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alstry (35.42)

An Alstrynomic Analysis

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November 06, 2009 – Comments (14)

America's Private Economy is primarily driven by Real Estate and Auto Manufacturing plus the Financing Surrounding those two sectors of the Economy.  Collectively we are looking at the majority of the nation's assets factoring outstanding debt and equity collectively exceeding $50 Trillion dollars.

These two sectors plus supporting businesses including finance and sales drove the majority of income and tax revenues to government.  In turn, those tax revenues drove trillions of dollars into health care, defense, and welfare based consumer spending.

Over the years, we built up health care into 20% of the GDP.....defense and homeland security to about 10% of GDP.  Welfare, Social Security and Unemployment into about 10% of GDP.

In other words, the tax receipts from the private sector drove the spend from the public sector creating our $14 Trillion dollar GDP.

In order for our system to function, we need autos, real estate, and finance humming on all cylinders....otherwise the system collapses under its own weight.  Between 2001 and 2007...we loaned an unprecedented amount of money to real estate which drove the growth into the rest of the economy.

Now we have cut off lending to real estate, real estate is crashing, sales to autos have been cut in half, and tax receipts are evaporating for the first time since The Great Depression.  October's preliminary numbers are far worse than most expected.  This trend is likely to continue as real estate continues its downward spiral and sales slow...especially commericial real estate.

Without tax receipts, cities, counties and states are going to be forced to make massive cuts.  Since government spend is half the GDP....the impact on the economy is going to be material.

In sum, real estate, autos and finance drove the private economy and tax revenues to the public sector where government spending drove revenues into health care, eduction, defense, and welfare.  Without real estate and autos humming......government revenues will contract massively and now it is...and based on our huge infastructure in America....the fallout will be unprecedented as we try to sustain an unsustainable level of debt.

14 Comments – Post Your Own

#1) On November 06, 2009 at 1:42 PM, matthewbanis (59.69) wrote:

that's right bud, 9.9.09, no wait!   10/10/09, oh wait...it's coming, get prepared, get your can food, and prepare to sit in the bunker underneath your home, it's coming...soon. 

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#2) On November 06, 2009 at 2:06 PM, Varchild2008 (83.79) wrote:

Flying well under the radar is Flagstar Bank's earnings report.

Almost $300 million dollars LOST in the previous quarter due to loan losses.  Flagstar Bank is one of the biggest lenders in America out of the regional bank sector if not the biggest.

TCF Bank also suffered big losses last quarter....
Bank of America, AIG, Fannie Mae all reporting massive losses last quarter.

Unemployment spiking up in Q4 is only going to make things worse... FBC going *under* will have a dramatic and devastating impact to America's economy pushing unemployment immediately to 12% if not much worset than that. 

Heck.... If Flagstar bank goes down... I'll bravely place a 20% unemployment rate as my expectation for 2011... and that is not considering the impact of OBAMACARE / Cap and Trade.

The Banking Sector does the lending and when they go under all is left is the FED.... The FED is already awash in Debt and they can not print money fast enough to lend it out and sustain America's economy under an atmosphere where there is no CIT GROUP and there is no FBC and so on.

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#3) On November 06, 2009 at 2:47 PM, alstry (35.42) wrote:

Var,

Youv'e nailed it.  Most of the lending in America was indirectly or directly related to real estate or autos....

The next crash will be the government/pension crash as revenues to government evaporate forcing massive layoffs in health care, education, city, county and state government.  The collateral damage will be much more significant than what we just went through....it is what 11.10.9 is all about....when we feel.

Puerto Rico - Eliminated 2,000 Civil Service Jobs

SunGard - < 200

The Washington Nationals - Layoff Reported

Midwest Stamping LLC - 198

Lewis County - Possible layoffs?

Update: Ameren - Job Cuts Grow to 300 

Regence BlueCross Blue Shield - 400

GTC Biotherapeutics of Framingham - 45

Petermann - 110

City of Escanaba - 8

Goodwin Procter - 55

British Airlines - Post Huge Loss , 5,000 Job Cuts by Year End

Leviton Manufacturing Co. Inc - 100

Duke University - 400 so Far, More to Come?

Hilliard Corporation - 30

Cooley Dickinson Hospital - 20 to 25

Daramic - 100

Ontario Legal Aid Program - Layoffs Coming

Brown Corporation - 264

Farley's & Sathers Candy Co - 175

Indiana Schools Warn of Funding Cuts - Layoffs Possible

Aber’s Hallmark on Baltimore Street

Carhartt to close Glasgow Facility 

Clemons Inc. of Newton

Paper Lily Closing

Elder-Beerman Salem Furniture Gallery in Trotwood Ohio

Update: GM plans to Close Solar Plant in Delaware

Maple Lane Youth Prison at Grand Mound Possibly closing

Genmab to Sell US Plant, 300 Jobs Cut Across the Business

Vlana Vlee store at the Pinehurst Square

Miramx closing NYC Offices

Kmart in Jeffersonville Closing After Holidays

Dingbats Restaurant Closing at the Galleria

Age of Aquariums in Goshen

Conway Bus Plant ( International ) Closing - 477 Layoffs?

Scranton Ford

Update: Paradise Sushi Bar in North Myrtle Beach

Crane & Co. Closing North Adams Plant

Saturn of Flint

Aurora Pharmacy located in Sentry Foods

The above curtesy of DailyJobCuts.com

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#4) On November 06, 2009 at 3:22 PM, ease1 (91.20) wrote:

"The collateral damage will be much more significant than what we just went through....it is what 11.10.9 is all about" 

11.10.9 ??  Oh, that's the releas date of Call of Duty:MW2 by ATVI.  All this time that's what you were referring to huh?

Collateral damange... ha!  That's a good one.

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#5) On November 06, 2009 at 3:39 PM, alstry (35.42) wrote:

12.11.10....AN UNAVOIDABLE BLOODBATH?????

Values will plunge, vacancies will rise and rents will decrease across all types of commercial property before the market hits bottom in 2010, according to the "Emerging Trends in Real Estate" forecast from the Urban Land Institute and PricewaterhouseCoopers LLP.
...
No quick recovery is in store, the report said. "2010 looks like an unavoidable bloodbath for a multitude of 'zombie' borrowers, investors and lenders," it said. "The shake-out period may extend several years as even some conservative owners with well-underwritten loans from the early 2000s see their equity destroyed."

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/11/06/BUO71AFVTV.DTL&type=business

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#6) On November 06, 2009 at 3:49 PM, jddubya (< 20) wrote:

HA!  I found this FAQ about Alstry on the internet:

Q.  11.10.9 or what?

A.  Nothing.  Alstry picked the date but hasn't said that anything is going to happen.  He is scared because his 9.09 prediction failed miserably.  As did his top call at 8300 in April.  As did his 50% unemployment call.  As did his SP at 555 call, among others.

Q. Will Alstry quit blogging?

A. Nope.  Alstry has lied several times about actions he was going to take.  Therefore, most of what he blogs about is, of course, unbelievable.  Anything he says cannot be trusted.

Q. Is Alstry right?

A.  Nope.  If fact, he has posted several times that he "hopes he is wrong"

Q. Is Alstry for real?

A. Nope.  The person that posts the "Alstry blogs" has said that the Alstry persona was created as a joke.

Q. If Alstry has contacts in the White House, as he claims, then why doesn't he use them?

A. He doesn't have contacts in the White House.  Oh, wait, yes, he does.  On a tour of the White House several years ago he dropped, and lost, one of his contact lenses.

Q. Why doesn't Alstry take his message to a broader audience other than the 20 or 30 people on MF?

A. Because he would have an even smaller audience as time went on.

The faq actually contains about 500 questions and answers provided by about 35 different bloggers... I'll post the rest when I have more time to waste on this particular subject.

 

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#7) On November 06, 2009 at 3:52 PM, ease1 (91.20) wrote:

Come on man, I thought the chronicle was below even you!  Is it still in print?

On the other hand, this is quite interesting:

 http://finance.yahoo.com/banking-budgeting/article/108106/goodbye-to-reforms-of-2002?mod=bb-budgeting&sec=topStories&pos=3&asset=&ccode=

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#8) On November 06, 2009 at 3:53 PM, wuff3t (98.63) wrote:

"On a tour of the White House several years ago he dropped, and lost, one of his contact lenses."

Lol! Very, very funny!

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#9) On November 06, 2009 at 3:55 PM, alasker (< 20) wrote:

I think you should re-adjust your dates- lets say 1/7/10. I have read your lists but dont think there will be across the board pain in the market until after the holiday season. Lots of small business retailers depend on $25-50% of their business between thanksgiving and christmas. hope the consumers are in celebratory mood this season.

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#10) On November 06, 2009 at 8:44 PM, docsteven (< 20) wrote:

Forget exact dates my friends...the big trend is more important... my practice has been thru the recessions of the 70's and 80's but this is SO much worse...i dont see food lines but i do worry about social unrest when real unemployment passes 20%.. sry but cant get to heaven without dying..

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#11) On November 06, 2009 at 8:45 PM, docsteven (< 20) wrote:

Forget exact dates my friends...the big trend is more important... my practice has been thru the recessions of the 70's and 80's but this is SO much worse...i dont see food lines but i do worry about social unrest when real unemployment passes 20%.. sry but cant get to heaven without dying..

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#12) On November 07, 2009 at 5:42 AM, KamranatUCLA (29.21) wrote:

you missed this artcle:

HONOLULU – The Honolulu Symphony said Friday it's canceling concerts for the rest of the year and filing for bankruptcy, citing a big drop in donations.

The symphony, the oldest in the nation west of the Rocky Mountains, said it has $1 million in debt and doesn't have enough money to support operations into November and beyond.

The Honolulu Symphony Society's board of directors voted to file for Chapter 11 protection at a special meeting on Oct. 30. Papers will be submitted to court next week.

"We made payroll, even in this economy, through October. But when we reached toward the end of October, cash ran out and dried up," said Peter Shaindlin, the board's chairman.

Ticket sales have generally been OK, though weak at some recent events. Even so, ticket revenue covers only 30 percent of costs, and donations, which cover the remaining 70 percent, have dropped sharply during the recession.

"These are difficult economic times and everyone is doing whatever it takes to maintain the products and services they provide in our community while being economically prudent," executive director Majken Mechling said in a statement.

The 109-year-old body hopes to come back as a leaner and more efficient operation, but it's not clear when concerts will resume. The symphony is aiming for early next year, said spokeswoman Kristin Jackson said.

The symphony spends $4.1 million each year on payroll and benefits. Musician salaries account for the biggest single expense.

Mechling said the symphony can't continue to sustain a 64-piece orchestra, but she didn't say how many musicians the organization would have in the future.

The organization's finances have been in trouble for about two years.

In May 2008, an anonymous donor gave $1 million to cover almost two months of unpaid wages. Earlier this year, the symphony took a $2.1 million advance from its endowment to pay employees several months of back pay.

 

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#13) On November 07, 2009 at 11:44 AM, bullnada (< 20) wrote:

Jdub,

 What have we learned from you? Thanks Alstry for all the info. If you dont like Als point of view lets here your side jdub. Or is it you have nothing useful to share

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#14) On November 07, 2009 at 12:33 PM, AdirondackFund (< 20) wrote:

And to think that all of this was deliberate from the beginning.  The greater FOOL is the collective one that we all pay into and are never allowed to inspect, or to audit, or to discipline in any way....it is called Government.  FOOL on Washington...your Ship of State has been sunk by your own people for the bribes and payoffs that you take, instead of acting and being the humble Public Servant that those jobs are only intended to provide.

You get an 'I'm sorry' from John Reed, the founder of Citibank, after he inspects the carnage of his own creation...and you wonder where the damage is coming from and the intent which lies behind it?  Fool on....fool on.

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