America Shutting Down!!!!!
July 29, 2008
– Comments (6)
Bennigan's declares Chap 7. Thousands of Jobs Lost and Hundreds of Retail Locations Dark.!!!!!! Mervyn's Declares Chap 11. Expect lots of closings...especially in California.
Now Chrysler stops leasing cars. Ford and GM are making it more expensive. All three companies are laying off tens of thousands of workers and shutting down plants around the country. Do you think ending lease programs and making it more expensive is going to stimulate auto sales?
MER is selling billions worth of mortgage assets at $0.20 on the dollar. Hundreds of Billions of similar paper is listed as assets on the books of Banks, Insurance Companies, and retirement accounts. What is going to happen when those assets get written down. How are banks going to replace the income they made over the last seven years from selling toxic paper? Who are they going to lend money to:
Auto Companies, Airlines, Builders, Developers, Restaurants, Retailers, Mortgage Companies??????
Paying interest on deposits without making loans is not a good business model. Expect many more banks to shut down in upcoming days and weeks as they are forced to mark their assets to market and loans keep defaulting.
At this point, the business model of the following businesses are simply broken and unprofitable:
Airlines, Automotive, Banking, Commercial Development......just these four industries alone direcctly or indirectly account for about half our economy. Now, healthcare and technology are beginning to suffer. Very successful salespeople I know are reporting pipelines are drying up.
It is simply amazing how few really understand where we will likely be in just a few months as the rate of debt defaults increases.
America has much more debt than equity......if values drop much further......there will be very little equity left anywhere.
Remember, in order to shut down sales don't neet to stop.....they simply need to slow to the point where fixed costs and debt can't be serviced. Right now there are many many business that are right at the breaking point. If sales slow any further.....they will be forced to shut down.
Between Bennigans and Mervyn's alone, we are probably contemplating around 25 million square feet of retail space. Add in Steve and Barry's and now we are up to 50 million square feet of retail space.
Who will finance Chrysler.....now that revenues are going to contract further? What about Ford and GM with about 3/4 of a Trillion in debt?
We havn't even started to address the Trillions in Commercial Real Estate Debt that is deteriorating.
You will know the SEC is panicing if they try to tighten the rules on shorting. If stock values are based on earnings.......earnings are evaporating completely in certain industries.....in others, earnings are shrinking rapidly.
You don't think officials are concerned???????
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