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alstry (35.43)

The Ultimate Alstry Question

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August 05, 2009 – Comments (10)

What happens to a nation when its citizens can no longer service its bankers and government?

For over 200 years, we Americans dutifully worked hard and earned enough to support our families and our nation. 

Right now, our governments collectively spend about $6.5 Trillion dollars per year.  That is about $20,000 for every man, woman, and child in our nation.  It is that spend that keeps tens of millions employed, tens of millions on social security, tens of millions on welfare and food stamps, and millions on unemployment.  It is that spend that drives trillions into our health care system and defense budgets.

It is that spend that is now the key driver of our economy.

The problem is our citizens don't earn anywhere close to $20,000 per person.....and now that our corporate profits have evaporated and real estate values have crashed....on a value adjusted basis, government will be lucky to generate $3 Trillion dollars next year leaving a $3.5 Trillion dollar deficit or over $10,000 per person per year.

There is no way our nation can sustain that kind of spend for any length of time....further, as it borrows more, the liklihood of foreigners supporting debt decreases potentially forcing our interest rates beyond rationality....especially now that many of our municipalities, schools and hospitals can't even sustain their current debt.

Currently we have a government wrong sized to credit bubble receipts.......with the bankers pulling credit, tax revenues are evaporating and our nation is socially and mentally unprepared for the change. 

We are currently slashing jobs and wages, firing police officers and fire fighters, and releasing prisoners from jail to compensate.  There are very few jobs available for anyone and cost of living is relatively expensive.  Social stress is rising and government is providing very few solutions.....such as restructuring debt.

The ultimate question is when government needs money and only a few of its citizens are capable of giving......does government take all of its citizens money to maintain its soverignty or does government contract/collapse?

What do you think your politicans and bankers are going to demand now that we can't service them?  They already made filing bankruptcy harder, raised interest rates, raised taxes and while we bailed them out with free money and sent in more and more taxes.

Remember, weren't they supposed to work for us?   What happened?

10 Comments – Post Your Own

#1) On August 05, 2009 at 10:15 AM, ChannelDunlap (< 20) wrote:

The problem is our citizens don't earn anywhere close to $20,000 per person

Wait, we don't make 20k per person?  I find that highly unlikely.  You seem to be interchanging "Sustaining" debt and paying debt off.  One minute you're saying how we're taking on 10k per person in debt, and it's true, it would be extremely difficult to pay this off on short notice.  However to MAINTAIN this debt is a much smaller bill which is much easier to afford.  I'm not saying we're not in a bad place, I'm just saying that you're being misleading.  

especially now that many of our municipalities, schools and hospitals can't even sustain their current debt.

While I've seen cities, counties, and states in various states of underfundedness, I have yet to hear anybody say it's because they can't make their "minimum monthly payment", so to speak.

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#2) On August 05, 2009 at 10:23 AM, alstry (35.43) wrote:

Our collective governent spend is now $6.5 Trillion dollars PER YEAR....do the math.

Jefferson County just said it and fired most of their workers.....and a lot more will as more and more stories like the following hit the press:

Sacramento County's general fund shortfall – which has become a moving target over the past year – has jumped to $50.5 million, the Board of Supervisors learned Tuesday.

Just a week earlier, the deficit was set at $37.6 million. Only weeks before that, the board had cut programs and laid off hundreds of employees to balance the previous fiscal year's budget.

http://www.sacbee.com/topstories/story/2083304.html

You went from balanced, to $37 million to $50 million budget deficit in a matter of weeks due to evaporating revenues....where do you think this is going?

9.09 you will likely know.

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#3) On August 05, 2009 at 10:56 AM, ChannelDunlap (< 20) wrote:

Yeah, Yeah.  Calfironia.  If I've said it once I've said it a hundred times; California is not an accurate representation of the rest of the country.  Not in any way, economically, politically, culturally, it just doesn't correlate. 

And then theres Jefferson County.  I won't slap it with the same judgements as California, but lets keep in mind that a tax responsible for 25% of their money was ruled illegal recently.  I'm sure the recession is making that cut hurt a whole lot worse, but it's not exactly something thats happening everywhere.

Any other terror stories for us this morning Alstry?  This one didn't even rattle me, some of your recent ones actually had.

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#4) On August 05, 2009 at 11:01 AM, alstry (35.43) wrote:

You will see similar problems in Detroit, Pittsburgh, Baltimore, Boston, New York, Chicago, Arizona(selling off the state capital;), Minnesota, Florida, etc.....

The same issue will be repeated in practically every city, county, and state across the nation because the origin of the problem is the same.

We Americans can no longer collectively service government and the bankers based on our current revenues stream....now the only question is what happens next?

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#5) On August 05, 2009 at 12:28 PM, davejh23 (< 20) wrote:

I live in a state that claims to have the strongest state economy in the country, and we're seeing large cuts in the school districts and the police departments.  We have never had cuts in the school districts before.  I don't believe the entire country will look like Jefferson County, but I do take it as a sign that these problems are certainly not contained to just a few hard hit states.

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#6) On August 05, 2009 at 12:34 PM, alstry (35.43) wrote:

IT KEEPS GETTING HARDER AND HARDER TO FEED THE $6.5 TRILLION DOLLAR ZOMBULATING MACHINE

WASHINGTON (MarketWatch) -- U.S. non-manufacturing industries contracted for the 10th consecutive month in July, the Institute for Supply Management reported Wednesday.

Mathematically as we keep contracting, debt service becomes a larger and larger percentage of cash flow.  All of our cities, states, hospitals and school districts have lots of debt.  Taking out that credit is what helped drive our economy.

As long as we could feed machine, we had an economy.....now that we can't feed the machine and pay interest.....in the not too distant future we won't have an economy.......

Unless we restructure debt.

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#7) On August 05, 2009 at 12:35 PM, ChannelDunlap (< 20) wrote:

dave, I'm not saying the rest of the country is dandy and great, by no means.  What I am saying is that Alstry picks the worst of the worst news stories and talks about them like it's happening everywhere, when that is very clearly not the case.

Though I must say, it's been a while since I got a traffic ticket.  Maybe there is a silver lining to this after all? :)

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#8) On August 05, 2009 at 12:38 PM, alstry (35.43) wrote:

NEVER BEFORE HAS THE GOVERNMENT BEEN THE ECONOMY....check out you largest ten employers in your state....20 years ago, you would have been hard pressed to find a government agency.....today, in many states it is most of the top ten.

If you can't feed government...................there is NO economy....government has morphed into the economy in the past ten years.

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#9) On August 05, 2009 at 12:47 PM, prose976 (< 20) wrote:

All government, but the barest necessities needs to go away.  Government needs to shrink.  I, for one, am glad to see government payrolls get slashed.  Release the prisoners.  I will have my defenses ready.  We have become a nanny state/country in so many ways, depending on "police protection" and a twisted, corrupted and ridiculous procedure called "due process" (which at one time was exactly what our Forefathers meant it to be) to a point that it's become a sum-zero game.

But if state and local governments are going to implode, then we need to clean out Washington in a big way also.  The whole lot of them are self-serving deadbeats.  And, until I see a single one of them stand up in session and lay all the cards on the table, calling out the liars, thiefs colluders and otherwise deceiptful and corrupt members of our government, then they're all the same.

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#10) On August 05, 2009 at 12:55 PM, alstry (35.43) wrote:

The problem is the Government is over half the GDP.  It is most of health care and defense.....two multi trillion dollar industries.

We are supporting those industries right now with money that does not exist and at at time when revenues are evaporating.

If we brought government to right size, our economy will implode and most of the outstanding debt will default........which by the way must happen if we don't restructure debt.

Printing your way out simply makes money worthless and has the same net result.

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