infrastructure construction programs."

Lockyer estimated that California's cash flow shortfall in fiscal 2009-2010 will be more than $13 billion.

But weakness in the credit markets will cause difficulties in short-term borrowing to make up that difference, Lockyer wrote, necessitating the use of TARP money to help make funds more easily available through banks.

Under a plan outlined by Lockyer in his letter, if a government is unable to repay loans made using TARP funds, the Treasury would use TARP money to "purchase the non-performing assets."

http://www.marketwatch.com/story/california-treasurer-requests-tarp-help

Effectively...California is bankrupt.  So are many of its counties and cities.......CA, alone, is responsible for approximately 14% of America's GDP.  Many other states face similar problems to CA...same with additional cities and counties as tax revenues evaporate.

But it is not limited to states, or local governments...we are seeing it with our banks, auto companies, large and small businesses, and millions of citizens......and as this blog is written.....conditions are deteriorating rapidly as evidenced by exploding foreclosures and declining revenues.

The question at this point is what course will government take??....what demands will be made of citizens??  Who does government choose to bailout....who does government let economically extinguish???  Who gets money and who doesn't???

None of us really know right now....unless of course you are buddies with Mr. Geithner or Mr. Bernanke.....

But one thing the Institue of Alstrynomics can assure you.....if we continue down the current path......it will be most of us.

Prepare...Don't Fear....Things may get a lot worse!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

8 Comments – Post Your Own

#1) On May 13, 2009 at 11:08 PM, alstry (35.28) wrote:

As The Institute of Alstrynomics warned.....the shutting down of the American economy is now spreading to Health Care and Hospitals across Amercia......

The bleeding continues at Twin Cities hospitals.

Hennepin County Medical Center said Wednesday it will eliminate 75 to 100 jobs by the end of June to save money, its second round of layoffs since January.

The Minneapolis hospital will also delay buying a piece of property in downtown for a new outpatient care building.

A spokesperson said the hospital has not pinpointed which workers will lose their jobs, or the specific services affected. The hospital will also require administrators, managers and supervisors to take two days off without pay this year to save money.

As with the first round of layoffs, the state's biggest safety-net hospital blamed cuts in state funding last year. HCMC lost $7 million in state funding in 2008 as the state addressed a budget shortfall and lost another $12 million in December.

http://www.startribune.com/local/44907977.html?elr=KArksLckD8EQDUoaEyqyP4O:DW3ckUiD3aPc:_Yyc:aUUsA

This is the second round of layoffs for this particular hospital.  This is being repeated at hosptials and heath care institutions around the country.

Please note that in addition to layoffs, staffers are being forced to take pay cuts.

Seagate Technology also announced 1100 job reductions today.

At this point, Concentric Contraction triggering the FU virus has spread to practically every segment of the economy....Autos, Airlines, Architects, Banks, Builders, Construction,  and that is just ABCs.....and now finally reaching the two biggies...healthcare and government.

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#2) On May 13, 2009 at 11:13 PM, OneLegged (< 20) wrote:

This is not tinged with criticism.   It's just a question;  How did you arrive at your figure of 70-90%?

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#3) On May 13, 2009 at 11:27 PM, alstry (35.28) wrote:

Actually, the math is pretty simple...

Virtually every city, county and state is either insolvent or on the way to becoming insolvent based on leverage and declining tax revenues.  Same with School Districts and Hospital Systems. 

Alstry estimates that 70%-80% of businesses are either leveraged or dependant on leverage for their success. 

And as far as citizens....somewhere over 70% of the population either lives paycheck to paycheck or has little in the way of savings to sustain themselves in case of a loss of income....and most Americans will be forced to accept a pay cut.

Based on Alstry's limited IQ.....if it can't be explained and understood on the back of a napkin......it is just too hard for Alstry to comprehend.....however, there are members of the Institute who can pick up the slack....but we have yet to encounter such a problem.....which is fortunate for Alstry.

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#4) On May 13, 2009 at 11:32 PM, arabianmoney (< 20) wrote:

Thankfully not another of these mythical green shoots? Come on America, the media distortion on this one has been massive. There has not been any sign of a recovery yet, global economies are still on the way down. The market implications are enormous, and the bear market rally is over, see:

 http://arabianmoney.net/2009/05/14/green-shoots-a-media-fantasy-facts-not-supportive/

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#5) On May 14, 2009 at 12:50 AM, lquadland10 (< 20) wrote:

Then they can start using the FEMA CAMPS> And they called me a nut job. People need to go to the Alex Jones Show on ytube.

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#6) On May 14, 2009 at 3:06 AM, therebuilder (< 20) wrote:

So a question:

What happens when all these bankruptcies lead a Too Big To Fail company to actually fail?

Many people are saying that this moniker is mistaken, that they made stupid investments and should be allowed to fail.  What do you think would happen if an BoA or even AIG actually did go under? Have you thought or written about this?  I haven't seen any discussion of it anywhere other than folks like Celente saying that the concept is ridiculous. You've said that the bailouts are a horrible idea too. 

What's the alternative?  What happens when we stop bailing them out and let them collapse?

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#7) On May 14, 2009 at 3:54 AM, uclayoda87 (29.24) wrote:

therebuilder

My guess is that the sky would not fall and after a few months of still no falling sky, the US voters would start getting very upset with the Congress and the Administration, because they would begin to realize that we just wasted Trillions of dollars on fear mongering hype.

So I believe that the reason that some of these businesses are too big to fail is because if they fail then the Congress and the administration would join the ranks of the unemployed in 2010 and 2012.

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#8) On May 14, 2009 at 8:37 AM, OneLegged (< 20) wrote:

Thank you for the clarification.

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