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alstry (35.44)

Why Alstry in Crisis Mode

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August 28, 2008 – Comments (9)

Right now our nation is facing an unprecedented financial crisis.  Few seem to be addressing the issue.

Tax revenues to our governments is evaporating.  Tax revenues are evaporating because earnings are evaporating.  When earnings evaporate spending slows causing even further slowing ahead.

Imagine a surgeon who supports 10 families.  He lives modestly and is able to save a little at the end of the month.  If he loses his hand in an accident, not only does he default, so do the ten families that were dependent on him.  In addition to those families, are are those that were dependant on those families spending.

A government is not much different except instead of 10 families, we are dealing with millions of families and employees and thousands of businesses dependant on government spending employing millions.

Our banking, auto, airline, construction, mortgage finance went from making hundreds of billions of dollars a few years ago to making nothing today.  The outlook for earnings is even worse.  These business were repsonsible for employing millions and paying billions and billions in taxes.  Not only are the business not paying taxes because they are losing money, the millions employees that have been fired are not paying income or social security taxes.

Banks that have been profitable for 70 years and more are now losing money even after reducing staff.  Further, a money losing bank can't lend and when most of the banks are losing money our system will simply shut down.  We are already one full quarter into this process.

As our capitalist system shuts down, the populous growing poorer and poorer and will demand change.  As more and more go hungry and more and more go bankrupt, the voices will get louder and louder.  

Right now millions are screaming siliently.  Soon the silencers will be removed as the situation continues to degrade.

Some complain that I fail to propose solutions......the issue is that the nation must first appreciate the problem before intelligent discourse can be had about solving the problem.

Right now, we are being lied to about the financial condition of many of our important companies.  Asset values are not being fairly reflected on the financial statements.  As asset values continue to crash the problem gets worse everyday.

If we refuse to stand up and help ourselves, who will help us.  We can't help ourselves until as a nation we understand the problem.

In a nutshell, the banks loaned too much money to too many.  Now the too many can't pay back the banks.  As the too many run out of savings they are defaulting in greater and greater numbers.  When too many fail, the entire system fails.

NEVER BEFORE HAS IT BEEN TOO MANY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

9 Comments – Post Your Own

#1) On August 28, 2008 at 11:37 AM, LordZ wrote:

You never ever Alstry offer any type of solution or recommendation, stop kidding yourself,

Alstry not everyone is some broke dirt bag who has borrowed beyond their means and who live beyond their means

Control your controllables is all I have to say.

And protect yourself.

A year from now Alstry

you'll probably be saying the same stuff.

Banks have constantly made bad loan decisions ?

this is nothing new ?

Some of us are prepared, life will still be good if not better.

Anyone remember y2k ?????

I bet if you could see Alstry thoughts around 1999

you would see how the world would come to an end on 2000.

Remember all the money blown thinking systems needed to get changed, all the businesses created to fix this huge perceived problem, all the projections as to what it would cost to properly fix ?

Give it a rest Alstry.

If people are really suffering, they don't need to read an alstry blog to make it thru their day.

They need some hope and the glimmer that their tommorrows will be better than their yesterdays

and not vice versa.

 

LORD Z

 

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#2) On August 28, 2008 at 11:54 AM, alstry (35.44) wrote:

Actually, in 2001 I was buying like crazy.

A patient who is sick needs to be aware of his illness before appropriate treatment can initiate.  Hope without understanding of the problem is an illusory hope.

This situation is very very different.  Between 2002 and 2007, our banking system loaned out trillions of dollars that now can't be paid back.

Those debts are the assets of our banks, insurance companies, pension plans, money market funds ect......

As the debts default, assets crash in value causing even more defaults.  It is a feedback loop getting bigger and bigger.

It has become so large now that our banking system is losing money.  As loans keep defaulting and assets keep crashing in value.....the losses will grow and grow.

The losses are now causing serious distress to our state and local governments and its only going to get worse as losses mount.

The losses are causing spending cutbacks and millions to get fired as unemployment is only going to increase as losses mount.

Never before has our financial system been sooooo leveraged.....much much more leveraged than 1999.

In the end, our economy is a game of finance.....if few can pay....none can play.

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#3) On August 28, 2008 at 12:06 PM, LordZ wrote:

The fewer the better, ever see a game of football where only the best play, now compare that to a field where you have every type of non athlete taking up the entire field, imagine playing football with hundreds if not thousands of players on the field.

In that environment, even if you were Johnny ELway or a Michael Jordan, you wouldn't get noticed nor would you see a good game.

Alstry these loan losses aren't really unprofound, I remember these same idiotic bankers making similiar crazy loans to second and third world countries back in the day, and they defaulted also like crazy, many banks went belly up, nothing really is going to change until it becomes too vast and than maybe just maybe real change will take place or simply the cycle will repeat itself with less funds.

 

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#4) On August 28, 2008 at 12:25 PM, alstry (35.44) wrote:

Lordy,

When that occurred, what happened to those third world countries after the defaults?  This time we are those third world countries.

Further, as far as dollars go and relative leverage, this time it is an order of magnitude larger than the early eighties.

The loan losses are not that bad because the banks are not marking the loans to market.  If they did, you would have a very very different perspective.

America is reaching the point where someone will be able to pull a switch and say...."surprise!!!!! the emperor has no clothes."

You are being lied to and think everything is fine because you perceive your assets have value....so do most people who are living in a ponzi scheme.

Without clear financial reporting....all is simply a fantasy.

 

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#5) On August 28, 2008 at 12:26 PM, LORDZPAIN wrote:

Wash, rinse, spin repeat.

 

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#6) On August 28, 2008 at 12:54 PM, alstry (35.44) wrote:

Just got off the phone with a friend who has pretty good insight into job outlook.  Based on his channel checks, he sees HUGE layoffs coming in Q3.

This will put HUGE pressure on government payouts as government revenues will contract further.

Expect announcements from service sector, finance, airlines, and retail.

Wash rinse repeat.....then we will all be spinning.

 

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#7) On August 28, 2008 at 1:45 PM, blake303 (29.28) wrote:

"Imagine a surgeon who supports 10 families.  He lives modestly and is able to save a little at the end of the month.  If he loses his hand in an accident, not only does he default, so do the ten families that were dependent on him.  In addition to those families, are are those that were dependant on those families spending."

Worst analogy ever.

Alstry - Relax. You need a drink like LordZ needs a lobotomy.

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#8) On August 28, 2008 at 1:51 PM, blake303 (29.28) wrote:

"Imagine a surgeon who supports 10 families.  He lives modestly and is able to save a little at the end of the month.  If he loses his hand in an accident, not only does he default, so do the ten families that were dependent on him.  In addition to those families, are are those that were dependant on those families spending."

Worst analogy ever.

Alstry - Relax. You need a drink like LordZ needs a lobotomy.

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#9) On August 28, 2008 at 11:01 PM, jegr5347 (< 20) wrote:

This guy is out of control. I think he honestly believes we are all going on welfare next week.

Just like floridabuilder, you have to be a monster junkie to be writing stuff like this. 

 

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