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alstry (35.96)

Obama's Mess is Your Nightmare...WAKE UP!!!!!!!!

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May 28, 2009 – Comments (12)

These numbers are not exact but close enough for illustrative purposes.....

Under the Bush/Pelosi Years....America DOUBLED both Public and Private Debt.....basically under Bush/Pelosi...America and Americans borrowed and banks lent as much in eight years as the previous 220 years.

As a result of massive borrowing alone, our GDP practically doubled even though we produced less which basically made America a Ponzi like economy so long as the banks lent to the citizens and infected them with ever increasing levels of debt.  If you loan $1,000,000 to a homeless person...and he were to spend it immediately, in the stores around him...the business would boom until he ran out of money.....now think about this on a national scale lending trillions to anyone with a pulse during the Bush/ Pelosi era.

With a higher GDP and significant savings accumulated over the past 200 years....we were able to service the debt.  But in the last year or so of the Bush administration banks stopped lending...first to subprime....then NINJAs.....then ARMs....then Alt A....then Credit Cards.....then HELOCs....then Commercial Real Estate....Autos...Student Loans....and so on......

The economy started to slow....and by the time Obama reached office....new housing sales were down 75%, auto sales down 50% and government tax receipts were DOWN about 30% and while the legacy debt burden was increasing to the population as interest rates reset.

Basically under the years of the Bush administration....about half the jobs in America existed simply because America and Americans were borrowing and spending money they simply didn't have at a rate we had never seen before.  4/5 of all new jobs creation was in housing.  Once the banks started cutting us off....the game was over and revenues started evaporating.

As millions lost their jobs due to a dramatic slowdown in lending....the expenses to government skyrocketed to cover unemployment and medicaid that were once allocated to the private sector under the Ponzi Like economy.

No Obama faces an economy will likely contract 50% as savings is depleted....many industries have already contracted that much and more.....the problem is that by cutting expenses....the economy will contract even more making a bad problem even worse.

With a 50% reduction in revenues and/or GDP....there is simply no way for most Americans and America to cover debt service and we can't print our way out of it due to an inability to raise funds at an acceptable rate of interest.

So here Obama stands with not enough revenues to pay the debts accumlated under the Bush/Pelosi years......and as more American's lose their jobs due to the inevitable slowing of the economy....the burdens on our state and national governments will only increase.  If you cut expenses you make a bad problem worse as millions of jobs depend on the revenues generated by government and welfare and medicaid.

Obama is walking into the most difficult economic situation EVER faced by an American president even though his contituents are not aware of it yet.  In The Great Depression, there was very little debt between the citizens and government....thus it was easy to stimulate the economy by lending to a growing industrial nation....something we have done for the past 70 years when necessary........but as our productivity was outsourced and slowed to where we could no longer service the debt, the banks stopped lending .

Under the Bush/Pelosi Ponzi Like economy...about 25% of the Ponzi Like GDP was needed to service interest.

Now that the economy is contracting...the number is growing closer to 50% of GDP while the burdens on government are exploding.  For every dollar spent on interest it takes a dollar away from savings and spending on goods and services causing the economy to shrink further.

At this point, we as a nation have about $6 trillion in private savings and about $30-$40 Trillion in private debt.....NOT INCLUDING FEDERAL DEBT/ENTITLEMENTS...as our incomes decline our savings will evaporate paying down debt.  After most have spent down their savings and have no access to credit,  government revenues will slow so much and government expenses will simultaneously explode that the FEW REMAINING SOLVENT will need to be taxed everything they have just to keep the nation functioning.

Welcome to reality and the problem your President really faces.  Does this help explain the lies coming from Wall Street in the past few years as they hurry up and drain the nation of its money before it all runs out???????

The only way to solve the problem of a nation burdened with too high of interest payments IS TO REDUCE the interest payments....borrowing/printing money will only make the problem worse.

Now prepare for change.....HUGE changes are just around the corner!!!!!!!!!!!!!!!!!!!!

12 Comments – Post Your Own

#1) On May 28, 2009 at 6:51 PM, alstry (35.96) wrote:

PREPARE FOR CHANGE!!!!!!!!!!!!!

In a new section, the president of the Dallas Fed warned at length that "storm clouds" were gathering on the horizon "in the form of daunting fiscal imbalances." Not only is the government spending vast sums now (which he said would be a good thing if it is well designed and propels the economy "farther away from the edge"), but the government is also facing a $100 trillion shortfall in its entitlement promises.

If the people believe the government won't fulfill those promises to provide retirement security and health care, then they will "spend less today to save more for tomorrow."

More savings could be good, "but in an economy driven by consumption" such a change "could dampen the pace of future economic growth," he commented.

Fisher urged Congress and President Barack Obama to "take this vexing beast of a problem by the horns and tame it."

http://www.marketwatch.com/story/fed-has-reignited-animal-spirits-fisher-says

$100 Trillion of entitlement obligations and $40 Trillion in private debt.......it is a vexing beast indeed!!!!!!!!!!!!!!!!!!

In The Great Depression there was relatively no entitlement obligations and relatively little private debt....imagine how easy it was to borrow one's way out of that problem in a growing industrial nation and the rest of the world needing your goods and services....

If you think the problems facing Obama are even close....you are not thinking.

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#2) On May 28, 2009 at 6:51 PM, PrestonCheek (31.70) wrote:

What you have just written is the truth about our economy and how we ended up here.

Have you ever tried Tabasco brand bloody mary mix, it's the best.

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#3) On May 28, 2009 at 6:54 PM, atarigod (< 20) wrote:

Did you read my post in your other blog?

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#4) On May 28, 2009 at 7:04 PM, alstry (35.96) wrote:

Actually...the Tobasco Spicy ain't bad...but I prefer my own mix.

What is amazing is how so few are willing to confront the massive problem that faces them....I can understand Wall Street's behavior....they are stealing the money and laughing all the way to China.

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#5) On May 28, 2009 at 7:49 PM, biotechmgr (34.05) wrote:

What you say probably has many shaking their heads in disbelief as we enjoy a stock rally and the enthusiasm returns. However what you say must be heeded as the Great Deflation unfolds. The gov will be getting cash whereever it can. Not only taxes increased on incomes but potentially on assets. Assets like IRAs and 401ks. Robert Prechter has warned of this as it will be very easy for the US to place a 90% penalty on a withdrawal giving them control over your money - if not an outright nationalization of your retirement funds.

Then we'll really have socialism. Perhaps nothing will belong to the individual. 

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#6) On May 28, 2009 at 7:53 PM, bostoncelitcs (44.38) wrote:

That must have been the reason why the Bush administration gave the biggest "tax-cut" during a time of war of any President in US history.

Unfortunately,,,,,all the so-called "red" states that voted for Dubya in 2004 have taken most of the beating as Wall St. has walked off with billions and huge bailouts the last couple years.........Hey as long as they don't have someone who's gay living next to them!!!   Unbelievable!!

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#7) On May 28, 2009 at 7:57 PM, jegr5347 (< 20) wrote:

I am sure glad a big chunk of our debt is owned by China and Saudi Arabia. Wonder what happens if we stop paying interest and use the tbills as toilett paper.

That would reduce interest line item on the deficit. Wouldn't it?

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#8) On May 28, 2009 at 8:08 PM, OneLegged (< 20) wrote:

I have ever-so reluctantly become a fan of your posts.  I may not agree with your predictions all of the time and I may not always follow your logic, but you never fail to get me thinking.  That is worth a great deal.

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#9) On May 28, 2009 at 8:43 PM, momolarge (< 20) wrote:

Part truth part Democrat hatchet job.You forgot to mention Pelosi , Reid and the Democratic Congress.

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#10) On May 28, 2009 at 9:06 PM, alstry (35.96) wrote:

It is not a Republican or Democratic issue...many of our leaders...save maybe Ron Paul have let us down or our letting us down by failing to give us an honest perspective.

Now after, millions of foreclosures....more than 10% of all remaining mortgages are now delinquent.....and we are now moving up the food chain to those borrowers with good credit scores....pretty soon we will not be far off 25% of all mortgages delinquint as job losses continue forward.

Imagine what your home will be worth when one out of four homes are for sale...and many distressed?

 

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#11) On May 28, 2009 at 9:16 PM, alstry (35.96) wrote:

Jagr,

Actually a very small part of our debt is owned by China and the Arabs....my estimate is less than 7% of our debt is owned by China and all the Arab countries combined.

China owns only about 3% of our total public and private debt...or about two trillion dollars.

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#12) On May 29, 2009 at 2:04 AM, ozzfan1317 (80.58) wrote:

Yeah its somewhere around those percentages. Good points the false boom obviously didnt help us. We are in a very serious situation wether you are pessimistic or optimistic truth is growth whenever it beats again it will be very gradual and even if the worst is behind us it likely wont get better for several years.

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