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alstry (35.17)

An Economic Death Star!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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March 17, 2009 – Comments (15)

SAN ANTONIO, Sept. 15 /PRNewswire/ -- Seventy one percent of American
employees are living paycheck to paycheck, according to results released today
from the 2008 "Getting Paid In America" survey.

http://www.reuters.com/article/pressRelease/idUS194666+15-Sep-2008+PRN20080915

This is a four percent increase from 2007, when 67 percent of respondents reported living paycheck to paycheck.

This article was written in September 2008....with all the job losses and pay reductions since then....what percentage of Americans today do you think are living paycheck to paycheck????

To make the math easy....let's say 3/4. 

Ask yourself the following....of those living paycheck to paycheck.....how many of them leveraged up in recent years and are dependent or credit to make ends meet?????

My guess is a very material percentage......then ask yourself....what percentage of those living paycheck to paycheck make up the total consumer spending in the USA???

My guess again is a very material percentage.....then ask youself....what percentage of jobs in America and stuff imported from China is dependent on those living paycheck to paycheck spending??????

My guess again is a very material pecentage????

Then ask youself....what happens to those people living paycheck to paycheck if they lose their jobs and/or credit is cut off???????

You guessed IT!!!!!!!!!!!!!!!!!!!!!!!!!!!   A fricken Alstrynomics Techno Economic Death Star

15 Comments – Post Your Own

#1) On March 17, 2009 at 4:22 PM, RVAspeculator (28.94) wrote:

They do whatever job they can get to make ends meet.   Good for fast food places, buy MCD...   :)

Only 4 blog posts today Alstry?  Were you tied up with other things?   :)

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#2) On March 17, 2009 at 4:33 PM, alstry (35.17) wrote:

If they don't have money....they can't spend.....if they can't spend....the economy slows....

 

Just an aside....what percentage of the 25% are dependent on the 75% spending.....now aren't things really getting interesting if we are adding up percentages.....one would almost think this is one BIG ponzi scheme keeping those on the bubble spending.....

Why do you think Alstrynomics was developed????....in the end we are all clients of Madoff in one form or another.....is is just a matter of time before we find out.

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#3) On March 17, 2009 at 5:14 PM, MikeMark (29.47) wrote:

Sounds right on.

The ponzi scheme in this case is the manipulation of the US $ by the Fed through interest rates,  the related monetization of debt by the US govt in the form of Fed printed money given to the treasury and the upcoming "credit easing". There appear to be some ugly times ahead.

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#4) On March 17, 2009 at 5:15 PM, Varchild2008 (83.69) wrote:

Have you ignored all of the news articles in 2008 about the fact that people were "Saving" all year long at record levels?  All of that "Saving" is going to convert to "Spending" this year and that spurs economic growth and eventually job creation.

As CNBC just reported.  We saw production levels down while demand was higher... Soon...Production levels have to be ramped up to meet demand and companys will have to hire.

With China experiencing at least an 8% GDP growth year over year... The whole exports are down business isn't as bleak as you think it is.

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#5) On March 17, 2009 at 5:24 PM, alstry (35.17) wrote:

MikeMark,

What most Fools don't understand is that we have pushed more and more Americans to the edge of the bubble by allowing them to borrow with ease.  It was that borrowing with ease that drove the American economy, and much of the world, for the past eight years.

Now 3/4 of Americans spend every dime of the paycheck....and a majority of them are borrow on top of their paycheck just to make ends meet.

It was that 3/4 spending and borrowing that allowed the other 25% to prosper.  Now we are firing the 3/4 from their jobs and cutting them off from credit.

It is causing a dramtic loss of income and asset values to the remaining quarter.....in otherwords....the remaining quarter are just learing to realize that the only reason they were comfortable is that 75% of the American population was overspending.

In addition, it was that overspending that drove corporate profits and tax revenues to local, state, and Federal government.

Now that people are losing their jobs en mass and credit is being cut off or restricted....Americans are slowly beginning to wake up that the whole game was a ponzi scheme.

Once enough find out....the consequences will be very interesting.

Until we restructure the debt from the 75%.....the problem gets worse and worse for EVERYONE...including the remaining 25%.

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#6) On March 17, 2009 at 5:25 PM, alstry (35.17) wrote:

MikeMark,

What most Fools don't understand is that we have pushed more and more Americans to the edge of the bubble by allowing them to borrow with ease.  It was that borrowing with ease that drove the American economy, and much of the world, for the past eight years.

Now 3/4 of Americans spend every dime of the paycheck....and a majority of them are borrow on top of their paycheck just to make ends meet.

It was that 3/4 spending and borrowing that allowed the other 25% to prosper.  Now we are firing the 3/4 from their jobs and cutting them off from credit.

It is causing a dramtic loss of income and asset values to the remaining quarter.....in otherwords....the remaining quarter are just learing to realize that the only reason they were comfortable is that 75% of the American population was overspending.

In addition, it was that overspending that drove corporate profits and tax revenues to local, state, and Federal government.

Now that people are losing their jobs en mass and credit is being cut off or restricted....Americans are slowly beginning to wake up that the whole game was a ponzi scheme.

Once enough find out....the consequences will be very interesting.

Until we restructure the debt from the 75%.....the problem gets worse and worse for EVERYONE...including the remaining 25%.

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#7) On March 17, 2009 at 5:47 PM, Alex1963 (28.35) wrote:

Alstry

I've read all of your posts today and they have been great,

Thanks & keep it up. Rec #8 from me

Alex 

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#8) On March 17, 2009 at 5:52 PM, alstry (35.17) wrote:

Alex,

My blogs are for people that think... and those who like to live in reality and desire to have a reasoned perpective about what is going to happen before they are told what happened.

Thanks for the rec.

 

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#9) On March 17, 2009 at 6:01 PM, Philyogy (22.61) wrote:

At least a small dose of reality will help us to navigate these troubled times.. Good read... 

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#10) On March 17, 2009 at 6:22 PM, Billullo (< 20) wrote:

Varchild

If you believe what the morons of CNBC are saying, you are for a big surprise! China's GDP growth is not 8% anymore take about 1/2 of it and that is optimistic. 

Alstry 

Great post. 

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#11) On March 17, 2009 at 6:32 PM, Varchild2008 (83.69) wrote:

8% came from China not CNBC... CNBC just played the video tape.  Sure.. 8% may be optimistic.  I'll take a 4% growth out of CHINA any day of the week and twice on Sunday as a Bullish indicator.

Right now... I am eyeballing 2 things....

1)  Will the Dollar rally up or down in the coming months?

2)  As Oil prices go up so goes Gasoline for people's transportation.  As that goes up, retail spending will dramatically slow.

So... I am not 100% bullish living in fantasy land here.  I think my last statement regarding where DOW will be is 7500 by JUNE.

We may pass 7500 before then but I expect at some point these crazy gains in the DOW will be cut by the impact of Gasoline Prices and the Slowdown of Retail spending.

At that time we can enjoy watching Pres. Obama beg OPEC for relief.

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#12) On March 17, 2009 at 9:44 PM, nuf2bdangrus (< 20) wrote:

I will be paring my longs into strength, with the exception of energy stocks, which I still may pare back.  Either that or hedge with SDS, which I hate doing...hedging is so dichotomous.

 

 

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#13) On March 17, 2009 at 11:29 PM, russiangambit (29.16) wrote:

On the same topic. I think the government is much worse spender than an average individual. 

The local governments were spending all the tax surpluses of the last 5 years like drunk. Now with tax receipts falling, let's say by 10%, while their projections was probably an increase of 5%, what are they going to do? People have little money, so there is no way they are going to be able to increase taxes. Are they going to issue bonds ? Or borrow from federal government?  Oh, wait , they are already doing it. ut it will get worse in 6 months or so. And where federal government is going to get the money? This is a death spiral. So, the government is trying to race around the clock and inflate the economy to get thing on a more level plane before tax money runs out, which is probably going to be as I said in about 6 months. So, either we recover in 6 months or we go back down even further.

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#14) On March 18, 2009 at 12:33 AM, MikeMark (29.47) wrote:

alstry

I'm in the upper end of that 25% and I agree. But it's interesting. The reason that I'm there is because I've always lived economically (pun definetly intended). 

For the past 10 or 12 years I've watched projects that I felt couldn't work actually work... until now. In 2008 entrepreneurs that appeared to be doing well previously began to tell me things like "there's my life's work and most of my net worth wrapped up in these projects... and now I could lose it all."

So the really interesting part is where things have gone wrong. Because of the high pressure that the Fed places upon accelerating growth through manipulation of the interest rates, the calculation of the entrepreneur is off.  The foresight of the entrepreneur is clouded by a picture that appears bright but hides the true picture of what the future holds. So he creates expensive items for a strong economy when what's needed are frugal items for a weak economy.

Apparently, there has been no change. The Fed is still attempting the same or even greater control. The result may be the worst economy we've ever seen. A result where all the indicators that the Fed looks at look right, but there is truly no underlying economic strength. I believe while that happens, the money will fail. Really, I think that's been happening for about 30 years, but it benefits the government, so it doesn't get stopped. 

I'm not really a doom and gloom type, so here's the hope that I have: people will recognize something bad and work around it. Already I see people who no longer want the starter castle, but instead are looking to fully own a simple cottage. People are beginning to ignore the corrupted mainstream media, educate themselves and work and save. May it continue.

 

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#15) On March 18, 2009 at 12:49 AM, alstry (35.17) wrote:

The problem is we built an ENTIRE economy on increasing leverage and acculated debt.  Until we purge the ACCUMULATED debt, servicing it will suffocate the economy until it dies for ALL of us.

We are only in the top 25% not just because we were frugal...but because all those people in the bottom 75% were buying from us.

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