Use access key #2 to skip to page content.

alstry (36.08)

A Sincere Message To My Foolish Friends

Recs

14

May 22, 2010 – Comments (7)

My fellow sheep, as your most prolific blogger it is now time for me to post this as the time is upon us...

 

For years, I have been warning you to prepare, not fear....and for what?

The transition from the Industrial Age into the Digital Age......what will likely be one of the most significant advancements in human history.

Most Fools, and people for that matter, filter life through their past experiences, and in America's case, the most prosperous industrial democracy the world has ever seen.  We built our entire society around the industrial age including our laws, the manner we get compensation, and our social systems and living styles.

For a prior example of a radical shift in lifestyle was America's advancement from the Agricultural Age into the Industrial Age.  For the most part, the shift was easily accomodated by our nation as most advancements led to more employment.

The Digital Age could be very different, where advancements actually lead to less employment. That is not necessarily a bad thing as long as we adjust.

Further, our laws, method of compensation, property rights, and governmental structure is geared and scaled to a prosperpous industrial society.....unfortunately that system really started to head South about ten years ago so we created the illusion of prosperity by loaning our society over $30 trillion dollars in a ten year period....more than our nation borrowed since its founding.

With loans comes a lot of issues....collateral, mortgages, interest, income, assets etc.....where things got sticky is where loans became the primary product of our economy driving everything else...especially if you factor derivitives.

At some point, and it appears that point is nearing, in a Digital Global Age, you simply can't lend to one population and not others if you truly want to grow the world....further, the world can't consume like Americans and Europeans or we would pollute ourselves to death.

It is clear, over the past three years the bankers have instituted a policy to systematically impoverish the Western nations citizens.  The process began by indebting the populations and govenments heavily at low rates, then raising interest rates massively in a short period of time, and then cutting off credit to a credit dependent consumption economy.

As a result, much of the economy crashed and consumption slowed.  Since our nation became dependent on massive government spend to function, it seems a deal was struck last year between Congress and the bankers to extend credit to government in exchange for bailing out the banks.

The citizens....well, they would have to adjust....and as was very foreseeable, many are having a hard time adjusting to austerity as the bankers and politicians party draining out what few dollars are left from the Industrial Age.

I am often asked what should you do....responding to that question is very difficult because few of us know what government and the bankers have up their sleeves nor how the populations around the world are going to react to the transformation into the Digital Age.

Some say buy gold, others a gun, more say grow your own crops.....all viable choices in an uncertain world.

What I think you can clearly expect is for major convulsive events to galvanize people....events such as natural disasters, major conflicts, and economic turmoil.  This is not conspiracy stuff, simply probablilities without any special insight into any particular one.

Our laws and our methods of compensation is geared to an Industrial Age...so are our education and health care systems....these are key drivers of our lifestyles and goals and aspirations.  Tranforming into the Digital Age will be very convulsive because your current paradigms of what is "normal" will shift racically going forward.

Imagine if you were a video retailer....or worked in a bank branch....or delivered mail....or a school teacher....or even a fisherman in the gulf....

Anger, frustration over oil mounts along the Gulf

If you think about it...much of what can be done in America can be done equally well, or well enough for a fraction of our cost overseas.....as a result many of our jobs are being shipped overseas.

Now our tax receipts are evaporating as our industrial economy net contracts....our economy is no longer large enough to sustain the Industrial lifestyle many Americans are accustomed.  Most of our assets are focused in the Industrial economy and comments like everyone needs to eat, or everyone needs a house, or household formation is growing are irrlevant in a Digital analysis.

Right now, government spending is the primary tool holding together the Industrial Age perception by the populous.....but that spending is based on a fraud and being arbitrarily distributed by politicians sure to get adverse reaction by those not on the receiving end....a very different process than what built America....the productivity and merit rewards of a strong private sector economy.

Stress is rising around the world as the citizens are getting upset at the fact that bankers are getting bailed out and citizens are being forced into austerity.  If enough get angry enough...then entire nations and economic systems can fail.....such events are no longer remote possibilities based on current policies and current trends around the world.

When we bailed out bankers and NOT citizens...we knew we were near the end....who could have dreamed that the sheep would take over a year to figure it out.  By only bailing out the banks and not the citizens, the economies would slow to such a degree that we wouldn't be able to sustain our current government and lifestyle without massive government borrowing and spending.

In a digital age....you can't have such disparities between nations when all nations will be contributing more equitably to world development....the greatest impact will occur here....we are the most industrialized and entrenched in a system that will have little resemblance to what lies ahead.

Hang on...the Digital Age is upon us....it will be exciting.

7 Comments – Post Your Own

#1) On May 22, 2010 at 7:03 PM, dibble905 (< 20) wrote:

I would also like to make a prediction.

Tomorrow will be different from Today.

I would also like to bring you a fact.

Today is different from yesterday.

Report this comment
#2) On May 22, 2010 at 7:11 PM, alstry (36.08) wrote:

Yes...that is what Madoff's clients used to say as well.....they were lubricated sheep too.

Enjoy this video...it is very funny....and true.

http://www.abc.net.au/news/video/2010/05/20/2905304.htm

Report this comment
#3) On May 22, 2010 at 7:11 PM, dibble905 (< 20) wrote:

But in all truth, Alstry, you are finally making some sense here and I agree with most of it. The debt burden will be enormous.

The only issue is your attack on bankers and your leniency on the people. Banks loan money to the responsible and the irresponsible, but the banks can only estimate the number of irresponsible and assume that most people are responsible. Over the past few years, the banks simply became overburdened by the irresponsible and the government did not want the irresponsible from burdening the responsible. The government had to step in and prevent an explosion in systematic risk as it would truly mean the irresponsible would be plaguing the whole nation. The banks would not require a bailout if everyone was more responsible.

Meanwhile, the government is providing home loan modifications... Although I fully support their efforts if it were meant for those reponsible but simply became unemployed or some other reasons, indirectly caused by those irresponsible. But, because the government simply cannot pin-point who was responsible and irresponsible, it is given to all.

If you want revenge, it would be to literally cut out and make the irresponsible suffer. That is true fairness.

Report this comment
#4) On May 22, 2010 at 7:22 PM, alstry (36.08) wrote:

Banks loan money to the responsible and the irresponsible

This is utter nonsense...banks loaned to anyone with a pulse and syndicated the toxic debt off their balance sheets into the public's hands.  They knew exactly what they were doing and made billions in the process.

It was no different than dealing financial crack....since when in America do we bailout and subsidize the dealers and punish the users?  We punish both.

Every Wall Street bank in America should have gone bankrupt and its executives fired....and new management brought in to run the businesses responsibly.

Now banks are not lending because no sane borrower who is financially qualified would borrow at these spreads....why do you think lending is slowing each and every month.

Report this comment
#5) On May 22, 2010 at 7:26 PM, alstry (36.08) wrote:

Are you prepared for Marshall Law as argued in Brown v. Board of Education....where no nation can be seperate but equal.

WEST POINT, N.Y. -- President Obama on Saturday pledged to shape a new "international order" as part of a national security strategy that emphasizes his belief in global institutions and America's role in promoting democratic values around the world.

Global institutions?

Report this comment
#6) On May 22, 2010 at 8:00 PM, dibble905 (< 20) wrote:

"Banks loan money to the responsible and the irresponsible

This is utter nonsense...banks loaned to anyone with a pulse and syndicated the toxic debt off their balance sheets into the public's hands.  They knew exactly what they were doing and made billions in the process.

It was no different than dealing financial crack....since when in America do we bailout and subsidize the dealers and punish the users?  We punish both.

Every Wall Street bank in America should have gone bankrupt and its executives fired....and new management brought in to run the businesses responsibly."

If this were true, every major bank would be laughing silly with money and would not have needed a bailout.

They may have securitized a lot of the loans, but its not just the pension funds and endowment funds that picked them up -- everyone did. The whole point of securitizing the loans was not to send other people garbage as you proclaim -- it was to make the loans more "mobile" in that they can be more easily bought/sold. By increasing mortgage asset liquidity, they could reduce costs and lower loan premiums which would have ultimately saved the consumer (mortgage lending is very competitive; no one earns outsized returns on them).

The reason why the banks offered loans left and right was because of their perception that real estate assets were very safe. This was built into their risk system. This may have been true historically speaking, but what they failed to recognize was that improved loan access would fuel such an enormous amount of real estate speculation and irresponsible borrowing.

It is not the banks that took advantage of the people, its the people who took advantage of the banks.

Now that the people simply threw in the towel and walked away, its the banks that must put up with the securitzed loans which have devalued astronomically.

"Now banks are not lending because no sane borrower who is financially qualified would borrow at these spreads....why do you think lending is slowing each and every month."

Banks are not lending because those qualified already have loans. The only people who needs loans right now are those who 'need it' so to speak. Variable loans are insanely low right now. The only loans which have high "spreads", as you speak of, is in the long-term fixed rate department... and that corresponds to the yield curve. The yield curve is more or less a forecast for future interest rates.

Also, consumer loans are beginning to pick up.

http://bloomberg.econoday.com/showimage.asp?imageid=19140

So, I'm not quite sure what you're talking about here.

Report this comment
#7) On May 23, 2010 at 1:45 AM, esmerelda777 (< 20) wrote:

Dibble, I have to side with alstry here on a couple issues:

1) When underwriting a 30 year loan for a $300,000+ home, who has more knowledge and experience about mortgages, interest rates, and budgeting?

a) the bank / broker

b) the retail store assistant manager who "cant wait!" to move into his new pad

 
2) "The reason why the banks offered loans left and right was because of their perception that real estate assets were very safe. This was built into their risk system."

 Ok, I'm just a Joe Smith (no not the plumber) who bought a 3 family home in Boston in late 2004.  By mid-2005 I saw clear signs the market was slowing down and felt it would decline.  How did I KNOW that but the banks, with all their highly-degreed staff in finance, economics, accounting, etc NOT know?  Hello...?

Let's not let the banks off so easy.  They enjoyed their profit ride and got out safe / a get out of jail free card, thanks to corporate socialism.

Report this comment

Featured Broker Partners


Advertisement