"Earlier I warned about a stock market crash, but that is merely a side show in my view. What I am writing about tonight is the final phase of the ongoing American financial collapse.
So here it is. One half of the American adult working population makes $18,000 or less. Another 30 to 40% makes $36,000 or less. the rest make up to $115,000. After that you are dealing with the 1% and the elite. So, roughly 90% of the American population makes under $3000 gross a month. The under $18,000 crowd is in the $1500 a month, or less, sometimes much less. We are talking about "consumer spending" being carried by people who "take home" between $1200 and $2500 a month. With many of them under $1200.
In 60 to 90 days, from September 23 to October 23, people are going to get hit with 40% electric, propane and natural gas price increases from their utilities. This is the final 40% of 60% from 2007 and early 2008. 100% energy increases, at a 8% per month rate. This is in addition to 30 to 75% food price increases so far, with another 20% to 50% in the next 60 to 90 days.
All of which will come out of a consumer netting $1200 to $2500 a month. All of which has been going on for years now. The critical factor this time is the capacity to get debt has collapsed.
At all levels of American society the ability to borrow has been curtailed or ended. The reason the system is going down in 90 days: it will be an ongoing process into spring 2009, is people will be on a cash and carry basis, or cash on the spot.
NO HOME EQUITY LOANS! NO CREDIT CARDS! NO BANK LOANS. ETC. ETC.
SO, the way I see it is consumer spending will simply cease for all, to use a military term, mission essential items. People will write the check for the 500 gallon heating oil tank fill, at $1500 in early October and then they will not spend anything else, other than food, shelter and heat.
Every other type of consumer spending, disposable income spending, will simply be disposed of. And when that happens, the 70% of our GDP that is consumer spending will suddenly be 40%. And when that happens, the system will simply lock up and freeze.
This is how I see it. Consider yourself forewarned. It will be a thin Christmas retail season for sure. And after the New Year, 2009 the retail blood will flow in the streets. By early 2009, a wave of credit card defaults, etc. etc. etc will have taken down many banks.
Yep, my view is the "October 8th surprise" is people beginning the process of spending all their monthly income just to eat, stay warm and live, with NOTHING left over. NOTHING. Followed by the elderly, the poor and the street crazies dying."
