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alstry (35.41)

A Very Interesting Analogy...

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August 16, 2009 – Comments (21)

Steins takes a breath. Life in this $2.5 million house was built on the premise of two incomes, not the income of a divorced mother of three in a tanked economy. Her property taxes are $35,000 a year, the nanny is $40,000 and the gardener is $500 a month.

Laura Steins doesn't mind saying that she is barely squeaking by on $300,000 a year. She lives in a place where the boom years of Wall Street pushed the standard of living to astonishing heights. Where fifth-graders shop at a store called Lester's that sells $114 tween-size True Religion jeans. Where a cup of fresh spinach and carrot juice called the Iron Maiden costs $7.95.

The nanny and property taxes take $75,000 right off the top, but Steins considers both non-negotiable facts of her life and not discretionary.

http://www.washingtonpost.com/wp-dyn/content/story/2009/08/15/ST2009081503017.html?hpid=topnews

The Washington Post has a very interesting story about a family who is having trouble maintaining a very high standard of living even though the income is about $300K per year.

Most will read the story and ask why does this woman need a home with $35K property taxes, a nanny, and a gardner?  Many would wonder what a burden it would be to have a spouse with this kind of spending habits? ....and in the end, feel relieved that thankful this is not their spouse or their life.

STOP RIGHT THERE!

As citizens of the United States, we live an unparalled standard of living.  A standard of living in large part because our government spent incredible amounts of money based on ever growing tax receipts from a private economy.  It spent incredible amounts protecting us, employings us, and providing an unparalled social safety net.  A standard of living that benefitted all of us collectively as citizens of the United States.

But just like the family above, now that our nation's income has dropped, few of us want to change our standard of living.  Somehow we think the money will simply grow on trees.  In the past ten years, it grew because of the issuance of excessive debt driving unprecedented growth and unprecedented incomes.  Now the bankers our cutting us off and sales and incomes are evaporating.

Soon we will have to make a choice, maintain our standard of living and go bankrupt, or restructure and move forward.  Either one is simply a choice, and right now it appears that the choice is to keep spending money we don't have....trillions upon trillions of dollars we don't have.

21 Comments – Post Your Own

#1) On August 16, 2009 at 2:54 PM, VintageCat (< 20) wrote:

We are in the process of voluntarily downsizing.  We are finding that our excessive stuff has taken too much of our time to support/maintain and keeps us from spending quality time with friends and family and doing some of the things that we have always wanted to do like study, pursue avocations/hobbies and travel extensively.  

We are finding that our family/friends also have very little free time because they have to work long hours to buy/maintain their stuff and much of their remaining time is consumed with chores related to stuff.

The one finite resource that we all have is time and I find that we as a whole squander much of it on our stuff that we barely use but pay highly in time and money to have and hold.  

George Carlin called it all those years ago with his brilliant riff on "stuff" and though we felt the truth of it then, we are really understanding it on a visceral level now.  It might be a blessing in disguise if most of us had less stuff to worry about and more time to spend with loved ones and friends living an experiential rather than materialistic life.  I think we Americans have been sold a big bill of goods, literally. 

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#2) On August 16, 2009 at 2:54 PM, alstry (35.41) wrote:

9.09 IS SIMPLY A POINT IN TIME

We as a nation have generally spent a little more than we made for decades.....creating depressions and recessions to clean things out.  But this time, we simply borrowed to create the economy blowig the bubble larger and larger......UNTIL....we infected our nation with so much debt that we can simply not service it anymore....but few want to accpet this fact as bankers cut us off from credit while getting trillions from taxpayers to make up for the defaulting debt that they infected us with.

Sales are crashing, incomes evaporating, bankruptcies skyrocketing, and forclosures increasing AND WE ARE BEING TOLD THINGS ARE GETTING BETTER?  PLEASE.

Government knows it is running out of money...bankers know this too as the lenders to government.......now the question is how will we be told as few want to change their standard of living.

If you think the family in the above story was living lavishly, just wait until you see how high on the hog your politicians are living on your dime.....consider them your overspending spouse....and spending a lot more than the family in the story.

You think you bankers and politicians are going to let you learn what they have done to you?

My guess is MOAP......what is yours?

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#3) On August 16, 2009 at 3:03 PM, alstry (35.41) wrote:

Vintage,

In order to contract AND pay down debt, we must reduce interest rates to a level close to the level we are charging bankers, or 1/2%.  By lowering rates, decreasing incomes will be able to service existing debt, assets will increase in value, and more and more will be able to stay in their homes as less debt goes toxic.

Bankers are forcing us to contract, yet we are bailing them out with trillions of taxpayer dollars while they are cutting us off from credit....insane isn't it?

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#4) On August 16, 2009 at 3:11 PM, AdirondackFund (< 20) wrote:

Completely insane.  Incredibly dangerous...and about ready to blowup. 

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#5) On August 16, 2009 at 3:24 PM, alstry (35.41) wrote:

Imagine what is going to happen to the overleveraged hospitals when they feel the effects of the following:

California board votes to drop healthcare coverage for 60,000 children

As a result of state budget cuts, the Healthy Families program will have to begin terminating coverage for more than 60,000 children on Oct. 1. Nearly 670,000 children could be dropped by June 30.

http://www.latimes.com/news/local/la-me-california-budget14-2009aug14,0,6580131.story

670,000?..........and we are talking about health care reform, when hospitals can't even service debt?  Truly, an amazing situation when so few understand....but my guess is soon they will.

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#6) On August 16, 2009 at 3:35 PM, truthisntstupid (83.19) wrote:

Hmmm.  Rich people are struggling harder and harder to keep from falling off their perch?  And some of this even extends to the "less rich"?  I'm so lucky I'm poor!  Because none of this is affecting me in the least.  But I am slowly but surely raising my standard of living through dividend investing.  Should I worry that some day I'll have more money and will then forget how the hell I ever managed to live on $16,000 a year?  Or how the hell I lived on it and saved three or four thousand a year too? 

Yeah.  I sure feel sorry for those rich people.

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#7) On August 16, 2009 at 3:36 PM, truthisntstupid (83.19) wrote:

Hmmm.  Rich people are struggling harder and harder to keep from falling off their perch?  And some of this even extends to the "less rich"?  I'm so lucky I'm poor!  Because none of this is affecting me in the least.  But I am slowly but surely raising my standard of living through dividend investing.  Should I worry that some day I'll have more money and will then forget how the hell I ever managed to live on $16,000 a year?  Or how the hell I lived on it and saved three or four thousand a year too? 

Yeah.  I sure feel sorry for those rich people.

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#8) On August 16, 2009 at 3:37 PM, selfdestruct2 (41.41) wrote:

I can't believe what's happening to this once great nation. I know I'm repeating what's been said, but how can one justify taking taxpayer dollars and giving it to these banks ?

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#9) On August 16, 2009 at 3:40 PM, truthisntstupid (83.19) wrote:

Damn!  Double posted again.

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#10) On August 16, 2009 at 3:46 PM, alstry (35.41) wrote:

truth,

The point is not feeling sorry for the rich.  Your government is acting like the family that spends more than it makes....and as a citizen, you are affected by the behavior of your government.

If few paid taxes, there would be no social security for the masses, no medicaid, no medicare, no unemployment benefits, no food stamps, no military, no parks, no highways, etc......

We are a society that depends on each other to create the society we live in......a society that can no longer afford to maintain its current standard of living without massive changes.

Right now, ALL of the society's income and assets is being directed to a few  Wall Street Bankers....when they coming knocking to collect, we will have nothing to pay them with except our assets.

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#11) On August 16, 2009 at 3:50 PM, Teacherman1 (55.02) wrote:

My wife and I are now living in a house, that when we were younger,, I would have thought outrageously over priced, but thanks to the overheated economy and two incomes, our housing costs (including taxes), run only 18% of our gross income. I sure am glad we resisted the urge to "upgrade a few years ago. I am not bragging about our situation, but am thankful that we did not get caught up in the bigger, fancier, pursuit of more. We can sleep comfortably at night, and not dread to hear the phone ring.

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#12) On August 16, 2009 at 4:03 PM, alstry (35.41) wrote:

Teacher,

You too miss the point.  Our government is also our hypothetical spouse, and in order for it to maintain the current standard it delivers to America, it will need to tax every American taxpayer 100% of their income as the income to America collectively declines.

But Americans don't seem to want to accept this reality.  It seems when I explain that America may need to take our children during time of war, most are more accepting then when I indicate America may need to take every dime we have to maintain our government.

I am not sure why people value their money more than their children, but that seems to be way the scale is tilting right now.

Unless America is prepared for massive convulsive changes, America is not prepared for what is coming.

Maybe our politicians and bankers have chosen war or pandemic as an alternate route to make us more accepting of the change?

 

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#13) On August 16, 2009 at 4:28 PM, alstry (35.41) wrote:

IT SEEMS ALSTRY IS NOT THE ONLY NUT JOB.....

The U.S. debt of $57 trillion in unfunded liabilities, according to common sense, is compelling reason for federal governors conspiring with special interests to murder 100 million Americans this fall using poisonous vaccinations.

According to federal deficit calculators at USDebtClock.org, more than $57 trillion is currently owed, including $39 trillion(T) in medicaid/medicare debt, $10T in social security payables, plus $8T in prescription drug liabilities, levying$189,210.00 in servitude upon every American citizen.

The mafia kills people for a lot less. Do you really think your debt collection is proceeding differently?

Consider current White House science czar John Holdren’s published affection for population reduction, nuclear industry promotion, biological weapons distribution, and vaccination sterilization through intoxication advancing under the guises of “national security,” “biopreparedness,” “flu prevention, and “health care reform.”

The fact is, you are worth more dead than alive to Obama’s ilk, because in reality, there is a WARRANT FOR YOUR DEATH THAT CARRIES A REWARD OF $189K, and rising.

Now you would never believe this is true. But do your “homework” and learn the FACTS:

1) Washington, DC is a “district,” not a “state” in the Republic. Legally, it is an offshore or “foreign” corporation.

2) U.S. Federal employees, including Capitol Hill legislators, are legally contracted to perform on behalf of the “foreign corporation.”

3) The “foreign corporation” in now unable to pay its debts.

4) The “foreign corporation” is now calling in its notes.

5) Under Uniform Commercial Code (UCC–global economic administrative banking and accounting law) a liquidity account called a “bond” was created for you at birth.

6) This “bond” secures every American citizen with a birth certificate and social security number against debtor obligations administered through the IRS and Justice Department.

7) Your “bond,” (private trust-like account created when your birth certificate was filed with the state, then sent to the federal corporation) is worth millions of dollars based on expert legal testimonies and insurance industry actuarial projections of your net worth–gross personal production– from birth to grave.

Considering your gross personal productivity over your lifetime carries this economic value, you might call this your “gross personal product.”

9) The “foreign corporation” assays America’s “gross national product,” and your “gross personal product” as well.

10) Assets of the “foreign corporation” may be liquidated to pay debts; and you may be liquidated, likewise, for available currency in your “transaction account,” to pay the corporation’s debts through the international bank-serving IRS “balance sheet” provisions that have been secreted from the public, but heralded legally by expert witnesses in tax courts.

The aforementioned FACTS EVIDENCE . . .

THE SINGLE, MOST IMPORTANT, FUNDAMENTAL MOTIVE DRIVING DECLARATIONS OF WAR, WAR ECONOMIES, AND CURRENT INCESSANT POLITICAL IMPOSITIONS, INCLUDING WARS ON TERRORISM, BIOTERRORISM; WAGING BIOLOGICAL WARFARE AGAINST PEOPLE AND MICROBES THROUGH MODERN MEDICINE, VACCINATIONS, AND DEADLY PHARMACEUTICALS.

http://revolutionradio.org/2009/08/08/57-trillion-reasons-to-murder-100-million/

And now are tax receipts are evaporating as our government's obligations are skyrocketing....what do you think is about to happen.....

unless we restrcture debt to managable levels, things only get a lot worse.

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#14) On August 16, 2009 at 4:29 PM, Teacherman1 (55.02) wrote:

alstry,

I respect your right to your opinion, and I share some of the same concerns, but in my opinion  (which I am also entitled to),I think you tend to go a little overboard.

Perhaps if you reigned in your rhetoric a little bit, you might find that more people would listen to you and consider your warnings.

I may have missed it, but have you offered a solution to what you see happening?

Maybe because I am (at least statisticaly) probably 80% through my life cycle, I tend to view things with a more hopeful and less strident attitude. I have seen a lot of things happen (many to me personally) in my life, and I have found that rarely do the extremes come to pass.

JMO and worth exactly what I am charging for it.

Not a Pollyanna, just not a Chicken Little either. 

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#15) On August 16, 2009 at 4:49 PM, alstry (35.41) wrote:

Teacher,

I understand your concerns, and in ordinary circumstances, you and I would be on the same side.

But these times are anything but ordinary.  The amount of debt infecting our nation is destroying our economy, and our bailing out the insolvent banks is only making matters worse.

There is a simple first step to a longer term solution.  If the problem is too much debt suffocating our economy....the easiest solution is relieve the debt burden by lowering interest rates to 1/2% so our school systems, hospitals and municipalities could service debt against lower revenues.

This is over twice the rate we charge our banks and similar to what Japan did for its citizens when it applied a Zombie Bank policy.  But if we allow the banks to continue to constrict lending and slow our economy, we will see more and more failures until there will be not much left to fail.

It is not very hard to see what is going on as we are constantly told things are getting better....when in fact you and I know things are getting worse.

 

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#16) On August 16, 2009 at 5:20 PM, Teacherman1 (55.02) wrote:

Alstry,

How would you propose that the interest rate be lowered to 1/2%? 

Have the Govt. reinstate the Original Bank of America and lend directly to the people? Perhaps issuing their own credit cards.

While it is an interesting idea, I think that we would still have the same basic problems, just all being financed at a lower level. They would still have to get money from somewhere, and there aren't too many somewheres to get it from. 

I still have a strong belief in the Capitalistic system, but do agree that more restraints need to be put into place. Unfortunately our congress (when all is said and done) is made up of individuals who put their own personal agendas ahead of the best interest of the American people.

If it comes down to relying on congress to solve the problems, as opposed to the American Capitalistic system, I put my money on the system.

Even though it is made up of far too many greedy individuals, they are more efficient and at least leave a "gleaning" for the rest of us.

JMO and worth exactly what I am charging for it.  

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#17) On August 16, 2009 at 5:30 PM, alstry (35.41) wrote:

GOVERNMENT GIVETH....GOVERNMENT TAKETH AWAY

Bush gave 40,000,000 Americans easy terms to buy houses causing home prices to skyrocket and property taxes to explode.

Greenspan raises interest rates 17 times, tightens credit, and causes millions to default as home prices crash and millions of homes get foreclosed as tens of millions lose jobs.

NOW THIS:

WASHINGTON - The Obama administration, in a major shift on housing policy, is abandoning George W. Bush’s vision of creating an “ownership society’’ and instead plans to pump $4.25 billion of economic stimulus money into creating tens of thousands of federally subsidized rental units in American cities.

The idea is to pay for the construction of low-rise rental apartment buildings and town houses, as well as the purchase of foreclosed homes that can be refurbished and rented to low- and moderate-income families at affordable rates.

Analysts say the approach takes a wrecking ball to Bush’s heavy emphasis on encouraging homeownership as a way to create national wealth and provide upward mobility for low- and working-class families, especially minorities. Housing and Urban Development Secretary Shaun Donovan’s recalibration of federal housing policy, they said, shows that the Obama White House has acknowledged that not everyone can or should own a home.

In addition to an ideological shift, the move is a practical response to skyrocketing foreclosure rates, tight credit, and the economic crisis.

“I’ve always said the American dream should be a home - not homeownership,’’ said Representative Barney Frank, chairman of the House Financial Services Committee and one of the earliest critics of the Bush administration’s push to put mortgages in the hands of low- and moderate-income people.

http://www.boston.com/news/nation/washington/articles/2009/08/16/president_shifts_focus_to_renting_not_owning?mode=PF

Nobody BSs like Barney....the chief cheerleader of FNM and Freddie Mac.

So now Obama wants to take the foreclosures and turn them into rentals......likely depressing the value of the remaining homes in the neighborhood even further.  Who wants to pay a $2500 mortgage payment when your neighbor is renting a similar house for $1200?

Even homeowners who can afford to make their payments are going to stop.

You would almost think this whole thing was planned at the outset.....some of us even predicted this would happen.  Imagine the trillions of dollars homeowners are going to lose as a result of this behavior?

Not a bad gig if you can get it.....pretty soon government will own just about everything in the nation...unless you are one of its banker buddies.

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#18) On August 16, 2009 at 6:17 PM, caterpillar10 wrote:

"....it will need to tax every American taxpayer 100% of their income as the income to America collectively declines..."

 

woewoewoe  slow down there sparky & put down the pipe 4 just 5 seconds will ya.....nobody's paying 100% of any thing - that's why we have guns 4crissake.....burned my draftcards a loooong time ago & the only kids they're gettin' are the 1s that wanna go....lil'hooligans wood probly like it anyway. 

 

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#19) On August 16, 2009 at 6:28 PM, alstry (35.41) wrote:

Well, to get a taste of things to come....read my next blog if you are not willing to pay 100% of your income....and by the way, it is NOT ENOUGH even if everyone pays 100%.

FURTHER

We are going to need some of your assets as well....until we need em all.

UNLESS

We restructure debt.

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#20) On August 16, 2009 at 8:27 PM, JerseyShoreGirl (< 20) wrote:

Thanks everyone for your posts today .. great stuff.  Alstry, I keep evisioning you as the Soup Nazi, behind the counter screaming "NO SOUP FOR YOU!" .. (Unless you agree we need to restructure our debt!)

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#21) On August 17, 2009 at 3:26 PM, OneLegged (< 20) wrote:

How would the banks who hold these notes (on financed assests) possibly ever  agree to allow interest rates to be retroactively rolled back to 1/2% to restructure debt?  Right now they have it all.  The interest they charge us in all cases is far more than 1/2%, they are getting Trillions of taxpayer dollars at UP TO 1/4% interest and they are getting to foreclose on Trillions of dollars worth of taxpayers assets all the while using sham accounting to lie about their bottom line.  They are hardly in a position where they have to negotiate. 

 

Audit the Fed.  Roll the Heads. 

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