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alstry (35.40)

The Ponzi Scheme Breaking Wide Open

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November 17, 2009 – Comments (13)

The lawsuit, filed by the Sacramento Municipal Utility District, is based on federal and state antitrust claims. It alleges Charlotte, North Carolina-based Bank of America and more than a dozen other banks conspired to pre-select winners of municipal derivative auctions, coordinated their pricing, and accepted kickbacks disguised as fees from co-conspirators.

http://market-ticker.denninger.net/archives/1634-Oh,-So-Jefferson-County-Wasnt-Alone.html

Soon you will learn that trillions of dollars of loans were made NOT because they were sound offerings.....but created simply to generate fees originating the loans and even bigger fees from Credit Default Swaps.  Our entire financial and retirement system is infected with these loans and improperly marked on the books as assets.

As a matter of fact.....so many loans were made on this basis that it is now mathematically impossible to pay them back due to evaporating cash flow and/or decline in underlying asset collateralizing the loan.

When you infect an economy with a mathematically unsustainable amount of debt, and cut off credit and raise interest rates.....absent a new policy, the economy will collapse due to trying to service the massive debt suffocating the declining cash flow until there is relatively no economy left.

13 Comments – Post Your Own

#1) On November 17, 2009 at 3:23 PM, alstry (35.40) wrote:

Unless we purge the massive amount of debt suffocating our economy.....servicing the debt will suffocate cashflow until most businness and governments in America shut down.

Pennsylvania Insurance Department Closing Pittsburgh Office

Ricochet Nightclub

Boyd Chevrolet Pontiac Buick GMC dealership

Lorain Schools Looks into Closing 1 High School

MediaWeek Crease Printing Today

Carlyle & Co. Jewelry Store in North Bibb County

Jules R. Schubot Jewelers Closing After Holidays

Center Court Restaurant in Natomas

3 Lansing Area Post Offices Could Close

Ed Schmidt Automotive Group Closing Chevy Store

Critchett Piano Co in Urbandale 

Elliot Park in Elkhart Closing

Pandemic Studios Closing Down?? 

2 Blockbusters Closing , Amherst and Buffalo NY

Bloomberg: Layoffs in NY may be Need

GM Says - 10,000 Job Could Go in European Shakeup

Chico Unified School - 15 Job Cuts

Associated Press - Layoffs Today?

Recticel ( International ) - 110

Oakland School Board Approves 36 Layoffs 

Aer Lingus Airlines ( International ) - 676

Englewood Hospital and Medical Center - 24

Update : Orland Park - 7

Paramount Unified School District - 17 Next Year

Portage Public Schools - 12+ Layoffs Possible

City of Reading - 25+ Layoffs & Tax Increases

NYC OTB - Layoffs Coming Next Year?

The Marine Corps Logistics Base - 170

SamTrans - 45

Dell in Forsyth County Starts Layoffs - 600 on Wed.

Pennsylvania Layoffs Hit Department of Environmental and Museums Hard

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#2) On November 17, 2009 at 3:54 PM, kirkydu (93.61) wrote:

Seriously Alstry, for the first time, I really am starting to believe what I warned could happen.  The U.S. is going to default on a lot of debt at every level except the Federal Govt.  The Federal Govt will simply print until it the dollar is worth another 50% less and then change the way things are counted.

If states default on debt to outside creditors what is the consequence?  They won't get invaded.  Will they lose federal assistance?  So what.  That might be cheaper than paying the debts.  Just default and take the lumps for a couple years until new creditors emerge.  That darn well might be better for certain states vs being in hock under a very oppressive debt load for 30 years.  What state is the first to declare outright bankruptcy? 

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#3) On November 17, 2009 at 4:03 PM, alstry (35.40) wrote:

Remember...the debt is infecting everything.....cities, counties, states, schools, hospitals, businesses, families, houses, commercial real estate, autos, etc.....

The flip side of servicing the debt is $3 Trillion dollars of income generating commerce around the world.....

The Federal Debt is a relatively small portion of the total debt....it is the non Federal debt that is the problem and is defaulting at faster and faster rates.

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#4) On November 17, 2009 at 4:04 PM, kirkydu (93.61) wrote:

How will people retire?  I have people calling me daily that have the same amount of money as ten years ago, which is half as much as they need to retire.  So, they work til 70 now instead of 62 or 65 like they thought they would. 

Wake up people, the banksters, DC, Wall Street (incl most Hedgies) and especially the board buddies execs have been stripping the most important assets in America for two decades, in particular labor.  What happens now that the labor force is shrinking?  Think about that.

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#5) On November 17, 2009 at 4:10 PM, kirkydu (93.61) wrote:

Let me make it easy to comprehend:

Huge debts with a shrinking level of production and income = can't get out of debt without defaulting.

Only the Feds have a way around it all, that is to devalue by at least 50% more the next decade. 

Get out of most stocks, keeping only a few dozen global core holdings banking on water projects, global healthcare themes, cleaner energy and sustainable agriculture.  Buy commodities (ag right now imho, RJA) and the Yuan (CYB) & Aussie dollar (FXA on next small pullback).

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#6) On November 17, 2009 at 4:18 PM, alstry (35.40) wrote:

This is going to be one cruel joke....the sad part is it will primarily fall upon the American people even the the entire world will be affected.

It is now in the wide open, as evidenced by GM saying it was going to pay back the government from proceeds borrowed from the government, and there is very little mainstream critical analysis.

Based on that fact, and little government intervention on bahalf of the citizens....it appears a external reset button will be pressed....the question now is what?

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#7) On November 17, 2009 at 4:23 PM, kirkydu (93.61) wrote:

Alstry, I've jabbed you a few times because you have seemed alarmist, but I can not help but think we are getting very close to a more severe 1932 kick in the chops. 

Folks, if you are close to even (heck, even if you are not), sell a lot of stocks and mutual funds off, pay off your debts, plant a garden and take what's left and put it in the Aussie dollar (you won't get great returns, but it will be returned) and some commodities (a lot of reasons to like RJA).

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#8) On November 17, 2009 at 4:51 PM, alstry (35.40) wrote:

The crazy part is that my alarmist behavior might end up being conservative in the end.  The sad part is as the nation struggles to service an unsustainable level of debt.....the infastructure of the entire country will  be gutted.

Here is an interesting story from the NYTimes about the NYPD:

After years of struggling to lure top-quality recruits, the New York Police Department has found that the prolonged recession — coupled with a significant increase in the first-year rookie salaries — has generated new interest in police careers.

Applications to the Police Academy rose 54 percent in 2008 from 2007, when there were 17,212 applicants. The wider pool of officer candidates has enabled the department to become more diverse by the year; the percentage of black, Hispanic and Asian officers has steadily risen since 2000, as has the percentage of female officers.

The department is also better educated than in the past: in 1999, 17 percent of the force had four-year college degrees; this year, the figure rose to 24 percent.

However, the department has been unable to fully take advantage of the surplus of talented applicants because of hiring restrictions tied to the city’s budget crisis. Over the next year, the department will continue to shrink through attrition to 34,304 members, about 6,000 fewer than in 2001.

“When we had the money, we didn’t have the people,” the police commissioner, Raymond W. Kelly, said in an interview. “Now we have the people and we don’t have the money. We have people knocking on our door and we can’t do anything.”

IF WE DON'T CHANGE THE CURRENT ZOMBULATION POLICY, PRETTY SOON FEW WILL HAVE ANY MONEY.

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#9) On November 17, 2009 at 5:00 PM, alstry (35.40) wrote:

We have entered into a Concentric Contraction Loop.....private sector layoffs reduces taxes to govenrment.....less spending by government reduces revenues to the private sector starting the whole process all over again.

Union says Verizon laying off 1,000

Fewer dollars chasing an unservicable debt burden causing more and more defaults.

Foxwood Casino Fails to Make Full Debt Payment

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#10) On November 17, 2009 at 6:08 PM, alstry (35.40) wrote:

A Jobless Job Saving Program????

Here's a stimulus success story: In Arizona's 15th congressional district, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that's what the Web site set up by the Obama administration to track the $787 billion stimulus says.

There's one problem, though: There is no 15th congressional district in Arizona; the state has only eight districts.

And ABC News has found many more entries for projects like this in places that are incorrectly identified.

Late Monday, officials with the Recovery Board created to track the stimulus spending, said the mistakes in crediting nonexistent congressional districts were caused by human error.

http://caps.fool.com/Blogs/ViewPost.aspx?bpid=295325&t=01002130057764754273#comments

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#11) On November 17, 2009 at 7:11 PM, kirkydu (93.61) wrote:

It is time for a real jobs program built around rebuilding the power grid, alternative energy and water reclamation.  Anybody whose unemployment ends should need to do 3/4 time work for the govt to continue getting unemployment.

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#12) On November 18, 2009 at 8:52 AM, jddubya (< 20) wrote:

"Anybody whose unemployment ends should need to do 3/4 time work for the govt to continue getting unemployment."

LOL - not laughing at you, but just the way it sounds:  If you're unemployed, in order to continue to receive UNemployment, you must work.  lol

Thanks for your #5 and #7 comments also - unlike the author of this blog, you offer some recommendations on actions to take.

 

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#13) On November 18, 2009 at 9:32 AM, kirkydu (93.61) wrote:

point I was trying to make without explaning- so my fault- was that unemployed and those on welfare (non-disabled) ought to be required to do something to keep getting the check.  Either an accredited education or training program, or labor for the government.  There is plenty to do, why shouldn't the govt get something for subsidizing unemployment after the insurance runs out or for long term welfare recipients?  This no strings attached use of the welfare state has got to end.  Most people think of me as a liberal, even though I've believed that too many people "free ride" since my econ days in college.  

We need to nudge people into being productive.  If it takes the threat of losing their subsitence check, then at some point I'm fine with that. 

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