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Sunday December 20 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Two Letters Re: Prepping as an Active Duty Servicemember Overseas »

Saturday December 19 2009

Economics and Investing:

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.

(The Economatrix is snowed in today, with no Internet service available.)

« Odds 'n Sods: |Main| Five Letters Re: Covert Home Power for When The Grid Goes Down »

Friday December 18 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Two Letters Re: Survival Tools »

Thursday December 17 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Letter Re: Infrared Imaging Countermeasures »

Wednesday December 16 2009

Economics and Investing:

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

« Three Letters Re: Sources for Prescription Medications? |Main| Letter Re: Fitness Training for WTSHTF »

Tuesday December 15 2009

Letter Re: Deflation for How Long?

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.

« Odds 'n Sods: |Main| Three Letters Re: Sources for Prescription Medications? »

Economics and Investing:

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

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Monday December 14 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Letter Re: A Prepared Christmas »

Sunday December 13 2009

Economics and Investing:

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

« Jim's Quote of the Day: |Main| Four Letters Re: In Praise of Betadine »

Saturday December 12 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Friday December 11 2009

Economics and Investing:

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

« Influenza Pandemic Update: |Main| Letter Re: Sources for Prescription Medications? »

Thursday December 10 2009

Letter Re: We Have Some Hard Decisions Ahead

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

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

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

« Odds 'n Sods: |Main| Feeding Your Family Well During Hard -- and Harder -- Times, by Lin H. »

Wednesday December 9 2009

Economics and Investing:

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

« Economics and Investing: |Main| Letter From Mike Williamson Re: The Pen is Mightier than the Sword »

Tuesday December 8 2009

Letter Re: Buying a House in Australia?

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.

« Odds 'n Sods: |Main| Letter Re: Buying a House in Australia? »

Economics and Investing:

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

« Letter Re: Best Military Manuals with Field Fortification Designs? |Main| Letter Re: Free Local EMS Training »

Monday December 7 2009

Letter Re: Buying a House in Australia?

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.

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

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

« Odds 'n Sods: |Main| Solo Survival in a Societal Collapse?, by Wry Catcher »

Sunday December 6 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Letter Re: Observations on Hand-Powered Tools »

Saturday December 5 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Friday December 4 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Letter Re: Another COMSEC Warning on Social Networking Web Services »

Thursday December 3 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Letter Re: Another COMSEC Warning on Social Networking Web Services »

Wednesday December 2 2009

Economics and Investing:

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)

« Odds 'n Sods: |Main| Two Letters Re: Securing Bedroom Doors Against Home Invaders »

Tuesday December 1 2009

Economics and Investing:

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

« Jim's Quote of the Day: |Main| Influenza Pandemic Update: »

Monday November 30 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Two Letters Re: "Cross-wire" Your Home Heating and Save Money »

Sunday November 29 2009

Economics and Investing:

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

« Two Letters Re: Generator Experiences During a Recent Nor'easter |Main| Notes from JWR: »

Saturday November 28 2009

A Frugal Wife's Contributions to Preparedness, by Desert Dawn

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

« Jim's Quote of the Day: |Main| Letter Re: Sources for Food Grade Buckets »

Economics and Investing:

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

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Friday November 27 2009

Economics and Investing:

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)

« Odds 'n Sods: |Main| Eight Letters Re: Mountain Money Isn't »

Thursday November 26 2009

Economics and Investing:

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

« Odds 'n Sods: |Main| Letter Re: B&M Baked Beans and Canned Bread »

Wednesday November 25 2009

Economics and Investing:

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

« Jim's Quote of the Day: |Main| Letter Re: Seeking Advice on Safe Food Storage, and Recommended Sources »

Tuesday November 24 2009

Economics and Investing:

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

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Monday November 23 2009

Economics and Investing:

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)

« Two Letters Re: Oral Rehydration Solutions |Main| The Fabric of Our Lives by Jeanan »

Sunday November 22 2009

Letter Re: Converting Precious Metals ETFs to Physical Metals

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

« Odds 'n Sods: |Main| Two Letters Re: Oral Rehydration Solutions »

Economics and Investing:

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

« Odds 'n Sods: |Main| Three Letters Re: Getting a Christian Wife Involved With Preparedness »

Saturday November 21 2009

Economics and Investing:

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

« Six Letters Re: Oral Rehydration Solutions |Main| Letter Re: Short Term Survival or Long Term Self-Sufficiency? »

Friday November 20 2009

Letter Re: Converting Precious Metals ETFs to Physical Metals

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!

« Odds 'n Sods: |Main| Letter Re: Parabolic Dish Shoutcasting »

Economics and Investing:

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

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Thursday November 19 2009

Economics and Investing:

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

« Economics and Investing: |Main| Letter Re: HF Radios and "Shoutcasting" Parabolic Dish Communications »

Wednesday November 18 2009

Letter Re: Converting Precious Metals ETFs to Physical Metals

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!

« Odds 'n Sods: |Main| Letter Re: Converting Precious Metals ETFs to Physical Metals »

Economics and Investing:

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

Gold Prices are a Dead Giveaway

Inflationary Armageddon? Not Yet, But 2011 is Coming

10 States Face Imminent Bankruptcy

Gold's Record Run: No End in Sight

Silver Prices to Hit New Highs in 2010

Court Orders Fed to Disclose Emergency Bank Loans

Unofficial Problem Bank List Grows to 507

« Economics and Investing: |Main| Two Letters Re: Long Term Food Storage Package Now Sold at COSTCO »

Tuesday November 17 2009

Letter Re: Converting Precious Metals ETFs to Physical Metals

Jim,
I send this respectfully to those delusioned Exchange Traded Fund (ETF) investors. Just like the people of earth believing the world was flat, it will become common knowledge that ETFs are just a vehicle for investors and not for those who believe in the metal. It is proven in the ETF prospectus that most are backed with the same faith as our Federal Reserve Notes. Both are still good for trading for profit now but when TSHTF at least your dollars can be used as tinder. You will never be shipped a single ounce of precious metal from an ETF. Just like you would never be shipped a barrel of oil or given the keys to a house owning shares of their respective ETFs.

I don't own shares of bulk food companies, I own bulk food. That is what will feed me and mine. If you believe in the metals and want to store your value for the long haul then buy the metal itself.

So the question now is as it should be, How do I get the most metal for my money? I am sure most who may be reading this do not trust the system as it is, so stop using it.

First, stop putting cash into it. A matching 401(k) is the only reason I still play along, for now, its free money.

Next take out what you don't want others (gov) to have access to or know about.

Whatever you leave in the system (401(k), IRA, etc.), apply to ETFs and or mining stocks.

Based on your investing time line and plan for TEOTWAWKI, your metal will be far more valuable than any dollar amount in any account. It will be hard enough just to cash out your accounts when TSHTF.

The way I see it as a 31 year old, the Social Security, Medicare, Medicaid, and Pension fund systems will not be available to me when the government let's me "retire". My company just this week told us that my age/time in service group will not be given health care benefits after retirement, so that just gives more credence to the impending need for self reliance.

I believe in precious metals as a store of wealth over time. I also believe precious metals are a great investment at this time. In the Fall of 2008, I took a 50% loan out against my 401k (the most I could take without closing my account). The day I got the check I went to the store and spent 100% on silver bullion. The remaining half of the account is in silver and gold mining companies. From that time until now, my stocks are up more than my bullion, both though are moving up.

Personally, I chose to keep my 401(k) account open and at a minimum as my company matches 5%. I continue to manage my account in "speculative" mining stocks.

Like I said, my time line fits. When my stocks go parabolic and the investment side of the precious metals opportunity expires, I will sell the remaining stocks, cash out my 401(k), pay the taxes which may tally up to 45%, and be out of the system. Yes I will give up almost half but you must remember that was my companies half. Yes I will be young and without a 401(k), but I will have everything I own paid off including home, vehicles, stored food, and other preparations. I will be out of the system and self reliant. I will still have my metal, I will have my health, I will have time, and I will have the option to work where I want, if I want, as I will owe nothing to anyone but charity and God. If that is not retirement then I don't know what I'm working for in the first place.

There are many people out there who believe in precious metals for the right reasons. If you are involved in ETFs and your not a hedge fund manager, read your prospectus. If you don't get out of them after that re-read it. Any penalty or tax that you pay to the system so that you can own the same thing in its natural form should be another eye opener to things going on around us all. Stay away from ETFs, buy physical metal and be prepared. God bless, - K.A. in Ohio

« Odds 'n Sods: |Main| Letter Re: Converting Precious Metals ETFs to Physical Metals »

Economics and Investing:

GG suggested this commentary by Ambrose Evans-Pritchard: China has now become the biggest risk to the world economy

Reader "Gravy" sent a link to an interesting animated map on changes in unemployment rates.

Mr. D. sent a link to a National Pravda Radio news story: Joshua Kosman, Predicting The Next Credit Crisis. And on a similar note, GG sent this from The New York Post: Book: Spike in PE-owned firm defaults ahead

Items from The Economatrix:

Irish Government to Pay Immigrants to Go Home

Have Prices Already Risen Too Much, Too Soon?

Karl Denninger: Better Late Than Never


Economists Fear Impact of "Dollar Carry Trade"

« Influenza Pandemic Update: |Main| Letter Re: A Bulk-Buying Solution--Form a Buyer's Club »

Monday November 16 2009

Letter Re: Converting Precious Metals ETFs to Physical Metals

Mr. Rawles,
I have read your blog with interest for several years now, and I am coming around to your view that using long-term physical holdings in precious metals as a "time machine" to fight inflation is a good strategy. I have some small investments in bullion-backed exchange traded funds (ETFs) that I would like to convert to physical holdings, but I am unsure of the most efficient way to proceed.

Of course I could always just sell the shares, head to the coin shop and pay the tax man next spring, but all I really want to do is shift the location of the bullion that I already own. It doesn't seem right that this should be taxed. Okay, I'm not the first person to whine about unfair taxation, but is there some way to postpone Uncle Sam taking his cut for a while?

Are you aware of any method to convert shares in a precious metal ETF into physical holding without incurring a tax penalty?

Best Regards, - Brian in Michigan (another one of your "burbivalist" readers)

JWR Replies: Sorry, but I don't know of any way to avoid the tax hit with cashing out an ETF. Perhaps a SurvivalBlog reader with a background in a tax law knows a way, and can comment.

FWIW, I've never recommended ETFs. Rather, I 've always said: "tangibles, tangibles, tangibles". To me, in the context of precious metals that means owning the physical metal and holding in your own hands. I recommend that all of your future precious metals purchases be done that way, to eventually minimize you paper or "synthetic" metals holdings,

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

Jonas sent this: GLD ETF Warning, Tungsten-Filled Fake Gold Bars

GG flagged this: China: Loose US Policy, Weak USD Creating Speculation

From Pamela E.: Arrogant Fed hasn't learned a thing

Items from The Economatrix:

White House Aims to Cut Deficit with Unspent TARP Money

AIG May Tap Credit Line as Commercial Paper Expires

Japan Derivative Market Unraveling

If You Thought the Housing Meltdown was Bad...

The Midnight Food Line at Wal-Mart. There are American families who aren't eating at the end of the month and are literally hitting Wal-Mart at midnight, as soon as their food stamp benefits hit their accounts.

« Odds 'n Sods: |Main| Two Letters Re: Wound Irrigation in Austere Environments »

Sunday November 15 2009

Economics and Investing:

GG mentioned this in The Wall Street Journal: Widest-ever October budget deficit (more than all of 2006)

More Friday Follies, with the link also courtesy of GG: Bank failure toll reaches 123; Regulators close two Florida banks and on in California, costing the FDIC $986.4 million.

Gold will stay above $1,000 an ounce forever, says Swiss Dr. Doom. (Thanks to Laura H for the link.)

Items from The Economatrix:

Drop in US Energy Use Drags Stocks Lower

Jobless Claims Fall, But Hiring Gains Seem Far Off

Buffett, Gates Tell Students Worst is Behind Us
. Gee, Happy Days are Here Again. Yeah, that's what they were singing in 1930. But in fact, the economy didn't fully recover until 1954. They say history doesn't repeat, but it often rhymes.

Banks Borrow Less From Emergency Fed Fund

Federal Deficit Sets October Record of $176.48 Billion

Wal-Mart, Kohl's: Holidays Could be Rough

Obama Announces US Jobs Forum with Business Leaders

Initial US Jobless Claims Fall to 10-Month Low

« |Main| Seven Letters Re: How Can I Make and Store Dog Food? »

Saturday November 14 2009

Economics and Investing:

Ben M. mentioned a recent Wall Street Journal article: World Tries to Buck Up Dollar

B.B. sent us the link to a television segment with Peter Schiff, in which he suggested gold might rise to $5,000 per ounce. "There is not top [for gold], because there is no foreseeable bottom for the dollar."

GG suggested this: China facing risk of debt-fueled crash

Items from The Economatrix:

Single US Banking Regulator Proposed

Financial Crisis Made in West Hits East Hardest

Dollar Falls to 15-Month Low Despite US Support

UK: BofE Government Dampens Recovery Outlook

NY State: We'll Be Broke Before Christmas

US Airlines Expect Fewer Thanksgiving Travelers

Gold Rises Towards $1,120 on Strong Sentiment

Airlines, Hotels Face Bleak Holiday Season

Odds 'n Sods:

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Friday November 13 2009

Economics and Investing:

Reader O.J.W. spotted this: Why the price of gold is rising

Ryan mentioned this: Report: 10 states face looming budget disasters

Jason H. and "Oxy" were the first of dozen readers to mention this article: Peak Gold? Barrick shuts hedge book as world gold supply runs out

Items from The Economatrix:

Fed Officials Warn Weak Recovery Won't Spur Jobs

Why Gold is Shining Brighter


Gold Bars Selling Like Hotcakes at Harrod's

Gold Hits New Record, Now Eyes US $1200

Jim Willie: Ultimate Conditions for Recovery

Failure Written into "Too Big" Policy

Job Openings Remain Close to Record Lows

FDIC Boss: Big Banks Still Aren't Lending Enough


Median Home Prices Fell in 80% of US Metro Areas in 3Q

Senate Dems Move to Curb Fed's Power


Housing Plan Reaches 1 in 5 Borrowers

Ex-BofE Kingpin Says Don't Buy US Treasuries as Fed May Raise Interest Rate

« Odds 'n Sods: |Main| Letter Re: Why I Began to Prepare »

Thursday November 12 2009

Economics and Investing:

FDIC Disowns Geithner Embarrassment. (Thanks to "Word" for the link.)

Morris suggested an editorial about the coming collapse in commercial real estate by Doug Hornig of Casey Research: De Nile is not just a river in Egypt

G.S. liked this: The gun that beat inflation; Commentary: How the Colt Peacemaker outshone gold. [JWR Adds: And you can't shoot a burglar with a Krugerrand. Well, maybe you could with a Wrist Rocket, but that would take some explaining, in court.]

Items from The Economatrix:

Fed: GMAC to Receive More Bailout Money


Sprint Plans to Cut Up to 2,500 Jobs


Economists Seek to Fix a Data Defect That Overstates the Nation's Vigor


Harmony in G-20 Starting to Unravel

UK: Financial Mess Isn't Even at the End of the Beginning

Daddy, If Incomes are Down, Where is All the Economic Spending Coming From?


The New Faces of Day Labor

Landing a Job is Like Getting into Harvard

« Odds 'n Sods: |Main| Two Letters Re: Maintaining OPSEC in a Geographically Extended Retreat Group »

Wednesday November 11 2009

Economics and Investing:

Flaw in US Data Overstates Growth, Productivity. (Thanks to Garth for the link.)

Jonathan H. sent this from The Wall Street Journal: Three Decades of Subsidized Risk

K.T. sent this: CNBC - Dollar Will be Utterly Destroyed, Global Currency, New World Order

Bobbie-Sue spotted this interview: Peter Schiff: The Government Chose Wrong. Here comes inflation!

Items from The Economatrix:

Dollar Down Again as G-20 Backs On-Going Stimulus


Stock Volatility Sign of Aging Bull?

UK: Zombies Lurking On Every High Street

Credit Card Firms Hurry to Raise Rates

Now Ex-CitiGroup Boss Becomes A Glass-Steagall Convert

BoE Says Financiers are Fueling an Economic "Doom Loop"


When Economists Get Nasty

Banks Gone Wild

Crisis Compels Economists to Reach for New Paradigm

« Odds 'n Sods: |Main| Letter Re: Maintaining OPSEC in a Geographically Extended Retreat Group »

Tuesday November 10 2009

Economics and Investing:

Raymond sent this New York Times piece: Inside The Global Frenzy For Gold

Several readers sent this: Gold price hits record high as dollar wanes. JWR's advice: Wait until the next profit-taking dip in precious metals, but then invest in silver, not gold. (I anticipate that silver may dip to as low as $12 per ounce, a proportionately much deeper drop, than gold. Watch the silver-to-gold price ratio closely! In the long term, the value of silver will gain versus gold, since silver is being consumed--and not reclaimed--from industrial use. (Nearly all gold is reclaimed, but an incredible amount of silver ends up in landfills.)

"Oxy" liked this article: The Next Big Bubble?

Items from The Economatrix:

AIG Taps Another $2.1 Billion from US for ILFC Share Purchase

Calderon Says Mexico No Longer in Recession


Mexico Faces Possible Downgrade After Tax Bill

World Unemployment Up Despite Economic Recovery

Japan PM: The State of the Economy is Severe

Japanese Shares Close Down 2.31% Over Doubts of US Recovery

Bank of Japan Begins Gradual Pullout of Credit Markets

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Monday November 9 2009

Economics and Investing:

Reader Chad S. sent this: No risk of hyperinflation, says Bernanke. (I feel so much safer now, knowing that he's grounding the helicopters.)

Also from Chad: The Truth about Hyperinflation and Price Controls.

Items from The Economatrix:

Ahead of the Bell: Consumer Credit

Mortgage Rate Falls Below 5%

GM to Axe 10,000 in Germany


Analysis: 10% Jobless is Obama's New World
. Sadly, 18-22% is more realistic. See the data at ShadowStats.com.

Unemployment Rate Rises Above 10%. "The 10.2 percent unemployment rate does not include people without jobs who have stopped looking for work or those who have settled for part-time jobs. If you counted those people, the unemployment rate would be 17.5 percent, the highest on records dating from 1994."

Freddie Mac Loses $6.3 Billion in Third Quarter

Consumer Borrowing Drops $14.8 Billion in September

Oil Prices Tumble
(on Friday)

AIG Plunges as Sales Decline at Life, Property Units


Soaring US Unemployment Threatens Path to Economic Recovery

« Three Letters Re: How Much Food Storage is Biblically Justified? |Main| Jim's Quote of the Day: »

Sunday November 8 2009

Letter Re: An Overwhelmed Newbie, Catching Up at Prepping

Mr. Rawles,
I'm fairly new to your blog (three months), and still feeling a tad bit overwhelmed. I'm a 5th grade school teacher, and my husband is a former truck driver, now a truck dispatcher/supervisor. Not just am I realizing that I have a lot of catching up to do to get my family prepared for the rough times ahead, but I'm realizing how much my husband and I have to learn, to be truly ready! I've taken your advice and have asked my mother to teach me how to do pressure cooker canning. That was something that I had always been "too busy" to learn, when I was a teenager, being more engaged with academics and chasing boys. We're also scheduled for taking three classes from the Red Cross, in quick succession. When I mentioned the Appleseed shoots to my husband, he said "Yes, that for us!" He didn't even play his usual cop-out of waiting for better weather in the Spring or Summer. We are gong to the first one available, though the weather will be uncertain, and its a 130 mile drive. My husband was in the Marines, so he has the gun thing covered. But he wants a refresher [course], and wants me to learn to shoot "under stress, out to 300 meters." He bought us a pair of silver [stainless steel] Ruger Mini-14s, and he also has antique Springfield "O-3" [Model 1903] that belonged to his dad. He has more than two dozen extra [Mini-14] 20 rounder magazines (made by Ruger--not the cheapie copies that jam) now ordered, plus Mollie [MOLLE] pouches to hold 16 of them in. Our twin daughters (now 9) are getting Ruger .22 rifles for Christmas, and he found used wooden stocks on eBay to "cut down" to fit them. (Under $10 each--the shipping cost just as much [as the stocks]!)

I've already bought a food dehydrator and meat grinder both very inexpensively on Craigslist and a wheat grinder from Lehman's. One of those "Food Saver" vacuum packer-sealers is next on my list. (I'm hoping to get one used on Craigslist, since they are expensive, when bought new.)

The other thing I've done (following your wife's guidance), is to buy two copies of Carla Emery's book [The Encyclopedia of Country Living]. I've dived into that book, head first. The Memsahib was right. What an amazing reference! Owning that book is like having a country aunt on "speed dial" that you can turn to, to ask just about any question about the old-fashion ways of doing things.

Since we are members of both Sam's Club and Costco (discount memberships, through my husband's work, and my school district) we plan to buy most of our bulk foods at those places. So I'm getting a copy of your ["Rawles Gets You Ready"] prepping course. I'm sure that will fill in some gaps that Carla Emery didn't cover, like details on food shelf lives and modern food packaging. Most important, it is perfect for people like us that want to be able to stock up [on food storage], just [shopping] at supermarkets or the Big Box outlets like Sam's [Club] and Costco.

OBTW, my husband devoured your novel. It kept him up 'til 3 A.M.!

We are selling off our "fluff stuff" on eBay and Craigslist, to get cash for prepping. So far, we've sold my collectibles and some vintage clothes, our Bose sound system, my husband's stamp collection, and more than 200 music CDs, in batches of 10 to 15, [sorted] by genre. We dropped our dish television contract--no time for that sort of time-wasting and mind-numbing entertainment! Next will be selling our Nautique ski boat. Fishing will replace water skiing as our summer hobby, and we can do that from the shore or from kayaks or inflatables that will fit on our Excursion's roof rack. The side bonus is that selling the boat and trailer is that clears one whole section of our garage. That will surely be filled with prepping shelves, shortly. My husband has a source for used industrial-weight shelving and pallet racks for about the price of scrap metal. (They buy shelving from failed companies.)

Thank You, Mr. Rawles, for extracting our heads from the sand. Semper Paratus and Semper Fidelis - Jessica and Ron, in the Non-Amish Part of Ohio (Wishing I lived in Kidron, next door to Lehman's!)

« Economics and Investing: |Main| Three Letters Re: How Much Food Storage is Biblically Justified? »

Letter Re: When Does the Other Shoe Drop?

James:
I was having a conversation with my survival think tank buddy tonight and he asked me when I thought the dollar would collapse. I answered that it was like asking when the next ice age would come. It's due in another 1,000 years but we could be off by century or a millennia. It's the same thing with the dollar. It is impossible, mathematically speaking, for it to continue in it's current valuation indefinitely as it is in a non-sustainable negative spiral for reasons people reading this blog are well versed.

A collapse could happen tomorrow but is could also be delayed for years. This is because the timing of the collapse is not something that can be calculated by mathematical formula alone. It also has a great deal to do with psychological and political forces. As an example, Mr. Obama could authorize the sale of missile technology to China in exchange for buying our debt or not dumping the dollar. The media could continue the party line about a jobless recovery (a euphemism still makes me chortle) and people could continue to remain in dollar denominated assets. Banks could continue the counterintuitive action of not moving forward on foreclosures so as to avoid having to put the losses on their books or do upkeep on the property.

The same holds true for gold. As long as the majority of the gold players are willing to take profits in dollars rather than demanding physical delivery of gold contracts the price of gold can be manipulated.
Then there is food. While food commodities can be manipulated, unlike gold, food is continually consumed and we are running out. You can hide the weak dollar by continuing to 'double down' at the world casino until your credit line runs dry. You can hollow out gold bars and fill them with tungsten as long as no one cuts them open. You can even sell the same serial numbered gold bar to 10 people giving them identical warehouse certificates and as long as none of them take delivery, you've just 'multiplied' your gold holdings by tenfold.

This cannot be done with food that is eaten. You either have it or you don't. So, my long winded answer is that you'll know that the gig is up when the food runs out. - SF in Hawaii

« Odds 'n Sods: |Main| Letter Re: When Does the Other Shoe Drop? »

Economics and Investing:

KT sent the link to an absolutely hilarious British music video parody on YouTube: Bohemian Bankruptcy (Warning: There are a couple of crude moments, so this is not for the kids!)

Reader Tom. L. sent this: London Officially Dethrones New York as World's Financial Capital

Pat G. flagged this: Big California Bank Fails, Has Two Chinese Branches (Five more US bank failures were announced Friday)

British Airways Makes Record Loss, Cutting 3,000 Jobs. (Thanks to Tom in Essex for the link.)

Items from The Economatrix:

Commentary from Doug Casey: Why Gold Has a Long Way to Go

Clunker Data Shows Pickups Hottest Swap, But Only Got Marginally Better MPG. Your tax dollars at work.

Top Nine Companies With No Layoffs Ever
.

Fed Keeps Interest Rates at Near-Zero Emergency Level

Long-Term Jobless Face Frayed Safety Net. "By February I will be in a tent."

Fannie Mae Getting Into Home Rental Business

Phelps Says Job Market to Bottom 1Q of 2010
Yeah, right!

« Odds 'n Sods: |Main| Letter Re: Once a Prepper, Always a Prepper »

Saturday November 7 2009

Economics and Investing:

Alex C. sent us this: Gold Jumps to Record Above $1,100 On U.S. Interest-Rate Outlook

Get Ready for 14 Percent Unemployment. (Thanks to Bobbi-Sue for the link.)

Items from The Economatrix:

Gold Jumps to Record Above $1,100 On U.S. Interest-Rate Outlook

Productivity Surge Signals Job Growth to Follow

Productivity Gains May Be Bad News for Job Seekers

Stocks Jump as Jobs, Productivity Data Improves Mood

October Sales Offer Relief to Merchants

Congress Set to Extend Homebuyer Tax Credit


Initial Jobless Claims Fall More than Expected

Jobless Rate Surpasses 10%, First Since 1983

Wholesale Inventories Fall, Sales Grow in September

« Letter Re: Book Recommendation: "Possum Living" |Main| Jim's Quote of the Day: »

Friday November 6 2009

Letter Re: Preps and Minimizing My Debts Paid Off When Unemployed

Dear Mr. Rawles,
With all the bad news reported every day and your personal heartbreaks I hope I can reassure you about our future just a little by sharing my story with you. I started reading your blog three years ago, during the good times. I'm a 23 year-old man from the liberal north east, some college under my belt, married, and willing to dig in and work to secure my family's future. I had a good job with a subsidiary of a major european telecom, I worked every hour of overtime I could and pushed myself to excel at any challenge thrown at me. I rose to the top of the EE techs at my former employer, but that still didn't stop my being laid off when production was shipped to China.

It's been a year since I've been able to find work, and in the intervening time my wife and I have struggled to stay afloat both financially and physically as my wife has Multiple Sclerosis. Thanks to what I had learned from your blog and Patriots, we've made it. When my wife and I were married two and a half years ago I made sure we paid off debt, were smart enough to skip buying an overpriced house, and built up our food stores.

Thanks to you when I watched over the past year the price of homes crash and energy skyrocket we were relatively secure in our apartment debt free and chopping up all the deadfall I could find out in the state owned land behind us to burn in our fireplace. I must have saved a thousand dollars last winter heating with wood and more importantly got myself into shape. Once again thanks to you when inflation hit food prices I dug into our larder to get us past the rise in prices. And thanks to you for getting me to take an interest in emergency medicine because I've been able to keep my wife stable during health scares a couple times now as we waited for the emts to arrive.

We made it through the rough times, thanks to you and the survivalist community. Today my wife is healthy, our persons secure, and my family while not rich will begin to prosper again. I've found a new job, I enlisted in the US Air Force and am shipping out in two weeks. I'll miss all the holidays this year but I'll know my family is celebrating safe and in peace.

Next to good planning, the most important lesson I've learned is to never quit. So through all your trials Mr. Rawles, I hope you can take heart knowing that you and the Memsahib have touched lives from afar for the better. Sincerely, - Brent S.

« Odds 'n Sods: |Main| Two Letters Re: How to Capitalize on Urine, Car Batteries, Wood Ashes, Bones and Bird Schumer »

Economics and Investing:

Regular contributor GG flagged this piece from Zero Hedge: Fannie Mae Seriously Delinquent Rate Hockeysticks to 4.45% From 1.57% In Prior Year

M.M. in Utah suggested this piece by Eric Sprott and David Franklin in Markets at a Glance: Dead Government Walking

Karen H. sent this: Profit 'Not Satanic," Barclays Says

Also from Karen H.: ADP says U.S. Companies Cut an Estimated 203,000 Jobs in October

Items from The Economatrix:

Gold Extends Record High on India Purchase

US Service Industry Expands Less than Forecast

Rogers Says Roubini is Wrong

US Home Price Slide to Continue to Mid-2010
[JWR's Comment: Gee, what optimists! I think "Mid-2020" would be a more accurate prediction.]

Silver Set to Soar as it Did in the 1970s

The Government Will Default on its Debts

Geithner Signals Gold Going Much Higher

Months of Gains Ahead for Commodities

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Thursday November 5 2009

Economics and Investing:

SurvivalBlog's Editor at Large Michael Z. Williamson pointed us to some commentary by Peggy Noonan in The Wall Street Journal that sheds some light on attitudes about the current recession: We're Governed by Callous Children.

GG flagged this: Junk bond revival stokes credit bubble fears

GG also sent us this troubling piece, from England: More quantitative easing is on the way – and that's a good thing. The UK government considers debt monetization a good thing? Watch out!

Items from The Economatrix:

Oil Hovers Near $78 on Positive US Economic News

World Markets Fall as US Recovery Doubts Linger

Three Strong Economic Reports Lift Recovery Hopes

Obama: Hiring Last to Come as Economy Rebounds

Oil Edges Lower Ahead of Fed Meeting


Author Says G20 in Scotland this Week is About Dumping the Dollar


Bankruptcy Filings to Match Divorce Filings in 2009: 1.5 Million, 35.8 Million Americans on Food Stamps -- 11% of the Population. The 5 Indicators of the Misery Index

Mish Shedlock: Obama Creates 640,329 Jobs at a Cost of $323.739.83 Per Job

« Odds 'n Sods: |Main| Letter Re: Archiving How-To Videos From YouTube »

Wednesday November 4 2009

Economics and Investing:

SurvivalBlog's Editor at Large Michael Z. Williamson sent this: Number of Utah jobs created by federal stimulus 'inflated'

GG was the first of several readers to mention a recent piece by economist Nouriel Roubini: Mother of all carry trades faces an inevitable bust

Damon S. sent us this bit of gloomage: Small-Business Bankruptcy Filings Up 44% Year-over-year, Equifax Data Shows

Items from The Economatrix:

US Inflation to Appear Next in Food and Agriculture. Here is a quote from the article: "While most mainstream economists such as Nouriel Roubini are warning of deflationary threats to the U.S. economy, it is our belief that massive price inflation has already begun. The Federal Reserve's policy of massive monetary inflation in 2009 has caused the Dow Jones to bounce over 50% from its low, oil to rise 100% from its low, and gold to surge to a new all time nominal high. One NIA co-founder just saw his health insurance premium rise 16% over a year ago; and the average tuition for a four-year public college increased this year by 6.5%."

Budget Deficits Risk Dollar Collapse and Breakdown in International Trade


GAO: Full Recoup of Government Auto Investment Unlikely

Fed to Hold Rates at Record Low, But Cracks Emerge


Goldman Sachs Warn of Huge Oil, Food Price Hikes

US Businesses at Risk Over CIT Group's Bankruptcy

CIT Bankruptcy Will Cost Taxpayers Another $2.3 Billion

How Detroit Turned Into a Ghost Town

Ron Paul: Be Prepared for the Worst


Roubini: Global Markets Could Soon Crash

Grim Reality: US Not Out of Recession

« Odds 'n Sods: |Main| Letter Re: Some Advise of Starting Wood and Charcoal Fires »

Tuesday November 3 2009

Economics and Investing:

HPD sent us this piece by Mish Shedlock: A Remarkable Comparison: Affordable Student Loans vs. Affordable Housing

Mr. Smith recommended this BBC audio clip: Fed Advisor Warns of the Next Financial Crisis: Mass Inflation

Chad S. flagged this: Geithner Says Commercial Real Estate Woes Won’t Spark Crisis

GG sent this: CIT Board Approves Chapter 11 Filing; Government Infusion of $2.3 Billion at Risk

Items from The Economatrix:

The Next Currency to Crash: The Japanese Yen


Think Tank: Graduate Unemployment to Soar

China Warns of World Slump if Stimulus Withdrawn

Stiglitz Says US Recession "Nowhere Near" End After GDP Jump

US Housing "Recovery" in Bubble Territory

Ambrose Evans-Pritchard: Deflation Fears as Eurozone and US Credit Contracts


UK to Break Up the Banks

Lloyd's of London Calls Time on Market Rally

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Monday November 2 2009

Economics and Investing:

Jeff E. suggested this: Wilbur Ross Sees ‘Huge’ Commercial Real Estate Crash

"FarmerGreen" mentioned: Harvard’s Bet on Interest Rate Rise Cost $500 Million to Exit. Even the best and brightest at Harvard lost a billion to get out of a derivatives contract that went south.

Bruiser spotted this: California to Begin Holding More of Your Paycheck. Bruiser's comment: "The lesson here is that if one needs a loan, just go out and take it from everyone who has a job. Like Commifornia is doing." [JWR Adds: My favorite quote from the article: "The state is closing part of this year's budget deficit by taking an advance on next year's tax revenues. 'It's a one-time acceleration, or on-time speeding up if you will, of tax dollars that would otherwise be collected next fiscal year.' But the state wants to make clear that the change, which has no cutoff date, is not a tax." Yeah. right. (Only someone that graduated from a California public school would believe that Bravo Sierra.]

Items from The Economatrix:

Flat Income, Weak Consumer Spending Raises Concerns


Dollar Rises Most Since April

10-Year Treasury Notes Decline Most Since May

Trillion Dollar Ticking Derivatives Time Bomb to Explode Under Bankrupt Banks

The Dollar Depends on Politicians Now

« Odds 'n Sods: |Main| Letter Re: Comments of Storing Coffee and Grinding Whole Wheat Flour »

Sunday November 1 2009

Economics and Investing:

Chris in West Virginia was the first of several readers that mentioned Glenn Beck's recent explanation of inflation, interest rates, and the history of destroyed currencies. It was a basic primer for the sheeple. I just wish he had taken a couple of minutes to explain the money multiplier effect of fractional reserve banking. Ehh! Probably too complicated for many television viewers to grasp.

The latest from Dr. Housing Bubble: Option ARMs Enter the Eye of the Hurricane: The $189 Billion Recast Problem Targeted Directly at the California Housing Market. Of $189 Billion in Securitized Option ARMs $109 Billion in California.

Norfolk Southern Railroad's profit slides as traffic remains slow. Revenues fell across all of the railroad's business segments. (Thanks to Damon for the link.)

GG noticed this piece by John Browne in The Asia Times: Inflation by Stealth

Items from The Economatrix:

Nine Banks Seized this Week, Total Up to 115. The fourth largest failure was California National Bank in Los Angeles

Are Things Really Getting Better?

New Home Sales Take Surprise Tumble

$8,000 Home Credit Still in Play Critic says government spent $43,000 for each sale that occurred because of the program

Investors Rush Back into Stocks as Economy Grows

Economy Growing But Recovery Could Be at Risk


Consumers Returning to Big Brands

Crude Prices Near $80 Again, Retail Gas Up Again JWR Adds: But wholesale inventories are very high, so expect prices to fall soon!

MetLife Posts 3Q Loss on Investment Losses

First-Time Jobless Claims Drop Less than Expected

Banks Cut Emergency Borrowing from Federal Reserve


US Economy: Consumers, Government Propel Growth; Economy Up for First in a Year

Mish: Houston is Bankrupt (As are California, Oregon, and Pension Plans in General)

Dollar, Yen Tumble as Growth in US Economy Spurs Risk Demand


Sprint Loses Nearly $500 Million in Third Quarter

Are US Treasuries About to Rally ... Or Crash?

World Markets Fall After Weak US Consumer Report

Soros on the World Financial Crisis
His message: China must be part of the New World Order

« Odds 'n Sods: |Main| Letter Re: Comments of Storing Coffee and Grinding Whole Wheat Flour »

Saturday October 31 2009

Economics and Investing:

The credit derivatives plot thickens: New York Fed’s Secret Choice to Pay for Swaps Hits Taxpayers. (Thanks to David V. for the link.)

Russia delays sale of 50 tons of gold. (A hat tip to Trey for the link, by way of MineWeb.)

GG sent this: Stimulus jobs overstated by thousands

SurvivalBlog's Editor at Large Michael Z. Williamson spotted this New York Times piece: Hard Work, No Pay. It includes this memorable quote: "I am not unemployable. I have a master’s of fine arts and spent two years in the Peace Corps." Mike's comment: "Er...I thought that was the definition of unemployable!"

Ben L. liked this article: Gold Market Reaching The Breaking Point

Items from The Economatrix:

Gold to Rise to $2,000 Amid "Massive" Inflation, Superfund Says

Paul Craig Roberts: Are You Ready for the Next Financial and Economic Crisis? "Evidence that the US is a failed state is piling up faster than I can record it. One conclusive hallmark of a failed state is that the crooks are inside the government, using government to protect and to advance their private interests."

Goldie Sachs Defends Controversial Trading Practices

Recession Declared Over But Job Losses Mounting

Home Foreclosures Jump in Previously Untouched Cities

Credit Card Hikes Raise Congresses' Blood Pressure

Unemployed Tap their 401ks

« Odds 'n Sods: |Main| Letter Re: University of California Disaster Preparedness Videos »

Friday October 30 2009

Economics and Investing:

Tom B. and "Word" both sent us this: Tax refugees staging escape from New York. Tom B. described as "voting with their feet."

Julius suggested an amazing Summary of US Foreclosure Activity. Wow! One in every 23 homes in Nevada is in foreclosure!

An interesting piece over at Housing Storm: Contradictions and Symptoms of the Great Depression

Items from The Economatrix:

GM Seen Posting Sales Again

Stocks Turn Lower as New Home Sales Fall

New Home Sales Fall a Surprising 3.6%

Treasury, GMAC in Talks for Third Round of Aid

Durable Goods Orders Rise 1% in September (Whoopee! Release the balloons!)

Energy Prices Slide on Surprise Jump in Gas Supply

Worsening Job Picture Fuels Slide in Confidence

Roubini: Carry Trades Fueling "Huge" Asset Bubble

Weiss: The War on the US Dollar

Iranian Oil Bourse Opens

UK: Credit Card Companies Will be Forced to Clean Up their Act


Regulators Prepare for the Next "Big One"


It Will be Difficult for the Housing Market to Return to Normal

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Thursday October 29 2009

Economics and Investing:

Treasury Sales Loom, but Demand Is There. $123 Billion Worth in One Week! Not to worry, they can always make it look like they all sold to non-puppet buyers. (Thanks to loyal content contributor GG for the link.)

Brad C. found this Business Week article interesting: The U.S. Metros Least Touched by Recession. Brad's comment: Note that none of the cities in the top ten are on the East or West Coast, and that they are all in "Fly Over" country. Once again, free states lead the way. JWR Adds: Also note the correlation with my Recommended Retreat Areas page.

Our Editor at Large Michael Z. Williamson suggested this piece posted over at Zero Hedge: The Next Step in the Bank Implosion Cycle??? The sheer volume of bank derivatives now in play is staggering!

Items from The Economatrix:

Global Exposure in Derivatives in Excess of One Quadrillion Dollars

US Foreclosure Crisis Spreads to New States

Awash in Nonsense
(The Mogambo Guru)


Massive Airline Cuts as Business Travel Plunges


New Fed Role: "Super Cop" to Police Banks

« Letter Re: Protein Powders as Emergency Survival Foods |Main| Note from JWR: »

Wednesday October 28 2009

Precious Metals in Context: Prudence, Moderation and Balance, by Gentleman Jim from Colorado

As I read the occasional letters and articles on SurvivalBlog about storing/using precious metals (PMs) during a TEOTWAWKI of whatever sort, I must conclude that every single writer is absolutely correct--and yet also mostly wrong. You might ask: How can everyone be right and wrong, simultaneously? It's because most preppers seem to anticipate and plan fairly narrowly for the use of PMs. IMHO, if you're taking such a narrow lane down the preparation highway, you're not thinking big enough.

Any situation following a currency collapse will be complicated by varying degrees of social disorder, economic breakdown, extreme paranoia among the population, (hopefully) temporary increases of theft and violence, etc., and thus will follow certain micro-unpredictable, yet macro-predictable, patterns. Saying it in a less scientific way, it is nearly certain that "big-picture," long-term trends for currencies in crisis, and especially the consequences of certain governmental actions, are extremely predictable. There have been more than 500 currency collapses in modern history (most recently in Zimbabwe, that I'm aware of, and seemingly ongoing for the US Dollar). Thus, economists and financial gurus can predict with fairly good accuracy what patterns will emerge during any currency crisis--whether it something as simple as hyper-inflation, devaluation or the wholesale destruction of a nation (and thus its currency). That makes such events macro (big-picture)-predictable.

Still, every civilization, society, currency and situation has unique characteristics and millions of variables, so certain events common to currency failures and thus almost certain to happen (macro-predictable) will still be hard to predict on a micro (small-scale) basis or timeline. In other words, economists can predict an abandonment of fiat currencies, they just can't predict the day, nor usually even the year. They can anticipate reliably that wheelbarrows will at some point be used to carry paper money to the grocery stores, but they just can't predict which person, on which day, at which store, in which city, will start the trend. Nor exactly when/how that trend will end, as the currency becomes so worthless that even a wheelbarrow-full isn't worth the effort of taking to a store.

Similarly, centuries-tested stores of value like gold and silver are almost certain to hold their relative value through almost anything crisis. Will gold and silver prices go up and down? Will governments make them difficult, illegal or even dangerous to one's health to hold them? Sure; but look at this way: if gold and silver were good enough for the Phoenicians to trade in; for many Jews to use to escape Hitler; for Marco Polo to use in his travels; for ancient, medieval and modern rulers to bribe the guards and spies of opposing rulers; for royal families to use to pay the ransoms of hostage family members; for Alexander the Great to exact in tribute from besieged cities; and for defeated Nazis to spirit away to safe havens after WWII. So it is a good bet that they'll be just as useful in any future scenario you can imagine. I could be wrong, but you shouldn't bet against that over the long haul.

Yes, a number of negative trends (take your pick: currency failure, government failure, world trade imbalances, food shortages, major droughts, out-of-control crime, oil shortages, nuclear terrorism, pandemic diseases, revolutions, major wars, civil wars, etc., etc.) could in theory climax simultaneously, causing gold or silver to be un-tradable for short, perhaps even moderately-extended, periods. (Note: I did not say "value-less." Just un-tradable. Folks will hunker down and drive off potential threats, and food, water and ammo will be the needs in the now. Over any period of more than a few months, though, society will demand a currency to enhance and ease barter, trade and commerce.

Yes, there may be short transition periods when precious metals will be temporarily under or even un-valued by some people, in some regions. But survivors must be pragmatic and flexible when they're hungry or in danger. Since nearly all Americans have at least some gold or silver jewelry, it seems likely the mental transition to gold or silver-based barter or currency wouldn't be difficult for most. Look at this way: When we travel overseas, the local currency (be it the Euro, the dollar, the Real, the Yen, the Renminbi, the Hutsi-Tutsi or whatever) always confuses us for a few days, until we get a feel for what it buys in real, local terms. Mentally converting from our "home" currency adds additional confusion, but usually not for long. Don't you and nearly all other foreign travelers very quickly overcome confusions over the local currency? Within a few days, we're bargaining at the bazaar or market and have a very good handle on what something is worth, and whether we're getting charged "gringo prices." Surely a transition away from the dollar and into silver or gold, in whatever form, can't be too much tougher than adapting to foreign currencies, when the need arises.

Yes, there may be short periods when guns and ammo are worth far more than silver, and possibly even gold. But if that holds true for very long, you're probably going to be dead anyway, unless you can get access to military-level armaments and armor. (Think about it; who's going to own all of those mortars, tanks, Apache helicopters, SAWs and F-18s if the government collapses completely?) On the other hand, in times of outlaws the common folks tend to band together and get rid of the outlaws. It might take a month, a year or a decade, but it will happen. Still, the key thing to remember is that common folks are not trying to make the world safe for guns and ammo; we use guns and ammo to make our world safe for living, trading and improving life for our families. When that point is reached, the relative value of guns and ammo will drop, just as it did in the frontier West, and the relative value of easily-exchanged commodities like gold and silver will go up.

Yes, there will be times when a bushel (heck, even a cup) of wheat will be worth more than a pound of gold. But almost every civilization since the dawn of time has soon invented a means of exchange--a currency. When that happens, things tend to be a bit more peaceful, farmers are farming and gunsmiths (and all the other trades) are buying food. Farmers that are farming peacefully = more food grown = drops in commodity prices. (As an aside, it seems probable that an effective portable water filter will be worth more than either wheat or gold, at some critical points in most TEOTWAWKI scenarios. Huge municipal water filtration/treatment systems are a product of peace, order and stability--not social chaos. We can live a long time on relatively little wheat or other foods, but only a very short time without pure, clean water. Remember, you won't be carrying 55-gallon water barrels anywhere--so you're going to need a sturdy, effective, long-lasting and portable water filter.)

You shouldn't bet your (and your loved ones') survival on a single commodity for future barter purposes, whether that be gold, silver, wheat, rye, 9mm, .223, lead, water, gunpowder, canned meat, spices, guns or whatever. IMHO, a reasonably proportional stash of precious metals in multiple forms increases flexibility, reduces overall risk levels and markedly improves your odds. Quite honestly, there is no single precious metals solution for every situation and need. Gold is too valuable for most day-to-day situations; silver can be too low in value for some needs. Why have only a few dozen Silver Eagles, when you can balance your preps and expand your flexibility by also owning a couple of Gold Eagles, maybe some Maple Leafs, and a good stash of 90% silver pre-1965 U.S. coins? And, why not a few reasonably-sized silver or gold bars or ingots, if that is in your budget and makes sense for your situation? You should tailor and balance your holdings to fit your budget, region, lifestyle, perceived risks and survival strategy.

* If you anticipate a "drop everything" evacuation, you'll be leaving behind most of your heavy silver bullion bars, and your stored items in general, due to weight limitations. So, either don't buy them, or bury them some of your stores in locations you can retrieve from later, or be prepared to hide them quickly in some other way.
* Rare or collectible coins? Only if you have a very generous budget to work with, and you believe that hyper-inflation is the biggest, and almost-certain, risk out there, and are focusing your preps on long-term horizons.

Just as you plan for redundancy and back-up solutions in other areas of preparedness, you should apply it to your precious metals caches. There's a reason you have both power tools and hand tools; several varieties of rifles, if possible; specific handguns for specific purposes (your concealed-carry pistol probably is not your open-carry pistol); and spare parts for just about everything. Most would agree it is wise to have a multi-fuel generator and solar power and some micro-hydro power too. You prepare a defensible retreat, but also also pack bug-out bags just in case, right? Many of us have both gasoline and diesel-powered vehicles, if we can afford it. So why wouldn't the same logic apply to your gold and silver stores? With many different "tools" in your PM toolkit, you can pick the right "tool" for whatever situation you encounter.

Now, back to Micro and Macro: While most of us may encounter micro-situations where precious metals hold little immediate value--in the macro sense, those situations will be relatively rare. Indeed, the odds are much in favor of gold and silver retaining important value in any emergency situation. If the ancient Romans, Greeks, Egyptians, Spanish Empire and many other civilizations over millennia have valued silver and gold so highly--why would you want to bet against it for the day after tomorrow? Next month? Next year? To me, the odds clearly lay with gold and silver. Yes, I still have appropriate firearms and ammo, and some reloading equipment, too. I'm just not going to bet everything on firearms and ammo, in isolation. Just like I'm not betting everything on having only food storage. The common-sense rules of prudence, moderation and balance dictate otherwise.

In short, never put all of your preparedness eggs in any single basket. For most of us, that means we should pursue a balanced and reasonable cache of silver and/or gold, in multiple forms, for multiple potential uses, along with our other balanced and reasonable preps.

Blessings to all, - Gentleman Jim from Colorado

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Tuesday October 27 2009

Economics and Investing:

Barry Ritholtz sets the record straight, (by way of a link at The Automatic Earth blog): Existing Home Sales FALL in September 2009.

FG sent this: Detroit house auction flops for urban wasteland

Jim Rogers Interview: Long Sugar, But Getting Short Bonds (Thanks to GG for the link.)

Items from The Economatrix:

Derivatives Bill Amended to Let Big Banks Keep Some Contracts Secret

Unemployment Getting Much Worse in 43 States

The Gathering Storm in Commercial Real Estate


How Uncle Sam is Killing Your Savings

Jim Willie: Attack By Central Bank Lilliputians

Obama Wants Banks to Lend More to Small Businesses

Bank Failures Hit 106, Many Are Weak

A Reader's View of the Current Gold Situation

America Has Lost its Soul and Collapse is Inevitable

Job Market Lands More Grads Back At Home

When Peter Schiff Talks, You Better Listen


The White House Doesn't Want You to See This. Major job miscalculations!

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Monday October 26 2009

Letter Re: Open Enrollment for Many U.S. Medical Savings Plans

Hi James,
First let me thank you for your wonderful blog, which I read every day. This is just a reminder that fall is typically Open Enrollment at many large and small companies for next year's benefits elections. My company's three week window to sign up for 2010 benefits opened yesterday. This is the time when a person can choose to participate in a ["before tax"] Flexible Spending Plan. While some people are justifiably nervous putting money away in a, "use it or lose it," program, the I.R.S. made the decision a lot easier a few years ago when it allowed Flexible Spending Plan funds to be used for over the counter medications. Even if you are blessed with perfect health and never see a doctor all year, the Flexible Spending Plan is great way to put some money away to stock up on your "Band-Aids," tax free!

My prayer for you and your family is that you have happy memories without pain in the shortest amount of time possible. - D.

JWR Replies: Thanks for that suggestion. One proviso for readers: Be sure to to mark your calendar for a date two weeks in advance of the spending deadline!

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

Reader B.B. sent us the link to this "must hear" audio clip: Peter Schiff issues a Red Alert: "Get out of the US dollar". Schiff warns: "This is what the Weimar Republic did, and we are going to have the same result."

Flavio liked this video clip of an an interview with Steve Forbes and Thomas E. Woods: Is Capitalism the Cause or the Solution to the Financial Crisis? This 28-minute video is well worth watching.

GG suggested a piece by Carnegie Mellon University professor Allan Meltzer in the Wall Street Journal: The United States is headed toward a new financial crisis.

Also from GG: Go for Gold: If the Fed Keeps Printing, the Dollar Will Keep Falling

Karen H. flagged this item: Goldman Sachs Still Paid for Swaps on Redeemed Bonds

Items from The Economatrix:

US Jobless Claims Climb More than Projected

7,000 Unemployed Americans Lose Their Lifeline Every Day. 200,000 to lose benefits in October if not extended

Mike Whitney: The Dollar Will Not Crash

UK: 1 Million Homes are Empty

Conditions In Place for Oil to Break $100 Again


Return of High Oil Prices Threatens Real Damage

23 States Report Higher Unemployment in September

Seven Months After Stimulus 49 of 50 States Have Lost Jobs

The Sound You Hear is the Social Fabric About to Snap
Real unemployment is really at 17%

We are "Worried" about Weak Dollar, Eurogroup Chief Says

Mexico Lawmakers Pass Tax Hike, Rating Fears Remain


Recession Will Be "Full Blown Depression"


Japanese Exports Fall 30.7% on Year In September

« Odds 'n Sods: |Main| Letter Re: Portable, Minimal Prep. Emergency Foods »

Sunday October 25 2009

Economics and Investing:

Reader HPD mentioned this ominous news over at The Market Ticker: Possible Credit Dislocation: Be Warned

From The Daily Bell: Dark pool trade limits to be reduced 95% in SEC plan

Laura H. sent this: Democrats seek cover to boost debt limit

Klaus sent this: China’s ‘Growth on Steroids’ Raises Danger of Renewed Slowdown [and Inflation!]

Items from The Economatrix:

Sept. Home Sales Rise 9.4%, Beat Forecasts

Existing Home Sales Surge on Tax Credit


Crude Rally Stalls, But Gasoline Prices Near Summer High

UK Recession: Recovery Hopes Dashed as Economy Shrinks Again


NY Delays $959 Million Payment to Pension Fund


Obama to Order Salary Cuts at Bailed-Out Firms

« Odds 'n Sods: |Main| Letter Re: Preparations for Eyesight & Hearing »

Saturday October 24 2009

Economics and Investing:

Reader Troy W. spotted this: Guess What: The Next Housing Bubble is Already Underway

Mr. W. sent this: A List of the Next Banks to Fail

The Daily Bell asks: Derivatives don't need regulation?

Jeff B. sent us this: Worldwide Diesel Glut Could Slam Oil Prices. [JWR's comment: Wait a few weeks before you refill your retreat's fuel tanks! The recent 18 cent jump in the price of diesel is sure to see a correction.]

Items from The Economatrix:

Friday Follies: Failed Bank Tally for Aught Nine Now at 101

Galleon Group to Shut Down Hedge Funds

Administration Plans Big Pay Cuts at Bailout Firms

Stocks Turn Lower As Note on Banks Spooks Investors

Fed Survey: Housing, Manufacturing Drive Recovery

Chain Restaurants Struggle, Compete for Customers

« Odds 'n Sods: |Main| Two Letters Re: Lessons Learned from Hurricanes Ike, Rita, and Katrina »

Friday October 23 2009

Economics and Investing:

Regular content contributor GG sent us a link to this press release: Adam Storch Named Managing Executive of SEC’s Enforcement Division. "Unbelievable! The Securities & Exchange Commission last week appointed a 29-year old Goldman Sachs executive as the managing executive of its enforcement division. You already know about all the curious contacts Goldman's leader Lloyd Blankfein has had with Treasury heads Hank Paulson and Tim Geithner. So I assume the SEC must also be aware of these contacts. While I have no reason to question Mr. Storch's ethics or motives in taking this job that presumably pays a fraction of his Goldman salary, not to mention bonus, isn't the SEC even a little concerned about its already soiled reputation?"

Yea, the great MOAB doth grow mightily, as hath been presaged in the blog of doom: Obama to announce help for small banks, businesses. "Wow, free money for everyone!" (Kudos to GG for the link.)

Bank of America to start charging customers for not using credit cards. Latest bank fee is for paying off credit card on time every month. (This news was mentioned to me by both GG and by Mike Williamson.)

Items from The Economatrix:

It's Official: US Government is Bankrupt


Higher Jobless Rates Could Become New Normal


Feds Still Providing Easy-Money Mortgages

No, You're Reading That Right: 79.9% Rate Targets the Credit Challenged

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Thursday October 22 2009

Economics and Investing:

Charles Hugh' Smith's assessment: Why We’ll See Stimulus 2.0, 3.0, 4.0, 5.0 (and so on), until The Great Implosion

Reader Aaron C. suggested: 20 reasons America has lost its soul and collapse is inevitable

Experts warn of 'deluge' of insolvencies to come in the UK

K.T. sent this video link: The Goldman Sachs Profitability Magic Trick.

After some travel, Peter Schiff is back to videoblogging.

Items from The Economatrix:

40% of Working-Age Californians Jobless

Treasuries Show No Lost Appetite as Dollar Declines

Hollywood Film Output Likely to Fall By One-Third

Fannie, Freddie Common Shares Worthless, Says KBW


Einhorn Bets on Major Currency "Death Spiral"

« Letter Re: Wood Stove Selection, Operation, and Safety |Main| Three Letters Re: Storing Food in Commercial Storage Spaces? »

Wednesday October 21 2009

Letter Re: Should I Rent, or Should I Buy Property?

Sir;
I have a question that I think would be of interest to a lot of your Blog readers:

"How to Survive the End of the World as We Know It". I really enjoyed the book. It helped coalesce all of the concepts I learned in "Patriots", [the now out-of-print] SurvivalBlog: The Best of the Blog Volume 1, and "Rawles on Retreats and Relocation".

One of your central precepts is that one should move to a "lightly populated rural area." Okay. With some work, I can find and buy a suitable piece of property and/or house. But you repeatedly point out that the real estate recession is going to get much worse and that real estate prices are going to plummet. Presumably, land prices are also headed far South.

In the interest of getting prepared as quickly as possible, I am interested in finding a viable retreat with a home already constructed on the property.

So, if it's a horrible time to buy real estate, should someone now making the move find a suitable rental property in the hinterboonies? Given the logistics of being a prepper (with literally thousands of pounds of Beans, Bullets and Band-Aids), is renting feasible?

While looking at properties, I have noticed that quite a few sellers are still hanging on to their ideas about their houses' value based on 2006/2007 prices. There are, however, dozens of properties that are for rent at prices way below market rents because of their remoteness and lack of appeal to the typical suburban sheeple (the very attributes which make the property ideal for me).

It doesn't make any sense to me to spend a significant chunk of money on a retreat and then watch as its value sinks over the next 5-10 years.

Should I sign a long term lease (two years or more) of a suitable retreat? And purchase a large sturdy trailer for each of my vehicles and be prepared to move from one rental location to another if required?

Your thoughts/opinions would be greatly appreciated. Thanks for all that you do to educate and prepare the rest of us.- M.M.

JWR Replies: We are definitely in a renter's market. I recommend buying only if the seller will accept a deeply-discounted offer.

I must mention a third approach that I recommend to my consulting clients for times like these, with declining house and land prices and an uncertainty of a turn-around within 10 years: Find a place that you really would like to buy as a retreat, and lease it, with a contracted option to buy. (A "purchase option" contract, commonly called "buying an option.".) That way, if the market tanks, you can walk away, and you will be just out the lease money. Alternatively, you could re-negotiate a purchase price. And if the market stays steady in rural areas (a possibility) or if you are still occupying the property when double digit inflation kicks in, then you can go ahead and exercise the purchase option, with all of the the lease money paid applied to the purchase price.

« Odds 'n Sods: |Main| Letter Re: Wood Stove Selection, Operation, and Safety »

Economics and Investing:

Reader Steven H. wrote to mention: VP Biden puts on his Captain Obvious cape and declares "This is a depression". Of course, Joe Biden has developed quite a track record for the inability to keep his mouth shut--most notably when he revealed the "secret" nuclear blast bunker beneath the VP's Residence.

Ralph N. suggested this piece over at Volokh about how the FedGov conceals some of its debt: Treasury Inc.: The Shadow National Debt. (It is hidden under a TARP, dontcha know...)

Commentary from analyst Niall Ferguson: The Dollar Is Dying a Slow Death.

From the Housing Storm blog: Strategic Foreclosure And The Last Man On The Boat

Also by way of Housing Storm: Subprime Mortgage Myths Debunked

Items from The Economatrix:

Sun Microsystems Slashing Up to 3,000 Jobs

Stocks Fall After Mixed Economic Data, Earnings

Fewer Home-Building Permits Signals Weakness Ahead

US Stock Market Returns to Housing Industry

UK: Business Failures Predicted to Surge in 2010 as Recession Deepens

Recession-Hit Spain Goes Back to Black Economy

« Odds 'n Sods: |Main| Letter Re: Storing Food in Commercial Storage Spaces? »

Tuesday October 20 2009

Economics and Investing:

New Hampshire Senator Judd Gregg: U.S. could be on path to a 'banana republic' situation. (Thanks to Tom B. for the link.)

Reader MP sent this piece in Business Week: What happens if the dollar crashes?

MP also sent this from The Motley Fool: The recession's second wave, subtitled "Green shoots? Sure, but there is actually little evidence of a solid recovery"

GG flagged this: FDIC bank fund in the red until 2012.

Tom R. suggested this piece: Intractability of Financial Derivatives

Items from The Economatrix:

Weiss: Bernanke Gone Berserk! Bank Reserves Explode! "Martin here with the most shocking new numbers I've seen in my lifetime. My conclusion: Fed Chairman Bernanke has dumped so much funny money into the U.S. banking system and has done so little to manage how that money is used, the fate of our entire economy has now been cast under a dark shadow of doubt. This is not conjecture or exaggeration. Nor are the underlying facts subject to debate. They are blatant, unambiguous, and fully supported by the Fed's own data ..."

Stocks Rise as Earnings Reports Top Expectations
. [JWR's comment: "Another bear trap rally!"]

Oil Jumps Above $79 to 2009 High Before Retreating

Iran and Russia Propose Oil Trade Without US Dollar

Housing Market Getting Worse


Wall Street is Winning: Elizabeth Warren "Speechless" About Record Bonuses

From Golden State to Failed State

Best Things to Buy in the Fall

Lloyds Short-Selling Doubles; Collapse Predicted

UK: Tax Raid on Banks Planned By Ministers

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Monday October 19 2009

Twenty-Two Reasons Why this Recession is Different and Why it Will Endure

I find it surprising that I'm now getting inquiries from readers, asking if "we've reached bottom" in the current economic recession, and asking if the time has come to start buying stocks or residential real estate. It seems that the talking heads of mainstream media are using some sort of voodoo. How can anyone think that we've hit bottom, and an economic recovery is in progress? To dispel the myths from the CNBC Cheering Section, please consider the following. (And note that I've provided references for each assertion, just so you know that I'm not talking out of my camouflage hat.):

  1. A broken global credit market that has not fully recovered. See: After Lehman, U.S. firms adjust to new face of credit
  2. Lack of transparency in Mortgage-Backed Securities and other re-packaged debt instruments. See: Geithner Blames Lack of Transparency for OTC Derivatives Hit on Market.
  3. The increasing Federal debt, which is growing at an unprecedented rate. See: The National Debt Clock.
  4. Mountains of consumer and corporate debt. See: Observations on the US Debt.
  5. The Federal budget deficit. See: Federal Deficit Hits All-Time High of $1.42 Trillion.
  6. Ever-expanding bailouts. (I call this The MOAB.) See: As More Companies Seek Aid, 'Where Do You Stop?'
  7. Monetization of the National Debt. See: Fed Could Expand MBS Purchases. (Can you spell Oroborus?):
  8. The destruction of the American consumer economy. (It had been artificially credit-driven). See: A Year After The Crisis, The Consumer Economy Is Dead.
  9. Chronic unemployment, possibly much higher than officially reported. See: Alternate Data at ShadowStats.
  10. More than $500 Billion USD in hedge funds that have borrowed short and lent long. See: Assets invested in hedge funds increase by $100bn
  11. A double wave of residential mortgage rate resets. See: this chart of scheduled mortgage interest rate resets.
  12. Continued down-ratcheting of house prices. See: Housing Prices Will Continue to Fall, Especially in California
  13. The under-reported "shadow inventory" of foreclosed houses. See: The "Shadow" Foreclosure Inventory
  14. The very likely collapse of commercial real estate ("the other shoe to drop".) See: Is a commercial real estate bust inevitable?
  15. A huge crisis lurking in over-the-counter derivatives. See my analysis published in 2006 and the dozens of articles on the Derivative Dribble Blog.
  16. Under-funded pensions. See: Almost half of top unions have under funded pension plans.
  17. A coming wave of municipal bond and municipal bond hedge fund failures. See: The Failure of Leveraged Municipal Bond Hedge Funds.
  18. Increasing numbers of bank failures. See: FDIC: Bank Failures to Cost Around $100 Billion.
  19. Insurance company collapses--some, like AIG, were foolish enough to insure more than a trillion dollars in derivative contracts. See: AIG: Is the Risk Systemic?
  20. Worsening state, county, and city budget crises. See: State prepares for shutdown as budget deadline looms, and this article from a liberal site: Predicting Worse Ahead from America's Economic Crisis.
  21. Loss of faith in the US Dollar, on the FOREX. See: Dollar's reserve currency status in focus as G-7 finance ministers meet.
  22. The coming mass currency inflation, following some asset deflation. See: Which is more likely in 2010: Deflation or inflation?

Back in the Fall of 2008, I started hearing from consulting clients with notes of fear in their voices. They realized that something is horribly wrong with the economy, but they could not properly isolate and articulate the problem. In my estimation, the "something wrong" that they sensed is nothing short of a monumental shift in the economic climate.

America will continue in recession. Most economic recessions are simply a product of the business cycle. These recessions are relatively mild and they often last just 12 to 24 months. The economic engine just readjusts and everything soon gets back to normal. But the recession that began in 2008 is something radically different, and it won't be short-lived. The current slow down was triggered by a collapse in the global credit market. For decades, the global credit market grew and grew, in an enormous debt spiral. Our neighbors to the south saw trouble coming decades ago, because their economies were at the time more debt-dependent than our own. As far back as the mid-1980s, their newspapers featured political cartoons that portrayed an enormous, insatiable monster that was invariably captioned "La Dueda"--"The Debt". Our cousins in Latin America saw it coming first, but the dark side of the debt nemesis will soon be clear to everyone.

The Federal governments's debt, just by itself is cause for concern. As an old gunsmithing friend mine, the late Chuck Brumley, was fond of saying: “If your outgo exceeds your income your upkeep will be your downfall." Several decades of profligate spending by the US Congress are finally starting to take their toll. Just because their friend Helicopter Ben has a high-speed printing press does mean that they can continue to spend money like drunken sailors in definitely. (On second thought, I should apologize for impugning the reputation of drunken sailors. They are actually much more conservative with their funds than congressmen.)

Because modern banking in the western world is based on interest charges that create continuously compounding debt, credit cannot continue to grow indefinitely. At some point the excesses of malinvestment become so great that the entire system collapses. This is what we are now witnessing: a banking panic that is spreading uncontrollably as wave after wave of ugly debt gets destroyed by margin calls and subsequent business failures.

Some economists are fixated on reading charted histories--and unrealistically expect that by doing so that the can reliably predict future market moves. Although they are working from a flawed premise at the micro level, the chartists do have some things right on the macro level: There are major economic "seasons" and even climate changes. The most vocal chartists like Robert Prechter hold to what is called the Elliot Wave Theory. And the big bad nasty in this school of thought is a Kondratieff Winter. This "K-Winter" is an economic depression phase that the world has not fully experienced since the 1930s. An economic winter does not end until after the foundations of industry and consumer demand are rebuilt. This can be a painful process, often culminating with war on a grand scale. (It was no coincidence that the Second World of the early 1940s was an outgrowth of the Great Depression of the 1930s.)

The US Federal Reserve and the other central banks are furiously pumping liquidity to the best of their ability, but in the long run they will not be successful. At best, dumping billions in cash on the economy will delay a depression by perhaps a year or two. But inevitably, a K-Winter depression will come. And the longer that it is delayed, then the worse the depression will be. Further inflating the debt bubble will only make matters worse.

"Big Picture" Implications

As I've mentioned before, hedge funds are presently most at risk in the unfolding liquidity crisis, because they use lots of leverage in lending funds that they themselves have borrowed. They borrow short and lend long, and effectively use debt compounded upon debt.

Even more alarming is the scale of global derivatives trading, particularly for credit default swaps (CDSes). Derivatives are a relatively new phenomenon, so most derivatives contract holders are only just now experiencing their first major recession. Thus, it is difficult to predict what will happen in a genuine K-Winter phase. In a perfect world, derivatives are a nicely balanced mechanism, where there are parties and counterparties, and every derivatives contract equation balances out to have a neat "zero" at its conclusion. But we don't live in a perfect world: Companies go bankrupt. Contracts get breached. Counterparties disappear and disappoint. We have not yet experienced a full scale "blow up" of derivatives, but I predict that if and when it happens, it will be spectacular. The pinch in CDSes (a form of derivative contract) in 2008 was just a faint foreshadowing of what we'd experience in a a full-blown derivatives collapse.

The scale of derivatives trading is monumental, and the vast majority of the population is blissfully ignorant of both its scale and the implications of a derivatives crisis. There are presently about $500 trillion of derivatives contracts in play. That is many times the size of the gross product of the global economy, but the average man on the street has no idea what is going on. It won't be until after the giant derivatives casino implodes that the Generally Dumb Public (GDP) awakens and asks, "What the heck happened?" Since the credit market began to collapse in the summer of 2008, the number of new derivatives contracts has dropped precipitously. But whether the aggregate derivative market is $400 trillion versus $500 trillion, when a crisis occurs there will undoubtedly be some very deep drama.

The next decade will likely be characterized by successive waves of inflation and deflation, and perhaps some of both simultaneously, at different levels. Countless corporations, and perhaps a few currencies or even governments will go under as this tumult plays out. (Take note of the recent vote of no confidence in Latvia.) The current low interest rates will soon be replaced by double-digit rates, much like we saw in the late 1970s. The dollar will lose value in foreign exchange, and may collapse completely. The Mother of All Bailouts (MOAB) will inevitably result in mass inflation. The bull markets in silver and gold will surge ahead, propelled by economic and currency instability. (Investors will be desperate to find a safe haven, when currencies and equities are falling apart.)

Mitigating the Risks

Be ready to "winter over" the coming K Winter depression. That will require: 1.) Prayer. 2.) Friends and /or relatives that you can count on (a "retreat group"). 3.) A deep larder, and 4.) An effective means of self defense with proper training. (For each of those four factors, see the hundreds of archived articles and letters at SurvivalBlog.com for details.)

Since additional large-scale layoffs seem likely, it would also be wise to have a second income from a recession-proof home-based business.

In the event of a "worst case" (grid down) economic collapse, it would be prudent to have a self-sufficient retreat in a rural area that is well-removed from major population centers. Get the majority of your funds out of anything that is dollar-denominated, and into tangibles, as soon as possible. The very best tangible that you can buy is a stout house on a piece of productive farm land. It will not only preserve your wealth, but living there may very well save your life.

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

Karen H. kindly sent us the following items:

Bank of America Posts Third-Quarter Loss on Defaults. "The idea that the financial crisis is over is a fantasy and it looks like the numbers bear that out,"

GE Profit Falls 45% as Revenue Trails Estimated

Buyers Suing Trump in Miami Condo Glut as Values Return to 1989 "There’s no recession in the real estate litigation community,”

Focus growing on keeping the jobless in their homes.

A Perfect storm's brewing to cool petroleum demand.

Items from The Economatrix:

Workers Still on Job, But Making Half as Much

Delaying Foreclosure Can Lead to Ethical "Heebie Jeebies"

What's Your Black Friday Shopping Plan?

US Stocks Rise as JPMorgan's Profit Helps Dow Exceed 10,000

Soros Says US Will Be Drag on World Growth


Germany Said Poised for a Full Recovery in 2010

October ZEW Decline Points to Weak German Recovery

« Odds 'n Sods: |Main| Letter Re: Preparations for Eyesight and Hearing »

Sunday October 18 2009

Economics and Investing:

Ex-Cop Loses Bank as Dutch Critic Spurs Withdrawals. (A tip of the hat to Karen H. for the link.)

Jonathan H. flagged this: DOW 10,000!!!! Oh Wait, Make That 7,537. Jonathan's comment: Due to reduced buying power, the current DJIA at 10,000 is equivalent to only 75% of when the DJIA went through 10,000 a decade ago. Additionally,back then $10,000 would have bought 30 ounces of gold; now its only 10 ounces.

Items from The Economatrix:

California Bank Becomes 99th Closure

Financial Meltdown in the Decade of Greed

Food Giants Cut Back on Size But Price Remains the Same


Bankers Should Stay Worried: We're Watching

Asian Stocks Gain a Second Week on Commodities, Economic Reports

Hedge Fund Chief Charged with Fraud

California Job Losses Continue to Climb

Corporate America Worried About Sinking Dollar

Bonuses Put Goldman Sachs in Public Relations Bind

Sorry, No Jobs. This is California
. State's employers expected to keep cutting staff in 2010.

« Economics and Investing: |Main| Three Letters Re: Perspectives on Roughing It and Covert Car Camping »

Saturday October 17 2009

Two Letters Re: Abandonment of the Dollar is a Premature Rumor

Dear Editor:
This civil debate on the status of the Dollar--and thanks, by the by, for keeping things civil on your blog--all comes down to a matter of not "if", but just "when." The United States Dollar will soon be dead meat. Finis. See this article: Reckoning Day for US Dollar Coming Next Year. We just need to ask: will the[definitive] end [for the dollar's dominant reserve status] come in six months, or six years? So, no matter when, I'm hedging by building up my stash of silver and lead. (The kind that goes "bang.") Since I'm still paying off college loans, my investing is very "modest". As one of the impoverished masses, I followed your advice and I'm gradually building up a supply of nickels. I'm also culling through a few rolls of half dollars from my bank every week. (I live in a small town in Texas.) So far I've found 9 pre-1965 [90% silver half-dollars] and 46 post-'64/pre-'71 [40% silver] halves. It's like finding buried treasure! It sure beats watching Wheel of Fortune on TV. The result of my effort is tangible. Thank you, thank you for mentioning [searching through half dollar rolls]. It is great way for people like me that are just getting started, after college. - Jason V.

Dear Jim and Family,
Those were interesting responses to my post that this dollar-dump rumor is just another rumor. I must point out, importantly, that everything the Saudis say is a lie, including "Hello". They promised $200 per barrel oil in 2008. Lie. They promised repeatedly to decouple themselves from the US dollar unless we do their bidding. Lie. They swore they do not provide money to Osama and his Al Qaeda terrorist network. Subsequent research by reporters proved this to be a lie but the Saudis went to the UK, sued for libel, won in the UK, and had the ruling applied to the author of the book and articles in question here in the USA under some sort of twisted reciprocity ruling which makes sense only to judges and crazy people. Yet another reason that globalism is bad.

Yes, the Dollar is dying. However, it is not dying quickly, and while there's a slim chance it could all go at once in a single day, history, particularly recent history, shows that to be unlikely. The Housing Bubble [collapse] happened over months. The Dot.Com [stock[collapse] took weeks. The Derivatives market crash is still happening and the housing bubble is still half inflated and won't be resolved until 2012 or 2013, depending on government interference, bankster greed, and economic inertia. A dollar crash would cause too many nations would lose control of their violent populations -- by this I mean populations counting on bribes, payoffs, and other forms of corruption bought with dollars to keep their peace. The ones who would gain the most by decoupling from the Dollar are also those who have the most to lose. If there was a viable world reserve currency which was everywhere the dollar was, from bars in Panama to the swamps of the Congo, the banks of Switzerland, the docks of Shanghai and the factory in Abilene, then I think we would have reason to worry. Without that existing everywhere, like the dollar, this is a silly rumor just like all the other silly rumors to erupt from the mouth of yet another lying Saudi.

It isn't Optimism if you're realistic and observant. They call this "Pragmatism". Sincerely , - InyoKern

« Odds 'n Sods: |Main| Two Letters Re: Abandonment of the Dollar is a Premature Rumor »

Economics and Investing:

Dollar hit on Fed’s signal of low rates. Meeting minutes show Fed has strong lean to more debt monetization. (Thanks to GG for the link.)

Brian H. sent us a link to a piece in Zero Hedge. that quotes Money magazine: "Now 5 institutions hold 97% of the notional value [face amount] and 88% of the market value in derivatives, and they are all basically in the same business and all basically hedge with each other. It is not a true hedge when the other side can't pay, and history has clearly proven how easy it is for the other side not to be able to pay." [JWR Adds: That is the very definition of derivatives counterparty risk.] Brian's comment: "I would add that the risk isn't just concentrated in these "Too Big To Fail" Five. The risks are clearly placed on the backs of the taxpayer, either through Federal Reserve inflation or direct confiscation of taxes passing through to the banks."

Items from The Economatrix:

Why the Housing Rescue Hasn't Prevented Record Foreclosures

BofA, GE Stocks Push Results Lower

Summers: Banks Must Accept Goernmnent Regulation

BofA Posts 3Q Loss on Defaults: $1 Billion

GE Profits Fall 45%, as Revenue Trails Estimates

US Consumer Confidence Worse than Forecast

Investors Get Jitters as Citigroup Fuels Fears Over US Economy

You Ain't Seen Nothing Yet at Goldman

The People v. Wall Street

60 Million Mortgages May Have Fatal Flaws. This refers to the Mortgage Electronic Registration Systems (MERS)

« Economics and Investing: |Main| From Michael Z. Williamson: M4 Carbine Failures in Afghanistan Likely Due to High Rate of Fire »

Friday October 16 2009

Three Letters Re: Abandonment of the Dollar is a Premature Rumor

James Wesley,
Regarding the oil-denominated-in-dollars flurry, two important points must be noted. First, dollar denominated contracts can be immediately hedged in foreign exchange markets (FOREX) even before the oil is pumped out of the ground. The oil barons aren't stuck holding their dollars any longer than they can call a FOREX desk or sovereign Treasury department (3/4 of the world's oil is owned by governments, not Exxon/Chevron/etc.)

The more important point of dollar-denominated oil contracts is dollar prestige. Documents from the Federal Reserve show that Arthur Burns not only was interfering with the gold markets three decades ago, but the level of cloak-and-dagger efforts to keep the dollar as the world's reserve currency for political power.

Dollar-denominated oil contracts purposes are to preserve hegemony, not prop up foreign central banks' currency reserve. Godspeed, - Brian in Wisconsin

Sir:
The current situation with the US Dollar is best described as a near perfect case of the Prisoner's Dilemma. The best thing for big holders of US Dollars to do is get rid of dollars as fast as is possible without tipping any other significant holders off that they are doing it. Otherwise their best bet is to get rid of their dollars before anyone else does. If someone did that, it would trigger a crash. The only thing stopping everyone right now is that a dollar crash would likely tank the global economy as well. It is beginning to appear that the carry-trade being funded in US Dollars could be the tipping point for serious action as it is relentlessly driving the value of the dollar down. Just look at a chart of the Dollar Index over the past six months. It is clear that the Federal Reserve has no stomach to raise interest rates to stop this progression of events since that would crash our own economy. It would not take a large event to bring the dollar crashing down any time now. - Mike B.

Jim
First, as other people have pointed out here, Iraq provides very little US oil due to its geographic location. The war in Iraq is in no way related to the US oil market. Rather, Iraq is a prime supplier to Europe, in which case a switch from Dollar to Euro was perfectly reasonable (and suited Saddam's temperament). It would be ridiculous to start a trillion dollar war over such a trivial item. There were much more significant reasons, which I'll offer in a separate post for discussion. However, the overall global trend is to diversify from single currencies, which I regard as a healthy movement. A great many of our current global economic problems stem from overemphasizing the paper dollar. The former USSR had the same problem--consider what the Ruble is worth now, versus what the USSR claimed it to be worth (About $5 US, in their over-inflated opinion). Personally, I've never been one for paper money. I prefer to convert it to capital, such as inventory, home equity, useful vehicles and food. You can always trade food. You cannot eat money. - Michael Z. Williamson, SurvivalBlog's Editor at Large

« Odds 'n Sods: |Main| Three Letters Re: Abandonment of the Dollar is a Premature Rumor »

Economics and Investing:

Karen H. mentioned this sobering piece, also subsequently sent in by several other readers: Foreclosures: 'Worst three months of all time'

The latest from Dr. Housing Bubble: A Comprehensive Look at the Southern California Housing Market: 60,000 Properties Listed on the MLS but over 100,000 in Shadow Inventory. California and Nationwide Median Home Price Trends since 1968. Say Good-Bye to Option ARMs.

Also from Karen: Dollar to Hit 50 Yen, Cease as Reserve

IRS Intensifies Global Hunt for Secret Offshore Bank Accounts

Desperate Dollar Heading to the Basement. (BTW, they concur with my comments on the USDI's crucial support level: 72.)

Items from The Economatrix:

Dow Passes 10,000 For First Time In A Year. There's another sheep to be shorn every minute...

JPMorgan Earns $3.6 Billion, But Loan Losses Remain High

Bank Regulators: Real Estate Loans Biggest Concerns

Watchdog: Treasury and Fed Failed in AIG Oversight


Sept. Retail Sales Fall 1.5% Post-Clunkers

The End of Money and the Future of Civilization

2008 Debt Crisis Morphed to 2009-2010 Dollar Crisis


Pension Fund Losses: To Infinity and Beyond

Silver Has More Possibilities to Appreciate than Gold

« Influenza Pandemic Update: |Main| Letter Re: Preparations for Eyesight and Hearing »

Thursday October 15 2009

Two Letters Re: Abandonment of the Dollar is a Premature Rumor

In response to InyoKern's letter: The title of this discussion thread and the original text that went with it could just as well have been written by any of the well-scripted talking heads on mainstream F-TV (financial television). My initial inclination is to be diplomatic, but considering the exceptional economic times we are currently witnessing, I say, "Balderdash!"

I could reasonably conclude that the majority of the readers of "Survivalblog" are more apt to follow unconventional economic sages such as Jim Sinclair, Jim Willie, Jim Rogers, Bob Chapman, or Peter Schiff as opposed to the well-orchestrated financial propaganda of CNBC, MSNBC, CNN, "FAUX" News, or any of the formerly-relevant "major" networks that spin financial news in the adoring spirit of the CIA's "Operation Mockingbird" that originated in the 1950s.

As such, these "enlightened" readers will know that the fiat U.S. dollar is doomed along with its unconstitutional facilitator, the Federal Reserve - which, as the saying goes, "is as 'Federal' as FedEx".

Coincidentally, Rep. Ron Paul's bill to audit the Fed has reportedly garnered 300 co-sponsors in the House of Representatives. The Federal Reserve's days are numbered and it too will go the way of the "Edsel" along with its monopoly-money-clone, the U.S. dollar.

The recent clues to the dollar's demise - sooner rather than later - are so numerous and widespread that one would have to be locked in solitary confinement in a maximum security prison to be oblivious to them.

The dollar has dropped from 89.49 to under 76 on the USDX within the last 12 months; gold is at record nominal highs in the $1,060 range; China is dumping dollars for tangible commodities at an alarming pace; Countries are making deals to trade goods and services to avoid utilizing dollars in their international transactions; The dollar is the international "carry trade" currency of choice now which is very dollar negative; The LBMA (London Bullion Market Association) and the U.S.-based COMEX are both in immediate danger of technical default due to lack of physical metals inventory for settlement of contracts that demand physical bullion; the Federal Reserve is monetizing U.S. Treasury debt sales via printing currency out of thin air to purchase foreign central banks' agency bonds to enable those foreign central banks to use the proceeds to purchase Treasuries...and on and on and on.

The readers who have known nothing but the strength and security of the U.S. dollar for their entire lives and cannot accept the fact that a currency change of epic proportions is coming will have a rude awakening in the form of a lowered standard of living and reduced purchasing power - especially those on fixed incomes. The fact that we are talking about the death of a world reserve currency makes the problem exponential in nature.

The days of the world's workers laboring all day for "a song and a dance" so that spoiled Americans can have access to cheap goods financed by the savings of the world are coming to a rapid and bone-jarring end. We have squandered our wealth and the creditors are lining up for the yard sale - and they're bringing our increasingly-worthless dollars with them to buy up our infrastructure.

Got gold? (or silver?, or platinum?, etc.) The answer to those questions may well determine how you answer the question, "Got milk?", in the future. Signed, - RB


Jim,
InyoKern is a real optimist, like so many of your readers. Many countries, such as those in the Middle East, have been in financial trouble, and are selling some of their holdings of all kinds, including dollars. Also, the US stock market is quite small compared to the bond market, where the real action is. And I don't believe Putin's trip was simply about being happy oil exporters.

His analysis below seems really off-base to me:

"And the Japanese, the other big holder of Dollars? We feed Japan with our rice, our Kobe beef (a special breed of cattle raised here in California and shipped across the ocean), and they buy our bonds because the national bank system of Japan is less than effective. Japan is also occupied by US bases since Japan is unable, legally, to more than defend itself within its own borders. Threats by North Korea means we, as their allies, are their defense abroad from a real and determined foe. A hundred million Japanese can't afford to dump the Dollar."

For one thing, an aging Japan is going to need to sell dollars to pay for pensions and medical care. For another, saying that the Japanese buy American bonds because the US banking system is in better shape is dubious. The Japanese have been in a "marriage" with the US, and that's why they are forced to buy American beef, even though there is strong resentment about not buying from a country where they test for diseases better, such as Australia. The trouble is that the husband has had a secret gambling habit, and was actually laid off from his good job a few years ago and has been working part-time and living off credit cards. The wife just found out, and she's letting the neighbors in Korea and China know some of the dirty laundry. Regards, - P.L.

JWR Replies: I agree that InyoKern is overly optimistic, but part of his premise is valid. In essence, the problem with US Dollars is that there are too many of them in circulation. And the problem for foreign holders of US Dollars is that they are holding too many of them, all at once. They cannot dump dollars rapidly, or the value of the dollar will collapse overnight, leaving them with nothing but kindling. (Or the electronic equivalent thereof.) Wise investors have been quietly getting out of dollars and into tangible commodities for several years. I expect this trend to continue for the foreseeable future. Interest rate inequities will perpetuate a Dollar Carry Trade that will be an even bigger market than the Yen Carry Trade that has been played successfully by currency speculators for the past two decades.

In the final analysis, yes, the US Dollar is doomed. Protect yourself by minimizing your dollar-denominated investments, and parlay the proceeds into useful tangibles like silver, gold, productive farm or ranch land, guns, and ammunition. The timing of the dollar's decline and eventual collapse is very difficult to predict. But it is better to be a year early than a day late. Get out of your Dollar-denominated investments!

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

GG sent us this New York Post article: Dollar loses reserve status to yen & euro

Fed's Bullard warns on inflation, unemployment. (Thanks to GG for the link.)

Value of UK farmland could double in five years.

Jeff mentioned this piece at Zero Hedge: Why Did U.S. SDR Holdings Increase Five Fold in the Last Week of August?

Items from The Economatrix:

Weak Dollars, Strong Euro Combine to Create Eurozone Pain

Rogers Sure Gold to Hit $2,000, Dollar to Lose Reserve

Why Soaring Gold Prices Should Set Off Alarm Bells

Unintended consequences of deflation: Colorado Minimum Wage to Drop as Cost of Living Drops

CIT Groups Says CEO Peek Plans to Resign

Dollar Facing "Power Shift" Say Analysts

Central Banks Diversify Out of the Dollar


Goldman Sachs to Reveal $23 Billion in Bonuses

Wall Street Banks Brace for More Big Losses

Cash Machines Were Monitored Every Hour During 2008 Crisis


Commodities Boom Could Last 20 Years

Dollar Reaches Breaking Point as Banks Shift Reserves

« Letter Re: Devotional Candles as an Emergency Source of Light and Heat |Main| Water, Water Everywhere?, by David in Israel »

Wednesday October 14 2009

Letter Re: Abandonment of the Dollar is a Premature Rumor

Dear Jim and Family,

I wanted to comment on the alleged threat of the Saudis to decouple the US Dollar from Oil sales. They've been saying that for a decade. The Iraqis promised to do it, one of the primary reasons for the invasion. The Iranians did it, but nobody cares because they're an oil importing nation so they don't actually matter much. The Venezuelans have been trying to get the rest of OPEC to do it since we nearly got Chavez ousted in a coup backed by the US. Pity that failed, but there will be a next time for him. With 16% annual inflation and 18% unemployment, talk is VERY cheap in Iran. Money is measured in Oil, and with the US Dollar as the reserve currency for Oil, we are in an unprecedented position.

This currency change threat has been going around for years, more and more often since 2006 when we were close to peak oil production. It is nearly inevitable except for one important fact: all the OPEC nations are loaded in US Dollars right now, and the USA is a stable country they like to invest in, both in Bonds and in real estate, the commercial variety in particular. Our stock market is where most of the Oil Sheiks put their investments so they really can't afford to dump dollars without taking a savage hit to their fortunes. While that may seem bearable for ideologues, the fact that their fortunes stave off violent revolution and pay their secret police and informants means they literally can't afford to dump the dollar. It would mean their lives would be forfeit in the resulting coups and revolutions.

Things are slightly less dire in China, where most of the nation's wealth is in US bonds. Dumping the dollar there has been requested since 2006 there, as well, but they don't dare for fear of abruptly ending the economic prosperity that's lifting the standard of living there for the first time in 50 years. They now have a middle class. Revolution is started by the Middle Class. They really can't afford a civil war in a nation of 1.3 billion people and counting. They can't dump the dollar.

And the Japanese, the other big holder of Dollars? We feed Japan with our rice, our Kobe beef (a special breed of cattle raised here in California and shipped across the ocean), and they buy our bonds because the national bank system of Japan is less than effective. Japan is also occupied by US bases since Japan is unable, legally, to more than defend itself within its own borders. Threats by North Korea means we, as their allies, are their defense abroad from a real and determined foe. A hundred million Japanese can't afford to dump the Dollar.

This means the rumor is probably just that: yet another rumor. Markets move on rumors, but they don't stay moved for long. Expect renewed stability rather than actual dollar collapse. Our current Post-Oil transition is [occurring in]slow motion. It will likely continue that way for the foreseeable future too. Sincerely, - InyoKern

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

Karen H. sent this: Dollar Facing 'power shift

Also from Karen: Stone Calls U.S. Economic Growth Outlook "Troublesome" in 2010

GG sent this: Silver Lining: Jim Rogers Talks Up Commodities

Reader D.D. sent the link to a good piece by Bill Fleckenstein: Your dollars are just Monopoly money

Items from The Economatrix:

Gary North: The Fed's Schizophrenic Monetary Economist

Failed Financial Policies and Rising Unemployment in the US


Stocks Bear Market Rally Will Soon Be Over

Government Deficit Spending Killing the US Free Market

« Odds 'n Sods: |Main| Letter Re: Making Your Own Maps for the Field »

Tuesday October 13 2009

Economics and Investing:

Reader Brian S. sent this: Dutch DSB Bank Nationalized After Bank Run By Clients. "The Netherlands’ central bank said Monday it has taken control of DSB Bank NV after clients began a run amid fears the regional lender might collapse." Brian notes: "People can [presently] only take 250 Euro per day from their accounts."

Icahn: Risk of Double Dip, Investor 'Bloodbath'. (Thanks to Flavio for the linkio.)

A piece by Charles Hugh Smith posted over at Housing Storm: Deflation or Inflation: Who Cares?

Analysis from Greg Fielding (also at Housing Storm): Did the FHA make bad loans with taxpayer money to prop up home prices?

I found an an interesting video of a Jim Sinclair interview by David Williams in South Africa: Gold & Inflation. Sinclair predicts gold at $1,650 per ounce by January, 2011. (This was linked at the Total Investor blog.)

Items from The Economatrix:

California Budget Already in the Red 10 Weeks After its Passage. California unemployment hit 12.2% in August

US Dollar Falls as Skeptics Buy Euro, Aussie

Derivatives Lobby Links with New Dems to Blunt Obama's Plan

China Buys The World


US Has Miles to Go With Its Mortgage Modification Plan


FHA May Be Setting Up Repeat of Housing Bubble


Many Jobless Workers Could Lose COBRA Subsidy. 65% subsidy will end on December 1st if not extended

Will Social Security Survive the Recession? Rep. Jason Chaffetz, R-Utah, has written that when debts to various government trust funds are added to the anticipated 2010 budget deficit, the U.S. debt burden will reach nearly 100 percent of gross domestic product in 2010. Moreover, Rep. Chaffetz estimates that when unfunded liabilities of more than $100 trillion from Social Security, Medicare and government employee pensions are included, national debt is several times larger than GDP.

Citigroup Tries to Shed $100 Million Man "Superstar trader a political liability now that bailed-out firm is 34% owned by feds"

Orange Juice Jumps 10% on Crop Report

Gary North: Banksters Bait and Switch Fractional Reserve System

Gary North: Fractional Reserve Banking System Basis of Bankster Fraud

FHA Raising Concerns with Policy Makers

« Experience With Bicycle Commuting and Touring, Hammocks, and Stoves, by David in Israel |Main| Notes from JWR: »

Monday October 12 2009

What Recovery? Find Yourself a Recoveryless Job

For more than a month, the mainstream media has been yammering about an economic recovery. Chasing phantom "good number" statistics amidst an onslaught of otherwise bad economic and global credit market news, the Wall Street cheering section is desperately seeking some news that the current recession is coming to an end. They talk about "the recovery in progress"--almost a fait accompli. They have been so good at this that they have fooled some investors into putting their sidelined money back into the stock market. What a masterpiece of disingenuous grandstanding. But the sad truth is that there is no genuine recovery in progress. Perhaps there will be a minor economic boost, generated by the huge bailout spending, but the bottom line is that we are in the midst of a major recession. And unlike the recessions in the past 50 years, this one is not based on just market cycles, but rather caused by a systemic failure of the global credit market. So any attempts to re-inflate the bubble with new credit (based on artificially low interest rates and bailout "programs") are bound to be unsuccessful. This recession cum depression won't end until malinvestment is driven out of the system, and trust in a fully transparent system of credit that backs genuine, truly marked-to-market tangible assets is restored.

America's debt bubble that emerged from over-inflated real estate is at the root of the current mess, just as it was in Japan in the 1980s. (In their case, it was commercial real estate, in parts of Tokyo.) The Japanese government has tried similar measures (mostly in the form of massive public works programs and artificially low interest rates) for 25 years, and they still haven't pulled out of their economic doldrums! But consider that our real estate bubble was much, much bigger, and that unlike Japan, we are a net-debtor nation. (Japan has traditionally been a fiscally-conservative nation of savers.) So how can we expect to do any better at "recovery" than they did?

The Obama administration has two potential courses of action that it can implement--through Treasury Department action, in concert with the Federal Reserve banking cartel's open market committee--to attempt to emerge from the current mess. Neither of these are appetizing:

  1. Continue keep interest rates artificially low. This, however, will create a huge dollar carry trade market that will be the source of laughing derision, internationally. This course of action will eventually destroy the US Dollar as a currency unit.

  2. Allow interest rates to rise, but that will likely choke off any economic growth. And regardless of the path chosen, the current administration (like its predecessor) seems committed to profligate spending on umpteen bailouts. These bailouts are funded by "out of thin air" dollars, creating massive budget deficits. In the long run, this dollar creation will prove to be highly inflationary. But there will probably be a time lag, since the effects of the continuing asset deflation is masking the ongoing currency inflation. I anticipate substantial inflation to become evident, circa 2011 and in subsequent years. It could be very nasty, so shelter yourself from it, as I've previously suggested in SurvivalBlog.

My suspicion is that the BHO administration will opt for the "weak dollar" route, since that will be the least painful of the two options. The sad news, however, is that ultimately neither option will solve the underlying problem, and hence the US economy is doomed to a deep 10+ year depression. During this period we will witness (and endure) massive unemployment, high crime, dislocation, rioting, repatriation restrictions, and substantially higher taxes. With these in mind, take the steps necessary to protect your family's safety, and your assets.

The talking heads on the finance and investing shows would have you believe that an economic recovery, or at least a "jobless recovery", is just around the corner. Do not be deceived. If any of you reading this are still under the deceptive spell of the CNBC rah-rahs and believe that recovery could be underway, then just take a look at this chart of scheduled mortgage interest rate resets, which I've previously mentioned in SurvivalBlog. As you can see, the oft-cited peak in subprime mortgage interest rate resets is now behind us, but the peaks in Alt-A, and Option Adjustable (aka "Option ARM") rate resets are still ahead of us. Thus, in actuality, the worst is not yet over. We are just in a lull between two tsunami waves.

With the exception of a few newcomers, SurvivalBlog readers are already well-informed on the foregoing facts, so I won't belabor these points. Instead, I'll move on to some practical issues that will have some benefit to you. Lets talk about jobs, and to be more specific, your job.

A Recoveryless Job

Even if you are currently employed somewhere in a "safe and secure" job, keep in mind that there are no absolutes. You could have a small town civil service jo, for example at a water treatment plant. But what if the city or county that you work for goes bankrupt? You could be laid off in a heartbeat. The phrase "under new management" often means firing you, and hiring the nephew or old pal of the new boss. The fictional character Sarah Conner said it best: "No one is ever safe." So hedge your bets.

I recommend that you develop a second stream of income through self-employment. Typically this can be found in a moonlighting service job, or a home-based mail order business.

I've often encouraged even my rural consulting clients to develop a second income stream. Why is this important? "Living off the land"-style self sufficiently is an admirable and commendable goal. But even if you are living truly "debt free", you will still have property taxes to pay. That means that you will need a recession/depression proof revenue stream in the event that you lose your primary job.

Successful home-based businesses usually center around unfilled needs. Find something that your neighbors buy or rent, or service that they "hire" on a regular basis that currently requires a 40+ mile drive "to town". Those are your potential niches.

A successful recession-proof home-based business is likely to be one where the demand for your goods and services is consistent, even in a weak economy. These include septic tank pumping, home security/locksmithing, care for the very young and the very old, and escapist diversions such as DVD movie rentals. (It is noteworthy that the movie industry was was one of the few sectors of the economy that prospered in the 1930s.)

One market segment that prospered in the Great Depression of the 1930s was repair businesses. Obviously, in hard economic times, people try to make do with what they have. So repair businesses are a natural. If it is some small appliance that you could repair that could be mailed from and back to the customer, so much the better. (That way you could have a nationwide business, rather than just a local one.) This might include: DVD player repair, laptop computer repair, and so forth.

Its a Dirty Job, But Someone Has to Do It
If you want to work for someone else and have that be recession-proof, then consider the dirty jobs. These are some of the least likely to suffer a layoff. In Japan, these are called the ""Three-K" jobs: kitsui ("hard"), kitanai ("dirty") and kiken ("dangerous"). If you are willing to take on any of the Three K jobs, do cheerful and hard work, and have exemplary attendance, then you will likely have a job that will carry you all the way through a deep recession or even a depression. If times get truly Schumeresque and you get laid off, then please be willing to "think outside the box", and consider taking a Three K job. Some of these are low level city and county payroll jobs. And by low level, I mean things like sanitation worker, animal control officer, sewer technician, solid waste transfer station worker, highway maintenance worker, and so forth.

Think about it: A steady job beats no job. Don't let your family starve, or end up homeless. There is no shame in accepting good old-fashioned hard work. If you take a job that brings in only one half of your existing income, consider that you'll actually come out ahead of any of your contemporaries that are laid off more than half of each year. Further, you will have uninterrupted benefits, such as health insurance, that they will also lack. A menial and low-paying job is better than no job.

Some suggested employment possibilities:

1.) Mining and manufacturing processes that because of shipping expenses cannot be practicably be moved offshore. Coal mining is a good example.

2.) Service industry jobs that are essential and non-discretionary. Let me reduce this to a few key examples, so that you'll know what to avoid:

Essential and Non-Discretionary Non-Essential and Discretionary
Mortician Pilates Instructor
11B Infantryman Hairdresser
Septic Tank Pumping Truck Driver Manicurist

3.) Retail sales (face to face, or mail order) of crucial items.

4.) Retail sales (face to face, or mail order) of comfort items. In the midst of an economic depression, people will crave escape. Movie DVDs are a good example.

5.) Military service. Most people don't think of the armed forces as service industries, but that is essentially what they are, on a national scale. In the military you are sort of a security guard for the real Mall of America. Or think of it as a lead delivery service. My father was an Air Force instructor pilot, back in the days of T-33s. He summed up his service when he told me: "I was a glorified bus driver, burning up lots of Uncle Sam's jet fuel. I did a great job of defending miles and miles of cactus." Thirty years later, I served as an Army Intelligence officer. It was great fun at the time, but in essence, I was just a detective--or more precisely the manager of detectives--that worked for one of the world's biggest detective agencies.

6.) Repair work.

Be Flexible and Proactive

The coming years will be difficult ones, globally. If you are risk of a layoff, then hedge your bets by developing a second stream of income, now. And if you are laid off, do not hesitate. Do whatever it takes to find steady work, even if means moving, or taking a lower-paying job. Don't just wallow in self-pity and draw unemployment insurance. be proactive and do something!

« Odds 'n Sods: |Main| Three Letters Re: Heating With Wood »

Economics and Investing:

Mara spotted this: First Fannie and Freddie, Now the FHA? Mara's comment: "Every time I read about more bailout money for existing “customers” or new bailout money for new “customers,” I start to get woozy and lightheaded! Good thing I am sitting down when I read this stuff!"

GG flagged this New York Times piece: Failures of Small Banks Grow, Straining F.D.I.C. (100th US bank failure thusfar for 2009.)

Items from The Economatrix:

The Great Recession: The Numbers Tell The Story

Investors to Companies: Show Us Higher Sales

State Budgets Get Adrenaline Shot From Clunkers

World's Largest Shopping Mall is Empty

« Odds 'n Sods: |Main| Letter Re: Where to Store Food When There is No Simple Answer »

Sunday October 11 2009

Economics and Investing:

The Other Chris sent the link to a New York Times piece: Foreclosures Mark Pace of Enduring U.S. Housing Crisis. Here are some key quotes: "Every 13 seconds in America, there is another foreclosure filing. That's the rhythm of a crisis that threatens to choke off hopes for a recovery in the U.S. housing market as it destroys hundreds of billions of dollars in property values a year."

"Michael Barr, the Treasury Department's assistant secretary for financial institutions, said more than 6 million families could face foreclosure over the next three years."

"The Centre for Responsible Lending says foreclosures are on track to wipe out $502 billion in property values this year. That spillover effect from foreclosures is one reason why Celia Chen of Moodys Economy says nationwide home prices won't regain the peak levels they reached in 2006 until 2020. "The default rates, the delinquency rates, are still rising," Chen told Reuters. "Rising joblessness combined with a large degree of negative equity are going to cause foreclosures to increase," she added. Anyone doubting that the recovery in U.S. real estate prices will be long and hard should take a look at Japan, Chen said. Prices there are still off about 50 percent from the peak they hit 15 years ago."

Reader Jim H. sent this link: U.S. states suffer "unbelievable" revenue shortages

Items from The Economatrix:

Whodunit? Sneak Attack on the US Dollar

Job Competition Toughest Since Recession Began

August Trade Deficit Narrows Unexpectedly to $30.7 Billion

Oil Prices Nearly Flat as Dollar Strengthens


US Job Levels at Lowest Level in at Least Nine Years

Britain Overtakes US as Top Financial Center

10,000 Apply for 90 Factory Jobs

Jim Willie: Death of Petro-Dollar, Told Ya So!

« Odds 'n Sods: |Main| Letter Re: Documentary Examines a Terrorist Nuke Scenario »

Saturday October 10 2009

Economics and Investing:

Reader KAF forwarded this: U.S. Budget Deficit Hit Record $1.4 Trillion in 2009

Illinois State Comptroller Dan Hynes Says State Finances A Mounting Crisis, Things Getting Worse. (Thanks to Jeff B. for the link.)

Matt in Tennessee alerted us to this video clip from Gerald Celente: The Dollar is Finished. And, BTW, Peter Schiff agrees. He announced "The carry trade [in US Dollars] is on!"

Items from The Economatrix:

Roubini: Housing Market Hasn't Bottomed Yet

Treasuries Fall After Weaker-Than-Average Demand at Bond Sale

US Budget Deficit Balloons to $1.4 Trillion

Questions Remain About Iceland's Banking Collapse

Latvia Threatens Foreign Banks with Huge Losses

Gold Hits New Record High for Third Day as Funds Move In

New Monetary Target: The Fed Under Fire

Dry Guide to "Recovery" (The Mogambo Guru)

Apartment Vacancy Rate Hits 23-Year High

Gold: Three Reasons Why the Price Will Go Higher

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Friday October 9 2009

Economics and Investing:

Reader CP suggested a column piece by Malcolm Berko: Taking Stock. CP's comment: "While Berko runs an investment advice column, he's generally not a cheerleader for irrational exuberance. This response to a reader's question is an general indictment of the markets and those who might as well be donning grass skirts dancing on a beach to appease the financial gods."

Commentary from Dan Denninger: Consumer Credit: Disaster, Down $12 billion

Items from The Economatrix:

US Consumers Cut Borrowing by $12 Billion in August

Mortgage Rates Below 5% Fuel Re-Fi Boom


Gold Price Hit Record High on Report to Ditch Dollar

Gold Breakout Alert


Dead Man Walking


Dow at 6,300 By Year End

China Calls End to Dollar Hegemony

Dollar Tumbles on Report of its Demise

Sugar the New Oil as Prices Soar. JWR's comment: Although most SurvivalBlog readers wisely store mostly honey, it might be prudent to buy some refined sugar to store for holiday baking and for barter, before the retail price of sugar jumps.

« Odds 'n Sods: |Main| Letter Re: Getting Self-Sufficient in Wyoming »

Thursday October 8 2009

Economics and Investing:

Thanks to reader GWC for this: U.K. Faced ‘Bank Runs, Riots’ as RBS and HBOS Neared Collapse

GG spotted this key data point: Hours worked plummets to all time low

Thanks to Damon for this news item: Venezuela inflation estimated at 26%, annually. (Prices were up 2.5% in September. But don't worry. Comrade Hugo has a plan.)

Mark G. found an interesting New York Times blog article: What Happened to Argentina?

Items from The Economatrix:

UN Calls For New Reserve Currency

Australia Rate Hike Good Sign for World Economy

National Retails Groups Forecasts Weak Holiday Season


Weak Dollar, Strong Stock Market Push Oil Higher

How the Dollar is Being Systemically Devalued Since the 1980s

Stiglitz: GDP Blinded Us to the Crisis

Report Questions Claims on Banks' Health

IG Report Finds Paulson, Bernanke Misled Public on Bank Rescues

Weak Dollar Drives Gold to Record High $1,043.20

Global Aging Population Financial Crisis Brewing

Weiss: Three Government Reports Point to Fiscal Doomsday

Soros Says "Basically Bankrupt Banks" Restrain US

US Rivals Plot to End Oil Trading in Dollars

Banks 1, America 0

The End of the Dollar Spells the Rise of a New Order

US Dollar Sinks After G7 Meeting

Peter Schiff: The "Recovery" That Isn't

« Odds 'n Sods: |Main| Letter Re: Older Technology Radio Receivers »

Wednesday October 7 2009

Economics and Investing:

GG was the first of more than a dozen readers to mention this article by Robert Fisk (an outspokenly leftist journal list, so take it with a grain of salt.): The demise of the dollar; In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading.

Given the import of the preceding (if it is true), is it any wonder that the USDI is tanking, and the future and spot prices of precious metals are going through the roof? You've had plenty of warning and investment encouragement from your editor. Eight years worth, in fact. (I called the bottom, back in 2001.)

Greg F. suggested this: Is The FDIC Killing Short Sales?

Banks brace for Latvia's collapse; The Baltic states are once again in the eye of the storm after leaked reports that Sweden is bracing for a full-blown economic and political "breakdown" in Latvia. (Thanks to GG for the link.)

Items from The Economatrix:

Most Economically Stressed US States

Treasury to Say Three More Funds to Buy Toxic Assets

HSBC Chief Fears Second Downturn

Roubini: Markets Have Gone Up Much Too Fast

Fiscal Storm in Caymans Set to Spread

Will California Become America's First Failed State?

Dollar Doldrums


Wall Street Faces Day of Reckoning Over Bear Stearns


US Unemployment Shows Downside of Short-Termist Stimulus Policies

East Taking Over from West in Irreversible Economic Power Shift


Treasury Yields Drop to Lowest Since May as Recovery Falters

US Stocks Fall, Posting Back-To-Back Losses Since July

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Tuesday October 6 2009

Economics and Investing:

From the Dr. Housing Bubble blog: Three Westside Shadow Inventory Homes. Santa Monica, Culver City, and Rancho Park. Banks will not Hold Inventory Forever.

John S. sent this: Bailout cop: Treasury set 'unrealistic expectations' Barofsky, reviewing the first big bailouts to 9 firms, concludes that the government was too rosy to the public about the banks' health. (Read: They fibbed.)

Tom B. thought this might be of interest: Baker Hughes: US Oil, Gas Rig Count Up 7 To 1,024 This Week

Damon mentioned: Is world economy still in deep woods? (The IMF announced that it plans to sell 8% of its gold reserves.)

Items from The Economatrix:

Ad Slump Leads Gourmet, Three Other Magazines to Close

Stocks Rise as Service Industry Activity Improves

Service Sector Grows in September, First Time in a Year

BofA to Select Emergency CEO


Oil Falls Ahead of Week of 3Q Earnings

Crash/Collapse Dead Ahead Say Faber, Rogers, Dent, and Celente

Waking Up to Discover the Mortgage Market Was a Giant Criminal Enterprise

Obama's Permanent Depression

Consumer Bankruptcies Surge Past One Million in First 9 months of 2009

World Bank And IMF Join Global Attack on the Dollar

AAR Reports Rail Traffic Remains Down

« Letter Re: Firearms Training -- Some Stress is a Good Thing |Main| Jim's Quote of the Day: »

Monday October 5 2009

Letter Re: Where to Start in Survival Preparedness?

Mr. Rawles,
My family and I are facing some challenges in our pursuit to become prepared. First off, a little background on our situation. I'm a 12-year Air Force veteran currently stationed in Montana. My wife also works full-time. We have about $60,000 in debt between credit cards and two auto loans. We have no problems paying our bills and our credit is excellent. It's just that we don't have a ton of extra money to begin our grand survival scheme. We've talked about all the different routes about living debt free and also purchasing the right vehicles, retreat and equipment that we feel we would need.

Option #1 - The Air Force pays large bonuses for certain career fields if you reenlist into that career field. I'm interested in one that will pay me a minimum $50,000 ($25.000 on signing, the rest spread out over the length of my reenlistment.) We talked about paying off one auto loan and our credit cards with the up-front $25,000. This would free up about $500/month which we would probably put towards our bigger auto loan. Since the first auto loan would be paid off, we can then sell that car and buy a less expensive '73-'86 Chevy/GMC Blazer or Suburban (gas). That would take care of survival vehicle #1. The other $25,000 over the following years would be used to pay down our other vehicle to where we can pay off or even break even so we can purchase survival vehicle #2---1994-1997 Dodge Ram 2500 4x4 5.9L Cummins diesel. If we go for this option, most if not all of our debt will be gone and we'll have about $1,000/month to spend on fortifying our equipment, supplies et cetera. The problem with this option is we won't be too prepared if something were to happen in the next 4-to-5 years or so.

Option #2 - Let's assume that I still have the same bonus as listed above. I retire in eight years and would like to have a little piece of land to go to--TEOTWAWKI or not. We plan on 10+ acres somewhere in north central Idaho (Orofino/Pierce/Deary--that area). Well, I could take the $25,000 up front bonus and put it down on a piece of land. We don't plan on spending over $80,000, so we can figure on a payment of around $300-$600/month. Then, when I retire, I'll move the family up there and build a house with a mini-farm. Of course, if I went this route I would still have a lot of debt.

Option #3 - Perhaps I should plan for more immediate needs. My family has little of the proper equipment/supplies that we would need. Shoot, we don't even have a Bug-Out Bag.. I've considered using that bonus money (or a portion) to build up in the equipment area and forego paying any additional to debt (after all, if TEOTWAWKI happens in the near future, debt will be the least of our problems).

So, this is the dilemma that I am faced with. I know my end goal a (self sustaining mini-farm in Idaho, while still receiving a pension and being debt free). Getting there is the hard part. The costs of my current debt, state of provisions, buying land, building on the land, vehicles, alternative power for the retreat will probably cost anywhere from $200,000-$500,000 when it's all said and done. I think the smart choice is putting as much money as possible towards debt and getting that out of the way, but at the same time making small provisions for WTSHTF. Perhaps I've missed something? - Dan W.

JWR Replies: For anyone that might be laid off, debt can be a real killer in the next few years. I still predict a at least another 18 months of deflation to be followed by sharp inflation. In deflationary times, having any debt load would be disastrous if income were interrupted due to a layoff. Granted, military service is a unique situation, but my general advice is to pay down debts, and avoid taking on any new debt. The situation in the immediate future will resemble the Great Depression of the 1930s, where cash was king, and the few people that had jobs fared well, but those that were unemployed suffered badly. So my advice is to take Option #1: Pay off one auto loan and your credit cards with the $25,000 re-up bonus. Not only will it remove the stress of potential loss of income, but it will eliminate interest payments, which are a non-productive drain on your resources. Then make your preparations gradually, using your expendable income, without incurring any new debt. If need be, downgrade one of your vehicles to an older model that won't require a car loan. That will free up even more cash each month.

« Odds 'n Sods: |Main| Three Letters Re: Travel Security, by CapnRick in Argentina »

Economics and Investing:

Reader Eric S. spotted this: CIT debt swap could cost U.S. more than $1.8 billion

By way of Market Oracle, Damon found these two links: News From 1930 and Zero Hedge discusses railroad carloading statistics.

Items from The Economatrix:

Jim Willie: Systemic Failure Approaches. "Numerous sustaining forces will contribute toward the inexorable path to systemic failure. It will begin with the relapse failure of the US banking system. Citigroup is facing real bankruptcy, whose numerous segments are underwater and growing worse. Bank of America is in a death spiral, whose CEO Ken Lewis departs amidst political and shareholder legal pressures. Wells Fargo is so dead that its true balance sheet makes a skeleton come to life, whose prime Option ARM and second mortgage exposure is monumental."

Wells Fargo "Lost" Grandma's Money

US Faces "Retro" 70's Inflation

FDIC Insuring 8,200 Banks with $9 Trillion in Deposits and Zero in the Deposit Insurance Fund; Calling Banks to Prepay Assessment of $45 Billion

Job Losses Overshadow Any Signs of Recovery

Greenspan: US Should Raise Taxes, Tighten Credit

Consumer Bankruptcies Soar in September

World Unemployment Rising; Rates, Responses Vary


Recession's Unemployment Takes Bigger Toll on Singles

Retail Stores Closing Doors in 2009

InkStop Abruptly Closes All 152 Stores, No Money For Workers

Japanese Deflation Worst on Record


US Unemployment Now Lasts Longer than Benefits

Are US Treasuries a Bubble Ready to Pop?

The Biggest Banking Heist in World History: Washington Mutual

Gary North: What is Money?


A Jobless Economy Recovery or Something Else?

Why All the Fuss Over Rare Earth Metals?

« Odds 'n Sods: |Main| Two Letters Re: Applying For a Non-Resident Concealed Carry Weapons Permit/License »

Sunday October 4 2009

Economics and Investing:

World Bank could run out of money 'within 12 months'. (Thanks to Chris H. for the link.)

Don W. flagged a New York Times piece: Too Rich to Worry? Not in This Downturn. JWR's comment: When even the uber-wealthy feel the pinch, then it is clear that this is not just a typical market cycle-triggered recession!

Items from The Economatrix:

Stocks Fall Following Disappointing Jobs Report

[Official] Jobless Rate Reaches 9.8% in September

Jobs Data Sends Oil Prices Tumbling Below $70

Banks Have Us Flying Blind on Depth of Losses

Banks With 20% Unpaid Loans at 18-Year High Amid Recovery Doubt

Stiglitz Deflation Threat Pushes Fed to Stay at Zero


US Unemployment Expected to Hit 26-Year High

Form the ever-cheery Ambrose Evans-Pritchard: Does Money Contracting Signal Serious Trouble?

Factories' Growth Slow, Jobless Claims Rise

« Jim's Quote of the Day: |Main| Travel Security, by CapnRick in Argentina (Part 1 of 2) »

Saturday October 3 2009

Economics and Investing:

Greg L. suggested this Housing Storm piece: Is it too early to declare mortgage modifications a complete failure?

Reader HPD mentioned this commentary by Mish Shedlock: Collectively, Economists Are A Perpetually Optimistic Lot

Ukraine's Naftogaz indicates default on bonds (Thanks to Danny S. for the link.)

The latest installment of the now predictable FDIC Friday Evening Follies: Three more banks go down. (Hat tip to Bill R. for the link.)

Items from The Economatrix:

Wall Street Money Rains on Senate, Especially Schumer

Governments Dip Deeper Into Alcohol-Tax Well


Shoppers Cash in on E-Coupons

Job Seekers Exceed Openings by Record


"Great Recession" Transforms the Workplace
. Most enduring change expected to be permanent loss of millions of jobs

Job Losses, Early Retirement Hurt Social Security
System to pay out more in benefits than collected in taxes over next two years

The Case For Inflation and Gold

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Friday October 2 2009

Economics and Investing:

Reader DLF spotted this: Detroit: Too broke to bury their dead

Foreclosure Rate Rises 17 Percent. (Thanks to The Other Chris for the link.)

A residential real estate shadow inventory case study.

Items from The Economatrix:

Manufacturing, Employment Pounds Stocks

Jobs and Manufacturing Suggest Slow Recovery

Banks Trim Use of Emergency Fed Programs

September US Auto Sales Fall Amid Clunkers Letdown

Natural Gas Tumbles with Most Ever in Storage

Unprecedented US Corporate Defaults Seen for 2009
[JWR's comment: So where is the "recovery" that the CNBC cheering section keeps talking about? I think that a recovery around 2022 may be closer to the truth.]

Greenspan: Growth Slowing, Stocks "Flattening Out"


Dollar Falls Again in Second Quarterly Loss

Schoon: The Coffin-Shaped Recovery

Dan Denninger: The Banking System is Insolvent

« Odds 'n Sods: |Main| Two Letters Re: Crystal Radios »

Thursday October 1 2009

Economics and Investing:

A Year Later, TARP Inspector General Barofsky Sees a 'Far More Dangerous' Financial Situation

Officials: Fed will need to boost rates quickly. (Thanks to El Jefe Jeff E. for the link.)

Bob G. sent the link to this Wall Street Journal piece: Plenty More Bank Losses Expected Globally; Additional $1.5 Trillion in Write-Downs Forecast by End of 2010

Account overdrawn: FDIC Fund Goes Negative. Although the US Treasury is the guarantor of last resort, it now won't take much to trigger bank runs. (A hat tip to K.T. for the link.)

Items from The Economatrix:

Hard Times Good for Your Health

Marty Weiss: US Dollar Crashes Against Yen! Time to Act!

US Dollar Set to Be Eclipsed, World Bank President Predicts


FDIC Considers Calling for Bank Advances


Homeowners in Financial Trouble Often Re-Default


Fed is Developing New Exit Tools


Economy Dips at 0.7% Pace in Second Quarter

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Wednesday September 30 2009

Economics and Investing:

Reader GG spotted this sobering piece: Corpse of a Thousand Houses. More foreclosures will soon be flooding the market, further depressing the housing market. This is the negative feedback loop (aka "death spiral") that I've been warning about since late 2006.

From El Jefe Jeff E.: US large-loan bank losses triple to $53 billion; Regulators say US lenders expected to lose $53 billion in 2009 on loans larger than $20M. Jeff's comment: "53 Billion is a lot to lose, and they were 'surprised' by the losses....I wonder what else is lurking that will cause these banks more surprises."

Also from Jeff E.: Economists React: “A Surprising Decline” in Orders

Reader Mike W. sent this advice from The Motley Fool on the US Dollar: Get Out Now!

Items from The Economatrix:

What's The Real Reason Banks Aren't Foreclosing?

Yen Hits 8-Month High on "Baffling" Fujii


Iceland One Year Later: Little Island, Big Trouble


Savers Losing Faith in Banks

Greenspan: The Fed is Above the Law And Answers to No One


No G-20 Reform, Just Cosmetic Patches

Money Figures Show There's Trouble Ahead

FDIC Bank Failures to Cost Around $100 Billion

Oil Prices Dip With Consumers Leery Over Economy

« Odds 'n Sods: |Main| Letter Re: Crystal Radios »

Tuesday September 29 2009

Economics and Investing:

From veteran blog content contributor GG: A $4 billion Postal Service bailout

Also from GG: Ten reasons for an imminent stock market crash

Reader mark S. flagged this: Another housing slump coming? Analysts say 7 million soon-to-be foreclosed properties have yet to hit the market.

Items from The Economatrix:

Simmons (Mattress) Plans to File for Chapter 11 Bankruptcy Protection

Housing Crash to Resume on Seven Million Foreclosures


The Long Slog: Out of Work, Out of Hope

Volcker Unleashes Another Volley on the Wizards in Wall Street and D.C.

Rare Earths are Vital and China Owns Them All

US Issues $7 Trillion Debt, Supply to Stabilize


UK: Now That It's Down to Politics, the Crisis is Starting to Turn Really Ugly

« Odds 'n Sods: |Main| Two Letters Re: Preparedness Information for Diabetics »

Monday September 28 2009

Economics and Investing:

SurvivalBlog's Editor at Large Michael Z. Williamson sent a link to: Dollar under scrutiny at G20 summit

Lost Vegas: Living Underground in Flood Tunnels. In Las Vegas, 1 in every 33 homes is in foreclosure. Where did all the people go? The answer might surprise some. There are an estimated 700 troglodytes live beneath Las Vegas.. Do they realize the mortal danger in the uncommon event of a flood? (A tip of the hat to David R. for the link.)

From Jim D.: Social Security strained by early retirements. An ever bigger budget deficit!

Items from The Economatrix:

FDIC is Broke, Taxpayers at Risk

Mission Accomplished: Part 1, Wrecking of the World's Greatest Economy

Sweet Spots (The Mogambo Guru)

UK: Investors "Panic Buy" Other Currencies as Sterling Slides

When Housing is Priced in Gold

Retirements in Peril: US System Full of Holes


Ambrose: Germany Declares Economic War


Japan Abandons America

House Passes Bill To Prevent Government Shutdown

Bailout Money for Smaller Banks Being Weighed

G-20 Leaders Declare Summit a Success

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Sunday September 27 2009

Economics and Investing:

From Paul D.: US faces Armageddon if China and Japan don't buy debt

Investors gird for post-recession inflation

HH latched on to this article: U.S. Debt Crisis May Cause ‘Fall of Rome’ Scenario, Duncan Says

From FG: Detroit hits 28.9% unemployment

Items from The Economatrix:

Fed Admits Hiding Gold Swap Arrangements

New Jobless Claims Drop Unexpectedly to 530,000


Fed Scales Back Two Emergency Lending Programs

Iran Replaces the US Dollar with the Euro


New Deadly Dollar Carry Trade


Gold to Reach $1,500 This Fall?

« Odds 'n Sods: |Main| Small Breed Dogs--Nature's Leatherman Tool, by B.C. »

Saturday September 26 2009

Economics and Investing:

Can you spell monetization? Federal Reserve Accounts For 50% of Second Quarter Treasury Purchases (Thanks to GG for the link.)

GG also flagged this piece in the Globe and Mail: Desperately seeking an exit strategy. (Roubini says debt monetization and inflation "the path of least resistance")

J.O. suggested this piece by Peter Schiff: Lehman Brothers Revisited

Items from The Economatrix:

UK: Crude Price "Shock" Next Threat to Recovery

UK: Markets in Government-Fueled Bubble Says Hedge Fund Manager


US Debt Crisis May Cause "Fall Of Rome" Scenario

Things are Getting Better?

Thank The Fed for Your Lack of Purchasing Power
(The Mogambo Guru)

« Odds 'n Sods: |Main| Grub and Gear--Lessons Learned from an Alaskan Trapper, by Old Dog »

Friday September 25 2009

Economics and Investing:

FG and Adam W. both flagged this: Homeowners who 'strategically default' on loans a growing problem. The article begins: "Who is more likely to walk away from a house and a mortgage -- a person with super-prime credit scores or someone with lower scores? Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" -- abruptly and intentionally pull the plug and abandon the mortgage -- compared with lower-scoring borrowers."

El Jefe Jeff E. recommended this piece by famed economist Arthur Laffer, in The Wall Street Journal: Taxes, Depression, and Our Current Troubles. Jeff's comment: "Arthur Laffer makes interesting comparisons of today's monetary policy with that of the Great Depression. The Fed has increased money supply 100% in recent months. A tax increase may be the tipping point."

GG recommended this piece by a Cato Institute fellow: The growing debt bomb

Items from The Economatrix:

Oil Prices Dip Below $69, Supplies Jump

Fallen Money-Market Fund Makes $1 Billion Distribution

IMF: No Full Recovery Until 2015

UK: Jobless Claims Show Demise of Slump May Be Exaggerated

Treasuries Fall After 5-Year-Notes Auction

UK: HSBC Staff Carrying Personal Alarms in Case of Customer Rage


Devaluation Remains Bank's Secret Weapon


Britain About to Lose AAA Credit Rating


Home Prices Rise 0.3%, Sign of Halting "Recovery"

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Thursday September 24 2009

Economics and Investing:

From Karen H.: Trailing Indicators: Out of a Job, Some Decide to Take a Hike

Don't Trip in Your Search for Higher Bond Yields

Blaine sent this: Ten Big Companies Veering Towards Bankruptcy

DD flagged a news item: FDIC considers borrowing cash from banks; Insurance fund that protects depositors is quickly running out of money

Jim Jubak asks: Will US repeat mistakes of 1937?

Items from The Economatrix:

Reversal: FDIC May Need Bailout from Banks

Ten Big Companies that are Veering Toward Bankruptcy

Rebound In Commodities Carry Stocks Higher


Oil Rebounds as Dollar Weakens

Landmark Decision Promises Massive Relief for Homeowners and Trouble for Banks

Debt Deflation Laboratory of the Baltics

Oil Giant Total Issues Oil Shortage Warning

US to Push for New Economic World Order at G-20

Breaking The Consumer: Exporting empty containers, declining consumer credit is contracting at rapid pace, is the consumer treadmill showing signs of exhaustion?

Car Showrooms Quiet After Clunker Clamor Ends

Stimulus Spending Sags After Deadline Rush

Grocery Stores Eliminating Check Payments

« Influenza Pandemic Update: |Main| Letter Re: Chronic Troubles with PT/MMC Pistol Night Sights »

Wednesday September 23 2009

Three Letters Re: Will Junk Silver Be Accepted for Barter, Post-Collapse?

Jim:
I am not surprised that ordinary people in Dallas, Texas (or anywhere else in the US) are not aware that pre-1965 US quarters and dimes are 90% silver. After 40 years of continual dumbing down the average high school graduate today probably couldn't tell you what the word "sterling" means either.

I just checked Dex Online for coin dealers in Dallas, Texas. Dex brought up 18 coin dealers. Dex also brought up 18 antiques and collectibles dealers (who always know the value of old coins.) I don't think there would be a problem converting pre-1965 "junk" silver coins into whatever new currency replaces the US dollar after the collapse.

Nearly every town in the US with a population of 10,000 or more has at least one coin dealer. Every coin dealer knows the value of pre-1965 "junk" silver coins. So does every jeweler and every pawn shop (not recommended.)

In my estimation it will take perhaps one week after the final collapse of the US dollar before people will be pawning their wedding bands and emptying out their kids' coin collections. It won't take long before everybody knows what still has value. Gold and silver have always kept their value since long before the Roman Empire.

If anybody still thinks that pre-1965 90% silver coins will be difficult to use after the collapse of the US dollar, then I recommend buying a copy of A Guide Book of United States Coins 2009 by R. S. Yeoman. (It is often just referred to by its nickname, "The Red Book.") Every Barnes & Noble store sells these.

In the mean time it would be a good idea to begin to equate the values of common good to an ounce of silver today. At $17/oz. one ounce of silver buys six gallons of gasoline in most parts of the US, for example. Figure this out for every necessity. Write it down on a legal pad for reference. Begin to educate your family and friends.

Post-US dollar collapse their will be a mass re-education in the values of gold and silver - out of sheer necessity.

Sir:
As in all civilizations, there will be traders that buy/sell/trade stuff professionally. These are the market-makers. Their expertise is knowing what things are worth to other people. Most trading will not be with your local neighbors, but with market-makers (think swap meets, traveling traders, etc). Average people will learn what items have value from the market-makers. They will learn quickly that a few silver coins is a lot more convenient than a 45 pound bucket of wheat to take to the swap meet.

Obviously, the more stuff you have to trade, the better, but silver should be among your stockpiles. - Brett


Dear CPT Rawles,
Some time ago, I wrote you concerning the Hyper-Inflation I witnessed in Romania following the collapse of Communism in the 1990s. You published my observations in the blog.

What I did not tell you at that time, was that the Romanians were widely using old silver coinage, much from the old Austro-Hungarian Empire days, as a regular means of paying for such things as food.

Even though the Romanian Lei, nearly died out as a currency, in favor of the Deutsche Mark, US Dollar and British Pound, old silver coins were widely used! It didn't take long for folks to accept old Austro-Hungarian silver coins as a viable means of barter etc. While this was illegal, I never heard of any enforcement efforts being made by either the regular police, or the Romanian Securatate.

Your assessment that pre-1965 90% silver coins will be widely used following the collapse of the fiat currencies is a sound prediction of what may yet come to pass. Initially, some may refuse to accept a silver quarter dollar as anything more than 25 worthless cents. But, it won't be long until everyone will gladly accept a real dollar (in silver coins) as the "real deal."
Americans are not stupid. Sometimes we are deceived by government and politicians, but not for long. Regards, - Michael B

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Economics and Investing:

Tamara (of the View From The Porch blog), linked to this by Les Jones: Three tales of inflation

From DD: Retraining roulette: New skills, no new job

Trent forwarded this video link: Bullish Today, Marc Faber is "Highly Confident" the Future Will Be Very Bleak

Items from The Economatrix:

Weiss: From Deflation to Inflation. This is a significant change, because up until just recently, Marty Weiss had for more than two decades been warning about deflation.

World Stocks Lower as Investors Eye Fed Meeting

Oil Falls Below $71 Amid Weak Demand

House Moves to Extend Unemployment Benefits

IRS Extends Amnesty Program for Tax Cheats

Major Funds Prepare for Run on Money Markets


HSBC Bids Farewell to Dollar Supremacy


Ron Paul: End the Fed, Save the Dollar


Wells Fargo's Ticking Time Bomb: Credit Default Swaps on Commercial Mortgages

Hawaii Businesses to be Hit with Soaring Unemployment Taxes


California, Nevada Reach Record Unemployment Records


Americans Won't Be Rushing to Put Out the Blaze Next Time Wall Street Burns

How to Prepare for China's Coming Derivative Default (Graham Summers)

The Housing Tsunami's Second Wave

« Odds 'n Sods: |Main| Letter Re: Grub and Gear--Lessons Learned from an Alaskan Trapper »

Tuesday September 22 2009

Economics and Investing:

Unemployment in California at 12%, Highest in Nearly 70 Years

GG flagged this: UK Public debt hits £800 billion - the highest on record

Tom B. sent this item: Charts predict: "Risk of Full- Fledged Dollar Crisis"

Items from The Economatrix:

Obama: G-20 Good Time to Assess Economy

Low Expectations for New Loan Help Program

Regulators Seize Two Banks; 94 Failures This Year


Irwin Financial's Two Bank Units Seized

Ohio Town Struggles After Package Giant DHL Leaves

Meredith Whitney: "Roaring Recover"? Unlikely


Fed Eyes Sweeping Bank-Pay Regulations

Summers: Troubled Firms Should be Allowed to Fail


Obama Adviser Blasts Big Business Ads. Larry Summers, top Obama economist, blasts ad campaign opposing proposal to create agency to protect financial consumers.

Chapman: The Looming Global Debt Crisis


Is the Fed's Money Pumping Inflationary?

Deflation, Falling Velocity of Money Ensures Printing Presses Will Keep Running

Missing Lehman Lesson of Shakeout Means "Too Big to Fail" Banks May Fail

« Letter Re: Storage Food Cookbooks |Main| Jim's Quote of the Day: »

Monday September 21 2009

Letter Re: Will Junk Silver Be Accepted for Barter, Post-Collapse?

I have been reading your blog for quite some time now and I have a different outlook that I would like for you to comment on if you would be so kind. I have seen multiple references to pre-1965 coins being good for barter in a post-SHTF environment, but I do not follow this reasoning. I live in Dallas Texas, and frequently converse with other like minded people about survival preparation and the world climate and, until I told them about the high melt value of pre-1965 coins, they had no idea it was greater than the face value. It should not have struck me as odd as I myself had no idea of this before I began reading your blog. These are well informed people, so it made me wonder how common this knowledge was. I began asking various people about this, and not one person had any idea that these coins had a higher silver value than their face value. Here is my perspective on this subject.

In a post SHTF environment some people will have prepared and some won't. However, regardless of this, when it comes time to trade with others the universal doctrines will apply. 1. You will have to have something that I want for me to trade you what you want. 2. A think worth what someone is willing to pay for it, not it's asking price. Now, if the vast majority of people have no idea that pre-1965 coins are almost the same as silver, most of them will likely have no desire for them at all, or worse, think that you are trying to scam them by pushing a trade with a currency which is likely defunct. Further, due to the probable lack of access to information, it is unlikely that people would be able to research the claim that these coins are worth more than their face value. Thereby keeping the populace at large ignorant of their true commodity value, and keeping the coins out of the trading markets.

I believe that the only scenario in which pre-1965 coins could come to be regarded as a barter good would be if people that already knew of their value agreed to take them in as trade for something that the ignorant populace already believed had value, such as ammunition or food. Again, however, there is a very small percentage of the populace that has knowledge of the melt value of pre-1965 coins, much less has a stockpile of them to use after the SHTF. Therefore, I believe it to be unlikely that there would be enough people, in enough varied locations, willing to make a sufficient number of trades of their items for coins for the trend of pre-1965 coinage as a barter good to become ubiquitous in the "villages" or "trading posts". Due to these perspectives, I find it to be unlike that the new "villages" or "trading posts", that spring up out of the ashes of our previous society, will use pre-1965 coins as even an uncommon trading good.

Most of the idea behind amassing coins for preparedness I believe to be tied to the value of silver, and the above illustrations assume that silver will be valued after the crash. However, after the crash I do not find it likely that silver will have any value at all for the the majority of the people. Very few people will be so well -prepared that they will have enough that they can concern themselves with amassing hard wealth for when society returns. I am certain that the majority will be trying to just survive as best they can. While there will be a Rolex or a diamond ring traded for a few tins of tuna, this will likely be an uncommon occurrence as society continues to devolve. Few people will have so much that they can trade away usable resources for hard value items in mass. While people may have the memory that silver used to be valuable, after having spent some time circling the drain with the rest of society, it is unlikely that they will have found a use for it since it can neither be used to defend nor feed one's self. It is more likely that a wealthy man will be one that has enough food, warmth, defense, and shelter to survive indefinitely. That only leave silver coins as an easily identifiable currency.

So, let us suppose that there are places that have almost gotten back to some sense of civilizations, such as the "villages" or "trading posts". As such they will likely want to use some form of currency. However, as we look to the past to inform the future, it is more likely that each community, or group of communities, will develop their own individual currencies in an effort to avoid counterfeiting and theft. Historically, in the absence of a centralized government, individual communities do what they feel they must to survive and to insure that they function as smoothly as possible. This is likely to focus more on food and defence, items that provide life stability, than it is on amassing hard value items.

In order for silver coins to have a value a person needs to want them from you more than they want to keep what you want from them. I can not see any functionally use for silver after the crash. I know that there are a great many very intelligent people that firmly believe that these coins will have a high value post SHTF, so I feel like I must be missing something. I would be most appreciative if you would share your views on the reasoning that I have outlined. I am very hesitant to invest in pre-1965 coins as a future barter good until I am convinced that it is a better investment than just using the same money to buy more food, guns, or ammunition. The ideal of having a compact, universal, and non-degrading barter good available when the time comes is very appealing, I'm just not sure that it is silver coins. - Russell from Dallas

JWR Replies: I stand by my prediction that in the event of a currency collapse, pre-1965 junk silver will very quickly become adopted as a de facto barter currency. Many people may not presently be familiar with these coins, but once the US Dollar's value disintegrates, people will wise up to what constitutes real money, very rapidly. Adaptability is in the nature of free markets. It won't take more than a couple of months for prices to stabilize in the new reality of silver coins, packs of cigarettes, boxes of .22 cartridges, and gallons of gasoline--in barter. I predict that within a month, the sound of ringing silver coins will become familiar--starting first at "mom and pop" stores and at farmer's markets. These coins will be eagerly sought in barter, because they encapsulate all of the key attributes of a genuine tangible currency: recognizability, scarcity, durability, portability, fungibility, and divisibility. Being 90% silver, they also have useful industrial value. No barter currency is perfect, but pre-1965 coins come very close, at least for use here in the United States.

« Jim's Quote of the Day: |Main| Influenza Pandemic Update: »

Economics and Investing:

Greg sent us this: FDIC Considers Borrowing From Treasury to Shore Up Deposit Insurance

Chaz liked this one: The U.S. Balance Sheet: Households See Net Worth Down by $12 Trillion Since Peak and Total Debt Floating in the Market of $33 Trillion

Items from The Economatrix:

Housing, Jobless Data Point to a Slow Economic Recovery

Stocks Zigzag After Rally as Jobless Claims Dip

FedEx First Quarter Profits Fall, Sees Improving Economy

Oil Edges Higher on Hints of Economic Improvement

Paul's "Audit The Fed" Bill One Co-Sponsor Away from Being Veto Proof

A Deluded G-20

Odds 'n Sods:

Federal Judge Rules Police Cannot Detain People for Openly Carrying Guns -- Includes nationwide map linking to open carry laws for each state. (Thanks to Cheryl for the link.)

   o o o

Food Stamp List Soars Past 35 Million: USDA

   o o o

Mexico Water Shortage Becomes Crisis Amid Drought

   o o o

White Paper Examines Role of Agricultural Innovations in Meeting World Food Crisis

« Odds 'n Sods: |Main| Squeezing Efficiency Out of Every Second of Your Workday to Provide Quality Relaxation Time, by KAF »

Sunday September 20 2009

Economics and Investing:

"Option" mortgages to explode, officials warn. (This is not a news flash for SurvivalBlog readers--I first warned you about this in March of '07, and several times since.) A picture is worth a thousand words. BTW, I have found that this chart link is very useful to send to any deluded relatives who have bought into the lie that the real estate market has "bottomed" and that are planning to buy back into the market. US residential real estate is presently a playground for idiotic contrapreneurs. The very earliest that real estate could turn around in the US is 2013, and I actually expect it to be much later than that!

GG alerted us to Mish Shedlock's highlighting 'Black Swan' Taleb's frank comments on Bernanke and Summers

Garnet and Cheryl both mentioned the story of how one family got out of debt.

Items from The Economatrix:

Stalled Economy Will Take Years to Regain Speed


We Still Have the Same Disease

More Taxes -- Of Course! (The Mogambo Guru)

Where We Are on the Laffer Curve

Greenspan Sees Threat US Congress Will Hamper Fed

UN Calls For Replacement of US Dollar


Is Your Bank "Underwater"? Check its Debt Level


UCLA Report Sees Little or No Growth in California


Buffett Says US Economy Has Not Turned Up Yet (but last year's terror is gone)

« Odds 'n Sods: |Main| Note from JWR: »

Saturday September 19 2009

Economics and Investing:

More trade war rumblings: China Condemns U.S. Tariffs on Tires as 'Protectionism'. (Our thanks to KAF for the link.)

Reader Laura H. mentioned: In 2009, US public debt will be approximately 90% of GDP "In 2009, US public debt will be approximately 90% of GDP. It will quickly approach and surpass 100% of GDP in the near future."

Items from The Economatrix:

Getting Better Bargains Easier in this Economy


Government Home Loan Agency Faces Cash Squeeze
. "The Federal Housing Administration said Friday that its financial cushion will sink below mandatory levels for the first time in its history, but officials insisted the agency won't need to be rescued."

42 States Lose Jobs in August, Up from 29 in July

FDIC Chief Considers Tapping Treasury for Funds "The chairman of the Federal Deposit Insurance Corp. says she is "considering all options, including borrowing from Treasury," to replenish the dwindling fund that insures bank deposits. ... Bair's remarks go beyond what she said just three weeks ago when asked about tapping the Treasury after the fund that insures regular deposit accounts up to $250,000 hit its lowest point since 1992, at the height of the savings-and-loan crisis. "Not at this point in time," she said on Aug. 27.... The FDIC's fund has slipped to 0.22 percent of insured deposits, below a congressionally mandated minimum of 1.15 percent." [And she didn't know this on August 27th?]

Stocks Advance as Investors Look to Resume Rally

Oil Down to $72 on Concerns Demand Recovery Slow


Gold Industry Faces Reserve Crisis

Celente: Revolution Next for US

Volcker Launches Bombshell on Wall Street and D.C.

« Odds 'n Sods: |Main| Linda Rawles Memorial Fund Donations »

Friday September 18 2009

Economics and Investing:

Pete A. spotted this one: Map: Household incomes by state. Look for some coming shifts in this map as the recession cum depression deepens. I think that the steepest declines in come will be on the coasts and in The Rust Belt. But a lot of my Recommended Retreat Areas may do better.

From Krys W.: US credit shrinks at Great Depression rate prompting fears of double-dip recession

Items from The Economatrix:

Money Market Funds No Longer Guaranteed. "... the US Government will no longer guarantee Money Market Funds. The key points are that the smart money is getting out of Money Market funds. Assets in these funds have declined by 15% in the last month. There is still $2 trillion in non-Treasury Money Market funds. Are you sure your Money Market fund is safe? The second and more important point is that the Treasury is trying to force this money into the biggest banks. Let's not let that happen. If you withdraw your money, put it in a local credit union or small bank in your community. But of course be sure to first check that institution's safety rating.

Peter Schiff Says Deflation Will Be BIG...when you measure it in gold

Foreign Demand For Long-Term US Securities Fall

Unemployment in Industrial World to Hit New High


Mortgage Problems are Walloping Americans' Credit Scores


Could China Propel Gold to $2,000?

"It Is Dangerous to Think the Financial Crisis is Already Behind Us"


Garfield Gets It
(The Mogambo Guru)

US Credit Card Defaults Up, Signals Consumer Stress


Which Crisis?

« Odds 'n Sods: |Main| Bug Out and Refugee Considerations, by Brad T. »

Thursday September 17 2009

Economics and Investing:

U.N. calls for replacement of U.S. dollar; Joins Russia, China and G20 with demands IMF step forward (Thanks to Laura H. for the link.)

Reader John M. suggested a Market-Ticker link that clearly describes the urgency of the financial situation: Warning: Deflationary Collapse Ahead.

Items from The Economatrix:

Derivatives Still Pose Huge Risk, BIS Says

How the Collapse of Lehman Bros. Averted a Second Depression

Geithner Exaggerates US Government Retreat


Natural Gas Prices Spike 12% (Even with warehouse tanks bulging!)

Stocks Subdued Amid US-China Trade Tension

Wall Street Crisis One Year Later: Lehman, WaMu Lead List of Biggest Bankruptcies

Wall Street Math Wizards Forgot a Few Variables

Cautiously, Small Investors Edge Back Into Stocks [JWR's comment: A more accurate headline would be: Lemming-like, Small Investors Edge Back Into Stocks ]

Job Market Outlook: When Will Companies Start Hiring?

Stiglitz Says Banking Problems are Not Bigger than Pre-Lehman

R.I.P. Zimbabwe Dollar

US Tire Duties Spark Clash with China

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Wednesday September 16 2009

Economics and Investing:

Wow! Take a look at the latest market tickers for spot silver and spot gold. We might soon witness some profit-taking that could temporarily drive silver back to the $12 per ounce range. But consider that a buying opportunity. The next leg up will probably be in November, when The Chartist Gnome predicts silver over $18 per ounce and gold over $1,070. For those that already have bought metals: Do not attempt to "time" such a volatile market. Just hang on, and as the Gnome says, "Be ready for a roller coaster."

Items from The Economatrix:

The Ghost Fleet of the Recession (Also suggested by several other SurvivalBlog readers.)

Airline Trade Group Predicts 2009 Loss of $11 Billion

Gold Falls as Speculative Holdings Reach Record, Dollar Climbs


Gold Investors Warned to Liquidate After Buying Frenzy

Moodys: UK Banks to Post $215 Billion in New Losses

Darryl Schoon: Greenback Gases, Gold and the Coming Shift

« Odds 'n Sods: |Main| Note from JWR: »

Tuesday September 15 2009

Economics and Investing:

Monty recommended this piece over at Seeking Alpha by J.S. Kim: The Coming Consequences of Banking Fraud

More about insider selling, courtesy of Pete S.: Insiders sell like there's no tomorrow; Corporate officers and directors were buying stock when the market hit bottom. What does it say that they're selling now?

GG sent this: U.S. Foreclosure Filings Top 300,000 for Sixth Straight Month

Items from The Economatrix:

Analyst: It's Too Late to Save Sears

The Ripple Effect: What One Layoff Means for a Whole Town


Wholesale Inventories Drop in July; Sales Grow

UK: Higher Oil Prices Feed Inflation Fear

Cash Down the Drain (The Mogambo Guru)

The 800,000 Pound Deflationary Gorilla

Chapman: Derivatives Collapse and the New China Gold and Silver Markets

« Odds 'n Sods: |Main| Letter Re: Living in the Time After TEOTWAWKI »

Sunday September 13 2009

Economics and Investing:

"The Other Jim R." was the first of several readers that sent us this: Federal deficit hits $1.38 trillion through August.

Mr. W. sent this: Three more down: 2009 Bank failure tally hits 92

Items from The Economatrix:

Treasury Sees Millions More Foreclosures

Job Openings Down 50% From their Peak in 2007

Why $200 Per Barrel Oil is Just Around the Corner


A Year After the Financial Crisis, a New World Order Emerges


"System Risk Laundering" -- Systemic Root Causes, Part II


Forbes: The Dollar Collapses

Gold Climbs to 18-Month High as Dollar Weakens

US Growth to Slow After "Clunkers" Rebate Ends, Survey Shows

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Saturday September 12 2009

Economics and Investing:

You might have noticed that gold set a record weekly closing price on Friday at $1,005 per ounce, and silver closed at a respectable $16.70. I expect some profit-taking in the next two weeks, so be ready to buy on this dip!

From Jeff D.: Treasury sees millions more foreclosures

Ben M. spotted this piece quoting Mr. Magoo Alan Greenspan. Market crisis 'will happen again'

Items from The Economatrix:

Government Paid Dealers $1.2 Billion for "Clunkers"

NYC's Tavern on the Green Files for Chapter 11 Bankruptcy


Trade, Jobless Claims Figures Show Recession Fading

Money Market Fund Guarantee Program to End


Proctor & Gamble Sees Sales Starting to Rise Again in 2Q

Seed Company Monsanto Plans to Double Staff Cuts

« Four Letters Re: Prepare to Garden Like Your Life Depends on It, by Prepared in Maine |Main| Notes from JWR: »

Friday September 11 2009

One Woman's View of Budget Preparedness, by Lisa L.

I wanted to write something for the contest for other ladies with children were in the same situation with wanting to be more prepared but not having the means to do so like the books recommend. I've had my frustrations but I've learned and bought gradually and wanted to share. :) It always upsets me when I hear in the media or from people their point of view that people are helpless due to their income level. This is what I've learned so far, how to cook with wheat, stockpiling shampoo for very little and ways to acquire some supplies for a 72-hour-kit inexpensively.

1. Educate yourself! I was able to get every preparedness book I requested from inter-library loan. Now I have high speed Internet and there are so many videos on YouTube. I was interested in learning how to use wheat so this is my experience. :) There are so many other preparedness topics and skills on youtube and in books.

Long Term Preparedness - Using Whole Grains

2. Learn about whole grains and different ways they are processed. Learn about red wheat, white wheat, oat groats, buckwheat groats, rye, and barely. Learn about the benefits of milling flour at home. There are so many different types of beans to learn about too!

3. Find where you can make a small purchase of whole grains. You can buy a #10 (large) can of whole wheat and cracked wheat from online retailers. If you use an EBT (Food Stamp) card, try a health food store's bulk section. The point here is not to use a lot of money until this is an item you and your kids consume. You can learn with a small amount. :)

Try to eventually purchase wheat in different forms like whole wheat berries, cracked wheat , bulgar, whole wheat flour, and whole wheat pastry flour. Purchase items found at regular the grocery store too like oats, beans and rice.

4. Learn how to use your grains. Cooking with whole grains is a skill but it's not complicated. A simple crock-pot makes it easy to cook wheat and other grains. One of the best cookbooks that helped me a lot is "Cookin With Wheat" by Pam Crockett. You can use wheat in other ways besides it's flour form and baking bread. She has a lot of recipes that use wheat cooked in the crockpot in there. As far as using whole wheat flour, I found baking bread to be very time consuming but I always put whole wheat flour into prepackaged mixes like brownies and muffins. Make oatmeal cookies! Serve oatmeal for breakfast and try it with different fruits and nuts. Learn how to cook and season beans. Something simple like a ham bone gives them a lot of flavor. I use allrecipes.com for new ideas. I like that site because I can convert recipes for two people.

5. Once you are using whole grains, consider purchasing grain processing equipment. This step was a long one for me. It was four years from the time when I learned about using whole grain and wanting a grain mill until I was able to purchase one. The IRS made a mistake on a previous tax year and sent me a check with interest so that allowed me to purchase an electric mill. I have the Marcato Atlas Grain Mill/oat roller (it manually flakes grain) and the Wonder Mill (electric grain mill to make flour from the whole wheat). Both have pretty good resale value compared to the initial cost [if purchased used] on eBay if you ended up needing to sell it quick to pay a bill. I use the grain flaker to crack wheat and turn oat groats into oats. I use the Wonder Mill to make whole wheat flour.

6. Buy wheat in a larger quantities like 25 lbs or 50 lbs. At this point you will already be using it in your meals. You can do this from the same place you bought it in a small quantity before. Do this even if you don't have grain processing equipment but are cooking it on your crock pot. Look into buying other grains in the large quantities too like beans, rice and oats. Sam's club has the best price on Bastmati rice. Learn how to store food in 6 gallon buckets with a mylar bag and oxygen absorber. The same place that sells you wheat should sell 6 gallon buckets except for a health food store. I have not tried to pack my food like this yet but it's next on my list. :) There are some great videos on YouTube that demonstrate this. You can buy grains already packed like this. For some things like rice, I plan to pack myself with the O2 absorbers and mylar bags myself since it's more economical. (And sugar, too, minus the O2 absorbers.)

Long Term Storage - Healthy and Beauty Products

7. Combine coupons with loss leaders/sales to build a supply of health and beauty products like toothpaste, toothbrushes, shampoo, conditioner and shower gel every six months. I utilize the site HotCouponWorld.com (HCW). They have previews of ads for major drug stores. I don't get a paper or clip coupons. I order them from a clipping service on eBay. Ads of chain drug stores are posted in advanced on HCW so you can order your coupons in time. If you get too much you or realize stuff will expire soon before using it, you can always post it on Freecycle. I guess donating it to a food bank or shelter is ideal but they never have donation hours when I can get there. With Freecycle (search it on yahoo groups with your city name) someone will pick it right up. :)

Short Term Preparedness.
Inexpensive ways to get started on a 72-hour kit. There are some great PDFs on the Internet and checklists about 72-hour kits. These is a just a few low cost things to get you started.

8. Bags. If you don't have bags around your home to designate for this, buy some from the thrift store. There are a lot of varieties of backpacks and travel bags there. Be sure to check things like zippers and if there is any foul scent before you buy. I've had good success with bags there. You also want to buy a box of larger zip lock bags for hygiene items. Save some of your plastic bags from the grocery store too.

9. Documents & Notebook. Most banks offer free photocopying. Grocery stores have it for around 15 cents per page. Copy your ID, birth certificate, social security cards, bank account statement. If you don't have things things start to acquire them. There are many lists on the internet on what to copy for an emergency financial folder. Make a list of important phone numbers, addresses and account numbers. I keep a notebook with page protectors for all of my important documents. My experience with hurricanes is the phone was turned on before power. I was able to get many things done over the phone. Keep some pens and sharpies in there. You may need to write ID on yourself and your children. US Mail may come back before power and phones. You may be able to send a letter before you have phone access so keep some stamps too and a few envelopes.

10. Medication. Ask your pharmacist for an extra labeled bottle and stick a few pills in there to put in your bag. If you use a local pharmacy you may want to transfer a few days worth to a chain pharmacy like Walgreens, CVS, Wal-Mart or Sam's in case you had to leave the area.

11. Food. Stick food in there that does not need preparation. Make sure to eat this food every so often. See what your kids eat and what didn't store so well. My son loves pop-tarts but they crumble pretty badly. I prefer canned food with a pop top lid. We like those small 1 - 2 oz cereal bowls too to snack on. Granola bars with chocolate melt and are messy. See what makes you feel full or not too. One day decide to only eat what is in there. Divide it up into 3 and see if that third gets you and your kids past 2 pm or not. :)

12. Drink. If you have a small child, use some type of drink that they can open without assistance. If they can't twist off a bottle cap use a juice box they can puncture. You could also keep a water bottle that has been opened. Practice with them. I recommended stocking some Kool-Aid singles. In a situation where the National Guard arrives they give out a lot of water bottles.

13. Whistle and Poncho and [Mylar] Emergency Blanket. These are less than $2 each. Make sure your kids know how to blow a whistle. :)

14. Discounted entertainment. When school supplies go on sale pick up some for your children for your bags. I cut inexpensive notebook paper into origami size paper. You can get pens, paper, markers, crayons inexpensively before school starts. Keep the crayons in a ziplock because they can melt. Around Christmas time the dollar store has $1 chess boards, checkers, word searches, suduko, card games and coloring books. This cost more than a $1 but Rainbow Resource Center has some inexpensive instructional books by Dover about origami, drawing, and paper airplanes. I don't have a daughter to use them but I've seen paper doll books too. I buy magazines for 25 centers each from the thrift store for my bag. I rotate these every few months.

15. Bug spray and sunscreen. You want to store this separate from your food. I find this highly discounted at the end of summer. I live in Florida so this is necessary here. You may need blankets from the thrift store or inexpensive warmers instead. :)

16. Discarded CDs. You can use these to reflect light. [JWR Adds: Save those ubiquitous AOL CDs for use in various projects including mirrors for home security, and to glue together front-to-front, and -hang up on monofilament fishing line, to scare marauding birds from your garden.]

17. Chewing Gum and Hard Candy.

Some Lessons Learned

It now seems so easy but at first I had no idea about purchasing small quantities of wheat. I called some of the vendors and had no idea about small cans, had no idea the health food store sold wheat, etc. It really took me years from the time of learning about it to purchasing it because I didn't have the money for 50# and had no idea I could buy it in a #10 can or locally one pound at a time at the health food store. It would have saved me a lot of time had I known those things. I learned about 72-hour kits and low cost things from dealing with the hurricanes.

Here are three web sites that I found useful:

The Prudent Homemaker. I know Brandy from the internet and she eats from her food storage. The nice thing about her blog is she posts recipes that she actually makes from her food storage and garden. She is really talented in making the food look really nice too.

Filling Your Ark. I know Erika from the Internet too and she is just brilliant with food storage and everything else! The PDFs there are great too.

Crockett's Corner
sells the Cookin' With Wheat cookbook and DVD. They are both so helpful to someone new to long term food storage like wheat. It's not just bake bread, bread, bread. LOL.

In Closing
My final thoughts are first don't be discouraged if you have to "use" your preparations too outside of a disaster like you need the food or hygiene items in your 72-hour kit or items in your pantry you bought extra of, for a short-term emergency. I've had to use ours so much and hindsight it's a blessing because I am more educated about what we will use or need. One time was this past January, I remember being so happy about all the canned goods I bought at a Sam's Club [warehouse store]. I was finally prepared again for a short-term power outage. Not long after that I was unable to work due to a short-term illness. So soon we had very little canned food left. I was so discouraged but now looking back I see what was left (that we didn't eat for some reason or didn't eat as much I thought we would when purchasing) and what to buy double or triple of when I could.

Secondly ,prepare to the best of your ability. It's now September and I still haven't been able to replenish even an extra one week canned food supply. Keep learning and educating your kids about self sufficiency regardless of what you can buy or not and you will make better decisions when you do have the means to make purchases.

« Odds 'n Sods: |Main| Four Letters Re: Prepare to Garden Like Your Life Depends on It, by Prepared in Maine »

Economics and Investing:

This piece, sent to us by Damon S., should come as no surprise to SurvivalBlog readers: The Dollar Collapses; Commodities, stocks and foreign currencies all rise as investors sell dollars. As I've stated before, the magic number to watch for on the US Dollar Index (USDI) is 72. The territory south of 72 is terra incognita. "There Be Dragons."

Phil G. sent this: Swiss topple U.S. as most competitive economy

U.S. ‘unlikely’ to recoup auto outlay, panel finds

Lack health coverage? You may pay; "Americans would be fined up to $3,800 for failing to buy health insurance under a plan that circulated in Congress on Tuesday as President Barack Obama met Democratic leaders to search for ways to salvage his health care overhaul."

From Damon: China Moves to Internationalize Currency

Items from The Economatrix:

Rising Commodities Push Industrial Stocks Higher

Oil Pushes Higher on Weakening Dollar

McDonald's Sales Growth Slows in August

A Year After the Financial Crisis, the Consumer Economy is Dead

Economic 9-1-1: Did Lehman Bros. Fall or Was it Pushed?


Ambrose Evans-Pritchard: China, Bernanke, and the Price of Gold

Wall Street to Cash in on Death

« Letter Re: A Practical Use for Post-1982 US Zinc Pennies |Main| Jim's Quote of the Day: »

Thursday September 10 2009

Letter Re: Living in the Time After TEOTWAWKI

Dear Mr. Rawles,
I think there is a blind spot in a lot of preparedness/survivalist writing that I would like to address. There are a number of sites which do a good to excellent job of getting the word out about the nuts-and-bolts of getting prepared to allow a family to get through a short term emergency, and there are sites which encourages us to get a retreat in farm country.

However, I have not seen anyone talk about how we will boot strap ourselves to back towards some sort of village life and civil society[, in the event of TEOTWAWKI].

In your novel "Patriots" , you touch on this with the Troy Barter Faire, and then fast forward at the end of the book to this being an accomplished fact. In the novel "One Second After", the author makes the point that an EMP event could have pushed people back to a 19th century lifestyle, but things were more medieval because no one had the knowledge of how
to live in the 19th century, or readily had the tools.

In a post-SHTF scenario, there won't be much call for fibre-channel administrators, but there will be a demand for bakers and candle makers. What I suggest is that while people are assembling their preps, they also look at the skills and services that they will need afterwards, and see if they can't learn to do these things themselves. After all, if they need them,
so will other people, and some folks will be willing to trade for them. Free trade will be the boot-strap which brings about village life again.

Here's a quick list of skills/trades that I think would be useful in a post-SHTF world.

Food:
Baker
Brewer
Canning fruits, vegetables and meats
Cheese making
Smoking meats
Sausage making
Truck patch gardening
Vintner
Yogurt making

Dry goods, sundries:
Soap maker
Candle maker
Paper making

Clothing:
Seamstress/tailor
Leather worker (shoes, belts, coats)
Weaver

Materials:
Leather tanning
Wool shearing
Wool carding
Wool spinning
Lumbering (the hard way!)
Foundry for smelting recyclable metals

Manufacturing:
Blacksmith
Tin smith
Wheel wright
Cartwright
Cooper (barrel maker)
Leather worker (tack for animal drawn equipment)
Glass blowing (jars, bottles and apparatus)
Pottery

Many of these skills and trades can be started as a hobby. I suggest that people think about these now, and find what they have a knack for and consider it "job security" for the future. - Bear in California

« Letter Re: Prepare to Garden Like Your Life Depends on It, by Prepared in Maine |Main| Letter Re: Living in the Time After TEOTWAWKI »

Letter Re: A Practical Use for Post-1982 US Zinc Pennies

Dear Mr. Rawles,
I was reading the post on Survivalblog regarding "A Practical Use for Post-1982 U.S. Zinc Pennies." You may want to remind your readers that in December 2006, the U.S. Mint announced a regulation making it illegal to melt cents and nickels. While this regulation was obviously aimed at large-scale melters and not us "little guys," the fact remains that the Mint considers the melting of these small-denomination coins illegal, and punishable by up to a $10,000 fine or up to five years in prison.

Of course, the feds won't necessarily know if you or I are melting down coins in our backyard foundries, but it probably isn't advisable to advocate such a practice on your web site. [JWR Adds: For the record, I advocate stockpiling pennies and nickels, in anticipation of a a future change in the anti-melting law.] And how they could possibly enforce this, well it would be nearly impossible. Speaking for myself, and off the record, if I want to melt a penny, the feds can go jump in a lake. It is my money after all. - Mr. Coin

« Often-Overlooked Readiness: Preparing for Joy, by Carla |Main| Letter Re: Prepare to Garden Like Your Life Depends on It, by Prepared in Maine »

Economics and Investing:

The latest weekly commentary and podcast from Don McAlvany: ECOSPASM: Inflation, Deflation, & Stagflation in One

From DD: Is Buffett worried about stocks?

Regular contributor Karen H. sent these news bits:

Currency Crash Possible

Wealthy Families Face Bankruptcy on Real Estate Crash

Dollar Falls to Lowest in Almost Year on Borrowing Costs

Items from The Economatrix:

Lew Rockwell: The Great Fakeroo Recovery

Backlash Against Banks Growing over Mortgage Modifications

Study: 2 Out of 5 Working-Age Californians Jobless

Post Office Closures Threats Adds Woes to Property Market

Reality Excluded (The Mogambo Guru)

Dollar's Fate Written In History

« Economics and Investing: |Main| Prepare to Garden Like Your Life Depends on It, by Prepared in Maine »

Wednesday September 9 2009

Letter Re: Bank Walkaways--Banks Intentionally Not Fully Foreclosing?

James Wesley,
I just read an ad on Craigslist explaining some sad stories for individuals on “Bank walk aways” . See BankWalkaways.com for more. It appears that [some] banks are intentionally not auctioning off properties foreclosed on and leaving the titles (… legal responsibility, liabilities, etc.) in the original record holder’s name. Down the road these vacant properties are vandalized, looted, burned etc., then the city comes a callin’ for the “homeowner” to fund the repairs / demolition. This is outrageous if this is true!

Thanks are hardly enough for the wake up call you’ve given me through your book and web site, but Thank You all the same. This is my first email to your in an attempt to contribute to your great knowledge resource looking out for people. On one hand I hope this is not happening, but if it is I hope you post the wake up call. All the best. - Hal H.

« Odds 'n Sods: |Main| Letter Re: Bank Walkaways--Banks Intentionally Not Fully Foreclosing? »

Economics and Investing:

U.S. Government to Loan Brazil's Petrobras $10 Billion. This supercedes the old offer of $2 billion. Oh, but wait a minute! So if the BHO administration favors offshore drilling in US coastal waters, then why is this money going to Petrobras-Brazil instead of to US companies?

Sue C. spotted this one: Dollar Falls to Lowest Versus Euro in 2009 as Stocks Rally

And from A.C.: Schiff: Rising Gold Signals Inflation

Items from The Economatrix:

Gary North: Deflation, Inflation, Stagflation, Mass Inflation, Hyperinflation: Which One Will Get Us First?

Obama Says US Still Faces Complex Economic Crisis


Federal Reserve Saved Us From Another Depression?
Methinks it is a bit early for self-congratulation...

International Regulators Agree on New Bank Rules


A Year After Meltdown: Tough Questions, Choices


Sears Hits Back at "Inaccurate" Report


Obama Accused of Making "Depression" Mistakes


G-20 May Curb Banker Pay, Profit at Pittsburgh Summit


Obama Offers Steps to Make Retirement Savings Easier
The recession wiped out $2 Trillion in retirement savings. Now they want us to buy US Savings Bonds (with long maturities), just before mass inflation sets in. What sort of fools do they think we are?

BoE May Introduce Negative Interest Rates for First Time in History
. (Japan tried "Super zero" rates. It didn't work for them, and I'm fairly confident that it won't for the Brits, either.)

French Economy Seen as Stabilizing

Russia's Credit Rating at Risk as Era of Deficits Loom

Ruble to Fall 10% by March on Deficit


Fed Imposes Restrictions on Two Midwest Banks

ECB's Trichet Says World Economy Shows Signs of Stabilizing

Bob Chapman: Financial Crisis, US Market Trends

Increased Liquidity Boosts Economic Recovery Hopes

UK Was Hours from Bank Shutdown

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Tuesday September 8 2009

Economics and Investing:

Courtesy of The Other Jim R.: Dollar Will Weaken, Currency Crash Possible, Roubini Says

From FG: More US wealthy opt to surrender their citizenship

Ambrose Evans-Pritchard asks: Does the world have the courage to deal with its debts? "There are three ways out of our mess. We can pursue 1930s liquidation that purges debt through mass default. Such Calvinist destruction cannot be imposed on a modern democracy. We can devalue debt by deliberate inflation. This will backfire as bond vigilantes boycott government debt - unless rigged by capital controls or "administrative measures". You see where this leads. Or we can try to right the ship by paying down our debts, very slowly, by sweat and toil, navigating a treacherous course between the Scylla and Charybdis of the twin-flations, for as long as it takes. This is the only responsible course left we as we face the devastating consequences of our own credit delusions. Are we up it?"

Reader Randy F. flagged this: China alarmed by US money printing; The US Federal Reserve's policy of printing money to buy Treasury debt threatens to set off a serious decline of the dollar and compel China to redesign its foreign reserve policy, according to a top member of the Communist hierarchy.

Items from The Economatrix:

Food Stamp List Soars to New Record Past 35 Million

Biden: Stimulus Working Better than Expected

[Memory] Chips and Beer May Herald Return of Pricing Power

Florida Exodus: Rising Taxes Drive Residents Out


Old Chrysler Defaults on $3 Billion Bankruptcy Loan from Government


US Doles Out Grants for Energy Projects
Projects are in US, but profits flowing to European companies and developers

1.3 Million Americans to Lose Jobless Benefits by Year's End

Mortgage Defaults Shifting to Prime Borrowers


The Government's Cooked Books

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Monday September 7 2009

Economics and Investing:

Sluggish growth in france leading to big trouble. (Thanks to DD for the link.)

Larry T. sent this: Why Default on U.S. Treasuries is Likely, by Jeffrey Rogers Hummel. "Buried within the October 3, 2008 bailout bill was a provision permitting the Fed to pay interest on bank reserves. Within days, the Fed implemented this new power, essentially converting bank reserves into more government debt. Now, any seigniorage that government gains from creating bank reserves will completely vanish or be greatly reduced."

Items from The Economatrix:

Five Weeks on the Brink: Reliving the '08 Meltdown

Brown to G-20: Economy at Critical Juncture

Recession Hits Nest Eggs; US Promotes Ways to Save

List of US Banks Closed by Feds Jumps to 89 (MO, IL, IA, & AZ)

Moody's Ruling is "Landmark Decision" Einhorn Says

US Recovery Leaving Workers Jobless May Spur Company Profits Recovery indicators not boosting paychecks; 9.1 million stuck in part-time jobs

New Jobless Claims Dip Less than Expected Data indicates job market's recovery long, bumpy

Jobless "Traumatized" by Tough Economy

« Odds 'n Sods: |Main| Influenza Pandemic Update: »

Saturday September 5 2009

Economics and Investing:

I found this linked over at TotalInvestor.com: Worst of slump yet to come, says economist; Ann Pettifor predicted a painful end to the good times. Now she says that only radical action can prevent further gloom. Her prediction was right, but it is sad to see that she has bought in to the notion that governments can "spend their way out" of the credit collapse.

GG sent this: Students Borrow More Than Ever for College--25% Increase

FG flagged this Wall Street Journal piece: The Coming Reset in State Government - Governor Mitch Daniel. The governor of Indiana explains why the tax well is dry, and why it will remain dry.

Items from The Economatrix:

Jobless Rate Jumps to 9.7%; 216,000 Jobs Lost in August

Stocks Edge Higher [Thursday] on Mixed Job Reports

Energy Prices Slide as US Sheds Jobs


Chinese Sovereign Wealth Fund Dumping Dollars for Strategic Investments Like Gold

Gold: Separation Before Liftoff


China and the Buzz of a Pending Bank Default

China to Buy First IMF Bonds for $50 Billion

Derivative Contracts In China: Our Loss, Your Problem

Six Million Home Foreclosures: Are FDIC-Insured Banks the Next Time Bomb? (Pt 1)

Top 25 Banks by Loan Portfolio

No Pity For Citi

Mad, Mad World (The Mogambo Guru)

States Shut Down to Save Cash

Poverty Rate Among Older Americans May be at 18.6%

« Two Letters Re: Do it Yourself Low Temperature Casting |Main| Jim's Quote of the Day: »

Friday September 4 2009

Letter Re: Some Economic Indicators to Watch

James Wesley,
I just had lunch today with a senior bank executive in Chicago. He confirmed much of what I have been seeing in the economy. After picking his brains, I have put together a few economic indicators to watch:

- Christmas will be a financial disaster - people are reluctant to spend their cash. Weak sales will be a tipping point for many retailers

- Commercial real estate is the next “shoe-to-drop”

- Small businesses continue to struggle – their problems will broaden and deepen as credit is strangled – SBA loans are off-the-street, defaults may be as high as 50% and growing, banks are not lending (see rutledgecapital.com – banks holding record cash reserves from Fred Reserve)

- Consumer Credit Cards – the second next-shoe-to-drop – Piled high and deep – longer unemployment means people can’t keep up payments

-Bankruptcies increase – especially in construction industry and real estate-related industries

- Joblessness – watch the U-6 column (the BLS report on a more “real” unemployment number.) Unemployment, according to Dept of Labor is over 16.5%

The big imminent threat? Inflation – “too much money chasing too few goods” as Milton Friedman warned. The government printing money, and inventories are falling –[ a classic inflation precursor].

Economic recovery? At least 18-24 months from now. Media reports about "recession end in sight" are nonsense.

Federal leadership is a “nightmare” – making all the wrong moves. Look for higher taxes, inflation, increased joblessness (as small businesses fail).

Outlook? Grim.

Best Advice – Avoid bonds (higher yields which are needed encourage buyers of US Treasurys = lower bond prices)

Avoid stocks – look for a "W" market move – stocks to go lower ([Dow] 3,800, H.S. Dent says) Why? Corporate earnings are very weak.

What to buy? Farmland and ammunition

And remember, I am an optimist.

Blessings, - Jeff E.

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