Soon... we all will be Madoffed....unless we restructure SOON!!!!
April 12, 2009
– Comments (7)
You think you are rich???? Have a solid net worth???? Take a step back.
So did many of Madoff's client's....until they found out the truth.
Soon we all will find out the truth as well.....this is what Alstrynomics is all about.....uncovering the truth by focusing on the facts.
None of us want to believe it...but the facts are the facts. William Black is now saying what few have had the courage to admit or expose. Further, there are few in America who understand the fraud and cover up better than Mr. Black.
Practically every bank in America is insolvent.....many loaned out 300%, 400% and more of capital to real estate development, investment, and mortgage loans. Others enhanced that leverage with derivitives that few really understand nor how to value and likely many will never pay off. We are talking about tens of trillions of dollars worth of loans, many secured against artificially inflated values over the past eight years....plus hundreds of trillions of dollars worth of deritivives. An aggregate amount greater than the net worth of America and and the rest of the world for that matter....a few times over.
In the end, as our government and Wall Street keep lying to us....more and more loans will default because there simply is not enough money in circulation to pay off the debt. Not only that, now that banks are not printing funny money so citizens that can't afford to pay on the debt, revenues are evaporating and even legitimate loans can no longer be serviced.
For the first time en mass, the elite of communities are falling like flies. Here is a snipit from a WSJ article:
LOGANVILLE, Georgia -- Builder Tommy DeMilio and banker Stanley Kelley had planned to create a four-acre park for this city of 9,500 residents. It's a quarter finished and won't likely be completed. Mr. DeMilio's construction business has dried up. Mr. Kelley's bank failed in November.
Maxie Price, a Chevrolet dealer whose lot is two miles away from the scuttled park project, is cutting his local donations by at least a third. His car sales are down to about 30 a month -- well below the hundred or so he moved during better times....
The situation in Loganville, located about 35 miles from Atlanta, mirrors what's happening in many small communities across the country. Stalwarts of these often-patriarchal areas are falling, changing the civic landscape while leaving financial and social commitments behind.
"Every small and medium-size town is going through this.
Actually, every town in America is going through this...large and small. We saw what happened when Madoff was exposed. We are seeing it as businessperson after businessperson is watching their businesses fail all across America.
Why???
Simple. Becuase much of what we viewed as revenues and wealth was a direct result or a derivitive of the counterfeit creation of money by what is known as the shadow banking system. As long as the counterfeit money kept flowing, we all benefitted from the boom as few of us knew it was effectively fake and we all accepted it....but it wasn't just tens of billions like Madoff...it was tens of trillions!!!!!!
As long as we didn't know, everything was fine and the fake money kept flowing juicing commerce. NEVER BEFORE WERE PRIVATE BANKS ALLOWED TO MANUFACTURE SO MUCH PRIVATE TOXIC DEBT.
As the bankers scheme got exposed because their borrowers started defaulting on their debts, slowly the bankers stopped issuing and printing the fake money or toxic debt. First sub prime was exposed because it was the most vulnerable, then Alt A, then Neg Am, Jumbo Prime etc....
As the fake money stream slowed, so did sales and revenues. Then commercial lending started cutting back, and corporate loans, and municipal loans. As the printing slowed to a trickle..so did sales.
Auto sales slowed by 50%. New Housing sales down by over 2/3. Retail sales imploded. Retailer after retailer started shutting down. Commercial vacancies started skyrocketing. Basically the entire economy started imploding as evidenced by evaporating tax revenues across the board.
All the while, Wall Street and the Government tried to hide the fact that the American Economy was infected with more toxic debt than the world had ever seen in history and an amount greater than the collective net worth of every American as asset values evaporated. Something that had never happened to this extent before and will likely affect our nation for generations to come.
Yes...from a legitimate accounting standpoint....most American families, businesses, and state and local governments are now insolvent.....NOT illiquid like The Great Depression. The longer we take to admit to our illness...the lower asset values will fall and the further the epidemic will spread contaminating more and more and infecting them with the FU virus.
Why do you think Alstry has been so vocal about restructuring debt. The longer it takes...the wider the disease spreads. Sorta like the damage inflicted by a slow moving hurricane vs. a fast moving one.
How we deal with this issue is still up in the air.....Our Presidents, Congress, Bernanke, Summers, Geithner, Paulson and others have chosen to only innoculate their buddies and let the rest of the country get economically sicker and sicker.
Unless we come clean with the truth...basically admitting that our bankers infected us with debt that we as a nation can't pay back.....more and more Americans will get sick and economically expire.
It is not the end of the world...it is just that most of America is broke....most borrowed more money than they can afford to pay back, including cities and states.......you can bury your head in the sand if you like....but in the end, the only way to deal with a insolvent crisis is to restructure......protect the dollar, protect savers, bankrupt the rest and start over.
It won't be fun....but after we complete the process.... we will be competitive and our children and children's children will have hope for the future.
Mr. Black should be awarded a medal of honor.....he is one of the few Americans who is willing to stick his neck out and tell you the truth.
In the end the truth is always exposed one way or the other.....for many of us....let's hope it is not too late. Until you understand that this is not a Credit Crisis....but a Debt Crisis.....you will be vulnerable to being dupped by the Greatest Fraud in History.
And for those of you that think printing more money, otherwise known as creating more toxic debt, is the solution.......first you fail to appreciate what got us here, and second, not only will you not be able to afford to service your debt after a relatively short period of time, but you and your customers won't be able to afford to buy a loaf of bread due to the consequences of hyperinflation from printing enough new money to cover the current shortfall.
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