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alstry (35.70)

A Little Piece Dying Everyday

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July 05, 2008 – Comments (4)

Almost everyday now, we are reading about a small part of our economy shutting down with nothing to replace it.  600 coffee shops and 12,000 employees.  10% of flights and thousands of workers.  Manufacturing plants, insurance companies, banks, retailers, restaurants, trucking  companies......few seem to be escaping the pressure of a contracting world economy.

Further this issue is not limited to America....Europe and Asia face similar pressures.  The Japanese stock market coming upon an over 50 year record for consecutive down days, the Chinese stock market down over 50%.

As business slow, it becomes harder and harder for banks to lend money.  Trillions of credit lines have been eliminated.  As lending slows business slows further.

And to add fuel to the fire, fuel and food are rising in a rapidly slowing environment....anyone think that money is flowing to the only place it thinks it can get a return.

As incomes fall and prices rise, we will certainly see a decline in consumption and more competitive pressures.  We are seeing it now in many different areas.

Government revenues are falling off cliff and now huge tax rebates will be forthcoming to corporations from NOL carrybacks.  If few are capable of paying taxes....expect a much bigger burden to fall upon their shoulders because the government needs to get money from someplace.

This time, it is those BIG taxpayers that aren't paying taxes.....banks and finance companies....based on some back of the napkin calculations....even if we taxed individuals 100% of eligible income.....we still would come close to the shortfall.

America is finally waking up...slowly day after day the news is getting worse.  Sure alternative energy is a good idea.....but where is the money going to come from?

With revenues slowing, our economic system is slowly dying day after day...tenants are asking their landlords for rent abatements, companies are asking employees for paycuts or eliminating jobs completely, government is cutting back services.

Who knows when this process stops, but when it does I will be the biggest bull in history......cheers to that day!!!!

4 Comments – Post Your Own

#1) On July 05, 2008 at 2:49 PM, DemonDoug (98.73) wrote:

but where is the money going to come from?

Deficit spending.  And we'll continue to have that becuse China still depends on selling stuff to us so they keep printing their own currency to keep theirs artificially low while buying our debt and allowing us to do just that.  Basic Keynesian economics.  (I'm assuming you're more Austrian?)

Almost everyday now, we are reading about a small part of our economy shutting down with nothing to replace it.

There are definitely companies hiring and expanding thier work force.  So there is something to replace job losses.  However, the job losses are definitely higher than the job gains, so in reality, your statement would be more correct if you said "with little to replace it."

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#2) On July 05, 2008 at 4:55 PM, mydoglixu (< 20) wrote:

Dying?!?!

If there's one way to strike fear into the average American worker's hearts, tell them that the economy is dying Most people have a very basic understanding of what an economy is, let alone what it means to keep it running well. And that includes many workers in financial institutions and other businesses.

The economy is NOT dying. We still have a government for crying out loud. Even when the Soviet Empire altogether fell, their economy didn't DIE, it just changed.

The word "recession" has a negative connotation and sure, in terms of numbers and how much harder we have to work, it certainly isn't easy. But what if you switched out the word with "correction"? For example, if a stock is overvalued, what happens-- there's a correction within the market and it (often temporarily) loses value. But that loss is relative to the price where it was over value. What if it was valued correctly the whole time? The stock would not appear to lose value. Sounds simple, doesn't it?

It's true that we have some challenges ahead of us in this country. (as well as some others around the world) But hard times quite often bring ingenuity. After the Great Depression there was a slew of new inventions and new, thriving businesses. After the dot-com boom, the American public realized a few things about the true value of the Internet (i.e. we 'matured') and stopped investing so much in any old silly idea (i.e. we learned that just because it's on the internet doesn't mean it's going to make us money) and we learned which types of companies would outlast the boom. Why did they outlast? Because they were good companies built on strong foundations.

This country is strong. Just because we lose a few jobs here and there is little reason to say it's dying. It's quite ignorant to say such a thing while taking for granted that you still have the freedom- AND THE US LEGAL SYSTEM- to sue someone from your laptop while sitting on your front porch basking in the sun. To say it's dying simply nullifies all the work our lawyers, legislature, founding fathers, troops, teachers, doctors, etc. etc. work hard together for every day.

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#3) On July 05, 2008 at 7:33 PM, lquadland10 (< 20) wrote:

gee.... you make my blogs look like I'm wearing rose color glasses. O.K. So how are we the people going to change this? 1776

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#4) On July 06, 2008 at 1:13 AM, alstry (35.70) wrote:

I said the economy is dying... not dead.  A dying warrior can still stand strong and fight with honor...up until his last breath.

To say a dying economy nullifies work in itself misses the point....a patient dying of cancer is a patient dying....regardless of the hard work of the doctors, nurses, and hospice professionals.

Most simply cannot accept the fact that the economy is dying, that our politicans are sitting back doing nothing about it, that we the people can do little as well.

In the end, we are overleveraged and our revenues are shrinking....each day more and more companies come closer to bankruptcy.  The WSJ reports today how many small business owners are being forced to max out credit cards simply to keep their doors open.

Small business owners now have to pay upwards of $15K simply to have health insurance.  For a small business owner who is making $75K per year, that is 20% of income.  Factor another 40% for federal, state, and FICA and now that person is paying 60% of their income for income taxes, social security, and health insurance.  And we laugh at Europeans paying 50% of their income for taxes but they get health insurance and higher education for free.  Now let's say that the same person pays $3,500 a year in property taxes and now 2/3 of his income is consumed.  Add in a $200K mortgage with homeowners insurance and now almost $80% of the income has been spent before a dime for food and fuel.  Whoops, lets say we have $500 a month in car payments and auto insurance, our friend drives very modest cars as well over a third goes to insurance and now we are approaching 90% of income assuming our friend has no credit card debt.

Yes, I am sorry to say our economy is dying, it is just few are still aware that the cancer has metasticized so far.  On the outside, things appear fine, on the inside, little bits are being destroyed day after day.

The fact that we have a government has no relevance on a dying economy.  Germany had a government during its period of hyperinflation.  North Korea has a government.  The fact that a government exists has little bearing on whether an economy is strong or weak......heck even Somalia has a government.

America had a very strong government during the great depression.  Nonetheless, at the time our economy was relatively weak. 

A dying patient does not mean a dead one.....however, if you don't diagnose the illness and begin treatment....the prognosis generally gets worse as time passes.

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