Alstry will QUIT BLOGGING FOREVER
If in the next twelve months, if one of the following three Historic Events fails to materialize....Alstry will quit blogging forever!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! and that is a PROMISE!!!!!!!!!!
1. It becomes very clear that America has entered into a MASSIVE DEPRESSION.
2. Martial Law is imposed upon American Citizens.
3. America is involved in a major military conflict where the draft will need to be reinstated.
Right now revenues are evaporating in America. There is simply not enough savings to pay down debt sufficiently for cash flow to cover interest obligations. As revenues continue to contract, a greater and greater percentage of GDP will be required to pay only interest and taxes and there will be very little private money available for goods and services.
This process was identified by The Institute of Alstrynomics a few years ago and called Concentric Contraction. As a greater and greater percentage of the wealth of the nation moves over to the bank's balance sheets, the private citizens will have very little money and assets to spend on anything.
Our government's policies right now of transferring the nation's wealth to the banks while leaving the debt obligations burdening the private citizens, corporations and municipalities is sufficating the private economy. There is simply not enough money saved to pay down debt enough where debt can be serviced by revenues.
The total deposits in the top 50 banks in America is about $4 Trillion dollars. That is barely enough to pay down credit card debt and auto debt.....once you factor mortgages, home equity loans, commercial loans, commercial real estate loans, and municipal debt......if we took every dime of savings and paid down debt.....there would still be about $20 Trilion of debt remaining....NOT INCLUDING FEDERAL DEBT and entitlements!!!!!!!
As long as the banks kept extending credit freely, spending flourished and the debt could be serviced as the balance kept increasing and increasing. Some call this a ponzi like scheme. Once credit started to be cut off, spending slowed and debt started defaulting.
As the existing debt obligations remain and revenues contract....debt will soon start to consume practically all of GDP and little money will be left for goods and services. THIS IS WHAT BERNANKE AND GEITHNER DO NOT WANT YOU TO KNOW!!!!!!!
As this happens, the legal process called foreclosure and bankruptcy will transfer the assets of the American citizens to the the creditors, primarily the banks.... until the private citizens own practically nothing.
As Americans catch on....which they ultimately will due to massive job losses in the not too distant future.....social disharmony and unrest will likely start to escalate as more and more lose everything........At this point, based on the current policies being implemented in Washington we are rapidly accellerating the process with little being done to remediate a very foreseeable situation. Katrina anyone???
The question now is whether government will allow the citizens to become aware....if yes, than it is likely Marshall Law will need to be implemented to maintain social order.....however, an equally plausible alternative will be to engage in major external conflict to effectively make economic concerns a non issue.
California is simply the first and most visible manifestation of concentric contraction....the state's deficit has become so large that the economy is no longer structurally sustainable. This is spreading to other states rapidly such as Michigan, Ohio, New York and Florida.
Soon there will not be enough tax revenues coming in for government to function effectively...even if it taxed the citizens 100% of their income......as relatively few will have any taxable income.
Corporations like American Express can only keep laying off 6 or 10% of their workforce time and time again before there is not much of a workforce left....anywhere.
Based on my calculations....within 12 months, our nation will be in the midst of the largest Depression in our history........ unless radically different policies are initiated. Based on recent comments by Geithner...this seems unlikely.
So there you have it....12 months and done.....unless radically different policies are set forth....and if so, Alstry will become the biggest bull in CAPs and Alstry's existence will no longer serve a purpose.
Here is to Alstry's departure......unfortunately, Alstrynomics is all about being right.