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alstry (35.61)

The Mother of All CATCH 22s

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March 14, 2009 – Comments (7)

Global trade flows collapsing (First Take)

Russia May Base Strategic Bombers in Cuba, Venezuela, Air Force Chief Says

The above are just two of the headlines from yesterday. 

We know that February container traffic at both the St. Petersberg, RU port and the L.A. port was DOWN about 30%.

We also know that Federal personal income tax receipts in February were DOWN over 60%.

We know that new housing sales are DOWN by about 75% over the past few years.

Auto sales are DOWN by about 50% in just a couple years.

The above numbers are really amazing if you think about how short a period of time it took us to contract(and, quite frankly, about six to nine months longer than my original estimates).

How did Alstry know that the contraction would be so violent and so quick???  It was very easy, because it was clear to me that a significant percentage of our economy was simply based on DEBT....and the vast majority of that NON Federal Debt.

You know...toxic mortgages, credit card expansion, insane commercial real estate loans, municipal debt based on short term spikes in revenues, auto loans to everyone, and corporations borrowing against unsustainable revenue streams.....

As long as the banks kept lending, the debt balloon grew bigger and bigger and it became harder and harder to make monthly payments without borrowing more money. 

What was amazing is that for most Americans, wages never rose during this period of illusory prosperity....unless of course you were in the debt industry.  Rising health insurance and rising fuel costs only exacerbated the demand for debt in order to keep the system going for EVERYONE.

Once the debt became too burdensome....coincidently right after the FED raised interest rates 19 times......you knew this house of cards was about to collapse because if people, business, and municpalities budgeted at 5%, how the heck were they going to make ends meet at 8%???

To compound the problem, banks began to realize this as well and started cutting back lending to just about everyone....the driver of this process in the first place. 

Imagine, loaning out trillions and trillions of dollars at very low rates....and once in place....raising the interest rates 19 times????....the mafia never had it so good... and then telling people if they can't pay you back....you will kick them out of their house?????....

We should have just bailed out Madoff and gave him a house on the Riveria just to remain consistent.....oh yeah...he already owns one.

Clearly there was abuse by the borrowers as well...many on both sides were culpuble.  However, when everyone was in trouble....who did the 'We The People' government come to rescue???....you guessed it...those guys that issued all of this toxic debt and extracted hundreds of billions in bonuses in the process.

Now, look where we are....revenues are evaporating in just about every corner of the economy.  Ad revenues to newspapers, TV stations, and media outlets like Motley Fool are slowing to a trickle.  Airlines continue to cut out flights and hotels are suffering.  Shopping centers are growing darker and darker everyday and auto dealers are behaving like the dinosaur.

A BIG issue right now is the evaporating tax revenues to government.  A 60% decline in income tax recepits is not sustainable without game changing initiatives.  Similar arguments can be made for declining sales and property tax receipts.

Here is the CATCH 22....we need to borrow to keep things going (commonly called printing money)....but few are capable or desire to lend us the necessary funds.......at least at an interest rate that makes any sense...

Obama Seeks to Reassure China U.S. Debt Safe, Deficits Are Under Control

Now that we Fools are finally beginning to understand the problem is too much debt.....maybe collectively we can put our minds together and craft a solution?????

I heard this quote from Mr. Celente and it has stuck with me...

"When people lose everything they have....they lose it." 

We must stop this process soon before too many lose it.

 Yes...Alstry has an answer....but its time for you guys to come up with a better one.

7 Comments – Post Your Own

#1) On March 14, 2009 at 10:10 AM, alstry (35.61) wrote:

It is NOW time to let world hear the Fool community ROCK...

 

If we let this go and don't extinguish the fuse...things could get volitile....

Trinitrotoluene (TNT), or more specifically, 2,4,6-trinitrotoluene, is a chemical compound with the formula C6H2(NO2)3CH3. This yellow-coloured solid is a reagent (reactant) in chemistry but is best known as a useful explosive material with convenient handling

And when we Fools figure this out.......

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#2) On March 14, 2009 at 10:10 AM, iviewit (< 20) wrote:

MADOFF + STANFORD = PROSKAUER ROSEDid I hear Proskauer Rose is involved in Madoff (involved a lot of clients too) and acted as Allen Stanford's attorney.  Investors who lost money in these scams should start looking at the law firm Proskauer's assets for recovery. First, Proskauer partner Gregg Mashberg claims Madoff is a financial 9/11 for their clients.  Then, Proskauer partner Thomas Sjoblom former enforcement dude for SEC and Allen Stanford attorney, declares PARTY IS OVER to Stanford employees and advises them to PRAY, this two days before SEC hearings.  Then at hearings he lies with Holt to SEC saying she only prepared with him but fails to mention Miami meeting at airport hanger.  Then Sjoblom resigns after SEC begins investigation and sends note to SEC disaffirming all statements made by he and Proskauer, his arse on fire. Proskauer Rose and Foley and Lardner are also in a TRILLION dollar FEDERAL LAWSUIT legally related to a WHISTLEBLOWER CASE also in FEDERAL COURT.  Marc S. Dreier is also a defendant in the Federal Case. The Trillion Dollar suit according to judge Shira Scheindlin is one of PATENT THEFT, MURDER AND A CAR BOMBING.  For graphics on the car bombing visit www.iviewit.tv. The Federal Court cases United States Court of Appeals for the Second Circuit Docket 08-4873-cv - Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al. - TRILLION DOLLAR LAWSUIT Cases @ US District Court - Southern District NY (07cv09599) Anderson v The State of New York, et al. - WHISTLEBLOWER LAWSUIT (07cv11196) Bernstein, et al. v Appellate Division First Department Disciplinary Committee, et al. (07cv11612) Esposito v The State of New York, et al.,  (08cv00526) Capogrosso v New York State Commission on Judicial Conduct, et al.,  (08cv02391) McKeown v The State of New York, et al.,  (08cv02852) Galison v The State of New York, et al.,  (08cv03305) Carvel v The State of New York, et al., and,  (08cv4053) Gizella Weisshaus v The State of New York, et al.  (08cv4438) Suzanne McCormick v The State of New York, et al. 

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#3) On March 14, 2009 at 11:19 AM, jszoke01 (25.35) wrote:

Alstry said, "Now that we Fools are finally beginning to understand the problem is too much debt.....maybe collectively we can put our minds together and craft a solution?????"

I think we're going to need more than the Fool community to solve this one.  From what I remember, there are about 65,000 CAPS members at this point, and as I am a very new member of the community, and have already made it to the 80th percentile (only closing one position), I'm assuming about 64,000 of those are skeletons.

Members of the CAPS community seem to be WAY ahead of the curve.  It's amazing to me that about 80% of the sentiment here is that our Federal and Local gov'ments are pursuing directly the WRONG course of action, while Obama still has (I believe) a plus 60% approval rating.  This will go down quite steadily, of course, as people wise up to the fact that something is wrong and the relief they're promised doesn't turn out to be right around the corner.

Nevertheless, it seems that the voices that echo CAPS members sentiment are being heard, finally.  It was never like this before the Obama regime (this is not giving credit to Bush - this started with Clinton, Bush just exacerbated it), Obama just got the gasoline out and poured away, until the issues we're seeing so well on CAPS became visible to everyone else.  The bigger that fire becomes, the more that the general public is going to try to determine the cause so they can avoid it.  Voices like Schiff and Celente and Rogers, previously obscure, are going to be getting more and more attention.

Unfortunately it will be far to late for the US population not to take a huge loss, potentially a life changing one at that.

Every CAPS member who sees the writing on the wall has a responsibility to our community, themselves, and our nation as a whole to speak up, and not fear to be criticised.  I myself have been pushing this for several months, at first just to try to save my friends and family from losing their wealth, but now for the cause of promoting awareness that what we are doing is wrong.  Spread the Peter Schiff, Celente, Roubini and all the other naysayers videos around and you will be amazed how beliefs can change when exposed to those people that called this for what it is, prior to the current meltdown.

This is a cleansing process, a necessary one at that.  Until people have hit new lows, they will believe that they can have all of their problems solved without pain and sacrifice.  While these lows are nowhere near the bottom we will hit, at least maybe we can change public sentiment so we can start putting policies in place that will begin to avert the mounting of new problems on top of our old ones.  It's difficult making these rationalizations to other people, but trust me, it's a lot easier than it was last year and it will be even easier in 2010.

 

 

 

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#4) On March 14, 2009 at 12:16 PM, milpo (80.96) wrote:

Obama's 60% approval rating is a relative number.  It is directly related to the utter global disgust generated by that Xenophobic, ignorant, and unrecovered alcoholic George Bush. Had my dog run for office, he would of had an approval rating in positive digits. At least he would not be able to sign an executive order, unless a pawprint is acceptable.

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#5) On March 14, 2009 at 12:36 PM, jszoke01 (25.35) wrote:

Milpo,

That brings me to another of my favorite Peter Schiff sayings (sorry, I listen to a lot of his stuff), "It would be better if my six year old were elected to office.  At least he would just sit around and just play with his toys, and not intefere with the economy".

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#6) On March 16, 2009 at 10:41 PM, StatsGeek (29.25) wrote:

Ron Paul 2012

Abolish the Fed

Buy stuff with savings, not debt

Allow losers to lose and winners to win

Credit is NOT the lifeblood of our economy; savings and investment are the lifeblood and credit is their opposite.  duhh!

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#7) On March 16, 2009 at 10:41 PM, 119862913 wrote:

Russia May Base Strategic Bombers in Cuba, Venezuela, Air......

I wonder why they'd want to do this? Could it because their old adversary is spending trillions upon trillions without a care in the world? What could all this possibly mean the Russians might ask themselves? Could the Americans have an endgame in mind? Shake head. Report this comment

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