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alstry (35.21)

Alstry GUARANTEES almost ALL will be ZOMBULATED!!!!

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May 28, 2009 – Comments (14)

Zombulation is the point where every dollar of your income will be required to either pay interest or taxes and NOTHING ELSE!!!!!!

So let's look at an easy Zombulation example.....a person or business owner making $300K per year spending only $100K on interest for his house, credit cards, and other miscellaneous consumer debt like a cabin, cars, boat etc.......not bad considering that only 1/3 of his income is allocated to such debt leaving a healthy 2/3 for taxes, goods and services, and savings.

Most conservative mortgage metrix allow for about 1/3 of income for housing ALONE.....keeping the above in perspective.

In the above case, if the person's income dropped to anything below $150K, he would be ZOMBULATED factoring taxes and interest.  How many American's do you think fit the above criteria in the past few years in occupations such as Real Estate Sales, Mortgage Brokers, Plastic Surgeons, Airline Pilots, Small Business Owners etc......????

When these people are Zombulated, they can no longer spend a dime on goods and services without tapping into savings or borrowing to survive....once savings and credit runs out...they are economically DEAD!!!!!

As income and spending decreases, ironically the demands on government expenditures INCREASES due to rising unemployment, welfare, and crime demands.  Consequently government must raise taxes on a smaller population base to cover the rise in costs.  If government cuts expenses, it too will contract the economy further having the same effect of decreasing income and expenses raising demands on government further. 

This process called Concentric Contraction continues to play until revenues aggregately slow so much that the demands for interest and taxes will consume practically every dime of every American.

You can already see the effects of Zombulation in New Housing Down 80% and Autos DOWN 50% where revenues to those two industries are so low they can no longer cover interest expenses and pay their employees at the same time....and now they are simply living on credit and savings.....until they run out.....

The demands on government are going to skyrocket as more and more will need free health care and unemployment benefits....fewer and fewer will be foreced to bear the burden.......and factoring legacy interest obligations......every dime of practically every American will need to be allocated to interest and taxes and nothing left for discretionary expenses if we continue down the same policy direction.

You think I am kidding....tell that to the every increasing and record number of Americans that are losing their jobs and getting kicked out of their homes EVERY month.....they are placing greater and greater burdens on government and society....as the economy slows even further, a greater and greater percentage of it is being used to service EXISTING debt while government obligations are exploding causing crowding out spending for goods and services that society depends on to exist.

The consequences of Zombulation are not a question at this point......under the current policy direction...they are mathematically certain...now the only question is when will all of us be Zombulated creating a Zombie Nation.

Japan was able to avoid a bunch of the distress because its population had no debt and it was an export based economy.....INTEREST WAS NOT A FACTOR IN JAPAN....versus our nation built up a significant dependance on credit and government welfare over the past 10 years.  Now that credit extension is cutting back dramtically, legacy interest obligations are enormous suffocating our economy resulting in an inability to pay back debt.

Printing money is not an option because printing requires borrowing and few will lend us any money right now at current rates due to our inability to pay it back....and those that will lend will demand higher and higher rates until we can't pay the debt anymore.

At this point...under current policy...as interest payments consume more and more....and government needs grow and grow resulting in higher and higher taxes on fewer and fewer.....it is only a question when before we all be Zombulated and we eventually morph into Zombie Nation.

14 Comments – Post Your Own

#1) On May 28, 2009 at 4:32 PM, atarigod (< 20) wrote:

Hello Alstry, Ive been following your posts for quite sometime. Im not sure if you've stated this previously (If you have, I apologize), but I was just curious as to your background?

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#2) On May 28, 2009 at 4:34 PM, alstry (35.21) wrote:

Attorney, Business Owner, Investor, Husband, Father, Friend, and Citizen who has travelled the world.

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#3) On May 28, 2009 at 4:38 PM, atarigod (< 20) wrote:

Interesting. Again, I apologize for side tracking your log. I am interested in any ideas you might have. I see you havent made any picks in about a month. Is there any particular reason why? Do you think it is best to stay on the sidelines until reality hits the market again?

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#4) On May 28, 2009 at 4:44 PM, alstry (35.21) wrote:

Because current behavior is simply insane and I am practically All IN at this point anyway.....

Clearly under current policy government knows exactly where things are going....the only question now is what preparations are being made for that direction......

At this point...maybe slightly bullish on metal....until government policy makes that no longer viable....which I think is likely.

This is a control issue......and must be analyzed as such.

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#5) On May 28, 2009 at 4:46 PM, 4everlost (29.47) wrote:

Do zombies make any sounds?

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#6) On May 28, 2009 at 4:58 PM, NOTvuffett (< 20) wrote:

When I am feeling blue, I look for something Alstry wrote for a little pick me up, lol.

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#7) On May 28, 2009 at 5:09 PM, alstry (35.21) wrote:

4ever,

Just listen to your partner...you will likely hear it soon;)

Obama walked into a terrible situation.  Basically he took on a company where revenues are evaporating and fixed expenses simply can't be met at current revenue levels....and if he cut's expenses....reveunes will fall further and liabilities will increase.....

hence the paradox...but cutting costs you decrease revenues AND increase obligations.

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#8) On May 28, 2009 at 5:12 PM, Seano67 (37.69) wrote:

Just listen to your partner...you will likely hear it soon;)

 

Ahahahaha. Good one, my friend. ;)

 

 

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#9) On May 28, 2009 at 5:19 PM, ralphmachio (23.92) wrote:

Alstry, I would appreciate any elaboration on your investment strategy you could offer. Do you think the gov't will prop up the banks much longer?

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#10) On May 28, 2009 at 5:33 PM, alstry (35.21) wrote:

ralph,

At this point....EVERYTHING is speculation.  PERIOD.

We have a nation where the revenues to the nation are evaporating and the expenses are rising.  Under the previous administration we concealed and aggravated the problem by lending and borrowing ever increasing sums of money.

BOTH PRIVATE and PUBLIC DEBT doubled under the previous adminstration....it was an incredible amount of borrowing which we as a nation simply can't pay back at current interest rates and declining revenues.

We made a bad problem much worse and now Obama must deal with nation where revenues are contracting and debt service is consuming practically every available discretionary dollar.

We are bascially screwed unless we restructure debt....plain and simple....and printing money is not a solution because, unlike previous nations that chose inflation.....IT IS AMERICA's private economy that is leveraged....not just its government.  The private economy does not have the capacity to print money like the soverign.....thus, inflation in present day America will starve its population to death because prices will rise much faster than its citizens ability to pay.

You rarely hear economist discuss the difference between Private Debt in America and Public Debt of previous nations that inflated where its populations had relatively little private debt.

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#11) On May 28, 2009 at 6:30 PM, atarigod (< 20) wrote:

This self perpetuating market astounds me. I have NO IDEA how any money managers or investors can shrug off the data released yesterday or today showing that 12% of CURRENT morgtages are delinquent. This is after the avalanche of foreclosures we've already gone through. With no signs of employment making a quick rebound, I just cannot comprehend how the market keeps going up. EVERY single time I've tried to short the market this month I've been smoked. GM is announcing 14 plant closures on Monday. Common sense makes me want to buy every BEAR ETF out there, but it seems like the market could care less about reality. I currently hold a position in TMV and I dont plan on selling it. I just dont see how the gov't could possibly drive down rates significantly from here. I'd like to hear what you think about that position, and what will it take if anything for the market to come back to reality?

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#12) On May 28, 2009 at 7:07 PM, alstry (35.21) wrote:

At some point....an over stretched rubber band snaps back or breaks.......either way....the liklihood of getting slapped in the face is high.....

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#13) On May 28, 2009 at 9:39 PM, Varchild2008 (84.67) wrote:

Alstry = Attorney.... 

Hmmm...   Zombie Attorney perhaps?   :-)

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#14) On May 28, 2009 at 10:03 PM, alstry (35.21) wrote:

Var...

Don't worry....if things slow down to half the extent that is likely...half the attorney's in America will be twiddling their thumbs....and that is a lot of attorneys!!!

There are some positive side effects to the FU virus;)

However, as the economy slows so do the tax receipts while the demands on government increases as more and more need welfare....as fewer can pay taxes....the increased burden gets imposed upon a few until the few are taxed into welfare.

Same typy of adverse feedback loop with housing, our largest asset class....as more and more lose work, more and more homes get foreclosed, as more and more homes get foreclosed home values drop due to rising distressed inventory....as home values continue to fall...more and more homeowners go underwater causing more and more forclosures until there are so many vacant homes on the market that homes are selling for practically nothing like Detroit and parts of Florida.

Not fun...just the reality of the current outcome based on the current Zombie Bank policy.

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