posted on Sep, 13 2009 @ 09:37 PM
I have given a lot of thought to this subject lately. There are a lot of theories about the economy. Most people on ATS would probably agree that
the bunk we hear in the MSM and from the federal government is just a psyops to try to make people feel better, spend money and get back into debt.
The reality on the ground is harsh and doesn’t synch with the “official” news.
I heard on NPR the other day an interesting story indicating that the funds that support our social safety net called “unemployment insurance” are
drying up. Many states, notably California, have lost all funds. When this happens they rely on a federal fund that is also stretched.
It took a bit of time to resolve this in my head, but I think I see a possible outcome of this and it is not pretty. I have to tell someone and my
family is already so cynical and jaded that none of it surprises them.
Unemployment is rising. The government tries to spin it with “we are losing jobs slower than we were last month”. That’s great, we lost 200K
jobs, but it’s great because we didn’t lose 250K jobs. That’s still 200k jobs lost! That’s over 2 million jobs a year! So what happens when
people lose their jobs? They go to unemployment insurance and savings while they try in vain to find another job.
Now what will happen as the safety net begins to break? State after state will begin tightening the leash on who qualifies for unemployment. The
ones who have been on it longest will probably be dropped first. As these people begin to roll off the fund, they will be unable to make their bills
Round 1 – Homeowners
In the first round, I see large batches of homeowners getting foreclosed. They will be kicked out and will try to find a place to rent. Some will
find rental houses, others apartments. Many will sacrifice the one room to a person concept and all bunk in common rooms or share rooms.
The banks on the other hand are converting their (some would say imaginary) liquid assets into real estate via foreclosure.
Round 2 – Renters start getting kicked out
Shortly after the initial boom in rental funds, the well dries out. After all, no unemployment insurance and no job mean no money to pay rent either.
People will buy food before they pay rent. Homelessness levels begin to rise along with crime rates. Independent landlords and property management
firms begin to struggle.
Round 3 – Investment Owners
This round will hit the people who were renting out property. They can’t find anyone to rent to anymore because of large scale unemployment with no
more safety net. By this time, unemployment funds have begun to catastrophically fail. Banks continue to foreclose, now turning to apartments and
rental houses, but the weight of the real estate is beginning to take a toll on their liquidity. The markets, sensing this freeze credit lines again
in a panic.
Round 4 – Banks begin to dump their Assets
In a panic, the banks begin to dump their assets onto the market at greatly reduced rates trying to recoup something, anything, and become liquid
again. No luck. The people that can buy will, but it is too little too late. The credit markets freeze and “credit ratings” mean squat to
anyone. This heralds the ultimate collapse of the dollar and the start of hyper-inflation.
So this is obviously just one way it could play out. I might have some logical fallacies in here, too. I just wanted to post this to see how
plausible this might be.
[edit on 9-13-2009 by rogerstigers]