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alstry (35.36)

No Chance of Second Half Recovery....Cities and States Running out of Money

Recs

8

June 06, 2009 – Comments (5)

As a matter of fact....we will likely see a dramatic slowdown!!!!!!!

June 5 (Bloomberg) -- Alabama’s most populous county is preparing to stop road maintenance, close courthouses and shutter services for the elderly after a court struck down taxes that pay for about 35 percent of its budget.  

Minnesota's top state finance official on Thursday formally notified Gov. Tim Pawlenty that the state will not take in enough money to pay its bills over the next two years, setting the stage for the governor to start using his executive power to unilaterally cut spending.

Declaring that "California's day of reckoning is here," Gov. Arnold Schwarzenegger said today the state should turn its dire budget straits into an opportunity to make government more efficient......"Our wallet is empty. Our bank is closed. Our credit is dried up."

"Every city is in trouble," said Marc A. Levinson, the lead insolvency lawyer on the Orrick Herrington & Sutcliffe team handling Vallejo's bankruptcy filing.

The Insitute of Alstrynomics was not sure what Charman Bernanke was smoking when he said subprime was contained last year or whether he is smoking the same stuff this year when forecasting a second half recovery.....

Consumers are 70% of the economy and consumers are getting cut and cutting way back....evidence is everywhere including rising unemployment, massive wage cuts, increasing foreclosures and delinquent mortgages, horrible May retail sales numbers, imploding consumer borrowing and rising bankruptcies.....other than the above and some other known headwinds, the consumer looks strong for the second half.........and I could use some of Benny B's tobacco.

Compounding a strained consumer is bloated nationwide State and Local government infastructure that is running out of money.....RAPIDLY RUNNING OUT OF MONEY.....Billions and Billions in deficits that simply can't be funded that will likely result in cuts of unprecedented proportions.  The job losses could rise into the hundreds of thousands and the impact on the economy will be profound.....especially state and local funded healthcare and education facilities.

If the consumer is facing profound and increasing headwinds.....and now government is just starting with MASSIVE cuts assuring a negative effect on health care.......how can Benny B state anything but how difficult the future looks???..............if he wanted to maintain any strands of credibility that might remain.

Remember....Alstrynomics is about telling the truth and being right.....Economics tells you what they want you want to hear.

But if you want a happier perspective, may I respectfully recommend Deej or Donner's Blog....they both provide well articulated alternative perspectives.


 

 

5 Comments – Post Your Own

#1) On June 06, 2009 at 1:07 AM, alstry (35.36) wrote:

Benny B does not look too happy......

 

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#2) On June 06, 2009 at 3:56 AM, Madelynn (< 20) wrote:

There is always a chance! If we are going to work hard and be united the economic crisis that we have today could be solved. It is not a secret that since recession has hit us lots of people are now struggling hard just to live well. Even businesses today are trying hard to stay on their track. Hummer, the controversial brand that General Motors refused to try and discharge after the price of gasoline began to shoot through the ceiling, has been subject of a lot of headlines.  Hummer was among the first brands that GM slated for culling after the recession began, with Saturn and Pontiac close behind, but unlike other companies that were simply shuttered, Hummer was able to secure a buyer.  It's been announced that Sichuan Tenzhong, or Sichuan Tenzhong Heavy Industrial Machinery Co will purchase the brand with some quick cash to the rescue.  The company manufactures heavy machinery in China, and this means debt consolidation for Hummer and a good deal for Sichuan Tenzhong.

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#3) On June 06, 2009 at 4:32 AM, TMFUltraLong (99.95) wrote:

Wait...hold the phone here.... when in the hell did Alabama ever have road maintenance in the first place?

UltraLong

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#4) On June 06, 2009 at 9:41 AM, alstry (35.36) wrote:

Madelyn, 

NOPE..under the current path..there is absolutely NO MATHEMATICAL chance of a second half recovery......

Right now, on the consumer side....many consumers have basically been cut off from credit...which is causing many consumers to become Zombulated and many others to cut way back...as the consumer is 70% of the economy....if consumers are cutting back and/or getting zombulated...the economy is slowing and there is NO CHANCE OF A SECOND HALF RECOVERY....PERIOD.

The same is occuring at the State and Local Government Level, as consumers slow tax receipts slow and state and local govts can't "print" money like the Federal Govt....which in turn will slow spending and impact hundreds of thousands and perhaps millions of consumers...and will also likely have a profound impact on health care.

Believe it or not, many government and health care jobs are fairly good paying jobs that will likely be cut and many of the jobs currently being created are Wal Mart type jobs, often to supplement social security, and lower paying seasonal jobs.

Right now we are entering a cycle of dramatically contracting the average wage of the Average American Worker which further destroys any chance of a second half recovery.

The only people with access to the "printing press" right now is the Federal Govt and Uncle Ben's banking buddies.  If Americans lose access to money through lower wages and loss of credit availability, but Uncle Ben continues to devalue the dollar,

he has basically signed a an economic death warrant for the American Citizens as wages will fall or evaporate and the price for everything we buy will skyrocket.  In such an environment, the only ones with access to money will be Uncle Ben, his buddies and the Federal Govt.

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#5) On June 06, 2009 at 9:45 AM, AllStarPortfolio (25.01) wrote:

From Yahoo. Front page top headline. It seems like the mainstream may be catching on.

ALL BUSINESS: Bond-market rout lifts mortgage cost

The Federal Reserve announced a $1.2 trillion plan three months ago designed to push down mortgage rates and breathe life into the housing market.

But this and other big government spending programs are turning out to have the opposite effect. Rates for mortgages and U.S. Treasury debt are now marching higher as nervous bond investors fret about a resurgence of inflation.

That's the Catch-22 threatening to make an awful housing market potentially worse and keep the economy stuck in a funk. Kick-starting the economy requires higher spending, but rising rates mean fewer Americans will be able to refinance their home loans. And some potential buyers will be shut out of the market by higher monthly payments they won't be able to afford.

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