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Dear Econophile: Advice For the Economic-lorn
I get a number of e-mails from readers seeking advice, usually investment advice. I politely advise them that I do not give investment advice. Last year I received messages of a theme that can be described as folks who felt The Great Collapse was happening. Armageddon and that type of thing.
Here is some correspondence I am excerpting from one of my readers, who will remain anonymous, but whom I think is an exceptional person in his desire to understand what's happening in our world. I recommended to him Henry Hazlitt's Economics in One Lesson, the best little book on economics ever written, and he read it.
With whom do you agree?
From "Travis"
As a member of the Great Unwashed I see no hope that our economy will survive the current parade of fools in D.C. There are two essential ingredients missing. Ethics and economic savvy. So, being a somewhat prudent individual, I am stocking up on food and other of life's necessities. Since my house is not yet paid for, I may need to retreat to mom's house. In the middle of nowhere. There is a survival blog that my wife reads regularly and they have posted several links to news on the economy. Of course, none of it contains anything the least bit encouraging. http://www.survivalblog.com/ Scroll down the page just a bit for the economic news from Financial Times, Telegraph etc.
I'm a slow reader. Last night I finished the chapter on wage laws. That's about 2/3 through [Economics in One Lesson]. I read an interesting piece yesterday on mises.org. Economics vs. Politics. That, together with your post Law of Unintended Consequences, doesn't extend a lot of hope for the future.
The imperviousness of economic law to political law is shown in this historic fact: in the long run every State collapses, frequently disappears altogether and becomes an archaeological curio. Every collapse of which we have sufficient evidence was preceded by the same course of events. The State, in its insatiable lust for power, increasingly intensified its encroachments on the economy of the nation, causing a consequent decline of interest in production, until at long last the subsistence level was reached and not enough above that was produced to maintain the State in the condition to which it had been accustomed. It was not economically able to meet the strain of some immediate circumstance, like war, and succumbed. Preceding that event, the economy of Society, on which State power rests, had deteriorated, and with that deterioration came a letdown in moral and cultural values; men "did not care." That is, Society collapsed and drew the State down with it. There is no way for the State to avoid this consequence—except, of course, to abandon its interventions in the economic life of the people it controls, which its inherent avarice for power will not let it do. There is no way for politics to protect itself from politics.
...
However inevitable the collapse may be, I can't predict how much time is left. 1 month, 1 year, 50 years. Sept. 2008 was somewhat of a wake-up call. But the vast majority have gone back to sleep.
From Econophile
I’ve seen the survivalist groups come and go during all economic cycles. And never has there been the Armageddon they envision. Their rhetoric is always the same.
It won’t happen here.
I can recall the in the late ‘60s and early ‘70s when I first got into free market ideas there were the same types then and I have to admit it made me a bit paranoid. Mostly fantasies of “what if.”
So I would take this stuff with a grain of salt and get on with your life and make the most of it. There is always opportunity even in the worst of times. You are obviously a bright guy and can think for yourself, so I am confident you will do well in any situation. But, heading for the woods? No.
From "Travis"
I was admiring your glass half-full optimism that seems to emanate from your writings on The Daily Capitalist. Personally, I'm a glass half-empty sort. An unfortunate inheritance from my late father. Then, lo and behold, I saw some cracks in that optimistic armor in your last post. Perhaps I'm reading more into it than I should. I think that if Econophile is forming a pessimistic view of the coming year, then I really need to kick the survival prep into a higher gear.
...
If indeed you are concerned with the activities in Washington and have had enough like the rest of us 'right-wing extremists', I leave you with a quote from H.L.Mencken ...
Every normal man must be tempted, at times, to spit on his hands, hoist the black flag, and begin slitting throats.
[I love Mencken.]
From Econophile
I guess I can’t change your mind.
I don’t see holocaust or Armageddon. Even during the Depression, most people did "OK," just not great. My mother didn’t even remember it well other than she said my father’s business wasn’t good. He was a lawyer in a small firm -- far from "rich." At the worst period of the Depression unemployment was 25%. Things then were much worse than today and there weren’t roving gangs of armed hungry people trying to take food by force, nor was the government seizing food production and handing it out to starving masses.
Things are different now. Look at France, Germany, the UK. More controls than here, but pretty good places to be. I'm not saying they are better than the US, but, all in all, nice places. Again, if you are a half empty guy, I’m not going to change your mind. But … you have to see opportunity regardless of what is happening in the rest of the world. We’re not Somalia nor are we France.
One of my immensely successful friends, a name you’d recognize, teaches a class at several universities on entrepreneurship. In the last class I attended the students, all bright kids looking to be their own bosses one day, were complaining about the economy and how they didn’t see a way ahead. My friend laid into them: “Let’s have a pity party! Let’s give up! I don’t think I’m getting to you guys. Why am I teaching this class to a bunch of losers!” He, pointed out, after his tirade, that there are many ways to get ahead … today. He ticked off a number of opportunities.
If I were looking for something to do here in SoCal, I would be buying homes from banks, putting in cosmetic improvements and flipping them. I’d do as many as I could until the opportunity runs out … knowing that it will. If I didn’t have the cash for the improvements, I’d do it myself. Sweat equity. You get my point?
If you want to run for the hills, if that makes you feel better, OK. But, your time would be better spent figuring out how to cash in from what is happening now.
Travis, I don’t know what’s going to happen. If things go worse in the economy, it won’t mean an “Escape From NY” scenario. I think the recession will be drawn out, as you know. But, so what. Obama isn’t going to seize your property and your guns. Get out of survival mode and get into success mode.
What do you think of my advice to Travis?
»
Ammo as the new currency. Damn, I do live in a 3rd world country. Probably a lot more insecure than the US, a lot more prone to angry mobs prowling the streets when economic crises hit; all in all and I never had or even needed a gun. In fact, I've been robbed at gun-point at least twice, and still feel no need in owning guns (in fact, if I had a gun during those times I'd have been dead by now). I guess it's that All-American gun fetish that's gonna turn a probable "hungry mob" into a very much armed hungry mob, with all its consequences. You reap what you sow.
My main criticism is that the person has limited resources available and the suggestion was to engage in speculation. He indicated that his position is such that he may lose his primary residence already. The only way a person like this could attempt to speculate on foreclosed properties is to extract equity from the primary residence where his family lives. Gamblers know that they should not gamble when they can't afford to lose.
The SoCal property market is up to its eyes in the cosmetic flip jobs that are still smoldering from the crash. Walk into any slave shack and it's got granite counter tops and such. Prices may be turning around, but I don't think so. The capital gains would be very risky because he would need to hold onto his property for at least two years and the prolonged depression will probably feature more asset price deflation. If during that two years he has a problem getting a renter in there, he is facing foreclosure, and is going to be deeply underwater on his primary residence.
He needs to worry about his necessities for survival since he is a man of modest means. And by survival I am not talking about pork'n'beans in the woods. Getting the financial situation straightened out to where his house is secure would be very good. Transferring secured debts onto unsecured lines of credit is a good thing too. Get any student loan stuff off of student loans in case default becomes desireable. The gov't never forgives student loan debt even in bankruptcy. Keep the cars and vital possessions safe from creditors.
If he suddenly becomes unemployed and unable to make the mortgage, he may be able to pay off his house in one shot with credit cards if his home loan is down far enough. Then go ahead and default the banks on the credit cards and keep the house his family lives in.
Its true that there are tremendous opportunities during depressions because of price deflation, but for a guy without capital to invest he has to build a financial base of operations first to where his family is in a secure economic situation. After that, then aggressive and brave investing will benefit a smart guy when there is blood in the streets.
I think that teacher gave the kids a TERRIBLE MESSAGE.
"There are lots of opportunities today" sounds to me like: "Don't change the system, don't struggle to reform it, or make it just, play the game with every one else"
Flip houses knowing it will come to an end, but not knowing when it will come to an end? Terrible idea. Basically asking people to volunteer to be the "Greatest Fool" (nevermind merely a greater fool)
Exactly what do all the people who tote guns think that will achieve in the event of a meltdown? A bunch of redneck yahoos in bunkers shooting anyone they think covets their canned goods hardly constitutes the defence of the nation against oppression that the Founding Fathers wished to provide for. That is just defeatist crap.
You call China undemocratic yet you put up with the Same and More of The Same from one of two parties year after year. You think Jefferson would be impressed? Christs sake, how about some independent thought and action to challenge the Washington Kleptocrats? it doesn't matter whether they call themselves red or blue, they are Them to each other and to Them we are nothing.
Ever heard of a little joint called Argentina? It seems that try as one may to communicate the fundamental necessity for the people's solidarity to resist the depredations of the elites and restore economic justice and etc., there are just these pockets of retrograde types who never absorb the message, and see breakdown in the state's control as an opportunity to fleece their comrades. These counterrevolutionary types seem never to assimilate the quite rational argument that resorting to the use of firearms to rebalance wealth within, rather than between, classes is counterproductive and, well, defeatist.
And as luck would have it, the longer a crisis continues the more these retrogrades seem to resort to such defeatist tactics, and the more bold and creative they become in finding ways to employ firearms in further interclass wealth redistribution. c.f. Argentina, above. And they ain't even got no second ammendment.
Ever heard of a little joint called Argentina? It seems that try as one may to communicate the fundamental necessity for the people's solidarity to resist the depredations of the elites and restore economic justice and etc., there are just these pockets of retrograde types who never absorb the message, and see breakdown in the state's control as an opportunity to fleece their comrades. These counterrevolutionary types seem never to assimilate the quite rational argument that resorting to the use of firearms to rebalance wealth within, rather than between, classes is counterproductive and, well, defeatist.
And as luck would have it, the longer a crisis continues the more these retrogrades seem to resort to such defeatist tactics, and the more bold and creative they become in finding ways to employ firearms in further interclass wealth redistribution. c.f. Argentina, above. And they ain't even got no second ammendment.
Maybe Obama is our black flag
Hope for the best, prepare for the worst. Act as if tomorrow will be terrific but be ready if it is not. When you carry a weapon you don't go around acting as if you are going to have to use it. You merely pay attention while you are living your life, laughing, loving and getting on down the road. You may never need your weapon but it is always nearby.
a supply chain meltdown would turn half of us into cannibals, you fools!
logical thought by Travis, illogical reasoning by Econophile. more than one outcome should always be anticipated. also, my guess is that Travis has children and Econophile may not.
Ground Hog Day (the movie): This has been the favorite cultural metaphor for Bernie Schaeffer, concerning the upcoming economic collapse. "A long cold day, for the rest of your life.."
Being a student of these things, I would marry that to another film call it A Long Cold Days Journey into Night, seems more than likely. Last year the American people voted for a man with a fairly thin resume, an outsider, like most of the Presidents before him, Carter, Reagan, Clinton, Bush II. They were all governors, most from small states, outside the Washington beltway.
Obama ran on the platform of change, but so far change has not been forthcoming. (It may be that American people recognize the status quo is what they really want, they want to keep what they have, not lose it, and change became the marketing slogan: Change from the radical policies of Bush, change back to the status quo..)
Years from now they'll call this next age the Age of Paralysis. Too bad, because economies are like sharks, they have to keep moving or they die. There may be an economy out there which functions perfectly on zero growth, or equilibrium, notice how those terms conjure up conflicting images?
Greenspan thought he could achieve equilibrium at about an 8% annual return in the S&P, through controlled money growth but once the investors saw the bid under the index at 8%, they quickly leveraged it out to the far distant future, and it collapsed under its own weight.
Now we still have equilibrium as the mantra, but 0% returns on the stock market seem more likely. It becomes increasingly hard to promote economic growth one way or the other, while maintaining stable prices (mission of the Fed)
The fallout of the economic slowdown is a drop off in new technologies, and as McLuhan says, there is really very little new technology, just ways of better using the technology we already have. Technology always solves one problem while it creates another. New technology solves the side effect of the old technology. Here's a car drive over there and talk to them. What, have you seen the traffic? Here's a phone, just call them instead. And wait hook your computer up to the phone, and do some shopping while you're at it.
As the rate of techological development slows, the previous side effects from the last technology go untreated, and eventually society collapses into a more holisitic form of government, and economic development. By 2050 they expect 1/3 of all Americans will have diabetes? The processed food business and lack of physical exercise is mostly to blame, but the drug companies are already working on a cure. Suppose that day comes, and the cure doesn't arrive?
A long cold day, with a endless parade of ineffective leaders repeating the same mistakes, that's what we have to look forward to. Real technology will continue, and this time the changes will render all the existing political, economic, and social institutions irrelevant. Food, clothing, and shelter will be ubiquitious, and pretty much free, imagine what that does to the politics of programmed conflict, religion, and nationalism, not to mention the value of those old John Lennon records. But it might take a thousand years.
Meanwhile the biggest casualty in our immediate future is the corporate structure, which in business and government means long supply lines, large fortifications, and a constant stream of tribute. (sounds familiar?) The economic slowdown is a guerilla war against the corporate model of uniformity projected around the globe. It will take a long time, but smaller regional models will replace the big box stores, and the federal government.
Finally the doom and gloomers are certain that it will end in the police state, the whole planet turns into a gulag. Just the opposite is what you should worry about. When the riots start you will wonder, where are the cops? (They were laid off last year in the last round of budget cuts)
So we need be a bit more self sufficent, and a lot more social, we need to know our neighbors. The economic unwind will probably be a lot slower, and staying in the game of diminishing returns is hard, and the long term trend is down. A long cold day for investors....
the "police state" scenario will never happen. the US does NOT have anywhere near the enforcement capacity needed to sustain martial law.
further, the notion that average americans will call/rely upon "the cops" is fiction. the average american does not like cops and distrusts them as much as any criminal threat.
this is why the "public safety" tax extortion being attempted now in states/counties across the country is BACKFIRING...
bureaucrats: "you serfs better pay more taxes or else we will layoff all the cops and public safety will suffer!"
public: "perfect. start those layoffs ASAP. we can take care of ourselves."
We should never lose sight of the fact that there are numerous methods of conquest, one of which is economic conquest.
On the plus side, I love the idea that after years of power hungry individuals flocking to the police service, the poor choice of personnel may backfire in a big way.
My only concern is that those former law enforcement are most suited to the forming of gangs. Gang mentality, trained in using weapons and intimidation.
I don't like the idea of anyone losing their pension, but I dislike the idea of working to pay someone else's pension even more!
The news reports of public sector employees sacrificing raises and pensions better come thick and fast. It is only once we are all in the same boat together than we can unite and act as one.
That will change as soon as Northcomm can make the arrangements and transport. Remember they have 48,000 active duty who theater of operations is North America.
It has happened in the past. Google '68 Riots and learn about Baltimore and how various active duty units put boots on the ground and cleared the streets with additional Military units on standby to drop into the zone. I was there. The damanged streets can still be seen today, in the form of vacant lots.
Earthquakes, hurricanes, floods, tornadoes. Where do you live?
Good job if you are not exposed to any of these. Do you have supplies for ten days? Remember Hurricane Katrina or the 1906 earthquake? If any of the major faults in California open up, the dead will be numbered in the hundreds of thousands. The government will not be there air dropping snacks in your neighborhood. You couldn't evacuate from Houston during Hurricane Ike because there physically are not enough roads. Large urban cities only have one week of food on hand
If you have supplies for ten days, you might as well tack on an extra week. If you don't have ten days supplies & live in areas subject to natural disasters you are a fu*king idiot IMO.
Don't tell your neighbors you have supplies and keep a decent medical kit on hand (including suture kits & QuickClot).
Being prepared is responsible. Odds are a lot greater you will get hit by an earthquake than some Mad Max scenario but if you are prepared for one you are prepared for the other.
Arch Crawford is ringing a bell ...
http://anonymousmonetarist.blogspot.com/2010/01/star-gazing-market-razing-knowledge.html
'The year ahead appears to us to contain the most powerful planetary alignments in centuries, not just decades....It would be considered a ‘done deal’ or a high probability that World Markets will Crash again during 2010....We will do everything but guarantee you that stocks will crash worldwide within three months of August first (that is between May 1 and November 1)'
Just to throw this further 2-cents in, I strongly advise all adults between the ages of 18-42 to at least CONSIDER joining a branch of the military reserves or state national guard, not simply to get training, but to be "on the inside" should national deterioration procede at a faster pace than I foresee.
Hey... if not that... then consider joining your local volunteer fire department, police auxiliary, or ambulance squad.
Separate yourself from the herd.
BILL
Are you suggesting that having armored deliveries of MRE's and water is preferable to "shooting it out" amongst the starving masses, or to relocating to the hinterlands to "live off the land"?
There might be something to this...
(*WINK*)
Yep. Something like that, Selah.
BILL
I like the herd analogy and I know you mean well. I'm shifting my approach on this.
Wild populations have a herding mentality because it works to their advantage. Many eyes and ears contribute to a group consciousness that is ever alert and wary of unseen potential dangers. If you watch them long enough, you will notice that while some are feeding or resting, a few easily agitated members remain alert, ready to sound the alarm.
We are the nervous ones. Heck, the wolves are circling. There may not be a single leader to galvanize the growing unrest, but folks like you are contributing to the well being of the herd. You aren't separate from them. Eventually the sleepy ones will wake up and realize what it was that had us all stirred up. Until then, we need to keep sounding the alarm, stir up more of the herd, and hopefully a critical mass is reached and we can move collectively to affect change.
Join or start a local militia instead, just like the "good old days" when people actually knew their neighbors and the government still feared the People. They can do the fire, police, and ambulance, teach you everything about civil defense, bake cookies, and keep the politicians in check.
I know what you're saying, but isn't that contrary to your post? ;-)
The problem is short and long term. Short term we do not know if there is going to be a significant economic dislocation which involves supply chains. We do not know if our job we commute to daily will be there either. Longer term, we do not know if what we think about investing to pay for retirement is prudent. To reconcile short and long term issues requires thinking about ultimate goals. If one intends to work twenty years more, living where one lives, doing what one does to earn a living then one ought to plan according to this scenario. Look at the what if's and think them over. If on the other hand one is weary of the grind and has the money and the option to walk away and live for perhaps forty years more-where ought they go and what ought they do? It is a no win situation. We are hostages to civilization such as it is. If it goes down, we go down with it. This is in a good or bad economy.
Buy properties in SoCal and flip them? Oh_My_God. I simply cannot believe you're advising such a reckless act. I hope "Travis" doesn't listen to that advice. I somehow doubt that he'll buy into that idea, and good for "Travis" if he doesn't.
Save your money; put it in a local bank or credit union with high ratings; buy some Gold and Silver and keep it close; pay off your mortgage; pay off all debt and learn to live entirely debt-free. And, did I say, save your money?
Oh, and get out of the Equities Casino and fuhgeddaboudit forever. You don't have to move to the woods to be independent. But you do have to think about your basic security and housing needs and stop being suckered into wasting your assets in the market.
But buying properties and flipping them in Southern California is simply ludicrous. No one in SoCal has any money; the state is bankrupt. Business is moving away; who would buy properties in such a climate?
Part of what keeps the survivalist mentality alive is the study of history. For example, after the Roman Empire collapsed, there is an approximiate 200-year "blackout" in the historical record. By definition, we don't know what happened then, but it was likely unpleasant. Ditto for Germany prior to Hitler -- few would have predicted his rise to power prior to it happening. It still seems hard to believe that someone that atrocious actually led a major country. I couldn't understand it until I learned about what kind of economic disaster Weimar Germany had just been through.
Note: I'm not in the survivalist camp, but I think it is prudent to be prepared.
"time would be better spent figuring out how to cash in from what is happening now".
How is this any different than gourging on the flesh of humans in an Armageddon event? The homes you'd be flipping are peoples dreams. Families lived there. You would be benefiting from their loses. This advice is no different than the local pastor saying God is the only way, again.
dude, put the spliff down and consider the fact that those people couldn't afford to be in their houses to begin with, and that is why they are not in them anymore.
"you would be benefiting from their losses"...give me a break! so should the houses be empty forever?? i'm not saying i think this house-flipping is a wise endeavor, and trust that i won't be participating, but price discovery is not a predatory process. it is natural. frankly the people whose dreams are being flipped, as you so righteously put it, benefited from the losses of all of us who as taxpayers are now proud owners of the securitized liar/ninja loans they got. not to mention the losses of many foreign municipal pensions in countries that i am sure you are quite fond of.
as for econophile's advice being no different from the local pastor...i'm not sure i understand the connection but maybe you can enlighten me
Ha ha, funny. Do you really believe that "those individuals couldn't afford to be in their houses?" Aren't you demonizing individuals for chasing the "American Dream"? Couldn't there be other causes like economic collapse at play here instead of supply and demand? Does the term financial innovation mean anything to you? Do the acronyms CDS, MBS, CDO mean anything or commodity bubble or boom and bust of the shadow banking system. How about lack of financial regulation? Seems a little more complicated
I'm no expert, take econophiles recommendations by all means, to exibit more of the same behavior though nothing has changed is symptomatic of how we got here. Clear this up for me if you'd like. And yes, I'm referring to econophiles advice as the same old religion as the answer to all problems.
Golly gee the Zero Hedge readers are a practical lot.I agree, why not have some insurance? And why not learn some new skills? I doubt a Mad Max scenario, but a bit of disruption is a possibility. And if we all believe that we're going to see higher inflation, starting a pantry now will be a savings.
Lots of paranoia here, people talking like they are getting ready for a cat 5 hurricane that is 3 weeks away.
All systems are manageable by a team of intelligent and dedicated people. No system is manageable on its own.
There is truly no hope for managing a system like the economy if only 17.5 % of the eligible voters in this country cast a ballot each and every time there is an election.
We have had a year to get ready for 2009 Hurricane Seasn. We have had a year and half to prepare for this winter and associated ice storms. We have had two years to get ready for a terrorist attack against the railroad tanker gas cars.. like Chlorine. We have had three or more years to think about the best path to get ready for anything, up to and including the old dusty cold war nuclear survival.
Let's say that we aint have NOTHING except a gallon of milk a few days food, half tank of gas just like the thousands of people in my area do right now. And a hurricane showed up.
Then you have thousands of people stripping stores bare, gas stations running out and all kinds of fun.
No.
All such a event will require is constant observing of availible NOAA data online and when it is determined by the models that such a storm is about.. 3 days away and will strike (Including windfields of 40 knots or greater) we are so outta here.
Getting out will throw 4 bags full of 1 weeks per person supplies, one month's cash and gasoline sufficient to travel one month independent of any gas stations.
It will take us 30 minutes max to get out.
Not like the days or weeks it will take thousands to get out after properly preparing.
They dont have the time, money or effort/desire to get ready while we are in peace time.
The Book says that everyone laughed at Moses while he built the Ark in fine weather.
Not anymore.
No one is laughing. At least the few smart neighbors I still have. All others will need FEMA, Government, Military and Law Enforcement management if not gangs of zombies hungry and roaming for food or whatever.
We wont be here when that day comes.
Paranoia, huh?
(*SNORT*)
Not to be argumentative nor rude, but you don't "get out much," do you, Waterdog?
Do you have ANY conception of the kind of conditions literally billions of your fellow humans live under? I'm talking TODAY... right now... January 12, 2010.
I'll let other refer (quite logically too!) back to the collapse of the Roman World or the Weimar Republic which gave way to the Nazi Reich (yeah... white people... educated, "civilized" Europeans...) or Hutus vs. Tootsies or the former Yugoslavia or the Mexican border...
(*SIGH*)
Yeah, Waterdog... it could NEVER happen here. I mean... it's not like anyone would ever burn down Watts... and God knows only a "paranoid" person could conceive of, say, Newark (you know... that city across the river from Manhattan) experiencing... er... civil unrest...
Am I making my point, WD?
I'm just guess that the folks who post here at ZeroHedge represent a certain... umm... highly educated, motivated, successful demographic. The fact that so many of us are on the same wavelength with regard to this thread shows not "paranoia," but rather that there's a whole frigg'n lot to be worried about.
BILL
No, the fact is it will happen if running and hiding in a cave with 2 months worth of food and enough ammunition to kill 200 to 300 people is the solution to the problem.
As far as the Mexican border, wait till the Mexicans can no longer sell oil on the open market and their entire system collapses in 2013 because the revenue source they have lived on the past 25 years is gone. Guns? you might as well shoot yourself. No one will be able to kill all of the Mexicans that will flood into the US in 2015 looking for food and shelter.
Oh, did I mention food? The present you say. Food riots all over the world today. People being killed for a loaf of bread.
Do you make your point? NO. You have no point. But you have a lot of emotion that is needed to join the paranoia club.
As far as the people who post here, not all of them have a lot of sense, but they do try their best to support the site, which is appreciated by all. But are you talking about people who comment here? Most of them lack the sense of humor needed to be clever enough to put a single thought together that is worth reading.
However Bill, I want to thank you for replying to my thought. At least you did not take the coward's way out and hit the junk flag. I do not mind if you shove my thoughts up my butt.
As far as getting out much, no I do not.
even if there is a solution, the confidence, that it will be implemented, before things get way bad, is low. churchil, said that americans will do the right thing, after they've tried everything else.
good advice: cash in on what's happening now
why not stockpile a little survival crap in case of melt down? it's like buying insurance.
you don't have to be a pessimist or optimist, just be practical in light of the fact that we're all under the thumb of a very stupid mob-led government.
I believe, that a stockpile of emergency supplies, could be a winning financial investment, if the situation, doesn't go full mad max. chinese goods, like generators, solar panels, compressors, a rototiller, golf cart, scooters, etc, will only go up in price, possible easier to barter, or sell, tham pm's. theres no way we will be able to aquire these items in the future, at current prices. and the dollar, aint getting any stronger.
I'm a child of a depression-era born gold bug. It's completely appropriate to maintain insurance policies of all kinds.
almost everything you list here is gasoline-dependent... which tells me that while you "get" the big picture, you absolutely do NOT "get" the details.
if things become difficult (social/economic systems breakdown), gasoline will be expensive, as will electricity, assuming that one can even take physical delivery of either.
folks that are serious about self-reliance need to look a little more deeply into their lifestyle and the modern infrastructure that supports it. a root cellar full of dry/canned goods is one thing... the ability to heat/power a home is something else altogether.
homestead-level electricity and fuel production will be the pillar of self-reliance around which the garden, root cellar, craftsman skills, etc. revolve.
An apocalypse scenario must include a little bit of the John Paulson economic stragety.
He of the multibillion dollar fortune made by going short bank stocks and other short options in CDS's. and MBS's in 2008.
A scenario like that playing out again, would require buy of a sizeable put on the economy of sufficient proportions to provide more than enough money to get out of the cities and head for more serene and self-sustaining environs.
Paulson is taking massive positions in gold. See: Whither Gold.
thanks for clearing up who john paulson is for all of us
Emotions aside, just facts (not govt stuff)
8 million jobs were lost in just over the last year
Homes are still foreclosing at the rate of 300,000 a month
Alt-a's and Comm RE are entering a hightening of defaults
Credit is again tightening, commercial credit is down for the last 6 weeks or so, same in Europe
Consumer credit dropped a record 17.5 billion bucks last reporting month.
Govt tax intake is dangerously down (see job losses above)
Real unemployment is over 20% and not getting better.
All govt programs have failed, 3% success is failure.
7 or more million homes are foreclosed and not on the market as banks hold them back for better prices. Not.
Central banks are now buying gold rather dramatically.
State governments are entering Hotel California one by one.
The "too big to fail" banks are in no better shape than two years ago due to "black hole" bailouts.
That's enough.
The social costs will be greater than all the above.
I guess Mogambo was right in the bunker building concept.
It's going to be very tough.
Good summary, but that doesn't mean a collapse of civilization. It does mean a more prolonged recession.
+10 on all of the above points; and I feel that the environmental cost will ultimately be the greatest of all. The time will come when westernized countries will not be able to maintain an adequate workforce due to rampant illness & disease - both mental & physical. Two quick examples:
- The last 6 people I know, or read about, who were diagnosed with lung had never smoked - ever.
- Two other folks I know, who developed cancer, are vegetarians who mainly eat organic foods.
And cancer may be the least of our worries - statistically. Point is, we have long past critical mass for biological toleration of the mass of pollutants we expell & ultimately consume.
Its actually easier to make money now than before -
instead of "by on the dips" its "sell on the rallies"
there's a long term undulating downward slope ahead. markets force prices down, governments force a partial retraction (bear rally).
use your profits to buy stuff from china and machines from japan (while you can still get them). stock up on storable foods and learn how to garden.
yes, its entirely likely that the just-in-time grocery store supply chain could break down. but can't you just have a few chicken? do you really need imported brie?
900 watt chinese, emergency generator $99
Ni hao! Yes chickens. No melamine. Nice try. How is Beijing these days?
If a breakdown in JIT foodstuffs occurs, the only place to be is on the farm. Almost our entire society depends on that system working perfectly - it's the scariest scenario to contemplate outside of NBC warfare.
In my view, there are no long term trends because we've experienced misallocation of capital for a generation. I'm waiting for when it hits the fan to formulate an investment thesis because today's opportunities won't matter in five years.
I like your idea of getting off your ass and making something happen but remodeling homes in SC is a terrible idea. Why? Because suburban living is extraordinarily expensive in terms of upkeep, maintenance, taxes, and transportation costs. I think a better idea is to fix up cheap inner city properties because the expense of the burbs will necessarily force a reverse diaspora. The only reason I don't invest my capital on this idea is that I don't know where people will amass in the future.
I know people who are doing this right now and making $10K to $25K a pop. It's driven by falling prices and the tax credit. At some point it will end, so when I say "flip" I mean a less than one month turnaround. Good luck!
There's also the massive tax and cost of living costs associated with SoCal. I wouldn't put a penny into that sinkhole, but if Econophile wants to play that's cool. Personally, I envision SoCal as being one of the places where Mad Max 2011 could conceivably play out.....WATS, Rodney King, etc -- social unrest seems to ignite quicker out that way.
the good weather in southern california, reduces energy consumption, the amount of fairly well off people, will make it a desireable place to preserve, plus the naval fleet is based in san diego, san onofre, is a candidate, for a new reactor.