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alstry (35.02)

Lord Z...Prepare to go Broke

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September 20, 2008 – Comments (13)

It is pretty funny....some people get upset at my posts for simply warning them about what is going to happen.  First, Alstry it is not too serious because our government tells us all is fine.  Then Alstry even if it is serious we should drink wine.

The problem is that no one will be able to afford wine and we will have mass starvation in America if we keep going down this path.  If we have mass starvation....what do you think would be a good investment.

First of all.....America is broke.  America, as a nation is broke.  If we extracted every dime out of every American's bank account to pay down debt, we are still broke. 

Since we exported much of our manufacturing overseas in the past ten years....a larger and larger portion of our revenues came from borrowing money.  Government borrowing, business borrowing, and individual borrowing.  Now we have accumulated tens of trillions of dollars of debt and only have a few trillion in the bank.

As those people, businesses, and municipalities can't pay....they call that defaulting debt toxic debt.  As more and more can't pay we accumulate more and more toxic debt.  We are rapidly reaching the point where toxic debt equals accumulated savings.

At this point, we have two options.....restructure our debt or print money to simply delay the eventual restructuring since it does nothing to relieve the burden of a growing debt base.  As a matter of fact the more we print, the more debt we accumulate and the more debt we accumulate the more we need to print.

Between the Iraq War and the Credit Bubble....America accumulated well over $10 Trillion dollars of debt as we became more dependent on borrowing money to survive.  Now we face a double crisis.  Banks can't lend so revenues are going to implode and debt is defaulting at records rates destroying the value of assets in America.

This bailout plan will do little to solve the problem.  It will only take toxic debt off banks balance sheets and put it on taxpayers backs.  Revenues in America will still spiral downward because few will be qualified to borrow and those that are will not borrow.  As revenues continue to evaporate...more and more debt will default destroying the value of assets even further.

So now what is the government proposing?  Print money and accumulate more debt.  This process now is being proposed at the Hundreds of Billions per request.  Foreigners will start dumping our dollars as they see the hyperinflation cycle go into full gear.

Basic necessities will start to cost more than many peoples incomes and few will even be able to afford basic necessities.  Only those institutions that got the entire nations wealth transferred to it to remove their burden of toxic debt will survive and the rest will fail.

Few will be able to afford much.  Assets will crash in value as people simply can't afford the carrying costs.  Businesses will fail.  Unemployment will skyrocket.  Crime and starvation will be rampant and wealth will be concentrated in a few hands.

OK Lordy, now that you are broke as you cash can't by a decent bottle of wine, your assets are basically worthless, what investment do you suggest?  May I suggest a Churchill Dominican Cohiba as I believe it is a lot smoother than its Cuban counterpart.

At this point, if we go the current route....we all starve save a few bankers who will own the entire wealth of the nation.....or we can restructure the country now, get through the process and protect savers.

Either road will be very painful....VERY PAINFUL.......but the latter road will take a much short time and provide a much better future for our children.

Now that you are broke Lordy...please suggest a Cab that I may try.

13 Comments – Post Your Own

#1) On September 20, 2008 at 8:41 AM, dinodelaurentis (74.68) wrote:

oh alstry, "kill the messinger" is a classic. people must lash out and that loud mouth that has been yelling "hey! look at this!" frequently gets their attention first. present company excepted of course. you may recall i have mentioned "the cassandra syndrome" in CAPS before. i have suffered this malady most of my life and i didn't even start looking at the stock market until may of this year.

i'll suggest some stocks to invest in:

BA, NOC, GD are the manufactures of america's air combat arm. i believe that increased strife and the fear of goverments all over the world losing their seat of power will result in war. even if it ain't the Big One, and it likely ain't yet, war is likely. other good stocks IMO are IRBT, SYMC, and SWHC.

once commodities bottom out, folks will always want food and oil. play it anyway you want. i like CAG, CPB, and KFT. and that's because i don't know how to buy WHEAT, CORN, SOY, RICE, and OIL directly as commodities and do not have the expertise to play futures. my son is fond of gold and silver so also CEF, SLW, and GSS. i have high hopes for COW.

entertainment does well in stressful times but that can be trying to catch lightning. not just classic movie producers like DIS, VIA, and TWX, but newbies NFLX, MVL. games too - ERTS looks good to me.

sin stocks are an area with growth potential, tobacco, alcohol, gambeling, and last but not least, prisons. Take Your Pick!  think "Brother Where Art Thou?" as a window to conditions during the 30s. many crimes will be commited out of need, not want as normal.

i know that a lot of books have been written about the 30s but the economic ones are kinda dry. i heartily reccomend Stud Terkel's "Hard Times" as a great book filled with personal stories of survival in an economic meldown. damn it alstry, it ain't just numbers!!!

oh yeah, you know that.

that's why you write these blogs i suspect. running around yelling "the Economics Are Coming" on a horse late at night just isn't patriotic anymore...  :D

 

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#2) On September 20, 2008 at 9:18 AM, daayoo (< 20) wrote:

The way I see it one of the best bets you can make with your worthless dollars is get in CYB, the chinese Rembini ETF. Soon they will be wolrld's currency anyways....

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#3) On September 20, 2008 at 9:38 AM, alstry (35.02) wrote:

SAN FRANCISCO (MarketWatch) -- General Motors said late Friday it will use the remaining $3.5 billion of its $4.5 billion secured revolving credit facility to boost its liquidity position as it continues its restructuring efforts.

Car companies are running out of money and borrowing capabilities.....so now they will be running to the government but government is out of money too.  Same with cities and states...just watch Barney Frank talk about borrowing money to give to states so they can meet medicare obligations(and we are just at the beginning of the babyboomers retiring and we can't meet medicare?),.... we are simply out of money period. 

In the past, we could argue we had the income to service debt....not any more.  Debt is defaulting faster than we can create it.  So now when we borrow the whole world knows there is no way we can pay it back.

You think anyone is going to buy mortgages, credit card debt, auto debt, commercial real estate debt or almost any debt for that matter???

America is at a critical point.  If we continue to issue debt with no way to repay it....the world will go nuts as we devalue the dollar.  Taking toxic debt off banks balance sheets is BORROWING MORE MONEY. 

If we continue down this path, much of the world will turn against us and we will likely become isolated.  Our industries will decline and prices for everything will skyrocket as the world dumps dollars.

Expect the politicans to deceive you to avoid you going after them.  Ron Paul puts forth a pretty clear picture of the problem....its just the mainstream press refuses to give him any air time.

At this point we are broke....it is plain and simple.  The only issue now is  whether government will save the savers or will it destroy the country for all its citizens.

If the government prints and prints without stopping digging a deeper and deeper hole.....then we will go into an INFLATIONARY depression and we will all be broke.  If we stop printing right now and restructure debt, we will still go into a severe downturn, but savers will be saved.

Now the question is which way will government go.

 

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#4) On September 20, 2008 at 10:05 AM, alstry (35.02) wrote:

SAN FRANCISCO (MarketWatch) -- Ambac Financial said late Friday that a downgrade by ratings agency Moody's Investors Service would leave its guaranteed investment contract business short of collateral to meet liabilities.The company also said plans to pump $850 million into a new municipal bond insurance business called Connie Lee have been postponed. It also cancelled a $50 million share buyback plan that was announced earlier this year.

So now our GUAURANTEED INVESTMENT CONTRACTS may not be guaranteed??  So basically, in order to operate, America must lie to stay in business.  Isn't this fraud????  Is this the country we are leaving to our children???

Don't worry....it won't get there.....it is unraveling before our eyes.....quicker and quicker and more and more each day.Now the question is when will war break out?

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#5) On September 20, 2008 at 11:07 AM, LordZ wrote:

alstry

ever see the movie no country for old men ???

This money that you say is so worthless is taking me on a flight, I'll be staying at my second home which apparently now is also worthless and than I'll be leaving the country, I'll be utlizing my worthless cash and cards to purchase many additional accomondations and meals as well as entertainment.

So please continue to write and place fear into driving everything down, hell even include the LORD Z name.

:)

3 years ago that old lady envisioned that trouble was a coming in that movie.

Also that old lady couldn't keep her mouth shut and enabled those mexicans and other killers to finish the job, meanwhile I'm out the door got a plane to catch.

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#6) On September 20, 2008 at 11:23 AM, alstry (35.02) wrote:

Lordy,

The day before we dropped a bomb on Nagasaki....everyone in that city thought they were just living through just another World War.

A year ago Benny told you this was a $25 Billion dollar issue contained to subprime...I warned you it was not.

Six months ago, Paulson said the economy was growing....I warned you it was not.

Three months ago Paulson told you the economy was strong...I warned you it was not.

A month ago, Paulson told you the finanicial system was sound....I warned you it was not.

Now.....I am warning you again.....I suggest you listen to Paulson.

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#7) On September 20, 2008 at 11:30 AM, dinodelaurentis (74.68) wrote:

 You Are Not Being Paranoid If They Really Are Out To Get You.

and if they DO get you, you were not paranoid enough!

forwarned is forarmed.

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#8) On September 20, 2008 at 11:58 AM, dwot (43.46) wrote:

So...

Just where do you think assets are "safe?"

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#9) On September 20, 2008 at 1:17 PM, alstry (35.02) wrote:

Safety is unknown right now.  It all depends whether we go into an inflationary depression or deflationary depression.  It further depends on how foreign countries are impacted by the current situation.

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#10) On September 20, 2008 at 1:32 PM, LordZ wrote:

Warning about something and being able to benefit from it is the disconnect, it would be nice Alstry if you could with all your great wisdom and crystal ball seeing prognostication, give a recommendation and for the very first time an investment recommendation or suggestion other than SELL SELL SELL SELL SELL SELL SELL SELL.

That story has gotten so old, i'm going to tell you all thats its alright, its all good, if you really are interested in making something of yourself, well guess what now is just as good as a time as ever, heck if this week you had the faith to buy stocks as the market tumbled you are sitting pretty, you are doing better than 99% of the people out there.

If only I could warp time and space so that I would not have to wait and wait.

 

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#11) On September 20, 2008 at 6:08 PM, abitare (31.93) wrote:

Invest in real assets, that are in hand should be part of your portfolio. Gold coins are high, but I think they are a good wealth protector in the event of high inflation.

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#12) On September 20, 2008 at 8:41 PM, StatsGeek (29.19) wrote:

If the dollar ever goes into freefall (and I personally think it eventually will), the U.S. government will probably confiscate gold again, as it did in 1933 already (yes, shocking) then you'll be in trouble with gold too.

http://www.austincoins.com/confiscation.htm

Korea also confiscated gold during the Asian financial crisis.

I'm really trying to figure out what is truly safe.

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#13) On September 21, 2008 at 5:08 AM, mliu01 (< 20) wrote:

StatsGeek: Silver.

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