The Shrinking Pie Effect
It seems to me that predominating now in the markets is something that could be called the “shrinking pie effect” (as I try my hand at my own version of Winterisms…) : basically this is the propensity of the credit bubble in the widest sense to continue deflating even as various bailouts and pumping schemes (i.e. by the central banks) enjoy some measure of success (with predictable cheers by the financial media). While these schemes may stabilize certain corners of the credit markets and avert near-term major money center bank failure, they cannot bring the markets back to their recent glory days of even a year ago. Too much “bid” is now gone, never to return, and the amount of such bid goes down with each passing month. Hence “shrinking pie.”
EU threat to U.K. rescue
In a striking warning of the loss of national sovereignty that comes with EU membership, Britain's $100 billion bailout plan for its banks and mortgage market is threatened with a ban from Brussels.
EU competition officials are frowning on the scheme for giving "unfair" preference to British over European banks, and because it may also breach rules against state aid. Legal experts on EU rules say the Bank of England's rescue plan has little chance of survival with EU bureaucrats.
"It seems to me that this is prima facie state aid because this scheme gives banks operating in the United Kingdom an advantage over other European banks operating outside the UK," said Anthony Woolich, head of competition for the London-based LG law firm.
The scheme, devised by Bank of England Gov. Mervyn King, allows banks to swap some of their troubled mortgages at a discount for state-backed treasury bonds. It is aimed at restoring liquidity to the London financial markets by giving the banks the safe and easily sold treasury bonds, in return for the mortgages that they cannot sell in the current troubled markets.
The irony is that the British scheme is similar to one long used by the European Central Bank, custodian of the euro, that lets European banks use their mortgage bonds as collateral to borrow ECB-issued Eurobonds. That policy has not been questioned by EU officials, and the threat of a ban on the Bank of England plan underlines British fears that the EU is determined to sabotage London's dominant role in financial markets in the name of competition.
Morgan Stanley see big bank woes just beginning
Morgan Stanley analysts on Monday told clients to "sell the rally" in financial stocks, slashing forecasts for big bank earnings and warning that the current credit crunch is only just beginning.
In aggregate, Morgan Stanley reduced its estimates for 2008 large bank earnings by $17 billion, or 26 percent, and reduced 2009 forecasts by $13 billion, or 15 percent. The analysts expect higher loan losses and expenses, offset by higher net interest income, though profits could fall further still if the Federal Reserve stops lowering interest rates.
"More capital hikes and dividend cuts (are) coming as our credit deteriorates and forward earnings decline," analysts led by Betsy Graseck wrote in a report. "We think we are only in the third inning of the credit cycle and expect this credit cycle will be worse than (the slump in) 1990-91."
Ratings Extortion? Maybe. And Yet More Fraud
Our capital markets have become one gigantic scam. The SEC won't investigate, the FBI won't prosecute and both political parties claim to be "concerned" about the impact this has had on Americans, but neither will get off their duffs and start insisting that existing law be enforced.
Every day I am treated to a new disclosure on the utter depravity of these people on Wall Street, Congress and The Federal Reserve who have taken truly extraordinary steps to rob every American, up and down Main Street.
And we wonder why the market "goes up" when the economic news "goes down"? I'm not surprised at all. Wall Street has become convinced that so long as a greater bagholder can be found, no matter what has to be done to make it happen, legal or not, nothing evil can occur in the markets. Therefore, there is no risk. We thus must buy, because prices will rise since we'll never be held to account for our lies, fraud and rape of the American public.
My Confession: “Approve and Move” - A Million Tiny Compromises
Let me set this up for you, briefly. As I’ve said, at any point in the process there is culpability for the crisis, rooted in greed. There is the borrower who wants that loan and that big dream home, which is too much for him to afford, but he wants it so bad he will do anything to get it, including stretching the truth of his financial situation. There’s the appraiser who wants to gain the favor of real estate agents, mortgage brokers and sales people at the bank, so he stretches that value; if even just a *little bit. There’s the politician that wants campaign contributions, or a seat on the board at a major bank someday, who knows our trade policy is wrong, but who votes for that free trade deal anyway, outsourcing thousands more jobs. There’s the mortgage broker who knowingly put together a loan with fraudulent documents and information; because he just has to get that commission; *just this once to get out of debt, and then he won’t do it again. Until the next time that is. And of course, the Wall Street banking executive, securitizing those loans and pushing the mortgage companies for more; even if the credit scores are lower, even if the LTV is higher, even if the documentation is less, because they just have to issue more securities, to keep up with their peers and hit those earnings projections. The love of money at all levels in the process.
But it could have been stopped, and the best place to stop it, if not on Wall Street, was at my desk. I was an underwriter, and yes, my confession is: this mess is my fault too.
It’s a tall order to expect a person to lodge a personal protest against this machinery of cowboy capitalism. But everyone makes decisions every day. Everyone has to face his own conscience everyday. Everyone has a role to play and even one cog in the wheel can stop the process, at least temporarily. And after all, it is the underwriter who, at the fundamental level, is paid specifically for his judgment and accuracy of decision making. They pay you to make good decisions. But 99% of the time what did I do?
Approve and move.
Will They Call FHA A Predatory Sub Prime Lender Too?
FHA reform is being “debated” in the House of Representatives. Even though the private sector managed risk better than FHA (where default rates are higher than in subprime, and rising), the House is prepared to increase FHA’s mandate and allow more loans to be made to borrowers currently in foreclosure. If that isn’t scary enough, the “debate” is currently centered not on the cost to taxpayers, not on credit quality, not on the role of limited government in a market economic system, not on our budget deficits and the need to keep government lean; no, the debate is on whether or not the taxpayers should pay for the legal fees of the borrowers in foreclosure.
Can someone give me ONE REASON that ANY AMERICAN should continue paying their mortgage? The election year Congress is falling all over itself to reward you for not paying your bills.
U.K. House Prices Decline the Most in Three Years
U.K. house prices fell the most in more than three years in April as a dearth of credit and concern that the property slump is deepening deterred prospective homebuyers, Hometrack Ltd. said.
The average cost of a home in England and Wales dropped 0.6 percent, the most since December 2004, to 173,100 pounds ($344,000), the London-based research company said today in a statement. Prices declined 0.9 percent from a year earlier.
A surge in borrowing costs has prompted banks to withdraw their best mortgage offers, worsening the housing decline. Falling home prices are sapping consumer confidence and held economic growth to the slowest pace since 2005 in the first quarter.
``Weak confidence is effectively resulting in a `buyers strike,''' Richard Donnell, director of research at Hometrack, said in the statement. ``The current downward pressure on prices will only start to be reversed once there is a turnaround in buyer confidence'' that will ``revolve around greater stability in the financial markets and an improved economic outlook.''
CRE Bust: How Deep, How Fast?
A key historical investment pattern is for non-residential investment in structures to follow residential investment by about 4 to 7 quarters (both up and down). See Investment Matters for some graphs on this subject.
Clearly the CRE slump is here. Now the questions is how deep and how fast will CRE investment fall. One way to think about this is to look at previous declines in non-residential investment....
....My guess - based on these two previous busts - is that non-residential investment will decline about 15% to 20% over the next four quarters, from a $501 billion seasonally adjusted annual rate (SAAR) in Q4 2007, to about $400 billion to $425 billion in Q4 2008 - and that most of the bust will happen during 2008.
Drinks? DJs? See Realtor Inside
n February, throngs of people gathered at a $100,000 poolside party in Miami, downing Roberto Cavalli vodka, sampling food from local restaurants and dancing to a DJ blasting hip-hop and house music. Nearly 1,000 more people showed up than expected, sending the hosts scrambling to provide extra booze and triggering noise complaints from neighbors.
It wasn't a wedding or a birthday bash. The swanky event -- designed with a film theme, with a red carpet and a giant movie screen -- was hosted by the Related Group, a luxury developer, to get people to see, and eventually buy, apartments in its new 1,000-unit complex....
....Welcome to the open-house on steroids. Home-baked cookies are out. Designer drinks, opera singers and Cinco-de-Mayo theme parties are in. Despite sluggish home sales in most of the country, some Realtors and developers are sinking money into open-house parties that they hope will draw crowds -- and an eventual buyer.
Fifty Ways To Leave Your Lender
Several speakers used expressions such as "I have never seen anything like this in my 25 to 30 years in the markets" or, "This sell-off in the mortgage market was unparalleled in the last 25 years." Obviously, the recent events are not seen as just another normal market correction.
One of the reasons for this was explained in a masterful and highly entertaining speech by Paul McCulley, the senior economist of PIMCO, the largest bond manager in North America. He used Paul Simon's 1975 classic song "Fifty Ways to Leave Your Lover" to illustrate the problem with the "NINJA" borrowers in the U.S.--"NINJA" stands for borrowers with No Income, No Job or Assets).
As Mr. McCulley pointed out, the song lyrics might also be interpreted as 50 ways to leave your lender, with the most important point being the last couplet: "Just drop off the key, Lee, and get yourself free." Lax lending practices that had allowed people with no assets or proof of income to borrow far more than they could ever hope to service, let alone repay, had effectively given the NINJAs a free call option on the increase in house prices as well as--and this is the vital point--a free put option back to the lender if the house did not go up in price.
With no down payment and therefore no "skin in the game," the NINJA borrower could walk away from his or her depreciating house and "send in the keys" to the lender. As Mr. McCulley pointed out, in most U.S. states, lenders can either pursue the borrower or the asset, but not both. As the NINJA borrower, by definition, has no assets, there is no downside to walking away.
Fed's Bailout Is Questioned by Ex-Staffer
The Federal Reserve's rescue of Bear Stearns Cos. will come to be seen as its "worst policy mistake in a generation," a former top Fed staffer said.
[Reinhart]
Vincent Reinhart: An ex-Fed player's Monday-morning quarterbacking.
The episode will be seen as comparable to "the great contraction" of the 1930s and "the great inflation" of the 1970s, Vincent Reinhart said Monday at a panel organized by the American Enterprise Institute, a conservative-leaning think tank where he is now a scholar. Until mid-2007, Mr. Reinhart was director of monetary affairs at the Fed and secretary of its policy-making panel, the most senior position on the Fed's Washington-based staff.
His appraisal is one of the harshest yet by a high-profile observer. The Fed last month lent Bear Stearns money to prevent a bankruptcy filing and then financed $29 billion of its assets to facilitate a takeover by J.P. Morgan Chase & Co. Former Fed Chairman Paul Volcker has said the move went to "the very edge of [the Fed's] lawful and implied powers," although he has since said that that wasn't meant as a criticism. Congress and analysts have deferred to the Fed's judgment.
Mr. Reinhart said the bailout "eliminated forever the possibility the Fed could serve as an honest broker." In 1998, the Fed coaxed private creditors of Long-Term Capital Management to bail out the hedge fund but didn't have to put up its own money.
U.S. Home Vacancies Rise to Record on Foreclosures
A record 18.6 million U.S. homes stood empty in the first quarter as lenders took possession of a growing number of properties in foreclosure.
The figure is 5.7 percent higher than a year ago, when 17.6 million properties were vacant, the U.S. Census Bureau said in a report today. The vacancy rate, the share of homes empty and for sale, rose to 2.9 percent, the highest since the bureau started keeping count in 1956. About 2.3 million empty homes were for sale, compared with 2.2 million a year earlier, the report said.
The worst U.S. housing slump in more than a quarter century is deepening as falling values encourage buyers to delay purchases in hopes of getting a better deal. The median U.S. home sale price may drop 5.8 percent in 2008, the most on record, followed by another 4.7 percent decline next year, Fannie Mae, the world's largest mortgage buyer, said April 7.
``We think it unlikely that prices begin to stabilize until vacancy rates start declining,'' Jan Hatzius, chief U.S. economist at Goldman Sachs Group Inc. in New York, said today in a report for clients.
Loan Industry Fighting Rules on Mortgages
The mortgage industry, facing the prospect of tougher regulations for its central role in the housing crisis, has begun an intensive campaign to fight back.
As the Federal Reserve completes work on rules to root out abuses by lenders, its plan has run into a buzz saw of criticism from bankers, mortgage brokers and other parts of the housing industry. One common industry criticism is that at a time of tight credit, tighter rules could make many mortgages more expensive by creating more paperwork and potentially exposing lenders to more lawsuits.
To the chagrin of consumer groups that have complained that the proposed rules are not strong enough, the industry’s criticism has already prompted the Fed to consider narrowing the scope of the plan so it applies to fewer loans.
So many Florida housing scams, so few watchdogs
Earlier this month, FBI director Robert Mueller described a "tremendous surge"' in mortgage fraud investigations that has diverted agents from other cases.
"I'm not sure at this point we can see the extent of the surge,'' he told a U.S. Senate hearing.
Few places have had more fraudulent activity than Florida, where buyers flooded into a booming real estate market in 2005 and 2006, only to be stuck with properties they couldn't afford or couldn't resell when prices plunged. That led to a torrent of shady transactions aimed at unloading unwanted homes and condos.
By last fall, the problem had grown so bad that Florida Attorney General Bill McCollum created a Mortgage Fraud Task Force with 26 investigators, attorneys, paralegals and an economist. They complemented Roseneau's 51-member investigative team. But spread across a state of 18-million, that's not many, given the prevalence and complexity of what they're dealing with.
"Mortgage fraud cases tend to be extremely document-intensive,'' says Sandi Copes, a spokeswoman for the attorney general's office. "The documents in possession of the complainants do not necessarily match the documents provided by potential defendants, necessitating a time-consuming comparison.''
In a legitimate real estate transaction, all parties are supposed to have identical documents with the same sale price and closing costs. With mortgage fraud, however, the lender may have closing statements showing a sale price of, say, $500,000 while the buyer and seller have statements showing the property actually went for $300,000. The other $200,000 — earmarked for "repairs'' or "renovations'' — ends up in someone's pocket.
"It's not uncommon to have three completely different sets of documents from three different sources,'' says Roseneau, the financial investigations chief. "Then you've got to run the dog to the ground.''
Complicating the process is that closing statements and appraisals, unlike mortgage documents, are not part of the public record. If fraud is suspected, investigators are often forced to subpoena reams of paperwork and bank records. And then they need to link up with a prosecutor who may or may not consider the evidence sufficient.
Good credit can't protect borrowers from bad loans
A good credit score doesn't mean you can't end up in foreclosure.
Many now troubled borrowers had excellent credit when they got their mortgages. But they took out loans that they couldn't afford to buy homes that were too expensive. Credit scores alone are no guarantee that borrowers will be able to keep up with their payments.
In September 2007, the most recent month for which data is available, more than 20% of subprime mortgage borrowers with scores of between 840 and 900 were 60 days or more delinquent, according to First American LoanPerformance. That default rate was roughly equal to that of borrowers with much lower scores, in the 540 to 599 range....
....In the runup to the bubble, underwriting standards eroded just as much for people with high FICO scores as they did for people with bad credit, said Bitner.
Vancouver residential property tax up 3 per cent
"The average home is about $940,000. So what the residents will be paying is $77 more in the year. Businesses will be paying $88 less," said Annette Klein, the director of budget services for the city.
Opposition councillors were quick to point out the tax increase for 2009 could be much higher.
Vision Vancouver Coun. Raymond Louie said last year's municipal strike saved the city millions of dollars, and the full cost of expanding Vancouver's police force won't be felt until next year.
"We're talking about potentially an 11 per cent tax increase right out of the gates [in 2009]," said Louie.
Forced out by the Olympics
Roy Van Hest owns the Art Knapp Plantland on Minoru Boulevard at Alderbridge Way with his family. When his store opened in 2005, his tax bill was $59,625. He estimates his 2008 bill will be $269,070.
“There’s no way that we can stomach it. Basically my taxes will be 400 per cent greater than they were three years ago.”
He said it will be hard to compete with other businesses when he’s paying taxes “astronomically more” than competitors elsewhere in Richmond.
Even non-profit groups have been hit hard. The Richmond branch of the Canadian Mental Health Association is facing a tax bill of $43,335 this year—a 119 per cent tax increase over last year.
Robert McCullough, senior property manager for properties in the area owned by Richmond Holdings Ltd., said it’s not unusual to see 100 to 200 per cent increases in taxes this year.
“It’s unfortunate. We all understand the needs of the city to move and to change and to redevelop, but there has to be some consideration to the people who are already a part of this neighbourhood, because within a year, they’ll all be driven out. No business can afford to bear that kind of tax hit.”
McCullough predicts the neighbourhood will become “an empty industrial ghetto” before 2010 on the doorstep to the Olympic oval.
Brazil Oil Trapped by 500-Degree Heat, Salt Barrier
Brazil's plan to become one of the world's biggest oil exporters hinges on exploiting crude 6 miles below the ocean surface in deposits so hot they can melt the metal used to carry uranium to nuclear plants.
Tapping what may be the biggest oil finds in the Western Hemisphere in three decades will require equipment that can withstand 18,000 pounds per square inch of pressure, enough to crush a pickup truck, pipes that can carry oil at temperatures above 500 degrees Fahrenheit (260 Celsius) and drill bits that can penetrate layers of salt more than one mile thick.
Petroleo Brasileiro SA, the state-controlled oil company, is betting on the Tupi and Carioca fields to become one of the world's seven biggest crude exporters. Until the tools needed to exploit the reservoirs are invented, the crude will remain locked under the sea, said Matt Cline, a U.S. Energy Department economist.
Move over, energy and food crises
The South African fuel industry is facing a crisis that is going to make Eskom's problems look like a picnic, the Fuel Retailers' Association (FRA) says.
This is because the pipelines used to get fuel from refineries along the coast to inland distribution points are crumbling and refineries past their lifespan are unable to cope with increasing demands.
Imported fuel has to be transported by road, because of the dire state of the pipelines, and the inability of the country's rail network to deliver.
"Nobody is building stockpiles, which is something we need as demands increase," says Peter Morgan, the director of the FRA.
He says South Africa has imported fuel for years because the country's refineries are unable to make enough for local needs.
Once the petrol or diesel is imported, the ability to transport it inland is limited "because the pipelines cannot cope, the rail system cannot cope".
Also unable to cope with the large volumes demanded by motorists and industry through fuel retailers are the tanker companies, which run hundreds of tankers from refineries to petrol stations every day.
Morgan says one of the most serious problems is that there are no strategic fuel supplies in South Africa. The country's refineries are already working to full capacity and any power outage, fire or other failure in the system will lead to shortages.
Rearming the world
Last summer, AS Americans focused on the surge in Iraq, most ignored a military exercise with a potentially more far-reaching impact. In a remote location in the Ural Mountains, Russia, China, and several Central Asian nations gathered for a massive war game, ironically dubbed "Peace Mission 2007."
Thousands of troops, armored vehicles, fighter-bombers, and attack helicopters stormed a town in a mock battle that was supposed to simulate fighting a terrorist takeover. Beneath its antiterror veneer, Peace Mission 2007 was a classic display of military readiness: When it was over, the troops paraded before their assembled defense chiefs, and the whole event laid the groundwork for a closer military alliance among the participating nations.
That such an exercise was held at all might seem shocking. Despite the global war on terrorism, and a steady drumbeat of civil conflicts, no war involving a major power like Russia has occurred in decades, and no external enemy threatens any of the Central Asian nations.
But the exercise highlighted an alarming new reality. With much less fanfare than the early days of the Cold War, the world is entering a new arms race, and with it, a dangerous new web of military relationships. According to the Stockholm International Peace Research Institute, which tracks international armed forces spending, between 1997 and 2006 global military expenditures jumped by nearly 40 percent. Driven mainly by anxiety over oil and natural resources, countries are building their arsenals of conventional weapons at a rate not seen in decades, beefing up their armies and navies, and forging potential new alliances that could divide up the world in unpredictable ways.
11 comments:
Hello,
Concerning the U.K. bailout and the EU, I wager that the EU will be blamed for anything that goes wrong in the U.K.
The real effect of an EU veto would be to prevent the British from throwing good money after bad, but that is not how it will be presented to the public.
Such blatant hypocrisy is not specific to the U.K. however. Lots of countries vote in favour of policies in Brussels, then turn around and criticise those policies back home. Chirac and his government were experts at that.
Looking at how politicians operate, at how people in general ignore obvious warnings or, if they do acknowledge them, refuse to change their behaviour while providing the most extraordinarily lame pretexts, I wonder how even a substantial percentage of the world population will make it.
I am surrounded by intelligent, well-meaning people who essentially grasp the seriousness of current events, but simply continue as they always have.
Are we (us bloggers) abnormal in our approach? I have a much greater appreciation for historical situations where entire countries walked into avoidable traps. We are doing it.
This is all certainly obvious to readers here, but I still marvel at actually living through such a situation myself. It is like being tied to the tracks and hearing the faint, distant whistle of a train. This should not be happening, but it is…
Perhaps I do understand the people who change nothing in their lives. It is so easy… but also so spineless.
What fun to at least be trying… to understand, to grasp the consequences, to prepare.
Best to all,
FB
I can think of many ways to describe the preps.I have made over the years,but "fun"usually is not one of them.I am hoping beyond words that I,as well as the rest of us "doomerkindred"have missed some essential point that will make the preparations and hard life choices appear to be/have been foolish.And that the truth.I want to be wrong,as the total doom fools who bankrupt them selfs preparing for y2k.
I want to be wrong.
But,alas,I,{we} are not.And very soon the writing on the wall will become more legible as the various crisis we as a people/nation/country/world face.
Now is the time for anyone who does not have seed,food,tradibles'...or any fruit of this civilization that may not be avalible soon,to get what you feel you need...and start thinking of alternative supply lines for what you need to survive....its coming
It IS fun, FB--I'm glad you said that as it's put me in mind of something I've been searching for: Given all the limitations (and there are many), HOW to focus our spirits? What's a long-term, healthy attitude? The answer is: The preparation and work is fun.
My hobby is long-distance trail running over mountains and through deserts. I carry my own food and water--no support team, running solo. It's nuts and the pain is extraordinary at times, but the rewards are greater. I'm not anything like the elite ultra-marathoners; I just plug along at my own pace. But simply being ABLE to run hour after hour through wilderness, through night, rain, snow, etc. is it's own reward.
Sometimes, though, you meet people who are grossly unprepared. I recall meeting a young couple near the summit of a 10k foot peak; they had no equipment, nor any real idea where they were. They were dressed in street clothes with street shoes--and the man asked me which trail to take to return to his car. The woman looked shell-shocked and he didn't even know where he was.
I helped them, (and someone could reasonably argue I'm not much smarter myself) but I no longer think "intelligent, well-meaning people" are all that smart. By nature, I feel (and hide) an almost overwhelming love and joy for most individuals I meet; but at the same time, I'm repulsed by their idiocy and arrogance.
Whether it's old age, starvation, violence, disease, or trail-running, the end eventually comes--and the point of the whole thing is it's FUN! Otherwise, why do it?
Hello,
I say "fun" because this is the first time, thanks to our two bloggers here, during difficult times that I have the impression of being even slightly informed as to why events are happening. That makes an incredible difference. It is fun to make decisions with a certain degree of confidence and then to observe, six months later, that yes, that was the right move.
By the way, Stoneleigh, any chance of seeing that level-two primer for all of us avid readers?
Thanks for everything,
FB
I also find it fun in the sense that I enjoy the experience of living through a momentous time period, which is not to say that I anticipate enjoying the consequences and results. I guess it makes me feel more alive though, and that's fun. Also, like fb said, it gives a perspective on history that is normally not possible. There are many things about human history that I never understood - bubbles, resource wars, dictatorships, trade, wars in general - that I now have a much better understanding of. And that gives a sense of pleasure. In fact, one of my new hobbies is to collect old books in order to have a good library to read through should other forms of entertainment become unavailable. I like to go to used book stores and pick up all sorts of books that I just might get to read some day.
Ah, books, my favorite things! My local library sells its cull of books no longer being read for 25 cents each. Just to-day I picked up" After The Crash" America in the Great Depression by John Rublowski(1970) It begins," Everything seemed to stop. Factories shut their doors;banks failed.Farmers could not sell their produce and left crops to rot in the fields;paper fortunes disappeared;businesses closed,and mortgages foreclosed....a shocked and bewildered people braced against the crisis." It also has some wonderful black and white photos like the kind Ilargi posts. One is of people living in shacks in Central Park in the shadow of luxury apartment buildings along Central Park.How was sanitation handled in these conditions I wonder? I am surprised that food was left to rot in the fields? You'd think hungry people would have picked those fields clean. Guess they really were in shock, not thinking clearly.
How do you get all those hungry people to the fields to pick them clean? Hop in your automobile, fill up the tank, and toodle on down the road?
Food will rot in the fields when the system collapses. Infrastructure will rust away in place with potential labor nearby but lacking capital (and hence raw materials) to actually do the repairs.
So many people fail to look at things systemically!!
Greyzone, Your comment about the system is well made. I was thinking that if I was hungry, I'd get my shopping cart, or the little red wagon that the kid across the street plays with, and walk many a Km to some of the farms around and fill it! So people will be in shock, waiting for the food to arrive on the shelves. They won't initially believe that they are on their own.
Systemic thinking is absolutely essential. I have no doubt that food will rot in the fields, although anywhere accessible by foot or by bike would probably be picked clean.
During the Depression, the lack of money prevented would-be buyers and sellers from connecting with each other so that food was discarded even as people chronically went hungry (amid plentiful resources and a solid skill base). Money acts as the lubricant for the economic engine - without it that engine will seize up, and our just-in-time economy will crash.
We are plugged in to so many centrally run life-support systems - heating, cooking fuel, transport fuel, electricity, water, sewerage, communication, garbage collection, snow removal, health care, education, etc. Problems that begin with a lack of money could quickly spiral into all those systems, crippling distribution even of essentials.
Will employees here turn up for work despite not being paid for months, as they did during the Russian collapse? They have their own bills to pay that Russians with guaranteed apartments and utility supply didn't have to worry about, and so can't afford to work for nothing.
Russia had a thriving global economy thirsty for its energy to export to, allowing its descent to be moderated (at least for a lucky fraction of the population). This time the economic seizure will be global, and the impact for all therefore much greater. We who have the furthest to fall, and who are the least prepared for any kind of self-sufficiency, won't know what hit us.
FB,
I do plan to write a sequel to The Resurgence of Risk, but time has been an issue lately. I need a free week to do the research and writing, and free weeks are hard to come by. I'll see what I can do for you though :)
Well I guess if anger and raqe were having fun, I had my fun. Now that we are reaching peak nonsense and after living through decades of it's ebbs and flows, watching the ones I knew as friends, compadres, chewed up and spat out I would be having a more and different vindictive kind of fun. But I live next to a cooperative housing unit and listen to kids playing.
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