A Quick Lesson in Zombulation!!!!
July 14, 2009
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You are Zombulated when you run out of savings and access to credit, or government taxes 100% of your income and assets, you have been Zombulated......in either case, you are broke.
Zombulation really kicks in when your the cost to service your debt exceeds income.
Let's see how Zombulation can occur to the unsuspecting Family.
Let's take a Family whose annual income is $100K per year and owns a home with a $250K mortgage worth $500K.
For the sake of illustrative purposes let's assume a fixed rate mortgage at 6%, or $15K in interest, property taxes of $6K per year and home owners insurance and utilities plus necessary maintenance of $8K.
We will also assume two cars with $30K of debt at 6% and credit card interst of $1200 per year.
Further, we will apply a $10K per year health insurance and life insurance cost.
In addition, we will apply a $28K per year cost in state and federal income tax, social security tax, gas tax, license tax and and miscellaneous tax.
For this reasonably leveraged family, approximately 70% of its income goes directly to Taxes, Interest, Insurance and Utilities.
If this was a two income family each earning about the same income, and one member lost their job, this families non discretionary expenses would likely exceed its income, even if that member was able to find part time replacement.
If one or both members worked for the state of California, or in real estate sales, or a mortgage broker, or IT professtional, in the airline industry, or manufacturing, the liklihood of a substantial wage reduction would be great also bringing the families income dangerously close to the non discretionary expense level.
We know that government supports over 60,000,000 million Americans per year with welfare and other assitance. That assistance used to come from tax receipts that are no longer flowing in. We also know that 25,000,000 Americans are unemployed and/or underemployed likely impacting at least another 50,000,000 Americans if we include spouses and children.
Millions more are not counted in the above statistics or facing massive mortgage resets.
We are looking at well over 100,000,000 million Americans who fall square within Zombatic Fallout if government can no longer afford to make welfare payments due to declining tax receipts.
The social and economic costs will be enormous. These are the kind of issues that Wall Street, the Media, and Government is concealing from you. Printing money is not an option because costs will rise much faster than incomes accellerating the Zombulation process.
Mathematically, as the economy continues to shrink, servicing debt will consume a greater and greater percentage of incomes from families, business and government. The greater the percentage of income debt consumes, the less there is to spend on goods and services. This process will continue to feed upon itself until most of the debt is purged which will result in an economy a fraction of the current size.
We are seeing Zombulation everywhere.....and it WILL GET WORSE!!!!
Today GM's CEO said this July's sales will likely be worse than last year.....so much for a second half recovery as conditions continue to deteriorate.
For the third consecutive month, foreclosure sales jumped significantly as lenders come off the moratorium. Foreclosure sales increased by 24.7 percent following a 31.9 percent increase in May, and a 35 percent April increase.
Office rental rates are collapsing which will likely cause MASSIVE CRE defaults.
At some point, Zombulation will come to an end, the only question now is how small will our economy be when it does......my guess is we have a long long way to go and the result will be a much much much smaller economy.
The above is simply the math.....and unlike people, the numbers don't lie. Unless we prepare for the inevitable MASSIVE ECONOMIC Contraction from the current Zombulation policies, social unrest stories like the one in the previous blog will become more and more common.
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