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alstry (< 20)

Alstry's Gift to CAPS



September 22, 2009 – Comments (21)

It is now time for you Fools to really understand Zombulation.   It is defined as the point when you run out of income, savings and access to credit or when government taxes you 100% of your income and assets, in e ther case you are broke.

Over the past ten years America's banking system infected America with over $30 Trillion dollars of NON federal debt.  This debt is in the form of mortgages, HELOCS, credit card debt, auto debt, commerical debt, private equity debt, commerical paper, municipal debt, and commercial real estate loans.

What few really appreciate is under fractional reserve banking, the banks really never had the money to lend...they simply loaned by levering up their deposits.  As a result of Credit Default Swaps, banks were actually incentived to make loans that they NEVER would have done under ordinary circumstances. 

Consequently, banks loaned out many times the deposits and drove asset prices to levels that were only sustainable if the banks kept lending.  Once the banks couldn't lend any more, asset prices were guaranteed to crash.  The problem is that as asset prices crashed, the economy slowed, jobs were cut, and wages slashed......BUT.....the debt and servicing obligations remained.

Now we have a collapsing economy burdened with over $30 Trillion dollars of NON federal debt but only about $6 trillion of savings.  Now here comes the really fun part that Benny B knows and you are soon to feel the effects.  Since savings is paying only about 1% and debt is costing anywhere between 5% and 30%.....anybody with savings is being forced to pay down debt.  As a result, savings is contracting rapidly at our financial institutions contracting lending capacity even further and causing even further slowdown in the economy.

We are now at the point where revenues have slowed so much we are firing workers at hospitals, schools, police officers, firefighters, and other public safety positions including prisons, parole officers, and prosecutors.

At some point in the not too distant future, as savings is drawn down to pay down debt and pay living expenses for the tens of millions of unemployed and underemployed...we will reach a critcal point where few banks will be sufficiently capitalized to remain open...especially as defaulting loans further impair banks' balance sheets.

Benny has known this point would eventually arrive under current Zombulation policies...after all, he engineered it whole thing along with is banking buddies.  Whenever you incentivize banks to make bad can be rest assured that a lot of terrible loans will be extended.

In 2007 as credit started to be cut was mathematically certain that most of the debt would default because it was underwritten at amounts that required massive credit to be injected in the economy to sustain high levels of cash flow.  Once the debt actually defaulted, the credit was cut further and the massive job losses were very foreseeable based on the Zombulation policy of bailing  out the banks and not the citizens....AT A TIME WHEN BENNY TOLD ALL WAS FINE.

So here we are,  savings has been drawn down to critical levels, many  many banks are on the verge of shutting down, record amouts of debt are defaulting or on the brink of defaulting and it is mathematically impossible to pay down $30 trillion dollars of debt with a few trillion of savings.

Unless we restructure debt soon....our economy will start to shut down at an accelerating rate.  Now that we are impacting hospitals, police and fire is now affecting public safety as the bankers bask in the trillions of bailout dollars....trillions that should have been used to restructure debt and not bankers.

None of this was hard to foresee if you were looking...but just very difficult to accept our own Federal Reserve would orchestrate such a massive deception and destruction on our entire population and economy.  9.09 is here and the shutting down is accelerating.......unless we stop the Zombulator...there will not be much left to Zombulate as the FDIC, FHA, and Pension Guaranty are out of money.  As government runs out of money, it will have to get more aggressive with its citizens.  Such aggression can and will likely incite anger and social unrest.  Just look at what we have seen so far at the early stages.

If Benny keeps printing without producing....a gallon of gas could be $1000 while tens of millions get fired as a result of prohibitive input costs to American corporations.  At this point, none of the choices are easy...but it is clear that unless we restructure debt...we will all suffer massive convulsions to a nation and life we currently know.

The time for blogging is coming to an end...the time for action is beginning.  In upcoming weeks and months, you will see things might seem unbelievable...but when the Fed unleashed the unleashed a destructive economic machine that has never been seen in America before.

Unless we demand debt be restructured...the Wall Street bankers will be only ones bailed out and government will be forced to take all we have simply to maintain the soverignty of America.

Money is running out fast Fools...unless we restructure soon...there will not be much money left as a few trillion of savings goes to pay down tens of trillions in debt and massive defaults shuts down most of America.

You are now prepared...go do something about it.

21 Comments – Post Your Own

#1) On September 22, 2009 at 9:53 PM, rofgile (99.57) wrote:

Alstry's gift to CAPS = panic, fear, pessimism...

 Looks like your 9.09 prediction really was great... S&P reaching 1070 now.. 

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#2) On September 22, 2009 at 9:54 PM, dudemonkey (51.32) wrote:

This was a good explanation of some of the things you've been talking about.  Thank you!

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#3) On September 22, 2009 at 10:11 PM, alstry (< 20) wrote:

As we keep shrinking...there will be fewer and fewer paying taxes.  America is not structured to be a nation with a few people with money and many living on a subsistance level...but under the current Zombulation policy, that is where we are headed.

The Buckhorn Inc. manufacturing plant in Shelbyville, Ky., will be closed this year, affecting about 88 employees.

In the related news release, company president and CEO John Orr said, “The decision to close any facility is extremely difficult because of the people and communities it impacts. However, given the changed economic landscape and to better position our business, it is absolutely critical that we further reduce costs, consolidate facilities and fully utilize our high-efficiency molding capacity to enhance productivity.”


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#4) On September 22, 2009 at 10:24 PM, alstry (< 20) wrote:

As money evaporates, it will not only affect existing jobs, profits and tax receipts.....but it will take away the capital necessary for the future growth of our economy for our children.

Confronting the roughest recession in generations, the nation's venture capital industry raised only $1.7 billion in the second quarter of 2009 — a cliff-like plummet from the $4.6 billion raised during the previous quarter, according to an industry report released Monday.

It was the smallest quarterly dollar total since the first quarter of 2003, when $938 million was raised in the depths of the dot-com crash. Meanwhile, the number of new funds created in the quarter shrank to 25 — the smallest number in 13 years.

You can do the math on this one.

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#5) On September 22, 2009 at 10:37 PM, checklist34 (99.06) wrote:

look alstry, you have had some nice moments on the CAPs game, and in and among the obvious overdrama of your posts you have raised some emminently good points.

But it remains that 9/09 is almost done, andthe S&P has just shoved to new highs, and by and large the recession appears to be easing.  And whoever you are you know that producing a negative headline doesn't prove that the recession is worse than ever.  Manufacturing indexes are positive, jobless rate is declining if still quite high.  

etc.  9/09 came and will go without a cataclysmic event, without a shutdown of the US of A, without Dow 5000, none of those.  

you staying or leaving per your earlier vow?

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#6) On September 22, 2009 at 10:47 PM, alstry (< 20) wrote:

If you call the FDIC, FHA, and Pension Guaranty running out of money in the same month not matierial........that is OK.

If you call CA having the highest unemployment rate since WW2 not material.....that is OK.

If you call shipments to some of the largest industrial companies like Catapiller or Potash, down 50% and more not matierial...that is OK.

If you call bankrupt financial companies constituting a material part of exchange trading....that is OK.

If you call bankruptcies approaching 2005 highs not material....that is OK.

If you call tax recepits evaporating and getting worse not material....that is OK.

Soon you  will see the effect....9.09 still has time.  Remember, most of the people on the Titanic thought the bump was just a big wave.

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#7) On September 22, 2009 at 11:22 PM, checklist34 (99.06) wrote:

thanks for the answer alstry, i take we are in for another 12 months of the same then?

where is that thread where you solemnly vowed to leave unless ABC happened?

now, if you please, i don't mean that in ill, alstry, but you did stake such a claim once and it may have related to 9/09

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#8) On September 22, 2009 at 11:35 PM, rofgile (99.57) wrote:

I'll echo what the GoodNewsEconomist said recently on his blog - with new job claims falling monthly, its quickly getting to the equilibrium where we'll have net job additions each week.  

All the economic indicators also are pointing towards entering the recovery phase.  


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#9) On September 22, 2009 at 11:35 PM, alstry (< 20) wrote:


soon you will understand it is impossible to pay down tens of trillions of debt with only $6 trillion of savings and credit being cut off. 

You will find out what happens to a massively leveraged consumer economy when it is forced to start savings and the debt is still burdening the economy.

You will likely find out in 9.09 as Benny B has known the whole time.

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#10) On September 22, 2009 at 11:36 PM, rofgile (99.57) wrote:

Things always look terrible at the low point - but when you've hit bottom, you can only go up...

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#11) On September 22, 2009 at 11:43 PM, rofgile (99.57) wrote:

If you call shipments to some of the largest industrial companies like Catapiller or Potash, down 50% and more not matierial...that is OK.

 If you search for "Manufacturing Orders": 

 Sept 7th - "German Industry Orders Beat Forecast"

 Australian Manufacturing Expands first time in 14 months  - Bloomberg

 China's Manufacturing Edges Up - WSJ

 Oklahoma Factories Reporting Orders, Recovery - WSJ

 Philly Fed Index Indicates Continued Growth In Manufacturing Sector RTT News




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#12) On September 22, 2009 at 11:51 PM, tomatoflu (< 20) wrote:

**********"As a loan is paid back, the commercial bank money disappears
from existence."***********


Here is a quote from Wikipedia. Under the sub-heading, "Money creation
through the fractional reserve system"

       "1. central bank money (all money created by the central bank
regardless of its form (banknotes, coins, electronic money through
loans to private banks))
       2. commercial bank money (money created in the banking system
through borrowing and lending) - sometimes referred to as checkbook

When a commercial bank loan is extended, new commercial bank money is
created. As a loan is paid back, the commercial bank money disappears
from existence."

The argument to counter this fact is that banks issue "new loans" when
an old loan is payed down.

Although this is not happening at the moment is it. Banks are in the
process of "not lending".

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#13) On September 22, 2009 at 11:53 PM, QwertyHero (< 20) wrote:

Alstry - I for one hope you are right. I hope this economy takes another HUGE dive so I can make some more money on the recovery. 

I'll tell you what, this investing stuff is so EASY!!!  I've been doing it for 6 months and have made $3,000 after starting with only $2,000!!!

I'm the next Warren Buffet!


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#14) On September 23, 2009 at 12:17 AM, tomatoflu (< 20) wrote:


 The money supply is shrinking through this mechanism at an allarming rate fellow fools.

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#15) On September 23, 2009 at 1:39 AM, checklist34 (99.06) wrote:

fractional, ...

i posted long ago, and i say again:  this is too complex and new of a situation for anybody to really predict.  any "prophet" who got something right has gotten at least as much wrong.

some cry hyperinflation, some cry a new round of deflation due to contracting lending = contracting money supply despite all the printing at the fed.  

time will tell, but the outcome is likely to be more "normal" than any of the predictions.  I said that months ago, i say it again.  :)

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#16) On September 23, 2009 at 10:17 AM, tomatoflu (< 20) wrote:

I am another one of those guys who has been spot on with timing and saw in advance what would unfold.

Though only more recently did i become a newbie to understanding the titillating particularities of 'fractional reserve banking'.

 I will agree with you. A severe depression is normal. Incremental, but exponential by November.

What i think checklist, is that the incremental nature of the change so far is the new normal. Quite a predictable sentiment.

Bad to worse.

Must say, i am getting used to it too. 

LoL, we are hardly going to get hyperinflation in my view.

Yes the velocity or amount of money changing hands on a 'Joe the Plumber level is shrinking super super rapidly.

Especially because the existing debt uncreates money when it is payed down.

In this sense, the banking system is quite a humungous ponzi scheme.

Lets just keep foolowing the money shall we.

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#17) On September 23, 2009 at 11:41 AM, davejh23 (< 20) wrote:

Fractional - You have claimed multiple times to know more than others, yet you acknowledge that you are new to this.  You still do not understand "the titillating particularities of fractional reserve banking".  Keep studying...and not on Wikipedia.

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#18) On September 23, 2009 at 7:24 PM, ArgusPanoptes (24.02) wrote:

stupid question- why is it that every country in the world seems to be in debt? who's going to call in that loan? Zeus?

another stupid question- doesn't debt only matter when compared to gdp?

if my stupid question is relevant: I noticed a lot of other countries are in worse shape in regard to debt. Including Greece, Canada, France, Belgium, India, Italy, Japan, Israel, Germany, Hungary, Portugal... while those countries with the least debt aren't exactly models of profitabilty: Botswana, Azerbaijan, Libya, Estonia, Oman (ok these guys make bank), Russia, Kuwait, Angola, Ukraine...

I mean ****! Seems like debt just means you have something going on. 

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#19) On September 25, 2009 at 2:28 PM, tomatoflu (< 20) wrote:



 Thanks  davejh23. A Profound observation.


Hmmmm ArgusPanoptes...He may not be as agitated or hysterical as Allen Jones, But he does a damn fine job of explaining not only money creation, but in my view just as important for a correct understanding of what is currently transpiring in the 'fractional reserve banking' economy, 'how money is destroyed' (Or un-created.).


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#20) On September 25, 2009 at 4:06 PM, booyahh (< 20) wrote:

alstry's gift? obsessive paranoia !!!

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#21) On September 26, 2009 at 10:33 AM, tomatoflu (< 20) wrote:


RE: booyah. As opposed to pathological boomtime optimism??

Perhaps you can create an economic sect based on optimism alone.

Everything would be just roses, roses.

Thanks Alstry. Nice formulation. 




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