CAUTION: DON'T READ IF YOU ARE AN ALSTRYBATER
You just couldn't stay away could you????
It is now time to unveil 9.09.....MOAP.
For the past eight weeks, The Institute of Alstrynomics has been documenting declining local and state tax revenues. We have seen tax revenues declining in practically every city, county and state in America. The decline has included all forms of taxes such as income, sales, and property.
IT IS IMPOSSIBLE TO HAVE AN IMPROVING ECONOMY WHEN TAX RECEIPTS ARE DECLINING.....NO MATTER WHAT BENNY B TRIES TO TELL YOU.
Here is the problem in a nutshell....for thirty years the baby boomers have been one big consumption machine...consuming and borrowing...then borrowing and consuming....only to consume and borrow even more. During that time period we produced relatively less and less as we shipped much of our production overseas as we kept moving forward with our borrowing and consumption economy.
Some of us called ourselves "service" providers, like doctors, lawyers, bankers, accountants, architects etc....but in reality, we were simply servicing the consumption economy. At first, the consumption was based on the productive capacity our prior generations created, but as time went on, it became more and more dependent on borrowing.
Over the last couple years, the bankers have slowly cut off credit to the consumption economy and spending began to slow.....as spending slowed, revenues declined, profits declined and jobs were lost. As time passed tax receipts evaporated and continue to decline.
The problem is without consumption, we have a relatively very small economy and it is impossible to service the current massive debt load and standard of living. Some Fools advocate cutting back spending, and in theory that is a good thing, but when you are a consumption economy....if the population doesn't consume, there is no economy.....and if the economy is leveraged...IT IMPLODES!!!!!
It would be different if we were a production economy like Japan where much of our income comes from producing things and selling overseas. As you cut back spending, your trading income would sustain the nation. In America, we don't sell much overseas....so if we don't consume....we don't have much of an economy.
The fallout from the bailed out bankers cutting off credit is now being seen and felt everywhere....just a few years into the process. Commerical Real Estate is DOWN over 60% in many areas....Residential has imploded and continues to implode on the high end......Auto Sales have contracted dramatically despite massive government subsidies.....etc......
Many Fools simply don't want to accept the fact that without consumption America has a relatively very small economy....and even fewer are willing to accept that our consumption is primarily in the hands of a few Wall Street Bankers that we just bailed out. If they don't lend, we don't spend and right now government is the biggest borrower holding this ship afloat running a $2 Trillion dollar deficit.
It is not hard to see if you really think about it.....The Consumer is 70% of GDP.....Government consumption about 50%........and Health Care approaching 20%......add it all up and about 90% of our economy is simply domestic consumption and servicing domestic consumption. Without domestic consumption we really don't have much.
Our current lifestyle is based on MASSIVE consumption....the value of our homes, the number of shopping centers we have, our the vast count of office buildings, our salaries and net worth based on our investments. If America and Americans didn't consume in such large quantities, much of the above would be unnecessary and practically worthless.
So here we are in 9.09......our consumption based economy is coming to a grinding halt.....we are running out of money as the bankers infected our system with a debt load that simply can't be serviced based on current Zombulation policies.....you simply can't pay back $40 Trillion of debt with a few trillion in the bank and bankers tightening credit and raising interest rates slowing the economy even further.
The American economic system is structurally broken...as we consume less, we spend less...as we spend less our economy contracts and so does the tax receipts to our biggest consumer....the government. About half of the population is dependent on the govenment to spend for their income.....if the government can't spend, we have serious issues.....and each day that goes by, we are seeing the government's spending ability decline more and more.
For the Alstrybaters, please keep living in your fantasy world.....for the rest of us, appreciate a massive change is coming to our nation.....a change bigger than anything we have seen since we moved from an Agricultural economy to an Industrial economy. The borrow and spend consumption based economy that we all became accustomed to is rapidly shutting down.
The change is unavoidable now as the bankers have cut off credit to a credit dependent consumption based economy...the question now is where are we headed???? If we don't understand what brought us here......how can we influence where we are going......and in the end....it is we....WE THE PEOPLE, THAT SHOULD DETERMINE OUR DESTINY....as we continue to bailout and bonus the bankers that helped put us into this position in the first place.