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alstry (35.09)

Depression, Deflation and the FU virus

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March 19, 2009 – Comments (7)

How the heck are we not in a Depression right now??? 

The definition of a depression is a 10% drop in GDP from Peak to Trough....

Exports are falling at a 50% clip..

Imports falling at a 33% rate.

New housing sales are down over 66% from peak

Auto sales are 50% of peak

Travel is falling at 22% annualized rate between Oct. and Dec. according to the WSJ.

Travel, Housing, and Autos account for well over 1/3 of the GDP.......add in imports and exports and we should be close to half of our economy....all crashing or crashed over twice the accepted depression definition.

We know that financial services companies have imploded across the board.......and the decelleration is accellerating in all areas of the economy including healthcare....and we still are not in a depression.

The TRILLION dollar travel industry is bleeding and blood is flowing everywhere.....tonight's wsj:

 As a result, the trillion-dollar industry -- a major employer in the U.S. -- is reeling, and struggling to lure people back with deep discounts and special packages. For their part, Americans are sharply scaling back vacation plans, canceling trips outright or trading down to cheaper options.

"Everybody seems to be in a panic mode, afraid to spend money," said Carol Beazley, who along with her husband, Jim, runs the Beazley House, an 11-room bed and breakfast in Napa, Calif. She notes there are fewer takers for extra services at the century-old mansion, such as massages, $200 balloon rides and the Napa Valley wine train.

The Beazleys say they've had to lower room rates by "well over $100" to keep their inn booked, and this month are offering 50% off, with a minimum two-night stay, for returning visitors. "We're getting our rooms sold but we're getting 33% less income on each one," Jim Beazley said. Their staff has shrunk to just a handful, half of what it was a few years ago.

THIS IS REALITY IN THE HOSPITALITY INDUSTRY!!!!!!!!!!!!!!!!!!  A signifcan't part of GDP.....and prices are crashing....just like prices for housing and autos............and wages are crashing in many industries........and there are people still talking about price inflation??????????  Doctors are even slashing the cost of procedures.

I spent the afternoon with a friend in the medical industry.   This person is the top salesperson nationally for the company.....the company is private but is the market leader for its product......and in the last four months physicians and groups have started to cancel or delay orders.....I have heard the same for friends selling nationally for IT companies....and friends in the transportation business....much of this slowing occured in the last few months and is not reflected in recent earnings reports.

Physicans performing any kind of elective surgery have seen a sharp drop off in patients.  Dentists are seeing a slowing in their business.....same with opticians......and even family docs because more and more want to avoid escalating copays......

All of this leads to further slowing in the economy and leads people to just say FU.....I don't want to buy....and if they don't buy.....employers say FU to many of their workers because they don't need them due to slowing sales......and employees are saying FU to retailers, credit card companies, and mortgage companies because they are seeing their pay cut or jobs eliminated entirely.

Pretty soon...many are going to be saying FU to each other because few will have any money or any customers.......

Remember....much of America is TAPPED OUT.....IT HAS MAXED OUT ON BORROWING AND CAN BARELY AFFORD TO SERVICE DEBT AT CURRENT LEVELS.......

Please keep the following secret among the CAPS community as Alstry and Alstrynomics is exclusive to CAPS......

it DOESN'T matter of you pour Zillions of Trillions into banks and wipe out all toxic mortgages off the banks balance sheets......if the people, cities, and businesses that banks lend money to are tapped out and barely making ends meet at current debt levels.........there is not a chance in hell that banks will lend them another dime going forward after what they just went through.

So my friends... the joke is on America and Americans by Wall Street....we are freely handing over all of our money......and they are simply keeping it in their vaults laughing at Americans and the hardworking citizens as they give themselves hundreds of millions in bonuses.  Pretty soon the process will run its course and Americans will have little left to pay for much of anything......most will be dependent on goverment handouts just to survive.........

and as we stand there naked.....looking at each other......we will ask ourselves.......how did we let the FU virus infect us all but not our banks who injected us with the virus as bankers sit sipping champagne toasting each other trying to figure out which government offical to buy next????

 

7 Comments – Post Your Own

#1) On March 19, 2009 at 11:28 PM, Harold71 (22.82) wrote:

"........and there are people still talking about price inflation??????????"

"All of this leads to further slowing in the economy and leads people to just say FU....."

Earth to Alstry....The market just said FU to the US Dollar.

Couldn't resist.

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#2) On March 19, 2009 at 11:34 PM, nau99 (28.33) wrote:

Sure feels like a depression, doesn't it?  Now you have Jim Rogers out there talking about civil unrest possibilities due to the crisis.  I don't know that we plunge that far... but then again if you would've told me two years ago that Citi would hit $1 or Lehman would disappear I'd have had you commited.

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#3) On March 19, 2009 at 11:35 PM, alstry (35.09) wrote:

Harold....nice:)

But if the world says FU to the dollar......what do you think the other currencies will look like.....remember...one FU begets another FU......

I simply can't figure out who the hell these banks are going to lend money to since most are too tapped out and those that aren't have no reason or desire to borrow.

You can't force people to borrow who don't want to borrow and you can't lend to those who can't afford to borrow.

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#4) On March 19, 2009 at 11:45 PM, lquadland10 (< 20) wrote:

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#5) On March 20, 2009 at 12:14 AM, alstry (35.09) wrote:

lquad,

I hear this argument all the time by many Ivy League graduates.  Quite frankly I don't get it...yes a dollar in 1950 is 12cents today...but 12cents put in the bank in 1950 at 6% is over $2 today.

The reason....because of the Alstrynomic definition of inflation and growing money supply.....CURRENCY PLUS AGGREGATE ACCUMLATED DEBT.  Due to expanding debt, the currency became diluted and thus banks were able to pay interest on dollars deposited in the institution.

Since 1950 there has been an ever expanding base of money because of an expanding base of currency and an even greater expanding base of debt........we needed to print more currency to compensate for the expanding debt.

It was not until recently that the growth of debt has been slowing and now it may even be contracting due to defaults and people starting to save more and paying off outstanding balances.

As a result, Alstrynomics is one of the pioneers, and maybe eventually up for a nobel prize, to identify and interpret the current NET contraction in money supply and consequent deflation due to contracting debt.

Just as an example, a year ago a $200 purchased one night in a decent hotel on the Vegas strip.....now that same $200 purchases two nights.....and if things keep moving along...soon it could purchase three nights.

Similar arguments could be made for homes, autos, land, shopping centers, office buildings, shares of stock.....and on and on....

As debt contracts, expect the price of just about everything to fall to levels not seen since 1950.....would that make CAPS poplular as the exclusive outlet for Alstrynomics.

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#6) On March 20, 2009 at 12:19 AM, Bays (30.11) wrote:

If anyone is in a depression it's Japan....

Their GDP plummeted 13% in the 4th quarter!!! are you kidding me

It's so bad there has been an increase in suicides.

http://www.cnn.com/2009/WORLD/asiapcf/03/19/suicide.forrest.japan/index.html?eref=rss_topstories

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#7) On March 20, 2009 at 10:13 AM, EHoyle80 (< 20) wrote:

Recession vs. depression? How about recession vs. collapse? This is the question Gregor Macdonald asks, and he favors the latter answer. His prognosis? “Based on historical studies, the asset that will survive any endgame of global deflation is gold – with oil also being considered ‘Not as money, but as a store of value.’”

Via Stock Research Portal 

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