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alstry (35.42)

It is now TIME 2 Understand 9.09

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September 26, 2009 – Comments (6)

America is radically transforming its economy.  It is morphing from a credit based domestic consumption economy to a deleveraged savings economy.  Unfortunately, America is not structured to be a savings economy and the change will be very convulsive.

There are few economies in the world like ours where practically the entire economy was based on borrowing and domestic consumption.  If Americans didn't consume, there was not much left as very little was allocated to export or foreign tourism.

Between government and consumer spend, it probably represents 90% of our total economy.  If government and consumers are not spending, practically everything slows to a trickle.   We have already seen office sales in New York decline 90%, new home construction decline 80%, commercial construction practically come to a grinding halt as we end 9.09, new car sales decline 50%, same with steel and sales at Caterpillar's sales.

Without Americans consuming in America......there is really not much currently viable for most of us to do and make a reasonable income.

It is not too hard to understand, if most of us have jobs because a lot of us consume, few of us will have jobs if few of us consume.

Alstry told you that you would understand what MOAP was in 9.09....basically America's economy was one big Ponzi scheme where many borrowed and spent money to simply keep our entire economy going.  And after 9/11, the banks were more than happy to assist, many trillions of dollars was freely lent each year stimulating every aspect of our existance.

In fairness, if we didn't borrow, our economy would have been in a depression years ago.  But now, we have accumulated a massive and unsustainable amount of debt.  The joke is the banks knew this was not sustainable because they were making bets that we would default through credit default swaps.  If the banks were the sellers of the SWAPS, they simply refinced the old loan and added to the outstanding debt collecting the premiums from the unsuspecting buyers.

Last quarter banks made over $5 Trillion playing derivitives.

Now that the banks are no longer extending credit to many, our nation's revenues is evaporating and businesses are shutting down.  Our debt is defaulting at record rates, bankruptcies are reaching record levels, and tax receipts are shrinking at rates never seen before.  Teen umemployment is at rates never seen before and many are getting restless.  You can see anger and tension rising across America.

All of this was very foreseeable.

Now you know, our economy was simply one big Ponzi scheme of borrow and spend....much of that borrowing was from money the banks really never had through fractional reserve banking.  Now we have only a few trillion of savings and OVER $30 Trillion of NON FEDERAL debt.

With relatively small savings paying only 1% and massive amounts of debt costing 5-30%, it will simply be impossible to pay off the debt as interest costs suffocate the cash flow of the nation while credit extension continues to contract.

At the end of 9.09, you will realize the game is over.  50% or more of us really don't need to work in a deleveraged savings economy.  Right now, the only thing keeping this ship afloat is government borrowing $2 Trillion per year and driving us and our children deeper into debt.

In the mean time, America is shutting down at an accelerating rate.  Now our governments and hospitals are laying off or reducing the wages of millions of workers.  Each time a worker is fired, it impacts other workers who lose revenues from spending slowing.

This process was inevitable and can't be avoided under the current government policy of Zombulation.......our nation is simply running out of money as credit, income, and savings is being drawn down.  We simply cannot bailout out the banks and leave over $30 Trillion of debt burdening a shrinking economy where fewer and fewer are capable of spending.  When most of the economy is dependent on many borrowing and spending, pretty soon, most of the economy shuts down when credit is cut off and savings is depleted.

Now you know the truth and the evidence is replete with examples from every corner of the country.  The most objective is the rapidly declining tax receipts and evaporating revenues to our hospitals and clinics.

This will get worse...MUCH WORSE...and Benny B knows this because it is his policy causing the contraction.  The policy is Zombulation.  You simply cannot bail out the bankers after infecting our nation with a unsustainable amount of debt, permit them to make controlled bets that the debt would fail, and burden the society with tens of trillions of relatively high interest rate obligations that mathematically can't be serviced once credit is cut off and revenues evaporate.

Eventually as the money runs out, the vast majority of the economy shuts down as we are primarily an economy of domestic consumption servicing domestic consumption that can no longer consume.  Conversely Japan, when things slowed domestically, was still a nation making relatively significant income exporting without being burdend with much private debt.

America is facing serious structural issues...unless we restructure debt, our nation will implode from defaults.  Our government is very aware of this fact and doing little about it.  Now the question is whether we will be taken to war to possibly distract us from this condition that Benny B is permitting to exacerbate and accelerate.

Based on the rhetoric...the odds get higher and higher everyday.

Welcome to 9.09...ITS TIME and NOW YOU KNOW!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

6 Comments – Post Your Own

#1) On September 26, 2009 at 11:24 AM, tomatoflu (< 20) wrote:

 

 

Cool, a fresh thread.

Nice read. Lots of formulations in there.

I am a newbie here.

""It is morphing from a credit based domestic consumption economy to a deleveraged savings economy.. Nice angle.

I am currently getting other aspects clear to myself as you have allready seen.

Some people get annoyed hearing about how the banking system works, though not all of us.

Thanks!!

 

 

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#2) On September 26, 2009 at 11:45 AM, tomatoflu (< 20) wrote:

 

 

A very sobering read.

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#3) On September 26, 2009 at 12:46 PM, weg915 (< 20) wrote:

Alstry,

Consumption is a funny thing.  Look at health care.  If all at once, everyone did the right thing - excercised more, ate better (whole foods, homecooked, no junkfood), no smoking, etc..), imagine the hit on consumption and on the economy in general.  To me that is the wonderful silliness of the heath care debate.  For all the money that is being spent, nobody really wants people to be more healthfull - it would hurt too much.

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#4) On September 26, 2009 at 1:06 PM, tomatoflu (< 20) wrote:

 

Is that all you want??

A burger??

You are easy to please. Some of us like to eat entire countries.

We need more like you.

 

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#5) On September 26, 2009 at 1:35 PM, tomatoflu (< 20) wrote:

And as if this wasn't enough:

"The joke is the banks knew this was not sustainable because they were making bets that we would default through credit default swaps".

They also know, though not entirley collectively (Not even many bankers have heard of or know of "the fractional reserve system of banking". FRB.), that when new Fiat is created, the fiat to service interest and charges is not created.

So it becomes impossible to service interest on existing debt without creating further debt.

And servicing of existing debt exascerbates the acceleration of the dissapearing dollar as well.

The whole finance play seems to be in this direction

The part where banks are all upset and paranoid, and so not lending seems very deliberate and brazen.

My ruminations seem to be revealing a disappearing dollar.

 

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#6) On September 26, 2009 at 2:22 PM, checklist34 (99.70) wrote:

i like hot dogs, mustard, and ketchup

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