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alstry (35.02)

85% CONTRACTION in the Economy!

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August 11, 2010 – Comments (5)

The INDUSTRIAL AGE economy should contract about 85% over the next few years........I know originally I thought it would only contract 50%....but now that I have the benefit of history.......80-90% seems like a reasonable number.

When we cut off credit to housing.....new home construction declined 85% in just a few years......and that was AFTER government picked up the slack and borrowed massively.  The problem now is that government has borrowed so much......who in the heck would continue to loan America money......and who is going to continue to loan America money?

Historically, America only borrowed a very small percentage of its annual tax receipts....now it is borrowing more than its tax receipts.......how long would you loan money to someone who borrowed more then their annual income, year after year.....?

Borrowing is the only reason politicians are getting paychecks while millions of Americans are getting fired.....Borrowing is the only reason Doctors are getting big checks from Medicare/aid.....

Just like we have a very small construction industry without borrowing.....imagine how much our economy would shrink if our politicians finally tapped us out.....?

My estimate is about 80-90%.......and my bias is closer to 90% via the Alstrynomic theory of Concentric Contraction.....it is simply what happens when you cut off credit to a leveraged credit dependent consumer economy.........

And once the economy does contract....government will be forced to tax us citizens everything we have simply to maintain the soverignty of our nation......BUFFET knows this, so he has started to give back most of his wealth early.......

5 Comments – Post Your Own

#1) On August 11, 2010 at 9:46 AM, IBDvalueinvestin (99.69) wrote:

Why do you always show up on bloodbath days??

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#2) On August 11, 2010 at 9:51 AM, alstry (35.02) wrote:

Today is not a bloodbath day........I just always show up.

But is not hard to see that if housing construction contracted 85% when credit was cut off.....our economy, which is similarly structured, will react the same as credit is cut off to our politicians.....

Look what happened to Madoff's clients when Madoff couldn't raise any more money.....but you want to bet that not a single statement he sent his clients had spelling mistakes...

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#3) On August 11, 2010 at 10:05 AM, IBDvalueinvestin (99.69) wrote:

Alstry its only not a bloodbath if your not margined like most traders are, people are losing their shirts today. Any stocks that they are not losing they will sell as well to average out their other losses.

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#4) On August 11, 2010 at 10:24 AM, alstry (35.02) wrote:

IBD...it will only be a bloodbath when America and its citizens learn that they are jointly and severally liable to pay back the debt....and as America and most of its citizens are essentially broke...those who perceive themselves to be wealthy are in for a rude awakening.....

Just ask Madoff's clients for some perspective...

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#5) On August 11, 2010 at 10:24 AM, alstry (35.02) wrote:

IBD...it will only be a bloodbath when America and its citizens learn that they are jointly and severally liable to pay back the debt....and as America and most of its citizens are essentially broke...those who perceive themselves to be wealthy are in for a rude awakening.....

Just ask Madoff's clients for some perspective...

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