Use access key #2 to skip to page content.

alstry (35.09)

To Buy...Or Not Dubai????

Recs

10

November 26, 2009 – Comments (12)

Alstrynomics has a simple basic premise.....much of the world is insolvent from an accounting perspective.  Much of the world's insolvency has been masked by fraud and improper accounting actions.  And a material part of recent corporate earnings has been improperly influenced as well.

The question becomes what becomes sound investment advice when much of the world is broke?  Some people say eat pancakes....and if you want to know the truth of the matter, it is as good advice as anything even though that Fool may think it is simply a parody.  Sometimes you just have to pity the Fools.  Why?

Because when enough people, businesses, and governments are broke.....we are all broke.  Let's say you were a sound bank that had a big loan to Dubai....its default could cause you to go bankrupt....and in turn force many of your depositors into bankruptcy.  By the nature defaults, one default can trigger many counterparty and subsequent defaults.

Some people make fun of Alstry....and that is fine.  Alstry is simply documenting in detail the shutting down of America under a Zombulation policy approach.  When you give the banks unlimited free money and subsidize and guarantee speculation....in is inevitable that banks will back away from the risks of traditional banking and the economy will implode due to lack of funds to service the debt.

Dubai, over $70 billion in soverign debt, is merely a symptom of a much larger problem.  How do you navigate the investing waters when much of the world is insolvent....or likely to become insolvent when enough default?

It is a very interesting question that many are afraid to confront.  If nations can't resolve differences on how to work things out, often conflict can arise.  If enough nations can't agree, a BIG conflict can develop.

I truly understand the fear of the Alstrybaters.........these are uncharted waters.  Lifetimes of savings can easily be wiped out.  Civil liberties and property rights can be taken away in an instant.  Never have so many been so insolvent.....and we are still at the beginning of trying to figure out how to deal with it.

As you can tell from Alstry's blogging, giving it all to the insolvent bankers is not a very good solution because the rest of the economy will implode and too many will fail.....as a matter of fact, almost all.

The outlook is unclear....will money be worth a lot....or little or nothing?  Will gold be the new currency, or will a new currency develop with no relation to gold?  All good possibilities.

Whatever happens...the outcome will likely create an investing landscape very different than the current one. 

What do you invest in when the world broke?.....you knew it in 9.09 when the FDIC, FHA, Fannie Mae, Pension Guaranty and most banks were technically insolvent at the same time under traditional accounting rules.....no one knows for sure.....but making pancakes is as good as anything.

Why?  Because  when people are broke...they act very differently.  Remember Trading Places?  When countries are broke....the behavior is not much different.  Since Alstry started blogging, Zombulation has caused more and more to have less and less........if this policy continues much longer.....things could get very volitile.

Already nations are staking claims to the world's natural resources....pretty soon disputes are likely to arise...if not resolved amicably, then violence is highly likely as the stakes are high......the sustainability of nations and the people.

As I have said on a number of occasions....when your nation goes to war, you go to war........and when your nation is broke....it likely needs everything you have.

Between now and the end of the year....most of you will wake up and finally understand and appreciate what Alstry, the screaming blogger, has been blogging about.  The stakes will be high....actually the ultimate stakes will be on the line, soverignty and survival.

If you think bailing out the banks and letting the real economy implode is the solution....you may be very disappointed in the people's reaction once they figure out what happend to them on this Thanksgiving Day.

Now sit back and watch things unfold between the present and 1.01.10.......it will definitely be a time to remember.

12 Comments – Post Your Own

#1) On November 26, 2009 at 10:28 AM, alstry (35.09) wrote:

Did we bail out the banks simply to blow one last bubble before the whole thing blows as the real economy continues contracting in its death spiral?????

Overall, many participants viewed the risks to their inflation outlooks over the next few quarters as being roughly balanced. Some saw the risks as tilted to the downside in the near term, reflecting the quite elevated level of economic slack and the possibility that inflation expectations could begin to decline in response to the low level of actual inflation. But others felt that risks were tilted to the upside over a longer horizon, because of the possibility that inflation expectations could rise as a result of the public’s concerns about extraordinary monetary policy stimulus and large federal budget deficits. Moreover, these participants noted that banks might seek to reduce appreciably their excess reserves as the economy improves by purchasing securities or by easing credit standards and expanding their lending substantially. Such a development, if not offset by Federal Reserve actions, could give additional impetus to spending and, potentially, to actual and expected inflation. To keep inflation expectations anchored, all participants agreed that it was important for policy to be responsive to changes in the economic outlook and for the Federal Reserve to continue to clearly communicate its ability and intent to begin withdrawing monetary policy accommodation at the appropriate time and pace.

Read that carefully and realize this: An apparently not insignificant portion of the FOMC believes that there is a terrible risk that banks loosen their credit standards and increase lending at a time when, even if the economy posts expected gain, unemployment remains at unacceptably high levels. Silly me, I thought increased lending was the whole point of the exercise to lower interest and expand the balance sheet. That whole credit channel thing. If not to expand lending during a credit crunch, then what else are they expecting?

I am in shock that this sentence made it into the minutes. One can only conclude that a significant portion of policymakers are simply clueless. Or, more disconcerting, they have lost all faith in the ability of financial institutions to channel capital into activities with any hope of financial returns. Has the Fed now embraced the view that they manage the economy through little else then fueling and extinguishing bubbles?

Yves Smith has the definitive last word on the issue:

These statement is an indication of intellectual bankruptcy at the Fed, that they have learned nothing from the crisis. But that isn’t surprising. CEOs usually need to be fired after they have presided over a disaster. They are incapable of seeing and remedying their errors. Why should senior bureaucrats be any different?

from zerohedge.com

Report this comment
#2) On November 26, 2009 at 10:34 AM, Rebkong1 (< 20) wrote:

gold most likely wont become a new currency alstry b/c there fundamentally isn't enough of it to go around...will that mean it still won't hold its value?? no if anything it means its the ONLY thing that will have value outside of whatever new "currency" they usher in

food and land that produces food will become very valuable as well...if you can keep it ..but that is the real that can be asked about anything you "supposedly" own

Report this comment
#3) On November 26, 2009 at 10:44 AM, alasker (< 20) wrote:

Its hard to appreciate in this country when we talk about hundred billion dollar bailouts and trillion dollar spending- what an 80 billion loan default means. It sounds aweful- but it does not seem that big compared to our problems. But it is relative- like iceland its a lot of money for a small arabian country.

As a side note I visited iceland in its prime- when dinner at a small chinese restaurant cost USD$50 and a fish dinner cost USD$100. From what I have read there has been a lot of disruptions in iceland with increased unemployment but they seem to be adapting- not the end of the world- just the end of the world as you know it.

Report this comment
#4) On November 26, 2009 at 10:55 AM, alstry (35.09) wrote:

Guys...soon many will learn that much of the world's economy was COLLECTIVELY a very large Ponzi scheme.  Americans borrowing to buy goods from China.  Dubai borrowing to buy goods from everywhere.  Iceland and Ireland doing the same thing.

Much of the Global economy was simply global borrowing.....and now that the lending is coming to an ending  few will be pretending to be vending any more.

It is simply a progression on the continuem of Alstrynomic's Concentric Contraction.

First you KNOW.

Then you FEEL.

Finally it IMPLODES.

As far as gold being the only solution....it can be a solution.....but so can a new currency based on any number of variables unrelated to gold.

Report this comment
#5) On November 26, 2009 at 10:57 AM, Rebkong1 (< 20) wrote:

im not saying gold is the only solution...let me retract...it is something that has underlying inate value..like silver , platinum etc.. that will NOT decrease as paper (fiat) monies around the globe get destroyed one by one

 

you are correct its one solution or way to protect what you do have..there are others but they are becoming harder to find and maybe even harder to keep with what is coming down 

Report this comment
#6) On November 26, 2009 at 11:28 AM, Rebkong1 (< 20) wrote:

and as far as the "new currency" sure it will be a solution..but how much of it will you be able to convert to when your dollar is worthless..making your home, and virtually every other asset you own the same

Report this comment
#7) On November 26, 2009 at 11:40 AM, jddubya (31.97) wrote:

"Now sit back and watch things unfold between the present and 1.01.10......."

LOL - that's your advice?  That's how you're going to get through this mess?!?!?  LOL

Report this comment
#8) On November 26, 2009 at 11:52 AM, Rebkong1 (< 20) wrote:

jddubya...according to you there is NO mess right??

 

Report this comment
#9) On November 26, 2009 at 11:52 AM, Rebkong1 (< 20) wrote:

freudian slip???

Report this comment
#10) On November 26, 2009 at 12:00 PM, jddubya (31.97) wrote:

#8 - Wrong.  Just like alstry, WRONG

I'm trying to capitalize on the current world condition.  Attempting to position myself to have MORE of everything.  Rather than sit around and boo hoo about how bad it will be, the fact is that having MORE will be better than having NOTHING.

You and big Al can have a blast "sitting back and watching" - the rest of us coherent Fools won't be distracted by your whining and blathering.  I've posted more than once the steps I've taken in real life - which is much more than either of you have done on this INVESTING WEBSITE.

Report this comment
#11) On November 26, 2009 at 12:41 PM, alstry (35.09) wrote:

Sometimes more is less in the new Alstry age...such as the more real estate you own, the poorer you will be.....one exception is when it comes to your CAPs score...that sorta speaks for itself.

Report this comment
#12) On November 26, 2009 at 1:31 PM, jddubya (31.97) wrote:

Awww now, c'mon Al - making fun of Rebkong1 isn't very nice.

Report this comment

Featured Broker Partners


Advertisement