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alstry (35.68)

Alstry Told You So

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December 17, 2008 – Comments (12)

After the Fed cut rates to .25%, I made the following observation in the following blog:

Do you think the other nations of the world are going to sit back and let the world's reserve currency evaporate into oblivion???  Not a chance my Foolish friends.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=120160&t=01002130057764754273

Well the battle is beginning....from the WSJ tonight.......

Policy makers around the world marched ahead Wednesday with efforts to stimulate a withering global economy that so far has overwhelmed their attempts to contain the damage.

Central banks in Norway, the Czech Republic, Hong Kong, Saudi Arabia, Oman and Kuwait cut interest rates, a day after the Federal Reserve slashed its rates and promised more unconventional lending to battle the deepening U.S. downturn. Additional interest-rate reductions are becoming more likely in places such as Japan, the U.K. and the euro zone.

The interest-rate moves come in addition to potentially a trillion dollars of fiscal stimulus that is being lined up around the globe for 2009.

As rescue efforts mount, economists are struggling to explain why nothing so far has worked to avert a deep recession.

My guess is that the dollar regains strength very soon, oil continues down its downward march, and gold.....well that depends on people's emotions.....and I suck at predicting that.....

As far as economists struggling to explain why nothing is working.....it is because I have told you over and over and over and over....until we restructure....it will get worse.....MUCH WORSE!!!!!!

In all my years, to date I have never heard, seen or been told that providing alcohol to an alcoholic is a successful treatment plan.......for some  reason economists never learned this in school.  As  an aside, have you ever noticed few economists have ever owned or operated a business.

12 Comments – Post Your Own

#1) On December 17, 2008 at 11:48 PM, alstry (35.68) wrote:

Now that the world is racing toward ZIRP.....I think a little Vapors is in order......

http://www.youtube.com/watch?v=qb5Ii0iIcXo&eurl=http://www.calculatedriskblog.com/

Unfortuately, America is the only nation in the world that is as leveraged as America.....think about that the next time you are eating sushi and the implications of using one's last bullet.

Do you feel lucky?

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#2) On December 18, 2008 at 12:25 AM, zygnoda (27.27) wrote:

In all my years, to date I have never heard, seen or been told that providing alcohol to an alcoholic is a successful treatment plan.......for some  reason economists never learned this in school. 

Too true.

I'm loving the stupidity at the SEC (not really.. it's amusing in a horrible way).  Cox is trying to act like he is not responsible.  Tell me another lie that's believable.  They say he is trying to protect his reputation.  He's a bit late.

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#3) On December 18, 2008 at 12:43 AM, alstry (35.68) wrote:

Zyg,

Americans are being assaulted by its own banking system.  At this point, money market yields are NEGATIVE.  It now costs you money to save.

We are rapidly reaching a point where it is not about return on investment, nor will  return OF investment be the goal, but rather how little one can lose on an investment.

If you are a saver, it now costs you money to put it in the bank......so  what is one to do.....call Benny Madoff?

So the Fed just made saving  money a money losing venture.....do you hear this on CNBC?  Now what, should  we  put it  into  money losing businesses so the executives can over compensate themselves with our money????

You think foreigners are going to keep lending us money at these terms with this kind of structure behind it.....why do you think BS Benny said the government will start buying debt????

BECAUSE HE KNOWS NO ONE ELSE WILL!!!!!!

At that point, the battle converts to a full fledged war and many Americans will be on the streets.  Our money will be worthless and our standard of living will go down the  drain.

You can thank the Federal Reserve  for this.......

This was pretty easy to see many months ago.....but I was hoping that no sane nation would  let  it  happen to itself.  But after Iraq, my view on what a nation  could do  reached  limitless  bounds.

Now instead of attacking  a  foreign country, we are  committing economic terrorism against  ourselves.....and the people don't know it yet.

It likely will not be long now....when people get their statements showing negative rates of return on their savings.....guess what is going to happen?

The battle  has begun......but Alstry will never run.......

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#4) On December 18, 2008 at 12:52 AM, alstry (35.68) wrote:

A HARSH DOSE OF REALITY!!!!!!!!!!!!!!!!!!!!!!!!!!

An estimated 12 million Americans owe more on their home loans than their houses' current value, unemployment is still rising quickly, and foreclosures are soaring.

For people whose home values have plunged, "I could have a 1 percent interest rate, but it wouldn't help them," said Michael Maynard, a mortgage broker in Branford, Conn.

"People losing their homes aren't losing their homes because they can't get a 6 percent mortgage," Maynard said. "They're not qualifying at all."

SOUND FAMILIAR????

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#5) On December 18, 2008 at 1:11 AM, Option1307 (30.48) wrote:

I hate that you are right, I know you do too...Times are going to get very interesting. Best of luck to all.

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#6) On December 18, 2008 at 1:11 AM, alstry (35.68) wrote:

OVER $8 TRILLION AND COUNTING......

As the holiday season commences, it’s worth taking stock of the last gift that President George W. Bush and the 110th Congress have left for U.S. taxpayers.

It’s a package of about $8.7 trillion dollars’ worth of potential taxpayer commitments for loans, guarantees and other bailout goodies for businesses and distressed homeowners.

http://news.yahoo.com/s/politico/16620

There is only about $12 Trillion in total mortgage debt.  Of that, only about  10% of mortgages are in trouble.  We could have fully paid off the troubled mortgages, prevented EVERY foreclosure, and still had  about $7 Trillion left to "stimulate" the economy.

The people would have been better off with disposable income ot spend  in the economy, the banks would have had good loans  on the  books, the mortgage market would  not have collapsed, and home prices would have held stronger value.  A pretty simple concept if you think about  it.

Think about that for a second when you think about the actions taken.  Makes one think who is on whose side?

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#7) On December 18, 2008 at 1:21 AM, DemonDoug (98.84) wrote:

alstry, your dollar is worthless scenario would mean hyperinflation - does that mean you believe that's where it's headed?  A sudden stop of foreign inflows leading to a rapid hyperinflation?

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#8) On December 18, 2008 at 1:23 AM, DemonDoug (98.84) wrote:

and i agree alstry - the bailout is more about AIG and propping up a failed system than saving the average american.

:sigh:

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#9) On December 18, 2008 at 1:33 AM, alstry (35.68) wrote:

Demon,

It all depends on what foreign governments do to offset our behavior.

It is very ominous times right now on a variety of levels.

Which way this ultimately goes is anyone's guess, but right now the direction sucks.

Just wait until the press release just after the New Year.

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#10) On December 18, 2008 at 1:52 AM, 292972826 wrote:

I completely disagree with your opinion.

 

And to prove you wrong, let's go back to the fundamental of this crisis.

This crisis is a credit crisis, the creditor finally figure out that nobody are going to pay them the fees that there were expecting, even worst they are losing money.

So with lender unwilling to lend, you end up closing all the under-performing industry.

 

It affects the consumer with rising unemployment and rising borrowing cost, the consumers end-up broke and are not willing to borrow anymore.

 

Who currently are the debtors and the borrowers?

The borrowers can be define as all the nations or consumers who live beyond their means, it includes all nations with trade deficit, all consumers with no or few saving. 

The creditor is a nation or an individual willing to lend because it has trade surplus or saving in case of individual or bank.

If you look at a map of trade deficit, you will see the borrower are the US and the EU in a less extend.

At the opposite, Japan, the middle east, china have huge trade surplus and the same countries have highest rate of individual saving.

Those countries or individuals until now and still now accept to lend us money to consume as much as we want in order to prosper.

 

What restructuring will do, as you suggesting?

Restructuring mean eliminating jobs, closing inefficient business and also closing efficient businesses...

The problem is even the best industry will be affected by a nation scale restructuring.

You may also completely eliminate the few consumers left, and end up closing profitable businesses.

 

This nation have only one choice to solve this crisis. Most now agree with it in the higher sphere of power, you hear the name more and more on TV, i guess the politics want the masses to get use to it....

 

"Keynesianism" is what we are headed for and it is by far the smartest solution.

Meaning, we will borrow more at a state level to make work the nation, keep as much job intact as possible and keep the remaining consumers of this nation. 

The first reason to implement this economic policy is because it worked once for the US.

You remember the "New Deal" of Franklin Roosevelt, It was the only economic policy that has worked after the great depression and it only occured after 1933.

 

Will this "New New Deal" work? I believe so but to a certain extend. In the sense that in 1930, America was the only superpower in the world and the money policy was somehow tied to the gold standard.

Now, there is no gold standard and more than one emerging power. It means that this country in order to finance the "New New Deal" and to

inverse the trade deficit balance sheet, will have to depreciate the dollar.

In the same time, the current lender will look for new consumers since the US and EU may be broke and this may affect even more the dollar. 


A hunt for consumers is often, to make them believe that they have more money that they really have....?

 

Do you wonder sometimes as me why a pound of tomatoes worth one green paper of 2.61 inches wide and 6.14 inches long?

Do you wonder sometimes as me why this nation represent 40% of the goods consume in the world, most of it produce in China?

So you believe that oil producer will sell their barrels for 20 of those green papers, i don't believe so, they are already for a hunt for new consumers.

 

And the hunt start by, making them believe that they have more money that they really have....?

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#11) On December 18, 2008 at 2:15 AM, Option1307 (30.48) wrote:

slycal  

You remember the "New Deal" of Franklin Roosevelt, It was the only economic policy that has worked after the great depression and it only occured after 1933.

Are you suggesting that this was a good economic policy that pulled us out of the Great Depression? If so, I've got news for you. It was actually the other minor thing, called WWII.

p.s. Where are you from? It fun to hear from people from different parts. (Just curious. It seems English is not your first language so I'm blindly assuming your not from here...Yes this is sterotypical, but I'm lazy)

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#12) On December 18, 2008 at 2:16 AM, Option1307 (30.48) wrote:

haha, i can't talk either....

It fun to hear ... = It's fun to hear

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