“Joshua Hamann jokingly compares himself to the last human in a city overrun by zombies. He’s not suggesting his neighbors are zombies. The problem is, he has no neighbors.Hamann occupies one of only about 50 sold condos in his 49-story tower, out of 409 units.
A couple miles north at Midtown Miami, Alisha Marks knows the same feeling. ‘It was pretty much a ghost town when I got here,’ she says.”
“On a recent Friday morning, Hamann encountered exactly three people over the course of several hours — two security guards, and a concierge. ‘This is how it goes every day,’ Hamann said, adding that he interacted with more neighbors growing up in rural Kentucky, where farms were spaced a mile apart.”
http://www.miamiherald.com/business/v-fullstory/story/110......
“The housing crisis is creating ghost towns of once-bustling communities like Merced. In largely abandoned neighborhoods, paved sidewalks and driveways lead to empty lots strewn with utility coils. Unfinished frames with rotting rafters and rusted hinges sit alongside occupied homes. Roughly 40% of the homes in Merced are considered distressed.”
“The University of California announced in 2001 that it would open its first new campus in more than 40 years on 84 acres in northern Merced. In anticipation of the potential demand, builders flocked to the area, and real estate investors bid up prices. But they were overly optimistic. Now the market lies in ruins, as unemployment tops 20%. Says Janet Young, assistant chancellor at UC Merced, which opened in 2005: ‘The housing boom was a huge surprise to us.’”
http://www.abcmoney.co.uk/news1/Merced:-Ghost-Town--USA--......
The Zombulator is now being felt coast to coast......five banks shut down yesterday across America...FIVE !
Unemployment OVER 20% in many counties!
Completed condo buildings practically empty, abandoned neighborhoods littering the landscape, food shelters running out of food.
And now this from Sacramento after learning earlier this week that 168 firefighters and union members will lose their jobs....
The Sacramento County Sheriff's Department says it will need to lay off almost 80 more deputies than it had anticipated – significantly reducing the department's ability to patrol unincorporated county streets – because of a miscalculation.
Sheriff John McGinness said Friday that he'll need to lay off 209 deputies and 22 non-sworn department employees. That's up from the 130 to 140 deputy layoffs McGinness projected when the Board of Supervisors approved a fiscal 2009-10 budget earlier this month including a $2 billion general fund spending plan.
"It is a huge hit to public safety," McGinness said. "There is nothing legal, moral or ethical I won't do to change that number."
Currently there are about 270 deputies patrolling unincorporated Sacramento County and several units such as SWAT, K-9 and air support that they can call on for help.
The cuts announced Friday would leave 171 patrol deputies and no ancillary units for backup, McGinness said. At any given time, there would be about nine or 10 two-officer patrol units on duty – five north of the river and four or five to the south. That's down from 38 units today, McGinness said.
"That is so scary. The safety of the public is being compromised," said Marianne Mueggenburg,Carmichael Service Center – an office staffed by volunteers and problem-oriented policing officers, which could be closed as a result of the cuts.
http://www.sacbee.com/topstories/story/1981440.html
The Sacramento count is already 400 getting Zombulated.....AND THAT IS JUST ONE CITY! Multiply that by the number of cities across America....and we have not even addressed teachers or professors yet!!!
If you are one of the hundreds of thousands that work for the State of California....prepare for ANOTHER wage cut!!!!
Gov. Arnold Schwarzenegger plans to furlough state workers an additional day each month starting in July if lawmakers do not send him an immediate solution for the entire $24 billion budget deficit, he said Friday.
Schwarzenegger's move would force at least 215,000 state workers to take three unpaid days of leave each month, the equivalent of a 14 percent pay cut in all. A third furlough day would strike another economic blow to the Sacramento region, where more than 80,000 area residents work for the state.
http://www.sacbee.com/topstories/story/1981543.html
A 14% PAY CUT for hundreds of thousands of workers! How many of those families will not be able to meet their monthly expenses with a 14% wage cut? What about the millions that may lose welfare....do you think there are jobs waiting?
Maybe those blackhawks flying over L.A. will not have to go overseas for their next mission after all......
And many of you frustrated at Alstry for simply giving you a heads up reporting the facts?
Isn't it about time you get off your backside and start getting frustrated with your elected officials?
You may want to inform them.......when you bail out the banks and not the people, the Zombulator will quickly turn everyone into sheeple.
Are you prepared for the Zombatic Fallout.....The House just passed the Cap and Trade Bill...you may soon find out what it's like to be capped by your politicians.
Saturday, June 27, 2009
Friday, June 26, 2009
WHY IS THE MAINSTREAM MEDIA LYING????
A few random Headlines re KB Homes:
KB Home says home orders are up
KB Home 2Q loss narrows, new orders up from 1Q
KB Home new home orders up from 1Q
KB Home's quarterly loss narrows
SOME FACTS FROM KB'S PRESS RELEASE:
Revenues totaled $384.5 million in the second quarter of 2009, down 40% from $639.1 million in the year-earlier quarter.
The Company ended its 2009 second quarter with a cash balance of $1.10 billion.....the Company’s debt balance totaled $1.71 billion
The Company’s backlog at May 31, 2009 totaled 3,804 homes, representing potential future housing revenues of approximately $796.9 million, compared to a backlog of 6,233 homes representing potential future housing revenues of approximately $1.47 billion at May 31, 2008.
Company-wide net orders for new homes in the second quarter were 2,910, down 31% from 4,200 in the second quarter of 2008 but up 59% from 1,827 net orders in the first quarter of 2009.
Some Real Analysis:
Orders were DOWN 31% from last years DEPRESSED ORDER RATE!!!!!!
Backlog was DOWN approaching 50%!!!
Due to depressed pricing, the company is losing money as it sells homes, the more homes it sells, the more it loses.....its losses "narrowed" because it sold a lot less homes this year than last year.....if the company simply shut down.......it's losses would go away.
To use a quarter over quarter sales/order comparison is IDIOTIC at best, and more likely DECEPTIVE at its origin. Spring selling quarter is ALWAYS the historically best selling quarter for housing. Could you imagine a retailer bragging its Christmas/Holiday December selling month was better than November??? How do you think January would compare???
Do you think it would be fair to compare next quarter's KB orders to this quarter's???? NOT A CHANCE!!!!
As indicated above, on a year over year basis, orders are collapsing and backlog is even worse!!!! Selling prices are crashing destroying margins. Ask yourself....why is the mainstream media treating us like IDIOTS???? And if it is being done in this context, where else are we being LIED to?????
KB Home says home orders are up
KB Home 2Q loss narrows, new orders up from 1Q
KB Home new home orders up from 1Q
KB Home's quarterly loss narrows
SOME FACTS FROM KB'S PRESS RELEASE:
Revenues totaled $384.5 million in the second quarter of 2009, down 40% from $639.1 million in the year-earlier quarter.
The Company ended its 2009 second quarter with a cash balance of $1.10 billion.....the Company’s debt balance totaled $1.71 billion
The Company’s backlog at May 31, 2009 totaled 3,804 homes, representing potential future housing revenues of approximately $796.9 million, compared to a backlog of 6,233 homes representing potential future housing revenues of approximately $1.47 billion at May 31, 2008.
Company-wide net orders for new homes in the second quarter were 2,910, down 31% from 4,200 in the second quarter of 2008 but up 59% from 1,827 net orders in the first quarter of 2009.
Some Real Analysis:
Orders were DOWN 31% from last years DEPRESSED ORDER RATE!!!!!!
Backlog was DOWN approaching 50%!!!
Due to depressed pricing, the company is losing money as it sells homes, the more homes it sells, the more it loses.....its losses "narrowed" because it sold a lot less homes this year than last year.....if the company simply shut down.......it's losses would go away.
To use a quarter over quarter sales/order comparison is IDIOTIC at best, and more likely DECEPTIVE at its origin. Spring selling quarter is ALWAYS the historically best selling quarter for housing. Could you imagine a retailer bragging its Christmas/Holiday December selling month was better than November??? How do you think January would compare???
Do you think it would be fair to compare next quarter's KB orders to this quarter's???? NOT A CHANCE!!!!
As indicated above, on a year over year basis, orders are collapsing and backlog is even worse!!!! Selling prices are crashing destroying margins. Ask yourself....why is the mainstream media treating us like IDIOTS???? And if it is being done in this context, where else are we being LIED to?????
Thursday, June 25, 2009
It's Official!!! A DEPRESSION!!!!!
A Depression is defined as a 10% decline in GDP from peak to trough.
We know:
Auto Sales are DOWN around 50%.
New Home Sales DOWN over 75%.
Hotel Revenues DOWN over 20%.
Trucking Sales DOWN over 20%....rail not far behind.
Banking in TROUBLE....Credit Card Defaults OVER 10% and CRE imploding.
Commercial Construction coming to a grinding halt at the end of this summer.
Major Law Firms cutting staff at unprecedented levels.
Architectural Billings evaporating with not much on the books after August.
Government Tax Receipts off 20, 30, 40% and MORE!
Below are just a sample of this afternoon's headlines:
Palm Q4 revenue $86.8 mln vs $296.2 mln
Accenture Q3 revenue $5.54 bln vs $6.59 bln
Micron Technology Q3 sales $1.11 bln vs $1.5 bln
It is obvious Technology and Services are feeling the slowing effect HARD!!!!!!
The two key sectors left are Health Care and Government, and both are tied at the hip and starting to feel the pain. Based on California's predicament, major cutbacks in spending will be necessary....and soon. The cutbacks will be material and not limited to just California. Major cutbacks will occur nationwide as most State and Local governments have seen tax revenues evaporate. As the large cutbacks kick in over the next few weeks, our economy will slow materially.
Based on the typical lag of government statistics, there is little doubt that we will look back sometime in the Fall and determine the Depression started sometime around the end of the 2nd Quarter.
As far as unemployment being reported under 10%.....U6 is now over 16% and many are not being counted as unemployed due to benefits expiring. Further, making an apples to apples comparison to The Great Depression, welfare NEVER existed in the thirties......so if you added in welfare recipients to the unemployment numbers, we are likely well OVER a 25% unemployment rate.
Here is an example from the WSJ of citizens going from being counted as "unemployed" to becoming "welfare" recipients:
Michigan's generous jobless benefits and strict eligibility rules have kept the welfare rolls down despite the state's 14.1% unemployment rate, the highest in the country. But a surge in jobless workers reaching the time limit for unemployment benefits in coming months could change that.
A major test for the state's welfare system could come by January, when nearly one in seven unemployed workers will have exhausted their jobless benefits, unless the laws change, said Norm Isotalo, a spokesman for Michigan's unemployment-insurance agency. Many of the more than 680,000 unemployed workers in the state are collecting jobless benefits, which last for as long as 79 weeks.
Other states with high unemployment, such as Florida and Oregon, have already seen significant increases in welfare caseloads.
"We're expecting a huge influx of applications in the next few months," said Barbara Anders, the director of adult and family services at the Michigan Department of Human Services. About 100,000 people's jobless benefits will expire by January. Officials hope for funding to add staff to handle the influx, and the state Senate appropriations committee has approved hiring 200 more staffers.
Just extrapolating from the above, it is easy to see that millions of Americans are likely to transfer from being counted as "unemployed" to "welfare" recipients. From a practical perspective, they are still unemployed.
Then if you factor in the number of spouses and elderly who will be forced to return to the workforce but unable to find a job....we should exceed 30-35% unemployment by the end of the year.
30% unemployment and a 20% contraction in GDP...........how fast do you think Benny B can print? Will it be an INFLATIONARY DEPRESSION?
We know:
Auto Sales are DOWN around 50%.
New Home Sales DOWN over 75%.
Hotel Revenues DOWN over 20%.
Trucking Sales DOWN over 20%....rail not far behind.
Banking in TROUBLE....Credit Card Defaults OVER 10% and CRE imploding.
Commercial Construction coming to a grinding halt at the end of this summer.
Major Law Firms cutting staff at unprecedented levels.
Architectural Billings evaporating with not much on the books after August.
Government Tax Receipts off 20, 30, 40% and MORE!
Below are just a sample of this afternoon's headlines:
Palm Q4 revenue $86.8 mln vs $296.2 mln
Accenture Q3 revenue $5.54 bln vs $6.59 bln
Micron Technology Q3 sales $1.11 bln vs $1.5 bln
It is obvious Technology and Services are feeling the slowing effect HARD!!!!!!
The two key sectors left are Health Care and Government, and both are tied at the hip and starting to feel the pain. Based on California's predicament, major cutbacks in spending will be necessary....and soon. The cutbacks will be material and not limited to just California. Major cutbacks will occur nationwide as most State and Local governments have seen tax revenues evaporate. As the large cutbacks kick in over the next few weeks, our economy will slow materially.
Based on the typical lag of government statistics, there is little doubt that we will look back sometime in the Fall and determine the Depression started sometime around the end of the 2nd Quarter.
As far as unemployment being reported under 10%.....U6 is now over 16% and many are not being counted as unemployed due to benefits expiring. Further, making an apples to apples comparison to The Great Depression, welfare NEVER existed in the thirties......so if you added in welfare recipients to the unemployment numbers, we are likely well OVER a 25% unemployment rate.
Here is an example from the WSJ of citizens going from being counted as "unemployed" to becoming "welfare" recipients:
Michigan's generous jobless benefits and strict eligibility rules have kept the welfare rolls down despite the state's 14.1% unemployment rate, the highest in the country. But a surge in jobless workers reaching the time limit for unemployment benefits in coming months could change that.
A major test for the state's welfare system could come by January, when nearly one in seven unemployed workers will have exhausted their jobless benefits, unless the laws change, said Norm Isotalo, a spokesman for Michigan's unemployment-insurance agency. Many of the more than 680,000 unemployed workers in the state are collecting jobless benefits, which last for as long as 79 weeks.
Other states with high unemployment, such as Florida and Oregon, have already seen significant increases in welfare caseloads.
"We're expecting a huge influx of applications in the next few months," said Barbara Anders, the director of adult and family services at the Michigan Department of Human Services. About 100,000 people's jobless benefits will expire by January. Officials hope for funding to add staff to handle the influx, and the state Senate appropriations committee has approved hiring 200 more staffers.
Just extrapolating from the above, it is easy to see that millions of Americans are likely to transfer from being counted as "unemployed" to "welfare" recipients. From a practical perspective, they are still unemployed.
Then if you factor in the number of spouses and elderly who will be forced to return to the workforce but unable to find a job....we should exceed 30-35% unemployment by the end of the year.
30% unemployment and a 20% contraction in GDP...........how fast do you think Benny B can print? Will it be an INFLATIONARY DEPRESSION?
Wednesday, June 24, 2009
A cash shortfall not seen since The Great Depression!!!
State controller John Chiang warned today that if legislators and Gov. Arnold Schwarzenegger fail to come up with a budget-balancing package in the next week, he would begin paying California's bills with IOUs on July 2.
The controller's warning came as legislators began what many on both sides of the aisle acknowledged was a rhetorical song-and-dance over closing a $24 billion deficit that stretches over the fiscal year that ends Tuesday and the one that begins Wednesday.....
"Next Wednesday we start a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Chiang said in a news release. "The state's $2.8 billion cash shortage in July grows to $6.5 billion in September, and after that we see a double-digit freefall."
Resorting to IOUs -- whose technical name is registered warrants -- would mark only the second time since the 1930s that California has paid its bills that way. The last time was 1992.
Chiang and other state officials had said that the state would first probably resort to delaying payments to vendors, local governments and others of the state's creditors while a budget balancing deal was worked out so the state could borrow money from Wall Street for its cash flow problems.
Both borrowing for cash flow and delaying payments are commonplace. In fact, Chiang delayed payments in February for 30 days while legislators and the governor wrestled with a budget deficit.
But, Chiang said said, the current cash shortfall was five times larger than the February hole. Since Gov. Schwarzenegger said last month he would not authorize a form of short-term borrowing through what are called revenue anticipation warrants, Chiang said IOUs were the only option.
A federal court ruled in 1996 that state employees couldn't be paid with IOUs. Others who receive them will draw interest on them, but banks and other financial institutions can refuse to accept them. Chiang said the IOUs would have a maturity date of Oct. 1
http://www.sacbee.com/topstories/story/1973740.html
Could you imagine paying your taxes this way??????
The controller's warning came as legislators began what many on both sides of the aisle acknowledged was a rhetorical song-and-dance over closing a $24 billion deficit that stretches over the fiscal year that ends Tuesday and the one that begins Wednesday.....
"Next Wednesday we start a massively unbalanced spending plan and a cash shortfall not seen since the Great Depression," Chiang said in a news release. "The state's $2.8 billion cash shortage in July grows to $6.5 billion in September, and after that we see a double-digit freefall."
Resorting to IOUs -- whose technical name is registered warrants -- would mark only the second time since the 1930s that California has paid its bills that way. The last time was 1992.
Chiang and other state officials had said that the state would first probably resort to delaying payments to vendors, local governments and others of the state's creditors while a budget balancing deal was worked out so the state could borrow money from Wall Street for its cash flow problems.
Both borrowing for cash flow and delaying payments are commonplace. In fact, Chiang delayed payments in February for 30 days while legislators and the governor wrestled with a budget deficit.
But, Chiang said said, the current cash shortfall was five times larger than the February hole. Since Gov. Schwarzenegger said last month he would not authorize a form of short-term borrowing through what are called revenue anticipation warrants, Chiang said IOUs were the only option.
A federal court ruled in 1996 that state employees couldn't be paid with IOUs. Others who receive them will draw interest on them, but banks and other financial institutions can refuse to accept them. Chiang said the IOUs would have a maturity date of Oct. 1
http://www.sacbee.com/topstories/story/1973740.html
Could you imagine paying your taxes this way??????
AN INFLATIONARY DEPRESSION...OUCH!!!!!
From MarketWatch:
SAN FRANCISCO (MarketWatch) -- Berkshire Hathaway Chairman Warren Buffett told CNBC Wednesday that he has trouble seeing so-called green shoots of economic recovery in the U.S. The risk of a collapse in the financial system has past, but "we haven't got the economy moving again," he explained. When asked whether Ben Bernanke should be re-appointed as Federal Reserve Chairman, Buffett said "I don't see how you could do better." He also said the stock market is attractive versus other types of investments over a long-term period such as 10 years. Fixed-dollar investments will be eaten away by inflation over the long term, Buffett added. "We could see a lot of inflation," Buffett warned.
The data today supports Mr. Buffet's perspective about NO green shoots:
NEW YORK (MarketWatch) -- Supervalu Inc.said Wednesday that earnings for the first quarter would be substantially below "First Call consensus earnings for the quarter." Analysts polled by FactSet Research estimated, on average, earnings of 65 cents a share for the grocer. Chief Executive Craig Herkert stated, "Consumers have become more value focused and cautious in their spending which has pressured sales and margins greater than anticipated. We currently estimate our identical store sales will be approximately negative 3%."
Supervalu is a national grocer and groceries are the last spend a consumer cuts. Sales tend to be more resilient due to tens of billions in food stamps the government hands out each year.
It is clear that the strain on the consumer is getting much more severe. Credit card delinquencies are increasing to historically high levels. We are now seeing Health Care and Government start to ramp up layoffs and pay cuts making the economic prognosis very negative at the current time.
The city of Sacramento has cut off talks with the fire union - and as many as 68 firefighters will lose their jobs next week as a result.
http://www.sacbee.com/topstories/story/1971509.html
One city......68 Firefighters!
Hospitals are starting to cut staff in material numbers in addition to hundreds of thousands of teachers and professors whose careers are in jeopardy due to lack of funding.
Prepare for lots of downward revisions as the summer progresses...like the following:
(MarketWatch) -- Monsanto Co. said Wednesday its third-quarter profit slipped 14% on fewer sales of Roundup herbicide as low-cost competition eroded its market share, leading to a reorganization of the company and the dismissal of about 900 employees.
NO GREEN SHOOTS AND INFLATION???? THIS COULD BE DEVASTATING!!!! BUT WHAT DOES MR. BUFFETT KNOW;)
SAN FRANCISCO (MarketWatch) -- Berkshire Hathaway Chairman Warren Buffett told CNBC Wednesday that he has trouble seeing so-called green shoots of economic recovery in the U.S. The risk of a collapse in the financial system has past, but "we haven't got the economy moving again," he explained. When asked whether Ben Bernanke should be re-appointed as Federal Reserve Chairman, Buffett said "I don't see how you could do better." He also said the stock market is attractive versus other types of investments over a long-term period such as 10 years. Fixed-dollar investments will be eaten away by inflation over the long term, Buffett added. "We could see a lot of inflation," Buffett warned.
The data today supports Mr. Buffet's perspective about NO green shoots:
NEW YORK (MarketWatch) -- Supervalu Inc.said Wednesday that earnings for the first quarter would be substantially below "First Call consensus earnings for the quarter." Analysts polled by FactSet Research estimated, on average, earnings of 65 cents a share for the grocer. Chief Executive Craig Herkert stated, "Consumers have become more value focused and cautious in their spending which has pressured sales and margins greater than anticipated. We currently estimate our identical store sales will be approximately negative 3%."
Supervalu is a national grocer and groceries are the last spend a consumer cuts. Sales tend to be more resilient due to tens of billions in food stamps the government hands out each year.
It is clear that the strain on the consumer is getting much more severe. Credit card delinquencies are increasing to historically high levels. We are now seeing Health Care and Government start to ramp up layoffs and pay cuts making the economic prognosis very negative at the current time.
The city of Sacramento has cut off talks with the fire union - and as many as 68 firefighters will lose their jobs next week as a result.
http://www.sacbee.com/topstories/story/1971509.html
One city......68 Firefighters!
Hospitals are starting to cut staff in material numbers in addition to hundreds of thousands of teachers and professors whose careers are in jeopardy due to lack of funding.
Prepare for lots of downward revisions as the summer progresses...like the following:
(MarketWatch) -- Monsanto Co. said Wednesday its third-quarter profit slipped 14% on fewer sales of Roundup herbicide as low-cost competition eroded its market share, leading to a reorganization of the company and the dismissal of about 900 employees.
NO GREEN SHOOTS AND INFLATION???? THIS COULD BE DEVASTATING!!!! BUT WHAT DOES MR. BUFFETT KNOW;)
Wednesday, June 17, 2009
The Solution to the Financial Crisis
IT IS REALLY VERY SIMPLE IF YOU THINK ABOUT IT
THE PROBLEM
THE SOLUTION
THE PROBLEM
THE SOLUTION
Sunday, June 14, 2009
Could California Homes Be Practically Worthless???
In the past five years, Californian's took out mortgages far exceeding their ability to service the debt. Now residents are suffering massive wage cuts and job losses.....many simply can't afford to make their mortgage payments and foreclosures are exploding.
The problem is simply not just home buyers who purchased homes, but the thousands who borrowed against their existing homes to sustain a "California" lifestyle:
The latest argument comes from Michael LaCour-Little, a finance professor at Cal State Fullerton. He is lead author of a new study, which found that during the housing boom some long-time owners borrowed against all their property's equity gain, or paper profits. They treated their houses like cash machines.
People who owe their bank as much or more than their home is worth are most vulnerable to foreclosure. When they suffer a job loss or other drop in income, they can't sell, because the sale price won't cover the debt.
It's long been assumed that home buyers who purchased at housing's peak with little money down are among the most likely to face foreclosure. They owed more than their property was worth once prices tanked.
But the study concludes 'cashing-out' is about as predictive of foreclosure for the same reason: negative equity.
Think of the countless number of elderly, small business owners, and others that survived over the past few years simply from extracting millions of dollars from perceived home equity......and now that the supplemental income has evaporated.....few can sustain their lifestyle and the equity is gone.
Many families are in financial distress and that distress is driving DOWN home values. Pricing projections are constantly being revised lower. Most recently, Fitch is calling for an ADDITIONAL 30% decline in California.
The projected losses also reflect an assumption that from the first quarter of 2009, home prices will fall an additional 12.5% nationally and 36% in California, with home prices not exhibiting stability until the second half of 2010.
Fitch-takes-various-actions-on-543-2005-2008-us-subprime-rmbs-deals
With countless numbers unable to make their payments.....California is struggling with the torrent of foreclosures flooding its court system every month.....a court system already stretched due to budget constraints. Things have gotten so bad that lawmakers are suggesting a moratorium on foreclosures....
California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday.
The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
But supporters acknowledge the California Foreclosure Prevention Act won't stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.
However, the moratorium will accomplish little other than delay a growing problem of affordability....evidenced by the most recent federal moratorium's failure to slow the rising the tide once lifted.
Foreclosures occur as a result of insufficient income and savings to service debt and other obligations. Without good jobs, savings or easy access to the home equity machine......many more in CA face eviction. In addition, the state faces the loss of billions in property tax revenues at a time when it's $24 Billion in the hole.
If wages continue to evaporate and jobs sliced like limbs on a sepsis patient....pretty soon there won't be much left to cut in California. Few will be able to afford much of anything.
Due to budget constraints, California faces the biggest cycle of wage cuts and job losses in its history. Especially vulnerable are high paid government and health care workers(and those that support government)....the cuts could easily affect millions of residents.
As many know, to destroy home values, it doesn't take every house on a street to be in foreclosure to impact all homes.....just a few distressed homes in the same area can drop values dramatically.
The most extreme case right now is in Michigan where home median home prices in a number of municipalities have dropped below $10,000.....simply due to the fact that there are no jobs and/or very low incomes......
It has become so bad in some areas that the government is now leveling ENTIRE sections of towns to save money!!!!!
Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.
California will be no different, although not likely to reach Michigan extremes for a variety of reasons, if you think that CA home prices have come close to reaching a bottom......you may want to sit back, have a drink, and watch the spectacle. Fitch is only predicting an ADDITIONAL 30% decline, I am predicting at least 50% MORE.
If we continue down this path of government spending money it just doesn't have, few will consider supporting our uncontrollable welfare payments and interest rates will likely climb into double digits in very short order destroying affordability. Conversely, if we lower government spending to income, California could loose or cut wages on hundreds of thousands of jobs imposing MASSIVE pressure on an already stressed state.
The above exemplifies why we, as a nation, are stuck between a rock and a hard place!!!!!
Economists used to laugh when I predicted homes values would drop 50-70% a few years ago. We are already there in a number of areas across America. The problem is the problem is a BIG problem....and not very funny, especially for those getting evicted from their homes and families destroyed.
Now the distressed home issue has morphed into a state concern. Tax revenues are evaporating and the burden of taxation is being focused on fewer and fewer. If this process continues, soon there will be few left in California to support state services. I am already aware of a number of wealthier Californian's who have migrated from the state due to fear of draconian taxes. For confirmation, just give the Austin, Texas MVA a call and see how many of the new license applicants are from CA!!!!!
Without tax revenues, California's economy faces serious hurdles maintaining the states standard of living. Right now tax revenues are imploding. If the situation is not reversed soon, many of you may be surprised how many may leave California. And if you are surprised by the migration out of the state, you will really be SHOCKED how low home prices can go in a state with negative population growth.
For those of you who think Great Depression pricing is the bottom, you may want to talk to residents in Detroit. What receives little commentary is that in the 1930s, property taxes and insurance payments were insignificant. Ask yourself, how much more of a home could be purchased today if you didn't pay taxes and insurance on your house and deduct it from its current value.
Soon you will begin to understand that massive structural change is ahead. Alstry is confident of this and very confident of a very bright future. However, the change will be very convulsive to many existing paradigms and few are prepared.
Are you ready to leave the matrix??????
Let's hope our government officials don't take us on a path of WAR to distract us from the symptoms of change.
The problem is simply not just home buyers who purchased homes, but the thousands who borrowed against their existing homes to sustain a "California" lifestyle:
The latest argument comes from Michael LaCour-Little, a finance professor at Cal State Fullerton. He is lead author of a new study, which found that during the housing boom some long-time owners borrowed against all their property's equity gain, or paper profits. They treated their houses like cash machines.
People who owe their bank as much or more than their home is worth are most vulnerable to foreclosure. When they suffer a job loss or other drop in income, they can't sell, because the sale price won't cover the debt.
It's long been assumed that home buyers who purchased at housing's peak with little money down are among the most likely to face foreclosure. They owed more than their property was worth once prices tanked.
But the study concludes 'cashing-out' is about as predictive of foreclosure for the same reason: negative equity.
Think of the countless number of elderly, small business owners, and others that survived over the past few years simply from extracting millions of dollars from perceived home equity......and now that the supplemental income has evaporated.....few can sustain their lifestyle and the equity is gone.
Many families are in financial distress and that distress is driving DOWN home values. Pricing projections are constantly being revised lower. Most recently, Fitch is calling for an ADDITIONAL 30% decline in California.
The projected losses also reflect an assumption that from the first quarter of 2009, home prices will fall an additional 12.5% nationally and 36% in California, with home prices not exhibiting stability until the second half of 2010.
Fitch-takes-various-actions-on-543-2005-2008-us-subprime-rmbs-deals
With countless numbers unable to make their payments.....California is struggling with the torrent of foreclosures flooding its court system every month.....a court system already stretched due to budget constraints. Things have gotten so bad that lawmakers are suggesting a moratorium on foreclosures....
California is imposing a 90-day moratorium on housing foreclosures under a new law that takes effect Monday.
The law is expected to make lenders try harder to keep borrowers in their homes. Loan companies must prove they tried to modify the delinquent loans before they can begin foreclosing.
But supporters acknowledge the California Foreclosure Prevention Act won't stop thousands of foreclosures from eventually happening. There have been more than 365,000 foreclosures in California since early 2007, with many more already scheduled.
However, the moratorium will accomplish little other than delay a growing problem of affordability....evidenced by the most recent federal moratorium's failure to slow the rising the tide once lifted.
Foreclosures occur as a result of insufficient income and savings to service debt and other obligations. Without good jobs, savings or easy access to the home equity machine......many more in CA face eviction. In addition, the state faces the loss of billions in property tax revenues at a time when it's $24 Billion in the hole.
If wages continue to evaporate and jobs sliced like limbs on a sepsis patient....pretty soon there won't be much left to cut in California. Few will be able to afford much of anything.
Due to budget constraints, California faces the biggest cycle of wage cuts and job losses in its history. Especially vulnerable are high paid government and health care workers(and those that support government)....the cuts could easily affect millions of residents.
As many know, to destroy home values, it doesn't take every house on a street to be in foreclosure to impact all homes.....just a few distressed homes in the same area can drop values dramatically.
The most extreme case right now is in Michigan where home median home prices in a number of municipalities have dropped below $10,000.....simply due to the fact that there are no jobs and/or very low incomes......
It has become so bad in some areas that the government is now leveling ENTIRE sections of towns to save money!!!!!
Dozens of US cities may have entire neighbourhoods bulldozed as part of drastic "shrink to survive" proposals being considered by the Obama administration to tackle economic decline.
California will be no different, although not likely to reach Michigan extremes for a variety of reasons, if you think that CA home prices have come close to reaching a bottom......you may want to sit back, have a drink, and watch the spectacle. Fitch is only predicting an ADDITIONAL 30% decline, I am predicting at least 50% MORE.
If we continue down this path of government spending money it just doesn't have, few will consider supporting our uncontrollable welfare payments and interest rates will likely climb into double digits in very short order destroying affordability. Conversely, if we lower government spending to income, California could loose or cut wages on hundreds of thousands of jobs imposing MASSIVE pressure on an already stressed state.
The above exemplifies why we, as a nation, are stuck between a rock and a hard place!!!!!
Economists used to laugh when I predicted homes values would drop 50-70% a few years ago. We are already there in a number of areas across America. The problem is the problem is a BIG problem....and not very funny, especially for those getting evicted from their homes and families destroyed.
Now the distressed home issue has morphed into a state concern. Tax revenues are evaporating and the burden of taxation is being focused on fewer and fewer. If this process continues, soon there will be few left in California to support state services. I am already aware of a number of wealthier Californian's who have migrated from the state due to fear of draconian taxes. For confirmation, just give the Austin, Texas MVA a call and see how many of the new license applicants are from CA!!!!!
Without tax revenues, California's economy faces serious hurdles maintaining the states standard of living. Right now tax revenues are imploding. If the situation is not reversed soon, many of you may be surprised how many may leave California. And if you are surprised by the migration out of the state, you will really be SHOCKED how low home prices can go in a state with negative population growth.
For those of you who think Great Depression pricing is the bottom, you may want to talk to residents in Detroit. What receives little commentary is that in the 1930s, property taxes and insurance payments were insignificant. Ask yourself, how much more of a home could be purchased today if you didn't pay taxes and insurance on your house and deduct it from its current value.
Soon you will begin to understand that massive structural change is ahead. Alstry is confident of this and very confident of a very bright future. However, the change will be very convulsive to many existing paradigms and few are prepared.
Are you ready to leave the matrix??????
Let's hope our government officials don't take us on a path of WAR to distract us from the symptoms of change.
Friday, June 12, 2009
Prepare to be ZOMBULATED!!!!
Zombulation is a term created by the Institute of Alstrynomics defined as the point when one runs out of money and extinguishes all access to credit OR when the government taxes you 100% of your income and assets. In either case, you economically lose everything.
The private economy in America is DYING QUICKLY!!!!
Today Cravath, Swain & Moore Firm Asked Incoming Lawyers to Delay Start a Year!!!!
For years government has been growing as the private sector has been shrinking. A greater and greater percentage of private sector revenues came from government...WalMart(welfare, food stamps, unemployment checks), Defense, Health Care.....you name it.
Now the true private sector has become so small, without Ponzi like bubbles....there is simply very little money flowing out of the Private Sector to sustain a MASSIVE government sector.
Without government spending.....THE ECONOMIC SYSTEM AS WE KNEW IT IN AMERICA IS DYING VERY FAST!!!!!
The above is one of the largest law firms in America....and there is just no work for incoming lawyers.....slowing is happening at practically every law firm in America.....many partners are coming to work and twiddling their thumbs.....plus most of the law firms at this size generate a HUGE amount of revenues from government spending....SO IF GOVERNMENT SPENDING SLOWED...SO WOULD THEIR BUSINESS!!!!
California faces a similar issue......A HUGE PERCENTAGE OF CALIFORNIA'S ECONOMY SIMPLY COMES FROM GOVERNMENT SPENDING...
And now the private sector is simply not generating enough money to sustain California's massive government....at this point.....revenues are soooo low that it threatens a shut down of the entire state government unless a resolution comes forth.
Barring a miracle, California lawmakers will miss their June 15 deadline for passing a balanced budget -- a staggering challenge with the state facing a $24.3 billion shortfall amid the worst drop in state revenues since the Great Depression.
Gov. Arnold Schwarzenegger vowed Wednesday to let California government come to a "grinding halt" rather than agree to a high-interest loan to keep the state afloat if he and the Legislature do not close the yawning budget gap in coming weeks.
http://globaleconomicanalysis.blogspot.com/2009/06/showdo......
THIS TIME CALIFORNIA'S BUDGET IS MUCH BIGGER THAN THE GREAT DEPRESSION.
Soon the light will turn on in many of your heads and you will begin to appreciate Alstrynomics. We are running out of money in the private sector.....and government has grown so large.....that if we took every dime the private sector generated in profits....it would not be enough to sustain government since much of current private sector revenues actually comes from government.
Yes my friends, during the past 10 or so years.....the entire American economy has morphed into one big Ponzi scheme (Private sector borrowing money it didn't have generating profits for government and in turn government spending driving the private sector).....your government officials have known this for some time....so have foreign bankers......and same with Alstry....now you guys are about to leave the Matrix........it is my job to condition you so the shock won't kill you.
In the end.....ask yourself how small would our economy really be if the government stopped spending.....you will be SHOCKED by the answer if you take the time to carry it out fully.
The only solution is to equitably bankrupt the nation or your politicians and bankers will rob you dry and there will be nothing left for anyone except those who stole the money and left the country.
Remember, the other course of action is WAR of course!!!!! You think if Madoff could have chosen war....he might have thought about it instead of getting caught???
The private economy in America is DYING QUICKLY!!!!
Today Cravath, Swain & Moore Firm Asked Incoming Lawyers to Delay Start a Year!!!!
For years government has been growing as the private sector has been shrinking. A greater and greater percentage of private sector revenues came from government...WalMart(welfare, food stamps, unemployment checks), Defense, Health Care.....you name it.
Now the true private sector has become so small, without Ponzi like bubbles....there is simply very little money flowing out of the Private Sector to sustain a MASSIVE government sector.
Without government spending.....THE ECONOMIC SYSTEM AS WE KNEW IT IN AMERICA IS DYING VERY FAST!!!!!
The above is one of the largest law firms in America....and there is just no work for incoming lawyers.....slowing is happening at practically every law firm in America.....many partners are coming to work and twiddling their thumbs.....plus most of the law firms at this size generate a HUGE amount of revenues from government spending....SO IF GOVERNMENT SPENDING SLOWED...SO WOULD THEIR BUSINESS!!!!
California faces a similar issue......A HUGE PERCENTAGE OF CALIFORNIA'S ECONOMY SIMPLY COMES FROM GOVERNMENT SPENDING...
And now the private sector is simply not generating enough money to sustain California's massive government....at this point.....revenues are soooo low that it threatens a shut down of the entire state government unless a resolution comes forth.
Barring a miracle, California lawmakers will miss their June 15 deadline for passing a balanced budget -- a staggering challenge with the state facing a $24.3 billion shortfall amid the worst drop in state revenues since the Great Depression.
Gov. Arnold Schwarzenegger vowed Wednesday to let California government come to a "grinding halt" rather than agree to a high-interest loan to keep the state afloat if he and the Legislature do not close the yawning budget gap in coming weeks.
http://globaleconomicanalysis.blogspot.com/2009/06/showdo......
THIS TIME CALIFORNIA'S BUDGET IS MUCH BIGGER THAN THE GREAT DEPRESSION.
Soon the light will turn on in many of your heads and you will begin to appreciate Alstrynomics. We are running out of money in the private sector.....and government has grown so large.....that if we took every dime the private sector generated in profits....it would not be enough to sustain government since much of current private sector revenues actually comes from government.
Yes my friends, during the past 10 or so years.....the entire American economy has morphed into one big Ponzi scheme (Private sector borrowing money it didn't have generating profits for government and in turn government spending driving the private sector).....your government officials have known this for some time....so have foreign bankers......and same with Alstry....now you guys are about to leave the Matrix........it is my job to condition you so the shock won't kill you.
In the end.....ask yourself how small would our economy really be if the government stopped spending.....you will be SHOCKED by the answer if you take the time to carry it out fully.
The only solution is to equitably bankrupt the nation or your politicians and bankers will rob you dry and there will be nothing left for anyone except those who stole the money and left the country.
Remember, the other course of action is WAR of course!!!!! You think if Madoff could have chosen war....he might have thought about it instead of getting caught???
Stuck between Barack and a Hardplace!!!!!!
President Obama faces THE MOST DIFFICULT economic issue ever to confront an American President.
Throughout our nations history, we have been a nation where the PRIVATE economy generated sales and profits and supported our government and its currency. As time passed our private industry grew and so did our government......but a few decades ago our private side failed to keep up with the growth of government and government grew and grew and grew becoming a more important part of the economy as each year passed.
Right now our total government spending is about $6.5 Trillion dollars........about half of our GDP.
http://www.usgovernmentspending.com/index.php?year=2009
Unfortunately, after popping the debt bubble of the last ten years....our private economy is simply too small to sustain a government with $6.5 Trillion in spending.....and that spending drives our entire economy including health care, defense, and welfare which drives trillions into the private sector.
As a nation, we are now only generating about $3.5 to $4 Trillion dollars in tax revenues......and a HUGE gap is forming......and the outlook for the gap to widen is almost assured with an aging population and more and more becoming un/underemployed.
HERE IS PRESIDENT OBAMA'S MASSIVE PROBLEM:
If government slowed spending to match receipts, our nation, and the world, would immediately implode into the biggest depression in history.......if government keeps spending money it doesn't have......our currency will collapse as few will want to deal with a country that produces very little and has such a MASSIVE social welfare spend while their own citizens are living at a much lower standard.
In sum, our President has two choices.......a depression where we restructure and start over or hyperinflation with a depression where our currency is worthless and nobody can afford to fill up their cars with gas unless they live outside the U.S...
War is always a third alternative.
You pick.
Throughout our nations history, we have been a nation where the PRIVATE economy generated sales and profits and supported our government and its currency. As time passed our private industry grew and so did our government......but a few decades ago our private side failed to keep up with the growth of government and government grew and grew and grew becoming a more important part of the economy as each year passed.
Right now our total government spending is about $6.5 Trillion dollars........about half of our GDP.
http://www.usgovernmentspending.com/index.php?year=2009
Unfortunately, after popping the debt bubble of the last ten years....our private economy is simply too small to sustain a government with $6.5 Trillion in spending.....and that spending drives our entire economy including health care, defense, and welfare which drives trillions into the private sector.
As a nation, we are now only generating about $3.5 to $4 Trillion dollars in tax revenues......and a HUGE gap is forming......and the outlook for the gap to widen is almost assured with an aging population and more and more becoming un/underemployed.
HERE IS PRESIDENT OBAMA'S MASSIVE PROBLEM:
If government slowed spending to match receipts, our nation, and the world, would immediately implode into the biggest depression in history.......if government keeps spending money it doesn't have......our currency will collapse as few will want to deal with a country that produces very little and has such a MASSIVE social welfare spend while their own citizens are living at a much lower standard.
In sum, our President has two choices.......a depression where we restructure and start over or hyperinflation with a depression where our currency is worthless and nobody can afford to fill up their cars with gas unless they live outside the U.S...
War is always a third alternative.
You pick.
Saturday, June 6, 2009
How OFF are Economists??????
As this is written, the government published U3 unemployment rate is 9.4%.....the U6 rate exceeds 16%. Many economists are predicting unemployment to peak at 11%.
WHO IS KIDDING WHO???????
The U.S. labor force is a bit over 150 million people. About 21 million are employed by Federal, State and Local Governments who are generally paid better than average private sector workers.
Many were hired in the last eight years as tax receipts to government gushed in from revenues, profits, and incomes generated in the credit bubble years. Taxes were flowing and government was growing....at unprecedented rates. According to recent data, TOTAL government spending approached $6.5 TRILLION dollars.....to put that number in perspective.....it approximates half of our total GDP.
With the growing number of government workers also came growing government spending on practically everything including technology and supplies, real estate, and health care. The Ponzi like boom in the private sector created fantastic prosperity in the public sector which in turn drove revenues back into the private sector........and we could go on and on and on......
But as too many borrowed too much.....the accumulated debt became a crushing burden and borrowers started to default and banks slowed lending. The party came to a halt and revenues evaporated all over the place. Nowhere more obvious than new home construction with sales down over 75% from peak. Auto Sales are down over 50% and retail sales are evaporating as thousands of stores are shutting down around the nation.
As sales and profits slowed, businesses started reducing workforces and millions of workers went from being taxpayers to unemployment recipients. In addition, millions of formerly highly paid workers in real estate sales, mortgage/finance sales, and construction saw their incomes contract dramatically.
FACT: The top 5% of taxpayers pay about 60% of the taxes.....and many of these taxpayers have seen their incomes drop materially in recent years without much prospect of returning to the good old days anytime soon.
Tax receipts to government declined sharply this year through April, Federal Income Tax receipts are DOWN 44%.....and state and local governments are not doing much better with collections.
In the next few weeks....state and local governments are going to have to make some very difficult decisions regarding budgets and labor reductions. 20% cuts are being routinely contemplated.
So let's think about this for a second.....if government cuts 20% of its labor force.....that alone will increase unemployment by about 3% taking the U3 rate to over 12%....WITHOUT factoring the impact of MASSIVE government spending cuts on the private sector.........which will likely take U3 to over 15% without too much effort.
A 15% unemployment projection fails to account for likely additional deterioration as more and more individuals and businesses get Zombulated......a term we will define in a future blog.
If you think a 11% peak unemployment projection is reasonable based on the currently known facts......you have little appreciation for Alstrynomics......the practical application of facts to economics.
Economists better wake up......because the economy just may shock them in the very near future!!!!!!
WHO IS KIDDING WHO???????
The U.S. labor force is a bit over 150 million people. About 21 million are employed by Federal, State and Local Governments who are generally paid better than average private sector workers.
Many were hired in the last eight years as tax receipts to government gushed in from revenues, profits, and incomes generated in the credit bubble years. Taxes were flowing and government was growing....at unprecedented rates. According to recent data, TOTAL government spending approached $6.5 TRILLION dollars.....to put that number in perspective.....it approximates half of our total GDP.
With the growing number of government workers also came growing government spending on practically everything including technology and supplies, real estate, and health care. The Ponzi like boom in the private sector created fantastic prosperity in the public sector which in turn drove revenues back into the private sector........and we could go on and on and on......
But as too many borrowed too much.....the accumulated debt became a crushing burden and borrowers started to default and banks slowed lending. The party came to a halt and revenues evaporated all over the place. Nowhere more obvious than new home construction with sales down over 75% from peak. Auto Sales are down over 50% and retail sales are evaporating as thousands of stores are shutting down around the nation.
As sales and profits slowed, businesses started reducing workforces and millions of workers went from being taxpayers to unemployment recipients. In addition, millions of formerly highly paid workers in real estate sales, mortgage/finance sales, and construction saw their incomes contract dramatically.
FACT: The top 5% of taxpayers pay about 60% of the taxes.....and many of these taxpayers have seen their incomes drop materially in recent years without much prospect of returning to the good old days anytime soon.
Tax receipts to government declined sharply this year through April, Federal Income Tax receipts are DOWN 44%.....and state and local governments are not doing much better with collections.
In the next few weeks....state and local governments are going to have to make some very difficult decisions regarding budgets and labor reductions. 20% cuts are being routinely contemplated.
So let's think about this for a second.....if government cuts 20% of its labor force.....that alone will increase unemployment by about 3% taking the U3 rate to over 12%....WITHOUT factoring the impact of MASSIVE government spending cuts on the private sector.........which will likely take U3 to over 15% without too much effort.
A 15% unemployment projection fails to account for likely additional deterioration as more and more individuals and businesses get Zombulated......a term we will define in a future blog.
If you think a 11% peak unemployment projection is reasonable based on the currently known facts......you have little appreciation for Alstrynomics......the practical application of facts to economics.
Economists better wake up......because the economy just may shock them in the very near future!!!!!!
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