Guest Post: How To Find Shelter From The Coming Storms?

Tyler Durden's picture

Submitted by Charles Hugh Smith from Of Two Minds

A Reader Asks: How to Find Shelter from the Coming Storms?

Some basic suggestions for those who are seeking shelter from the coming storms of global financial crisis and recession.

Reader Andy recently wrote: "I look forward to your blog each day but am still waiting for your ideas for surviving the coming crisis." Andy reports that he and his wife have small government and private pensions, are debt-free and have simplified their lifestyle to survive the eventual depreciation of their pensions. They currently split their time between a low-cost site in North America and Mexico. They are considering moving with the goal of establishing roots in a small community of life-minded people.

Though I have covered my own ideas in detail in my various books (Survival+: Structuring Prosperity for Yourself and the Nation, An Unconventional Guide to Investing in Troubled Times, Why Things Are Falling Apart and What We Can Do About It and Get a Job, Build a Real Career and Defy a Bewildering Economy, I am happy to toss a few basic strategies into the ring for your consideration.

Let's start by applauding Andy for getting so much right.

1. Don't count on pensions maintaining their current purchasing power as the promises issued in previous eras are not sustainable going forward. I've addressed the reasons for this ad nauseam, but we can summarize the whole mess in four basic points:

A. Demographics. Two workers cannot support one retiree's pensions and healthcare costs (skyrocketing everywhere as costly treatments expand along with the cohort of Baby Boomer retirees). The U.S. is already at a ratio of two full-time workers to one retiree, and this is during a "recovery." the ratio in some European nations is heading toward 1.5-to-1 and the next global financial meltdown hasn't even begun.

B. The exhaustion of the debt-based consumption model. The only way you can sustain a debt-based model of ever-expanding consumption is to drop interest rates to zero. But alas, lenders go broke at 0%, so either the system implodes as debtors default or lenders go bankrupt. Take your pick, the end-game of financial crisis and collapse is the same in either case.

C. Printing money out of thin air does not increase wealth, it only increases claims on existing wealth. An honest government will eventually default on its unsustainable promises; a dishonest government (the default setting everywhere) will print money to fund the promises until its currency loses purchasing power as a result of either inflation or some other flavor of currency crisis.

In other words, the dishonest government will still issue pension checks for $2,000 a month but a cup of coffee will cost $500--if anyone will take the currency at all.

D. Pensions funds are assuming absurdly unrealistic returns on their investments. Many large public pension plans are assuming long-term yields of 7.5% even as the yield on "safe" government bonds has declined to 3% or 4%. As a result, the pension fund managers have taken on staggering amounts of systemic risk as they reach for higher yields.

When the whole rotten house of cards (shadow banking, subprime everything, etc.) collapses in a stinking heap, the yields will be negative. As John Hussman has noted, asset bubbles simply bring forward all the returns from future years. Once the bubble pops, yields are substandard/negative for years or even decades.

Pension funds that earn negative yields for a few years will soon burn through their remaining capital paying out unrealistic pensions.

2. Lowering the cost of one's lifestyle. It's much easier to cut expenses than it is to earn more money or squeeze more yield out of capital.

3. Establishing roots in a community of like-minded people. Though it's rarely mentioned in a culture obsessed with financial security, day-to-day security is based more on community than on central-state-issued cash--though this is often lost on those who have surrendered all sense of community in their dependency on the state.

The core of community is reciprocity: before you take, you first have to give or share. Free-riders are soon identified and shunned.

My suggestions are derived from this week's entries on the inevitable popping of credit bubbles, the unenviable role of tax donkeys in funding corrupt state Castes and the Great Game of Elites acquiring essential resources with unlimited credit issued by central banks, leaving the 99% debt-serfs and/or tax donkeys with neither the income nor the credit to compete with Elites for real resources.

4. Lessen your dependence on anything that requires debt and assets bubbles for its survival. Whatever depends on expanding debt and asset bubbles for its survival will go away when credit/asset bubbles pop, which they always do, despite adamant claims that "this time it's different." It never is.

5. Control as many real resources as you can. These include water rights, energy-producing or conserving assets (solar arrays, geothermal heating/cooling systems, etc.), farmland, orchards and gardens, rental housing, and tools that you know how to use to make/repair essential assets such as transport, housing, equipment, etc.

6. It's easier to conserve/not use something than it is to acquire it or pay for it. As resources rise in price, those who consume little will be far less impacted than those whose lifestyles requires massive consumption of gasoline, heating oil, electricity, water, etc. It's as simple as this: don't waste food, or anything else.

7. The easiest way to conserve energy and time is to live close to your work and to essential services/transport hubs. Those who reside in liveable city neighborhoods and towns with public transport and multiple modes of transport who can walk/bike to work, farmers markets, cafes, etc. will need far less fossil fuel than those commuting to everything via vehicle.

8. If you can't find work/establish a livelihood, move to a locale with a better infrastructure of opportunity. I explain this in Get a Job, Build a Real Career and Defy a Bewildering Economy, but John Kenneth Galbraith made much the same point in his 1979 book The Nature of Mass Poverty.

9. If you buy property, do so in a state with Prop 13-type limits on property tax increases. We have no choice about being tax donkeys, but choose a state where income and consumption (i.e. sales tax) are taxed rather than property tax. You can choose to earn less and buy less, but you can't choose not to pay rising property taxes.

10. Be useful to others. That way, they'll want you around and will welcome your presence. There are unlimited ways to be helpful/useful.

11. Trust the network, not the state or corporation. Centralized systems such as the government and global corporations are either bankrupt and don't yet know it or are bankrupt and are well aware of it but loathe to let the rest of the world catch on.

12. Be trustworthy. Don't be morally corrupt or work for corrupt/self-serving institutions. Many initially idealistic people think they can retain their integrity while working for morally bankrupt, self-serving bureaucracies, agencies and corporations; they are all eventually brought down to the level of the institution.

Lagniappe suggestion: lead by example. "Setting an example is not the main means of influencing others; it is the only means." Albert Einstein

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LawsofPhysics's picture

Le me be clear.  There no, not will there ever be a political or monetry solution to resource scarcity.

A decent list, but you will need to defend your community, property, and essential assets with deadly force.

hedge accordingly.

Gaius Frakkin' Baltar's picture

This is no mistake:

They are testing the waters to gauge public sentiment for a draft. Probably another DARPA project.

LawsofPhysics's picture

Crap, now I can't proofread the post.  That should be "Let me be clear, there is no, nor will there ever be".


Perhaps, but I think people are wise to such things now. Those vietnam vets and protesters are still very much alive.

lordylord's picture

If we ever step out from under the umbrella of government, we would soon find a sunny sky above our heads.  The storms were made up to keep us in their control.

Keyser's picture

One thing Andy got right was establishing a part-time residence outside the US... When the SHTF, I don't want to be anywhere near the US... 


Liberal's picture

Trust the government and let's all go to FEMA camps! What could possibly go wrong?

oldschool's picture

Right, because Mexico will be a utopia.

RafterManFMJ's picture

I bought a mud hut in Uganda; payments are low. I'm hoping I don't stand out too much from the locals.

JenkinsLane's picture

Whatever you do, don't "black-up" in order to avoid standing out because doing so would

mean you are a racist.

Save_America1st's picture

ah, good one....nice dual meaning there. +1 extra

CheapBastard's picture

I believe it will get much worse. For example, I heard on NPR today that 1/3 Eye-Rack vetereans are on more then 10 prescription medications. 1/3?! He said they were everything from "powerful pain killers" to "anti-psychotic drugs." The poor condition of the VA health care system tells me their future is not too bright and neither is the health of our society.

Government needs you to pay taxes's picture

Have you seen the statistics for Rx drugs consumed by the French?  It makes what your panties are in a twist about look like a church bake sale.

booboo's picture

you do have the "machette accident" and "eaten by war lord" riders on your life insurance correct.

Jerk_Store's picture

I bought a mud hut in Uganda; payments are low. 


And you can refinance the ARM just before the rates jump

TheAnswerIs42's picture

Actually, it's not that bad there. Wife used to run a microbio lab in sunny downtown Kampala for 4 years.

Rented a nice place from a retired UN official and bought a beatup used Toyota Corola to get around town.

Worst experience was coming home to a Cobra snake in the living room, nothing like getting a sh*t scarred call like that at 2AM...

Besides the gardeners all the places came with armed guards...

Once a group of local baboons got pissed off when one of theirs was killed by a car and blockaded the local highway.

B Power!

Best story was about some German idiot who lost his arm because he was driving with it hanging out the window with a Rolex on it...

Other than that she had a relatively good time (besides working 15 hrs/day and constant power failures), was invited to several weddings up country and saw the great apes in Rawanda (as well as their genocide memorial...)

Although she is white, she never, ever gave any indication of wealth. Used to help a lot of the polio paraplegics around town.

Bottom line, if you live in third world country, learn to accept it or get the F out, real quick.


migra's picture

The article failed to mention US citizens cannot own property in Mexico. The mexican government/ narco state can take anything it wants from you at anytime and you have no recourse whatsoever.  Try fighting back and your decapitated head will be hanging from an overpass and your wife will be raped/murdered. Your children will be sold into sexual slavery. Oh yea mexico is the answer.....

Miffed Microbiologist's picture

I have seen this happen to so many gullible Americans. Just visiting can be hazardous. Had a friend with a nice Dodge Cummins Diesel, camper and a toy box filled with motorcycles go down to camp on the beach. I warned him this wasn't the best of ideas. Let just say he and his family made it home alive but were out a lot of money.

If you really want to relocate in Mexico, you better not show you have money, try to blend and realize what ever you own, it can be taken away at a moments notice. Not bad advice if you're living in the USA today as well.


Jerk_Store's picture

Why do americans need so many toys to have a good time? Common sense says don't act rich around a bunch of poor people. But common sense is in limited supply..

The Alarmist's picture

So, maybe we're inviting all the migrants to help tame our bent to conspicuous consumption?

gmrpeabody's picture

I just got back from a drive across SoCal during the night...,

It was like another country.

They own the night and the streets..., and the freeways.

(was that race-it?)

TBT or not TBT's picture

It's only race-ish, but close to the limit.   If you had argued for smaller less intrusive government on the other hand, that would be doubleplus racist, with an ist.  

Jerk_Store's picture

The jerk off mentality....beautiful beach, beautiful sunset,,listening to the waves breaking......uuuhhh.lets break out the motorcycles and atvs and race up and down the beach........uuuuhhhh that will be awesome...

Plato's Law's picture

While biking or hiking far from humanity, nothing increases one's sense of beauty and serentity like the grotesque sound of an ICE (internal combustion engine), the acrid smell and appearance of its exhaust fumes, and the earth destroyed by huge OHV tires...

Miffed Microbiologist's picture

Completely agree. Nature should be enjoyed on foot or on horseback. It is a time for contemplation,reflection and escaping the modern distracting, plugged in world. I would have included mountain bikes but after my horse was hit and injured by a man going fast around a blind turn and on the wrong side of the trail, I have become irritated by their presence. I could have been severely injured or killed that day if I were on foot. Why, wherever you go, there is always a self absorbed, inconsiderate asshole.


DanDaley's picture

Mexican people are wonderful people and most would give you the shirt off their back, BUT, there is a high level of corruption in Mexico.  I have a close Mexican friend, engineer and MBA, and now a very productive American citizen, and he wouldn't go back to Mexico on a bet. He says you can't leave your house without money (at least $100) to pay off cops at the inevitable traffic stop. 

As a Marine in the '60s my friends and I had to pay off the cops, and was glad to be able to, but not everybody is so lucky. Now Obama is bringing Mexico to America.

cossack55's picture

"Mexico to America".  I thought CONgress looked a lot like that donkey show I saw in Juarez about 40 years ago.

TBT or not TBT's picture

They don't have rule of law down there, and Obama/Holder have set us on a precedent of having ever less here.   So yeah, he is bringing the banana republic stuff, and wants the result.  The lowering of the USA and western civilization generally with respect to poor authoritarian, rule-of-man parts of the world.  

Keyser's picture

Then pick another country... Mexico is not on my radar at all... 


Miffed Microbiologist's picture

I'm not sure if there really is any "safe" country. I would never go to a county that had gun control because, historically, you run the risk of a fascistic state like natzi Germany. Locals will always see you as an outsider and you have an innate disadvantage. Americans tend to be deluded they can buy their way out of any circumstance. At some point, this may not be the case.

I'm sticking with my close friends and going with the guns, gold and grub route. I'm prepping as best as possible knowing I can't withstand a massive well armed army. One can't prepare for all contingencies but there is a home advantage staying in the USA for me. But I have no criticism for those who choose to leave and understand their reasoning. Just don't call for help if you get into trouble.


grunk's picture

"Shawshank Redemption" way of thinking.

Hard to get angry at people for thinking this way people when the system fails them so utterly and completely.

SumTing Wong's picture

I have both local knowledge and friends in three different countries other than the US, set up years ago and continued through the years. Not everyone is so lucky, but it might pay to start thinking about making networks in other places so that you have an out if needed. It will take time and effort, and we may not have much time remaining. This is all too clear. The plan for us is to wait it out here at our little subsistence farm, but if it gets bad we hide in the woods in places we know well until we can get the hell out of Dodge and off to one of our other countries. 

Helped a neighbor and friend slaughter and put up 60 chickens yesterday. These kinds of efforts also help...

Winston Churchill's picture

I watched one American tourist try to buy his way out of a situation in Jalalabad

back in the 1970's.

The crowd frogmarched him to the neaest wall,where he was promptly shot.

They took his money and belongings.

My Swiss passport saved my life that day.I had ditched my US one.

When SHTF most Americans could expect that same welcome almost anywhere outside the US.

Foreign Govt's. will need scapegoats as well remember.

Jerk_Store's picture

I watched one American tourist try to buy his way out of a situation in Jalalabad


With a credit card?

Winston Churchill's picture

$100's. Crowd thought he was CIA.May have been for all I know.

They got his cash anyways.He got lead.

Keyser's picture

I understand your point, but who in their right mind would pick Afghanistan as a safe haven when the SHTF?  Lot's of places on the planet that have a subsistence economy based on agriculture... Take your pick... 


Jugdish787's picture

I am with you Miffed!  Packing up the family and moving to some unknown area of the world seems a lot more risky than hanging here.  We live outside the city and there are a lot of good people out there, willing to band together and help each other.  My back up plan is heading for the mountains...outside of that I see no reason to leave.  If you look closely, you will see that this country still has a lot of good people, its not all FSA out there.  Other civilizations have been totally decimated in the past and managed to pick up the pieces and come back.

Professorlocknload's picture

Add to that, Miffed, is it a good idea to be in any other oil producing country, down range of the most oil thirsty, biggest assed military on the planet?

jimmytorpedo's picture

I hear Kiribati is pretty empty these days.

Anyone up for building a seawall with me?

If we all went, that would be pretty fun.

Monty Burns's picture

May-hee-co also has draconian laws and punishments for, wait for it, illegal immigrants. Yup, the same people who scream at the gringos for their treatment of their illegals. Oh sorry, we must now call them 'refugees' must we not?

toady's picture

We have places in Mexico and Canada, and live in the states. I have big problems with Mexico, no guns, draconian laws against non-citizens, etc., but the wife's family is down there, one brother is a government prosecutor, ones a cop, and the other owns a dozen or so busses that he runs through town.

The Canada property is a seasonal hunting cabin. The US hobby farm is the best bet, self- sustaining, but Mexico may be the best bet if they can carve out their own little empire and the farm is overrun.

starman's picture

I owned property in Mexico , its all legit. You just have to know where and whom you buy from.

SilverRhino's picture

No, the place you don't want to be is URBAN US.  Country dewellers will do quite nicely once militias are formed up and watching. 

As far as being outside the US.  WHERE?   Pick wrong and die.  If you aren't in the same ethnic pool you're the expendable one.



Croesus's picture

@ SilverRhino: 

Agreed. The cities are definitely NOT the places to be, if/when disaster strikes. I relocated to semi-rural PA (originally from the NJ Shore-area). I remember the 1992 Nor'easter that hit NJ very well, and also remember how utterly helpless most of the people in my community were. 

ZH'ers looking to move to another state should check out this book:

If you're like me (and intending to stay where you're at, regardless of what happens), then this might be another worthwhile addition for your library: