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alstry (35.70)

9.09 It's Game Time

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August 15, 2009 – Comments (11)

Alstry has been blogging for over a year warning about what was coming.....using facts, extrapolation of facts, and lots of punctuation marks because he had no prior texting or computer knowledge of manners or proper decorum.....so he morphed into the screaming blogger by accident and the rest is history.

But we are now here and we must COLLECTIVELY start to confront a very serious issue that I knew would become clear by 9.09.

In The Great Depression, America was a very independent nation.  Very few relied on government for any sort of payment and not many were directly employed by government.  The private economy and the entreprenurial spirit is what drove our nation.  Innovation and hard work was rewarded and we as a society benefitted tremendously as we became the leading economy selling our goods and services around the world.

I know the above is a bit simplistic, but it makes the point for the next paragraph.

Today, over 100,000,000 million Americans depend on government for income whether through unemployment benefits, welfare, social security, food stamps, or actually employed by government.  Then if we include those that earn most of their living supporting the above and government contractors....we are now counting OVER half of our population dependent directly or indirectly on government for their income.....and in many cases, a very high income or very expensive lifestyle to maintain(anyone read what a Congressional Budget looks like?).

IT IS WE TAXPAYERS THAT SUPPORT ALL OF THE ABOVE GOVERNMENT SPEND AND OUR AMERICAN LIFESTYLE.

The only reason  we don't see long lines of people begging for food is due to government's social safety net.  As a result of shipping much of our industry overseas for the past twenty years, it is getting more and more difficult for the private economy to support government.

Soon, we Americans are going to be forced to make some very convulsive decisions in order to bridge a growing and unsustainable gap between government expenses and tax receipts.  Will we be willing to pay 100% of our collective incomes to taxes to support the above system?  Are we going to force citizens to take care of themselves and their family members like we did in The Great Depression?

If we as citizens don't address this issue, the consequences will be shoved down our collective throats.  Right now government is avoiding the issue by simply monetizing(some people call this counterfeiting) our parabolicly rising  debt.  It is the exact same path country after country led citizens down before eventually every single nation's currency became worthless and bankrupted the people.   There is little doubt our currency will be worthless if we continue to monetize the biggest deficit in human history.

Do you think the nations around the world are going to let America break its promise to keep its currency legitimate in exchange for making it the reserve currency without retribution?

The time is getting much closer for America to make tough choices.....are you prepared?

9.09.....Wake Up Time.

 

 

 

 

11 Comments – Post Your Own

#1) On August 16, 2009 at 12:16 AM, topsecret09 (72.44) wrote:

         http://online.wsj.com/article/SB123780272456212885.html

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#2) On August 16, 2009 at 3:19 AM, vtBrunson (60.37) wrote:

Ohh... 9/9/09... are we talking about the 10 year aniversary of the Sega Dreamcast?

http://www.escapistmagazine.com/news/view/93863-Sega-Not-Celebrating-Dreamcasts-10th-Birthday-on-9-9-09

Game Time! 

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#3) On August 16, 2009 at 9:07 AM, alstry (35.70) wrote:

As we move into 9.09....we will have to deal with the BIG issues....

Issues such as the fact that pension funds across America are underfunded, that even after massive budget cuts, State and Local Government deficits are growing, sales to our businesses are continuing to evaporate, layoffs continuing to rise, etc....

All while we are being told things are getting betteer.....ONLY IF YOU ARE A BIG WALL STREET BANK THAT JUST RECEIVED TRILLIONS IN TAXPAYER MONEY or a business that just got a big taxpayer contract.

Your politicians knee jerk reaction will be to increase taxes, but it is hard to raise taxes when your constituents are not earning enough to meet current expenses....furthermore, the taxes required will be more than the taxpayers ability to pay.

The tensions will inevitably escalate....it will be your job to stay cool.   You have been reading Alstry's blog......you know the answer, simply restructure the debt so that it is not suffocating our economy any more and many of our problems will evaporate.

Going forward, we must reward innovation and not banking malpractice.

 

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#4) On August 16, 2009 at 9:29 AM, alstry (35.70) wrote:

In 9.09 you will learn the rebound in NEW home sales was really no rebound, but a move to sell much smaller homes not much larger than a doll house.

Housing starts rose to a seven-month high in June and sales of new houses gained in each of the last four months, including the 11% increase in June that was the biggest in eight years. Spending on residential construction fell to a 13-year low of $252.1 billion in May, according to the Commerce Department.

Sales of new homes costing less than $200,000 jumped to 47% of all transactions in June, up from 39% in May, U.S. Commerce Department data show.

Homes under $200,000 accounted for almost half of the sales in the first six months of this year, the biggest share for a first half in five years.

http://www.freep.com/article/20090816/BUSINESS04/908160323/1322/Homebuilders-cut-frills-for-1st-time-buyers

A reader in Land Park touted her 526-square-foot house, saying her PG&E bill is about $8 monthly and her SMUD bill about $20 a month. Come and see it, she said.

Another in Auburn offered an invitation to visit a house he built "just under 500 square feet." It's a two-story with a 288-square-foot garage that can be used for living space. I loved this writer's line: "This little place has gotten a lot of attention over the last few years; it used to be a novelty, but now it's starting to make sense."

Another reader wrote about how most people live in one part of their house day in and out - and don't need so much space. She says: "If the recession brings the industry back to home sizes that reflect how people really live, I'll be very happy." 

A fourth, a former home building company executive, wrote about his company's struggles to design a smaller house that would make a profit: "Small houses still need heating/air conditioning systems, bathrooms and a kitchen - the expensive parts of a house - so the builder's cost per square foot goes through the roof and he simply can't charge buyers a price point high enough to make money. Sad, but true."

Photo by Sacramento Bee, Randall Benton - K. Hovnanian Homes Production Manager Dave Cook exits the company's 817-square-foot house at Westshore in Natomas.

http://www.sacbee.com/static/weblogs/real_estate/archives/2009/08/living-in-a-tin.html

Yes, a few more homes may be selling, but in total, a lot less home.

Now the big problem is what do we do with the tens of millions of homes just built people can't afford and municipalities depend on for tax receipts?

These were the homes that drove trillions in revenues to the states and millions of new jobs plus higher wages for all government workers who then went out and purchased stuff.

When you don't care whether the borrower can ever pay back the debt, you can build a lot of things, and spend a lot of money, and hire lots of people.......UNTIL, you have to care whether the borrower can pay back the debt.

Welcome to the destructive nature of Credit Default Swaps.....and we are rewarding Wall Street for creating them?  No wonder Buffett called them finanicial weapons of mass destruction.....and no wonder he is supporting those banks, because he knows everyone else fails....including you and me, unless we restructure.

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#5) On August 16, 2009 at 9:37 AM, alstry (35.70) wrote:

9.09 IS COMING....

If you think Miami-Dade County is overvaluing your home -- and overtaxing your property as a result -- get in line.

But be warned -- the line is long, and it's about to get a whole lot longer.

Tax notices should begin hitting mailboxes later this month, and some Miami-Dade homeowners may be disappointed that their properties aren't appraised for tax purposes in lockstep with the low, low, low values ballyhooed in news reports about the depressed real estate market.

One reason for this apparent disparity: Miami-Dade Property Appraiser Pedro Garcia has decided to disregard foreclosure sales -- homes sold off by banks after foreclosing on the previous owner -- when determining a neighborhood's taxable values.

Garcia's rationale is that foreclosed homes are almost always stripped of appliances and fixtures or otherwise vandalized. Consequently, they do not reflect the true value of better-kept homes in the neighborhood.

And so, even if homes on either side of yours sold for, say, $150,000 after going through a foreclosure and resale, your similar (though perhaps better-maintained) home could be assigned a much higher taxable value by the county -- especially if your county is Miami-Dade.

And your tax bill will be higher as a result.

http://www.miamiherald.com/251/story/1188238.html

Lower Incomes, higher expenses, lower values and higher taxes? 

Welcome to Zombulation Nation...your job will be to stay cool as the heat rises.....you know the answer....stay focused and stay on task.

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#6) On August 16, 2009 at 10:01 AM, alstry (35.70) wrote:

Another happy housing story.....

http://www.marketwatch.com/story/housing-hits-a-bottom-2009-08-16

The problem now is that the crash is hitting the higher end.......sorta like people at the bottom of a building saying things are stabilizing as the top comes crashing down......

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#7) On August 16, 2009 at 10:48 AM, alstry (35.70) wrote:

But another not so happy perspective:

After showing signs of stabilization over the last three months, the Architecture Billings Index (ABI) plunged nearly five points in June. As a leading economic indicator of construction activity, the ABI reflects the approximate 9- to 12-month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the June ABI rating was 37.7, far lower than the 42.9 the previous month. This score indicates a sharp decline in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry score was 53.8, the fourth straight month with a score in the mid-50’s.

“It appears as though we may have not yet reached the bottom of this construction downturn,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Architecture firms are struggling and concerned that construction market conditions will not even improve as soon as next year. There has also been little movement in terms of stimulus funding allocated for design projects having the desired impact of leading to new work.”

If you are not designing you are not building....no matter what anyone tells you.

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#8) On August 16, 2009 at 12:07 PM, jarlers5x4 (< 20) wrote:

Alstry, do you like gold and silver for the next few years?  If so, (or even if you don't), do you see risk in using GLD and SLV?  What about an ETF like DBP?

 

thanks

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#9) On August 16, 2009 at 12:57 PM, Rebkong1 (< 20) wrote:

alstry,

 

if the government is to come after you when we no longer can pay our debts...the best way to get the people's money is obviously by taxing current income levels...property taxes? sales taxes?

 

is there anything other than these that you see being a big keys ways government will try to loot from the people to pay off their debts?

 

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#10) On August 16, 2009 at 12:58 PM, alstry (35.70) wrote:

It is as good a guess as anything.....my preference is for physical posession over ETFs.

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#11) On August 16, 2009 at 2:08 PM, VintageCat (< 20) wrote:

Today, over 100,000,000 million Americans depend on government for income whether through unemployment benefits, welfare, social security, food stamps, or actually employed by government.  Then if we include those that earn most of their living supporting the above and government contractors....we are now counting OVER half of our population dependent directly or indirectly on government for their income

 

Though purely anecdotal, I looked at this statement in terms of my family and my husband's family and some of my close friends' families and it in fact works out to be well over 50% if one includes contractors and business who's primary bread and butter comes from government contracts.  

In the case of my and my husband's family it works out to over 70%. They include a public school teacher, state law enforcement officer, two retired federal employees, retired military officer, several active military, several social security recipients, two retired state employees, three employees for large government contractors, a paralegal/part time real estate agent, an architect that designs hospitals, a few nurses and a doctor.  The latter types of employment being the least directly dependent on governmental support but not wholly free of it. 

I'm going to have to think about this subject for a while.  I've been accustomed to the fact that governmental entities are some of our largest local/state employers but I never gave much thought to how large it actually has become over the years, though I grouse about our property taxes which have raised by roughly a thousand dollars each year in the last few years.  The fact that we pay no state income or sales taxes here and that oil revenue taxes, transportation fees, property tax (and probably federal money) supports our local economies left me pretty unbothered about the growth of government.  

It's probably worthy to consider the impact of the shortage/squeezing of the various types of revenue that has fueled governmental growth, likely forcing retrenchment or more taking in the form of higher taxes/fees to support it, probably a combination of both strategies.  It won't be a happy process to be sure.  

Over the years, governmental entities have taken over functions once provided by either the family or private enterprise in the interest of taking the larger risks/needs of human beings (such as education and safety and is the basis for the health care debate right now) out of the realm of the uncertain into a more regulated and homogenous environment.  I really have no problem with this as a generality and some public services are (IMO) a legitimate function of government, but good intention in many cases it has gone way beyond the initial concept of providing a basic service into an Orwellian world of over-regulation and officious meddling on the one hand, and on the other hand incompetent, ineffectual actions/inactions and wholesale failure to provide a needed service or due diligence in regard to the stated/intended mission such as the SEC's in the face of repeated warnings about Madoff as an example.  

The real problem as I see it is that we have lost control of the growth and processes of our government as taxpayers and have no real input as evidenced by many of our unsatisfactory responses from our elected officials and the anger to those deaf ears in Washington and various seats of government across the country as a response in town meetings across the USA.  

Thanks again for the food for thought, though on Sunday's I'd rather coast along.... 

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