Use access key #2 to skip to page content.

alstry (35.42)

9.09 MOAP Is Here

Recs

15

August 29, 2009 – Comments (9)

We know the consumer is 70% if the economy...and overlapping this is government spend consuming 50% of GDP.  Combining the two, we pretty much account for the entire economy.

What if we were to learn in 9.09 that both of the above can no longer afford to spend much anymore for the first time in a couple generations, it would not take long for many to realize we really won't have much of an economy left and the viablility of our government and economic system would be called into question...pretty heavy stuff.

Due to the current leverage our nation is burdened with, the fallout could be rather dramatic and unprecedented in our nations history.....at least for the last hundred years and more.

What would happen if Americans learned America can no longer afford to spend?

AUSTIN, Tex. — Even as evidence mounts that the Great Recession has finally released its chokehold on the American economy, experts worry that the recovery may be weak, stymied by consumers’ reluctance to spend.

Given that consumer spending has in recent years accounted for 70 percent of the nation’s economic activity, a marginal shrinking could significantly depress demand for goods and services, discouraging businesses from hiring more workers.

Millions of Americans spent years tapping credit cards, stock portfolios and once-rising home values to spend in excess of their incomes and now lack the wherewithal to carry on. Those who still have the means feel pressure to conserve, fearful about layoffs, the stock market and real estate prices.

“We’re at an inflection point with respect to the American consumer,” said Mark Zandi, chief economist at Moody’s Economy .com, who correctly forecast a dip in spending heading into the recession, and who provided data supporting sustained weakness.

“Lower-income households can’t borrow, and higher-income households no longer feel wealthy,” Mr. Zandi added. “There’s still a lot of debt out there. It throws a pall over the potential for a strong recovery. The economy is going to struggle.”

In recent weeks, spending has risen slightly because of exuberant car buying, fueled by the cash-for-clunkers program. On Friday, the Commerce Department said spending rose 0.2 percent in July from the previous month. But most economists see this activity as short-lived, pointing out that incomes did not rise. Some suggest the recession has endured so long and spread pain so broadly that it has seeped into the culture, downgrading expectations, clouding assumptions about the future and eroding the impulse to buy.

The Great Depression imbued American life with an enduring spirit of thrift. The current recession has perhaps proven wrenching enough to alter consumer tastes, putting value in vogue.

http://www.nytimes.com/2009/08/29/business/economy/29consumer.html?_r=1&hp=&pagewanted=print

If the consumer can't spend, then there is not much revenues going to government.  Without much revenues, the viability of government in its current form is called into question.

Millions will lose their jobs.  Entitlements will be debated affecting over 100,000,000 million Americans.  Many could and will likely question capitalism?

Our nation is about to confront its most difficult question in its history IMHO.....the abandonment of the system and principals our forefathers created and our politicians and bankers have recently emasculated.

For those of you that are regular readers of this blog...you are prepared.  For many, it will be shock and awe.  Now let's see how we as a nation behave...do we swim together or do we swim apart?

9 Comments – Post Your Own

#1) On August 29, 2009 at 9:56 AM, alstry (35.42) wrote:

9.09 IS HERE.....

Report this comment
#2) On August 29, 2009 at 10:01 AM, alstry (35.42) wrote:

When I posted the above video, I hadn't watched it all.  The import is not the conclusion, but rather the anger that is developing against the current system.

No one knows how this will play out.

The Zombulator induces anger...that is one of the goals...stay cool Fools....or few will rule.

Report this comment
#3) On August 29, 2009 at 11:45 AM, JerseyShoreGirl (< 20) wrote:

I say "Hope for the best, but prepare for the worst" it's that simple.  We're preparing so we don't have to worry about not being prepared if some tipping point event occurs.

At this late hour, I think that pouring over financial stats is pretty irrelevant .. I think we should be doing our homework on who is in power, what their intentions are and if their intentions should come to fruition, what could possibly happen.

A very simple equation ....

CRISIS (organic or engineered) + POWER GRAB (martial law, etc.) = CHAOS

As yourselves these questions .. Why are there Communists advising BHO? Why do they want to control banks and other major industries? Why are all of these HUGE bills being shoved through? Why internet control? Why a civilian national security force that's "just as powerful, just as well funded as our military? What's up with all of this Swine Flu hysteria? Why is 9/11 now a 'National Day of SERVICE'?  And this one really gets me ....

WHY DID AIR FORCE ONE SWOOP DOWN ON MANHATTAN & JERSEY CITY IN APRIL?  WHY?   

There is a lot of weird stuff going on outside of all the layoffs, cuts and that is what gets me. 

Report this comment
#4) On August 29, 2009 at 11:55 AM, alstry (35.42) wrote:

Stay cool Jersey.....things are really about to heat up.

When the Fools learn that much of the stock market trading was simply High Frequency Trading computers trading back and forth to each other generating commissions and manipulating markets....they will be shocked at how government could have permitted such sinister behavior.

Heck, how else do you explain 4 relatively worthless stocks dominating the volume on the NYSE?

When Fools learn that Credit Default Swaps incentivized the banks to underwrite bad loans infecting our nation with debt that it can't repay, they will question how government could have permitted such sinister behavior now that our nation is broke.

When Fools learn that 50% of our GDP is government consumption and 50% of government spend is borrowing or printing, they will question how government could have considered operating in such a fraudulent manner.

When Fools learn that our economy was effectively not much more than a Ponzi scheme...we will all learn what it was like to be a client of Bernie Madoff.

 

Report this comment
#5) On August 29, 2009 at 1:19 PM, mawnck (< 20) wrote:

Jersey - Think about this for a second. Why would Fox News - a commercial cable network owned by an Australian - be so much more patriotic, and so much more interested in your welfare than the other networks?

And if they and the talk radio guys were to stir up a segment of the population to revolt and overthrow the elected US government, wouldn't martial law be the correct response?

Get the Communist silliness out of your head for a moment and THINK, girl!

alstry - Clearly if things go to heck in a handbasket as you've predicted, there will be some unrest. But do you think it will be enough to make any real difference? Or have Americans as a whole become so disinterested in anything but their own immediate gratification that a few well-placed national guard units will be able to "keep the peace" as it were?

We've been through other disasterous depressions with no credible attempts to overthrow the powers that be, and they were all during times when people were more involved in civics than they are now. I'm thinking that most of the country, even if there are food shortages and such, are going to be content to let whatever happens happen, as long as the government - in whatever form - is able to keep them reasonably comfortable and reassured - by whatever means. And I'd like to get your thoughts on that.

Report this comment
#6) On August 29, 2009 at 1:48 PM, alstry (35.42) wrote:

mawnck,

You hit on a central theme.....indifference.  Those that remained indifferent on the beach in Indonesia were washed away....for the most part because of an EXTERNAL event that was foreseeable if you were privy to the data....namely the seismic event.

What we have been through before has no bearing on the present.  I have been through some serious illnesses in my life and it would have no bearing on how I approached a new illness that was different than the previous ones.

I am not saying this is the end of the world....I am not saying it is not either.  The only thing I am forecasting is the realization that this is the mother of all ponzi schemes affecting our entire nation and its financial system.

If you want to look at Enron and how it affected its shareholders, or Madoff and how he affected his clients...it might be a good start.  But this go around we are analyzing the entire financial system...and the impact could be profound.

A change in government?  An external event to occupy the population?  War? Pandemic?  Just a Collapse?  Something else?  Who knows?

But one thing for sure....this is one heck of a bubble that is just starting to deflate.

 

Report this comment
#7) On August 29, 2009 at 4:18 PM, awallejr (81.55) wrote:

Alstry: "When I posted the above video, I hadn't watched it all."

So you don't even watch your own links (rolls eyes).

Report this comment
#8) On August 29, 2009 at 5:30 PM, alstry (35.42) wrote:

awa...how scared are you?  your additiction to my blog is spectacular.

Report this comment
#9) On August 29, 2009 at 6:05 PM, awallejr (81.55) wrote:

Slow day.  And you just keep spamming new ones.

Report this comment

Featured Broker Partners


Advertisement