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alstry (36.49)

IT'S OFFICIAL: WE ARE IN A DEPRESSION!!!!!!

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July 17, 2009 – Comments (21)

Alstry was waiting for GE's earnings report before making the call....and now with a 17% decline in revenues, it is confirmed we are now in a DEPRESSION as defined as a 10% declined in GDP from peak to trough.

New home starts also supports the thesis as new home builders have morphed away from building more expensive homes to less expensive  homes, so from a revenue standpoint, a builder must build 5 $150K homes to equal one $750K home......and practically every builder is scaling way back....way way back on the size of home built.

Preactically every industry in America is reporting massive revenues declines over the past year or two.

Imports down over 25%

Exports down over 25%

Autos down 50%

New Houses down over 80%

Technology down over 20%

Transportation down over 20%

Hotel revenues down over 20%

Airline revenues down over 20%

Retail down double digits

Home prices crashing

Commerical real estate prices crashing

Bankruptcies going parabolic

Foreclosures at record highs

Tax Receipts over 20%

It is a crazy time in our nations history, banks that would be bankrupt but for a citizen bailout are  foreclosing on bankrupt citizens homes and raising their credit card fees.  While citizens are losing their jobs by the millions and suffering paycuts by the tens of millions, otherwise insolvent banks are giving their executives massive bonuses......for what????

Infecting our nation with a debt burden that can never be paid back......

As the economy continues to slow, as is mathematically certain under current Zombulation policies, a greater and greater percentage of our economy will simply go to make interest payments......and there will be very little left for goods and services.

This cycle will also apply to government forcing government to raise the taxes on those few citizens left who can afford to pay taxes.

Further, the increased interest payments the banks receive will simply go to pay their huge bonuses and offset the continuing failure of the destructive debt they created for the past ten years.

There is no way to avoid this cycle under the current policies.....we are already in a depression and it is about to get much worse.  State workers are being forced to work without pay.  University workers are being furloughed.  All of this is fine, but for the fact that bankers who would otherwise be insolvent are receiving massive bonuses as the rest of the nation rots....

and under the current policies, the rotting will accellerate as the bankers get rich.....that is guaranteed.

It is time to destroy the Zombulator.....audit the Fed!!!!!!!!!!!!!!!!!!!!!!!!!

 

21 Comments – Post Your Own

#1) On July 17, 2009 at 10:07 AM, OneLegged (< 20) wrote:

The "official" number for GDP are aroun -3% (or less).  Given the reducit in shipped volumes (rail, ship and over- the- road) 3% seems impossible.  How can one get a clearer picture of "real" GDP?

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#2) On July 17, 2009 at 10:09 AM, alstry (36.49) wrote:

GDP is measured in dollars......

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#3) On July 17, 2009 at 10:17 AM, ocsurf (< 20) wrote:

"It is time to destroy the Zombulator.....audit the Fed!!!!!!!!!!!!!!!!!!!!!!!!!"

I can get on board with this comment.

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#4) On July 17, 2009 at 10:22 AM, curiousdoc (< 20) wrote:

 

 Excellent points. Good to hear the reality versus  happy talk on the media. Cap and trade, Government health insurance, Stimulus  III and punitive tax policies will nail the coffin for this economy. We face at least 10 years of deleveraging by consumers and corporations, collapse of the dollar to a new world reserve currency, and an eviscerated U.S. manufacturing base as 40,000 factories have moved to Asian or Latin American markets -- It IS different this time because WE CAN'T WORK OUR WAY OUT OF THIS DEBT. WE ARE A COLONY OF CHINA. This is a market to trade up or down as it swings and any investment will lie in commodities, foreign equities and foreign bonds/currencies Welcome to the New World Order promised by George H W Bush 20 years ago!

 

 

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#5) On July 17, 2009 at 10:40 AM, drgroup (68.89) wrote:

"This cycle will also apply to government forcing government to raise the taxes on those few citizens left who can afford to pay taxes"

Does it work like this?

# of Workers Tax Paid/Worker  Fed Wants  

1000              $200                      $200,000

500                $400                      $200,000

100                $2,000                   $200,000

1                   $200,000                $200,001

This is where we are headed....

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#6) On July 17, 2009 at 11:04 AM, jlmjlm77 (99.17) wrote:

You may be right, but more likely politics will keep most of what you fear in check for the next 2-4 years.  We are likely in a "1932-1937" type period.  I think the market performed fairly well for that time frame.

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#7) On July 17, 2009 at 11:33 AM, alstry (36.49) wrote:

Not a chance....there was very little debt in the thirties!!!!!!!

You think commercial rents collapsed 50% in one year in New York in the thirties???

Government had no debt and was a very small part of a growing economy.  Now Government IS THE ECONOMY and it is saddled with Trillions of debt it can't pay......just ask the Governator!!!!

Our economy is collapsing WHILE government is spending $6.5 Trillion dollars, imagine what happens when government cuts spending because NO ONE is willing to finance debt????

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#8) On July 17, 2009 at 12:19 PM, alstry (36.49) wrote:

This is timely.....

The Daily Show With Jon StewartMon - Thurs 11p / 10c
Pyramid Economy
www.thedailyshow.com
Daily Show
Full Episodes
Political HumorJoke of the Day

You know we have issues when the best Economic commentary is coming from our comedians.

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#9) On July 17, 2009 at 12:23 PM, millionby24 (< 20) wrote:

we had excess inventory?

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#10) On July 17, 2009 at 12:39 PM, alstry (36.49) wrote:

million,

You will soon learn that a million means nothing.....it means something today, but tomorrow is another story.

Sorta like Madoff's clients who thought there statements were worth millions one day and nothing the next.

A dollar is simply an IOU from the government.  It was worth a lot when the government was bringing in a bunch of tax revenues.   But right now the government is not bringing much money. 

Wait until you see how much second half tax receipts contract.  It is not much different than CA,  Both are dependent on taxes to raise revenues. 

Heck banks have stopped accepting California IOUs....what happens if they stop accepting Federal IOUs?????

Until we purge debt from the system, things will get much worse...MUCH MUCH WORSE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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#11) On July 17, 2009 at 1:00 PM, VintageCat (< 20) wrote:

When I finally figured out for myself a number of years ago that money as we know it is a faith based concept that has value in direct proportion to the mass belief that a unit of currency has the purchasing/trading power and value indicated by it's face denomination and that the loss of such faith by large segments of the population (starting with the investor class) will render it worthless or near worthless, I looked at money in a whole new light and acted/invested accordingly. 

Should unemployment and the accelerating drain on the average US taxpayer's reserves continue unabated there will be loss of faith here in main street USA in our government's ability to create/sustain a stable economy and to repay it's debts and obligations. Already our foreign creditors are nervous and probably have good cause to be as they limit their further exposure.

I like others await the other shoe which is bound to drop. 

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#12) On July 17, 2009 at 1:32 PM, ozzfan1317 (78.68) wrote:

I think we are in a depression  its not hard to look past the happy talk and realize that GDP will likely minimal growth and this will be a long slow painful recovery.

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#13) On July 17, 2009 at 1:36 PM, Varchild2008 (86.15) wrote:

Great Depression (Michigan):  Unemployment 20%
June 2009 (Michigan):  Unemployment  15.2%

Yep... I really don't see how anyone can say with a straight face that Michigan's economy is in a recession instead of a depression.

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#14) On July 17, 2009 at 1:46 PM, UKIAHED (35.33) wrote:

alstry

Not a chance....there was very little debt in the thirties!!!!!!!

Well – not sure how you get to very little debt from:

 In fact, credit was used in the purchases of up to 90% of major durable goods by the end of the 1920s.

This tells me that we entered the 30’s with debt – not as much as today – but not “very little”.  Remember – if there was very little debt – there would be no reason for so many displaced (ahem – I mean bankrupt) farmers and businesses in the 30’s.

Government had no debt and was a very small part of a growing economy.

The federal debt by 1940 was actually 52.4% of GDP.  Not exactly “no debt”.  Still – lower than today.

 

and was a very small part of a growing economy

 

By 1939 – the federal government (all by itself) was 10.3% of total GDP.

By 1942 – it was 43.6% of GDP!

 

BTW – I do love the Jon Stewart swhow.  This whole episode was worth the watching.

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#15) On July 17, 2009 at 2:02 PM, UKIAHED (35.33) wrote:

Varchild2008

Yep... I really don't see how anyone can say with a straight face that Michigan's economy is in a recession instead of a depression.

 

I can – because – as Alsry states : “a DEPRESSION as defined as a 10% declined in GDP from peak to trough.”

 

GDP for Michigan (in millions) for 2007 $379,934 – for 2008 $382,544.  Hardly a 10% drop.  Let’s check in at the end of 2009 and see where it ends up…  Little known fact – the auto industry accounts for only 6% of Michigan’s GDP.

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#16) On July 17, 2009 at 2:06 PM, alstry (36.49) wrote:

Most of Michigan's GDP comes from Government Spending in one form or another.....

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#17) On July 17, 2009 at 2:14 PM, UKIAHED (35.33) wrote:

Most of Michigan's GDP comes from Government Spending in one form or another.....

And?  Are you saying that government spending in Michigan is down 10%?  If not - then I still have a straight face...

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#18) On July 17, 2009 at 2:20 PM, alstry (36.49) wrote:

No.....that is the point, the only reason that Michigan's overall economy is not in a technical depression is because government continues spending more and more money it doesn't have.......for now.

Michigan's private economy is in a horrible depression.

If government slows spending......things will be a mess.

Based on upcoming budget cuts, Detroit's prosecutor is contemplating not prosectuting low level crimes including breaking and entering.......

imagine what happens when word gets out on the streets????

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#19) On July 17, 2009 at 5:17 PM, davejh23 (< 20) wrote:

UKIAHED -

"The federal debt by 1940 was actually 52.4% of GDP.  Not exactly “no debt”.  Still – lower than today." 

By the end of WW2, it was worse than today's as reported numbers.  However, if you include our current unfunded obligations that didn't exist back then, we're about 500% worse than ever before.

"credit was used in the purchases of up to 90% of major durable goods by the end of the 1920s."

Care to cite your source?  In any case, I would still say there was VERY LITTLE personal debt back then compared to today.  Families paid MUCH less for homes as a percentage of incomes, a still small percentage of families had ONE car, etc...  A large percentage of these durable goods purchases were probably farm equipment.

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#20) On July 17, 2009 at 6:01 PM, UKIAHED (35.33) wrote:

davejh23

 

"credit was used in the purchases of up to 90% of major durable goods by the end of the 1920s."

Care to cite your source?

Sure - thanks for asking. I found the entire article quite fasinating.

However, if you include our current unfunded obligations that didn't exist back then, we're about 500% worse than ever before.

I agree, to a point - not all those unfunded liabilities are due today (and are calculated based on a lot of assumptions).  How much of a present value calculation did you do to get to 500%?  What inflation number did you use?

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#21) On July 18, 2009 at 8:33 PM, AdirondackFund (< 20) wrote:

To further buttress Alstry's claims, Home Mortgages in the late 1920's and early 1930's were for 3 or 5 year terms.  It wasn't until the Depression hit and the Bank Crisis of 1932, were Mortgages rewritten to be 10 years in duration.  In today's economy, most Mortgages are 30 years in duration, with a Reverse Mortgage feature added, which essentially means that you can live in the house for the entirety of your life, pay the taxes, and never actually own the asset. 

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