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alstry (35.13)

Soon... we all will be Madoffed....unless we restructure SOON!!!!

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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.

7 Comments – Post Your Own

#1) On April 12, 2009 at 3:14 AM, kaskoosek (62.84) wrote:

+1 rec

 

But it seems that the only accepted solution politically is to print shitloads of money.

 

I hope Americans start accepting the pain and correct the major problems that have caused the economy to be this sick.

 

No more useless consumption on luxuries. Service and consumption sectors  need to contract in order to have any semblance of an economy. 

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#2) On April 12, 2009 at 3:35 AM, sandyfool886 (< 20) wrote:

I totally agree with it. As the investors, what should we do now?

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#3) On April 12, 2009 at 7:26 AM, dmjst11 (< 20) wrote:

Banking has changed over they years and for the worse;  buy why?

 

My first home loan fron a bank was in 1977.  I was only needing 25k.  It took three weeks becuase they had to verify my employeement records,  savings and checking balances,  stock accounts statements,  any other outstanding loans,  etc.

 

Finally they approved it but neeeded 20% down and loan ammount could not exceed 30% of disposable income.

 

Fast forward 20 years.  I purchased a new home and was expecting to be "drug thru the mill" so was armed with pay stubs,  balance sheets of saving of liquid assets plus brokerage statements along with my car loan agreement.

 

The nice woman who was drafting our loan agreement only asked a few question and none about my earnings,  savings,  current debt situation.  Instaed of 3 weeks it was over in 40 minutes.

 

No questions about employment,  no down payment unless we wanted to.  She had our "credit score" which is more than a number but still she granted the loan without extracting some important info.

 

When I questioned her about not requiring my last 9 monthes earnings,  talking to my employer,  seeing if I had a huge debt in another area;  she just smiled and said they aren't ALLOWED to obtain that info because of some law.

 

I wonder how many people have loans recently that 20 years earlier would have been turned away.  

 

It is time for banks to get back to basics... 

 

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#4) On April 12, 2009 at 7:51 AM, Skiptwin (< 20) wrote:

Political Greed.

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#5) On April 12, 2009 at 9:50 AM, alstry (35.13) wrote:

Kas, 

Useless consumption is fine....not my style, but not improper....it is the reckless counterfeit creation of toxic debt and baseless borrowing of money where the problem sets in.....

It destructively dilutes the currency....and if done on a large enough scale....infects the entire economy with a burden that can't be paid back that sucks the lifeblood out of the system.

It is effectively Economic Terrorism on a scale that even Osama Bin Laden could have never hoped of accomplishing in his wildest dreams.

We are at that point right now....there is not enough dollars in the system to pay back the debt and there is little doubt that we are heading into the deepest depression in history as more and more fail every week.

What is amazing is that no one is demanding the prosecution of these bankers for fraudulent accounting.  Not only are we not prosecuting the fraud, government officials are actually aiding in a cover-up and handing these fraudsters trillions of additional dollars which they are taking as bonuses.

If banks can lie about their assets and earnings, why should any investor believe any financial results of any public corporation?  Even my favorite chimp, in likely his best blog ever, discussed this subject in a clear presentation but seemed to accept it as the way it is without contemplating the consequences.

Now we are handing fraudsters tillions of dollars of taxpayer money while hardworking businessmen are being forced to shutter operations and families are thrown on the street.  Few realize that we are still in the early stages of this process and based on my calculations....about 70-90% of every American Family, Business, and State and Local government will go bankrupt before we hit bottom.

Imagine the social consequences from such widespread bankruptcies.  It will take generations for America to recover and few will want to invest here because there will be little trust in the system and those that were supposed to police it were complicit in the fraud.

Most CAPS bloggers don't have accounting backgrounds so understanding the fraud is not within their competency.  Even the Gardner Bros. have English backgrounds and fail to appear to want to deal with this obvious issue. 

Many simply assumed that fraud was not something to worry about in America....that it would be policed by the various agencies.

My guess is that when this actually breaks wide open....we will learn that the fraud was systematic and it will take generations to repair.  We will learn that the fraud was supported by the ratings agencies, the enforcement agencies, the exectutive branch, legislative branch, and of course Wall Street itself.

It is possible that a fraud is too big to expose???????  Are we Americans too much of wimps to really want to know how hard we have been bent over by our financial and government leaders????

It is either deal with it now....or soon the entire nation will be broke!!!!!!!!!!!!!!!!!!

Here is a snipit about what is happening to Credit Union debt investments from CalRisk:

The securities purchased by corporate credit unions ... were all permissible under NCUA’s Rules and Regulations. Almost all had very high ratings (AAA and AA) as assigned by the nationally recognized statistical rating organizations (NRSROs). NRSRO ratings were the norm in the financial markets for determining the quality of a security. However, NRSROs relied primarily on historical data of the performance of a security’s underlying assets in making rating determinations. No reliable historical data existed relating to the performance of the sub-prime and other types of loans that were originated in a period of rapid home price increases and relaxed underwriting criteria. As such, NRSRO ratings did not prove to be a reliable means of determining the quality of these securities. Since late-2007, analysis of these securities has been based on actual performance of the underlying assets and projected future performance. This has led to very significant downgrades in the NRSRO ratings of many of the securities held by corporate credit unions. The downgrades had the most severe impact on the portfolios of WesCorp and U.S. Central.

The ratings were BS because never before were such reckless loans orginated in such large quantities.  How many families making $50K per year could afford a $500K mortgage???  Don't you think the ratings agencies knew those loans would fail.  Never in the history of the free world were so many reckless loans made to so many while most remained silent. 

If we on CAPs stand silent on the Fraud.....do you think our children will appreciate it in the future???  Especially as they are standing on street corners panhandling for food......

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#6) On April 12, 2009 at 7:30 PM, bullnada (< 20) wrote:

alstry,

  I have seen your blogs for a year. This is my first reply. You are the man. I am so thankful you are so honest and tell it how it is. So thanks man keep it up!!!!

 The fu virus has turned into the f me virus. I took my rolex in for service at my local jewelry store. They sent  it to Rolex Beverly Hills. After three weeks I called and no answer... Thats strange.Find out my local store is bankrupt!!! F me I call Rolex Beverly Hills.. They say we sent your watch to Dallas Texas because Rolex Beverly Hills service Is closing..

   Yes I am going to be getting my rolex but just a little fu virus in real life. 

 

 

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#7) On April 13, 2009 at 5:56 AM, outoffocus (22.80) wrote:

If we on CAPs stand silent on the Fraud.....do you think our children will appreciate it in the future???  Especially as they are standing on street corners panhandling for food......

Who's remaining silent? Heck I dont blog much and even I havent remained silent.  If you check the other blogs on here you will see that CAPS has been quite vocal to the fraud thats going on.  I would challenge you again to the other blogs on CAPS.  We are definitely not sitting here in la la land.   

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