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alstry (35.03)

Alstrynomics Explained...

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November 10, 2009 – Comments (4)

Alstry realized in 2005 that most of our PRIVATE economy centered simply around real estate..sales, construction, finance, residential, commercial, insurance, furnishing, renovating etc.......between 2001 and 2007 much of the other areas of the PRIVATE economy was supported by borrowing against real estate.....especially travel and autos.

BASICALLY WE PRIMARILY MORPHED INTO A MASSIVE REAL ESTATE ECONOMY.

As long as banks lent and people borrowed...massive sums of money was spent and such spending drove massive tax revenues to government.  Rising real estate prices and additional constuction supercharged property tax receipts.

Government spending in turn exploded supporting Health Care, Defense, Welfare, Social Security and 22,000,000 government workers and untold number of government contractors etc....

In essence, our entire economy was built directly or indirectly on the profits arising out of Real Estate. Without RE America did not have much of a private economy and without a private economy tax receipts to government would evaporate.

It became clear that we simply over leveraged RE to keep the ponzi scheme going and the whole house of cards would collapse once lending was cut back and spending slowed materially.

America is now burdened with over $50 Trillion dollars of Private and Public debt....you need a huge amount of cash flow to service that debt or else the debt will mathematically default.  The only way America could generate anything close to the necessary revenues would be to continue the lending and spending on RE or something else. 

When the bankers cut us off, you knew the party was over.....nobody knew this more than the bankers, but we will save that for another blog.

First RE collapsed, then seemingly banks......and now we face the Biggest and Final Crash...the government collapse.  Government consumes $6.5 Trillion per year...more than our total GDP not too many years ago.......without massive tax revenues coming in...govenrment must borrow or cut.....and if it can't borrow...it can only cut.

Now tax revenues are slowing at the fastest rate in history...New York held a special session last night warning about running out of money by Christmans, New Jersey is contemplating imposing an emergency fiscal plan and practically every city, county and state in the union is implementing material cuts.

When government cuts...it will drive further slowing to the Private economy...which in turn will deminish tax receipts further.....as revenues continue to slow, more and more debt will default causing even more distress.

11.10.9 is the date that you can now Feel the beginning of the Government Collapse...it is about to get a lot worse as government is forced to take action against less income.

In America...we need massive employment to function....and most of that employment comes from RE or government spending.  If Americans are not working, America does not have much of an economy.  And soon, unless we restructure debt...tens of millions of additional Americans will lose their jobs.

Think of our economy as one massive human system...and income/money is the blood which keeps everything going...in order for the entire system to shut down, you do not need to lose all the blood, simply enough to cause enough organs to fail.

On 11.10.9 we are now at that point where organs are failing.  Businesses are shutting down.....millions of workers are losing their jobs...libraries and schools are closing...police and fire departments are cutting back....hospitals and universites have recently started to feel the effects.

The problem is our MASSIVE debt is consuming our income and there is little left for anything else.  As income decrease...the debt will become IMPOSSIBLE to pay back and our government will crash.

Unless we restructure debt...this is not speculation, but a mathematical certainty.  If you have ever been by the bedside of a patient dying...you know the routine.  Think of the rising stock market as morphine....although it helps with the pain, it does little to stop process of demise.

What the system needs is a transfusion...the bankers already got one with Free Money.....in turn, they have tighened credit and raised interest guaranteeing the death of our economy and government as we know it since nothing has been done to reduce the debt burden.

We knew it by 9.09 when the bankers got unlimited free money and cut off our credit dependent economy, and felt the effects on government by 11.10.9........now we can simply sit by the bedside as we will experience are rapidly accelerating contraction in BOTH our Private and Public Sectors.

After enough income/money is consumed, and debt can't be serviced...the entire system will shut down....there is little doubt about it now that we can Feel and the bankers are running the show.

State of Ohio - Expect 100 Bus Drivers / Monitor Layoffs

Warren County - Looking at More Layoffs?

City of Macon - 31 Full Time and 36 Vacant Position Eliminated 

Iowa State - Schools are at Risk For Layoffs

4 Comments – Post Your Own

#1) On November 10, 2009 at 10:47 PM, alstry (35.03) wrote:

FWIW...The government crash is the last one......it will be the biggest...after that there will be no more for a while.....but then we can start over...if we are still around.

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#2) On November 10, 2009 at 11:28 PM, TMFUltraLong (99.96) wrote:

Alstrynomics explained.....

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Alstrynomics explained

UltraLong

PS... all in good fun Alstry =)

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#3) On November 11, 2009 at 4:33 AM, KamranatUCLA (29.20) wrote:

you are right that everything starts with real esate.

I was born in Iran where everybody owns their home flat out and all taxes on homes are included in the buying price (no more anual taxes). Most of the taxes people pay is on products (like state tax/flat tax). People are happy financially and are pretty laid back ( politically Iranians are not happy because of lack of freedom, you can't use drugs or drink on teh street or have prostitutes at your home and stuff).

I grew up in Germany. In germany space is so restricted. INWest Germany-before teh reunification- we had 78 million people cramed into a space 1/3 of California. But guess what...my rent for a 1 bedroom apartment was 250 Deutche Mark...which is about 100 Euro or something ( about 280 USD). That year, 1992 when I came to the U.S. my rent in LA was $1250 for a 1 bedroom apartment.

I was shocked. In a country where land is plenty why should I pay 1250 dollars/ month. And buying a house was completely out of question...and still is.

I would understand if someone paid 1250/mont if they had ocean view in a brand new apartment but that amount in just a regular apartment didn't make sense.

Now it's 2009 and my rent is 1700.00 They gave me $26 discount because of "hard economic times."

So it doesn't take a genius that this is not sustainable...if a guy like me who speaks 3 languages, who has graduated from UCLA, who had a clothing company, who is very energetic and works almost night and day and still goes to school at age of 39...I mean if s guy like me is complaining about rent, what would other do..people who have kids, are not as ambitious or hard working as me, are maybe disables, maybe older people, recent immigrants, and so on and no...

So it was obvious this sytem will collaps...now the thing is that the government doesn't want this to collaps which will make the collaps even worst.

Let the damn forclosures take their normal path!

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#4) On November 11, 2009 at 4:41 AM, KamranatUCLA (29.20) wrote:

By the way all my friends in Canada, Germany and Iran make fun of me and call me idiot (maybe they are right) because they only pay a fraction of the rent I pay, they make more money than me with less work (one of my friend is a driving instrcutor and own his own home in canada flat out, i worked as a driving instructor here full time and it didn't even pay half of my rent).

They make fun of me because with the money they save they travel a lot...every month I see a friend's pic on facebook from some islands in Indian Ocean to New zealand to Austrailia...Kish Island in Iran, travels to Spain and Turkey....and where did I go in the last 3 years...las vegas for 4 days!

So again, as globalization continues we- people in the U.S.- reliaze that we are getting the short part of the stick and people will not put up with it.

It has already started, my neighbor left and my landlord can't find someone to rent the apartment and this 1 bedroom apartment has not been rented now for almost 5 months.

It will be interesting to see how long more the land lord will stick with his price. If he lowers the rent so he can rent the apartment surely everyone else will ask him to lower their rent too, so I really don't know what he will do?? ANy Ideas??

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