Dear Mr. Rawles,

I thought I would drop you a note on my experiences in attempting to collect a significant volume of nickels. After seeing the Coinflation.com site and some of your articles and hearing about the changes being made by the US government in what materials are allowed to be used to make nickels, I decided to take your advice and start collecting. I decided to obtain $1,000 worth to start with, so I went to my local credit union and walked up to the teller and asked what their policy was on obtaining large volumes of coins. She said that they have to pay for shipping of coins and that they order coins twice per week. They also ship their bulk coins that they collect in the coin counter they provide for their members to a company that counts and rolls and sells the coins back. She described the coin service they use. So I asked if they had any coins that they were going to have to pay to ship to the coin processing company that I could buy at face value so they could save money on the processing fee. She was happy to sell me a $200 bag of nickels, unrolled and only counted by their coin counting machine. I accepted that, bought the nickels and took them home. 4,000 nickels in one bag is not lite but it looked worse than it was for carrying.

I thought this solution seemed easy enough so I started dropping in at the credit union once or twice per week. At first they said they didn't have any bags of nickels for me to buy and then after about two weeks they told me they weren't allowed to sell me bulk nickels anymore and that their manager told them it was not allowed. I found this to be a little annoying, after all I was trying to help them to save processing fees by buying the nickels in a $200 bag so they didn't have to pay the shipping for the nickels. I considered my options at this point. I wanted to find the least painful way to get this situation resolved so I thought I would call up the Vice President of the branches in the area and complain. I realized this was excessive and thought I would try calling up the manager of the branch first. Maybe he was a reasonable man. I was disappointed to hear him tell me they had recently had a meeting and established new rules for coin purchasing. The rules outlined that each non-commercial member was only allowed to purchase $20 to $30 worth at a time on a basis of once or twice per week. I explained that I only needed $800 worth and that if I buy $30 worth twice per week it would take me a little over one year to obtain my goal of $800 more worth of nickels. I then stated that this was really over burdensome. He countered that he anything more would cost them too much money. He asked when I would be bringing back the nickels and putting them through the counting machine in the lobby. Then he explained that they have been having problems with some of their members buying large volumes of nickels, sorting them and returning the bulk of all the low value coins while keeping all the coins that sell on eBay to collectors. I responded by promising not to bring back any nickels and that I simply wanted to store them. I would only bring them back if I became unemployed and foreclosed on my house and desperate to spend the money. He still resisted and told me that this was their policy and he had to follow the rules as they were given by the senior management of the Credit Union. I persisted and asked if he would please request an exception to the rules this one time so that I could obtain $800 worth of nickels and that I would be willing to pay a small fee to obtain them if needed. After waiting about a week he called me up and told me they were willing to grant my exception to the rules if I paid a one time $25 fee and promised not to bring them back and put them in his counting machine. I did some quick calculations and decided this was a reasonable solution and accepted. We setup a schedule and they have been calling me twice a week to pick either 1 $100 box or 2 $100 boxes for a total of $300 worth per week. I now have $600 worth of nickels in my safe and am on track to have my goal reached within a little over one week.

Thanks for all your help and advice and hard work on your blog. - Max

G.G. liked this piece at The Daily Beast: America's Debt Gets Scary

Greg C. suggested this blog article that has some serious implications: The Most Important Story that the MSM, Fox News, Glenn beck, and Others Will Not Cover.

Flavio sent this linkio: Retail Sales Fall.

Here is a real Economic Indicator: Box makers wait for signal of economic growth (Thanks to Mike A. in Ohio for the link.)

Items from The Economatrix:

Stocks Fall on Worries Regarding Greek Debt Return

The Four Cities that Best Weathered the Recession (As if the "recession" were in the past?)

Germany and France Split Over Solution to Greek Debt Problem

When Credit Falls and Equities Rise, Stock Investors Beware

Veteran analyst Jim Rogers talks about the world’s financial woe: Another recession ahead. It was nice of him to use the more kind term for it.

From Chad S.: Food prices push Indian inflation up to 9.9 percent

Also from Chad: China's Wen pushes back against yuan rise calls. This quote from the article doesn't bode well: "We are very concerned about the lack of stability in the U.S. dollar. If I said I was worried last year, I must say I am still worried this year."

G.G. liked this commentary from Richard Daughty (aka The Mogambo Guru): US Economic Outlook: Default, Hyperinflation or Both

Items from The Economatrix:

Pain in the Tank: Gas Prices Highest Since 2008

"Wall Street" Sequel an Omen of US Collapse

To Fill Budget Gaps, "Stealth" Taxes are Creeping Up

Debt Doom (The Mogambo Guru)

Strategic Defaults are Soaring in California, and Now they Might Really Explode

SurvivalBlog's Editor At Large Michael Z. Williamson sent us a link to an interesting graph on debt figures in the U.S.. Per capita debt almost $41,000 per person, and rising about $20 per day.

Chad S. recommended this: How Can Anyone Claim that the Housing Crisis is Over When the Delinquency Rate on U.S. Mortgages Continues to Explode at an Exponential Rate?

The latest Friday Follies installment: Regulators shut 7 banks in 5 states; 37 in 2010

Tod P. flagged an article from the Philippines, wherein the government pleads with its citizenry to spend their coins back into circulation, to co-mingle with the new debased steel slugs. JWR's Comment: People aren't that naive. I think that they'll wisely keep their real coins at home. This is a foretaste of things to come here in the States, once inflation kicks in.

Items from The Economatrix:

Will Your State Ban Employer Credit Checks?

Wachovia Settles Money Laundering Case for $160 Million

Economic Mixed Bag: No Inflation But Little Hiring

FedEx Sees Economic Recovery Spreading

Sue C. sent this: Derivatives debate splits U.S., European regulators

China in Midst of ‘Greatest Bubble in History,’ Rickards Says. (I found that article linked at The Drudge Report.)

Reader Brett G. spotted this: Roubini Economist: We're Headed For World of Inflation

GG sent this: My Inflation Nightmare

Chad S. sent this: Latvia government collapses amid economic crisis

Also from Chad: U.S. Hyperinflation Possible by 2015

Items from The Economatrix:

Moody's Fears Social Unrest as Triple A States Implement Austerity Plans

Idaho's Plan to Downgrade the Dollar

Hipsters on Food Stamps

Sovereign Debt = Subprime Debt

China Trims Holdings of US Treasury Securities

Social Security: "Here It Comes"

KT flagged this: FedEx Chart Means Double-Dip for Economy

From GG: ‘Black Swan’ Author Concerned About Hyperinflation

Also from GG: Buyers for Puerto Rico Banks? FDIC Has Three Institutions to Sell; Downside Is They May All Need Capital

Items from The Economatrix:

Construction Unemployment Rate Hits 27.1% as Another 64,000 Construction Workers Lost Jobs in February

Moody's Warns US Debt Could Test Triple-A Rating

Dodd Unveils Sweeping Financial Regulation Plan

Thanks to Tom W. for sending this link: Fiscal Crises Hit Closer to Home; States and localities face burgeoning deficits; next phase in debt-deflation?

Ben M. suggested this New York Times link: Junk Bond Avalanche Looms for Credit Markets.

Several folks sent this link: Rising food prices may start with seeds

Items from The Economatrix:

Not Durable?

Gold, Silver and Oil: Buying the Essentials in Tough Markets

Fed May Hint at How Long the Rates Will Stay Low

What Credit Card Pay-offs? Consumers are Dumping Debt!

IRS: Get Tax Relief if Lender Forgives Part of Home Debt

Housing Construction Drops 5.9% in February

Stocks Rise After Fed Pledges to Keep Rates Low

Oil Settles Near $82 as Fed Keeps Rates Low

Gold Supported by Geopolitical and Sovereign Risks as S&P and Moody's Warn US

Several readers mentioned this: Social Security to start cashing Uncle Sam's IOUs. This does not bode well. The most telling statement is in the sixth paragraph. In summary, we'll be borrowing from foreigners to pay our Social Security benefits. This article certainly makes it clear that Al Gore's "Lock Box" rhetoric during a presidential campaign a few years back was absolute nonsense. Congress has been busily spending your Social Security "contributions", for many years. Here is a quote from the article: "In all, the agency has about $2.5 trillion in bonds, all backed by the full faith and credit of the U.S. government." Doesn't that give you a warm, fuzzy feeling? L'empereur est sans culottes.

GG sent this: Ratings agency warns on US public finances. L'empereur est sans culottes.

Reader H.J. sent this: Another Record Month of Red Ink: Government Racked Up Record Monthly Deficit of $220 Billion in February. L'empereur est sans culottes.

Frank. L. flagged this: Is There Gold in Fort Knox? L'empereur est sans culottes.

From Darryl Robert Schoon: Will the US Devalue the Dollar? L'empereur est sans culottes.

Items from The Economatrix:

Stocks Fall On Concern About US Credit Rating

Industrial Production Rises 0.1% in February

Oil Falls Near $79 On US Crude Demand Worries

Why Middle-Class Money Woes Rage On

UK: Another Banking Crisis Looms

James,
Chris Wood, of CLSA and author of the Greed & Fear newsletter, was recently interviewed on CNBC and stated that the collapse of the Dollar would likely take place within five years. CNBC's Dennis Kneale, however, asserts that the Dollar is "self-healing", so that when the panic begins, "...suddenly people want to go into the Dollar, because the US Government is the most stable government on the planet". I had to rewind, because I couldn't believe what I had just heard.

This is precisely why looking to mainstream news sources as reliable conduits of factual information is so dangerous. If the US
government is the most stable government on the planet, then the world is in worse shape than I'd ever imagined. Cheers, - H.H.

J.D.D. sent this British newspaper article: Detroit family homes sell for just $10

CNN Money offers a baker's dozen of articles about America's fiscal disaster. (Thanks to S.M. for the link.)

Straycat sent us this item: States Facing Financial Doomsday as Debts Mount

SurvivalBlog's Poet Laureate, George Gordon ("GG"), spotted this: New round of foreclosures threatens housing market

My old friend Sandy mentioned this: Iceland, the Mouse that Roared.

Odds 'n Sods:

Courtesy of reader J.D.D.: Why the U.S. can't inflate its way out of debt

Some Tough Love from the editors of Der Spiegel: Built on a Lie; The Fundamental Flaw of Europe's Common Currency

Larry T. suggested this Powerline piece: Buy Gold.

Items from The Economatrix:

Why Italy Faces a Derivatives Time Bomb

Why California is Doomed

Double Dip is Coming in 2011

Welcome to the United States of Iceland

Big Ax Looming at FDNY: More than 1,000 Layoffs, 62 Fire Companies to be Closed

It's Going to Implode, Buy Physical Gold Now

$2,000/oz. Gold by the End of the Year

States May Hold Onto Tax Refunds for Months

Subprime Lending Crisis: Auto Loans Thrive, Housing Down

Jobs May Rebound in 2010

Mass School Closures in Near Bankrupt Kansas City, Missouri

Trent and J.D.D. were the first of several readers to send this: Faber and Mish: We're Doomed and Washington Can't Do Anything About It

A.P. sent us some more gloomy news: World faces a day of financial reckoning

Canadian dollar likely to trump US greenback: experts.

More FDIC Follies: Four more banks bit the dust in the past couple of days.

Items from The Economatrix:

OPEC Raises 2010 Oil Demand Forecast

US Sales Tax Rates Hit Record High

US Dollar Gains as Rating Agencies Warn on Europe

Toledo, Ohio Likely to Face "Fiscal Emergency"

Robbing The Old to Pay the Rich

Virginia State Police Help The Budget Crunch. This will probably become a nationwide practice.

First Iceland, Next The World

UK: New Credit Crunch Risk as Banks Face Funding Crisis

Over at Zero Hedge, Tyler Durden asks: Is The Federal Reserve Insolvent? (He's warning that monetization is the logical next step. So beware of inflation ahead!)

Ben in Tennessee sent us this from The Market Oracle: The Coming Dark Ages.

GG suggested this one: Bernanke's Dilemma: Hyperinflation and the U.S. Dollar.

Also from GG: Doug Casey on Surviving Financial Apocalypse Now

Items from The Economatrix:

Are Unemployment Benefits No Longer Temporary?

Jobs Outlook May Be Too Optimistic

Public Pension Funds are "Going to Vegas"

National Debt to be Higher than White House Forecast, Says CBO

Senate To Pass Jobless Aid, Business Tax Breaks

Paul W. mentioned an insightful article by Janet Tavakoli: Washington Must Ban U.S. Credit Derivatives as Traders Demand Gold. (Long-time SurvivalBlog readers are already familiar with my strong warnings about the derivatives time bomb. Newbies, please take a look.)

Eric S. suggested this piece by Chris Nelder: Peak Oil Demand Is Coming, But Here's Why It's Not Good News

Reader David D. spotted this Wall Street Journal article: Commercial Real Estate Owners Beginning To Walk Away From Properties

Items from The Economatrix:

Job Openings Up Sharply in January to 2.7 Million

Failed Banks May Get Pension-Fund Backing as FDIC Seeks Cash

Europe Bars Wall Street Banks from Government Bond Sales

Martin Weiss: The $21 Billion Hot Potato

Los Angeles to Pull Investments from Foreclosure-Heavy Financial Firms

Karl Denninger: All You Need to Know About Bank Balance-Sheet Fraud

SPY Volume Back to 2010 Lows as Equity Mutual Funds Run Out of Cash

Jobless Aid Bill Passes Key Senate Hurdle

43% of Americans Have Less than $10,000 for Retirement

From The Appenzell Daily Bell: More Sovereign Defaults Loom?

Brett pointed us to some great Afterburner commentary on the "carbon credits" nonsense as well as personal initiative versus Nanny Statism: Flying Solo: Choose Freedom Over the Nanny State.

I warned you, folks! U.S. Sales Tax Rates Hit Record High. (Thanks to Loren for the link. OBTW, I expect even more tax rate increases as the recession deepens, and more states face crises.)

Williams: Expect Hyperinflation Within The Next Five Years. (Thanks to H.H. for the link.)

S.M. liked this piece of commentary about the national debt and precious metals by Stewart Dougherty: America's Impending Master Class Dictatorship.

GG and MM both flagged this New York Times article: Public Pension Funds Are Adding Risk to Raise Return. (G.G.'s comment: "What could go wrong?)

You might have noticed that a CPA service advertising on SurvivalBlog. Her name is Mara Helland. Since it is now tax season, I thought that it would be appropriate to give my personal recommendation, and let you know what services she offers.

Like many other CPAs, Mara mainly does tax accounting. But what sets her apart from other CPA firms is absolute privacy. I know that this is crucial for a lot of people, especially fellow SurvivalBlog readers. I don’t know what privacy issues are like in the big cities, but I do know that in small towns, people who make a decent living want to be assured their personal financial information isn’t going to end up as fodder for gossip at the local bar.

I've learned that when new clients come to Mara Helland from another CPA, it is almost always because they have experienced poor service. She says that she rarely hears complaints about prior CPA fees, but she definitely hears about lack of attentiveness from other accountants. Of course, all CPAs will say that they value their clients and that they provide "excellent service", but that is not what happens in reality. A lot of times, CPAs or firm-partners will bring in the new clients, but the actual services and care for the clients are pushed off on staff members, with much less experience and fewer skills. Mara is now in her 20th year of working in public accounting. When clients come to her, they get top-notch service directly from Mara. As I have experienced personally, when a client calls her office, she answers the phone herself. She prides herself on taking good care of her clients, and I think that shows with the number of very long-term client relationships that she has developed.

Mara works with a wide clientele, including individuals, all types of businesses, estates, trusts and non-profit organizations. She has clients throughout the United States, so being in Montana does not limit her to only having Montana clients. She also works with military families and US citizens that work overseas.

March 15, 2010 is the tax-filing deadline for businesses that are corporations. And, of course April 15th is the big deadline for personal income tax returns, as well as partnership/LLC tax returns. If you need more time to gather your personal or business tax information, she can prepare and file a tax extension for you.

Mara noted in an e-mail: "I, too, am a SurvivalBlog follower. I came to your site first as a reader and then later chose to advertise with you. I can certainly relate to my SurvivalBlog clients."

I'm one of Mara's satisfied tax accounting clients, so I can highly recommend her!

JDD sent this item: China ready to end dollar peg. The article begins: "The head of China’s central bank has given the strongest signal yet that the country will move away from pegging its currency to the dollar, but he said any changes would be gradual."

Brian B. sent this news story that illustrates that the Mother of All Bailouts (MOAB) won't stop growing: Program Will Pay Homeowners to Sell at a Loss.

I found this linked at The Drudge Report: Congressional estimates show grim deficit picture.

Jeff B. offered this for the No Great Surprise Department: IRS to Track Online Sellers' Payment Transactions Beginning Next Year

Tony B. recommended this recent two part article by Jeff Nielson, over at The Street: Silver Supply Crisis Looms, Part 1: and Part 2.

Dissension in the Ranks? San Francisco Fed Doubts Jobs Outlook. (Our thanks to David D. for the link.)

Chad S. suggested this commentary by economist Bill Bonner: Losing Control of the US Debt Machine

EMB sent this: Iceland Voters Set to Reject Debt Deal.

Items from The Economatrix:

Our World Balances on a Sea of Debt

More Consumers File for Bankruptcy Protection

Situational Awareness is simply knowing what is happening. Information enables us to make more intelligent or informed decisions. Informed decisions could be the difference between surviving or not surviving. Communications is the exchange of information between a sender and receiver. It could be a simple shout, Morse telegraph or a complex computer network. This article will focus on using radios that are available to the general public. All frequencies listed in the following, except AM broadcasting, are in megahertz (MHz) or million cycles/second.

Radio and Television Broadcasting

There is usually a radio playing in my home and vehicle. The radio station I regularly listen to has news every 30 minutes and bulletins for breaking news. No special equipment is needed, just listen to your favorite station. The AM broadcast frequencies are 540 - 1700 KHz. During daylight hours these frequencies are absorbed by the upper atmosphere, only local stations can be heard. During nighttime hours they are reflected back to earth enabling distant stations to be heard. Most tabletop radios can be used without modification but they often lack the selectivity needed to separate stations. Adding an external antenna can make the selectivity problem worst.

I recommend using a good quality AM/FM radio designed for vehicles. They can operate on 12 volt batteries, with very short antennas, good selectivity, push-button tuning and often have scanning functions. Many automotive radios have front and rear speakers. Connect the rear speaker wires to a stereo phone jack for headphones. Distant FM and TV stations can not be received. These stations use much higher frequencies and are seldom reflected back toward earth therefore limited to "line-of-sight" or less than 100 miles.

List of 50,000 watt "clear channel" AM stations. Frequencies are in kilohertz (KHz)

540 WFLF ORLANDO, FL
580 KMJ FRESNO, CA
640 KFI LOS ANGELES, CA
650 WSM NASHVILLE, TN / KENI ANCHORAGE, AK
660 WFAN NEW YORK CITY, NY / KTNN WINDOW ROCK, AZ
670 WSCR CHICAGO, IL / KBOI BOISE, ID
680 KNBR SAN FRANCISCO, CA / WRKO BOSTON, MA / WPTF RALEIGHT, NC
700 WLW CINCINNATI, OH
710 WOR NEW YORK CITY, NY / KIRO SEATTLE, WA / WAQI MIAMI, FL
720 WGN CHICAGO, IL / KDWN LAS VEGAS, NV
740 KCBS SAN FRANCISCO, CA / KTRH HOUSTON, TX / WQTM ORLANDO, FL
750 WSB ATLANTA, GA / KFQD ANCHORAGE, AK
760 WJR DETROIT, MI / KFMB SAN DIEGO, CA
770 WABC NEW YORK CITY, NY / KKOB ALBUQUERQUE, NM
780 WBBM CHICAGO, IL / KKOH RENO, NV
810 WGY SCHENECTADY, NY / KGO SAN FRANCISCO, CA / WKVM PUERTO RICO
820 WBAP FT WORTH-DALLAS, TX
830 WCCO MINNEASPOLIS, MN
840 WHAS LOUISVILLE, KY
850 KOA DENVER, CO / WEEI BOSTON, MA
870 WWL NEW ORLEANS, LA / KAIM HONOLULU, HI
880 WCBS NEW YORK CITY, NY / KRVN LEXINGTON, NE
890 WLS CHICAGO, IL
940 KWRU FRESNO, CA
950 KJR SEATTLE, WA / WWJ DETROIT, MI
1000 WMVP CHICAGO, IL / KOMO SEATTLE, WA
1010 WINS NEW YORK CITY, NY
1020 KDKA PITTSBURGH, PA / KINF ROSWELL, NM / KTNQ LOS ANGELES, CA
1030 WBZ BOSTON, MA / KTWO CASPER, WY
1040 WHO DES MOINES, IA
1050 WEVD NEW YORK CITY, NY
1060 KYW PHILADELPHIA, PA
1070 KNX LOS ANGELES, CA
1080 WTIC HARTFORD, CT / KRLD DALLAS, TX
1090 WBAL BALTIMORE, MD / KAAY LITTLE ROCK, AR / KYCW SEATTLE, WA
1100 WTAM CLEVELAND, OH / KFAX SAN FRANCISCO, CA
1110 WBT CHARLOTTE, NC / KFAB OMAHA, NE
1120 KMOX ST LOUIS, MO / KPNW EUGENE, OR
1130 WBBR NEW YORK CITY, NY / KWKH SHREVEPORT, LA
1140 WRVA RICHMOND, VA / KHTK SACRAMENTO, CA
1150 KXTA BURBANK, CA
1160 KSL SALT LAKE CITY, UT
1170 KFAQ TULSA, OK / WWVA WHEELING, WV
1180 WHAM ROCHESTER, NY
1190 KEX PORTLAND, OR
1200 WQAI SAN ANTONIO, TX
1210 WPHT PHILADELPHIA, PA
1220 WHK CLEVELAND, OH
1500 KSTP ST PAUL-MINNEAPOLIS, MN / WTOP WASHINGTON DC
1510 KGA SPOKANE, WA / WLAC NASHVILLE, TN / WWZN BOSTON, MA
1520 KOMA OKLAHOMA CITY, OK / WWKB BUFFALO, NY
1530 KFBK SACRAMENTO, CA / WSAI CINCINNATI, OH
1540 KXEL WATERLOO, IA / WPTR ALBANY, NY
1560 WQEW NEW YORK CITY, NY
1580 KBLA SANTA MONICA, CA / KMIK PHOENIX, AZ

Additional information about AM/FM broadcasting including this list of "clear channel" stations obtained here.


National Weather Service all hazards alert radios

Every family, and many businesses, should have a National Weather Service (NWS) all hazard alert radio. The NWS not only provides current weather conditions and forecasts, they also transmit all hazard alerts for a wide area. These alerts are not all weather related: such as "shelter in place", "radiation hazard", "civil emergency message", "evacuation immediate", "911 telephone outage" or "child abduction emergency". All hazard alert radios can be programmed for only one county. The "Specific Area Message Encoding" ( SAME ) is a 6 digit code: ABCDEF. A = in most cases 0, it can be used to sub-divide a county into zones ( 1 - 9 ) otherwise zero for the entire county, BC = state number; DEF = county number. Example: Clay county
Missouri 0 29 047 / 0 = entire county / 29 = Missouri state code/ 047 = Clay county code. If a hazard affects a larger area or region, then all the affected counties will be individually triggered by the alert signal. Most NWS radios can be programmed for multiple counties. The National Weather Service has seven radio channels, frequency modulated ( FM ) voice & data:

162.400 162.425 162.450 162.475 162.500 162.525 162.550

National Weather Service station coverage and "SAME" codes can be obtained a the NOAA web site.

International Shortwave Broadcasting:

Nearly every country broadcasts on shortwave ( 2.3 - 26.1 MHz ). Many of these countries transmit powerful signals that are some times beamed toward North America. These broadcasts can often be heard on portable shortwave radios. International broadcasters often cover stories not reported in the American media. If you use or are learning another language there are many non-english broadcasts. These signals travel thousands of miles via the upper atmosphere and they may have static, fading or interference. These signals are also affected by the seasons, time of day and solar activity (sunspots etc). Broadcasters often change frequencies, languages and times. Any schedule would soon become out of date. I have never used a "schedule. In stead, I just tune around the dial and listen to any interesting stations.

Usually good only at night:

2.300 - 2.495, 3.200 - 3.400, 3.900 - 4.000, 4.750 - 5.060, 5.900 - 6.200, 7.100 - 7.450

Usually good day or night:

9.400 - 9.900, 11.600 - 12.100, 13.570 - 13.870, 15.100 - 15.800

Usually good when sun is active:

17.480 - 17.900, 18.900 - 19.020, 21.450 - 21.850, 25.670 - 26.100

Listing of English shortwave broadcasts sorted by time.
Listing of English shortwave broadcasts sorted by country.
Listing of English shortwave broadcasts sorted by frequency.
An excellent web site: "Shortwave Monitoring Guide"

SHORTWAVE EMERGENCY FREQUENCIES

There are many shortwave frequencies used for long distance emergency communications. AM and International broadcaster's transmit a carrier with two sidebands [ lower / carrier / upper ]. Both sidebands have the same information therefore redundant. Shortwave frequencies use single sideband modulation ( SSB ). SSB removes the carrier and one sideband, only one sideband is transmitted. The advantage of SSB is a narrower more powerful signal. Disadvantages: SSB signals are harder to tune, when mistuned they sound "quacky" and when the talking stops the entire signal disappears. Almost all signals on shortwave are upper
sideband ( USB ).

It takes a better and more costly receiver to correctly copy SSB signals. If you purchase a shortwave radio I recommend it be capable of receiving SSB signals. Practice listening to USB signals by tuning to amateur radio operators ( Hams ) between 14.150 - 14.350 MHz. When you hear a signal slowly tune back and forth until the voice sounds normal. ( Read the radio owner's manual ).
The frequencies listed are the suppressed carrier, which is not transmitted. The actual USB signal will be centered about 1.4 KHz higher or lower sideband ( LSB ) signals will be centered about 1.4KHz lower.

SECURE ( State Emergency Communications Using Radio Effectively ) is a secondary emergency back-up communications network. Each state in the network may operate base and mobile stations, transmitting in USB voice, data and maybe morse code. I do not know of any scheduled drills or net operations. Suggest monitoring the interstate coordination frequency 2.326 MHz.

SECURE; Listed by states ( 33 states in network )

AL 2.326 2.487 5.135 5.192 7.805 7.935
CA 2.326 2.419 2.422 2.804 2.812 5.140 5.195 7.480 7.802 7.805
CO 2.326 2.466 2.471 2.274 5.135 7.802 7.805
CT 2.326 2.419 5.135 5.192 7.477 7.805
FL 2.326 2.439 2.463 5.140 7.805 7.932
ID 2.326 2.414 2.471 2.535 2.804 5.135 5.140 5.195 7.477 7.805 7.932
IL 2.326 2.414 2.569 2.804 5.135 5.140 5.192 7.480 7.802 7.932 7.935
IN 2.326 2.487 2.511 5.135 5.140 7.802 7.805 7.935
LO 2.326 2.812 5.192 7.477 7.480 7.805
ME 2.326 2.414 5.135 5.192 7.805
MA 2.326 2.411 2.414 2.419 5.135 5.192 7.447 7.805
MI 2.326 2.414 2.804 5.140 7.477 7.805
MS 2.326 2.535 2.569 5.195 7.477 7.805
MO 2.326 2.411 2.414 2.419 2.439 2.463 5.140 5.192 7.477 7.802 7.805 7.935
MT 2.326 2.804 2.812 7.477 7.480 7.805
NE 2.326 2.804 2.812 5.192 7.805 7.935
NV 2.326 2.487 2.511 5.195 7.480 7.805 7.932
NH 2.326 2.414 5.135 5.192 7.805
NJ 2.326 2.411 2.587 5.195 7.805
NM 2.801 2.804 5.135 5.140 7.477 7.480 7.805
NY 2.326 2.812 5.135 7.477
NC 2.326 2.411 5.135 7.477 7.935
OH 2.326 2.419 2.422
OK 2.801 2.804 5.135 5.140 7.477 7.480 7.805
OR 2.326 2.414 2.801 5.135 5.195 7.480 7.802 7.805 7.935
RI 2.326 2.411 2.419 5.135 5.192 7.477 7.805
SC 2.326 2.422 2.511 5.135 7.480 7.932
TN 2.326 2.419 2.474 5.135 5.140 5.195 7.480 7.805 7.932
TX 2.326 2.419 2.422 2.587 2.801 2.804 2.812 5.140 5.192 5.195 7.802 7.805 7.932 7.935
VT 2.326 2.411 2.419 5.135 5.192 7.477 7.805
VA 2.326 2.411 2.463 2.511 2.587 2.801 2.812 5.140 5.192 5.195 7.805
WA 2.326 2.411 2.414 2.587 2.801 5.192 7.805 7.935
WY 2.326 2.414 2.419 5.195 7.805 7.932

SECURE: Listed by frequency

2.326 INTERSTATE COORDINATION FREQUENCY ONLY
2.411 MA MO NJ NC RI VT VA WA
2.414 ID IL ME MA MI MO NH OR WA WY
2.419 CA CT MA MO OH RI TN TX VT WY
2.422 CA OH SC TX
2.439 FL MO
2.463 FL MO VA
2.466 CO
2.471 CO ID
2.474 AL CO TN
2.487 AL IN NV
2.511 IN NV SC VA
2.535 ID MS
2.569 IL MS
2.587 NJ TX VA WA
2.801 NM OK OR TX VA WA
2.804 CA ID IL MI MT NE NM OK TX
2.812 CA LA MT NE NY TX VA
5.135 INTERSTATE COORDINATION FREQUENCY ONLY (ALTERNATE)
5.140 CA FL ID IL IN MI MO NM OK TN TX VA
5.192 INTERSTATE COORDINATION FREQUENCY ONLY
5.195 CA ID MA MS NV NJ OR TN TX VA WY
7.477 CT ID LA MA MI MS MO MT NM NY NC OK RI VT
7.480 CA IL LA MT NV NM OK OR SC TN
7.802 CA CO IL IN MO OR TX (DAY ONLY)
7.805 INTERSTATE COORDINATION FREQUENCY ONLY
7.932 FL ID IL NV SC TN TX WY
7.935 AL IL IN MO NE NC OR TX WA (DAY ONLY)

SECURE locations and frequencies obtained from the Federal Communications Commission ( FCC ) database.

SHARES ( SHAred RESources ) is a network of over 1000 stations representing 93 federal, state and industry sharing radio resources. They have standardized message formats and procedures, so any agency can transmit emergency messages for other agencies. Each agency maintains their own ( unpublished ) frequencies. Drills and weekly nets are called on Wednesday 1600 - 1800 z ( 1100 - 1300 EST or 1200 - 1400 EDT ). Large scale drills are conducted in April, August and December.

4.490 5.236 5.711 5.901 6.800 7.632 9.064 9.106 10.5865 11.108
11.217 13.242 14.3965 14.455 14.3965 15.094 17.487 20.107 26.812

Information about SHARES found here.

FEMA ( Federal Emergency Management Agency ) has a network of shortwave stations between their regional offices: The day primary frequency is 10.493 MHz USB and night primary frequency is 5.212 MHz USB.

Net is called almost daily on 10.493 MHz at 1600 z ( 1100 EST or 1200 EDT ).

Each Monday, Thursday and Friday by primary net control station in Philadelphia, PA.
Also 1st Tuesday in January, April, July, October by primary station in Philadelphia, PA.
Also 1st Tuesday in February, May, August, November by 2nd alternate in Denton, TX.
Also 1st Tuesday in March, June, September, December by 3rd alternate in Thomasville GA.
Then 2nd Tuesday in March, June, September, December by 4th alternate in Battle Creek, MI.
Finally, every Wednesday an open drill between all regional stations. During any disaster or emergency, the affected state is in authority.

FEMA HQ Washington DC
Region #1 Boston: CT MA ME NH RI VT
Region #2 New York City: NJ NY PR VI
Region #3 Philadelphia: DC DE MD PA VA WV
Region #4 Atlanta: AL FL GA KY MS NC SC TN
Region #5 Chicago: IL IN MI MN OH WI
Region #6 Denton: AR LA NM OK TX
Region #7 Kansas City: IA KS MO NE
Region #8 Denver: CO MT ND SD UT WY
Region #9 Oakland: AZ CA GU HI NV
Region #10 Seattle: AK ID OR WA

2.321 ( Foxtrot 06 ) Regions 8,9,10
2.361 ( Foxtrot 07 ) Regions 6,8,9
2.375 ( Foxtrot 08 ) Region 4
2.446 ( Foxtrot 09 ) Regions 1,3,5,9,10
2.659 ( Foxtrot 10 ) Regions 3,4,7,8,10
3.342 ( Foxtrot 11 ) Regions 4,5,6,7,8
3.380 ( Foxtrot 12 ) Regions 5,6,8,9,10
3.390 ( Foxtrot 13 ) Regions 5,6,7,8
4.603 Region 4
5.212 ( Foxtrot 15 ) All regions, night primary frequency
5.403 ( Foxtrot 16 ) Regions 9,10
5.822 ( Foxtrot 17 ) Regions 1,2
5.962 ( Foxtrot 18 ) Regions 1,2,3,4,5,6,8,9,10
6.050 ( Foxtrot 19 ) Regions 3,5,8,10
6.107 ( Foxtrot 20 ) Regions 3,4,6,7,8,10
6.109 ( Foxtrot 21 ) All regions
6.152 ( Foxtrot 22 ) Regions 3,4,5,6,7,8,9,10
6.177 ( Foxtrot 23 ) Regions 6,8,10
6.180 ( Foxtrot 24 )
6.809 Regions 9,10
7.349 ( Foxtrot 25 ) Regions 1,4,5,6,8,9,10 Point-to-point primary frequency
7.428 Region 4
9.463 ( Foxtrot 26 ) Regions 9,10
10.493 ( Foxtrot 28 ) All Regions, day primary frequency,
10.589 ( Foxtrot 29 ) Regions 8,9,10
10.793 Region 9
10.407 ( Foxtrot 30 ) Regions 1,4,6,8
11.802 ( Foxtrot 31 ) Regions 3,6,8,9,10
11.958 ( Foxtrot 32 ) Regions 5,7,8,9
12.010 ( Foxtrot 33 ) Regions 9,10
12.217 ( Foxtrot 34 ) Regions 5,6,8,9,10
14.451 ( Foxtrot 35 ) All regions
14.777 ( Foxtrot 36 ) All regions
14.837 ( Foxtrot 37 ) All regions
14.886 ( Foxtrot 38 ) All regions
14.900 ( Foxtrot 39 ) All regions
14.909 ( Foxtrot 40 ) All regions
16.202 ( Foxtrot 41 ) Regions 9,10
16.431 ( Foxtrot 42 ) Regions 9,10
17.520 ( Foxtrot 43 ) Regions 9,10
17.650 ( Foxtrot 44 ) Regions 5,8,9,10
18.745 ( Foxtrot 45 ) Regions 9,10
19.758 ( Foxtrot 46 ) Regions 9,10
19.970 ( Foxtrot 47 ) Regions 9,10
20.028 ( Foxtrot 48 ) All regions
20.405 Philadelphia, PA ( Primary Net Control ) to Washington DC
21.919 Denver, CO ( 1st Alternate ) to Mt. Weather VA
27.850 Philadelphia, PA ( Primary Net Control ) to Washington DC

FEMA information and frequencies obtained here.
Additional information about FEMA and SHARES can be found here.
AMERICAN NATIONAL RED CROSS operates shortwave base stations and mobile units for long-distance
emergency communications. The listed locations and frequencies, from the FCC database.

Washington DC, Austin TX, Kansas City MO and Berryville VA.

2.326 2.463 2.801 3.170 3.201 5.135 5.140 6.858 7.480 7.549 7.697 7.932 7.935

Gretna LA has only one frequency listed: 3.201 MHz, USB only

AMATEUR ( Ham ) RADIO NETS handle emergency messages during disasters. Amateur radio stations do not have assigned frequencies. All frequencies listed are approximate.

ARRL ( American Radio Relay League ) during a communications emergency transmits hourly bulletins from their station W1AW in Newington, CT.

VOICE hh:00 MORSE CODE hh:30

1.855 LSB 1.8175
3.990 LSB 3.5815
7.290 LSB 7.0475
14.290 USB 14.0475
18.160 USB 18.0975
21.390 USB 21.0675
28.590 USB 28.0675

See the ARRL web site.
ARRL has an online search for amateur radio nets.

Hurricane Watch Net is active whenever a hurricane is within 300 miles of land in the northern western hemisphere. Amateur radio station WX4NHC located at the National Hurricane Center in Miami, FL.

3.977 LSB nights
7.265 LSB nights
14.265 USB daytime

More information about National Hurricane Center at http://www.fiu.edu/orgs/w4ehw/
Additional hurricane net frequencies can be obtained at http://www.hurricanefrequencies.com

SATERN The Salvation Army Team Emergency Radio Network is called on 14.265 MHz daily ( except Sundays ) at 1500 z ( 1000 EST or 0900 EDT ).

3.740 LSB
3.977 LSB
7.265 LSB
14.265 USB - daytime primary frequency

See web site http://www.satern.org/net further information


RADIO FREQUENCY SCANNERS

I own two radio scanners yet seldom have them turned on. During an emergency both scanners would be operated 24x7. The first scanner is programmed with local public safety ( air, fire, police and medical ) channels. The other scanner is a wide-band receiver ( 1 - 1500 MHz ) is currently programmed for shortwave broadcasting and two-way channels.

Here are a few frequencies I will monitor during an emergency. All frequencies use FM voice.

MEDCOM ( Medical Communications )
Nation-wide most hospitals and ambulance services use these frequencies.

463.000 463.025 463.050 463.075 463.100 463.125 463.150 463.175
462.950 ( Dispatch 1 ) 462.975 ( Dispatch 2 )

Many local Red Cross chapters operate on 47.42 MHz for disaster relief and damage assessments.

Many CERT Community Emergency Response Teams use FRS channel 1 ( no sub-channel ). If there is a disaster near your area CERT maybe engaged in search and rescue. DO NOT TRANSMIT non-emergency messages on channel 1. Monitoring channel 1 ( 462.5625 MHz ) could provide important information.

Amateur radio national FM calling frequency = 146.520 MHz and local repeater channels.

Here are two web sites for finding local frequencies: http://www.fcc.gov/searchtools.html and http://www.ac6v.com

TWO - WAY COMMUNICATIONS

Disaster planning should include using two-way communications. Anything said on a radio is not secure. Keep all transmissions short! Instead of "cute handles" use false names. Example; Bob could always be called Jim on the radio. Anybody listening would assume Jim is on the radio. If available, use the "automatic roger" feature that sends a "beep" at the end of each transmission. Request repeats only if transmission was not fully understood.

Use a prearranged phrase that is said at the end of the message, such as; " Good day! ". If that phrase IS NOT said, ( or the WRONG phrase is said), then that could indicate trouble without alerting people outside your group. Do not call back and ask if they are okay. Instead ask for a repeat, like you did not understand their last transmission. If the phrase is omitted again take pre-planned action.

PLAIN OLD TELEPHONE SERVICE ( POTS ). Have at least one telephone that is powered by the phone line. These telephones will continue to function during power outages. However storm damage can cause service outages.

Do not place unnecessary calls during a disaster. Too many people trying to use the telephone at the same time can deny dial tone to everyone. Reserve the phone lines for real emergencies.

CELLULAR TELEPHONES: Everybody has them. Easy to use, reliable until disaster strikes! Too many people using their phones at the same time will crash the network. Disasters can take down towers and disturb power. Do not depend on cellular telephones for emergencies. Federal law prohibits listening to cellular telephone conversations and most scanners have those frequencies blocked.

CITIZENS BAND: ( CB ) Unlicensed 40 channels limited to 4 watts for AM or 12 watts for SSB voice modulation. If you decide to use CB install a good base station antenna. Every vehicle used during a disaster should be equipped with a CB radio. A good base station has a range of 10 miles or more. A big disadvantage of CB is interference and lack of security.

CB could be used to communicate with nearby sites or groups. Every site monitors the national emergency channel 9 ( 27.065 MHz ). Place a call on channel 9 using tactical call signs or handles. If the conversation lasts longer than a few seconds move to another [pre-arranged] channel. When the call is finished all sites return to monitoring channel nine.

CITIZENS BAND FREQUENCIES

1 - 26.965 8 - 27.055 rc - 27.145 23 - 27.255 32 - 27.325
2 - 26.975 9 - 27.065 16 - 27.155 24 - 27.235 33 - 27.335
3 - 26.985 10 - 27.075 17 - 27.165 25 - 27.245 34 - 27.345
rc 26.995 11 - 27.085 18 - 27.175 26 - 27.265 35 - 27.355
4 - 27.005 rc - 27.095 19 - 27.185 27 - 27.275 36 - 27.365
5 - 27.015 12 - 27.105 rc - 27.195 28 - 27.285 37 - 27.375
6 - 27.025 13 - 27.115 20 - 27.205 29 - 27.295 38 - 27.385
7 - 27.035 14 - 27.125 21 - 27.215 30 - 27.305 39 - 27.395
rc 27.045 15 - 27.135 22 - 27.225 31 - 27.315 40 - 27.405 rc = remote control / no voice

Rules and regulations for CB operations can be found here.

FAMILY RADIO SERVICE ( FRS ) is unlicensed 14 channels ( 1 - 14 ) limited to 1/2 watt with frequency modulation ( FM ) voice. FRS has a range of only 1/2 to 2 miles. Do not believe the mileage claimed on the handheld packaging! The commonly available FRS/GMRS handhelds have 22 channels. Do not use channels 15 - 22 unless you have a GMRS license.
Have your older child(ren) carry a FRS radio in their school back-pack(s). In case of an emergency ( school lock-down ) your child may be able to communicate with you. They may not have access to their back-packs so you need to wait for them to call you!

Learn more about using FRS radio for emergencies here.

GENERAL MOBILE RADIO SERVICE ( GMRS ) is licensed 15 channels ( 1 - 7 & 15 - 22 ) limited to 50 watts with FM voice. GMRS requires a no-test license, obtainable with an application and fee. GRMS can provide greater base to mobile range with far less interference then CB and FRS. The costs may be higher but a base station with external antenna and repeaters are allowed with GRMS. Unless you plan to use a higher powered base station or repeater I see no reason to obtain a GMRS license.

MULTIPLE USER RADIO SERVICE ( MURS ) is unlicensed 5 channels limited to 2 watts with FM voice and data. MURS has a range of 1 - 3 miles with low interference. External antennas are allowed to extend the range. MURS handhelds are rarely sold at retail stores therefore uncommon [and hence slightly more secure than CB and the other other commonly used bands]. I purchased 8 MURS heldhelds on the Internet and donated them to my church which is a local Red Cross shelter.

FRS FREQUENCIES GMRS FREQUENCIES MURS FREQUENCIES

1 - 462.5625 Channels 1 - 7 1 - 462.5625 1 -151.820
2 - 462.5875 shared by FRS 2 - 462.5875 2 -151.880
3 - 462.6125 and GMRS 3 - 462.6125 3 -151.940
4 - 462.6375 4 - 462.6375 4 -154.570
5 - 462.6625 5 - 462.6625 5 -154.600
6 - 462.6875 6 - 462.6875
7 - 462.7125 7 - 462.7125

8 - 467.5625 Channels 8 - 14
9 - 467.5875 FRS only
10 - 467.6125
11 - 467.6375
12 - 467.6625
13 - 467.6875
14 - 467.7125

15 - 467.550 Channels 15 - 22 can be used for repeater
Channels 15 - 22 16 - 467.575 output channels. The input channels are
GMRS only 17 - 467.600 + 5.0 MHz up from output frequencies.
18 - 467.625
19 - 467.650
20 - 467.675
21 - 467.700
22 - 467.725

Channels and sub-channels? Everybody on same channel shares the same radio frequency. Sub-channels are low frequency audio ( below voice ) tones that are transmitted along with the voice. That tone enables the receiver to hear the signal. If other stations transmitting on the same radio channel but with different sub-channels ( tones ) your radio will remain silent. Using a sub-channel does not provide privacy, anybody monitoring the radio frequency channel ( sub-channel off ) can hear all transmissions on that channel. Using a sub-channel only prevents you from hearing their transmissions. During an emergency recommend setting the sub-channel OFF.

Amateur ("Ham") Radio.
An amateur radio license requires passing written tests, but there is no longer a Morse Code test. Hams have access to many frequency bands and up to 1,000 watts (or 1.500 watts in SSB). Hams can operate local line-of-sight to global communications. Every survival group should have a licensed amateur radio operator. Because of their license test studies, hams understand radio theory, propagation, and operating procedures.

Amateur Radio Bands

1.800 - 2.000 CW & LSB
3.500 - 3.600 CW & digital
3.600 - 4.000 LSB
5.3305 5.3465 5.3665 5.3715 5.4035 Five channels limited to 50 watts USB only
7.000 - 7.125 CW & digital
7.125 - 7.300 LSB
10.100 - 10.150 limited to 200 watts CW only
14.000 - 14.150 CW & digital
14.150 - 14.350 USB
18.110 - 18.168 CW & USB
21.000 - 21.200 CW & digital
21.200 - 21.450 USB
24.890 - 24.930 12 meter band CW
24.930 - 24.990 USB
28.000 - 28.300 10 meter band CW
28.300 - 29.700 USB FM above 29.5
50.000 - 50.100 6 meter band CW
50.100 - 54.000 USB FM
144.00 - 144.10 2 meter band CW
144.10 - 148.00 CW USB FM

There are several more bands of frequencies above 200 MHz.

"CW" means morse code. Rapidly turning the transmitter on and off with a hand operated switch called a telegraph key. When passed through a beat frequency oscillator (BFO) in the receiver, it sounds like a series of short and long tones. Each letter or number have an unique Morse Code pattern of tones.

More information about amateur radio, see the ARRL web site.

About the Author: Ron Y. is an amateur radio operator since 1964 with an Amateur Extra Class and commercial
radiotelephone licenses. Retired from a "Bell System Telephone company" after 31 years of service.

"Card House" sent us this: CBO: National Deficit to Hit Nearly $10 Trillion Over Upcoming Decade

GG flagged the latest Friday Follies news: Regulators shut down banks in 4 states, making 26 US bank failures this year

Also from GG: National debt to be higher than White House forecast, CBO says

Another from GG: Greece is a harbinger of austerity for all--The effects of the stimulus are wearing off, leaving us with a nasty
hangover, says Jeremy Warner.

E.M.B. sent us this piece by Mish Shedlock: Construction Developer Says Banks Suddenly Playing Hardball, Asks "Mish, What's Going On?"

Items from The Economatrix:

Stocks Jump After Better-Than-Expected Jobs Report

Consumer Borrowing Up in January After 11 Declines

Unemployment Rate Holds, Payrolls Fall

Oil Settles at $81 on Jobless Report

More Fake Gold Bars Found

Gerald Celente: Neo-Survivalism Trend in Action

Odds 'n Sods:

Art suggested this piece by an economist: Stocking up on meds and ammo, NOW!

   o o o

Norman in England mentioned that he had found 680 tree fact sheets available from University of Florida Environmental Horticulture Department.

   o o o

Ready Made Resources has expanded their 25% off sale on Mountain House freeze dried foods in #10 cans. They are now offering free shipping on mixed case lots, as long as you order increments of full cases! There's just one week left for the sale, so order soon!

James K. sent a link to a humorous little video clip: Prepared Police Fail.

   o o o

In my recent mention of the recently-passed Wyoming Firearms Freedom Bill, I neglected to mention that the South Dakota legislature has passed similar legislation, and that another 10 Amendment amplifying bill has already been signed into law, in Utah.

GG flagged this piece over at Zero Hedge: CLSA's Chris Wood "In Five Years The US Dollar Paper Standard Will Collapse"

Greg C. suggested a piece posted at Money News: Rogoff: U.S. Has Defaulted Before, May Do So Again

Bob G. liked this piece: 'Buy some gold every month' as protection against falling currencies, says Marc Faber

Items from The Economatrix:

Gold Going Higher: Even George Soros Agrees With Marc Faber

Is Moving Out of the US A Way to Escape the Coming Economic Collapse?

Gold and Silver Supply: Get Some While You Can (The Mogambo Guru)

Economists: Another Financial Crisis on the Way. (Thanks to "Straycat" for the link.)

Fronm Brett G.: Greenhouse Gas Taxes to Push Gasoline to $7 a Gallon?

Items from The Economatrix:

Stocks Falter After Drop in Pending Homes Sales

US Economy Continues to Slow

Pending US Home Sales Fall 7.6% in January

Investing In Gold: Protection From Runaway Inflation

Karl Denninger: Speculative Premium and Why the Markets Will Crash

Darryl Robert Schoon: Will the US Devalue the Dollar?

C.M. suggested this alarming opinion piece by Niall Ferguson that ran in the Los Angeles Times: America, the fragile empire--Here today, gone tomorrow -- could the United States fall that fast?

Items from The Economatrix:

Ambrose Evans-Pritchard: Don't Go Wobbly on Us Now, Ben Bernanke

The Sovereigns and the Serfs

Peter Schiff: Don't Bet on a Recovery

The Financial Battle For The Middle Class: Underemployment At 20%; 38 Million Americans On Food Stamps; Little Hiring; Can It Be A Recovery With No Jobs For This Long?

Reader John S. spotted this: California is a greater risk than Greece, warns JP Morgan chief

I found an article linked in a piece by Dr. Gary North that illustrates just how deep a hole the Federal government is digging: $126.9 Billion and Counting.

The charts in Nathan's recent blog piece tell a thousand words. This is no ordinary recession. We've fallen off a cliff.

George Gordon spotted this: Gold Hits Record High In Euros, Pound.

Items from The Economatrix:

Ron Paul Discusses Coming US Collapse

Jim Rogers: Pound Could Collapse Within Weeks

Housing Recovery Looking Shakier than Expected

Consumer Confidence Weakens in February

No Relief From Tax Agony (The Mogambo Guru)

Massive Bank Failures Due, Says Bank Oversight Panel

Commercial Mortgage Default Rate in US More than Doubles

More Merger Activity Helps Lift Stocks for Third Day

Postal Service's Emerging Model: Never on Saturday

Bad Debts Hit Record High

Chilean Stocks Post World's Biggest Drop as Quake Closes Roads

GG flagged this: WTO says global trade shrank 12 percent in 2009, biggest collapse since Second World War

From Brian B.: Head of IMF Proposes New Reserve Currency - ABC News

Another from GG: American reliance on government at all-time high

Items from The Economatrix:

Manufacturing Grows in February, Jobs Gauge Rises

January Spending Increases But Income Growth Slows

January Construction Spending Slides

IMF Says New Reserve Currency to Replace Dollar is Possible

Mish Shedlock: Short-Selling Restrictions "A Great Indicator of Imminent Market Crashes"

Temporary Hiring: A Different Kind of Signal

Jobless Benefits Begin Ending on Sunday

JDD sent this: Greenspan: Worst Financial Crisis Ever, Including the Great Depression.

Blunt words: Bernanke delivers warning on U.S. debt. (Thanks to A. H. in Tucson for the link.)

GG suggested this, over at Seeking Alpha: Something Very Strange Is Happening With Treasuries

Kevin S. sent us two interesting map links: Bank Failure Map and Interactive Job Loss Map

Jeff Recommended an article over at George Ure's site on the plight of a surveyor, which is a macrocosm of the national economy: And the Bottom Line Is?

Don't like the record number of foreclosures? Well, ban them! See: Obama May Prohibit Home-Loan Foreclosures Without HAMP Review

This comes from Pravda, so I'm naturally dubious: China has confirmed the intention to purchase 191.3 tons of gold from the International Monetary Fund at an open auction, Finmarket news agency said. (Thanks to J.D.D. for sending the link.)

Items from The Economatrix:

Sultans of Swap: Explaining $605 Trillion of Derivatives

Common Sense Economics (The Mogambo Guru)

Concerns Grow Over China's Sales of US Bonds

Greeks Scramble to Pull 8 Billion Euros from Local Banks

FDIC Hits Record "Default" Level as Deposition Insurance Fund Plunges by $12.7 Billion to NEGATIVE $20.9 Billion

Damon alerted us to this: Concerns grow over China's sale of US bonds; Evidence is mounting that Chinese sales of US Treasury bonds over recent months are intended as a warning shot to Washington over escalating political disputes rather than being part of a routine portfolio shift as thought at first.

Kevin S. sent us this from John Galt's blog: Looking at some deadly charts.

Another link from Kevin S. is for a video posted at YouTube: Gerald Celente Predictions

Jim D. forwarded an interesting article about the financial crisis in Greece and how it may be a window into the future of the US, by Bill Fleckenstein: US will suffer its own Greek crisis

Items from The Economatrix:

Bernanke Sees Low Rates Amid Weak Rebound

New Home Sales Drop 11% in January, New Low

Oil Prices Tumble on Economy Worries

FDIC's Problem Banks List: Where Will it End?

The various state budget crises are increasing in severity. Here is the news from California, and Illinois. (Thanks to GG, for both links.)

Reader "Burrito Boy" forwarded this warning of darker days in Europe: Greece leads Europe's winter of discontent

Michael H. suggested a piece by Professor Bainbridge: What, Me Worry? Credit Default Swaps on US Treasuries. Oh, don't miss his advice at the end of the article: "Although sovereign defaults are hardly unknown, things would have to get incredibly bad for the US to default on Treasuries. And if they got that bad, you'd probably have been better off investing in a survivalist camp than CDSs."

Items from The Economatrix:

Quantitative Easing May Have to Restart. (They're talking about monetization, folks. Be ready for some serious inflation, in coming years.)

A Desperate FDIC Begs Americans to Open Savings Accounts During "America Saves" Week

Chart of the Day: Banks Continue to Pull the Rug Out From Under the Economy

The Expanding Economics of Austerity

El Jefe Jeff E. sent this one: U.S. New-Home Sales Drop 11.2%. "Unexpectedly"??? What planet are they from? I suspect that we'll see a further drop, seasonally adjusted this summer, as mortgage credit tightens and as another wave of foreclosures further flood the housing market.

GG mentioned an article in an Indian newspaper, wherein Jim Rogers says that the UK will lose its AAA bond rating this year, and that inflation and a currency crisis are inevitable.

I noticed that The Total Investor Blog has had some great posts, recently.

Items from The Economatrix:

Bernanke: Record-low Rates Still Needed

Stocks Rise Ahead of Bernanke Report on Economy

Freddie Mac Loses $7.8 Billion. (Senator Everett Dirksen said it best: "A billion here, and a billion there, and pretty so you're talkin' about real money." )

Bad Credit Sidelines Some Jobless Workers

World Economy to be Hit by Several Sovereign Defaults

Consumer Confidence Down Again

Oil Rally Fizzles, Drops Below $80/Barrel

GG sent this: Buy farmland and gold,' advises Dr Doom

Also from GG: Prices are rising fast, even if the CPI isn't

Corey was the first of several readers to forward this: Banks at risk of going bust tops 700. Gee, with 7,000 banks in the country, that is a 1 in 10 chance that your bank is on the list. Those are practically Russian Roulette odds.

From Flavio: Harvard’s Rogoff Sees Sovereign Defaults, ‘Painful’ Austerity

Items from The Economatrix:

Real, Uglier American Unemployment

Death By Trillions of Dollars (The Mogambo Guru)

US State Pension Funds Have $1 Trillion Shortfall

Wealth Disparities in US Approaching 1920s Levels

More Generations Living Under Same Roof

Bad Economies in States to Worsen

Hollis wrote to mention that "John Galt" of the Shenandoah blog has completed his "The Day The Dollar Died" web novella.

Adrian sent us this: Argentina Seizes Central Bank.

GG flagged this one from Time magazine: How Big is the Threat from Option ARMs?

Items from The Economatrix:

FICO and the Credit Card Financial Prison: How a Three-Digit Credit Score Reflects Consumerism and Not Financial Independence

Boeing Sends More than 1,000 Layoff Notices

Citigroup Warns Customers it May Refuse to Allow Withdrawals

Fastest Shrinking Restaurant Chains

Stocks Waver in Early Trading on Earnings, M&A

Poll: Economists See "Healthy" Expansion Underway. (Cheery folk, those mainstream economists. They almost always look on the bright side...)

Oil Near $80 as Traders Eye Low Interest Rates

European, US Markets Steady Despite Big Asia Gains

Millions of Unemployed Face Years Without Jobs

So Where Did All The Money Go?

Greece Changes Chief Debt Manager as Pressure Grows

SurvivalBlog's Editor At Large Michael Z. Williamson sent us this sign of the times: Frustrated Owner Bulldozes Home Ahead of Foreclosure.

Robert H. and A.P. both sent us this link: South Carolina Lawmaker Seeks to Ban Federal Currency

Reader H.M. e-mailed me to mention that he greatly enjoyed a recent radio interview with Jim Sinclair.

Adrian recommended this commentary by John Rutledge: Banana Republics Need Compliant Central Banks. Here is an excerpt: "Wait a minute. Huge increase in government spending. Fast-rising debt. Tax the rich. Appoint political advisors to run the central bank. That’s us! "

Items from The Economatrix:

Jobless Claims, Inflation Jumps as Economy Wobbles

Monetary Inflation and the 32 Cent Gallon of Gas (The Mogambo Guru)

Law of Diminishing Returns of Credit Expansion

Governors Brace for More Economic Turmoil (also sent to us by J.D.D.)

US Consumer Prices Fall for First Time in 27 Years

Pound Slides Further on Surprise Fed Rate Raise

GG sent this: Federal deficit at $430.69 billion through January

GG also sent us the link to some commentary by Josh Lipton: What to expect from the commercial real estate crisis

Courtesy of SurvivalBlog reader LT: Greece loses EU voting power in blow to sovereignty

The Friday Follies continue: Four more US banks are closed.

Items from The Economatrix:

Premiums Jump 14% on Private Medicare Plans

Asian Markets Drop On Surprise Fed Rate Hike

"Crisis of Confidence": Risks of US Defaults are Very Real

Credit Markets Flash Hottest Warning Signal Since Crisis

SurvivalBlog's "George Gordon" (GG) suggested this article: Five Million Workers to Exhaust Unemployment Benefits by June.

Also from GG comes the link to this Seeking Alpha piece: The Municipal Bond Crisis Is About to Begin

Yishai sent us a link by way of Glenn Reynolds (at Instapundit): International Monetary Fund to sell another 191 tons of gold. This is panic-driven market manipulation, folks!

Items from The Economatrix:

Low Inflation Gives Fed Room to Keep Rates Down

Fewer People Falling Behind in the Home Loans

Stocks Edge Higher as Fed Eases Bank Supports

Oil Prices Up 12% in Two Weeks

JWR,
I did some research after reading the recent "Making Change in a New Precious Metals Economy" article. The following will make it easier to determine the metal value of coins. Thank you for your great blog.

Ounces of silver in pre-1965 coins:
Silver bullion coin = 1 ounce
Pre-1965 silver dollar = .77344 (90% silver, 10% copper)
Pre-1965 silver half dollar = 0.36169 (90% silver, 10% copper)
1965-69 silver half dollar = 0.1479 (40% silver)
Pre-1965 silver quarter = .18084 (90% silver, 10% copper)
Pre-1965 silver dime = 0.0715 (90% silver, 10% copper)

There is no silver in most post-1965 coins, except the aforementioned half dollars, and in some proof sets:
Post-1965 clad dollar = weighs 0.260 troy ounce. (copper 88.5%, zinc 6%, manganese 3.5%, nickel 2%)
Post-1970 clad half dollar = weighs 0.365 troy ounce. (nickel plated copper- 8.33% Ni, 91.67% Cu)
Post-1965 clad quarter = weighs 0.1823 troy ounce. (nickel plated copper- 8.33% Ni, 91.67% Cu)
Post-1965 clad dime = weights 0.0729 troy ounce. (nickel plated copper- 8.33% Ni, 91.67% Cu)

Nickel coins:
Mid-1942 to 1945 (56% copper, 35% silver, 9% manganese)
1866 to present except 1942-45 weighs 0.1615 troy ounces. (75% copper, 25% nickel)

Penny coins:
1793–1857 (100% copper)
1857–1864 (88% copper, 12% nickel)
1864–1942 (95% copper, 5% tin and zinc)
1943 (zinc-coated steel)
1944–1946 (95% copper, 5% zinc)
1946–1962 (95% copper, 5% tin and zinc)
1962–1982 weighs 0.080 troy ounces. (95% copper, 5% zinc)
1982– present weighs 0.080 troy ounces. (copper-plated zinc- 97.5% Zn, 2.5% Cu)

Base Metal Content Values
(The following are as of February 2010. See www.coinflation.com for updated figures)
Pre-1965 silver dollar = $12.47
1965-69 silver half dollar = $2.38
Pre-1965 silver half dollar = $5.83
Pre-1965 silver quarter = $2.91
Pre-1965 silver dime = $1.16

1971-1978 Eisenhower Dollar = 18 1/2 cents
1979-1981, 1999 Susan B. Anthony Dollar = 6 1/2 cents
2000-2010 Sacagawea Dollar = 5 1/2 cents
2007-2010 Presidential Dollar = 5 1/2 cents

1971 to present half dollar (clad) = 9 cents
Post-1965 quarter (clad) = 4 1/2 cents
Post-1965 dime (clad) = 2 cents

1946-2010 Nickel (except 1942-45)= 5 cents
1942-45 Nickel= 91 cents

1909 to 1981 penny except 1943 = 2 cents (95% copper)
1982 to the present penny = 1/2 cent (97.5% zinc)

JWR Adds: Because it was a transitional year, there were a mix of copper and zinc U.S. pennies minted, but all bore the mark 1981. As I've previously noted, it is not worth anyone's to sort pennies by date.. If you are serious about stockpiling lots of pennies, then buy a Ryedale electric penny sorting machine. But be advised that you will need to sort several thousand dollars worth of pennies to have that machine pay for itself. So my more conservative advice is to stockpile just nickels now. At least for the present time, nearly all of the nickels in circulation are 75% copper and 25% nickel. (There are still a few silver "war nickels" floating around out there, but they are very scarce.) But once a new debased nickel is introduced, then we will have the same sort problem that now exists for pennies. The new nickels will most likely be made of steel. Yes, the American people will be robbed of our valid specie once again--just as we were in 1933 (gold) , 1964 (silver) , and 1981 (copper pennies). But this shouldn't come as a surprise, since the history of coinage debasement is sordid and lengthy--pre-dating even ancient Rome. You've had plenty of warning. Stock up on nickels now, or you'll kick yourself about it in just a couple of years, especially if inflation returns in earnest.

Also, keep in mind that it is currently illegal to melt or bulk export U.S. pennies and nickels, but that would likely be rescinded, if they are dropped from circulation.

Stock Market Analyst and hedge Fund Manager Barton Biggs: Stock A Safe Haven With Food And Firearms To Protect Against Doomsday Pillagers

Here comes inflation! Reader Justin B. pointed us to this: January wholesale prices jump 1.4 percent. Justin notes: "That equates to a 16.8% annual wholesale price inflation rate!"

And now, news that the ratcheting-up has begun: Fed bumps up rate banks pay for emergency loans.

Greg C. sent us this: National Debt, Budget Deficit Scary Forecast for Taxpayers: Obama to Sign Fiscal Reform, Economists Predict Cutbacks, Tax Increases

El Jefe Jeff E. forwarded this little red flag news item: Foreigners cut Treasury stakes; rates could rise

Items from The Economatrix:

US States with High Jobless Rates Outsource Food Stamp Services Jobs...To India!

Sacramento, California: Region's Shuttered Stores Tell a Thousand Stories

A salvage economy is a post-production economy. The economy is based on salvage and then reuse or remanufacture of salvaged materials. The current modern equivalent of this are those individuals who sort through trash heaps and dumps for recyclable materials. The historical equivalent of this are the stone masons in Egypt who tore down ancient monuments for building material. For example, the lost Pyramid of Djedefre was thought to have not been built until its foundations were found, including a mortuary temple and queens’ pyramids. Where did it go? Must of it was used to build buildings in Cairo from 1300 through the 1700s. It was easier and cheaper to take apart an existing pyramid near the city than find, mine and transport new limestone blocks from now-distant quarries.

Salvage occurs when the manufactured product is unavailable in a new state, has become too expensive for anyone to purchase, or has a supply chain that has fallen apart to the degree that the product is often unavailable most of the time.

For all of the discussion on survival, why focus on long term survival on a salvage economy? First of all, many people will not set up a refuge in the wilderness. Their best survival opportunity seems to be within the city. While difficult, it is not impossible, especially for those who prepare. Secondly, if we do slide to a post-technical or “eco-technic” society, we should not expect to return to “Little House on the Prairie”. More than half of the world’s population lives in the cities. Those cities will still be there even if some catastrophe, be it nuclear, chemical, biological or EMP, manages to kill most of its inhabitants. And we should not expect all cities to be lost, even if several major ones are destroyed in terrorist strikes or war. If those untouched but partially depopulated or damaged but re-buildable cities can be utilized to rebuild civilization, which should be part of a larger goal. This rebuilding will then requires a salvage economy. And last but not least, if we have a multi-generational decline, we will fall into a salvage economy as manufacturing capacity fades. Even if we retain the capacity for a high-tech manufacturing capacity and find it crippled by environmental regulation and economic depression, we will find a salvage economy as has exploded in California.

If faced with a salvage economy, the question then rises: how do you survive long term in such an economy? More importantly, how can you prosper in a salvage economy?

1. Use creative recycling within your own household. If opportunities present themselves that can be ethically utilized, do so, but avoid scavenging for a living. (Hunting and gathering of food are excluded from this discussion. Here we are only discussing physical materials.)

2. Do not be a scavenger or salvager of materials yourself. This is to literally be at the bottom of the economic food chain. Be the collector or buyer that buys goods from the salvagers and then sells it at a profit to the recycler or craftspeople. This level of the supply chain is safer than doing the manual labor of salvaging, and your supply is both more diverse and continuous than those who do the actual salvaging. There is also less personal risk of injury or illness than salvaging. By becoming a collection point or “depot”, your own time is still mostly spent on survival related activities instead of searching for materials one only hopes to trade for items and resources needed for survival.

3. Have close and direct ties to multiple smelters or material re-processors. This provides more stability in sale price than if there is only one customer. A single purchaser can set their purchase price based on their ability to refuse to buy until you are hungry enough to sell at their desired price.

4. Invest in the replacement materials and goods that will replace salvaged product. After all, salvaged goods will eventually run out. This may be smelting equipment that can melt down the newly recycled metal into yet another material, compared to smelting equipment that melts down old steel beams into new steel goods. It may be plastic grinders and pellet makers that can turn new plastic materials into another form. It may be the act of investing in green energy projects as Peak Oil runs out and salvaging wood and plastic to burn winds down.

5.  Supply the material working tools needed by re-processors. This may be forges to be sold to metal workers or fuel to smelters. It could be molds or presses that can be sold to those recycling plastic. Create or produce what is needed for the salvage economy to turn salvaged goods into useable goods. The additional benefit of this is that there may be more than one re-manufacturer to sell these industrial essentials to, and one can always have the fall back of setting up the re-processing facility on their own property or help a neighbor do the same if the main re-processor shuts down.

6. Help develop the distribution market for existing salvaged goods, whether finding new uses for old salvaged goods or new demand for recycled products. By creating new markets or new customers, the profit margin is higher than competing with the existing salvage economy.

7. If shortages of obviously long-term useful materials are clear, consider stocking up on them. However, it is best to do so only if you can use them in your own business or own property. For example, copper tubing can always be used in plumbing projects or manufacturing of stills – or be sold to those manufacturing their own equipment. However, it is unwise to have hundreds of pounds of copper tubing sitting in storage if the money and space could be used to items with greater value to your household. Having a large stockpile of [cables or] solder wire may be critical if you are an avid ham radio operator and can generate extra income fixing and selling older rigs. But if you have no significant personal or business use and cannot barter it in sufficient quantity to acquire goods needed for life, use the space for food, water, or more valuable tools. However, if you have a small business that could use the materials or goods and it is a critical supply for those who may need it to rebuild technology as we rebuild, consider stockpiling it as a way to profit from the salvage economy.

8. Have the skills to fix salvaged items yourself. This may range from fixing broken toasters and radios to making small car parts to restore a heap of junk to a functioning car. Those who salvage are a dime a dozen. They could have been the migrant poor before the collapse, or they may have been hedge fund managers and bureaucrats who have no others skills than looking for and collecting salvage and scrap items. However, those who can take those broken things and make them functional will be a precious minority. If you do not have these fixer-upper skills, consider learning them.

Consider encouraging younger family members to learn these skills – be it wiring, tool and die cast, equipment repair or even complex mechanical assembly. Learning to read blueprints and manufacturing instructions would be an engaging project for any elementary school child. Fortunately, many of use have already stocked up these kinds of books in our homes, if only in the form of repair manuals for equipment and appliances we already own. Make it a reading assignment for yourself or your family members. Having these skills makes your labor valuable and your teaching ability even more so – and a non-tangible trade good that cannot be taken away.

Reader B.H. recommended this primer, published by a precious metals dealer: Buying silver, buying silver bullion for survival purposes. JWR Adds: I concur with nearly all of what they recommended on "survival"/barter coins. However, I do see the utility of buying some 1/2-ounce silver bullion coins. I also recommend buying some of the new pre-scored "Stagecoach" one-ounce silver bars a and rounds that can easily be chiseled into 1/4-ounce "bits", minted by Northwest Territorial Mint. Also, readers outside of the U.S. should concentrate on buying whichever bullion coins are the most recognizable and trusted in your respective countries. In Australia, for example, that might mean buying silver Kookaburras.

GG sent this: Lone voice warns of debt threat to Fed. (Yishai also alerted us to the same Financial Times piece linked over at the Instapundit blog.)

Also from GG, comes this piece by Jim Jubak: Eight Reasons for Investors to Worry

Items from The Economatrix:

Entitlements Threaten to Crush US Under Debt

Federal Reserve Begins Withdrawal of $2.2 Trillion from US Economy

US Government Paying Banks Thousands to Foreclose on Americans

Mortgage Rates Poised to Jump as Fed Cuts Funds

Silver Price Trends Show Signs of a Bottom

No Sharing Allowed (The Day The Dollar Died Series--Chapter XIX)

Kiss That V-shaped Recovery Good-bye; The US "Worse Than Greece" Says Economist

Stocks Rise on Upbeat Earnings, Economic Reports

Data on Industry Output, Home Building Boost Hopes

Health Insurer Humana Plans to Cut 2,500 Positions

So, given that the USA Federal Reserve currency, the US dollar, is going down the tubes, something else will replace it. There will undoubtedly be attempts by various governments to reinstate some version of fiat money, but people are going to see through that, and will not accept it, since fiat money is, at it’s core, an undeclared, and essentially unlimited, tax on those who produce.

Ultimately, people will probably return to a means of exchange with more than 4,000 years of history;  Gold and silver.  Here in the USA, in the aftermath of the coming economic collapse, there will be barter, at least at first, but as economic activity revives, something more convenient will be badly needed.  I am sure that there will be all sorts of private minting of gold, silver and even copper ultimately, but in the meantime, before private mints are established to meet the demand for real money, I expect, as many others have postulated, that pre-1965 US silver coinage will be a recognizable means of exchange.

There is a problem, however, with silver coinage.  Just as gold coins have too much buying power, even in 1/10 troy ounce sizes, for many transactions, so even a US silver dime may have too much buying power for many da- to-day local transactions.  Someone wishing to buy a needle, or a couple of fishhooks is not going to spend a whole 0.0715 ounces of silver (the amount in a pre-1965 silver dime) for a single needle.  Smaller change will be needed, and needed badly.  What to do?

At present (mid-February, 2010), based on the present commodity prices at Coinflation, a silver dime is worth $1.10 US based on spot prices for silver.  A US nickel is worth about 5 cents, for the metal content.  Clad dimes are about the same value as pre-1982 pennies (~2 cents), while clad quarters are slightly less valuable than nickels (~4 cents) and clad halves are worth about 8 cents in US currency.  While most people have not put aside precious metals as such,  (gold or silver coins) there will be a substantial quantity of clad coinage in circulation, and this could be used as smaller change for silver coins.

It is my intention, as economic activity is resumed, to exchange clad quarters and US nickels as 1/20 of a silver dime, essentially ½ of a ‘silver penny’ in exchange, and clad dimes and pre-1982 pennies as half of that value, or ¼ of a ‘silver penny’. 

For example, let’s suppose that I have #6 fish-hooks for sale, at the rate of four hooks for a silver dime.  Mr. Jones wants to buy just two hooks, but has no silver, all he has are clad coinage.  I’d sell him the two hooks for 5 clad halves, 10 nickels or clad quarters, or twenty pre-1982 pennies or clad dimes. 

Another example-  Mr. Smith wants to buy a pound of 8d cement coated nails.  I’m offering to sell ‘old’ factory made nails (not my new handmade ones) at one silver dime per pound (maybe a screaming bargain for him!)  Again, he has no silver coins, but has a bunch of nickels;  I’d sell the nails for twenty nickels.  Local commerce and trade would be facilitated by such an arrangement. 

Until private minting fills the money gap, this would appear to be a workable solution for small local transactions, which is where most of the trade would be, at least to start with. - Larry W.

Reader K.T. wrote me: You won't believe the sweetheart deal that the Indymac boys were given by the FDIC.

Reader JDD sent us this: Economist: China will soon revalue the yuan; Nation must slow economy down, deal with inflation threat, analyst says.

Also from JDD come this alarming Zero Hedge article link: Move Over China: Beijing Sells Whopping $34.2 Billion Treasuries In December As Japan Becomes Largest Official Holder of US Debt

Items from The Economatrix:

Stocks Gain on Earnings, Deals, and Hope For Greece

Foreigners Cut Treasury Stakes; Rates Could Rise

Gasoline Price Hits New Low for 2010

Are US Taxpayers Bailing Out Greece?

Credit Card Holders Face "Crippling" Rates

Forecasting with a Grain of Salt

China's Debt Bomb

Collapse of Euro Inevitable, Bailing Out Greek Economy is Futile

To Gauge Housing Prices, Look to Rents

US Debt Will Keep Growing Even After Recovery

The Day The Dollar Died Fiction Series: The Boxankle Adventure

L.A. Budget Crisis Threatens Jobs, Credit Rating

Russ D. spotted this: China: the world’s next great economic crash; Like Dubai at the beginning of last year, China is now reaching the peak of a bubble.

From Jonathan C.: Euro Area Headed for Breakup, SocGen’s Edwards Says

Steven H. suggested this iStockAnalyst article: Forget Greece, The US Almost Had a Failed Treasury Auction

Reader Sue C. forwarded this: Strong dollar hurts exports

Survivalblog's George Gordon notes that even Esquire magazine is trumpeting: "Inflation is coming, buy gold!"

Items from The Economatrix:

Economic Warnings from an Elderly Third Grader (The Mogambo Guru)

The Day The Dollar Died (Part 17): Black Ice

Depression 2010: Western Fiat-Money Finished?

Sovereign Alchemy Will Fail

US Banks facing $1.2 Trillion Crisis Over Commercial Property Loans

Treasuries Tumble on Supply

US Businesses Cut Inventories, Revealing Caution

Use of Temps May No Longer Signal Permanent Hiring

European Debt Markets Edge Up Despite Greek Debt Fears

Chrysler Dealers Upbeat, Worried After Meeting

Marc Faber Predicts: Debt Interest Will Lead to Default, Then War. Thanks to Brett G. for the link.

From GG: The Debt Contretemps Everybody's Ignoring

Several readers mentioned this: Collapse of the euro is 'inevitable': Bailing out the Greek economy futile, says French banking chief. In the short term this could push the US Dollar up, and gold down.

The soon-to-be-released Generation Zero documentary looks like is destined to be a success. I noticed that Andrew Sullivan of The Daily Dish is giving it some coverage.

From J.T.: Greek FinMin unveils tax reform, wage policy

GG sent a link to the latest from Mish Shedlock on "revenue enhancement" in the land of Ouzo: Greece Outlaws Cash Transactions Above 1500 Euros, Unveils New Taxes

Items from The Economatrix:

Bipartisan Jobs Bill Won't Add Many Jobs

A European Crisis, Not a China Slowdown, Will Trigger a Global Collapse

Bankruptcy Bloodbath May Hit Muni Bond Owners Next

Euro Currency Union Showing Strain

Desolate Malls, Empty Offices May Come Soon

The Least-Trusted Banks in America

Doing the Dead Cat Bounce

This is No Time to Bet Against the US Stock Market

Individual Insurance Rates Soar in Four States

Obama Says New Budget Rules Will Rein in Spending (Gee, it must be a matter of one's perspective, to have "out of control spending" seem "conservative"...)

Hi Jim,
I noticed this article on Zero Hedge today that I think you will find interesting, if you haven't seen it already. This is regarding the fiat system and how it the assumptions it is build upon are probably faulty. This, coupled with human nature, make collapse of the fiat system very probable, if not a certainty. Lots of good data in this article as well.

Thanks for all you do. I am learning much from you. I am now re-reading "Patriots" (after just finishing a stint that included 'Alas, Babylon', 'Lucifer's Hammer', 'Tappan on Survival', your new book ["How to Survive the End of the World as We Know It"], and 'One Second After'--do you think I should read something a bit lighter next?) We have many blessings to be thankful for; at the very least, your work has made me appreciate this.

God Bless, - Neal in Birmingham, Alabama

From GG: California Teachers Pension Fund $42.6 Billion Short

Truckman sent this; Commercial Real Estate's Coming $1.4 Trillion Crisis

From JDD: Report: 1 in 5 U.S. homeowners underwater

Items from The Economatrix:

Inflation: Ignoring Doesn't Make It Go Away (The Mogambo Guru)

Chapter XVI: When Shopping Is A Pleasure (The latest in The Day The Dollar Died series)

Globalization is Killing the Globe: Return to Local Economies

FEAR Davos 2010, Into the Bomb Shelter

Why Silver Price Will Boom to $50/Oz.

Bernanke Says Discount Rate May Rise "Before Long"

Trade Gap Unexpectedly Rises on Imports

How A New Jobless Era Will Transform America This raises interesting questions: What do all the jobless people do to survive now? What happens when the unemployment runs out? Will government increase welfare, which will raise taxes even more?

Hugh D. zeroed in on this Telegraph article: China orders retreat from risky assets. The article begins: "China has ordered managers of its vast currency reserves to withdraw from risky dollar assets and retreat to core debt guaranteed by the US government, a clear sign that Beijing is battening down the hatches for fresh trouble on global markets."

Randy F. sent this article: Monopoly "Money " --which notes that it is currently illegal to melt pennies or nickels, and the plans for further debasement of our currency.

Reader JTH found this: Bailout panel cites commercial real estate danger

UK central bank says it may restart debt monetization --after just r4ecently trumpeting the end of it. (Thanks to George Gordon for the link.)

Items from The Economatrix:

Money Supply Data Reveals "New Major Dip" Ahead

Famous Last Words: US Will "Never" Lose AAA Rating (Not as long as the fox is guarding the henhouse!)

The Dumping Begins: Chinese Reserve Managers Notified That Any Non-USG Guaranteed Securities Must Be Divested

Jobless Claims Figures Raises Hopes for Recovery (What a roller coaster this is...it's down...it's up...it's worse...it's better!)

Median Home Prices Show Signs of Stability (Someone saw a green shoot in a neighbor's front yard and misinterpreted it as an economic indicator...correction will soon follow!)

Citi Plans Crisis Derivatives

Darryl Robert Schoon--Davos: The Bomb Shelter

Stocks Swoon After China Brakes Spending Again

Eurozone Economy Falters, Germany Flat

The Rude Awakening of 2010

From GG: How Goldman Sachs Helped Greece to Mask its True Debt

Tom W. wrote to mention that he liked a Real Clear Politics piece titled Big Government's Big Shortfall.

Items from The Economatrix:

Stocks Up After EU Pledges Support for Greece

Moral Support, But No Money, EU Says to Greece

Oil Up for Fourth Day on Strong International Demand Outlook

The Fed's "Exit Plan" is Just Another Secret Gift to Wall Street

Jason Kelly Reviews the US and European Economies

Banking and Housing Payments Devoured Middle Class Income

Stocks Fall as Bernanke Points to End of Stimulus

Trade Deficit Jumps Sharply in December

Consumers Spent Modestly in January

Oil Nears $74 as Weak Dollar Offsets High Supplies

EU Officials Wrangle Over Possible Greece Rescue

Greek Bailout Looking Increasingly Likely

British Airways Credit Downgraded by S&P

Think PIGS are in Trouble? These Seven US States Could be Headed for Something Worse

A link sent by SurvivalBlog's Poet Laureate George Gordon ("GG"): Why Sovereign Debt Pain Has Only Just Started

Also from GG come this big red flag article: Greece ‘Dress Rehearsal’ for U.S. and U.K., Deutsche Bank Says

Sent by Trent: Britain faces 'oil crunch' within five years, Richard Branson warns

Forget The Mortgage, I'm Paying My Credit Card First! (Thanks to Coyote in northern Michigan, for the link.)

Items from The Economatrix:

Greece's Financial Crisis Puts Future of Euro in Question

Super-wealthy Investors Move Billions Out of Greece

World Bankers Meet in Sydney as Recovery Fears Intensify

Bank Failures to Keep Rising in 2010

Obama Says Economy Turning Corner to Growth ("Turning at warp nothing, Captain.")

Seven US States that are Worse Off than Greece, Portugal, Ireland, and Spain

UK: Thousands to Lose Jobs as Universities Prepare to Cope with Cuts

Will We Ever Trust Wall Street Again?

Greek Ouzo Crisis Escalates into Global Margin Call as Confidence Ebbs

CMBS Loan Liquidations Hit Record $585M in December. (A hat tip to Flavio for the linkio.)

Jeff P. suggested this Business Insider piece by Michael Snyder: 20 Reasons Why The U.S. Economy Is Dying And Is Simply Not Going To Recover

And from Jeff B., news of further debasement of US coinage: Obama’s Proposed 2011 Budget Allows Coin Composition Changes. Do you have your stash of nickels yet?

Items from The Economatrix:

US Mortgage Sector Braced for End of Fed Help

Initial Jobless Claims Rise Unexpectedly; Stock Futures Down, Dollar Up

Portugal Warned Near Political Crisis Over Debt

Mr. Rawles,
I took your advice of socking away nickels to heart. I wanted to start off with an ammo can for each member of my family. I figured why not go to the local bank where my wife has banked since 1993?

I went in, filled out the withdrawal slip for $178 (one ammo can) and requested the payout in nickels. The teller then said that if I withdrew $200 instead he can give me two boxes that came from the Fed. They gave me the nickels but told me that they really only give rolled coins to their commercial customers. At least I got my first batch.

I then went to another bank in town that has the account of the club where I'm the club president. I told them we were doing a fundraiser and needed $500 worth of nickels. Because this bank had one of those coin machines, I was able to get $500 of rolled coins in two canvas sacks! I basically saved them the cost of shipping those coins back to the Fed.

The following day I went back to the first bank and asked if I could get more nickels. I told them I was willing to pay the extra fee. They told me that I really had to be a commercial customer. I then asked about coins they receive [from merchants]. They chewed on that and realized that I was saving them money. The downside is that the coins won't be rolled up. They offered to call me when they had a $100 [face value] bag. I was fine with that.

Lessons learned
- Offer to take the nickels that they are sending back to the Fed. They save money in shipping and get paper money to put right back in circulation.
- Find a bank with a coin counter in the lobby. Those coins may be rolled up already and they will give you the nickels to save them shipping costs.
- When trying to cut a deal, be honest. When I went back to the first bank I told them why I was wanting nickels. We have been loyal customers of the bank and they have done right by us and were willing to work with me.

I found an interesting web site where you can buy $10,000 worth of nickels at face value and copper pennies at spot prices.

Thanks for all you do. Regards, - Cascinus, Jefferson City, Missouri.

JWR Replies: I stand by my prediction that nickels will begin to sell at a substantial premium over their face value in coming years. OBTW, there is a great forum called RealCent for folks that stockpile nickels and the pre-1981 copper pennies. They also have a sub-forum that discusses some survivalist preps--their "Non-Metals section".

Reader Dan D. recommended this piece by Simon Johnson: Europe Risks Another Global Depression

Commentary from Bill Pesek: Biggest Bubble in History Is Growing Every Day. He's anticipating big time currency inflation in east Asia. (Thanks to Auby for the link.)

Mike H. recommend this essay by Doug McIntosh, posted over at Steve Quayle's site: When the Gimmicks Fail

Items from The Economatrix:

Shell Downplays Prospect of Quick Recovery in Oil Demand Despite Profits Rebound

The Bernanke Reappointment: Be Afraid, Be Very Afraid

Planned Layoffs Rise for First Time Since July Economic Report

The Devaluation and Fight for Survival of the American Middle Class

Global Insolvency, How Will the US Service its Debt?

G-7 Seeks to Calm Global Markets, Sustain Rebound

SurvivalBlog's Editor At Large Michael Z. Williamson flagged this:mentioned this at Market Ticker: Derivative Fraud? Where Are OUR Cops?

GG flagged this: What Every American Should Know About the National Debt

Also from GG: Evercore CEO Altman: Obama's Deficit Will Cause An International Currency Crisis In The Next Two Years

Tim R. was the first of several readers to send this: It is Now Mathematically Impossible to Pay Off the U.S. National Debt

Items from The Economatrix:

Mortgage Rates Edge Up Slightly

Moody's Warns US of Credit Rating Fears

Sovereign Debt Fears Rattle Investors

Greek Debt Woes Spread to Portugal, Spain

Shell To Axe 1,000 More Jobs

January Unemployment Rate Drops to 9.7%. JWR's Comment: Sure it did...

Middle Class No More, Families Struggle to Fight Off Homelessness

The Bankruptcy of the US is Now Certain

There has been a veritable torrent of bad economic news in the past few days. Here is just a sampling...

Ponzi Scheme: The Federal Reserve Bought Approximately 80 Percent Of U.S. Treasury Securities Issued In 2009. (Thanks to Duane for the link.)

George Gordon ("GG") sent this: 20 Reasons Global Debt Time Bomb Explodes Soon

Also from GG: Sprott: Gold to gain 30% in 2010, higher interest rates to hurt US economy

and another from GG: Fears of 'Lehman-style' tsunami as crisis hits Spain and Portugal

Chad S. forwarded this: North Korea's economic moves bring new misery

John G. liked this piece over at Zero Hedge: The Next Leg Of The Housing Crisis In Five Simple Charts

Items from The Economatrix:

Stocks Sink in on Economy Jitters; Dow Below 9,900

Companies Boost Productivity and Put Off Hiring

Bond Yields Tumble on Latest European Debt Worries

Stocks, Commodities Plunge as Dollar Gains

Retailers Likely to Close More US Stores

A curious thing happened yesterday (Thursday, February 4th). Both the stock markets and precious metals markets declined. Traditionally, they have moved in opposite directions, but we are living in curious times. I took advantage of the dip in metals and bought some more silver. (I hope that you do likewise, on dip days. I've mentioned that countless times in SurvivalBlog. Has it sunk in yet?)

---

Today we present another entry for Round 27 of the SurvivalBlog non-fiction writing contest.

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner's choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost between $500 and $600, and B.) Two cases of Mountain House freeze dried assorted entrees, in #10 cans, courtesy of Ready Made Resources. (A $392 value.) C.) A HAZARiD Decontamination Kit from Safecastle.com. (A $350 value.), and D.) A 500 round case of Fiocchi 9mm Luger, 124gr. Hornady XTP/HP ammo, courtesy of Sunflower Ammo. This is a $249 value.

Second Prize: A "grab bag" of preparedness gear and books from Jim's Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $350.

Third Prize: A copy of my "Rawles Gets You Ready" preparedness course, from Arbogast Publishing.

Round 27 ends on March 31st, so get busy writing and e-mail us your entry. Remember that articles that relate practical "how to" skills for survival have an advantage in the judging.

From GG: Revelations of hidden Greek debt "last straw". And here is a related news story: EU toughens demands on Greece

Flavio sent this linkio: It’s Official: California Housing Production Reached New Low in 2009. Down 83% from the 2004 peak!

Pioneering blogger Hugh Hewitt says: We Are Headed For A Fiscal Stroke. (A tip of the hat to Damon for the link.)

Chad S. flagged this: U.S. May Lose 824,000 Jobs as Employment Data Revised

Items from The Economatrix:

Note from JWR: Cheryl (aka The Economatrix) wrote me to mention that there is up to two feet of fresh snow expected there soon, as well as high winds and some freezing rain. So she might be out of contact. Throw another log on the fire, Cheryl!

False Hope in Financial Free Lunch (The Mogambo Guru)

Jim Rogers: Federal Reserve is Worsening the Depression

The Subtle Nationalization of the Banks and Housing Market

Homeowners May Still Owe Even After Foreclosure

Data on Service Sector Show a Struggling Recovery

Gasoline Rises After Unexpected Supply Drop

Sir:
Do you know of any good web sites that list where you can buy just an acre or so of land in the woods, where people wouldn’t expect you to actually live? I live right on the Florida/Georgia state line so there's plenty of land around. However, parcels are typically sold in 50 acres or 100 acre chunks. Or [with a lot] they expect you to turn it into a house with a mailbox and all that. I just want some woods. My goal is to excavate for an underground storage shed, with small sleeping quarters. I'll then gradually fill it up with supplies. Thanks, - Rob C.

JWR Replies: One web site that I recommend watching is RealtyTrac.com. They specialize in listing foreclosed and otherwise "distressed" properties.

You should also ask a few real estate agents in your planned retreat area if they have any listings for any bargain parcels in any of these categories:

• Landlocked properties,
• "Access problem" properties,
• "Off-grid" properties
• State or National Forest In-holdings, or
• Patented mining claims

One other possibility (usually just an outside chance, in the more populous states) is to visit the County Assessor's Office, and ask about any tax delinquent parcels--especially ones with access problems. Depending on the county and state that you live in, these can sometimes be had just for paying the back taxes, or not much more than that.

I believe that the current collapse in the real estate market will create some rare opportunities to buy distressed properties for the next five to ten years. Be vigilant and prayerful. Lord willing, you'll find the right place at the right price.

George Gordon ("GG") sent this news item: Largest-ever federal payroll to hit 2.15 million

Also from GG comes this link to a Seeking Alpha piece: U.S. Economy: Don't Worry, Prosperity Is Just Around the Corner

Yet another from GG: Rising FHA default rate foreshadows a crush of foreclosures

Reader JDD spotted this over at The Daily Beast: The Dollar's Scary Decline

Also from JDD: Obama's Budget Has One Small, Missing Piece.... For $6.3 Trillion Dollars

Items from The Economatrix:

US January Auto Sales Rise

Unemployment Rises in Most Metro Areas

Roubini Sees "Very Dismal and Poor" US Growth Ahead

Bernanke Voices Economic Concerns as He is Sworn In

Deficit Brings US Closer to Brink of Bankruptcy

Colorado Springs Cuts Basic Services. More than 1/3 of streetlights to go dark on Monday, and that's just the start.

No Help In Sight, More Homeowners Walk Away

The First Country to Leave the Euro? What About Germany?

US Deepening Debt Crisis, Be Afraid of Bernanke Reappointment

Growing Bubble in Commercial Real Estate; CRE Losses Could Wipe Out Banking System

I warned you, folks! Coin Composition Change Included in Obama's 2011 Budget. Have you socked away your nickels yet? Do so before they start making them out of stainless steel! Gresham's Law is still in force. (Thanks to CRD for the link.)

Matt B. mentioned that the Geography of Recession interactive map has been updated. This is looking grim!

The Other Jim R. forwarded us a link to this Zero Hedge piece: Brace Yourself for the Coming Gold Shortage

GG sent this: White House to paint grim fiscal picture

Michael Z. Williamson (SurvivalBlog's Editor At Large) flagged this: Obama’s 2011 Budget Proposal: How It’s Spent

Items from The Economatrix:

Obama Seeks $1.9 Trillion Tax Rise on Rich, Business

Britain's Banks Downgraded by S&P

US Hunger for Gasoline Falls, Unlikely to Return

Is America Broke?

How Japanese Hyper-Inflation Could Turn the USD Into Toilet Paper

George Gordon ("GG") sent this: In Coke We Trust; Investors now view a default by the U.S. Treasury as more likely than a default by the Coca-Cola Company.

Sue C. sent us this: It only gets worse this year for commercial real estate

Kevin K. flagged this: Kalashnikov Gun Factory Offers Food in Place of Salaries. JWR's Comment: If they don't have cash to pay workers, then they probably don't have cash to pay the food suppliers, either. I suspect that some barter is going on. (Which would make me very happy, if I were a local farmer.)

Items from The Economatrix:

Central Banks End US Dollar Emergency Swap Lines

Dr. Gary North: Fed Starting to Unwind Loose Monetary Policy, Could Trigger Secondary Recession

Stock Market Heading for Black Monday Crash?

Banks Under Attack from Washington, the Impact on You

"Underemployment" Tops 20% in Three States

Obama Unveils 2011 Budget with $3.83 Trillion in Spending

Fewer Banks Imposing New Loan Hurdles; Demand Low

Lower Gasoline Prices Vary Widely Across US

Stocks Climb as Manufacturing, Spending Increase

Odds 'n Sods:

Last week, SurvivalBlog reader Noah C. sent me a link to piece by Dan Denninger: SEC Tightens Rules for Money Funds. Noah made this comment that amplified Denninger's observations: "Here is the most interesting part: That a Money Market Fund's Board of Directors can now 'inform' the SEC (instead of request) that they are suspending fund redemptions." I also heard from our friend Darrin in Wyoming about same topic. He wrote: "A Wall Street Journal report mentioned that the SEC voted Wednesday (1/27/10) to allow money market fund managers to freeze redemptions, in an effort to 'make your investments more safe'". This is the closing sentence from the WSJ article:

"These and other changes will provide significant additional protections and will benefit money market fund investors."

Ahem, but I don't feel any safer, knowing that my money market accounts could be "temporarily unavailable" when the net asset value (NAV) drops below $1/ per share. (They call that "breaking the buck.") This change echoes something that I've been warning about since 2006 over in the hedge fund world. (See; Hedge Funds--A Disaster Story that Could Unfold in Quarterly Episodes.) There, they've already had the ability to suspend redemptions, at will. Seeing a comparable rule implemented for Money Market funds is very troubling. I thought that in the wake of the big credit market meltdown, that government control of the financial markets was going to increase. This new rule is something quite the opposite.

Let's face it: The SEC has a high population of staffers that formerly worked in the same industry that they are now regulating. The "foxes guarding the henhouse" metaphor comes to mind. And to see folks like Tim Geithner and Ben Bernanke--both formerly banking industry insiders--now placed in the highest levels of oversight really makes me wonder: In who's best interest are they governing? And, more importantly, from a preparedness perspective: What circumstances are they envisioning for the future that would make this rule change necessary? Why do they need to empower fund managers with a giant "OFF" switch, that can be thrown at a moment's notice? Buckle up, folks. There is a bumpy ride ahead.

Price Tags are Merely Suggestions: Haggling is Back (Thanks to Damon for the link.)

Bill R. flagged this news story: Swiss warn UBS bank could collapse

From Jeff D.: Bailout Cop: U.S. May Face Another Financial Crisis

J.S. spotted this: Bailouts created more risk in the system

From George Gordon ("GG"): UK claims it will end debt monetization this week

Items from The Economatrix:

Roubini: Greece is Bankrupt

Greek Crisis Shows Euro is Too Big to Fail

Soros Warns Gold is Now the "Ultimate Bubble"

Are You Ready for the Coming Obama Retirement Trap?

Truckin' for God and Country (more from The Day The Dollar Died series)

The first time I spoke with real estate entrepreneur Andy Miller was in late 2007, when I asked him to serve on the faculty of a Casey Research Summit. As John Mauldin, a former faculty member himself, knows, we're very selective with our speakers. And there was no one in the nation I wanted more than Andy to address the critical topic of real estate.

My interest in Andy was due to the fact that he has been singularly successful in pretty much all aspects of the real estate market, including financing and developing large projects – such as shopping centers, apartment communities, office buildings, and warehouses – from one end of the country to the other. His expertise has also allowed him to build an impressive business providing assistance to large financial institutions that need help in dealing with problem commercial real estate loans. As you might suspect, business is booming.

Back in 2007, however, what most intrigued me about Andy was that he had been almost alone among his peer group in foreseeing the coming end of the real estate bubble, and in liquidating essentially all of his considerable portfolio of projects near the top. There are people that think they know what's going on, and those who actually know – Andy very much belongs in the latter category.

In fact, he initially refused to speak at our event, only agreeing very reluctantly after I had hounded him for several months. The reason for his refusal, I later found out, was that he had spoken at several industry events before the real estate collapse and had been all but booed off the stage for his dire outlook.

The happy ending of this story is that Andy's speech at our Summit was a rousing success, and he enjoyed it so much that he has now spoken at several, and has kindly agreed to sit for periodic interviews to keep our readers up to date on the latest developments in this critical sector. So far, Andy's real estate forecasts continue to come true.

As you'll read in the following excerpt from my latest interview with Andy, who now spends considerable time each day helping the nation's biggest banks cope with growing stacks of problem loans, he remains deeply concerned about the outlook for real estate.

David Galland

No one has been more right on the housing market in recent years. So, what's coming next? Some of the housing numbers in the last few months look a little less ugly. Could housing be getting ready to get well?

MILLER: I don't think so.

For all intents and purposes, the United States home mortgage market has been nationalized without anybody noticing. Last September, reportedly over 95% of all new loans for single-family homes in the U.S. were made with federal assistance, either through Fannie Mae and the implied guarantee, or Freddie Mac, or through the FHA.

If it's true that most of the financing in the single-family home market is being facilitated by government guarantees, that should make everybody very, very concerned. If government support goes away, and it will go away, where will that leave the home market? It leaves you with a catastrophe, because private lenders for single-family homes are nervous. Lenders that are still lending are reverting to 75% to 80% loan to value. But that doesn't help a homeowner whose property is worth less than the mortgage. So when the supply of government-facilitated loans dries up, it's going to put the home market in a very, very bad place.

Why am I so certain that the federal government will have to cut back on its lending? Because most of the financing is done via the bond market, through Ginnie Mae or other government agencies. And the numbers are so big that eventually the bond market is going to gag on the government-sponsored paper.

The public doesn't have any idea of the scale of the guarantees the government is taking on through Fannie, Freddie, and FHA. It's huge. If people understood what the federal government has done and subjected the taxpayers to, there would be a public outrage. But you can't get people to focus on it, and it's very esoteric, it's very hard to understand. But it's not something the bond market won't notice. The government can't keep doing what it has been doing to support mortgage lending without pushing interest rates way up.

Refinancings of single-family homes are very interest-rate sensitive. Consumers have their backs against the wall. They have too much debt. Refinancing their maturing mortgages or their adjustable-rate mortgages is very problematic if rates go up, but that's exactly where they're headed. So anyone who's comforted by current statistics on single-family homes should look beyond the data and into the dynamics of the market. What they'll find is very alarming.

On that topic, recent data I saw was that something like 24% of the loans FHA backed in 2007 are now in default, and for those generated in 2008, 20% are in default, and the FHA is out of money.

MILLER: Fannie Mae had a $19 billion loss for the third quarter of 2009, and they are now drawing on their facility with the U.S. Treasury. We have all forgotten that Fannie and Freddie are still being operated under a federal conservatorship. On Christmas Eve, the agency announced that they were going to remove all the caps on the agencies.

So what about commercial real estate?

MILLER: When I saw what was happening in the housing market, I liquidated all my multifamily apartments, shopping centers, and office buildings. I liquidated all my loan portfolios, and I'm happy I did.

Then it occurred to me in 2005 and 2006 that the commercial world had to follow suit. Why? Because it's a normal progression. Obviously, when single-family homes decline in value, multifamily apartments decline in value. And when consumers hit the wall with spending and debt, that's going to have an impact on retailers that pay for commercial space.

Furthermore, the financing for retail properties had gotten ludicrous. The conduits were making loans that they advertised as 80% of property value when they originated them, but in reality the loan-to-value ratios were well over 100%. And I say that to you with absolute, categorical certainty, because I was a seller and nobody knew the value of the properties that I was selling better than I did. I had operated some of them for 20 years, so I knew exactly what they were bringing in. I knew what the operating expenses were, and I knew what the cap rates were. And, you know, the underwriting on the loan side and the purchasing side of these assets was completely insane. It was ludicrous. It did not reflect at all what the conduits thought they were doing. They were valuing the properties way too aggressively.

I became very bearish about the commercial business starting in late '05. In fact, I think I was in Argentina with Doug Casey, sitting on a veranda at one of the estancias, and he and I were lamenting what was going on in the real estate business, and I said there was going to be a huge adjustment in the commercial market.

Beyond the obvious, that the real estate market has taken pretty significant hits and some banks have been dragged under by their bad loans, what has really changed in real estate since the crash?

MILLER: I think the first thing that changed was that people learned that prices don't go up forever. Lenders also saw that underwriting guidelines for commercial real estate loans, especially in the securitization markets, were erroneous. They realized that some of their properties had been financed too aggressively, but still, I don't think even at the fall of Lehman, anybody was predicting a wholesale collapse in commercial real estate.

But they did see they should be more circumspect with loan underwritings. In fact, after the fall of Lehman, they completely stopped lending. I think they realized we had been living in fantasy land for 10 years. And that was the first change – a mental adjustment from Alice in Wonderland to reality.

Today it's clear that commercial properties are not performing and that values have gone down, although I've got to tell you, the denial is still widespread, particularly in the United States and on the part of lenders sitting on and servicing all these real estate portfolios. People still do not understand how grave this is.

Right now there are an awful lot of banks that do an awful lot of commercial real estate lending, and for about a year now you've been telling me that you saw the first and second quarter of 2010 as being particularly risky for commercial real estate. Why this year, and what do you see happening with these loans and the banks holding them?

MILLER: It's an educated guess, and it hasn't changed. I still think that it's second quarter 2010.

The current volume of defaults is already alarming. And the volume of commercial real estate defaults is growing every month. That can only keep going for so long, and then you hit a breaking point, which I believe will come sometime in 2010. When you hit that breaking point, unless there's some alternative in place, it's going to be a very hideous picture for the bond market and the banking system.

The reason I say second quarter 2010 is a guess is that the Treasury Department, the Federal Reserve, and the FDIC can influence how fast the crisis unfolds. I think they can have an impact on the severity of the crisis as well – not making it less severe but making it more severe. I will get to that in a minute. But they can influence the speed with which it all unfolds, and I'll give you an example.

In November, the FDIC circulated new guidelines for bank regulators to streamline and standardize the way banks are examined. One standout feature is that as long as a bank has evaluated the borrower and the asset behind a loan, if they are convinced the borrower can repay the loan, even if they go into a workout with the borrower, the bank does not have to reserve for the loan. The bank doesn't have to take any hit against its capital, so if the collateral all of a sudden sinks to 50% of the loan balance, the bank still does not have to take any sort of write-down. That obviously allows banks to just sit on weak assets instead of liquidating them or trying to raise more capital.

That's very significant. It means the FDIC and the Treasury Department have decided that rather than see 1,000 or 2,000 banks go under and then create another RTC to sift through all the bad assets, they'll let the banking system warehouse the bad assets. Their plan is to leave the assets in place, and then, when the market changes, let the banks deal with them. Now, that's horribly destructive.

Just to be clear on this, let's say I own an apartment building and I've been making my payments, but I'm having trouble and the value of the property has fallen by half. I go to the bank and say, "Look, I've got a problem," and the bank says, "Okay, let's work something out, and instead of you paying $10,000 a month, you pay us $5,000 a month and we'll shake hands and smile." Then, even though the property's value has dropped, as long as we keep smiling and I'm still making payments, then the bank won't have to reserve anything against the risk that I'll give the building back and it will be worth a whole lot less than the mortgage.

MILLER: I think what you just described is accurate. And it's exactly a Japanese-style solution. This is what Japan did in '89 and '90 because they didn't want their banking system to implode, so they made it easier for their banks to sit on bad assets without owning up to the losses.

And what's the result? Well, it leaves the status quo in place. The real problem with this is twofold. One is that it prolongs the problem – if a bank is allowed to sit on bad assets for three to five years, it's not going to sell them.

Why is that bad? Well, the money tied up in the loans the bank is sitting on is idle. It is not being used for anything productive.

Wouldn't banks know that ultimately the piper must be paid, and so they'd be trying to build cash – trying to build capital to deal with the problem when it comes home to roost?

MILLER: The more intelligent banks are doing exactly that, hoping they can weather the storm by building enough reserves, so when they do ultimately have to take the loss, it's digestible. But in commercial real estate generally, the longer you delay realizing a loss, the more severe it's going to be. I can tell you that because I'm out there servicing real estate all day long. Not facing the problems, and not writing down the values, and not allowing purchasers to come in and take these assets at discounted prices – all the foot-dragging allows the fundamental problem to get worse.

In the apartment business, people are under water, particularly if they got their loan through a conduit. When maintenance is required, a borrower with a property worth less than the loan is very reluctant to reach into his pocket. If you have a $10 million loan on a property now worth $5 million, you're clearly not making any cash flow. So what do you do when you need new roofs? Are you going to dig into your pocket and spend $600,000 on roofing? Not likely. Why would you do that?

Or a borrower who is sitting on a suburban office property – he's got two years left on the loan. He knows he has a loan-to-value problem. Well, a new tenant wants to lease from him, but it would cost $30 a square foot to put the tenant in. Is the borrower going to put the tenant in? I don't think so. So the problems get bigger.

Why would the owner bother going through a workout with the bank if he knows he's so deep underwater he's below snorkel depth?

MILLER: It's always in your interest to delay an inevitable default. For example, the minute you give the property back to the bank, you trigger a huge taxable gain. All of a sudden the forgiveness of debt on your loan becomes taxable income to you. Another reason is that many of these loans are either full recourse or part recourse. If you're a borrower who's guaranteed a loan, why would you want to hasten the call on your guarantee? You want to delay as long as possible because there's always a little hope that values will turn around. So there is no reason to hurry into a default. None.

So that's from the borrower's standpoint. But wouldn't the banks want to clear these loans off their balance sheets?

MILLER: No. The banks have a lot of incentive to delay the realization of the problem because if they liquidate the asset and the loss is realized, then they have to reserve the loss against their capital immediately. If they keep extending the loan under the rules present today, then they can delay a write-down and hope for better days. Remember, you suffer if the bank succumbs and turns around and liquidates that asset, then you really do have to take a write-down because then your capital is gone.

So here we are, we've got the federal government again, through its agencies and the FDIC, ready to support the commercial real estate market. They've taken one step, in allowing banks to use a very loose standard for loss reserves. What else can they do?

MILLER: Well, obviously nobody knows, but I can guess at what's coming by extrapolating from what the federal government has already done. I believe that the Treasury and the Federal Reserve now see that commercial real estate is a huge problem.

I think they're going to contrive something to help assist commercial real estate so that it doesn't hurt the banks that lent on commercial real estate. It'll resemble what they did with housing.

They created a nearly perfect political formula in dealing with housing, and they are going to follow that formula. The entire U.S. residential mortgage market has in effect been nationalized, but there wasn't any act of Congress, no screaming and shouting, no headlines in the Wall Street Journal or the New York Times about "Should we nationalize the home loan market in America." No. It happened right under our noses and with no hue and cry. That's a template for what they could do with the commercial loan market.

And how can they do that? By using federal guarantees much in the way they used federal guarantees for the FHA. FHA issues Ginnie Mae securities, which are sold to the public. Those proceeds are used to make the loans.

But it won't really be a solution. In fact, it will make the problems much more intense.

Don't these properties have to be allowed to go to their intrinsic value before the market can start working again?

MILLER: Yes. Of course, very few people agree with that, because if you let it all go today, there would be enormous losses and a tremendous amount of pain. We're going to have some really terrible, terrible years ahead of us because letting it all go is the only way to be done with the problem.

Do you think the U.S. will come out of this crisis? I mean, do you think the country, the institutions, the government, or the banking sector are going to look anything like they do today when this thing is over?

MILLER: I know this is going to make you laugh, but I'm actually an optimist about this. I'm not optimistic about the short run, and I'm not optimistic about the severity of the problem, but I'm totally optimistic as it relates to the United States of America.

This is a very resilient place. We have very resilient people. There is nothing like the American spirit. There is nothing like American ingenuity anywhere on Planet Earth, and while I certainly believe that we are headed for a catastrophe and a crisis, I also believe that ultimately we are going to come out better.

About: Andy Miller is the co-founder of the Miller Frishman Group, which includes three companies serving different sectors of the real estate market – from mortgage brokerage and banking, to the building, management, and marketing of commercial real estate across the United States. His firm is currently deeply involved in the distressed real estate business, assisting lenders across the nation with their growing portfolios of non-performing loans. (Reposted with permission from John F. Mauldin's e-newsletter, Thoughts From the Frontline.)

Mac Slavo gets is all right in this piece posted in the SHTFPlan blog: Wealth Preservation, Investing, and Prepping in 2010. (Thanks to G.S. in the State of Jefferson for the link.)

Damon sent this: U.S. Economy Grows 5.7 Percent in Fourth Quarter of 2009. JWR Adds: They're calling it a "recovery"? That is laughable. I call it nothing more that the effect of many hundreds of billions of dollars in short term stimulus. Keep in mind that this will effectively be paid for with money borrowed from my children's generation. The current presidential administration has spent more than $3.5 trillion, and much of that went to "stimulus." And all that got was just 5.7% in growth? I suspect that the real underlying economy is actually heading into a depression that will last a decade or more. If you look at the job numbers minus the stimulus-generated make-work jobs, the government's sleight of hand is apparent.

Maybe they won't call it "conspiracy theory nonsense" anymore: Secret Banking Cabal Emerges From AIG Shadows: David Reilly. (A tip of the hat to K.L. in Alaska for the link)

Items from The Economatrix:

Energy Prices Fall So Far in 2010

Wages and Benefits Rise Weak 1.5% in 2009

Stocks Have Dismal January, Bad Omen for 2010?

Bernanke Confirmation Means Fed Independence. He was reconfirmed by the narrowest margin in congressional history.

Weak Greece Could Drag Down Weak Eurozone

Asian Stock Markets Fall on Greece Debt Fears

Growing Shares of Americans' Income Comes From Government

Geithner Accused of Incompetence Over His Role in AIG Bailout

Reader Johnny G. recommended an article by PIMCO's Bill Gross titled: The Ring of Fire. Johnny's comment: "It is interesting to see how and where SurvivalBlog precepts and the predictions of well connected, mainstream bond investors' converge."

Some folks in England are catching on to what privately owning gold means: How to live without banks. (Thanks to Karl P. for the link.)

George Gordon ("GG") sent us this: The Fed's Anti-Inflation Exit Strategy Will Fail; Sooner or later the pressure to lend out excess bank reserves will be unstoppable.

Items from The Economatrix:

Our Financial Rulers are on Another Planet

IMF: Banks Must Raise Billions to Fend Off Crisis

UK Economy Lies on Bed of Nitroglycerin

Revealed: See Who Was Paid Off in the AIG Bailout

How The Major Stock Indexes Fared on Friday

The Latest Installment of the Friday FDIC Follies: Six More Banks Bite the Dust in California, Florida, Georgia, Minnesota, and Washington

Banking crisis, currency fears. (Thanks to G, for the link.)

Items from The Economatrix:

24 States Unemployment in the Red, 9 More Within 6 Months

Is the Dow About to Dive 1,000 Points?

Pakistan Collapse Could Trigger Global Depression and WWIII

Walmart to Cut 11,200 Sam's Club Jobs

Bob Chapman: Are We in an Economic Depression?

IRA & 401K Theft Plotted by US Government

Doug Casey: Stock Market Set to Crash

Home Prices Stabilize Further, But More Drops May Be in Store

First-time Jobless Claims Drop Less Than Expected

Mr. Rawles,
I am a collector for a large bank. Before I go out to repossess ("repo") a car, motorcycle, RV, etc. I use Google map and Google earth to try to locate my collateral.

In most cities and towns Google has paid a company to take street view pictures of your house and property. More often than not, the vehicle is sitting in the driveway or in front of the house and there is a nice picture of it. Also Google earth allows me to see if it is hidden in the back 40. If you look close enough you can see what looks out of place or see the shadows of the vehicle and find the hidden collateral.

Most people leave the garage door open so I can look into it from the safety of my desk. It always surprises me at what I can see from those pictures.

You can also see dog houses, helpful to know so I don't get bitten while looking at your property from outside the fence (I bring dog treats along to help them keep quiet, works all the time). - J. from Spokane

Dear Jim,
I'm writing to let your readers know that there are services other than Google Earth which may provide detailed overhead photographs of their homes. Most alarmingly, the services complement each other by using different data and photographs, so one should not draw unreasonable comfort if one particular service (e.g. Google Earth ) does not by itself show excessive detail of one's property. Different sites have different strengths and weaknesses and can be easily combined to provide outstanding intelligence.

The best (worst?) example of an alternative is Microsoft's Bing.com, whose mapping service features generally inferior satellite photos to Google, but which also provides something called "Bird's Eye View". Their "Bird's Eye View" uses aerial photographs shot from low-flying airplanes, not satellites. Its coverage is spotty in some rural areas, but it is always expanding. Since it uses aerial photos and not satellite photos, it shows a completely different and more natural perspective from Google and therefore complements it nicely. The photos also generally shows much greater detail than Google's satellite photos.

I used Google and Bing together with other services (FEMA flood maps, etc.) to gather very detailed intelligence on potential retreats before purchasing one. I'm sure the "bad guys" can be counted on to do the same.

I would also caution your reader Garnet (and all of your readers) against relying on perceived data or technology problems, such as ambiguous cursor location, for comfort from any of these sites. They are all constantly "improving" their services. For example, Google has recently added lot lines to maps in some areas, including mine. Previously it was a "secret" (i.e. available only through a records request at Town Hall) that my property is not only larger than one would assume from a satellite photo, but includes a certain feature that would otherwise appear to belong to a neighboring lot. Now it is visible to anyone who cares to check. Regards, - John S.

From George Gordon ("GG"): Money sent home by Mexicans abroad plunged a record 15.7 percent in 2009

GG also sent us this piece by David Galland: What the Deflationists are Missing

From LJ: Don't invest in Britain: The UK economy sits 'on a bed of nitroglycerine', investors warned

Items from The Economatrix:

New Home Sales Fall 7.6% in December

Stocks Fall as Investors Await Fed Decision

SEC Tightens Rules for Money Funds

Caterpillar 4Q Profit Tumbles; Outlook Cautious

Verizon to Cut 13,000 Jobs as Business Cut Lines

Signs of Housing "Recovery" Will Fade with End of Stimulus

"Daunting" US Fiscal Outlook Means Bulging Deficits: CBO

UK: Recession's Toll on Workers Far Worse than Reported

Reader Jeanan asks: It this a sign of a commercial real estate collapse? Owners: $5.4Billion New York housing complexes go to creditors

Robert H. recommended this piece by Paul Mladjenovic: Three Things Everyone Needs to Do with Money in 2010

Our friend Evan describes this as sort of like "doubling down" at a casino: Greece Sells 8 Billion Euros in Notes After Offering Premium

GG flagged this Reuters piece: Record number of young Americans jobless

Also from GG: Deficits As Far as the Eye Can See

Economics Update from JWR: The last I heard, the Economatrix was still snowed in, warm by her woodstove, but sans Internet. You can expect more of her posts sometime later this week.

Jim,
During many years of "hiding, prepping and watching" I've tried to determine what series of events may lead to TEOTWAWKI. There are many, but not obvious to most.

Hurricane Katrina and Haiti are examples of either predictable events or unpredictable instantaneous events as would be a single nuclear event such as a "suitcase bomb" . Each of these has a number of things in common, but the most significant is the limited geography associated with each. The biggest difference between Hurricane Katrina and the Haitian earthquake is the lack of adjacent unaffected land. In the case of Hurricane Katrina there was a place to bug out to, on foot or by vehicle, without walking into hostility, and the time to do it. In Haiti, there is no warning and no place to go unless you are a long distance swimmer, but it will be remedied and controlled. There will simply be more deaths and casualties along the way. There will be survivors and they will by and large return to the way things were before the quakes.

By and large, events such as these are attended to with aid being provided from outside the immediate area. How well the aid is administered and how soon it arrives is a subject for another time. Needless to say, it always arrives later rather than sooner; get used to it. Survival during these types of events is always in the relatively "short term", unless you are in the middle of it; I'm sure it then seems very long term. If not crushed by falling debris, me and mine will get through these types of events. We are prepared to do so.

I've quit thinking about those types of events, as I'm either prepared for them or I'm not, but they are not TEOTWAWKI events. I've focused on the type of events that creep up on you, but that cause long term and lasting changes to society as a whole. These are on a much larger scale with little or no aid or organization from anyone. The "aid providers" will be worried about providing for themselves, as will everyone else. This concerns me much more than a short term catastrophe. What events could cause this and what kinds of subtle warnings should one be looking for?

Our society is so intertwined that any number of small subtle events can build up to and then spark these events. As with Hurricane Katrina, those signs are out there. You are being warned, and just have to identify what they are and be on the outlook for them. I would compare Haiti to a localized small nuke; no warning, nothing to see coming, it just happens.

People will kill for a number of reasons. Lack of Food, Water and Shelter, and all that it takes to get them, will be the most common reason . Other immediate threats or perceived threats to their loved ones is on the same level or next on the list. All other reasons are subsets of those. We are now seeing, if we are aware and watching, the beginnings of many of those reasons.

It could be a stock market crash, droughts, government failure to renew its short term debt, political upheaval, increased taxes or something as obvious as hyperinflation caused by continued Fed intervention into the economy. It is likely that all of these things and many others, in their own small way, will collectively be the straw that breaks the camel's back. There is no way to tell which one or ones and when it is likely to happen. History tells us that it will happen. I've decided to carefully monitor world events through all media sources and try to weed out the wheat from the chaff.

Some Observations:
I could ramble on forever about all of these things, but consider that hyperinflation is absolutely in our future. It's caused by the Federal Reserve Bank and our government. The only way to decrease the value of what we owe is to print more money, or go to war. Printing more money simply dilutes the value of the dollar in this country. We buy oil with those dollars, and the less they are worth, the more dollars it takes to buy it. All things in our world are directly related to oil. The more it costs, the more everything else costs. Most of our goods are imported from foreign countries. The less the dollar is worth, the more dollars it costs to buy them. As the dollar decreases in value and it takes more dollars to buy the same old necessities, your paycheck never increases proportionately, and if the company you work for fails to make a profit, you'll be unemployed. That $2 gallon of milk may soon cost $5 or even $10 dollars. As in Zimbabwe, $1,000 or more dollars. Sometimes it can't be had at any price. Our money today has decreased dramatically in value and purchasing power since the Federal Reserve began in 1913. If you are my age, you'll remember 15 cent per gallon gasoline. At that time minimum wage was $1.25 per hour. I could buy 8.3 gallons of gas for every hour worked. Today, using the same comparison, I could almost buy only 3 gallons for one hour worked at today's minimum wage. This applies to all commodities. It's only going to get worse, much worse.

Schumer rolls down hill. The prevailing attitude is: "When I can't buy it but have to have it, I'll steal it. If my kids are starving, I'll kill for it." Get the picture? It doesn't take a single event to cause this, although a single event could get us to the same place.

Suppose that nationwide draughts caused decreased crop harvests. It's already been happening for years. Food reserves are the lowest they have ever been. Supply and demand dictates price. Less supply equals higher prices. Watch the crop forecasts. The price of oil also dramatically affects the price of fertilizer, cost of food preparation and transportation. Just stop in a convenience store and buy a candy bar. How much does it cost now, compared to a year ago; compared to two years ago? On a very small scale that candy bar represents everything else in your life. Inflation, like many other things (such as loss of freedoms) sneaks up on you.

The government is giving away more money than we provide to it. It's generating unbelievable debt. Taxes have to be increased. This will decrease how much money you have to buy the more expensive goods and services. Watch the M2 and M3 money funds. They are the gauge of how much money the government is borrowing. Watch the roll-over or default of the short term debt at the end of this year. Where will the money come from to pay the $2 trillion in short term debt? Why would China or anyone else loan us this money when even they can se that they will not get repaid in anything other than devalued dollars.

You will never see the truth about any of these topics reported in the mainstream media, and there is a dearth of connecting the dots, even on the Internet. As you read about these things, ask yourself, "what does it really mean" and how does it link the the other current happenings. I can't list all of the inter-related subjects that have an effect on this, but can only advise you to pay attention. If you don't, it will sneak up on you and you won't be ready. - Tom H.

Sue C. and Chris S. were the first of a dozen readers to forward me this article link: Seven Things About The Economy Everyone Should Be Worried About

Trent sent us this: Gold is "fairly expensive" could fall to $800 if Fed moves Midas fund manager says. [JWR's Comment: I'm dubious about a big correction in the near future. I don't expect interest rates in the US to change radically anytime soon. If anything, they are headed lower, in a desperate attempt to turn the real estate market around, and boost equities. Also note that the funds have continued to be big gold buyers, even after gold topped $1,000 per ounce. There will be some dramatic dips, but gold is still in a bull market. You can quote me on this: In the long term, gold will prevail, and the dollar will fail.

GG sent this: Home sales plunge nearly 17 percent in December - largest drop in 40 years. Meanwhile, we read: Government pulling out of mortgage support as home resales plunge. (Thank to EMB for the latter link.)

Also from GG: Will this decade prove even more volatile than its predecessor?

From Greg C.: Poverty rate hits 17.5 percent in Nashville

Commentary from Instapundit editor Glenn Reynolds: “MYSTERY BIDDERS” at Treasury auctions. Let’s hope they’re gullible!…

GG flagged this: State jobless rates on the rise - 43 states reported rising jobless rates in December, reversing signs of improvement

Kent B. sent this: Bernanke under pressure

Items from The Economatrix:

Bill R. and El Jefe Jeff E. sent us the latest Friday Follies news: Banks shut in Florida, Missouri, New Mexico, Oregon, and Washington.

GG sent this Christian Science Monitor piece: China: the world’s next great economic crash

Items from The Economatrix:

World Bank Sees Risk of Recovery Losing Steam

UK: Markets Panicked About Inflationary Spiral

UK: Families Face Years of Pain, Says Bank

Empty Office Spaces Soar in Downtown Seattle

Bank of America Loses $5.2 Billion in Fourth Quarter of 2009

FHA Raises Fees, Tightens Loan Standards

2009 US Airline Revenue: Worst Plunge on Record

Trent sent us this: Gold is "fairly expensive" could fall to $800 if Fed moves Midas fund manager says. [JWR's Comment: I'm dubious about a big correction in the near future. I don't expect interest rates in the US to change radically anytime soon. If anything, they are headed lower, in a desperate attempt to turn the real estate market around, and boost equities. Also note that the funds have continued to be big gold buyers, even after gold topped $1,000 per ounce. There will be some dramatic dips, but gold is still in a bull market. You can quote me on this: In the long term, gold will prevail, and the dollar will fail.

Items from The Economatrix:

BofE "Nerves" to be Tested as Inflation Jumps to Most on Record

Rise in Jobless Claims Signals Bump in Recovery

Rates on 30-Year Home Loans Fall to 4.99%

Target to Renovate Older Stores, Open Fewer in 2010

How Can Localities Cope if the Dollar Crashes?

Railroads Signal a Tepid US Economic Recovery

China's Economic Rebound Sparks Price Worries For Country's Food Shoppers

GM to Cut 2,500 Jobs in Germany

Citigroup Cuts Compensation By 20% as Losses Fall

Top U.K. Economist Dumas: Euro Will Collapse. (Thanks to GG for the link.)

Also from GG comes some grim news from Forbes: The Global Debt Bomb: "If 2008 was the year of the subprime meltdown, 2010 will be the year entire nations start going broke."

Trent flagged this: Why Americans should care about the debt crisis in Greece

Items from The Economatrix:

Identifying Sure Signs of the Final Economic Plunge

Banks Pull Another $1 Billion from Small Business Lending

One Million Americans Give Up on Job Searches

Chevron to Shrink Refining Business

Ship Engine Maker Warstila to Lay Off 1,500 Globally

Stocks Slide as Obama Calls for Tougher Bank Rules

Oil Tumbles as Stock Market Stumbles

Flavio sent us this: Foreclosures Up 14% in December. Flavio's comment: "I can tell you as a real estate broker for the past seven years that things are getting worse, not better. I began to notice years ago that the media is usually about 4 - 6 months behind in reporting what myself and associates are experiencing in the now. So judging by the how quiet the phones have become, and how quiet they remain the last couple months, I would say the 'second leg down' has already begun. It is no longer a matter of if anymore. I give it until August for an all out real estate panic to set in among the public and our political leaders."

Russia diversifies into Canadian dollars. (Thanks to GG for the link.)

Also from GG: Obama to Nationalize Student Lending with Pending Budget Bill

Items from The Economatrix:

US Homebuilder Confidence Drops

Citi Loses $7.8 Billion in Fourth Quarter

Japan Airlines Files for Bankruptcy

The Housing Timebomb

No Genuine Economic Recovery Happening

"The 13 Worrier" sent a link to a very interesting YouTube video of Richard Maybury and Jim Powell discussing the possibility of a double dip depression and civil unrest in the United States.

Country homes get an appetite for business

Is the US Economy Being Tanked by Mistake or Intent?

Illinois enters a state of insolvency

Items from The Economatrix:

Martin Weiss: 200 Bank Failures Expected in 2010

European Markets Lifted by Corporate Deal Hopes

IMF Chief: Global Recovery Stronger than Expected

Recession Takes Toll on University President Pay

Oil Stays Near $78 on Demand Doubts, Weaker Dollar

2010-2020 Towards a Knockout Victory by Gold Over the Dollar

Société Générale Ordered to Stop Derivatives Trade tn India

Congress Makes Job Creation Top Priority in 2010

Foreclosures Weigh on Home Appraisals

Euro Rupture as Greek Crisis Escalates

Two more banks fail, bringing year's tally to three

UK’s Only Options are “Default, Inflation or Belt-Tightening”

Items from The Economatrix:

US Gas Likely to Top $3+ in Spring, Summer

Capital One US Credit Card Charge Offs Hit 10%

US 2009 Foreclosures Shatter Record Despite Aid

Doug Casey Says Stock Market Set to Crash

Dr. Gary North: Why Deflation is Not Ahead

Is the American Economy Destined to Fail?

Items from The Economatrix:

Dubai World Tries to Keep Banks at Bay with Six-Month Standstill on its Debts

Horizon Bank of Bellingham, Washington First Bank Failure of 2010

Four Economic Scenarios You Better Hope Won't Materialize

For Every One Job There are Six Jobless Applicants

Financial Markets and Economic Crisis Outlook 2010, When Hope Turns to Fear

Dr. Gary North: Deflationists Predicting Price Deflation are Not Economists, They are Journalists

What Happens When the Fed Stops Quantitative Easing

Howard Ruff Preparing for Rough Times By Hedging Against Inflation

California debt rating cut as cash crunch looms. (Thanks to GG for the link.)

World Health Organization Eyeing Global Tax on Banking and Internet Activity

Items from The Economatrix:

UK: Consumer Confidence Takes a Dive

US Jobless Rates to Stay High Until 2012

Barons of Wall Street to Face US Crisis Panel

Consumers Are Squeezed as Inflation Outpaces Wages

Obama Mortgage Relief Program Fails to Deliver

GG flagged this: Ambrose Evans-Pritchard: A global fiasco is brewing in Japan

I spotted this piece by Pat Buchanan over at WND: Is America's financial collapse inevitable?

Items from The Economatrix:

Ambrose Evans-Pritchard: A Global Fiasco is Brewing In Japan

Fitch Warns US Must Cut Spending to Preserve AAA Rating

How Nation's True Jobless Rate is Closer to 22%

Stocks Fall on JPMorgan Results, Sentiment Survey

Oil Drops on More Signs of a Struggling Consumer

Platinum to Beat Gold, Says Goldman Sachs

Warning of Further Economic Crises Ahead

Tim B. sent this: Dollar Crisis Looms if US Doesn't Curb Debt

And in related news, GG sent us this: US must cut spending to save AAA rating, warns Fitch

GG also sent this one: The Coming Sovereign Debt Crisis, by Nouriel Roubini and Arpitha Bykere

Yet another from GG: A Season Of Discontent: The only alternatives for which majorities express "a lot" of trust to help manage financial risk are close family members (64 percent) and their own efforts (74 percent)

Items from The Economatrix:

Stocks Rise as Optimism Builds About Earnings

Retails Sales Fall Unexpectedly; Jobless Claims Up

Scariest Chart of the Day

US Has Record December Budget Gap of $91.9 Billion

Reader Pamela E. suggested this article: America's vulnerable half-speed recovery

Frequent content contributors GG and Charley S. both sent this piece by Jim Kunstler: Economy has Six Months to Live

Items from The Economatrix:

Japan Airlines to File for Bankruptcy and Cut 15,600 Jobs

UK: Work Until 80 Under Plan to Abolish Retirement

Venezuela: Devaluation Sparks Chaos in Caracas

MyBudget360: The Capture of Our Government by Wall Street

Federal Reserve Seeks to Protect US Bailout Secrets

Wall Street, Politicians Still Don't Get It

Keith B. liked this piece by Ambrose Evans-Pritchard: America slides deeper into depression as Wall Street revels; December was the worst month for US unemployment since the Great Recession began. (Gee: I thought that companies were supposed to avoid December layoffs. So how will the January and February employment stats play out?)

Obama considers levy for rescued firms. (Thanks to Rory for the link.)

From GG: How nation's true jobless rate is closer to 22%

2010 Bank Failures Start with Two. (The FDIC could become insolvent in the near future--which would mean another huge bailout...) A tip of the hat to W.F.A. for the link.

Items from The Economatrix:

Schwarzenegger Unveils California Budget Cuts

2010: Giant, Gathering Storm Clouds

Harsh Realities: 85,000 Jobs Lost in December, "Real" Unemployment Rate at 17.3%

Commodities Will Roar in the Year of the Tiger 2010

12 Dr. Dooms Shred 2010 Investing Optimism

Tips: Gold May Hit $1,375, Dollar Going Down

Disappointing Alcoa Results Drag Stocks Lower

November Trade Deficit Increases to $36.4 Billion

Fed Posts Record Profits for Last Year

Oil Falls as Cold Eases Grip

Trent spotted this on Yahoo's Tech Ticker: Survivor america "it's only going to get worse" Gerald Celente says

Courtesy of Cousin Al: How Barter Saved Russia

Items from The Economatrix:

Debt Collectors Doing Huge Business in New York

Iceland Blocks Repayment Deal, Sparks Global Outrage

All Of Pakistan's Oil Refineries at or Near Default Energy crisis may cripple Pakistan by the 15th

Oil Rises Above $83 Amid Strong Chinese Demand

Road Projects Don't Help Unemployment

Second Wave of Mortgage Defaults, Part 1

Biggest Bond Trader Dumping UK Gilts as Well as US Treasuries We're All Icelanders Now

Japan Airlines "About To Collapse"

Hard Questions for Tim Geithner

Don't Think That it Can't Happen Here Department: Chavez devalues currency by 50%. (Thanks to Damon for the link.)

Eric. C. mentioned the latest piece by Dan Denninger: A "Macro Level" Look At The Economy

The Economist makes a Bubble Warning: Markets are too dependent on unsustainable government stimulus. Something’s got to give. (A tip of the hat to GG fro the link.)

KAF sent this: China Overtakes Germany as World's Biggest Exporter. But wait! You should also read this: Contrarian Investor Sees Economic Crash in China. (Thanks to Rick V. and Darryl C. for sending the latter link.)

Items from The Economatrix:

Are You Ready for a Stock Market Crash of 2010?

Fed Statements Clear Any Doubt of Gold Hitting $1,700

United States Debt Ridden Road to Perdition

Contracts Down: Is US Housing Heading for Double Dip?

California Requests $8 Billion in Federal Aid

Reader Thomas B.was the first of several readers to reference this article by Jim Jubak: Anarchy in the UK (and US, too)?

Al wrote to mention that just as I predicted, the base metal value of US five cent pieces ("Nickels") have again risen to above their face value. ($1.01 for $1.00 face value) I stand by my position that nickels are a good hedge against future inflation. If you have sufficient secure storage space, then gradually accumulate nickels!

Items from The Economatrix:

10 Jobs That Will Get a Raise in 2010

Greece Faces Intrusive EU Surveillance Amid Reports of Burgeoning Deficit

Senate Panel Near Agreement on Role of Fed

Late Credit Card Payments Rise to Record

Bernanke: Low Rates Didn't Cause Housing Bubble

Banks Trim Borrowing from Fed's Emergency Program

A bit more of the truth comes out: Geithner’s Fed Told AIG to Limit Swaps Disclosure. (Thanks to Shale for the link.)

From GG: U.S. regulators warn banks on interest rate risk

Brett sent us this bit of confirmation for the prevailing sentiment amongst Rawlesians: Krugman: 40 Percent Chance of Double Dip Recession

Items from The Economatrix:

Fed Wants Florida Bank to Boost Equity or Find Buyer

Construction Spending Down Seven Straight Months

Bank Lending Poised to Pick Up

Bernanke Says Confident in Fed Strategy for Exit

Blackstone's Wien Sees Strong 2010 US GDP, Profits

Fed's Kohn Says Economy, Jobs Will Recover Slowly

GG sent this: Double-Dip Risk Seen in ‘Stall Speed’ Recovery: Stephen Roach

Darryl C. suggested this: Time for Fed to disprove PPT conspiracy theory; Commentary: Analyst charges that government is manipulating markets

Items from The Economatrix:

GM Sales Fall 33% in 2009, Ford Up in December

Pending Home Sales Fall 16% in November

Pump Prices On Pace to Top 2009 High By Weekend

US Public Pensions Face $2 Trillion Deficit

IMF: Commodity Prices to Rise in 2010

Stores to Post Modest December Sales Gains

European Stocks Remain Lower After US Jobs Data

US Job Cuts Shrink to Two-Year Low in December

Frequent content contributor GG spotted this piece over at Zero Hedge: The Fed Is Preparing Quantitative Easing 2.0, MBS-Only Edition

El Jefe Jeff E. sent this: Pending Home Sales Tumbled in November

Joan mentioned this at Zero Hedge: US Avoids Technical Default By Three Days

Items from The Economatrix:

Robert Rubin: All Hell Could Break Loose Because of Huge Government Debt

Something Evil This Way Comes

Mortgage Demand Near Six-Month Low as Rates Jump

Private Sector Sheds 84,000 Jobs in December

If The Fed Missed that Bubble, How Will it See a New One?

ECB's Stark: No Bailout for Greece

GMAC Sees $5 Billion Fourth Quarter Loss After Latest Bailout

From GG: Personal Bankruptcy Filings Rising Fast

Also from GG: Global Boom Builds for Epic Bust: Peter Boone and Simon Johnson

Items from The Economatrix:

BRIC to Rebuild New Economic World Order

Banks to Blast Customers with New Bank, Check Fees

US to Lose $400 Billion on Fannie, Freddie

China's 2010 Gold Rush

Year-End Gold Charts

2010 Will Be Worse

Chad S. spotted this: Lower home appraisals appear to be up; Deals get killed as foreclosures, short sales make valuing property difficult. JWR's Comment: The continuing waves of house foreclosures are bound to ratchet down both sales prices and in turn assessed valuations. This will lead to more state budget crises. The bottom line: If they can't raise your home' assessed value, then they'll raise property tax tax rates. A corollary exists with income taxes. As more people lose their jobs or have their payroll hours cut back, then states will be forced to raise income tax rates. The 50 states will balance their budgets, because unlike the Federal government, they can't create money out of thin air! To delay taxation, shelter your assets in tangibles. On a related note, MM sent this:
Montana's big sky views become bigger tax burdens. The lesson here: Avoid living in a "resort" county with over-priced property!

Reader Keith B. sent a link to a news article that should serve as a warning flag: U.S. Treasuries Post Worst Performance Among Sovereign Markets

GG flagged this: "Mystery buyers" take $500 billion of Treasuries. Who do they think they're fooling?

Items from The Economatrix:

Iceland bank deal increases national debt by 40% of GDP to 130%

2009 Bankruptcies Total 1.4 Million, Up 32%

Manufacturing Reports Bolsters Hopes for Recovery

Global Bear Rally of 2009 Will End as Japan's Hyperinflation Rips Economy to Pieces

Bernanke Insists the Financial Crisis Was Not The Fed's Fault

From G.G.: China provides 97 percent of the global supplies of rare earth elements, most coming from a single mine in Inner Mongolia

I spotted this over at the Dr. Housing Bubble blog: Unlocking the Foreclosure Box – The Most Comprehensive Shadow Inventory Housing Analysis for Los Angeles County.

Items from The Economatrix:

Taxpayers Hit Harder as Bank Shares Nosedive

20 Million+ in US Got Unemployment Checks in 2009

Washington Times Slashes Staff 40%

US Stocks Drop as Crisis Causes S&P 500's First Decade Loss

US Dollar and Treasury Bonds at Risk Following Fannie and Freddie Debt Monetization

A Year on From Financial System Collapse: Something is Not Quite Right

Gary North: How to Protest Against the Big Bailed Out Bankster Run Banks

GG sent an article link which will not be a news flash to SurvivalBlog readers: What Americans might face next: inflation

CNN: Three reasons home prices are headed still lower. (Thanks to FG for the link.)

Monroe sent us this: Death and Taxes: 2010 Graph of Federal Budget. Monroe's comment: "Not for the faint of heart... but then if you aren't using real money...!"

Items from The Economatrix:

US Economic Disaster Worse than Weimar or Zimbabwe

Cities, Counties Take Back Corporate Tax Breaks

China Becomes World's Biggest Gold Buyer in 2009

Eurozone Credit Contraction Accelerates

The Economic "Experts" Who Stopped Making Sense

Banks Accused of Profiteering in 2009

Flavio sent the linkio to a PDF on the Shadow Inventory of real estate.

Thanks to RVL for this: Banks take big hit to replenish FDIC funds

Jerry L. forwarded this item by Doug French from Mises Daily: Gold and Guns

Survival is more than just having supplies, it is possessing knowledge, and specifically knowledge about free market (Austrian) economics and banking. One of the fundamental reasons for past productive success in the United States is because there were less intrusive government regulations, a smaller court system, and the division of labor was less cumbersome. Individuals were able to gravitate to where there was a demand that wasn’t currently being met, and were able to meet it without Big Brother wanting to not just regulate the behavior, but also steal a piece of the action if it was successful. If TSHTF, then we will need to return to our roots and be able to analyze where we can be productive and learn to maximize our trading capabilities.

While it is important to be able to sustain yourself as referenced by the many survivalist tactics in this blog, it is also important to consider what would happen if there was a form of Anarchy, meaning “no rule.” Have you thought about what would happen if the roads were privatized (Read Walter Block’s The Privatization of Roads and Highways)? Privatized courts, police, military, and even bodies of water? How does someone take advantage of this? Each person attempting to become self sufficient needs to study the nuances of these ideas because they could shape the community both during and especially after society attempts to put itself back together. Most people think of the intact government handling these aforementioned parts of society, but what if there was no government for a while, what if the oceans were even privatized? What is someone claimed the air?

If society as we know of today ceased to exist, the individuals who thrive will be those who didn’t just prepare to survive, but those that also have a business product in high demand and is lowly supplied. Survivalists need to look into their skill set and figure out their specialty. Is it creating low lactose dairy via goats? Growing herbs and being an apothecary? Eventually all our supplies will run out unless we have something that we can produce and trade. My recommendation is that someone specialize in a product more so than a skill. People will have a lot of time to learn new trades, but they won’t necessarily have the ability to learn both a new skill and have the resources to produce the said product.

An example would be to create a bank. May sound extreme but how many people really understand how a bank works? How many have studied Murray Rothbard and the ills of fractional reserve banking? Most people today know more about their iPod than the soundness of their bank’s balance sheet because they think the magical FDIC is guaranteeing their deposit. This has led to people only caring about the interest paid on their savings or money market accounts and not on the actual bank. Well the FDIC doesn’t really have any money, it just has our money that is taken via taxation. I think when banking returns post collapse, people will not put a deposit in banks with the idea of getting an interest payment on their money. Instead, they may note that the FDIC has been abolished due to lack of taxation, and that the only reason for a bank to exist is to safeguard the money, and they will be willing to pay a fee to do so. I am sure that there will not be many survivalists who not only understand banking, but will have a structural set up to protect the deposits. The entrepreneur who creates a vault like residence, has an ethical reputation in the community, has ample gold, silver, and yes even copper pennies, will most likely be the choice for a bank.

Now this banker would understand that he can have two types of accounts, he can have 100% of his reserves backed by a commodity such as gold, or can accept long term deposits with the idea of lending them out to other business’s or for real estate ventures. I don’t think anyone after TSHTF will want their money lent out at first, but eventually as society re-organizes itself, some individuals may want to take risk and allow their deposits to be lent out. If you have the time, go to YouTube and type in “How an Economy Grows and Why it Doesn’t” by Irwin Schiff. (This is Peter Schiff’s father). Although it is in the form of a cartoon, it explains how a primitive economy on an island grows and is fantastic for not only educating children, but also adults who aren’t economically inclined.

The combination of gold and guns for a banker is important, but it should also be noted that the new money may in fact not be gold or silver. Although it most likely will, at least in my opinion, be silver, there is the possibility it will be something else. The idea put forth by Frederick Hayek of competing currencies will probably be the scenario, and survivalists need to understand that currency is always spontaneously created. It is created out of need. It is possible that different parts of the U.S. will adapt different types of currency. A banker needs to be prepared to accommodate these types of transactions to help an economy grow from a primitive one to facilitate more advanced monetary transactions. Therefore understanding currency exchange is rather significant, as well as how to understand business’ and real estate on a risk adjusted basis, should the need for bank lending become demanded by the bank’s customers. Additionally, a banker may need to partner with another entrepreneurial survivalist with Radio/Communication expertise to stay in contact with other “start-up” banks, and be readily in touch with their customers.

The nuances of lending out deposits are great, and I’ll mention many Libertarians and Constitutionalists find it revolting, but it is still something that needs to be understood for a banker to be able to explain all available services to his potential customers. Understanding of all services is important, as it is the consumer via the free market that will dictate what is desired “post collapse,” not a government entity. The basis for banking, I believe, is the basis for modern society. Although my entry is devoted to economics and banking, there are many other novel business ideas that a survivalist could educate themselves on, my thoughts on this are “to each his/her own.”

In terms of education and where someone could go to get started, the booklist on this web site is fantastic, but for the topic of this entry I will make a few specific suggestions. First YouTube videos should be downloaded and stored on your hard drives. This will be very valuable because if the internet goes down then there will be no way to access YouTube, and I’m just using this site as an example since there are other comparable ways on the internet to find videos. Perusing the various Austrian economist sites (like the Mises Institute for starters), intelligent investors like Jim Rogers, Doug Casey, and Marc Faber, and specifically lectures on banking will be very valuable.

Besides just economics, investing, and banking, if there are any other areas of question such as the constitution or law, stocking up on some Andrew Napolitano video’s could be both useful and entertaining post collapse. If you really want a good laugh then just download things like Ben Bernanke was wrong, but I suspect that post-TSHTF no one will believe in Keynesian economics anymore anyway. Books will be important for trading, but as a banker, if you are able to hand out duplicated DVDs of topics to your customers you will help distribute the ideas of a free market post collapse in a novel way, and hopefully create not only better, but a more educated customer relationship than other competing bankers; although I’ll again mention that I think there really won’t be much competition in this area. Obviously food, protection, et cetera are needed to simply survive, but there is no way that free trade, and innovation via division of labor can truly help us after TSHTF unless we have sound banking, and an educated banking populace.

Even More MOAB Money: Bankers Get $4 Trillion Gift From Barney Frank

The Economist: A turbulent year in the currency markets is coming. (A hat tip to frequent content contributor G.G.)

Bill R. sent us this from The Wall Street Journal: Banks Risk Storms in Safe Havens

From Reader F.G.: California gears up to charge "Use Tax" on items purchased out of state

Items from The Economatrix:

Stocks Edge Higher as Jobless Claims Fall

Fannie, Freddie Proving Too Big to Shrink

North Korea Bans Foreign Currencies in Market Clampdown

$36 Charge for Not Using Your Credit Card

Goldman Sachs Denies Betting Against Clients on CDOs

US Studies Banks' Handling of Toxic Assets

Pension Fund Sues Morgan Stanley Claiming Bank Knew Investments Were Bad

Morrie recommended a web page that he found by way of Dan Denninger's site: Move Your Money.

SJR spotted this: Government moves closer on fresh aid to GMAC

El Jefe Jeff E. sent this: Economists React: Prices Have Further to Fall.

Also from Jeff come this in The Wall Street Journal: State, Local Tax Revenues Decline 7%

Items from The Economatrix:

Government Gives GMAC $3.8 Billion in New Aid, Boosts Stake

Chinese Firm Says it Won't Pay Goldman on Derivatives Losses

Banks Bundled Bad Debt, Bet Against It, and Won

World Stock Market Rally Seizes Up

Consumer Confidence Up, House Prices Stall

The Day The Dollar Died (Part 10): The Dented Crown and Worthless Pound

Gold Rush Grips China as People on Buying Spree

Zero Corner, Debt Costs and Isolation

29 Foreigners Send a Message: Your Debt Instruments Suck!

The Mother of All Bailouts (MOAB) continues to grow: U.S. may prop up housing further via Fannie, Freddie; Unlimited support may presage more aggressive action in mortgage markets. (A tip of the hat to Randy F. for the link.)

Adjusted for Inflation Dow's Gains are Puny. (Thanks to James B. in Colorado for the link.)

Items from The Economatrix:

Retailers Stores Thinly Stocked, Profits Won't Be

Stocks Edge Higher As Shoppers Step Up Spending

Holiday Sales Rose Estimated 3.6%

"Reasonably High Chance" Economy Will Contract in 2010

Cash-Strapped US Running Out of Unemployment Money

Home Equity Lines Of Credit Have Dried Up All Over the US

Oil Hits Five-Week-High on US Cold, Optimism

Charley S. recommended this R. Taggart Murphy article over at Japan Focus: In the Eye of the Storm: Updating the Economics of Global Turbulence

Damon sent this: Burlington Northern's Tepid Outlook is a Warning

Several more readers have suggested that I link to this 30 minute YouTube video: The Dollar Bubble, which was mentioned once before in SurvivalBlog. It features clips of Peter Schiff, Ron Paul, Dr. Marc Faber, Gerald Celente, and Jim Rogers.

Items from The Economatrix:

Schumer Urges Wall Street Banks to "Get That Money Out There"

US Stocks Rise, S&P 500 Reaches 15-Month High on Commodities

Berkshire Eliminates 21,000 Jobs as Manufacturing, Retail Slump

Japan Jobless Rate Climbs for First Time Since July

Retailers Shift to Post-Holiday Bargains as Sales Seen Falling

Storms, Falling Supply Drive Energy Prices Up

Treasurys Come Off Lows Following Auction

Last Decade Worst Ever in Stock Market

Even as the US Economy Recovers, a Decade of Joblessness and Flat Wages Could Lie Ahead

US Treasury Bonds a Ponzi Scheme Waiting to Crash

The Other Jim R. mentioned a piece in the SHTFPlan blog: Hyperinflationary Depression - No Way of Avoiding Financial Armageddon

Markus suggested this piece over at 321 Gold: An Introspective Look at the Future of America Craig Harris.

A recent post from the Dr. Housing Bubble blog: Real Homes of Genius: Culver City Housing Bubble. Housing Shadow Inventory in Action. Countrywide Bank Owned home versus Duplex on Same Block. Foreclosure Holiday.

Items from The Economatrix:

Geithner: Tight Lending Threatens US Recovery

Global Food Crisis 2010 Means Financial Armageddon

Bob Chapman: The Credit Crisis is Not Over

Global Markets Face Rising Risk of a 2010 Double-Dip Recession

Fragile U.S. Economy Under Increasing Stress From Escalating Afghanistan War

US Dollar Breakout Means Gold Has Further to Fall

The Other Jim R. was the first of several readers to alert us to this article: We're Screwed! ShadowStats.com founder John Williams explains the risk of hyperinflation. Worst-case scenario? Rioting in the streets and devolution to a bartering system. [Gee, what blog has Mr. Williams been reading?]

YRC Has Until Yearend to Corral Bondholders, Avert Bankruptcy.

Items from The Economatrix:

Retailers Slash Prices After Christmas

Shoppers Return to Malls, Looking for Deals

Stores Hope Gift Cards Will Give Post-Christmas Lift

Credit Crunch: Home Equity Lending Evaporates

China Closer to Becoming World's Second Largest Economy

US Removes Caps on Fannie, Freddie Lifelines for Three Years. This means unlimited funds to failed mortgage giants.

Treasury Yield Curve Steepens to Record on Debt Demand Concern

Bailout nation continues: Schwarzenegger to seek federal bailout of California on threat of deep cuts. (Thanks to GG for the link.)

Also from GG: Austria nationalises Hypo in ECB-backed rescue deal because of "systemic importance in the former Yugoslavia".

Items from The Economatrix:

Fitch: Britain and France Risk Losing AAA Rating

Thrifty Families Accused of Prolonging the Recession

UK: Families Hit By Worst Wages Crash in 50 Years

By way of Steve Quayle's web site: National Irish Bank Stops Handling Cash

Lack of Bank Liquidity Threatens Commercial Real Estate Market

States' Jobless Funds Going "Absolutely Broke"

Economic Data Dump For Christmas Eve: Durable Goods Numbers "Ain't" What They Seem

Treasury removes cap for Fannie and Freddie. (Thanks to Jeff R. for the link.)

GG sent this piece in The New York Post by fellow near future novelist Ralph Peters: 2010: The year of bankrupt governments. (And coincidentally, Ralph and I have the same literary agent, Robert Gottlieb.)

Items from The Economatrix:

Shoppers Give Stores Last-Minute Sales Surge

Jobless Claims, Goods Orders Signal Modest Rebound

Stocks End Shortened Session at New 2009 Highs

Mortgage Rates Inch Above 5%

Congress Raises Debt Ceiling to $12.4 Trillion

Ford Sells Volvo to China

Geithner: Job Growth Should Resume By Springtime

Britain Joins Italy in Debt House

Mr. Rawles,
I am grateful to you for providing this site. I am one of perhaps to many, who can barely make it check to check. Though I have been aware of what is happening for several years now, the amount of provisions I have been able to secure has amounted to nothing compared to what I am reading here. However, within this site is information which has been the greatest of value to, at the least, strengthen me with understanding.

I sit here in the comfort of my home, surrounded outside with cold and over a foot of fresh snow in the east, and ask myself what would I be able to do if it came to leaving on a moment's notice?
While I am without skills for the outdoors, and not tempered to weather hardships, one article of knowledge from here resonates more and more frequently, and hopefully I am on the start of becoming better. Do not lose your head. Do not allow panic to set in. Think. Look around and think. Stay calm and just think.

I am literally out of money. Utilities cannot be paid and Christmas is three days away, so there are meager presents to speak of. My family prefers to ignore the signs of what may occur shortly. I have no preparedness network, as most people I know want to believe it will never be necessary to scramble and bug out.

And yet, within this web site, I find people and information everyday which encourages me. It provides me with opportunities to look around and see what I can use if need arises. Look at what is required for to build a quick shelter, how to store what food I can, etc. Mostly, your site is helping me to stay awake and force myself to push out of this box I have come to comfortable in, and see what I can do to be more prepared. I need more help and perhaps more time as well.

I am seriously considering sleeping outdoors within the next week or so before New Year's, just to learn more of myself and my abilities to stay calm and think. Push myself to find strength and tough it out. Build a fire, make a shelter, etc. It will probably end up a disaster, but I need to experience something like this. I perhaps sound like a fool, yet I want you to know that somebody who needs what you provide is greatly appreciative you and all the others put it out there. Sincerely, - Jim F.

Arrow Trucking suspends operations leaves hundreds of drivers stranded. (Our thanks to HPD for the link.)

El Jefe Jeff E. spotted this: Consumer Spending in U.S. Climbs Less Than Forecast

From Chris J.: Economy revised downward (AGAIN!). Chris's comment: "It looks like the men in the know have yet again revised the third quarter downward, from 3.5% to 2.8% to 2.2%. Of course this CNN article doesn't mention that the cash-for-clunkers and home buyer's credits are estimated to be worth 2.0 to 2.5 percentage points. It takes faith though; the "experts" who didn't get it right last time assure us that the economy will grow 3% this quarter!"

Items from The Economatrix:

Oil Holds Above $74 After OPEC Output Unchanged

Asian Markets Rise on Stronger US Housing Starts

November New Home Sales Seen Rising 2.3% (But only because of the temporary Federal tax credit. The bottom is is still nowhere in sight!)

Top Execs: Longer, Deeper Recession Ahead

Professional Middle Class Hardest Hit By Recession

Ron Paul: Bernanke World's Greatest Counterfeiter

Martin Weiss: Three Government Reports Reveal New Looming Risk

While You Were Sleeping...The Economy Collapsed

Jim Sinclair Interviews

Small Business Bankruptcies Rise 81% in California

The Ponzi Decade

Jeff D. mentioned: Employment funds going ‘absolutely broke’; 40 state programs to be emptied by the jobless tsunami within two years

GG spotted this: The Inflation Bomb Hiding on The Fed's Balance Sheet

Tom B. spotted an article in The Shanghai Daily: Harder to buy US Treasuries. Here is a brief quote: “...it was inevitable that the dollar would continue to fall in value because Washington continued to issue more Treasuries to finance its deficit spending.”

Items from The Economatrix:

Gasoline Prices Flatten Below $2.60. This may be a good opportunity to refill your storage tanks with fairly reasonably priced winter formulated gasoline!

Borrowers with Modified Loans Falling Into Trouble

Surge of Foreclosed Homes Set to Hit Market

The Coming Shortage of All the World's Most Important Industrial Metals

US Jobseekers Face Bleak Christmas as Unemployment Continues to Rise

As a student of history, it is surprising how often the same traumatic patterns emerge in times of economic turmoil, political upheavals, and civil unrest. All too frequently, average citizens get caught in the middle of tumultuous situations and unwittingly are soon reduced to the status of refugee. Unlike someone that intentionally emigrates to better themselves, a refugee typically hits the road with few or any assets and no sure destination. As I've mentioned before in SurvivalBlog, if the 20th century taught us anything, it is that the one category you don't want to find yourself in is "refugee." Refugees have a short life expectancy, nd embody the risks of being tossed about by the waves of change and the vagaries of polical shift and consequent civil unrest. Do everything in your power to avoid becoming a refugee! Your surest and best course of action is to strategically relocate, before tumultuous times occur, to a region that will fare well in hard times.

Just the other day while on a cross country trip, I noticed a commercial trailerload of U-Haul trailers being returned empty to California. This was indicative of the hard times that have befallen the periphery of our nation. In normal (good) times, California was the destination point for U-Haul trailers, but now the worm has turned, and states like Wyoming, Utah, and the Dakotas now have U-Haul trailers and trucks piling up in huge numbers. So many in fact, that they must be shipped back to places like California and Arizona. My mention of this should not be construed as criticism of those who have left California, Arizona, and Florida, but rather, my hat is off to them for taking the initiative of moving to more prosperous region with better chances for employment. Good for them! They didn't just wallow in self-pity, collecting unemployment, waiting for someone the bail them out. They've taken the initiative to provide for their families, better themselves, and move to greener pastures.

In closing, heads of families should prayerfully develop a contingency plan for relocating in the event of localized economic problems. Again, there is a sharp contrast between someone that proactively relocates in advance of truly bad times and someone that hesitates, and thereby reduces himself and his family to refugee status. If and when hard times befall your family, don't hesitate to relocate. It's better to be a year early than a day late. This is doubly true in the event of a TEOTWAWKI-scale economic collapse. We have no way of knowing if the current recession will continue to stair-step down into a full multi-decade economic depression. Be ready!

From Vanity Fair, on Iceland's financial rise and fall: Wall Street on the Tundra (HT: Sharon)

Flagler County, Florida, had the state's highest jobless rate: 16.8 percent (HT: F.G.)

Items from The Economatrix:

Federal Salaries Targeted As Private Sector Pay Stagnates

Skies Darken For Bernanke Nomination

Luxury Retailers Look To State Christmas Comeback

What People Are Splurging On

Tech Stocks Pull Market Out Of 3-Day Slide

7 US Banks Seized, 2009 Total Now 140

66% Americans Not Confident Their Children's Lives Will Be Better

Greenspan: Threat To U.S. Fiscal Stability Larger Than Ever

John S. in Virginia suggested a Forbes article on China's Economic Bubble.

Items from The Economatrix:

Buyers Spurn Gold for Silver

Greece Credit Rating Rated Junk Levels

UK: Confidence Falls on Fears of "Double-Dip" Recession

How Much Imaginary Gold Has Been Sold?

2010 Food Crisis for Dummies

Full Circle of Government Debt Default

Reader M.S. spotted this editorial by James Quinn: Brave New World 2010.

This editorial by Frank Seuss was linked over at The Daily Bell: The Life-Long Challenge of Differentiating Between Truth, Paradigms, Truisms and Plain Lies

RLG sent this video clip: Ryedale Coin Penny Sorter. Keep in mind how much profit from how many hundreds of thousands of pennies it would take to recoup the cost of buying a sorting machine. To my mind, this is a hobby business strictly for retirees with strong backs!

Bill from Ohio sent this: Six Banks shut down Friday - 140 total this year

Items from The Economatrix:

12 Gift Ideas That Save Recipients Money Great ideas to help tight budgets!

Fewer States Add Jobs as Recovery Sputters Along

Greece Hit By Strikes as Debt Crisis Grows

ECB Raises Estimate on Bank Writedowns

Who Needs Casino Bankers?

Dollar Rises as Stocks, Commodities in Flight From Risk

Mark Lundeen at Gold Eagle asks: How could GDP have increased 2.8% and yet electrical power consumption in the US declined by 5.04%?

The latest from the Dr. Housing Bubble blog: Southern California and the MLS Myth: Why the MLS does not Provide an Accurate Picture of Housing Inventory. Shadow Inventory, Foreclosures, and Fantasy Housing Numbers.

Red State Ranger sent us this: You Can Negotiate Anything. BTW, I recommend that you read my archived article on savvy bartering, for some more negotiating tactics.

Eric C. sent us a link to a recent Peter Schiff interview over at The Motley Fool: A Tough Year Ahead for the U.S. Economy?

From Hal N.: Greenspan backs deficit-reduction commission

Items from The Economatrix:

A World Crisis No Bailout Can Stop

Are Your US Treasury Bonds Safe?

Fastest Food Inflation--Milk Up 39%

Stock Futures Signal Weaker Open as Dollar Rises

Treasury Backs Out Of Plans to Sell Citi Stake

Citi Suspends Foreclosures for 30 Days

US Lawmakers Approve Jobs Package

Moody's Warns of "Social Unrest" as Sovereign Debt Spirals

Gulf Petro-Powers to Launch Currency

Mexico Whacked with Second Debt Downgrade

Getting A Mortgage in 2010: 10 Things to Know

Extreme Modifications: 2% Mortgages

Another $1 Billion In Small Business Credit Vanishes

Jim B. recommended this video on the Federal Reserve: The Dollar Bubble.

Randy K. suggested this item: by the ever-cheery Ambrose Evans-Pritchard: Gulf petro-powers to launch currency in latest threat to dollar hegemony

From J.S.: More countries at risk of default.

Items from The Economatrix:

World Losing Faith in Debt-Laden UK

The True Danger Lurking Behind 0.00% Treasury Yields and the 1-3-6 Rule Part I

The Return of Gold and Silver Eagle Rationing

Airlines in Deeper Trouble than Forecast

EU/IMF Revolt: Greece, Iceland, Latvia May Lead Way

Bond Price Crash is Surest Bet in Town

Poll Reveals Trauma of US Joblessness

I found this linked over at The Drudge Report: Democrats plan nearly $2 trillion debt limit hike

Damon sent this: Cleaning up after real estate debacle

Larry mentioned this BBC piece: Greece 'faces sinking under debt'

Items from The Economatrix:

Bankruptcy of US Now Certain

Gold and the Last Real American Dollar

Hedge Against Hyperinflation, Hard Assets Should Continue to Appreciate During 2010

Marty Weiss: Stock Market, Gold, Commodities, and Economic Forecasts for 2010

Darryl Schoon: Deflationary Economic Depression 2010, Ready or Not, Here it Comes!

Foreign Demand for US Long-Term Assets Slows

Greece Defies Europe as EMU Crisis Turns Deadly Serious

Dear Captain Rawles,
I recently saw the following excerpted comment at Zero Hedge and the argument makes sense to me:

In my opinion there is a flaw in the inflationary argument. It is only when money escapes into the general populace that the dilution effect on the currency actually occurs and drives up prices. By giving the majority of the new money directly to his buddies, Bernanke is simply changing the ratio of cash held in favor of the big banks and against the general populace. If the big banks fail to spend this money with wild abandon and instead hold on to most of it, inflation will be moderate or even nil.

Thus, I view the current Fed policies as simply a way to steal from Peter to enrich Paul with little or no inflationary impact whatsoever. At worst we may see inflation in equities (which we are seeing right now) but little or no general inflation since the money is not out there in the malls and grocery stores competing for common goods and services. It may take years for this extra cash to leak out into the general economy and meanwhile asset prices, like the entire housing stock of the United States, continue to fall.

Deflationary pressures may continue for far longer than many people expect. Or, as Keynes said, "the market can stay irrational longer than you can stay solvent". - Dave R.

R.R. sent this: NS&I withdraws all its fixed-rate savings bonds

Chris mentioned an article on the new underground economy and the avoidance of bank accounts.

Thanks to Joan M. for finding this one: D-Day nears for Dubai's $3.5 billion debt hurdle

Also from Joan come this CBC (Canada) piece: Peak oil: Problems and possibilities

Items from The Economatrix:

World Stocks Up on $10 Billion Dubai Rescue

Citigroup to Repay $20 Billion in Bailout Money

Oil Near $69 as OPEC Signals No Output Cut

US Recession "Not Over Until Job Rates Rise"

White House Economist Sees Jobs Growth By Spring. JWR Adds: They "Visualize World Peace", too.

Federal Reserve Likely to Repeat Low-Rate Pledge "We're still a long, long way from normal."

The Future of Gold, The Dollar, and More

Tom W. liked this piece by Todd Harrison at Minyanville: What in the World Is Going On?

Trent H. suggested this video clip: Globe "Overdue for a Currency Crisis"; Why Jim Rogers is Buying Dollars

GG flagged this: The Coming Wave of Debt Defaults

Items from The Economatrix:

Sovereign Debt Defaults the Next Shoe to Drop?

House Passes Massive Overhaul of Wall Street's Regulations

US Foreclosures to Reach Record 3.9 Million in 2009

North Korean Won Plunges 96% after Gov't Reevaluation

Venezuela Debt Holders Rush For Exits As Banks' Woes Surface

Regular content contributor GG mentioned this in The Wall Street Journal: Are Your U.S. Treasury Bonds Safe? The price of credit default swaps jumped by more than 50% in the private market in recent months.

Frank S. sent this Friday Follies Update: Three bank failures take year's tally to 133

"3Can" mentioned that the IBD had a good discussion of gold related to purchases by central banks.

Items from The Economatrix:

Freightliner Moving Truck Production to Mexico, Raising Fears of More Layoffs

Australian Lawmaker Warns US Could Default on its Debt Triggering an "Economic Armageddon"

Timebomb for the Euro: Greek Debt Poses a Danger to Common Currency. (The EU's economic and currency problem almost always start on it periphery.)

Obama Blasts Banks for Opposing Financial Overhaul

HPD highlighted this one: 100 Ridiculous Projects Funded by the American Recovery Act

SurvivalBlog's Editor at Large Michael Z. Williamson spotted this piece in the Wall Street Journal: How to lose $127 million.

Items from The Economatrix:

Greece Teeters on Bankruptcy

Federal Budget Deficit for November Hits $120.3 Billion

Geithner Says Treasury Faces Losses from Autos, AIG

Stiglitz Urges "Powell Doctrine" to Fix Jobs Picture

Market Jitters as Spain Joins Dubai on Danger List

Food Stamps Go to a Record 37.2 Americans

Reader P.D. sent this: 10 Countries most likely to default. (It is notable that because of the size of its economy, they listed California among the list of "nations" at risk of default!)

Russ J. recommended a link from Nathan's Economic Edge. to an MP3 recording of John Williams of Shadow Government Statistics. Russ's comment: "His conclusions, if they prove out, could easily land us all in a "Patriots" scenario".

El Jefe Jeff E. sent this: U.S. Homeowners Lost $5.9 Trillion Since 2006 Peak. Jeff's comment: "Home foreclosures topped 300,000 in October for the eighth straight month, and still growing. As you know, the bulk of foreclosures are working its way through the system like a gopher in a garden hose."

The folks at The Daily Bell linked to this Telegraph article: Volcker Sees No Value in Derivatives. Here is a key quote: "He said credit default swaps and collateralized debt obligations had taken the economy 'right to the brink of disaster' and added that the economy had grown at 'greater rates of speed' during the 1960s without such products. When one stunned audience member suggested that Mr. Volcker did not really mean bond markets and securitizations had contributed "nothing at all", he replied: 'You can innovate as much as you like, but do it within a structure that doesn't put the whole economy at risk.' He said he agreed with George Soros, the billionaire investor, who said investment banks must stick to serving clients and "proprietary trading should be pushed out of investment banks and to hedge funds where they belong".

Items from The Economatrix:

Americans Want Money Spent for Jobs, Send Bill to Rich

Government Program Has Only Helped 31,000 Borrowers So Far

Stocks Rise as Trade Deficit Narrows in October

Goldman Sachs Execs Won't Get 2009 Cash Bonus. They are receiving restricted stock awards instead

Natural Gas Prices Surge as Crude Fades

High-Stakes Duel Between Ron Paul and Bernanke Intensifies

An Obvious Question About US Government Gold Supplies Goes Begging

First Dubai

S&P Overvalued by 100%

Official Chinese Paper Calls for More Gold Reserves

Dear SurvivalBloggers:
The economy has taken a dramatic turn for the worse for many Americans. Hundreds of pages could be written to describe how it happened and who did it. While many individuals and households have had the financial resources and good fortune which will allow them to weather economic uncertainty, many will simply not be able to maintain their standard of living. Many two income households are now one income households and that income may have decreased due to companies cutting back on work hours. This situation has been occurring for many Americans for many many months, forcing people to assess what is important and downgrade their lifestyle. The time to make hard decisions has arrived, and will dramatically alter the lives of many for years.

People who relied on spouses to pay the bills are now paying the bills. Those who have relied on savings and unemployment benefits to maintain their standard of living are now faced with the reality that those resources are exhausted. Bills are not being paid. Healthcare premiums are not being paid. Automobile and household maintenance is being neglected which will create costlier repairs down the road. Simply put:

• You might have to stop making your car payment and save those payments up to buy a used car. The car you currently have financed will be repossessed.
• You might have to stop paying your mortgage and save those payments up to move into an apartment.
• You might have to give up your healthcare, your magazine subscription, your club membership, your vacation plans, your charitable donations, your cell phone, your internet access or home phone service, your lawn care service, your financial support that you provide to friends and family who are having financial problems themselves, and many more expenditures not listed here.
• You might have to contact an attorney to discuss bankruptcy.
• You might have to sell off your possessions and assets.
• You might have to move in with other families, friends, relatives, or shelters provided by the government or charitable organizations.
• You may come to realize that what you thought was valuable and important to you has no value or significance at all.

Basic human needs will become the biggest priority in your life after you shed the things that have merely brought comfort and convenience to you. You may be forced to downscale your lifestyle so dramatically that it will cause you to question your own intelligence and hindsight for not planning for such a life changing event.

The things that you have always taken for granted could become difficult to obtain now that there is no longer enough money to buy those things. Basic needs become vital issues that need to be addressed:

• Food, and ‘non-electric’ means both to prepare it and store it.
• Portable water filtering devices and containers to store water for drinking, cooking, and bathing.
• Over the counter medicines, vitamins, supplements, first aid supplies, and some basic health and first aid literature in book form. Individuals using prescription medications, or require medical attention, will need to determine their best course of action during a period of financial distress.
• The need for shelter may require the purchase of a tent, camper trailer, and other camping equipment if you can longer provide an actual roof over your head and have no one to turn to.
• The need for personal protection will become more obvious as desperate people begin to take desperate actions to provide basic needs for themselves and their families. The level of security you choose will be determined by your location, your finances, and your personal views and beliefs. If chaotic conditions occur lawless activity will surely follow. Past incidents of disaster and mayhem give testimony to this.

The times that we endure today will be the history that others will read tomorrow. History has shown us events that have destroyed some societies and created new ones to take their place. Those who rise to power often decide the fate of millions. And there have been times when a people rise up as a nation, united to achieve mutual goals of prosperity and hope for a better future. Today as a nation, Americans must uphold their moral convictions and beliefs that a nation of people that stand united will not perish. There are events occurring in this country that could change the very existence of our nation as we know it. And no one person or political party can decide the best course of action to insure our prosperity and hopes will not be taken away from us. The answer to our problems is right in front of us, and we must cling to it as if it is our only hope, because it is the only thing We The People have left: The Constitution of the United States of America .

We must set aside our differences and unite as a nation before those that would profit from our demise succeed in destroying us. - T.R. in, Florida

Chad S. was the first of several readers to mention: Feared "super spike" in rice prices

Reader T.H. pointed us to this troubling piece: Sovereign Debt Defaults Likely Over Next Several Years, Says Rogoff

From Brett: G.: Experts: Greece Going Bankrupt Could Doom Euro

Items from The Economatrix:

Stocks Climb as Investors Shrug Off Debt Concerns

$700 Billion Bailout Extended Until October

Crude Oil Falls to 2-Month Low

Financial Markets Tumble After Fitch Downgrades Greece's Credit Rating

Ex-Fed Chief Volcker's "Telling" Remarks On Derivatives

Soros Warns Against Rebuilding Same "Humpty Dumpty" Financial System

Few CEO's Plan to Hire In Next 6 Months

US Job Openings, Hirings Slip In October

Lawmakers Impatient with Obama Mortgage Plan

Items from The Economatrix:

Shockwave From Dubai Default About to Hit Markets

The Great RBS Exodus: 1,000 Bankers Quit Over Pay Disagreement

Dollar Rises Most Since 1999 Versus Ye as Fed Bets Increase

"The" Bank Job

Pockets of Rot

John Galt: The Day The Dollar Died, Part 7 -- Security For Liberty for All (Scroll down for Part 6, and earlier)

Gold Rally is Not A Bubble, Mania Stage Ahead of Us

Dear James:
To follow up on a previous post, as information for US citizens looking to relocate to Australia, I offer a few very general suggestions.

Although Australia is a large continent, most of the population is located on the eastern sea-board mostly because of the arid interior. House prices have not fallen dramatically during the GFC and houses in capital cities are dearer than those in regional centres. But even in capital cities, there can be great differences in house prices in the different suburbs. I suggest that in the first instance that anyone relocating, rents for a period of time until they find their feet, a job, a location and a lifestyle with which they feel comfortable.

For a general overview of housing in Australia I suggest browsing through Realestate.com.au or Domain.com.au. Both of those sites will give plenty of information on houses/units/land for sale and houses/units for rent. - Margaret G.

Carla alerted us to this article: Recent World Events Indicate Impending Market Chaos, by Giordano Bruno.

F.G. and Matt C. were the first of several readers that flagged this apropos piece in The Wall Street Journal: Green Acres Is the Place to Be; The Recession Is Inspiring More Young Families and Singles to Head Back to the Country

Thanks to GG for finding this: S&P says European companies face $1.5 trillion funding shortfall next year

Items from The Economatrix:

Geithner Slams Wall Street Bonuses, Says All Big Banks Could Have Failed

A Deeper Look Behind The Jobless Numbers. Despite the upbeat report, long-term unemployment worsens

US Congress Set to Strip Power Away from Federal Reserve Chief

North Koreans Burn Bills in Anger Over Currency Reform

UK Bank Bailout Hits Staggering L850 Billion

New Japanese Stimulus Package Likely Worth Over Y7 Trillion

Japan Airlines Rating Cut By S&P After Loan Defaults

Aetna Forcing 600,000+ to Lose Coverage In Effort to Raise Profits

Stocks Push Higher Even as Dollar Rises

Oil Below $75 As Opec Ministers Flag Steady Output

US Economy Entering Sluggish Recovery

Dear Mr Rawles,
I pray that God may continue pouring His comfort, love and strength upon you and your family in these difficult times.

My wife and I will finally settle down in Melbourne, Australia in 2010 after years of relocating internationally due to my work - we finally obtained the Australian resident permit! As a result of all the traveling, we have also had to leave all our savings in banks for all these years.

We prefer living in a region to know it well before purchasing property, so we will probably purchase a house sometime in 2010-2011. As many (including yourself) have convinced me of rising gold prices and crashing fiat values in the coming years, it makes a lot of sense to buy Australian gold bullion/stamped bars using our savings, and converting them to cash just before purchasing property.

What is your opinion on this? The worst-case scenario I can see is a minor loss in profitability whereby interests from the bank would have yielded more 'profit'. As I am risk-averse, there are few 'investment' opportunities for me outside of term deposits. Thanks for your advice. Blessings, - David C.

JWR Replies: I cannot comment on the particulars of the housing market in Oz, but it is apparent that the real estate market is far from the recovery stage in the US and presumably in the rest of the English-speaking nations. Here in the States, I suspect that it will be 6 to 12 years before the residential real estate market recovers. But things might be considerably different, Down Under. With that said, if you find a truly retreat-worthy property (say, with a shallow well, defendable acreage with plenty of room for gardens, and that has an exposure advantageous for photovoltaics) and you an buy it below current market prices, then you might consider it. Just keep in mind that prices are likely to continue to drop, and it may be a long time before that investment that will appreciate in value. if you do decide ito park your money in tangibles--and you probably should do just that if you are indeed risk averse--then Australian Mint Kookaburra one ounce gold coins are a good choice. Just be sure to buy ion a "dip" day.

Reader HPD mentioned this article: 24 States Borrow Money To Pay Unemployment Benefits. HPD's comment: "Don't worry. The Fed sees signs of recovery... Besides, Barney Frank and Nancy Pelosi are on the scene to fix it. "

Another missive from Dr. Housing Bubble: Wall Street and Housing Neurosis: The Real Cost of California Homeownership. Extreme Foreclosures, Option ARMs, Renting Utility Costs, and Breaking the Financially Twisted Psychology.

Noah C. spotted this: Heh, I Thought Dubai Was a Non-Event. Here is a quote: "Refusal to stand-still means there's an immediate default, which means the [credit default swaps] go boom"

Items from The Economatrix:

Chinese Official Slams Western Banks Over Derivatives

Gold Will Reach Mind-Boggling Levels

High US Jobless Rates Could be New Normal

Japan's Recovery Stumbles

China Wary of Gold "Bubble" Danger After Doubling its Reserve. [JWR's comment: At least it beats leaving their assets in the stinkin' US Dollars!]

Recent World Events Indicate Impending Market Chaos. "All those who value truth, liberty, and an honorable society, should be ready not only to save themselves, but to save each other, and to save their country. The time for readiness grows short."

Taxpayers in 29 States Hit With Higher Taxes

This is Progress? Jobs Data Optimism Obscures Harsh Reality

More Friday Follies: U.S. Bank Failures Continue Apace. "Cleveland-based AmTrust Bank, with 66 branches and roughly $8 billion in deposits, was closed by regulators Friday, as the ongoing credit crunch continued to claim victims."

Financial institutions urged to make banking accessible

UN says global economy will bounce back in 2010. [Again, one for the Economic Humor section.]

Items from The Economatrix:

Goldman Sachs December Party Ban: No Groups of 12 Or More. So, 10 lords a leaping, nine ladies dancing is totally OK. But if you see 12 bankers — they'd better be banking!

Most Americans Not Confident About Financial Future

Stocks Mostly Rise as Fed Sees Improving Economy

Senator Moves to Block Bernanke Confirmation

BofA to Repay TARP, Raise Cash

Ample Supply of Oil Drives Prices Below $77

From reader J.D.: Rural America Surprisingly Prosperous, Study Finds

Reader Ben M. suggested this article: How to Tell if You are Saving Enough.

Items from The Economatrix:

Retailers Report Surprise Drop In November

Poor Report On Services Saps Stock Market Gains

Services Sector Activity, Retail Sales Disappoint

Weak Demand Puts Natural Gas Prices At 52-Week Low

North Koreans In Shock As Cash Banned

US Loses Another 169,000 Private Sector Jobs

UN Economists Fear Hard Landing For Dollar

Yen And Dollar Both Weaken

US Service Industries Unexpectedly Contract

Charting The Great World Trade Collapse

As Housing Goes, So Falls The Economy

European Banks Growing Bigger "Sowing The Seeds" Of Next Crisis

Dubai Debacle Just Tip Of Iceberg

More Evidence Gold Being Hoarded As Comex Fulfills Gold Contracts With Paper

A recent piece at the Dr. Housing Bubble blog: Shadow Inventory in 10 Prime Southern California Cities. How Pent up Inventory and Option ARMs are the new Front for the California Housing Market.

K.T. sent this from Dan Denninger: FDIC Deposit fund had negative $8.2B balance in Third Quarter

Jeff B. spotted this: More Evidence Gold is Being Hoarded as Comex Fulfills Gold Contracts with Paper

Items from The Economatrix:

Where Dubai Leads, Britain Could Soon Follow

Lloyds To Suffer Further Job Losses

Fears Of Credit Card Crisis As Bank Write-Offs Double

Peter Schiff: Bull Market in Gold or BS?

Warning on US Muni Market Threat

Britain Faces Return to Victorian Levels of Poverty

HPD recommended these observations from Mish Shedlock: Virginia Borrows $1.26 Billion to Pay Unemployment Benefits; Detroit Loses $400 Million on $800 Million of Bonds; Detroit's Easy Solution

I'm sure that you've noticed the surge in spot silver and gold prices. The last time I checked, spot silver was at $19.26, per ounce, and gold was at $1,212 per ounce! There will likely soon be some profit taking, so be ready to buy on those dips!

Chad S. sent these other links:

Four Reasons Hyperinflation Hasn¹t Hit the U.S. Economy Yet

What's Worse? Hyperinflation or Deep Recession?

National Inflation Association's 10 Most Interesting New Answers

Bob Chapman's analysis: Potential For Fed To Hyperinflate

Items from The Economatrix:

More Consumers Late on Auto Loan Repayments in Third Quarter

Morgan Stanley Fears UK Sovereign Debt Crisis In 2010

Gold $1,200; Gold And Silver Up 13% and 14% In November

Food Stamp Usage Across The Country

Fed Moves To Drain Some Money Out Of The Economy

Unemployment Rises In Almost Half Of Metro Areas

Fed Survey Finds Recovery Gaining Momentum.. [JWR Adds: We really should have a "Humor" department to file these news items.]

Stocks, Commodities Rise On Dubai, China; Dollar Weakens

The New Iceland? Greece Fights To Rein In Debt

Gold Breaks $1,200

From frequent content contributor GG: Gold acquires new investment aura: The weight of gold coins sold by the US Mint far this year has exceeded the one million ounce mark, up 40% year-on-year

Sticker Shock at Pump: Gas Prices Poised to Soar

Jeff mentioned this over at Zero Hedge: Is The Fed Facing Margin Calls From European Banks?

Knocking off two zeroes. (BTW, don't gloat, the US Dollar may be next to have a 100-for-1 exchange): North Korea Revalues Currency to Curb Free Trade. (A tip of the hat to SSK for the link.)

Trent spotted this: What Recovery? U.S. Consumers Getting "Dramatically Worse,” Howard Davidowitz Says

Items from The Economatrix:

UAE Central Bank Guarantees Dubai Banks' Debt to Head Off Crash

Lenders Face Sanctions For Failed Loan Modifications
Just Like Dubai, Our Recovery is Built on Sand

Banks Must Pay for Market Failure

Audit The Fed: Bernanke and the Bankers are Running Scared

Is Britain on the Brink of Financial Armageddon?

Dubai, Debt, and a Return to Reality

John Galt: The Day The Dollar Died, Part 5 (A New Day Of Economic Justice For All)

GG sent this: Far from being a safe haven, the dollar is the likely source of the next financial crisis

Also from GG: We must get ready for a weak-dollar world

Items from The Economatrix:

UAE to Back Banks Amid Dubai Meltdown

Professor Advises Underwater Mortgage Holders to Walk Away From Mortgage (Back in August, 2005, JWR warned us that these walk-aways were coming.)

Furious Investors Warn Dubai it Will Never Raise Another Penny

How Much Longer Can the Dollar Defy Gravity?

South Africa's Golden Age Coming to An End

Senator Opposes Bernanke's Renomination

Few Signposts Mark the Road to Economic Recovery

Shoppers Spent Less Over Black Friday Weekend

Unemployed Turn to Church Networking Groups

Idle Hands: Some Puritan Advice for the Unemployed

Treasury To Push More Mortgage Firms to Reduce More Loan Payments

Home Prices May Be Headed Back Down

Frank S. sent this: FDIC cites Loveland's Advantage Bank; Announcement states business uses unsafe and unsound banking practices

Paul D. recommended a short but excellent article by financial advisor, Jeff Clark. "In short, his advice is to learn to grow a tomato!"

Items from The Economatrix:

Dubai Debt Fears Threaten Credit Crunch 2, and RBS is Exposed

Dubai's Troubles Hint at Troubles Elsewhere

Forget Gold and Silver, Invest In Garlic--How to Get "Stinking" Rich

Most US Stocks Retreat on Fears Dubai Will Default on Debt

Dr. Gary North: Fiat Currency Money Printing Leading To Decentralization and Operational Secession

Investors Buy Gold as Central Banks on Course to Crash Global Economy

Government Sovereign Debt Spirals

Dr. Gary North: Tis the Season to be Thrifty

Damon sent this: U.S. dollar collapse could devastate economy: book

Chad S. spotted an article about indigent families now having to bury dead family members themselves.

C.K. in Texas mentioned that there was a PBS mini-series this past summer (available online) about how money gained its importance over time. It was called The Ascent of Money and the fourth episode would be of interest to many SurvivalBlog readers. C.K.'s description: "It talks about the hyperinflation that occurred in Argentina years ago (so bad that ranchers wouldn't bring their cattle to market) and also about the fragile economics of Chinese and US trade."

Items from The Economatrix:

Black Friday Store Spending Edges Up; Online Sales Soar

Black Friday Shopping Spree Doesn't Disappoint

Hotel Owners, Like Home Owners, Are Behind

Bernanke: Don't Tamper with the Fed

British Banks Quizzed By Regulators on Exposure to Dubai Crisis

Fears of "Second Recession" as Dubai Crashes

If Countries Like Dubai Begin to Fail, Who Will Save Them?

Commentary from Mike Panzner: Time To Stick The Knife In

Recession is Over, Welcome Back to the Depression

This is for the Ladies: take the lead on frugality to finance your family preparedness! Below are things I do and have done, some for years, some for only a few months. You’d be amazed at how much starts accumulating in your checking account when you do these things. I have paid off credit cares and bought a rifle with scope, some junk silver, 1,000 rounds of ammo and a more than three month food supply since I started being more serious about these things.

My husband and I are professionals making good salaries – at least for now. We are fortunate to be able to live in a small town in a relatively low-cost area. This allows us to avoid some of the gratuitous spending pitfalls in larger urban areas, such as parking fees and bridge tolls. We have 10 mile commutes. We are able to live fairly simply. We still seem normal in the workplace, but there are some tricks for this that I will share. Why? Because if you are just waking up to the need to start your preparedness and are not already frugal, these are some good ways to free up disposable income without suddenly showing up at work looking really different and starting the curiosity mill....

First is transportation. For your ‘normal’ part of life, remember that the vast majority of automobiles are not investments, they are financial liabilities that depreciate every moment. My husband and I have different work hours at widely-spread places, so we commute separately in old Hondas. His is a 1991, mine is a 2000. We inherited both from my parents, so no high payments for fancy cars. We keep up the routine maintenance but not at the dealer, though we have a trusted mechanic for the tricky stuff. With rare exception, they get clean in the rain (we have no road salt issues here). I haven’t had to make a car payment since 1992, and I bought that car with cash. Our G.O.O.D. vehicle is a truck and we paid cash. Occasionally someone will make a crack about my car – essentially that at my salary I should be able to afford a nice car. I just smile and make some benign remark as I think about all that I save on transportation and how that money is helping me be more prepared.

Next, if you work and must keep looking ‘normal’ here are some tips on The Office Look if you haven’t been able to take the leap to work out of your retreat.
For Basic skin care: Frugality doesn’t mean you stop looking normal at the office. It is a subtle change in how you get to that look. Stop buying anything from cosmetic counters in department stores. Buy no Lancome or Estee Lauder. You don’t need the 4-step (that means four expensive products) skin cleaning system. It is a trick. Where ever you enter in the 4-product cycle, the product creates a skin problem that the next one fixes. The cleanser leaves your skin oily so you need the ‘toner’. The toner dries you so you need the ‘moisturizer’. See where this goes? Take care of your skin simply. If you really need a ‘toner’ here’s a secret: it is mostly witch hazel and colorant. Buy the witch hazel from K-Mart or another discount chain – twice as much for 10% of the price.

Bar soap is probably too harsh for most of us. Get some Neutrogena facial wash (unscented) and a stack of cheap washcloths – the kind that come in 12 packs and have really short loops in the terry. Dilute the Neutrogena by half with warm water so it mixes well. Use one or two pumps on a wet washcloth in the shower – work it into the cloth well before you start and use it all over, from the top down. Remember that both sides of the cloth are soapy! Fanny is next to last, feet are last. ( Use a clean cloth each day or rinse well and let dry in the sun so you don’t end up with a fungus from your feet). You have just been cleaned and exfoliated. If you don’t like this brand, use a mild shower gel but dilute it by at least half. Shower gel is commercially engineered for you to use much more than you need so you will buy more and sooner. By diluting, you get better foaming and waste less – either pump or sprinkle on the cloth.

Now, use a little Aveeno daily moisture lotion on your face and your parts that get dry. It will not make your skin oily or plug your pores. Buy the stuff in the big bottle for $8, not in the expensive little bottles. If you need a sunscreen, then get the Aveeno in the big bottle with SPF 15. You have just replaced at least 5 products at $20 or more each with 3 (4 if you include the bundle of washcloths) for a total of less than $20. That gives you $80 to buy ammo or junk silver this month. See where this is going?

For your work cosmetics: do your research. Many of the K-Mart brands are the expensive department store brands without the pushy sales people. Learn a basic routine that puts on eye makeup first, then the rest. Otherwise you use more product fixing the mistakes. Most of us can get by with very little makeup, and we look better for it. If you really like a specific brand, you can probably find it for about half price on eBay. Most of the sellers are basically honest– just check their feedback. This change can free up $100 a year or more, depending on your habit.

For your things that grow: Stop getting nail jobs. Long cutesy nails make you look less professional and cost a bundle. Trim and file your own. Keep them short and clean. There’s $30 a month, more if you stop pedicures, laser hair removal, tans, etc.. I still get a haircut, with no color or perm, about every 8 weeks from a one-woman salon in another small town. She charges $15 a cut. Even with a tip, I enjoy a ‘private consultation’ for a quarter of the price I was paying with my perm-and-cut style at a conventional salon. So, there’s another $25 to $50 a month by being you!

For your wardrobe: Simplify, Simplify, Simplify. Choose two color palettes of relatively timeless pieces. Mine are in black and navy blue. I have several black skirts, pants and jackets in black, less in Navy. Black works well because you don’t have the same ‘shades’ problem as you get with navy. Black is black. I have some different shirts and an odd skirt or pair of pants (gray, wedgewood blue) just to keep it from looking too uniform-ish. The jackets are in the washable Traveler styles from on-line cataloguers, hence no dry cleaning. I wash on gentle and hang to dry. I have two sets of navy and black shoes – same shoes in both colors. I wear black or navy hose. Everything mixes and matches easily. I have a couple of nice pairs of pearl earrings and make my own pearl necklaces by stringing the sale pearls from Fire Mountain Gems. There’s my professional working woman wardrobe. I plan to retire in a year, so I will buy even fewer items before I retire. Do this and your ‘wardrobe spending’ goes way down. I went from 80% dry cleaning to about 10% dry cleaning using this basic scheme, so have saved money there as well. Stockings, one or two tops and a couple of pairs of shoes a year are your shopping list once you have the basics -- possible replace a piece or two if too well worn. Just the dry cleaning part of this saves about $50 a month.

Personal habits:
If you still smoke, then stop. You can buy your year’s prudent reserve of food by quitting smoking alone. If your household consumes more than 1 bottle of wine a week, cut back. If you eat out, including lunch at work, more than once a week, cut back. Stop buying prepared packaged food. Spend some time cooking over the weekend and freeze it for your lunches. Stop buying lottery tickets. These are the easiest dollars to keep and will add up. You will probably feel more like firing your weapon on weekends when you eat less junk.

Around The House:

In the kitchen:
Best investment I’ve made in a while was a really nice bread machine. I bought a Japanese one that makes a normal-looking loaf. It paid for itself really fast when good bread was pushing $4.50 a loaf. My husband was taking a bakery-bought bagel to work every day for breakfast as well. We were spending $10 to $12 a week for bread products. Making our own for about $3 a loaf is a deal. Our ‘bread bill’ was cut in half and paid for the machine in 7 months. We go full tilt on nutrition as well. No sugar or corn syrup, and plenty of dry milk, whole wheat, nuts and dried fruit so a slice of bread is more than half the meal. This also helps me in rotating our supplies because we eat what we store.

Your water:
If you have hard water, try to learn to live with it without a water softener. If you feel you must have one, then locate it in a place where only the hot water coming into the house goes through the softener. Most cold water applications do not need softened water. You want your shampoo to suds up, so just do the hot for your warm shower. Bar soap does not work well in hard water, so another reason to go with the diluted shower gel and a washcloth. There’s the price of a big bag of salt or more each month for your prep supplies.

Laundry:
Not all detergents are created equal. We have very hard water and have learned to adjust to it rather than use a water softener. I tried all sorts of combinations trying to reduce the residue, which is mainly the solids from the detergent. I find that All free and clear cleans as well or better than the rest and leaves little residue. I use cold water and about half the amount of detergent they recommend. Powdered detergent in a hard water area will ruin your clothes or require more additives, so a low-solids liquid like All Free and Clear fits the bill. I learned this from my County Agent – he had a list of detergents and how much powdered residue they bring to your wash load. I buy the largest container when it is on sale. I use it to refill the small container that I keep in the laundry room. A dab full strength on greasy spots, otherwise everything goes in, no pre-soak, spray, etc.. If something is really smelly, I add a splash of Pinesol to the mix. When I retire next year, I anticipate having time to line dry a lot of items. Right now, it is only my work tops and jackets (traveler fabric dries fast). What I have found is that it is the drying that wears clothes out. Set you drier on a low to medium heat for the minimum time needed. Our old dryer does have a moisture sensor. I set it on the moist side of medium. No need for softeners if you don’t have fabrics full of solids from your detergent and are not toasting them in the dryer. Your clothes will now last longer and you will save on lots of product that you no longer need. I spend less than a dime per load of wash on laundry product and my clothes are soft and long-lasting. Over time, this can save you a few hundred dollars in a year.

Electricity:
If you are on the grid like we are, power is a big expense. First thing to invest in is a programmable thermometer. Program the temp to be seasonally 10 degrees higher or lower when you know you will not be in the house. Ours changes the temp for the time we prepare for work and then when we get home. Nights are set colder in the winter. That, along with turning off lights that we aren’t using and minimizing use of appliances makes a difference. Also, if you have natural gas or propane available, migrate appliances to gas as you replace them over time. We also make use of our lovely desert natural light when we can. From the complaints I hear, we spend about half of what our neighbors are spending on power.

Tissue
Little things add up, so pay attention. We both have allergies and a lot of runny or stuffy nose problems. For tissues, I buy one fancy boutique-shaped tissue box per dispenser. When it is empty, I cut the top so I can refill it from the big, less expensive boxes. I can refill 3 vanity boxes with 1 large box of tissue. There’s another $5 a month.

Hand soap
We don’t use much bar soap here in the desert, it dries you out to much. I get the foam soap dispensers with a screw top, usually from Bath and Body works during their big sales. These have several advantages. Most are refillable. You can refill with a couple of tablespoons of the diluted shower soap and more water and have a fresh supply. In addition to saving product, these foamers save water as well, because you are not running water to get the blob of thick soap off your hands. Hand-washing is a good habit to maintain with the pandemic du jour potential over the next few years.

I have probably exceeded my word limit so will stop for now. The above tips can go a long way to building a larder, so we ladies shouldn’t leave all that to our primary breadwinners. Lets do our part – oh, and don’t forget to work hard on your marksmanship. I recently beat my husband on the pistol range. - Desert Dawn

Chad S. sent this: Get ready for 65 percent tax rates.

Also from Chad: "You could be running out of time to buy gold"

The folks at The Daily Bell linked to this piece over at Seeking Alpha: High Gold Prices: It's the Oil, Stupid

Items from The Economatrix:

Signs of Life in Stores as Holiday Shopping Begins

Food Banks Nationwide Report More First-Time Users

Russia to Invest in Canadian Dollars

Recession "Is Even Worse Than Feared"

Dubai Bankruptcy is a Taste of Things to Come. Global intervention has only bought us time

Dubai is a Harbinger of Things to Come for Sovereign Debt

Dubai Tries to Stem Investor Panic

FDIC Reports the Biggest Drop for Business Loans on Record

Credit Card Monopoly: Five Banks Hold 60% of Credit Card Debt

Bobbi-Sue mentioned an extensive Niall Ferguson interview. Bobbi-Sue's comment: "Ferguson is still bearish based on historical norms and a few of his other popular ideas such as the China/America dance."

From Damon S.: Dubai Debt Woes Turn Ugly After It Seeks Standstill Deal

Items from The Economatrix:

FDIC Rescue Fund Slides into the Red

Washington Post Closing All US Bureaus Outside of DC

Britain Has Run Out of Money

Cold Turkey Thanksgiving 2009

The Day The Dollar Died (Part 4--Arrogance of the Gods)

A news item flagged by GG: IMF: Banks Still Hiding Half of Their Actual Losses; $1.5 trillion in bad debt on bank balance sheets, and losses on these bad loans still threaten the solvency of many institutions.

From El Jefe Jeff E.: One in Four Borrowers Is Underwater

Also from Jeff E.: FDIC Reports 552 ‘Problem Banks’ As of Sept. 30, 2009

Items from The Economatrix:

IMF Warns Second Bailout Would Threaten Democracy

Wave of Debt Payments Facing US Cities

Wall Street Pummels US Cities Over Billions in Fees on Investments Gone Bad

More Bankruptcy Cases Filed

Rates on 30-Year Mortgages Sink, Match Record Low

India Plans to Buy More Gold from IMF

GG sent this: A Mad Rush as Gold Bugs Get the Boot

FAF sent this from Fox News: Economic Growth Revised Down in 3rd Quarter

From El Jefe Jeff E.: Stocks, Oil Drop After U.S. Consumer Spending Trails Forecasts

Items from The Economatrix:

Crude Prices Sink Down Near $76

Reports on Consumer Confidence, GDP Tug at Stocks

Banks Earn $2.8 Billion in 3Q, Insurance in Red

Reports on GDP and Consumers Signal Modest Rebound

Fed Under Fire as Public Anger Mounts

Goldman Sachs and US Demise

Wall Street Plays Hardball

Restaurants Brace for a Sour Season as Consumers Lose Appetite for Dining Out

PBS: Ten Trillion and Counting

Most Global Banks are Still Unsafe, Warns S&P

GG flagged this: The Debt Bomb: Uncle Sam on teaser rate

Randy F. sent this: Payback Time - Wave of Debt Payments Facing U.S. Government

Items from The Economatrix:

Stocks Climb on Report Showing Jump in Home Sales

Late Payments on Credit Cards Drop in 3Q

IMF Chief: Global Economy Still Fragile

AP Survey: Debt Stress Turns Shoppers into Scrooges

Gas Prices Fall to Begin Busy Travel Week

Bets Rise on Rich Country Derivative Defaults

Gold Hits New High Among Rising Political Tension

Couples Turn to "Shift-Parenting" to Stay Afloat

End of the Checkbook: Bankers Drawing Plans, Could End by 2018

Dollar Slump Persisting as Analysts See No End

From that oft-quoted French Think Tank: Red Alert: The Second Wave of the Financial Tsunami. It could hit between the 1st and 2nd quarters of 2010

The Great Stimulus Debate of 2009

More than a dozen readers mentioned this London Telegraph article: Société Générale tells clients how to prepare for 'global collapse'. Gee, folks must be catching on...

Beepaw sent this: Bloomberg news: U.S. Housing Recovery Delayed to 2010 as Market Wanes. BeePaw's comment: "It is remarkable that the [same] pundits who failed to see the crisis at all are now able to pinpoint its recovery. I don’t believe the markets will recover in 2010. Or 2011. Or 2012."

Peter D, suggested the latest installment of some speculative fiction from John Galt: “I Have Been to the Fields of Gettysburg” (The Day the Dollar Died Part III)

Dear Jim,
You mentioned that someone with a Gold IRA might want to take the [warehoused gold] out and hold it in physical form after they turn 59-1/2 and are able to withdraw it without penalty.

I see the merit in that, but I am a tax accountant and want to warn you about the tax implications. When you take money out of an IRA, it is taxed as ordinary income, even if you escape the penalty. You can very well get shoved into higher tax brackets than you'd otherwise ever pay. Because, as you know, so much of the rise in gold is due to inflation, you will end up paying taxes on imaginary gains.

A better plan to avoid taxation is to move a Traditional IRA into a Roth IRA in increments. You will have to pay taxes on the amount you convert in the year you convert it, but with some tax planning you can convert only enough to fill up a low bracket that year. Be careful, this is calendar year conversion, no extended deadlines to do it, so you need to do this tax planning and make the conversion in November or December, not wait until you do your taxes.

Another thing to mention about gold outside of IRAs. It is taxed as a collectable and not subject to the lower long-term capital gains rates. Again, this is entirely about taxing inflation. It's a tricky problem because moving large amounts of gold necessarily involves working with a reputable firm, and reputable firms also do tax reporting. My analysis suggests that having gold in a Roth IRA has the best tax advantages.

As always, your individual tax situation may differ and I encourage you to discuss this with your own accountant. There are opportunities for conversions coming up next year that make this plan newly accessible to wealthier people. Best wishes, - Gwendally, CPA

From regular content contributor GG: Barron's: Collapse in Treasury note yields suggests economic distress

Chad sent us this: More fixed-rate home loans going into foreclosure

Also from Chad: Latest bank fee is for paying credit cards off on time.

Items from The Economatrix:

Gary North: Gov't Debt Default: How (Not If) Will It Happen

The Critical Unraveling Of US Society

What Has Government Done To The Dollar

Commercial Real Estate Reality Check

John Galta: American Hangover (Day the Dollar Died, Part II)

Americans Save More But Earn Less As Rates Fall

Central Bankers Blowing Bubbles In Global Stock Markets

Financial And Economic Situation Could Get Ugly Fast

Gold Steam Roller Running Towards $1,300

What If The Foreigners Stop Buying Our Debt?

Roubini Says Gold $2,000 Utter Nonsense

Flavio liked this interview with Robert Kiyosaki, where Bob is blunt about who really call the shots in the US, and he reiterates his advice to buy silver.

GG flagged this: World economy setting itself up for a bigger bust, says Marc Faber

El Jefe Jeff E. sent us a piece about the 124th US bank failure in 2009: Florida regulators close bank

Items from The Economatrix:

Karl Denninger Says Watch This: Glenn Beck and the Dollar Carry. Even if you don't agree with Glenn Beck, watch it, it's important

The New Yorker: How The Tax Code Encourages Debt

Downbeat Dell Weighs on World Markets

Ron Paul's "Audit The Fed" Bill Approved By House Panel

UK Royal Mint Quadruples Production of Gold Coins

Mike Whitney: A Small 'd' Depression

US Leading Indicators Point to Expansion

Ambrose Evans-Pritchard: Is $6,300 Fair Value for Gold?

Leggo My Eggo! Kellogg's Fights Waffle Shortage

Why Gold Will Reach a Record $2,000 in 2010

Dear CPT Rawles,
To follow up on the recent thread about cashing out of precious metals ETFs: Long ago, I took your advice and got out of stocks for my IRA and switched to a Gold IRA with Swiss America . It's done quite well and I was fortunate to read your advice several years ago. [Since then, most stocks went down substantially. Meanwhile gold has appreciated substantially, at least when denominated in US Dollars.]

My question and I'm sure I'm not the only one, is this: I will soon be 59-1/2 years old. Should I continue to keep my Gold IRA at the storage facility and pay storage fees every year, or should I withdraw the gold and keep it myself? I'd like your recommendation on this issue as your advice is always sound. Best Regards, - Michael B

JWR Replies: I also have a Gold IRA (also set up through Swiss America), and I highly recommend them. But given your age, I recommend that you get that gold in your own hands, at the first opportunity! Too many things can go wrong with warehousing, not the least of which is a change of government policy. In a severe economic crisis, all IRAs might become centralized (read: stolen) by the Federal government disappearing into some amorphous (and actually non-existent) "trust fund", just as they have done with our Social Security "contributions". We "contributed", all right!

Jesse sent this: Short-Term Economic Boost from Fiscal Stimulus Outweighed by Long-Term Output Loss

Also from Jesse: Why the Stock Market Should Crash

From reader HPD: Bank Regulators "Reign of Terror" on Small Business Loans

Items from The Economatrix:

Stimulus Watch: Did the White House downplay errors in rush to take credit for job data?

Stronger Dollar, Weak Economic Data Pummels Stocks

Dollar Gains as Homeowners, Job Seekers Struggle

Weak Jobless Claims, Future Economic Activity Data

Foreclosures Hitting More People with Good Credit

AOL Offers Buyouts to 2,500 (33% of their workforce)

Treasury to Sell Warrants as Three Banks Exit Bailouts

Geithner: Some Bailout Funds to Help Lower Debt

AARP Received $18 Million in Federal Stimulus Money--For a job training program that has not created any jobs

Roubini: Unemployment to Worsen

Commentary from Richard Russell: I Sleep Better With The Metal

Tom B suggested this from WorldNetDaily: $120 Trillion in Derivatives. “They are privatizing the profits and socializing the losses.”

Evi recommended this: Glenn Beck comments on a dollar collapse and global government.

Items from The Economatrix:

Stock Market Falls as Home Construction Slows

Where Are Stocks, Economy Headed? Even Pros Disagree

Goldman Says "Sorry" and the World Moves On

Gold is Getting Frothy

US Wants China to Buy Into Its Small Banks

Gold at $5,000 an Ounce? Don't Discount it

Speculators Accused of Forcing Up Fuel Prices

Core US Deflation Continues to Gather Pace

AIG $85 Billion Bailout was Botched, Report Says

Gold in the Face of Fiat Fallout

John Galt: The Day the Dollar Died (Fiction)

US Job Losses Demystified

Jim,
A reader wrote in and was posted with a letter called Converting Precious Metals Exchange Traded Funds (ETF)s to Physical Metals. This is pretty good advice but I would consider one change. I would not invest my IRA or 401k into ETFs or mining stocks as they are too volatile. Like his idea that investing in food companies wouldn't feed his family like physical food, investing in ETFs and mining stocks guarantee nothing as far as actually getting any money out if things fall apart. Rather, what I recently did was convert them to physical metals. The IRS allows this with the metals being held by an approved storage facility. While there certainly is a chance that those facilities could be seized by the government, it may be possible to take possession of the metals if we see the end coming and move quickly at that time. In the meantime, you actually own physical metals in your retirement fund instead of stocks. The only issue for a 401(k) is that you may need to check with your plan administrator to see if they'll allow you to choose that investment. In my case, I am self-employed and had an old 401k with a former employer that I converted so I didn't have to work within their system of investment choices. - Dave R.

JWR Replies: Since starting SurvivalBlog in 2005, several times I've mentioned that Gold Eagle IRAs are available through Swiss America. I set up one of these accounts through them in the late 1990s, and have held it ever since. My largest contributions to the account were made in 2000 and 2001, which was when gold dipped to a 20 year low. While not as absolutely safe as gold in your hands, these gold warehousing IRAs are a great way to shelter dollar-denominated funds that are presently parked in 401(k)s and IRAs. In most cases you can roll these over into a gold IRA without taking a tax hit!

GG sent us this editorial by Nouriel Roubini: The worst is yet to come: Unemployed Americans should hunker down for more job losses.

Jeff B. spotted: Taxpayers on hook as some bailed-out firms prove frail; With CIT in bankruptcy, U.S. is faulted for investing in weakened companies

As Needlenose Ned Ryerson said (repeatedly): "Watch out! The next step's a doooozy." (For some background, see: Dollar Falls to 15-Month Low as Fed’s Support Draws Skepticism.) Meanwhile, at the risk of mixing movie metaphors, it's Hi-Yo Silver, Away!

Items from The Economatrix:

Stocks Post Modest Gains on Rise in Commodities

Factory Production Dips, Wholesale Inflation Muted

Foxwoods Resort Casino Fails to Make Full Repayment. One of the world's largest casinos, will default, credit downgraded to D

Target Profits Climb 18% in 3Q on Lower Costs

Home Depot Earnings Fall 8.9% in 3Q

Oil Up Again, Settles Over $79

Dollar Slides Despite Bernanke's Support

Global Stock Markets Rise to Highest Level of the Year