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alstry (35.17)

Why you are being LIED to......

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January 28, 2009 – Comments (5)

As many of you know, my blogs have been focusing on unemployment lately and providing factual documentation of the ever increasing rounds of layoffs.  It ain't fun, but Fools must be prepared for the consequences.......

One of the key analytical focuses in Alstrynomics is how unemployment affects the economy in general.....and distilling it to its essence, the impact is profound and it compounds in severity.  It is the compounding that is key and why many "economists" are likely intentionly under estimating future unemployment rates.

Here is a piece from Mish's blog.....

Last week, consumer lender Capital One Financial increased its unemployment forecast to 8.7% by the end of 2009, from its previous expectation of 7% by midyear. And Capital One added that it is building more-severe unemployment scenarios into lending decisions.

Also last week, Kelly King, chief executive of regional bank BB&T, said unemployment of 8% to 8.5% is "kind of manageable," but 9% to 10% would "have a dramatic impact on our scenarios."

Why the trepidation of going above 9%? Take a regular credit-card book. Past data show that a percentage-point increase in unemployment leads to roughly a percentage-point rise in the charge-off rate, the amount of defaulted loans written off at a loss.

But as unemployment exceeds 9%, bankers think charge-offs will start to increase by more than the increase in unemployment. The reason? A high rate could cause an unprecedented wave of defaults among prime borrowers, who tend to have bigger loan balances.

"The situation is so extreme and beyond what we've seen in past cycles that management teams are becoming reluctant to predict the relationship between unemployment and credit losses," said Kevin Fitzsimmons, analyst at Sandler O'Neill & Partners.

If you understand this, you understand why Alstrynomics focuses sooooo much on unemployment.  As I have warned you before, please prepare.....if not financially, at least mentally.  And if you have read my blogs, whether you like it or not, you are more prepared than most. 

In the mean time, stay focused on the facts.....but if you like fiction and you have already not read it, Atlas Shrugged is a great read.....and it may be more reality than you think.

5 Comments – Post Your Own

#1) On January 28, 2009 at 9:01 AM, alstry (35.17) wrote:

 From Above:

 Last week, consumer lender Capital One Financial increased its unemployment forecast to 8.7% by the end of 2009.......Also last week, Kelly King, chief executive of regional bank BB&T, said unemployment of 8% to 8.5% is "kind of manageable," but 9% to 10% would "have a dramatic impact on our scenarios."

Are you kidding me???  8.7%  8.7%  8.7%  by the end of 2009???

We already have two states over 10% and a bunch over 9% including the big biggie of them all.....California........here is a piece from the WSJ this morning....

One troubling sign is that states that were first into recession -- generally those with a heavy concentration of home building and manufacturing -- are getting worse, not better. Nevada's unemployment rate increased one percentage point to 9.1% between November and December. Florida's rose 0.7 percentage point to 8.1%. California's jobless rate increased 0.9 percentage point to 9.3%. Those three states saw their unemployment rates rise between 3.4 and 3.9 percentage points in 2008 as a whole.

Many Rust Belt and other manufacturing-heavy states saw a similar deterioration, as the credit crunch and sagging demand among consumers and businesses forced manufacturers to cut jobs. Indiana and South Carolina both saw their unemployment rates increase 1.1 percentage points in December, tied for the largest month-over-month increase in the nation. Michigan's unemployment rate, already the highest in the nation, rose one percentage point to 10.6%.

Michigan was one of two states to hit the 10% mark, along with Rhode Island.

Let me repeat above one more time......

Also last week, Kelly King, chief executive of regional bank BB&T, said unemployment of 8% to 8.5% is "kind of manageable," but 9% to 10% would "have a dramatic impact on our scenarios."

No kidding.....so just lie about your forecast for now and adjust it later??????  But those who practice Alstrynomics know better........maybe I will start a mutual fund.....but not until next year.

Its party time...may have to take a quick trip to the Casino this morning.......the odds are better than trying to predict this nonsense.....but at least we know where things are heading.....if you are prepared....you could get rich with points.

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#2) On January 28, 2009 at 10:01 AM, drgroup (69.30) wrote:

Who keeps tabs of the unemployed that have used all the benefits and fall off the reporting rosters? Or who counts those that don't even apply for benefits? This is one of the most manipulated numbers in exisitence. Besides, Capitol One does not need any excuse to raise the interest rates they charge. They just do it at will especially if the numbers they dream up can reflect higher unemployment.

Unemployment is not the key issue, global warming is. bbrrrr it is cold here in FL...

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#3) On January 28, 2009 at 12:12 PM, alstry (35.17) wrote:

Boeing Co. said Wednesday it plans to slash about 10,000 jobs across its businesses, compared to a prior announcement of 4,500 job cuts from its commercial airplane unit.

Hmmmmm........How early is Alstrynomics versus mainstream economics??????

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#4) On January 28, 2009 at 3:59 PM, alstry (35.17) wrote:

AOL lays off 10% of workforce in cost-cutting move

700 jobs at AOL, 3000 as SAP, Boeing, BestBuy, Target, and many others.....and these jokers are forecasting only 8% umemployment?????

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#5) On January 29, 2009 at 11:57 AM, OneLegged (< 20) wrote:

What's the best guess at the "real" unemployment numbers?  I know I have worked only 4 days in 6 weeks.  Being self-employed that makes me toast.  I, and many like me, are not counted in any unemployment tally of any kind.

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