Alstrynomics Final Summation
It is now certain that credit is being cut off to mainstreet yet flowing to Wall Street banks in unlimiated quantities and for practically free.
Banks cutting back on loans to businesses
U.S. banks are reducing their lending at the fastest rate on record ... According to weekly figures provided by the Federal Reserve, total loans at commercial banks have fallen at a 19% annual rate over the past three months, while loans to businesses have dropped at a 28% annualized pace.
'Democratization of Credit' Is Over
The recession has forced a reckoning for low-income Americans who relied on borrowing to gain the trappings of middle-class life.
The problem is mainstreet is responsible for much of the employment in America and with mainstreet shutting down, many are losing jobs and livlihoods.
It is also clear that the unemployment rate is much higher than the BLS is reporting simply because the Labor Participation rate (those counted in the labor force) is much lower today than a few years ago.....likely doubling the actual unemployment rate.
"There has never been an expansion cycle in the past 45 years in which the participation rate (those actually in the labor force as a percent of those that could be in the labor force) trended lower save for the current one. Had the labor participation rate risen in a normal cyclical fashion, today’s unemployment rate would be considerably higher"
Now the question is WHY isn't labor participation rate higher....especially since spouses and others are being forced to look for work compensating for lower incomes.
If we applied U6 figures to a normalized labor participation rate, unemployment would be much closer to 25%.
As are result of credit being cut off and unemployment skyrocketing...revenues to American business is evaporating which is evident in new home construction, auto sales, and manufacturing to name a few.
In addition to revenues to business and families shrinking.....now tax receipts to government are contracting rapidly.
Precipitous Drop In State Tax Collections
This is a huge issue because collective government spend and consumption is responsible for half of our GDP. With credit being cut off to the private sector, and receipts evaporating to government....there is a strong likihood for much deeper contraction and little chance for a catalyst for growth.
The problem is our asset base, retirement plans and pension require growth to fund the assets and service debt.....
Steep Losses Pose Crisis for Pensions
The financial crisis has blown a hole in the rosy forecasts of pension funds that cover teachers, police officers and other government employees, casting into doubt as never before whether these public systems will be able to keep their promises to future generations of retirees.
U.S. Office Vacancies Reach Five-Year High of 16.5%, Reis Says
US apartment vacancy rate hits 23-year high-report
Shopping center vacancy rate hits 17-year high: report
With figures like the above, it is little wonder that the Pension Guaranty is out of money, the FDIC is out of money, and the FHA is out of money.....and it is clear that the FDIC has a long haul ahead.
The coming CRE losses for Local and Regional Banks
About $870 billion, or roughly half of the industry’s $1.8 trillion of commercial real estate loans, now sit on the balance sheets of small and medium-size banks like these, according to an analysis by Foresight Analytics, a research firm. ... And as a group, small banks have written off only a tiny percentage of the losses that analysts expect them to incur.
With all of this data so easy to see....it makes one wonder why Benny B and Timmy G are telling the American People that the recession is over......it makes one wonder how Pensions, or Social Security, or Medicaid, or any government promise can ever pay?
These issues are not years off, these issues are today....for the first time in American history government is simply printing money. In the past, printing meant borrowing, today it is printing money out of thin air.......and hoping that engaging in counterfeiting will be permissible when no other nation in the history of the world has ever done it without massive negative consequences on the society.
It is interesting now that we KNOW tax receipts to government are evaporating in 9.09, credit being cut off to main street, unemployment still increasing massively and commercial real estate collapsing.....our government officials are telling us things are getting better????
Is it possible they know they can't payoff and we are being set up for something????
Government Violates The Citizens (Again)
Now we find out that indeed (as I have long suspected) the government's insane FHA approvals of patently unsustainable loans was an intentional act:
Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee, said in an interview that the defaults were, in essence, worth it.
“I don’t think it’s a bad thing that the bad loans occurred,” he said. “It was an effort to keep prices from falling too fast. That’s a policy.”
Got that? It's a policy to intentionally bankrupt people so as to allow banks who have made bad mortgages a chance to avoid their own bankruptcy.
Quite frankly no one knows for sure......the only thing we know is that government is bailing out Wall Street Bankers and citizens are being cut off........in the past government supported citizens to grow out of recessions which benefitted all. Under this policy and at this rate, the assets of the citizens will be practically worthless while Wall Street enjoys its new taken wealth overseas.................
and the strangest part of all, you will find very few of the Alstrybaters actually debate or question any of the above facts.