"Dwellers in Circleville, Ohio's 'Hooverville.' During Depression many farms of the district were foreclosed. People who lost homes naturally gravitated toward the town. A town of its character is unable to house new influx of population. Consequently there sprang up around it an extensive Hooverville"
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Ilargi: Independence, right? Fireworks and all, fighter jet fly-overs. Boy, are we ever free!
Got to wonder, though, how much longer these celebrations make any sense.
See, in Greece they're fast losing their freedom and independence. The country may still be a sovereign nation in name, but are the Greeks still a sovereign people? According to Erik Kirschbaum at Reuters, Eurogroup chairman Jean-Claude Juncker thinks not:
Greek sovereignty to be massively limited: JunckerGreece faces severe restrictions on its sovereignty and must privatize state assets on a scale similar to the sell off of East German firms in the 1990s after communism fell [..] "The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would heading to Greece. [..]
The Greek parliament voted on Thursday to set up a privatization agency under austerity plans agreed with the European Union and IMF which have provoked violent protests on the streets of Athens. Greeks are acutely sensitive to any infringement of their sovereignty or suggestions of foreign "commissars" getting involved in running the country. "One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.
Athens must sell off five billion euros in state assets this year alone or risk missing targets set under its EU/IMF program, which could cut off its funding needed to keep the government running and avoid a debt default. A repeat of Germany's Treuhand experience may prove bitter for Greeks, who are already suffering soaring unemployment as a recession drags into its third year.
Once the world's biggest holding company, Treuhand was supposed to sell off state property at a profit but closed its books with a huge deficit and a legacy of bitterness among the legions of workers whose jobs it destroyed. Four million Germans were employed by Treuhand-owned companies in 1990 but only about 1.5 million jobs were left in 1994 when the agency closed. Instead of reaping profits to be distributed to all east Germans, as it was designed to do, it ran up debts of 270 billion marks ($172 billion) in the fire sale of assets.
Ilargi: To call Treuhand an abject failure would be a gross understatement. Still, Juncker cites it as an example for Greece. Lovely. Well, to be honest, it was a failure only for the people. Not for banks and industries. Viewed from that angle, it all makes sense. As does openly stating that Greece will be massively limited in its sovereignty. It all depends whose interests you're protecting, after all.
And no, we're not just talking Greece here. From the Guardian:
Sell, sell, sell: everything must go in great fire saleGreece
Europe's most ambitious sell-off is taking place in its most indebted nation: Athens plans to sell €50bn (£45bn) of state assets by 2015.
Looking at the sales list, it seems that very little has been left off the table. The government's stakes in the ports of Piraeus and Thessaloniki, 39 airports, a state lottery, a horse-racing concession, a casino, a national post office, two water companies, a nickel miner and smelter, hundreds of miles of roads, a telecoms operator, shares in two banks, electricity and gas monopolies and thousands of hectares of land, including coastal stretches, are among the host of assets on offer.[..]
Ireland
The national airline, ports, power stations and even the Irish National Stud, which hosted a visit by the Queen in May, face being broken up or sold off under plans to get Ireland out of the red. A government-commissioned review of state assets published in April said privatisation could raise about €5bn for the cash-strapped country. [..]
Spain
The world's biggest annual lottery payout, Spain's famous Christmas El Gordo (Fat One), spreads joy to tens of thousands of winners – but the biggest winners of all may soon be investors who snap up part of the state company behind the lottery. [..]
Some 30% of the state lottery will be sold as the organisation behind the 151-year-old El Gordo becomes what may be the world's biggest listed gambling company, valued at up to €25bn. The company recorded €3bn net profit in 2009 on sales of €9.8bn – meaning the sell-off will reduce treasury income by about €1bn a year.
RBS recently won a contract to run the privatisation of up to 49% of Spain's airports authority, AENA, which has a book value of €2.6bn. The government also plans to auction off Madrid's Barajas airport and Barcelona's El Prat by the end of the year. Reform of the country's savings banks means that many will also soon be seeking stock market listings. [..]
Portugal
Neighbouring Portugal is in even starker need of money after accepting a €78bn bailout. On Thursday, the newly elected centre-right prime minister, Pedro Passos Coelho, announced a rush sale of state holdings in the utility company Energias de Portugal and the power-grid operator REN by October.
Passos Coelho recently told the Financial Times that he wanted to sell off up to 49% of water utilities as well as several state media interests, reportedly including television and radio channels, plus the national news agency Lusa.
The state airline TAP and the airport owner ANA – which runs airports in Lisbon, Faro, Oporto and the Azores – are also due to be sold along with the insurance business of the state-run bank CGD [..]
Britain
The coalition government in Westminster is in the process of selling off the 49% state stake in the air traffic control service Nats, decommissioned naval ships and its own collection of fine wine.
In the March budget the chancellor, George Osborne, set a target of raising £2bn from asset sales to finance the Liberal Democrat's idea for a green investment bank. The bulk of that is coming from the sale of its remaining stake in Nats and the Tote, the government-owned bookmakers. The private bookmakers Betfred have been chosen to buy the Tote for a reported price of £200m. [..]
Ilargi: By the way, Richard Milne at the Financial times reports that S&P have said the Greek bailout will be declared a default (credit event) anyway:
S&P threatens Greece with defaultFrench and German banks’ plan to roll over their holdings of Greek debt suffered a huge blow on Monday as Standard & Poor’s, the credit rating agency, said the move would amount to a default.
The proposal to provide up to €30bn ($43.6bn) in financing for Greece had been made conditional on rating agencies not downgrading Greece’s debt. But S&P said in a statement early on Monday that any rollover would be a “distressed” transaction and thus lead to Greece’s rating being lowered to selective default.
Such a move all but scuppers the rollover proposal in its current form. It is also likely to further heighten European scrutiny and scepticism of rating agencies, who are blamed by some for stoking the eurozone debt crisis as well as having missed the causes of the 2008 financial crisis. The euro erased all its gains against the dollar and European markets were seen opening lower on Monday morning on the news.
S&P said both proposals put out by the French banking federation last week – and broadly endorsed by both German banks and other global financial institutions – would amount to a default.
Ilargi: That would indeed seem to be the only logical conclusion. But the IMF and ECB may have more up their sleeves yet. The best way to look at the bailout plan, meanwhile, is provided by Wolfgang Münchau at the Financial Times:
The Greek rollover pact is like a toxic CDOIt was always clear that European politicians would ultimately end up trying a complex debt product to solve the crisis. If you want to “kick the can down the road”, as the wearily favourite metaphor of the crisis goes, if you want to obfuscate facts and circumvent rules, then a variant of a collateralised debt obligation seems the perfect choice. I wonder what took them so long.
I have no space for a large drawing with lots of boxes and arrows to explain the complexity of the vehicle, through which eurozone governments want to involve the private-sector banks in its next loan package.
So here is my best attempt in words: if you own a Greek bond that matures by June 2014, you keep 30 per cent of the redemption as cash, and roll over 70 per cent into a 30-year Greek government bond. The Greeks will have to pay an annual coupon, or interest rate, of between 5.5 per cent and 8 per cent. The precise rate will depend on future economic growth.
Of the money received, Greece will lend on 30 per cent to a special purpose vehicle, another well-known construction from the subprime mortgage crisis. The SPV invests into AAA-rated government or agency bonds, and issues a 30-year zero coupon bond. The purpose of this is to guarantee the principal of the 30-year Greek government bond that you just bought.
With this construction, the downside to your losses is limited. Depending on how some of the parameters of this agreement evolve, you will probably make a small loss, relative to the par value of your holding. If you are lucky, you might come out positive. You will probably not be lucky. But you will still be better off than if you sold today, or if Greece were to default. More important, the accounting rules allow you to pretend that you are not making any losses at all.
If this was any other field of human activity, you would go to jail if you accepted, let alone made such an indecent offer. [..]
Ilargi: So when everybody sells everything, where do we draw the line between a sovereign nation and one that is "occupied"? It's hard to say, granted, but I would think that a people that wants to be in charge of its own destiny would want to always retain control of its transport and energy infrastructure: roads, waterways and ports, energy sources and supplies, etc. Control over health care services and schools seems obvious too, if you want to be and feel independent. And we haven't even mentioned land yet.
The prevailing ideology, however, has become the privatization of everything that's not bolted down (and even then...) The underlying notion, of course, is that private business is more efficient than government in running all sorts of services. Whether that's true or not is up for debate, but there's another factor at play as well: private businesses are run for profit, and profit implies growth. The question than must be asked if we really want our hospitals and prisons to be run as growth industries. After all, that would at some point necessarily mean we need more sick people, and more criminals. Yeah, you're right, that does look a lot like what we already have in the US, doesn't it?
And while the examples above deal with European nations selling off their goodies, the same happens stateside of course. Individual states, as well as counties and municipalities, are auctioning off roads and buildings as fast as they can, in desperate and doomed attempts to make budgets whole. Just like Greece does. All while awaiting the economic recovery that never seems to come, or not quick enough, or not enough enough.
The problem is that this economy, these economies, will never recover. They will never return to where they once were. They won't even return to where they are now. Because there is so much debt all around, and our leaders refuse to let the institutions that incurred it pay the bill, there's a huge amount of downside waiting for us. And selling off what should have been our children's inheritance is not going to change that. It will only make their lives that much harder. They will indeed not be sovereign people, they will not hold control over their own societies. And they will therefore have no reason left to celebrate their Independence Day. They will be serfs. Debt slaves.
The gutting of societies and their independence is not new by any stretch of the imagination. The gutting of our present societies, too, started a long time ago, with the ideas propagated by Milton Friedman and his Chicago School criminal racket. What cannot, however, be put at Friedman's feet, is the devastation to the world we live in caused by the derivatives trade. And that, to repeat myself, is where today's real danger lies. I'll leave you with something that Chris Whalen wrote on the topic two weeks ago.
Happy Fourth of July. Enjoy it while it lasts. And maybe save some for your kids.
The World Held Hostage by Credit Default Swaps[..] ... the apparent bailout for the EU banks led by BNP, Societe General and the German landesbanks is shared equally by their US derivatives counterparts. Remember, as of the end of Q1 2011, it would take just a move of less than 10bp in the aggregate value of the OTC derivatives book of JPMorgan Chase [..] to wipe out the firm's capital.
So the more accurate description is that all of the major players in the world of credit default swaps were bailed out on Friday, proof again that this financial ghetto known as OTC derivatives is adding to the systemic risk problem -- and holds the entire world hostage.
The net increase in financial exposures due to the existence of the CDS market in sovereign credit risk has not made the real economy safer, but instead multiplies the dollar amount of the basis risk in all markets, real or imagined. You cannot get rid of systemic risk and "too big to fail" until you limit credit derivative products to holders of actual debt.
Instead we have hedge funds and banks gambling on the end of the world.
The impending damage of a mark-to-market event with respect to Greece or Ireland is such that the craven fools who inhabit public offices from Paris to Washington are forced to socialize the losses of the banks. The free market is dead and we have all arrived at a sort of involuntary socialism, where the largest banks rape and pillage, and even hedge funds and other credulous players in the financial markets are turned into victims. [..]
The thing people need to appreciate is that the large banks today with respect to exposure to Greece and Ireland are in precisely the same position as was American International Group in 2007. In that case, AIG had written excessive credit insurance on mortgage backed securities in order to generate fictitious income. This financial fraud eventually collapsed, forcing the Fed of New York under Timothy Geithner to come riding to the rescue of JPM, Goldman Sachs and their derivatives counterparties in Europe because AIG could not make good on its liabilities.
In the most recent case, the major dealer banks in the EU end US have created mountains of new credit risk with respect to Greece and Ireland by selling insurance to their clients, both commercial hedgers and speculators. The latter group is far larger than the true commercial hedging needs for risk management, a side benefit of the expansionary policies of the Fed under Alan Greenspan and now Ben Bernanke. Thus the original sin of monetary accommodation by the Fed comes back to haunt us all in the form of an uncontrolled market panic fueled by cash settlement credit derivatives.
The refusal of the political class to imposes losses on large bank creditors since the collapse of Lehman Brothers and Washington Mutual in 2008 illustrates the extent to which the financialization of the western industrial economies has turned into a gradual coup d'etat by the banks and the global speculators who dominate their client base. The CDS market specifically has become so large and threatening that the politicians are even forced to renege on bets against Greece by the largest and most important bank clients.
So much of what goes on inside the typical investment bank today has nothing to do with the real economy as illustrated by the Greek situation. Much of finance today is beggar they neighbor speculation. But even the hedge funds that were betting on raging contagion are getting stiffed by the banksters and their political sponsors. Just as individual savers are being denied their due via low rate policies, the speculative class is also being stiffed by banks that cannot make good on their wagers in CDS.
By saying that the banks and their creditors cannot be made to take losses on even their speculative activities, technocrats such as Germany's Angela Merkel, France's Nicholas Sarkozy and Barack Obama have become the ambassadors for the new global ruling class. The servants of the banksters, Sarkozy, Merkel and Obama, think that they can put the entire weight of restructuring Europe and US debt on the backs of taxpayers.
Do our leaders really think that they can restructure Greece and Ireland via austerity without requiring any pain from investors in bank debt or the managers of the banks? If so, then the decision on Friday is not a solution but instead puts the western market economies on the road to further political and financial turmoil. Just as the unfair peace after WWI led to economic depression in Europe and the rise of fascism, the decision to dispense with the pretense of free market discipline in the industrial economies puts us all on the road to serfdom and political upheaval.
S&P threatens Greece with default
by Richard Milne - Financial Times
French and German banks’ plan to roll over their holdings of Greek debt suffered a huge blow on Monday as Standard & Poor’s, the credit rating agency, said the move would amount to a default.
The proposal to provide up to €30bn ($43.6bn) in financing for Greece had been made conditional on rating agencies not downgrading Greece’s debt. But S&P said in a statement early on Monday that any rollover would be a “distressed” transaction and thus lead to Greece’s rating being lowered to selective default.
Such a move all but scuppers the rollover proposal in its current form. It is also likely to further heighten European scrutiny and scepticism of rating agencies, who are blamed by some for stoking the eurozone debt crisis as well as having missed the causes of the 2008 financial crisis. The euro erased all its gains against the dollar and European markets were seen opening lower on Monday morning on the news.
S&P said both proposals put out by the French banking federation last week – and broadly endorsed by both German banks and other global financial institutions – would amount to a default. The main proposal would have seen investors reinvest 70 per cent of their holdings that mature in the next three years into new 30-year Greek bonds. The bonds would pay an interest rate of between 5.5 per cent and 8 per cent depending on the strength of Greek economic growth.
The other proposal was for investors to buy new 5-year bonds with a 5.5 per cent interest rate with the money they receive from maturing debt before mid-2014. Both proposals were meant to help give Greece up to €30bn in new financing as part of the mooted second bail-out for the highly indebted country. But analysts were sceptical that the rollover would provide so much money.
Gary Jenkins, head of fixed income at Evolution Securities, called S&P’s move “a brave decision” that meant it “might be back to the drawing board” for banks. “We are in such strange and dangerous times and anything is possible. It might be that a completely different form of bail-out has to take place, such as guaranteeing Greek debt or buying it back,” he added.
The Institute of International Finance, a grouping of some of the world’s largest banks, on Friday backed the rollover plan but also called for other options to be explored, such as debt buy-backs. Policymakers had previously floated the idea that the European financial stability facility, the temporary bail-out vehicle, could buy back Greek debt on the market but the idea was torpedoed by Germany and others.
Ratings agencies could wreck Greek rescue by declaring it a default
by Heather Stewart and Richard Wachman - Observer
Financial markets are braced for renewed turmoil this week amid growing doubts about the complex rescue plan for the debt-burdened Greek economy. Analysts are increasingly questioning the French and German governments' plan for holders of Greek bonds to swap them for new loans as part of a fresh aid package.
The Greek prime minister, George Papandreou, met his side of the rescue bargain last week by winning MPs' approval for radical new austerity measures, including €50bn of privatisations, public sector wage cuts and widespread civil service job losses. But eurozone ministers have so far failed to agree details of a new rescue, expected to be up to €110bn. The debt-swap proposal, which French and German banks have agreed to, involves offering new 30-year loans in exchange for expiring bonds, to meet Germany's demand that investors bear some of the costs of a new Greek bailout.
But analysts say it is likely that ratings agencies could still brand the plan a default. That would trigger chaos in world markets, as investors were forced to slash the value of their Greek debts - and could also lead to Portugal and Ireland, the other bailed-out eurozone states, having their debts downgraded.
Simon Derrick, chief currency strategist at BNY Mellon, said: "When you compare the French plan to what the ratings agencies have said, it looks as though they would make it a default."
Standard & Poor's said no final decision would be made on the scheme until the full details were published but pointed out a recent statement setting out the reasons a debt-swap might still constitute a default. "While an exchange offer for longer-dated bonds may appear to be 'voluntary', we may conclude that investors have been pressured into accepting because they fear more adverse consequences were they to decline the exchange offer," S&P said.
Meanwhile, it emerged that Europe's insurers have invested up to €15bn in Greek government bonds, and could be drawn into any debt-swap plan. Barclays Capital said the most heavily exposed European insurer was Italy's Generali: it has €3bn invested in Greek bonds. Groupama and CNP Assurance of France are next, exposed to €2bn apiece. Ageas of Belgium, Munich Re and Germany's Allianz are also big investors. Exposure for British insurers is said to be minimal.
On Friday, Munich Re said it had about €150m in Greek government debt falling due by 2014. A spokesman said: "We still have to see what the rollover will look like … [EU] insurers and banks would be working to clarify details in the coming days." Germany turned up the heat last week on other EU nations to agree further contributions to a second Greek rescue package after finance minister Wolfgang Schäuble indicated his country's banks would roll over about €3bn (£2.7bn) of Greek debts.
British banks are understood to be assessing their own exposure to Greece in readiness to follow the French and German lead, but have yet to announce the level of debt they will roll over.
Germany's government has pressed hard for a voluntary private sector contribution owing to increasing reluctance among the public and particularly among members of parliament to pledge more taxpayers' money to Greece.
The Greek rollover pact is like a toxic CDO
by Wolfgang Münchau - Financial Times
It was always clear that European politicians would ultimately end up trying a complex debt product to solve the crisis. If you want to “kick the can down the road”, as the wearily favourite metaphor of the crisis goes, if you want to obfuscate facts and circumvent rules, then a variant of a collateralised debt obligation seems the perfect choice. I wonder what took them so long.
I have no space for a large drawing with lots of boxes and arrows to explain the complexity of the vehicle, through which eurozone governments want to involve the private-sector banks in its next loan package.
So here is my best attempt in words: if you own a Greek bond that matures by June 2014, you keep 30 per cent of the redemption as cash, and roll over 70 per cent into a 30-year Greek government bond. The Greeks will have to pay an annual coupon, or interest rate, of between 5.5 per cent and 8 per cent. The precise rate will depend on future economic growth.
Of the money received, Greece will lend on 30 per cent to a special purpose vehicle, another well-known construction from the subprime mortgage crisis. The SPV invests into AAA-rated government or agency bonds, and issues a 30-year zero coupon bond. The purpose of this is to guarantee the principal of the 30-year Greek government bond that you just bought.
With this construction, the downside to your losses is limited. Depending on how some of the parameters of this agreement evolve, you will probably make a small loss, relative to the par value of your holding. If you are lucky, you might come out positive. You will probably not be lucky. But you will still be better off than if you sold today, or if Greece were to default. More important, the accounting rules allow you to pretend that you are not making any losses at all.
If this was any other field of human activity, you would go to jail if you accepted, let alone made such an indecent offer.
This structure is still not quite so complex as some of the more elaborate CDOs we have encountered in the global financial crisis. If you take some time to work through the arrows and boxes, you see relatively quickly that this complex structure is not a private sector participation at all. Rather it is a private sector bail-out.
It is also inevitable that Greece will default on its coupon payment at some point. The interest will be 8 per cent under a benign growth scenario, and 5.5 per cent under a not so benign one. Either way, Greece cannot pay such a high level of interest.
As Jeffrey Sachs pointed out last week in the Financial Times, if you really wanted to achieve Greek debt sustainability, you would need to reduce the interest rate to about 3 per cent. This is what Germany pays for 10-year bonds. And even then would you have to extend the maturity of those bonds as well. Neither is, unfortunately, on offer. All there is, is this dirty little con-trick. The complexity of the scheme is due to the need to persuade the rating agencies not to attach a default rating to Greek bonds.
The rollover agreement represents, from an economic point of view, nothing but a collateralised bond. It subordinates all other bondholders. The rating agencies would normally not hesitate to attach a default rating to Greek government debt. So the solution is to create a complex structure, and claim that it is technically not a collateralised bond, but something that defies definition.
Just why the Greeks would want to accept such a ruinous deal is not clear to me. They did their duty last week when they voted for the austerity programme and its implementation law.
The acceptance of the terms of this private sector participation agreement was never part of the agreement with the European Union and the International Monetary Fund. They could therefore simply refuse, and throw the ball back to Europe’s squabbling finance ministers. I doubt they will do this. They seem scared about the consequences of an immediate default.
Nevertheless, once the treacherous nature of this contraption is fully understood, I would expect the politics of crisis resolution in Greece to become even more difficult, and accident-prone.
How about Germany? Having made so much fuss about the need for private-sector involvement, Germany managed only to secure a pitiful €2bn from its own non-state sector banks. The French banks have more short-dated Greek debt securities than their German counterparts, and thus have made a correspondingly larger commitment.
Considering the line-in-the-sand rhetoric from Berlin on the issue of private sector participation, one might be surprised to hear that this tiny, cuddly, bank-friendly agreement will now miraculously secure a Yes vote in the Bundestag. The speed with which the German government is shifting inalienable positions is breathtaking.
We have learnt from the financial crisis that one should not place too much faith in financial vehicles with three-letter acronyms. But that is what we are doing with this European equivalent of a late-period subprime mortgage CDO.
We are not just “kicking” any old “can down the road” any more. This is a can of explosives.
Greek sovereignty to be massively limited: Juncker
by Erik Kirschbaum - Reuters
Greece faces severe restrictions on its sovereignty and must privatize state assets on a scale similar to the sell off of East German firms in the 1990s after communism fell, Eurogroup chairman Jean-Claude Juncker said.
In an interview published after euro zone finance ministers in the Eurogroup approved a further 12 billion euro ($17.43 billion) installment of Greece's bailout, Juncker said he was optimistic that measures agreed with Athens would help to resolve the country's problems. "The sovereignty of Greece will be massively limited," he told Germany's Focus magazine in the interview released on Sunday, adding that teams of experts from around the euro zone would heading to Greece.
"For the forthcoming wave of privatizations they will need, for example, a solution based on a model of Germany's 'Treuhand agency'," Juncker added, referring to the privatization agency that sold off 14,000 East German firms between 1990 and 1994.
The Greek parliament voted on Thursday to set up a privatization agency under austerity plans agreed with the European Union and IMF which have provoked violent protests on the streets of Athens. Greeks are acutely sensitive to any infringement of their sovereignty or suggestions of foreign "commissars" getting involved in running the country. "One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone," Juncker said.
Athens must sell off five billion euros in state assets this year alone or risk missing targets set under its EU/IMF program, which could cut off its funding needed to keep the government running and avoid a debt default. A repeat of Germany's Treuhand experience may prove bitter for Greeks, who are already suffering soaring unemployment as a recession drags into its third year.
Once the world's biggest holding company, Treuhand was supposed to sell off state property at a profit but closed its books with a huge deficit and a legacy of bitterness among the legions of workers whose jobs it destroyed. Four million Germans were employed by Treuhand-owned companies in 1990 but only about 1.5 million jobs were left in 1994 when the agency closed.
Instead of reaping profits to be distributed to all east Germans, as it was designed to do, it ran up debts of 270 billion marks ($172 billion) in the fire sale of assets.
"Not Fully Functional"
Juncker, also Luxembourg's Prime Minister, first floated the idea of a Treuhand-style agency for Greece in May. He said then he believed Greece could raise considerably more than the 50 billion euros in asset sales. "The current package of measures, which Athens has agreed to, will bring a solution to the Greek question," he said in the Focus interview. However, he added that the Greek tax collection system was "not fully functional."
On Saturday, euro zone finance ministers agreed that the fifth tranche of the 110-billion-euro bailout agreed with Greece in May 2010 would be paid by July 15, as long as the IMF's board signs off on the disbursement. The IMF is expected to meet on July 8 to approve it. The payment will allow Greece to avoid the immediate threat of default, but the country still needs a second rescue package, which is also expected also to total around 110 billion euros and which will now probably be finalized only in September.
Juncker said the Greek crisis had been largely caused by itself. "Between 1999 and 2010 wages rose 106.6 percent even though the economy did not grow at the same pace. The wage policies were completely out of control and not based on (gains in) productivity," he said.
Sell, sell, sell: everything must go in great fire sale
by Polly Curtis, Lisa O'Carroll, Giles Tremlett, John Hooper and Suzie Bird - Guardian
Europe's most indebted countries – and Britain – have put prized assets up for grabs to bolster their creditworthiness. So what exactly is on offer?
Greece
Europe's most ambitious sell-off is taking place in its most indebted nation: Athens plans to sell €50bn (£45bn) of state assets by 2015.
Looking at the sales list, it seems that very little has been left off the table. The government's stakes in the ports of Piraeus and Thessaloniki, 39 airports, a state lottery, a horse-racing concession, a casino, a national post office, two water companies, a nickel miner and smelter, hundreds of miles of roads, a telecoms operator, shares in two banks, electricity and gas monopolies and thousands of hectares of land, including coastal stretches, are among the host of assets on offer.
While a 50% stake in Athens international airport is probably the best-known asset on the block, when it comes to sheer beauty the Anavyssos saltworks could prove difficult to beat. The saltworks, an hour south of Athens, shut down in 1969, and is situated on a mile-and-a-half of beach.
However, while Greece's privatisation scheme apparently offers plenty of desirable assets, experts say the country will struggle to raise the hoped-for €50bn because investors are wary of the country's bureaucracy, strong unions, corruption and lack of transparency. Barely a year ago, Greece itself estimated that privatisation could raise, at best, €1bn to €2bn a year.
Ireland
The national airline, ports, power stations and even the Irish National Stud, which hosted a visit by the Queen in May, face being broken up or sold off under plans to get Ireland out of the red. A government-commissioned review of state assets published in April said privatisation could raise about €5bn for the cash-strapped country.
Energy suppliers, transport and sporting assets were all earmarked for divestment. However, the plans could end up in the shredder. The Irish government is in no rush to sell off the family silver and the private equity company Terra Firma, which made an approach about the sale of Electricity Supply Board assets, was told that no talks could take place.
The economist Colm McCarthy, who chaired the Review Group that wrote the report, recommended the break-up of the electricity and the gas boards. Other assets he recommended putting on the block include Rosslare port, Dublin Bus and the government's 25% stake in Aer Lingus, which recently celebrated its 75th anniversary.
The Irish Aviation Authority, which regulates aviation and provides air traffic control services in Irish airspace and the north Atlantic, could be merged with the UK's National Air Traffic Services or other north-west European services, and the forestry commission should dispose of forests but the land they grow on should remain in state hands, McCarthy said.
On the sports front, the National Stud should be sold and Horse Racing Ireland should put racecourse interests up for sale. The greyhound racing body should also get rid of its stakes in dog tracks.
But the report was attacked in parliament and the government agreed there would be no "fire sale" of assets and certainly no sale until market conditions improve. Joe Higgins, a Socialist member of parliament, branded the privatisation blueprint a "neoliberal huckster's deal which will involve pawning the assets of the people to pay off moneylenders".
So far little progress has been made and McCarthy has also said that he would be surprised if any assets could be sold this year. Top of the government's wish list is the sale of its stakes in the five bailed-out banks but until they emerge from the current wreckage there are unlikely to be buyers. The country's biggest life insurance operation – Irish Life – is being prepared for a trade sale on government orders. It is expected to fetch about €1.6bn but this will be used to shore up losses at the bailed-out sister bank Permanent TSB, which will disappear from the high street.
Spain
The world's biggest annual lottery payout, Spain's famous Christmas El Gordo (Fat One), spreads joy to tens of thousands of winners – but the biggest winners of all may soon be investors who snap up part of the state company behind the lottery.
The country's State Betting and Lottery (LAE), which offers a series of prize draws, also brings a huge dose of Christmas cheer to the country's treasury. Of the €2.15bn Spaniards bet on the draw, almost a third is retained by the lottery administrator.
Spain is not as badly indebted as other European countries, but bond yields have soared as Greece, Ireland and Portugal have been forced into bailouts. Spain's socialist government, led by José Luis Rodríguez Zapatero, has set strict deficit targets to avoid the fate of its southern European neighbours. Sales of stakes in the state lottery and the country's airports authority form part of the plan for pulling safely back from the brink.
Some 30% of the state lottery will be sold as the organisation behind the 151-year-old El Gordo becomes what may be the world's biggest listed gambling company, valued at up to €25bn. The company recorded €3bn net profit in 2009 on sales of €9.8bn – meaning the sell-off will reduce treasury income by about €1bn a year.
RBS recently won a contract to run the privatisation of up to 49% of Spain's airports authority, AENA, which has a book value of €2.6bn. The government also plans to auction off Madrid's Barajas airport and Barcelona's El Prat by the end of the year. Reform of the country's savings banks means that many will also soon be seeking stock market listings.
Portugal
Neighbouring Portugal is in even starker need of money after accepting a €78bn bailout. On Thursday, the newly elected centre-right prime minister, Pedro Passos Coelho, announced a rush sale of state holdings in the utility company Energias de Portugal and the power-grid operator REN by October.
Passos Coelho recently told the Financial Times that he wanted to sell off up to 49% of water utilities as well as several state media interests, reportedly including television and radio channels, plus the national news agency Lusa.
The state airline TAP and the airport owner ANA – which runs airports in Lisbon, Faro, Oporto and the Azores – are also due to be sold along with the insurance business of the state-run bank CGD, although the government had not given a time frame. Portugal will also be selling off real estate belonging to its civil governors' offices, which are being scrapped.
Italy
There had been talk of Silvio Berlusconi's debt-laden government raising cash by means of privatisation. But a package of fiscal adjustment measures being finalised in cabinet this week appeared to include only one sell-off.
The government was expected to clear the way for radio frequencies to be auctioned off to telephone companies. The frequencies, made available by the shift to digital radio, were expected to bring in €2.4bn. The package of cuts, which has yet to be approved by parliament, aims to trim €47bn from the projected budget deficit but the bulk of the squeeze – €40bn – has been deferred until after 2012.
Britain
The coalition government in Westminster is in the process of selling off the 49% state stake in the air traffic control service Nats, decommissioned naval ships and its own collection of fine wine.
In the March budget the chancellor, George Osborne, set a target of raising £2bn from asset sales to finance the Liberal Democrat's idea for a green investment bank. The bulk of that is coming from the sale of its remaining stake in Nats and the Tote, the government-owned bookmakers. The private bookmakers Betfred have been chosen to buy the Tote for a reported price of £200m.
Last week, the telecoms regulator Ofcom approved plans to sell spectrum for mobile broadband. Ministers will decide this summer whether to proceed with the sale of the student loan book and in the March budget, the Treasury indicated that plans for a new Public Data Corporation would involve selling public data to the private sector.
Plans in the budget to sell off government buildings have been stymied by the poor property market and many departments are opting to "sweat their assets" instead by squeezing more people into the buildings in order to get out of expensive leases elsewhere. The Treasury is renting desk space to the Cabinet Office to allow it to end an expensive lease.
Dozens of judicial buildings are due to go up for sale as the coalition pushes through its rationalisation of the courts service with a reduction in number by 142, including 93 magistrates courts. The government is planning to sell off HMS Ark Royal, the aircraft carrier that was decommissioned in March after 25 years' service. The deadline for bids is next month, and among those bidding is someone hoping to sink it off the Devon coast and turn it into a wreck for divers.
The Commons has announced it will sell its wine cellar though the proceeds will not go to the Exchequer but to fund a larger stock of cheaper wine for official functions. The British public's appetite for the sell-off of public assets has been sorely tested and other attempts have gone spectacularly wrong.
Plans to sell off as much as 150,000 hectares of forest and woodland in England in the biggest sale of public land for nearly 60 years were confirmed by MPs in October last year. The U-turn – after a huge groundswell of public opposition –came in February.
Greece Awaits Further Rescue
by Laurence Norman and Nathalie Boschat - Wall Street Journal
Euro-zone finance ministers signed off on a new slice of bailout money for Greece, avoiding a financial meltdown this month, but left themselves with a heavy task ahead to work out details for a new rescue package for the country.
The ministers' agreement in a teleconference call on Saturday evening leaves only the expected approval of the board of the International Monetary Fund before €12 billion ($17.4 billion) is handed over to Athens. The payment is expected by July 15. The IMF said it welcomed the "euro group's commitment to a financing strategy" for Greece.
Ministers also decided they would agree by September on arrangements for a new bailout to supplement the €110 billion package they agreed on last year but which fell short mainly because Greece is unable to raise money in financial markets as had been expected.
German Finance Minister Wolfgang Schäuble said after the teleconference that a new aid package for Greece could be approved by autumn, in time for the next expected quarterly tranche of EU/IMF aid. The Greek finance ministry also said a deal was expected by mid-September. The ministers said they will continue to work on ways to encourage holders of maturing Greek government bonds to contribute to the new rescue package. The ministers said the "precise modalities and scale of private-sector involvement and additional funding from official sources will be determined in the coming weeks."
This is likely to be achieved through encouraging private investors to reinvest some of the proceeds from maturing Greek bonds into new debt. The ministers reiterated their position that any such plan must avoid Greece being declared in "selective default" by credit-rating agencies.
A European official said that even though euro-zone governments may not agree the outlines of the second bailout package by July 11—as they had intended—there would be "full clarity" on private-sector involvement later this month. He said that would include an estimate of the size of private-sector contribution and the overall bailout package. Officials have said in the past they hope for a €30 billion contribution from bondholders by 2014, but it isn't clear if this will be achieved. The rest of the new package is expected to include a €30 billion in contributions from Greek privatizations and as much as €90 billion in new official funds. "We don't expect any surprises," the EU official said.
Approval for the next payment of last year's bailout had been widely expected after the Greek parliament on Thursday approved a new €28 billion austerity package aimed at shoring up government finances through 2015. That vote took place two weeks after the near-collapse of the Greek government and amid mass street protests.
A French official also said on Saturday evening that the ministers are aiming to "work quickly" on the details of private-sector involvement in a second package. The official, who was briefed on the call, said the finance ministers didn't discuss details of private-sector involvement on Saturday's call but talked about the broad principles that would underlie the participation of private creditors and about the time frame for a plan.
The main scenario on the table for private-sector participation is a debt-rollover proposal floated by French banks last week, the official said, cautioning this doesn't mean this proposal would eventually be adopted. Under the French banks' plan, private creditors would buy €50 of 30-year Greek bonds and €20 of high-grade assets for every €100 redeemed by the Greek Treasury. The low-risk assets would be put into a fund and serve as a guarantee in case Greece defaulted on the long-term bonds.
On Friday, the Institute of International Finance, a Washington-based grouping of more than 400 financial institutions world-wide, recommended that Greece's creditors consider expanding the French plan to include a bond-buyback program. The IIF proposal wasn't discussed in depth by the ministers, the French official said.
On Saturday, the euro-zone finance ministers again urged all Greek political parties to work together and said a new bailout program will depend upon "a continued strong commitment" from Greece "to implementing fiscal consolidation measures as well as ambitious and concrete structural reform and privatization plans." The ministers also signaled there would be heavy external monitoring of Greek economic policy implementation, saying further financial support would come with "large-scale technical assistance, provided by the Commission and member states."
Luxembourg Prime Minister Jean-Claude Juncker said in an interview published Sunday that Greece must be ready to see foreigners help decide about its privatization program, Agence France-Presse reported. "The Greeks' sovereignty will be massively constrained," he told the German magazine Focus. The finance ministers decided to hold a conference call Saturday, canceling plans for a meeting in Brussels on Sunday.
Greece to see out year in recession
by Kerin Hope - Financial Times
The European Union has warned that Greece will stay in recession for the rest of this year, upending forecasts of a return to growth in the third quarter. The economy is set to shrink 3.75 per cent in 2011 and will show only marginal growth in 2012, according to the European Commission’s quarterly report on the debt-stricken country’s reform effort.
“Contrary to earlier expectations, economic activity is expected to continue contracting in the second half of 2011 as additional fiscal consolidation and liquidity constraints are taking their toll on the economy,” it said. Weaker activity this year on the back of the extra measures “implies a smaller growth rate – 0.6 per cent – in 2012”.
The report, by experts from the commission and the European Central Bank, was made public after European finance ministers approved a loan tranche of €8.7bn on Saturday, ensuring that Athens would be able to meet debt repayments due this month. Greece’s central bank has forecast that the economy will shrink this year by 3.9 per cent.
Analysts said a longer recession than expected would be likely to aggravate political and social tensions as the socialist government tries to implement painful reforms in return for a second bail-out by international lenders. Greece has agreed to reduce the government payroll by 20 per cent and privatise state-controlled utilities – moves that have triggered strikes by the country’s powerful public sector unions.
On top of structural reforms, the finance ministry has announced fresh tax rises and spending cuts in an effort to plug a projected €3.8bn hole in this year’s budget. Revenues are lagging behind targets as economic activity has reduced.
Tax receipts fell 7.1 per cent in the first five months on an annual basis – against a target increase of 8.5 per cent for the whole of 2011. Tax officials opposed to the closure of about 200 regional tax offices under an anti-corruption plan have been staging a work-to-rule since the start of the year. “Persistent dysfunction of the revenue collection mechanism and widespread tax evasion continued to weigh on budget revenues,” said Platon Monokroussos of EFG Eurobank.
The deteriorating economic outlook has undermined the governing socialists’ approval ratings with 80 per cent of respondents saying “worse times are coming”, according to an opinion poll in Paron, an Athens Sunday newspaper. The socialists trailed the opposition conservatives by 1.3 per cent, the poll found.
Antonis Samaras, the opposition leader, who refused to back the medium-term austerity package approved last week by parliament, held a 1.5 point lead over George Papandreou, the prime minister, Paron said. A violent attack at the weekend on a socialist lawmaker in his central Greek constituency highlighted the tension after last week’s riots in Athens. Protesters in Lamia threw yoghurt and eggs at Nikos Tsionis, a backbencher leaving a local party meeting, then punched him after scuffling with his police escort.
Greek debt 'a threat to Irish recovery'
by Richard Blackden - Telegraph
Ireland's nascent economic recovery could be threatened by the failure to find a long-term solution to Greece's debt crisis, says the man tasked with for attracting foreign companies to the country.
"I think it's important that the issues be got under control sooner rather than later," said Barry O'Leary, chief executive of Ireland's Investment and Development Agency (IDA). "The thing you have to be careful of is if Greece went wrong, what sort of knock-on effect there would be not just in Portugal and Spain but in countries like Italy and Belgium."
Ireland became the second of the euro countries to be rescued when it accepted an €85bn (£77bn) bail-out from the European Central Bank and the International Monetary Fund last November. While Ireland now doesn't need to borrow again from the bond markets until 2013, the global instability caused by the ongoing crisis won't help its ambitions of an export-led recovery. However, Mr O'Leary said that the pipeline of companies planning to establish operations in Ireland looks encouraging.
One of India's biggest technology companies will later this month announce plans to establish a European headquarters in Ireland, while a major US technology company will do the same later this summer, he said, declining to name them. Attracting foreign companies to Ireland is central to its recovery plans because they generate 80pc of the country's exports.
The Irish government has so far resisted heavy pressure from other European countries to lift its corporate tax rate from 12.5pc in exchange for paying less interest on its bail-out loans. "We will not be tampering with the 12.5pc tax rate," said Mr O'Leary, though he insisted that a skilled labour force and technology are also critical when trying to drum up investment.
There are signs that Ireland's export strategy is helping the economy escape from the collapse a decade-long housing and construction boom, which has in turn left the country's banks in intensive care. The economy grew 1.3pc in the first quarter, as exports jumped 3.8pc. The bust "has been a nasty lesson," Mr O'Leary told the Sunday Telegraph on a visit to New York. "People are very, very angry but they're not on the streets."
The IDA, which has just over 30 staff in six offices in the US, has stepped up its global efforts since the financial crisis and opened offices in China, India and Singapore. While technology and pharmacutical sectors been key pillars of a strategy Ireland first embarked upon in the early 1990s, the recent focus has been on the new wave of social media companies spilling out of California.
Google, Facebook and LinkedIn, the professional networking site, all have significant operations in Ireland. Zynga, the social gaming company that filed for a multi-billion dollar flotation on Friday, opened its European headquarters in Dublin earlier this year. "The important thing is to win the new movers," said Mr O'Leary. "Once you get a few of the leaders, you tend to get all the other services around them." The IDA's office in Mountain View, California, approached Zynga before it was considering international expansion. The California office, says Mr O'Leary, has one person whose job it is to comb Silicon Valley for the start-ups that are likely to be successful and need a European base.
Greek-Style Austerity Would Be Hell for Germans
by Yasmin El-Sharif and Stefan Kaiser - Spiegel
Tough times are ahead for the Greeks, with the government raising taxes, cutting social benefits and selling off state enterprises. Berlin has led the European pack in demanding the measures from Athens. But economists say Germany would be overwhelmed if it were forced to implement similar measures.
The Germans are always way ahead when it comes to austerity measures -- at least when it comes to having an opinion on what cuts other countries should make. The multi-billion-euro austerity package passed by the Greek parliament on Wednesday largely came about because of pressure from Berlin. In recent weeks, Chancellor Angela Merkel and other European Union leaders had repeatedly said that additional aid for Athens would be contingent on more belt-tightening.
The result is a radical austerity package that will mean some €78 billion ($113 billion) in savings and additional revenue by 2015. Some €50 billion will come from privatizations and another €28 billion through tax increases and cuts to social benefits. This comes on top of savings of almost €12 billion last year, when more than 80,000 public workers were sacked and those that remained had their wages cut by 15 percent. Pensions also saw a 10 percent reduction.
The Germans see the Greeks' need to scrimp as self-evident. But could the Germans themselves cope with such penury? Experts are skeptical. "When one considers how much we Germans bickered over €5 more or less for Hartz IV (welfare benefits), it's easier to understand what we're demanding of the Greeks," said Ulrich Blum, president of the Halle Institute for Economic Research (IWH). "Such cuts would also cause problems for the German government in terms of its ability to run the country."
To envisage how such a program would burden the country, a little math is involved. Together with last year's austerity measures, the Greeks hope to save €40 billion by 2015 using tax increases and spending cuts alone. That doesn't sound very dramatic, but the figure alone reveals little. To gain a real sense of the Greeks' savings efforts, one has to look at it in relation to gross domestic product -- the country's entire economic output. Then it becomes clear that within just five years, the Greeks want to cut spending by the equivalent of 17 percent of their total GDP in 2010.
Similar Measures Would Crush German Economy
Applying this to Germany would amount to a savings goal of €425 billion -- a gigantic sum that would mean the complete collapse of the German economy. "Removing that much money from the economy in such a short period of time would kill everything off," said Gustav Horn, head of the Macroeconomic Policy Institute (IMK). In order to reach savings of over €400 billion, Germany would have to slash spending in the areas where it has the highest expenditures -- many of which are essential to the fabric of German society and its social-welfare model. The country would have to cut some €71 billion each year in the period until 2015.
Just to give you an idea of what would be involved in order to make savings of that magnitude, if the German government cut state subsidies for pensions, say, it would save around €80 billion a year. Slashing unemployment benefits in addition to this would bring the total savings to €120 billion. Another easy way to save money would be to simply close all the country's kindergartens, schools, universities and other educational facilities. After all, they cost the federal, state and local governments more than €100 billion each year.
The political and social price for such radical reforms would be enormous. Pensions and civil servant salaries are sacred cows that neither state-level governments nor the federal government would slaughter. And public workers already crippled the nation's universities, hospitals, and administrative offices earlier this year when they went on strike to demand higher wages. The kind of chaos they would cause if their wages were slashed is unimaginable.
If the government chose not to make cuts, the only remaining option would be tax increases. But such a measure would garner only a comparatively small sum. If the so-called "solidarity surcharge," levied to pay for the costs of German reunification, were to be doubled from 5.5 percent of an individual's income tax to 11 percent, it would raise a measly €13 billion. Charging the full 19 percent rate of value-added tax (similar to sales tax) on goods such as books and food, which are currently taxed at a reduced rate of 7 percent, would bring in a maximum of €25 billion. But increasing the rate of VAT to 25 percent, as has been suggested, would rake in some €70 billion -- assuming people would consume as much as they do today despite the higher prices.
Social Unrest Is Inevitable
The Germans would also have to exert enormous efforts to achieve the equivalent of the €50 billion in revenues that Greece is aiming to get from privatizating state assets -- despite having seven times the population and correspondingly larger state-run companies.
To compare, the 32 percent stake that the German state holds in Deutsche Telekom is worth about €14 billion on the stock exchange, but would bring in much less if sold under pressure. The once-planned partial privatization of national rail provider Deutsche Bahn would have yielded proceeds of €5 billion to €8 billion.
But Germany already privatized a large portion of its former state enterprises in the past, and has therefore already done the painful work that Greece now has to push through in record time. Athens' reforms are bound to cause social upheaval, experts fear. "Imagine if Germany hadn't privatized its state-owned companies like Volkswagen, Lufthansa, Deutsche Telekom and Deutsche Post bit by bit over the years, but had to do it all within two years," says economic researcher Ulrich Blum. "It would put enormous pressure on the economy."
Greece's situation is similar to that of East Germany at the time of reunification, Blum feels. "Just like East Germany back then, Greece today can expect the transformation to trigger a shock," he says. "When the enormous public sector is trimmed down to a level that is efficient, enormous underemployment will arise. The unemployment rate could double in a short period of time."
The outlook for Greece is far from rosy. Should the government actually implement all of the recently ratified austerity measures, the country will remain in recession for a long time to come -- and social unrest will follow. Economizing, it seems, is not nearly as simple as many Germans assume.
The Q Ratio: The Stock Market Is Overvalued Between 48% And 61%
by Doug Short - DShort.com
The Q Ratio is a popular method of estimating the fair value of the stock market developed by Nobel Laureate James Tobin. It's a fairly simple concept, but laborious to calculate. The Q Ratio is the total price of the market divided by the replacement cost of all its companies. Fortunately, the government does the work of accumulating the data for the calculation. The numbers are supplied in the Federal Reserve Z.1 Flow of Funds Accounts of the United States, which is released quarterly.The first chart shows Q Ratio from 1900 to the present. I've estimated the ratio since the latest Fed data (through 2011 Q1) based on a combination of the price of VTI, the Vanguard Total Market ETF, and an extrapolation of the Z.1 data itself.
Interpreting the Ratio
The data since 1945 is a simple calculation using data from the Federal Reserve Z.1 Statistical Release, section B.102., Balance Sheet and Reconciliation Tables for Nonfinancial Corporate Business. Specifically it is the ratio of Line 35 (Market Value) divided by Line 32 (Replacement Cost). It might seem logical that fair value would be a 1:1 ratio. But that has not historically been the case. The explanation, according to Smithers & Co. (more about them later) is that "the replacement cost of company assets is overstated. This is because the long-term real return on corporate equity, according to the published data, is only 4.8%, while the long-term real return to investors is around 6.0%. Over the long-term and in equilibrium, the two must be the same."The average (arithmetic mean) Q Ratio is about 0.71. In the chart below I've adjusted the Q Ratio to an arithmetic mean of 1 (i.e., divided the ratio data points by the average). This gives a more intuitive sense to the numbers. For example, the all-time Q Ratio high at the peak of the Tech Bubble was 1.82 — which suggests that the market price was 158% above the historic average of replacement cost. The all-time lows in 1921, 1932 and 1982 were around 0.30, which is about 57% below replacement cost. That's quite a range.
Another Means to an End
Smithers & Co., an investment firm in London, incorporates the Q Ratio in their analysis. In fact, CEO Andrew Smithers and economist Stephen Wright of the University of London coauthored a book on the Q Ratio, Valuing Wall Street. They prefer the geometric mean for standardizing the ratio, which has the effect of weighting the numbers toward the mean. The chart below is adjusted to the geometric mean, which, based on the same data as the two charts above, is 0.65. This analysis makes the Tech Bubble an even more dramatic outlier at 179% above the (geometric) mean.
Extrapolating Q
Unfortunately, as I mentioned earlier, the Q Ratio isn't a very timely metric. The Flow of Funds data is over two months old when it's released, and three months will pass before the next release. To address this problem, I've been making estimates for the more recent months based on changes in the market value of the VTI, the Vanguard Total Market ETF. In an effort to improve my estimates, I'm now using a combination of the VTI price change and an extrapolation of the Flow of Funds data itself.Bottom Line: The Message of Q
The mean-adjusted charts above indicate that the market remains significantly overvalued by historical standards — by about 48% in the arithmetic-adjusted version and 61% in the geometric-adjusted version. Of course periods of over- and under-valuation can last for many years at a time, so the Q Ratio is not a useful indicator for short-term investment timelines. This metric is more appropriate for formulating expectations for long-term market performance. As we can see in the next chart, the current level of Q has been associated with several market tops in history — the Tech Bubble being the notable exception.
Please see the companion article Market Valuation Indicators that features overlays of the Q Ratio, the P/E10 and the regression to trend in US Stocks since 1900. There we can see the extent to which these three indicators corroborate one another.
Tensions rise on Capitol Hill as America runs out of money
by Dominic Rushe - Observer
Not so long ago, the Onion, America's satirical "newspaper", ran a story about what had happened to the real Barack Obama. You know, the one who was all about change and "the audacity of hope". Apparently, he had been kidnapped by an imposter bent on destroying the president by turning him into a "wishy-washy loser". But with another election looming, and a new financial crisis brewing across the Atlantic, the old Obama seems to be back.
By 2 August the US must raise the legal limit on its $14.3 trillion debt or face dire consequences, and Republicans and Democrats have been locked in battle on Capitol Hill. With the crunch deadline approaching, Obama hit out at Republicans last week, saying they favoured corporate jet owners over children and the elderly. Those high-flying fat cats got six mentions in a speech that set out the president's combative stance.
"Before we ask our seniors to pay more for healthcare, before we cut our children's education, it's only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no other business enjoys," Obama said.
The Republicans came back just as hard. Fired up by rightwing, Tea Party-backed newcomers, the Republicans now control the House of Representatives. House speaker John Boehner said Obama was "sorely mistaken" if he believed he could muster enough votes to raise the debt ceiling and raise taxes. "The votes simply aren't there, and they aren't going to be there," Boehner warned. So bad have things got that the politicos are working tomorrow, on 4 July, the Independence Day holiday.
All this political posturing is about to have very serious consequences, according to economists. Some are predicting a second recession if it doesn't get sorted out soon. But, as the deadline approaches, both sides seem, if anything, to be toughening their stance.
It takes two votes to keep America's finances running: one vote to pass budget bills, another to borrow the money. There have been plenty of rows about the borrowing limit in the past. But after conditions are imposed and compromises reached, the limit has always been raised before the US treasury ran out of cash. This year may be different. With US debt at levels unseen in 60 years, Republicans are insisting on at least $2tn (£1.25tn) in spending cuts over 10 years and no tax increases.
If a deal cannot be reached before 2 August, the treasury says it will be forced to default on its debts. No one knows quite what that means yet. Will it choose to stop paying interest, a move that could trigger a global financial crisis? Or will pensioners, soldiers, contractors and other government workers find Uncle Sam welching on his bills?
Either way, economist argue, already jittery financial markets could go into meltdown. "When you start to voluntarily jeopardise the perceived integrity of your government in financial markets, you are creating long-term difficulties. People are never going to forget this," said David Levy, chairman of the Jerome Levy forecasting centre.
Last week 235 senior economists wrote to Washington's bigwigs, warning: "Reaching the limit on total outstanding debt could force a dramatic and sudden cut in federal spending that would destroy jobs and threaten the recovery."
Mark Zandi, chief economist at Moody's Analytics, said: "Our biggest problem now is the fragile nature of the recovery. Confidence is lacking. If anything goes off track, people freeze." He predicts that if the row continues on into July, financial markets – distracted in recent weeks by the shenanigans in Greece – will start to get more and more unsettled. "If we get to August, things will get a lot worse."
Even if an agreement cannot be reached, the US could afford to pay interest on its debts. Of every dollar the US spends, about 60 cents comes from revenues, such as taxes, and 40 cents is borrowed money. If the US gets to August and has not raised its borrowing limits, it will have to decide where to cut that 40 cents. Not paying the interest on its loans is a "nightmare scenario", says Paul Ashworth, chief US economist at Capital Economics. Markets could go haywire, with global consequences.
But the interest rate payments probably amount to 5-10 cents of that dollar, Ashworth calculates. "Even with 60 cents you could pay that. But that means massive cuts to the rest of spending. Contractors, social security, unemployment, tax rebates. Spending in the overall economy would plummet, with severe consequences."
According to the Washinton-based Bipartisan Policy Centre, if an agreement is not reached soon, the US will no longer be able to pay all its bills somewhere between 2 August and 9 August. The consequences would be immediate and "harrowing".
Federal spending would have to be reduced by as much as 44% for the remainder of the month as the treasury prioritises payments to remain under the debt limit. Choices would have to be made between paying $49.2bn in social security benefits, $34.6bn in defence spending, and $12.8bn in unemployment benefits. Rating agencies, having already threatened to downgrade US debt, would probably do so. Double-dip recession, here we come.
With so many lining up to paint such a nightmarish picture, it's a wonder the political elite is not lining up to call for a solution. "All we need now is an agreement on a broad outline on reductions in the deficit," said Zandi. "The election is the referendum on how to achieve that goal."
With 17 months still to go, that election has already begun. The reinvigorated Obama is up there championing pensioners against the jet set; his Tea Party haters are calling for greater responsibility and an end to Obama's "socialism". By the time summer hits its height, the consequences of this spat could be felt around the world.
The Deficit Is Worse Than We Think
by Lawrence B. Lindsey - Wall Street Journal
Normal interest rates would raise debt-service costs by $4.9 trillion over 10 years, dwarfing the savings from any currently contemplated budget deal.
Washington is struggling to make a deal that will couple an increase in the debt ceiling with a long-term reduction in spending. There is no reason for the players to make their task seem even more Herculean than it already is. But we should be prepared for upward revisions in official deficit projections in the years ahead—even if a deal is struck. There are at least three major reasons for concern.
First, a normalization of interest rates would upend any budgetary deal if and when one should occur. At present, the average cost of Treasury borrowing is 2.5%. The average over the last two decades was 5.7%. Should we ramp up to the higher number, annual interest expenses would be roughly $420 billion higher in 2014 and $700 billion higher in 2020.
The 10-year rise in interest expense would be $4.9 trillion higher under "normalized" rates than under the current cost of borrowing. Compare that to the $2 trillion estimate of what the current talks about long-term deficit reduction may produce, and it becomes obvious that the gains from the current deficit-reduction efforts could be wiped out by normalization in the bond market.
To some extent this is a controllable risk. The Federal Reserve could act aggressively by purchasing even more bonds, or targeting rates further out on the yield curve, to slow any rise in the cost of Treasury borrowing. Of course, this carries its own set of risks, not the least among them an adverse reaction by our lenders. Suffice it to say, though, that given all that is at stake, Fed interest-rate policy will increasingly have to factor in the effects of any rate hike on the fiscal position of the Treasury.
The second reason for concern is that official growth forecasts are much higher than what the academic consensus believes we should expect after a financial crisis. That consensus holds that economies tend to return to trend growth of about 2.5%, without ever recapturing what was lost in the downturn.
But the president's budget of February 2011 projects economic growth of 4% in 2012, 4.5% in 2013, and 4.2% in 2014. That budget also estimates that the 10-year budget cost of missing the growth estimate by just one point for one year is $750 billion. So, if we just grow at trend those three years, we will miss the president's forecast by a cumulative 5.2 percentage points and—using the numbers provided in his budget—incur additional debt of $4 trillion. That is the equivalent of all of the 10-year savings in Congressman Paul Ryan's budget, passed by the House in April, or in the Bowles-Simpson budget plan.
Third, it is increasingly clear that the long-run cost estimates of ObamaCare were well short of the mark because of the incentive that employers will have under that plan to end private coverage and put employees on the public system. Health and Human Services Secretary Kathleen Sebelius has already issued 1,400 waivers from the act's regulations for employers as large as McDonald's to stop them from dumping their employees' coverage.
But a recent McKinsey survey, for example, found that 30% of employers with plans will likely take advantage of the system, with half of the more knowledgeable ones planning to do so. If this survey proves correct, the extra bill for taxpayers would be roughly $74 billion in 2014 rising to $85 billion in 2019, thanks to the subsidies provided to individuals and families purchasing coverage in the government's insurance exchanges.
Underestimating the long-term budget situation is an old game in Washington. But never have the numbers been this large. There is no way to raise taxes enough to cover these problems. The tax-the-rich proposals of the Obama administration raise about $700 billion, less than a fifth of the budgetary consequences of the excess economic growth projected in their forecast. The whole $700 billion collected over 10 years would not even cover the difference in interest costs in any one year at the end of the decade between current rates and the average cost of Treasury borrowing over the last 20 years.
Only serious long-term spending reduction in the entitlement area can begin to address the nation's deficit and debt problems. It should no longer be credible for our elected officials to hide the need for entitlement reforms behind rosy economic and budgetary assumptions. And while we should all hope for a deal that cuts spending and raises the debt ceiling to avoid a possible default, bondholders should be under no illusions. Under current government policies and economic projections, they should be far more concerned about a return of their principal in 10 years than about any short-term delay in a coupon payment in August.
Mr. Lindsey, a former Federal Reserve governor and assistant to President George W. Bush for economic policy, is president and CEO of the Lindsey Group.
We Knew They Got Raises. But This?
by Pradnya Joshi - New York Times
It turns out that the good times are even better than we thought for American chief executives.
A preliminary examination of executive pay in 2010, based on data available as of April 1, found that the paychecks for top American executives were growing again, after shrinking during the 2008-9 recession. But that study, conducted for The New York Times by Equilar, an executive compensation data firm based in Redwood City, Calif., was just an early snapshot, and there were even more riches to come. Some big companies had not yet disclosed their executive compensation.
So Sunday Business asked Equilar to run the numbers again. Brace yourself.
The final figures show that the median pay for top executives at 200 big companies last year was $10.8 million. That works out to a 23 percent gain from 2009. The earlier study had put the median pay at a none-too-shabby $9.6 million, up 12 percent. Total C.E.O. pay hasn’t quite returned to its heady, prerecession levels — but it certainly seems headed there. Despite the soft economy, weak home prices and persistently high unemployment, some top executives are already making more than they were before the economy soured.
Pay skyrocketed last year because many companies brought back cash bonuses, says Aaron Boyd, head of research at Equilar. Cash bonuses, as opposed to those awarded in stock options, jumped by an astounding 38 percent, the final numbers show. Granted, many American corporations did well last year. Profits were up substantially. As a result, many companies are sharing the wealth, at least with their executives. “We’re seeing a lot of that reflected in the pay,” Mr. Boyd says.
And at a time of so much tumult in the media business, it might be surprising that some executives in media and communications were among the most richly rewarded last year. The preliminary and final studies put Philippe P. Dauman, the chief executive of Viacom, at the top of the list. Mr. Dauman made $84.5 million last year, after signing a new long-term contract that included one-time stock awards. Leslie Moonves, of the CBS Corporation, got a 32 percent raise and reaped $56.9 million. Michael White of DirecTV was paid $32.9 million, while Brian L. Roberts of the Comcast Corporation and Robert A. Iger of the Walt Disney Company each received pay packages valued at $28 million.
“Media firms seemed to be paying a lot,” said Carol Bowie, head of compensation policy development at ISS Governance, which advises large investors on corporate governance issues like proxy votes. “Media companies in general tend to be high-payers, and they tend to feed off each other.”
Other big payers included oil and commodities companies like Exxon Mobil and a few technology giants like Oracle and I.B.M. Some of the other highly paid executives on the new list who were not in the April survey are Gregg W. Steinhafel of Target, who had a $23.5 million pay package; Michael E. Szymanczyk of Altria, $20.77 million; and Richard C. Adkerson of Freeport-McMoRan Copper & Gold, $35.3 million.
Most ordinary Americans aren’t getting raises anywhere close to those of these chief executives. Many aren’t getting raises at all — or even regular paychecks. Unemployment is still stuck at more than 9 percent. In some ways, chief executives seem to live in a world apart when it comes to pay. As long as shareholders think that the top brass is doing a good job, executives tend to be well paid, whatever the state of the broader economy. And some corporate boards were probably particularly generous in 2010 after a few relatively lean years for their top executives. In other words, some of this was makeup pay.
“What is of more concern to shareholders is that it looks like C.E.O. pay is recovering faster than company fortunes,” says Paul Hodgson, chief communications officer for GovernanceMetrics International, a ratings and research firm. According to a report released by GovernanceMetrics in June, the good times for chief executives just keep getting better. Many executives received stock options that were granted in 2008 and 2009, when the stock market was sinking.
Now that the market has recovered from its lows of the financial crisis, many executives are sitting on windfall profits, at least on paper. In addition, cash bonuses for the highest-paid C.E.O.’s are at three times prerecession levels, the report said. Of course, these sorts of pay figures invariably push the buttons of many ordinary Americans. Yes, workers’ 401(k)’s are looking better than they did in some recent years, but many investors still have not recovered from the hit they took during the financial crisis. And, of course, millions are out of work or trying to hold on to their homes — or both.
And it’s not as if most workers are getting fat raises. The average American worker was taking home $752 a week in late 2010, up a mere 0.5 percent from a year earlier. After inflation, workers were actually making less. On the flip side, some chief executives have consistently taken token salaries — sometimes, $1 — choosing instead to rely on their ownership stakes for wealth. These stock riches don’t show up on the current pay lists, but they can be huge.
Warren E. Buffett, for instance, saw his stock holdings rise last year by 16 percent, to $46 billion. Other longtime chief executives or founders who are sitting on billions of paper profits include Jeffrey P. Bezos of Amazon.com and Michael S. Dell, the founder of Dell.
Resurgent executive pay has some corporate watchdogs worried that companies have already forgotten the lessons of the bust. Boards have promised to tie executive pay to company success, but by some measures pay is rising faster than performance. The median pay raise for chief executives last year — 23 percent — was roughly in line with the increase in net corporate profits. But it far exceeded the median gain in shareholders’ total return, which was 16 percent, as well as the median gain in revenue, which was 7 percent.
For the moment, shareholders aren’t storming executive suites. And while they received a say on pay under new federal rules last year, their votes are nonbinding. In other words, boards can still do as they please. Pay specialists say companies are taking a hard look at these votes. Still, only about 1.5 percent of the 200 companies in the Equilar study were rebuffed by their shareholders on pay. A vast majority of the votes passed overwhelmingly, with 80 percent or 90 percent support, according to Mr. Boyd of Equilar. Mr. Boyd says companies are making an effort to explain their pay plans. “We saw companies take it very seriously,” he says of the new rule.
In some respects, the mere possibility that shareholders might reject a proposed pay plan is enough to make corporate executives think again. Ms. Bowie of ISS says that outrageous payouts — such as so-called tax gross-ups, in which companies cover executives’ tax bills on perks like corporate jets — are becoming rarer. Disney for instance, eliminated tax gross-ups this year in the face of shareholder ire, she said. Company directors have the power to rein in runaway executive pay, but it is unclear whether either they or shareholders will do so in 2012. “It can be done if there is the will,” Ms. Bowie says.
191 comments:
John Michael Greer made this comment in response to a question the other day about Stoneleigh's take on things:
I enjoy Nicole's stuff, but it's probably worth noting that she's been insisting for years now that we'll be in the mother of all depressions within a few months. I think she's got the right idea, but the wrong time frame.
And I have to say, I'm wondering if she is going to revise her timeline. I recall at at the beginning of 2010 she was saying 6 months to at most 2 years as a timeframe for the start (resumption) of the crash. That means by the end of this year. I think Greer makes a good point that she expects things to unravel faster than it will (in part because authorities are happy to do the unthinkable to keep the unsustainable going just a little longer, and she discounts this).
"On a long enough time frame, the survival rate for everyone drops to zero." - Tyler Durden.
Draft,
We ARE in the mother of all depressions.
.
Or, put another way: "Death is certain; the timing is not. What should I do?"
And the answer to What should I do? depends upon your worldview and your reasons for living. From having read both "The Archdruid Report" and TAE regularly for several years now, I don't see any fundamental difference in worldview between Greer and Stoneleigh. They seem to value many of the same things.
Which raises the question one more time of "time frame" relative to what?
I think there are two differences between Greer and Stoneleigh:
1. Greer is talking on the order of a decade before it's generally acknowledged that business as usual is over. Stoneleigh is talking on the order of a year or two.
2. Greer suggests that TPTB will respond in ways that keep things going for longer than Stoneleigh thinks. He suggests that this will sacrifice parts of our system (and entire groups of people) in doing so, but it will keep things going more or less longer than Stoneleigh seems to think.
Hey ilargi you should be able to do better than that. This may be the mother of all Stagflations, but it sure isn't worse than the Great depressiion.
As far as Greer goes, how well did he predict the 2008 market crash? Me, I was 6 months early and now am not too sanguine what with Greece et al, pumping of the SPR, and the end of Stimulous to mention a few items, so am taking a safety position. Greer can put his money on capital gains if he likes.
Draft,
Yes, their issues of timing and response of TPTB may be different, but fundamental values and worldview (relative to the questions of "What should I do?" and "How should I live my life?") are congruent. Or so it seems to me.
Issues of timing for investment purposes don't seem to be the point of either blog. Issues of timing for the big picture, long(er) range well-being, health, community, and sanity seem to be much more at the heart of each blog.
As for how well Greer predicted the 2008 crash - very well (as did Stoneleigh). See this post from Nov. 2007 where he describes the situation and suggests a major discontinuity approaches.
Further ilargi,
if this is the mother of all depressions, then we really are doomed. What we need as a species and planet is something that stops this whole berserk machine. The 2009 dip barely made the good old military/industrial complex cough.
Hey Draft this from that article.
"Prophecy is a risky business at best, and archdruids are not necessarily any better at it than anyone else. Still, the possibility that another such wave of dramatic change might be about to break over the industrial world has been much on my mind of late."
Wow Draft, after those strong words I am sure to run around all crazy-like and cash in all my stock portfolio. Talk about whimpyness unbound!
I am afraid Stoneleigh wins on that call.
Excellent read, Ilargi!
the speculative class is also being stiffed by banks that cannot make good on their wagers in CDS.
Like a fish that gets a cut in a school of piranhas.
Just as the unfair peace after WWI led to economic depression in Europe and the rise of fascism..
A perfect analogy.
muchtooloose -
In that same post he wrote:
Still, this might not be a bad time for my readers to shed any speculative investments they might have, to be particularly wary of economic risks...
Sounds right on to me. He doesn't write with the same certainty in general, nor does he use bold language. That's just a difference in style.
Another fine article!
Although, everyone around me is partying and celebrating the 4th of July, independence, freedom, democracy, and all that.
Cough, Cough, Cough.
They truly have no clue, believing we are in recovery. Propaganda, full speed ahead.
I guess things under the hood are much worse than we imagine; much, much worse, as it seems to have become the norm.
I'm scared of when the financial implosion happens, but now I'm more scared that it's still somehow levitating despite the obvious.
6/27/10 Jay Leno video clip, How much do Americans know about US history? appx 7 minutes
http://www.youtube.com/watch?v=6JEjXbLQOOE
7/6/10 Jay Leno video clip, Indepen-dunce, appx 6.5 minutes
watch to the end...grandpa knows all the answers!
http://www.liveleak.com/view?i=b98_1278463537
Poll: Many in US ignorant of July 4 history; 1 in 4 don't know from what country we declared independence
CBS link
http://bit.ly/mIS4hl
Marist poll link
http://tinyurl.com/3cxfm7m
Timing is a much harder nut to crack than trend. In retrospect, the Weinen, Klagen moment will probably be AIG's bailout, which unleashed a vicious cycle of unimpeded and continuing financial blackmail. This comment from a recent Mish is a good capsule summary:
Notice how silly this has gotten. Had Greece simply defaulted a year ago, the cost may have been haircuts of $50 billion or so. Now $282 billion (and counting) has been invested to "save Greece". Another $124 billion was approved today, details to be finalized later.
From the end of Whalen's article:
"the decision to dispense with the pretense of free market discipline in the industrial economies puts us all on the road to serfdom and political upheaval."
I would say that in this case "political upheaval" will end up meaning war -the shooting kind. At the very least it's eventually going to mean revolutions, also the shooting kind, given that the oppressions being imposed are more than people will be able to bear. It's already happening in North Africa & the Middle East, and it will be coming to a country near you. Like Celente says, when people have nothing to lose, they lose it.
"muchtooloose said...
Hey ilargi you should be able to do better than that. This may be the mother of all Stagflations, but it sure isn't worse than the Great depressiion."
If you don't understand that it is, that is too bad, but it's not my fault.
.
Speaking of fire sales, I noticed what are called " sidewalk sales " to-day. A month early as they traditionally don't happen until the beginning of August.
Reposting a link that Alexander Ac submitted shortly before Ilargi put up this topic. I think Jon and his associates have nailed the essence of our predicament.
Jon Stewart: America's dystopian future
Pretty definitely Polka Dot Gallows;
Scene 3, in the Slapstick Kabuki DSK BurlyQ show:
http://tinyurl.com/3vuhfhx
"French writer Tristane Banon will file charges of attempted rape against the former head of the IMF Dominique Strauss-Kahn, who is already facing charges of sexual assault in New York."
"Banon's lawyer David Koubbi said he would formally file the complaint in Paris on Tuesday."
If this ain't international BurlyQ, I just don't know what it is. :-) Half nekkid broads and dirty jokes, and old guys in baggy eyelids...
Ratings agencies could wreck Greek rescue by declaring it a default
One wonders who is paying them now?
@ Draft
It good that you are quibbling over the date of when the misery will come. At least, you agree that it's coming.
Almost Everyone agrees that it's coming.
It has not hit my circle of life ... yet ... but I expect that it will eventually.
I know that there will be big changes coming that will affect 90% of the population.
The market is a rigged game. It's not a place to invest. It's for gamblers.
The providers of capital will demand hard assets as payment for interest due until all of the hard assets are in their portfolios. Then they will demand labor as payment for interest due. The providers of capital will own the world and be required to do nothing aside from collect their fees and pay private armies to ensure the work gets done. That is the endgame of supply side economics. The supply side ends up ruling the world.
Draft said... "And I have to say, I'm wondering if she is going to revise her timeline. I recall at at the beginning of 2010 she was saying 6 months to at most 2 years as a timeframe for the start (resumption) of the crash."
How has the "crash" not resumed? Almost all metrics of US economic health have turned south, including the biggest one, housing data. Even the mainstream financial people have recognized that, albeit with the BS positive spin they never fail to apply. Sure, the stock market hasn't completely crashed yet, but a) what average person in the unemployment line really cares and b) who really thinks it will maintain anything close to its value for another 5-10 years? I don't know any legitimate analyst who thinks that.
bosuncookie and jal -
Timing does matter. The set of responses that are possible for an individual or family given 1-2 years of more-or-less business as usual are very different from those possible given 5-10 years of more-or-less business as usual. 1-2 years is not long, and you have to really start hunkering down fast. 5-10 years - the timeframe on which I think Greer is suggesting we really will see major changes - is enough time to move to a new location, get settled in a new community, change occupations, buy / sell land as needed, learn difficult new skills, etc.
While the two will have overlaps, the timing makes a big difference in planning, which is why Greer's observation about Stoneleigh's timing is important.
jal said "Almost Everyone agrees that it's coming."
No, not really. Everyone in my circle of family and friends believe there is a recovery going on now, the Great Recession is history. And none discuss a depression. For them, it's spend and more spend usually via credit card or a loan for the latest techie gadgets, taking exotic vacations, buying new cars and houses. They are totally clueless.
Ash -
"How has the "crash" not resumed? Almost all metrics of US economic health have turned south, including the biggest one, housing data."
Leading indicators are just that - leading. We don't know yet whether this will just be a short-term slowdown (leaving the major decline for next year or later). It may be the beginning of a big downturn, but we just don't know yet, and it's inaccurate to say that we do.
Things are functioning more or less as business as usual for most folks in the United States. No, I'm not saying things are good. But there's nowhere near the level of economic distress that is implied in saying that we're in a "depression" right now. To say that we are in a depression reveals serious epistemic closure.
I don't expect things to hold up for 5-10 years, but then again, I'm not sure Stoneleigh's fast crash scenario will hold up either - it could be a slow stairstep decline over a decade wherein we have a series of small recessions or downturns and/or medium-sized recessions, but no major crash of the level of 2008. TPTB will try to plug holes, they'll fail of course, but they might not fail spectacularly.
Anyway, timing matters.
The monthly trend for people applying for federal food stamps is like 350,000 per month, since 2007 - consistently.
The only ones left with any confidence at all are the New Dumb. It is the beginning of the end of our world as we knew it. Doom is the operative ethic
Hunter S. Thomson after Bush II was elected.
Expanding on my previous comment...Another reason that people I know are clueless, is because we live in America, land of the free, democracy, independence, etc. etc. They think the rules and regulations that were put into existence years ago were done to prevent another depression. No way, do they think they would see a depression, not in their lifetime. Never going to happen. And they are of the mindset that the government works in the best interests for the people.
Draft,
The Great Depression didn't end after the crash of 1929. If anything, a long drawn out decline with relatively frequent periods of both rapid decay and "sucker's rallies" is much worse. Especially if it's just leading us right into the waiting arms of peak oil, climate change, potential nuclear war, etc. Seriously, I think it's quite ridiculous to call what's happening now around the world anything less than a systemic Depression, with a capital D.
Draft,
If the change is inevitable, why not begin the work now?
Why do you have to wait in order to:
1) Hold no debt (for most people this means renting)
2) Hold cash and cash equivalents (short term treasuries) under your own control
3) Don't trust the banking system, deposit insurance or no deposit insurance
4) Sell equities, real estate, most bonds, commodities, collectibles (or short if you can afford to gamble)
5) Gain some control over the necessities of your own existence if you can afford it
6) Be prepared to work with others as that will give you far greater scope for resilience and security
7) If you have done all that and still have spare resources, consider precious metals as an insurance policy
8) Be worth more to your employer than he is paying you
9) Look after your health!
This advice of Ilargi and Stoneleigh is good right now, regardless of circumstances.
Ash -
Especially if it's just leading us right into the waiting arms of peak oil, climate change, potential nuclear war, etc.
That's a change in the argument. I fully agree that what's happening is setting us up for a long period (decades to centuries) of social upheaval and hardship.
But that's different from saying that currently we are experiencing hard times in human terms comparable to the great depression, or that we will be very soon (i.e. by the end of the year, by Stoneleigh's timeline). We're not right now, by any reasonable metric, and it remains to be seen if we will be soon.
bluebird said:
They think the rules and regulations that were put into existence years ago were done to prevent another depression.
If they ever knew about it, they forgot about Glass-Steagall's evisceration in 1999, another pebble contributing to the avalanche towards a Weinen, Klagen world.
muchtooloose said...
This may be the mother of all Stagflations, but it sure isn't worse than the Great depression.
============
Well, I was about to write an essay comparing the current economy with that of a few years into the great depression. But I am not in the mood. Anyone who reads this blog knows the facts anyway.
But I will list a couple. Peak to current national RRE prices are down 37% compared to 35% at the worst of the GD. Real un and under employment is in the range of 20-25% and getting worse. But you can't really compare it to the GD because so many people lived on subsistence farms like Joe Bageant's parents before he was born (1946) and 90% of their "income" was not in money. People now think of them as ignorant but their skill set will be worth their weight in fiat soon :-) BLS are not even worth reading - they just make them up. I'd rather read the daily horoscope than their birth death model. Maybe they could be combined. And people who fall off the 99er cliff just disappear. Banks are leveraged so badly that a 0.1% loss in there derivative portfolio would wipe them out beyond even false accounting standards to hide. !5% of the USA is on food stamps on which JP Morgan profits. It's hard to figure what percentage of the people of the GD were on bread lines to compare.
I would disagree that the country is in a BAU mode. Only if you still have your job or pension and are not terrified of losing it or having a radical pay cut. Or are under water in a state where the banks can go after your paycheck if you mail in the keys. State and local employees including teachers, sanitation workers, police, and firemen are certainly not in a BAU mode. The Post Office is defaulting on paying into their contracted pension funds. Is that BAU?
The stock market is more rigged than a casino roulette wheel with 50 magnets under it. The dumb money pension fund and insurance company managers have been funneled into it by ZIRP just like herds were funneled into canyons with cliffs at the end by our paleolithic ancestors. Mr Sack of the NY Fed talks to the PD traders every morning and discusses how to manipulate the market. They freely admit it. 70% of trading is supercomputers front-running other supercomputers. They fight to get closer to the NYSE computer as the speed of light has now become an encumbrance. If the stock market is your basis of BAU it has as much significance as a thermostat with its wire cut to the furnace. The Big Boyz no longer even use the stock exchanges but meet in "dark pools" to swap their baseball cards.
I could go on and on. I as well have been a bit early in my predictions regarding the equities market because in 2008 I was too naive to imagine the illegal extent that the Fed would go to prop it up, control the markets, and transfer the bankster losses to the public. My predictions were based on history, particularly 1929 through 1937, but the Fed never dreamed back then of this degree of manipulation and criminality.
The owners are getting the sheeple ready for the end of any pretense of BAU. There was no Vaterlandsicherheit 10 years ago and I am forbidden to discuss how it came to be here. Transit police and immigration agents did not grab young girls by their genitals 10 years ago. Or examine the adult diapers of their great grandmothers. Is that BAU?
Damn, I went off on a rant anyway.
OK. To summarize from my crystal ball. The owners and their knaves cannot keep these clubs over our heads jumping up and down for 10 years. Forget it. They don't want to either. They don't want to keep printing money. They just wanted literally to buy a little more time with our checkbook. And the only alternative to printing money is austerity like this country has never seen before. They are more ruthless than a sausage machine, and they would like to see the earth's population of 7 billion reduced to under 2. When they stop printing money, the plug will be pulled. And they will make us consumers behave with truncheons, assault rifles, and electromagnetic and chemical weapons from our nightmares. Chains we can believe in.
Draft said "But that's different from saying that currently we are experiencing hard times in human terms comparable to the great depression"
Agree. There may be some/many people experiencing hard times now, but for all those in my circle, everyone is still living in the bubble and still experiencing the 'good life' with credit cards. Of course they see businesses and restaurants closing, but they just get in their vehicles and drive elsewhere. When their own bubble bursts, then they will wake up, because then, they will be personally affected.
@Seychelles - I doubt any had ever heard of the Glass-Steagall or what it was for. They truly don't pay attention to such things.
"But that's different from saying that currently we are experiencing hard times in human terms comparable to the great depression"
Who is we, exactly? I know that most of the people I know are not yet, even though a few of them can't find a job, but I don't really know that many people...
I don't personally know any Egyptians or Libyans currently living in their home country, for example. Or any Greeks suffering through austerity. Or any people working multiple jobs in a US city, struggling to make basic ends meet. I do have some relatives in India, but they are doing pretty good right now, unlike most of that population.
It's hard to see how bad the "human terms" really are from our vantage point, at least until you get into the gritty, unpolished facts and figures. Then it's not so hard, and it's not so hard to see that there is a good chance the human terms will get a lot worse for a lot more people in the next 5 years, and even worse in the next 10. What I'm really saying is that it's very hard to over-state the seriousness of the global economic situation. Calling it a "depression" doesn't even come close to an overstatement.
Just by way of reminder!!! We still need a YouTube version of this- and probably bi-weekly updated verses, by the commentariat, IM'er, and hopefully TAE Sumerian, who is probably our poet laureate..
I. M. Nobody said...
OK Greenpa, you asked for it. And now with all due apologies to Chuck Berry and The Beach Boys for a bad job of lyrical butchery.
If everybody was a workin'
Across the U. S. A.
Then everybody'd be serfin'
Like in Merry Olde Britann-i-a
You'd seem 'em wearing their sackcloth
Tire tread sandals too
A scragly greasy hairdo
Serfin' U. S. A.
You'd catch 'em serfin' at Del Mar
Ventura County line
Santa Cruz and Trestle
Australia's Narabine
All over Manhattan
And down Doheny Way
Everybody's gone serfin'
Serfin' U.S. A.
We'll all be plantin' and weedin'
We're gonna plow real soon
We're gonna do our serfin'
We can't wait for June
We'll be sweatin' all summer
We're in serfdom to stay
Tell the master we're serfin'
Serfin' U. S. A.
Haggerties and Swamies
Pacific Palisades
San Anofre and Sunset
Redondo Beach L. A.
All over La Jolla
At Waimia Bay
Everybody's gone serfin'
Serfin' U.S. A.
Everybody's gone serfin'
Serfin' U.S. A.
Everybody's gone serfin'
Serfin' U.S. A.
MAY 25, 2011 6:21 PM
Blogger bluebird said...
"jal said "Almost Everyone agrees that it's coming."
No, not really. Everyone in my circle of family and friends believe there is a recovery going on now, the Great Recession is history. And none discuss a depression. For them, it's spend and more spend usually via credit card or a loan for the latest techie gadgets, taking exotic vacations, buying new cars and houses. They are totally clueless."
How do you deal with something like that?
@El G - I agree it is not BAU, too many things going on. But to people around me, they are too busy with work, family, hobbies, vacations to pay attention. And to them, the TSA enhanced security measures were done to protect us from the 'terrorists'. They truly don't get it, and I have been told that I am the crazy one. Eventually, they will wake up, most likely when it is too late.
bosuncookie - All those suggestions from I&S are good, but they don't address the issue of why timing is important.
For example, if we have 1 year left of BAU, then I might choose to hunker down here, where I live, even though I don't have land to grow on, but I do know some people, etc.
If we have 5-10 years, and the decline will be bumpy, I might decide to save money for a couples of years, buy some land a bit outside of the city, and get good at sustainable gardening. (I'm decent at it now, but not good enough that I can depend upon it for my life - and that level of skill takes years to develop.)
That's just one example of how timing makes a huge difference.
Ash - most of the discussion on this blog has focused on the United States and Europe. In both, the level of human hardship is far from that of the great depression, and is far from what Stoneleigh speaks about in her talks (that is, the U.S. and Europe aren't experiencing the human hardship she suggests will be commonplace in the deflationary depression she expects to happen imminently). Also, when you talk about 5-10 years for when the deflationary depression will have hit with full force, you're talking about a far longer timescale than Stoneleigh does, as I observed above.
ogardener said "How do you deal with something like that?"
I quietly go about my preparations and never speak anything of the economy or financial matters. Life is less stressful that way. I figured that I can't open their eyes for them, they need to do that themselves. Unfortunately, most will be too late. Perhaps I can help them when their bubble bursts.
bluebird said...
Eventually, they will wake up, most likely when it is too late.
===============
It is already way too late. And most of them won't "wake up." Most of them will blame themselves for being failures.
I even have some doubts about Stoneleigh's lifeboat. Sure it will protect one from the worst of the Greater Depression and quasi legal debt slavery. But will it protect people and their small communities from the jackbooted government thugs who will visit them to steal whatever they can? Just feeling a little pessimistic on this fourth of July. I am so happy that I am not 30 with young kids however.
"Also, when you talk about 5-10 years for when the deflationary depression will have hit with full force, you're talking about a far longer timescale than Stoneleigh does, as I observed above."
Am I? I believe she said there will another significant market crash by the end of 2012, and I think that's a very likely possibility. But I also believe she has said that the deflationary depression will last just as long, if not longer, than the GD, which lasted at least 10-15 years. Market crash events, naturally, won't be the worst of it, but the self-reinforcing, non-linear (not straight down) spiral that comes afterwards. And I also believe she has said that the periphery typically deteriorates faster than the center (the US). Also, it's quite a bold statement to say that people in Europe are not suffering immensely right now... only less than the GD because WWIII or an equivalent military disaster hasn't broken out... yet
"Almost Everyone agrees that it's coming."
I'll eat those words.
AND
change it, to what I meant.
"Almost Everyone who are following or making the economic news, lawmakers, financial analysts, economists, and the gang of eight, agrees that it's coming."
Ash - I believe she said there will another significant market crash by the end of 2012, and I think that's a very likely possibility.
At the beginning of 2010 in her talk series, she said she expected the next major crash to happen in 6 months to 2 years - putting it at the end of this year. Greer's and my point is that her timeline changes.
ilargi,
So are Lese Majeste comments to be deleted from this site? That would be just so MSM, don't you think?
El G,
Here in Canada during the great depression people on many farms were starving to death. Possibly, it was easier in the US, but, other than in cities with Rosevelts programs, I kind of doubt it was greatly different. I wouldn't glamorize the idea of going back to mom and pop on the old farmstead too much. Think, expand on the instance that, when you can't afford the matches to light your fire with, how good is life on a farm.
"At the beginning of 2010 in her talk series, she said she expected the next major crash to happen in 6 months to 2 years..."
Draft, really? So if there is a market crash in Jan 2012, you will say that he was wrong and Greer was "more right"? Stubbornly sticking to an time line when new events develop is, stubborn. Timing is important, in the sense that you have to realize what your inability to predict exact timings implies. You know, better safe than sorry and all that... and we're talking about being real sorry.
muchtooloose
My best friends are from northern SASK (the little village of Shell Lake), and I went up to visit them in Sept of 2008. We constantly went out into the back woods to hunt the mighty northern pike and passed a few collective communities, since gone to ruins, where Canadians attempted to survive during the GD. I was impressed at just how tough things were there and heard tales about the starvation. The minus 40 winters probably didn't help either. But my understanding from reading Bageant's two books was that his kin didn't go hungry and got by. There were plenty of deer, which the title of his first book reflects. And they were skilled with planting and livestock, particularly hogs, as well. And apparently the climate didn't treat them as badly as the poor Okies of which Steinbeck wrote. But they worked from dawn to dusk and beyond and their hands were almost never idle. At night the women would sew the clothes from ground oyster shell bags (for they laying hens) and the men would clean their guns and carve pick handles.
I mentioned this not as a recommendation for everyone to start subsistence farming but rather as to how difficult it is to compare employment statistics from then to the present even if the BLS weren't a pack of liars.
Regarding the stock market, both Stoneleigh and I originally figured the dead cat bounce, also referred to as a suckers' rally, starting in mid-March of 2009, to last no longer than the end of the year. On my part at least, this was based on looking at the DJIA 1929-1937. What changed this about was at least 10 trillion dollars (probably more) of liquidity to counteract the natural course of events pumped in mainly by the Fed, which we, our children and grand children may have to pay back assuming that the superstructure of the nation survives at all. IMO TARP was a small diversion to the real action at the Fed. The Fed broke all the rules and the laws. One can argue whether that should have been expected to the degree that it happened. But don't hold your breath for a Pecora commission either. This time it is different - in terms of the sheer magnitude of the criminality and fraud. In 1932 the banks had not captured the governments in electoral politics. Otherwise they would not have approached General Smedley Butler to depose FDR.
Draft,
Timing is only important if you have some goal in which timing is important and a world view to match. If your world view is less dependent on time-certainty and your "goals" are more general, then timing is not such a big deal.
For example, my present world view leads me to believe that I have limited ability to control what unfolds. But the same view leads me to believe that I am mentally prepared to respond to much of what I suspect could unfold. This has nothing to do with timing, except to the extent that I can increase my "mental resiliency" and adaptability to change.
I could speak further about how this primary consideration plays out in terms of choosing where to live, renting vs. owning, what to buy, where to put assets, etc. But the over-arching concerning is mental preparedness for I-know-not-what. That is not an issue of time, except that if I put it off, I'm probably more screwed than if I get my head right today!
The big issue for me in the last 6 months, for example, has been health. Recently diagnosed as Type II diabetic, I have chosen to respond with drastic diet changes and weight loss, eschewing reliance upon TPTB (Big Pharma)for salvation. While amending my health, both of my strategic responses to diabetes are at the same time preparatory for a bleaker future.
No need to wait, or should I say "weight." The time is now.
As long as your goal is increase of conventional denominations of wealth, then I would agree: timing may be important. If your definition of wealth, however, is more grounded, more fundamental, more earth-bound, more real and less virtual, then THE END IS NEAR!
Ash -
No, if a crash happens in January, I won't say that. It's a matter of degrees.
Here's what I think is going on here: confirmation bias. Stoneleigh expects a crash. Let's say there's a minor to medium downturn and/or recession between now and the end of 2012. I bet that will be seen as the predicted "crash" regardless of its magnitude - if you keep predicting the same thing, you'll eventually be right (not saying she's doing this, but she might be headed in that direction).
I agree that predictions are important, but for that reason I tend to try to seek out diverse viewpoints and try to avoid confirmation bias. That means being less certain in one's predictions, and being able to respond to those who disagree with reasons for one's arguments. I thank you for doing so. I do hope Ilargi and Stoneleigh will make the case regarding timing vs. Greer's take rather than dismissing it out of hand.
An open question: what are the personal consequences to you for the in-exactitude of timing of systemic collapse?
@I.M Nobody from previous thread
Quixotic maybe, but if evil cannot be constrained by legislation, it can at least be slowed by lawfully liberating the good.
The fact that congresspersons haven't been impeached or otherwise removed from office in proportion to the impeachable offenses some must certainly have committed does reveal a significant part of the problem then. Conversely, there is no basis of jurisprudence to forcibly drag congresspersons from office, that being the default recourse if no proper procedures were in place, it is best to lawfully codify such procedures of removal just in case they're needed.
"Charging the POTUS with treason probably wouldn't fly because he did not order the Protectorate of Pentagonia to make war on the United States of America."
This is precisely the gravity of such warmaking. Causing one's nation to levy war upon another nation is always equivalent to levying war on one's nation directly, thus putting its citizenry in harm's way. This is why such dangerous powers of war are constricted and exclusively delegated to congress.
"That damnable War Powers Act does seem to give POTUS the authority to make war on any other country."
Not without the specified timely notification of military action and consequent congressional authorisation [of funds] which remains absent. Failure to even minimally legitimise war by such means as specified has grave consequences, as argued.
"POTUS' failure to tell Congress why the war is justified might be a misdemeanor, but that calculation is well beyond my meager legal knowledge."
Its plain treason, and cannot be less, since it is indeed war by all legal definitions, the POTUS is fully impeachable for unauthorised warmaking by now, the gravest of transgressions committable from high office other than actively betraying one's country to a military enemy in wartime.
That is, he must now necessarily be impeached, otherwise congress would commit to treason of the same variety, against the nation and against itself.
This debate in the comments is an interesting one. Bosuncookie asks why one ha to "wait" to get into cash and cash equivalents, when the end-game is inevitable. And I guess my answer would be, "Because decade is too long to wait." You can go broke holding cash for a decade. Some people might not even be alive for a decade. So if you lose 10% of cash value every year for 10 years where will you be? And at the end of 10 years, if that's when the implosion happens, how do you know those dollars you have left will even be in the right place? It's a very tough time. At least Stoneliegh is very clear on this: "There is risk EVERYWHERE." She is mainly trying to MITIGATE risk and warn us to be very very careful. Still, I wonder if one can be too careful too soon, and end up just as broke when the walls come tumbling down.
Most folks probably can recognize the next lines:
First IMF demanded the Icelandic assets - but I said nothing as I wasn't an Icelander.
Next IMF demanded the Greek assets - but I said nothing as I wasn't a Greek.
Then IMF demanded the Spanish assets - but I said nothing as I wasn't a Spaniard.
Soon IMF demanded the Italian assets - but I said nothing as I wasn't an Italian.
It didn't take long before IMF demanded the assets of my country - and there was nobody left to speak on my behalf.
Kudos to Martin Niemöller.
@ bosuncookie:
Re: "what are the personal consequences to you for the in-exactitude of timing of systemic collapse?"
Answer: For me, the consequences are pretty important. I currently have a great job and I make a very good salary doing it. However, in an all-consuming economic collapse/depression, I wouldn't count on this job surviving.
My family lives 3000 miles away on the opposite coast. There are not as many job opportunities there for me, but that's where the family lives.
So, during an all-consuming economic collapse, I'd move back to be with the family and restart my life locally.
Should I do that now? When my job is still going great and I'm still earning a great income?
I don't think so. My income and my accumulating savings are important to my future.
And by the way, I solicited advice on this topic from I&S about 1.5 years ago before I accepted my current job.
Ilargi's advice at that time: Get home to your family. Well that was bad advice because his timing was off. He would have cost me 1.5 years of income and savings, and with my current job, that's a real chunk of change.
Bad timing and bad advice.
Skip Breakfast
Why are you losing 10% a year? Are you retired without an income? No Social Security? Or are you thinking of John William's calculated current COL (or what the MSM calls inflation)?
Alex
Regarding your question 1.5 years ago, one couldn't even begin to attempt to give advice without knowing the answers to about 15-20 details of your life. Everybody's milage does vary.
And it's usually Stoneleigh who would give that sort of personal advice, not Ilargi, and she tends to be very, very circumspect about it,
@ el g
If you doubt me on this,
I'll dig up the exact post. But it'll take a bit to find it in the archives.
And besides,
The exact details of my situation are secondary to my larger point
Timing matters to me and other people in situations similar to mine.
i.e. Anybody who is currently working and whose income is dependent upon a job that places them far from family and friends (there local home base in times of despair and depression).
El Gal
Enjoyed your reply. Now could I go off on a tangent and talk about ideas being like shirts? Okay you wear a plaid shirt and I hate plaid shirts! So I should hate you? Of courses not! Now what are ideas and opinions other than shirts that we wear? Just things we can put on or off as we please. Is that right?
If we can understand that each of us are not our opinions do you not think we just might have a better chance of reaching some sort of true understanding if we think of our ideas and opinions as something mutable rather than cast in stone? In other words I think Skip Breakfast has a point worth discussing.
There is a bifurcation of needs on this site.
Retired readers vs. working readers.
Many readers are clearly retired. Their income is relatively fixed, and it is currently location-independent. Their sources of income include:
pensions, social security, interest/dividends from liquid assets, rental income etc. from illiquid investments. Retired folks will collect this income regardless of where they live. They also generally have time on their hands to accumulate skills that will be important post collapse (assuming they are still physically able to do so).
On the other hands, younger readers who are still working and still earning their daily bread have a tougher choice. Their income is generally speaking very much location dependent. In addition, preparation for collapse vs. continuing to work at the current source of employment is often a zero sum game. You either get your shit done at work and make your money, or you start to build a doomstead in your local community where friends and family know your name and your history. Not possible to do both.
So for working folks, there is often an inherent conflict built into Stoneleigh's lifeboat suggestions:
On one hand: Stay employed and make sure you are worth more to your employer than he/she is paying you.
Conflicts with:
Gather control over the necessities of your existence and build a network in the local community.
24 hours in a day and you can't make realistic progress on both sets of goals. Retired folks don't face this dilemma.
Alex said:
24 hours in a day and you can't make realistic progress on both sets of goals. Retired folks don't face this dilemma.
This is one of those moments when you have to decide. A lot more moments like this will soon follow.
Alex is making a number of good points that I'd like to see Stoneleigh address - regarding timing, accuracy, confidence in projections, and the set of good responses to the problems we face. I get the sense she's more open to considering challenges to her arguments than Ilargi (not trying to pick a fight - just making an observation).
@Draft
I fail to see the points. One cannot take the advices literally, one has to apply them to their own situation. For example, I have always put health first, even if it's the last on the list.
As they say, YMMV
In this economy, staying employed and being worth more to your employer than he/she is paying you....
That one single goal is pretty much all consuming. It takes everything you've got in terms of brainpower, energy, and stamina.
If it doesn't, then you probably aren't worth what they're paying you.
p01 - I'm not taking them literally. I'm just suggesting that I&S need to be open to looking at what they've said in the past, considering their mispredictions or too-sure statements about what should be or will be done by individuals / governments / etc. and discuss how those lessons might help us all think about the things that are to come.
It'd be a helpful exercise for all of us.
Waiting for some epochal SHTF moment is a little absurd. The collapse of capitalism is a process(our world system). It could go fast, like 1-3 years of successive hard financial collapses or decades. Rather than sitting watching the the final few rounds of a big game of planetary jenga, with all the swaying to and fro it entails, until the final tumble, which we know is going to tumble, one should start thinking of what comes next. Unless, you are over 55-60 then it really doesn't matter. But thinking you are going to build up walls and fight off the zombie hoards for decade after decade is a little silly. The dysfunction will eventually catch up to you. Half the population of the US has nothing, no assets. You could probably add a few tens of million on top of that, that what they do have in assets won't last too long with out a job. So we are pushing 200 million people in the US the will not be "prepared" - their lack of preparation almost invalidates yours. Paradoxically, if everybody "prepared" it would bring the collapse faster.
Excellent post. I wish more people I knew "got it." Is ignorance bliss, or just foolishness?
Draft,
Greer does indeed see things unfolding over a longer timeframe than I do. My view is based on the way credit bubbles manifest and implode, on the tug of war between greed and fear that leads to fractal behaviour. This simply does not play out as a slow squeeze, but as a series of declines, culminating in cascades, with interspersed rallies. Many of these will be sharp, with steep retracements, and some will last for quite a while. Fear-driven volatility is the name of the game in bear markets.
I have spent a long time studying how markets work in good times and in bad. Most big picture people are lacking that particular piece of the puzzle. Personally I think it's a critical factor.
My general advice is to minimize the consequences of being wrong. If you assume things will shortly get difficult, and you make sure you have a decent safety margin, what have you really lost if things take longer to unfold? In contrast, if you assume BAU will continue and therefore do nothing, the results of being wrong could easily be catastrophic.
As I have said before, you can be early, but you can't be late. This is why I emphasize that the risk is large and growing, even though there is the outward appearance of calm and complacency. It will take time for people to extricate themselves from situations based on assumptions that are going to be invalidated, perhaps all at once. If they think they have a lot of time they may do nothing until it's too late.
@btraven
Bliss
@ SecularAnimist:
Interesting post, but I don't perceive what you propose that folks do about the present situation.
It's one thing to diagnose the problem. You did that.
It's another to propose a course of action. Action that is relevant to working folks who are accumulating a reasonable pile of liquid assets (~$350000) at last count, retired folks, working folks with few assets, etc.
Except for a rare few, you won't earn a living preparing for collapse.
And if your timing is wrong, you'll go broke before the collapse ever arrives
Therein lies the dilemma.
TAE makes my point for me:
$20000 from a yearly fund raising drive for an organization that requires 24-7 attention of 2 individuals.
It's hard to survive on that wouldn't you agree?
And TAE represents pretty much the top of the heap of post-collapse prep economy.
How much does Kunstler earn writing about collapse? Probably not enough to be comfortable.
Michael Ruppert has been in and out of financial trouble over the years.
How many people does Nitro-Pak employ?
You get my drift. Without income you're sunk. And doom prep doesn't offer much in the way of income.
Alex
"Retired folks don't face this dilemma."
Tough!
I am as you would say 'retired' and what is interesting is my folks had it easier in the retirement business than I do. So I should whine about that?
Anyway dude I will be dead and gone by the time it is necessary to have learned any of the new skills you say I have the spare time to learn, whatever it is you seem to think they are. Better you should take the time to learn what many old farts already know. For instsance, I bet you don't even know which side of a pea pod to begin stringing it on. Could be important, that is if you plan to survive, eh, punk?
Stoneleigh - thanks for your reply. Would you agree that sometimes, however, planning for something a year away will lead to different (and perhaps worse - though of course not always) choices than if you're planning for something 5 or 10 years away? And it seems there's definitely interest among the comments in an update on when you see things happening - I think we're all speculating on what you think the timeline will be based upon things you said over a year ago and would love to hear how you think things will play out going forward.
To the board
From all the discussion on timing, each case/region will be different.
You are now all aware of the trend, pick a time line for your case, act upon it.
If you see variable that brings your time line forward, act appropriately.
My time line is 2015 and with the accelerated pace of changes, I'm fearing that it could be sooner.
jal
A whole lot of interesting threads here.
As to timing, better to be a year early than a day late. Also, how long does it take for an apple tree to produce fruit, a hazel to produce nuts? I bought a 2.5 acre homestead 4 years ago and have brought two children into the world since then- and have divided my time between working, homesteading and child rearing since leaving MUCH yet to be done. If you have a family farm to return to, by all means work, save your money. But if like many of us you recognize the need for a lifeboat within 1-10 years, start building now because upskilling, planting, renovating, building and integrating yourself into a community takes time. Aside from that, returning to life in the REAL world of the land, the seasons, and family is pretty damn rewarding.
We have an open window before us of indeterminate time when the vital supplies, educational opportunities, relative security, and a BAU economy (also relative) enable us to accomplish now what may be ridiculously difficult in a few years time.
Also, on a completely unrelated note, something I've been wondering- at the FEASTA conference a few years ago Dmity Orlov asked John Sharry, a psychotherapist if he could identify some of the markers which might indicate the kinds of people who are most capable/willing to understand/accept the realities of a post-peak world. Dmitry offered that so far the only correlation he had found was that such people tended not to watch television. I've noticed an anecdotal correlation in this regard with people who have undergone a sustained traumatic or life-threatening experience. Does this resonate with anyone here?
@ ben
You've got to earn a income.
That's not controversial. At least it shouldn't be.
More emphasis needs to be placed on this central point. Income and the savings derived from it should be the central plank of any survival plan.
Without income, you'll end up living in your parents basement counting how many cans of pinto beans you've stored.
Alex,
Many readers are clearly retired. Their income is relatively fixed, and it is currently location-independent. Their sources of income include:
pensions, social security, interest/dividends from liquid assets, rental income etc. from illiquid investments. Retired folks will collect this income regardless of where they live. They also generally have time on their hands to accumulate skills that will be important post collapse (assuming they are still physically able to do so).
Many retired folks are very vulnerable to losing all those sources of income you mention, and many essential services like healthcare as well.
On the other hands, younger readers who are still working and still earning their daily bread have a tougher choice. Their income is generally speaking very much location dependent. In addition, preparation for collapse vs. continuing to work at the current source of employment is often a zero sum game. You either get your shit done at work and make your money, or you start to build a doomstead in your local community where friends and family know your name and your history. Not possible to do both.
Many people will indeed face hard choices and conflicting goals. The fewer resources, or natural advantages, you have at your disposal, the harder your choices will have to be unfortunately. Life is not fair. All we can do is to make the best of our own circumstances, IMO preferably in conjunction with others trying to do the same, because a community approach is always strongest.
So for working folks, there is often an inherent conflict built into Stoneleigh's lifeboat suggestions:
On one hand: Stay employed and make sure you are worth more to your employer than he/she is paying you.
Conflicts with:
Gather control over the necessities of your existence and build a network in the local community.
24 hours in a day and you can't make realistic progress on both sets of goals.
It can be important to earn what you can while you can, but if your job is not at least depression resistant, and you do nothing to prepare in the meantime, you could be very vulnerable. In general I would suggest trying to aim for a job that may survive hard times, even if it pays less now. Alternatively, at least save every penny you can from a well paid job and make sure you have no debt. You may be able to prepare psychologically, if not physically.
Unfortunately, living with a foot in both worlds means all the work of both and not all the benefits of either during the transition period. This is undoubtedly difficult, but living all in one or the other can be harder. At one extreme you're completely plugged into, and dependent on, a system that cannot survive. At the other extreme you may earn very little at a time when the cost of living is still high in comparison with your savings. Somewhere in between is where I generally suggest people position themselves in the meantime.
Blogger Alex said...
You get my drift. Without income you're sunk. And doom prep doesn't offer much in the way of income.
Doom prep and personal security are one in the same. The same way you equate $ with your personal security. It's better to have it and not need it than need it and not have it. Still after the proverbial SHTF money may not be worth anything. I'm sure my organic garden will be worth something to me and others who depend on me. Tell me why I should give you some food in exchange for worthless pieces of paper. You'll have to do better than that if you want to eat. Got skill sets? In a world made by hand will fiction writers have something to barter?
Thanks Stoneleigh,
You've pinpointed exactly what needs to be expanded here. The central weak spot in the lifeboat strategy:
Stoneleigh said:
"living with a foot in both worlds means all the work of both and not all the benefits of either during the transition period......Somewhere in between is where I generally suggest people position themselves in the meantime."
How does one position oneself in the middle of both worlds, realistically.
My point: I don't think it's realistic.
I'd like to hear some stories from people who've made it a reality WITHOUT TAKING ON DEBT. I've heard plenty of stories about folks borrowing money few a few acres here and there to grow apples/veggies/nuts/chickens etc.. Recipe for disaster....You'll never produce the income to enable you to keep the property.
And....
What are "depression resistant careers"?
Ogardner said:
"after the proverbial SHTF money may not be worth anything. "
One of TAE's central and very often repeated points is that when the proverbial SHTF, MONEY WILL BE WORTH EVERYTHING.
There will be many many more vegetables than there are $ to buy them.
Draft,
Would you agree that sometimes, however, planning for something a year away will lead to different (and perhaps worse - though of course not always) choices than if you're planning for something 5 or 10 years away?
Indeed, which is why it's important to me that people not think they have 10 years. I think we're very close to phase 2 of the credit crunch, and may in fact have turned the corner already (to judge by the markets, which are a leading indicator). There are so many factors poised to break sharply lower once people and companies that have been hanging on for recovery realize it isn't coming. I'd be very surprised if most of us didn't see some significant impact on our personal lives within a year or two. Many, of course, have already fallen off the back of the bus, and that number is set to grow rapidly.
Depressions typically aren't recognized for perhaps a few years after they actually begin, as was the case in the thirties. They are clearly identifiable with hindsight, but that doesn't help much. The important thing is to anticipate trend changes, while knowing that timely warnings will sadly be less credible than warnings which come too late.
The sock puppets Alex and Draft have sown up the conversation for the entire day. Forcing otherwise very respectable people to make completely obvious observations about the desirability of being cautious in an end-of-empire geologic moment. Do you all really think they want your well reasoned advice?
As a matter of fact they do. They want it in spades. They want any excuse to continue throwing barbs at the honorable hosts, because that is their assigned mission. Only doG knows why it matters to anyone.
As to those who are younger. Don't even worry about it dudes and dudettes. Your future is so screwed that not even I&S cannot save your bacon. Absolutely do stay tuned though, because we might be able to pass along some awesome recipes for how to make it and cook it.
And muchtooloose, you know nothing about Ilargi. For instance, he left Canada several years ago. He is Dutch and not at all the person you prefer to suppose him to be. Being wrong at least as often as you are right, I suggest you adopt a more moderate tone, or STFU!
If any of you suspect that I have tipped the bottle once too often, you may be right. Don't let that stop you from respecting my advice. I didn't get to be 67 by being wrong very often.
And finally to Greenpa, my bastardization of the truly great Chuck Berry's lyrics should probably be suppressed as an affront to music generally, but I would be lying if I didn't admit that it made my eyes a little wet to see them posted again. Mucho gracias.
Many here are **complaining** that Stoneleigh declared the next big leg of the "collapse" early, yet are asking her to make another prediction about timing. This seems odd to me. Maybe you should see Nancy Reagan's psychic. Also, the collapse has many components, so as I wrote in an earlier comment today, the stock market is a rigged casino afloat on the debt slavery of our children. Property values are already further off their peak than in the great depression according to Case-Schiller (who are both reasonably competent and honest). Employment? You see a lot of restaurants opening up? Shops opening in the strip malls. Factories moving to Viet Nam?
The glue which is wallpapering over the crash is sovereign debt credit. Credit from treasuries, credit from guarantees like $5T to F&F, credit from the illegal activities of the central bank, our beloved Fed. You stop the sovereign credit rip-off of Joe and Jane Bagadonuts and the whole phucking country goes into cardiac arrest in a couple a days. So basically you are asking Stoneleigh when the MotU are going to pull the plug. Wouldn't it be more effective to ask the MotU directly. Ask the Rockefellers or the Rothschilds or their hired guns like Benny Boy or TurboTimmay.
Alex, you are rather combative today. Maybe it's in honor of us declaring war on the British throne :-) Anyone who gave you detailed financial advice without knowing your circumstances should be ignored. Maybe you had $150k in student loans? Trying to pay them off should be a top priority. Maybe your family hates you and are very non-supportive. I can think of a dozen reasons that keeping this job **could** have been the right decision. I think the reason that you are so combative is that you are putting 100% into the job and not doing anything else to prep, and that makes you nervous. Maybe you could get a different job paying less that would give you time to build community and still be valuable to your employer? But it appears from your comments that like many Americans, you define your value by your gross income. Hey that's your business. Good luck.
As to retirees having an easy time right now, muchtooloose gave an appropriate response. Owning rental real estate while the bottom is still falling out of the market? Social Security? Even guys like Jim Paplava and Gordon Long keep repeating that Social Security is broke. They conveniently forget about the $5T dollars in the bullshit "lockbox" payroll taxes that our leaders stole and pissed away on guns and hookers. I give SS less than 18 months in its present form. That's why I put in at 62 despite still working and getting hit big time with taxes for two year. I knew that once collections went into the red they would renege and kill it. Just think, what would the Gambinos or the Gottis do and you have their number.
Thee month treasuries paying 5 basis points interest. That won't buy you a snickers bar a week. Junk bonds? I don't think so. The stock market. It's totally fixed and Benny Boy and Brian Sack do not whisper in **my** ear every morning before the opening. Yeah, retirees just have it made. ROTFL.
What's more:
The lack of $ to buy veggies is likely to have many troublesome consequences:
Not only will many people not have the $ to buy veggies
People looking to sell veggies from the back yard garden won't be able to raise the $ necessary to make the mortgage payment.
Thus, the veggie garden goes to the bank.
The most practical thing for Joe Shmoe to do is to really put his nose to that old grindstone and stay employed for as long as possible. Kiss your bosses feet and do whatever is required.
It's what your Great great grandpa did when he worked down the coal shaft or next to the blast furnace...
And its what we'll all need to do as well. I know it doesn't have the Newage appeal of communal veggie gardens, but its really the only realistic scenario that I see.
@Alex,
The human capacity for self-justification is limitless. You are doing what you want to do, in spite of misgivings to the contrary. If you are looking for validation, try the blogrolls at the WSJ or the NYT. If you wanted to make a life on a few acres with chickens and the like, you'd probably find a way to do it- and BONUS, you'd find a way to justify it.
As for me and my family, we've been working toward the goal of our current lifestyle for several years now for reasons in addition to the fact that we have potentially increased our resiliency a great deal by manifesting our goals. We currently manage to make ends meet solely on the basis of the three days per week that my wife works from home as a business consultant. If the SHTF, we have contingencies for paying the bills. What is possible is in so many ways large and small a product of what we are willing to believe is possible so long as we are willing to do what it takes to make it happen.
Here in Western North Carolina, I know lots of people engaged in similar ways of making a life and a living. It is not unrealistic- in fact, I think it's far more realistic than hoping we can muddle through with little more than psychological preparation when the unraveling of the world around us leaves so much of what we depend on broken. I can depend on that apple tree to produce apples, I know that the chickens will lay eggs regardless what the FED does. Certainty, realism, and the pleasure of the sun setting over the green mountains... What's not to like?
Alex,
I merely point out that somewhere in between, as difficult as it undoubtedly is, is more likely to preserve a measure of flexibility to adjust to changing circumstances than either extreme would be. All strategies have strengths and weaknesses. There are NO easy answers and risk is everywhere when you negotiate a metaphorical minefield. Still thinking through your dependencies (vulnerabilities) and attempting to mitigate them seems like a worthwhile exercise to me.
As for depression resistant means to put food on the table, I would suggest things like supplying basic goods and services, practical skills (trades), fixing essential things, basic healthcare, mediation services (ie seeking equitable loss sharing), community organization, education in lost skills, recycling waste into useful things, security, low-tech entertainment, escapism etc. I would avoid middle-management, paper-pushing, and anything where your income depends on the discretionary income of others (eg restaurants).
I also tell young people to be very careful about avoiding educational debt, since that gives someone leverage over your life. Tuition fees are outrageous in the US. Apprenticeships are better, and self-directed learning is great, even though you don't get a piece of paper.
Stoneleigh - thanks for your updates, especially regarding timing. (I wonder if the weird looking circle diagrams from Gordon Long are going to turn out to be accurate after all, then.)
I hope you get a chance to take a break from your (I'm sure grueling) road tour and are able to start writing again about what's going on presently in the markets. I think you're right that few on the peak oil / sustainability world understand markets well, which is where your personal knowledge of both is invaluable.
btw, I.M. - I find it weird that you dislike the idea of calm discussion intended to better understand the important issues this site is about. I think it's important to question our beliefs if we are to further our knowledge.
The only depression resistant career that I see:
Union busting
Like it or lump it, that's reality.
Alex,
The most practical thing for Joe Shmoe to do is to really put his nose to that old grindstone and stay employed for as long as possible. Kiss your bosses feet and do whatever is required.
There will certainly be far fewer choices and a lot more hard work in an era of sky-high unemployment. Income is important, but a balance between income from a source that might last and some ability to produce essentials is better if you can manage it with no debt. Depends on whether you take the urban or rural approach among other things.
Good comments, all.
I would like to add my $0.02 worth.
It is not only the age or the financial means/source of the readers that varies, but where you are geographically plays a huge role (IMO) in what and how you should be preparing. And I'm not just talking about growing seasons, or how cold it is in winter. Every place has different risks and advantages, be they geographic, cultural, political, etc.
You always have to take any advice you read and run it through the filter of your local conditions.
For example, I expect my locale will retain a viable power grid, probably for decades to come. This is a lucky accident of geography which significantly affects what resources I am currently trying to acquire. (It helps that we have huge numebrs of power lines running across our place, and over the years I have taken the opportunity to talk to the various linesmen,and learn a lot about the local grid and local repair knowledge and resources).
If someone from Kenya, or South Africa, or most places in the world, asked me for advice, I could only point them to the very salient points Stoneleigh raises in her lifeboat primers, and then tell them to learn about where they live, and make a best guess and take a prudent course.
As global interconnectivity fails, how well will your locals pick up the slack? Some places will do much better than others.
And don't forget, people can walk. They can walk a long way. I sometimes wonder what Europe would do if a half-billion starving people in east and south asia decided to walk there, because they heard there was food.
-Jeotsu
My apologies to any that may have been more or less properly incensed by the uninhibited nature of my inebriation inspired comment. I should do it more often, but booze is not exactly cheap and I do have some taste in that regard. I should switch to cheaper stuff, but damn we have to draw a line somewhere.
Today was the supposed birthday of this effed up imperial power that wasn't supposed to be one. It has made me more than a little pissed off. I have a little advice to offer those who want to know when to bail out of the equity markets. Don't. Who knows it might levitate forever. The chart I saw this morning says to me that whatever parties are still in are heavily discounting the future value of the dollar. Who isn't? None of us are going to get out alive. Pay your money and take your chances. But, please don't whine if your bet doesn't pay.
PS
And as to pension, government and private, the bankers have already marinated them. Ilargi has written quite a few thousands of words describing their recipes.
I appreciate Alex challenging certain ideas. Particularly the work long vs. early gardening.
I sense little patience from some board members with anyone that disagrees with I&S. Is this healthy for community-based discussion? Either you're in the boat, or against us?
Alex,
"The only depression resistant career that I see:
Union busting
Like it or lump it, that's reality."
Come on Alex, one would expect a little more creativity from one such as yourself. Drug dealing, extortion, high-jacking, robbery, human trafficking- there's lots of careers open for those willing to do what it takes to make a buck.
But I suppose for those comfortably ensconced in some cubicle in one of our shiny metropolises, it's hard to see how and why a simpler life in fly-over country might not only make sense, but would come with countless intangible rewards. Not to mention that I'm surrounded by good god-fearing working folk with guns who'll have little compunction against protecting the fundamental essentials necessary for our collective survival. In a time and place where food and land are dear, bullets are cheap and union busters are cheaper still.
Is anyone here well acquainted with the ideas of Milton Freedman? My impression is the Ilargi is wrong about him. My impression is that he was a very strong advocate of free markets. The problems the world faces is not primarily caused by free markets; instead they are caused by crony capitalism. I believe Milton would have said that if banks have trillions of dollars worth of losses they should go bankrupt--NOT THAT THESE LOSSES SHOULD BE TRANSFERRED TO THE GENERAL PUBLIC.
@ Draft
I am very much in favor of discussion about what might happen. Nobody, including this nobody or our beloved Stoneleigh can possibly know exactly when it all goes to hell. Actually, it doesn't happen everywhere all at once. It rolls back and forth across the landscape. More or less randomly smashing lives here and there.
You posted a comment today almost as soon as the new post came up that sure looks trollish to me. You have kept it up all day. You've tried awfully hard to make a big deal out of JMG and Nicole not saying exactly the same thing about exactly when we will all wish we were already dead. With a little bit of luck I will be, but I hardly ever get that lucky.
Whether you are a troll or not, I will offer my thoroughly ignorable theory on why her prophecy didn't materialize on schedule. I could be entirely wrong. As I recall she has two law degrees. Which might dispose one to suppose that laws matter. Up until very recent times that was probably a very reasonable assumption, As we know this is now the post-legal age and legalities are entirely optional. What that means is that it all goes to hell the day one of the power-drunk bastards accidentally hits the wrong lever.
Have a nice day.
Just a lack of imagination:
The theater taking place in Washington, DC has the US Treasury asking permission to borrow/lend from Congress. The childish parties play chicken with each other as if nothing but short- term political advantage matters. This is absurd: an administration that engages in three wars overseas without permission from Congress can ignore sanctions against borrowing/lending and do as it pleases.
If this Administration had any imagination it would introduce its own currency rather than borrow from finance by way of the Federal Reserve. The president could ask Treasury Secretary Elizabeth Warren to use the Treasury gold hoard @ Fort Knox — 50 ounces or so it has left — to back the issue of a fixed amount of currency necessary to continue the functions of government. We can call this currency ‘United States Notes’ or ‘US Silver Notes’ as opposed to the current toilet paper ‘Federal Reserve Notes’. The Treasury could imply limited convertibility of notes to gold/silver.
The Treasury would lie … as it ‘implied’ full faith and credit toward mortgage- backed securities offered by Fannie Mae and Freddie Mac. Nobody would risk calling the Treasury on its lie or otherwise rock the boat. There would be no reason for anyone doing business with the government to do so. The government would run a paper- gold ponzi scheme the same way the bullion banks do now!
The Treasury could also swap a few of its new notes for all the gold and silver held on the Fed’s account @ the New York Fed to make a lie the truth. Unlike the bullion banks and the Fed, the Treasury possesses the tools of eminent domain and a public service mandate.
A hard US dollar would be a reverse- or negative ‘anti-default’. How amusing!
Treasury Secretary Warren could take the next step and compel the Fed to treat its Reserve Notes as ‘demurrage money’. This kind of money requires the holder to pay a fee to the issuer to hold onto it. An entity would have to increase his holding’s value by a fixed amount on a regular schedule per year.
Imagine this strategy applied to the trillion$ in excess reserves or in corporate vaults? Rather than holding money, the rational entity would spend it instead, hoping to push the demurrage cost onto another. The increased spending would stimulate business activity. Without the addition of a single penny of currency created, the economic effect of inflation would be produced without there being actual inflation. Demurrage money is a strange form of inflationary/non-inflationary money. To hold money you have to be actually earn more money by way of economic activity so as to afford the fee which usually amounts to 10- 15% per year. Since the money becomes that much more valuable with time, the incentive to ration liquidity by hoarding — becoming super rich — vanishes.
The Greeks could issue demurrage money as drachmas to stimulate their euro- starved economy and get people off the streets and out of Syntagma Square. The ‘New Drachmas’ would only be acceptable in Greece yet freely convertible to euros which would still circulate. The counter- productive IMF- ‘austerity diktat’ would be bypassed. Economic activity would increase while anarchy and disorder would decrease.
http://www.economic-undertow.com/2011/07/03/lack-of-imagination/
@ pasttense
Even Satan worships Milton Friedman. Adolf, Benito and Hideki weren't able to inflict as much pain on the world as that bastard.
@ john patrick
I don't entirely agree with I&S. Neither does the buzzard or probably anyone else. But this is their platform and a little respect is in order. If someone thinks they are wrong, it is unseemly and extremely bad manners to try to badger them into agreeing. If someone thinks JMG has the right answer they should just post their laudatory comments on his site and get on with their lives. But, that's just my humble opinion.
I might add that I post comments fairly often that probably do not conform to their specific prognostications. I do not and will not make a big deal out of it and neither do they. Anybody's opinions are worthy of what ever they are worth. Badgering questions and assertions of prophetic failures are BS.
SFV,
I read your post at your blog this morning. I bow in your general direction. It is dust in the wind, of course, but I am impressed. I hope you can keep going at least as long as I do.
On timing...
In the past, I've sensed certain things coming down the pike. And damn, it felt like it was going to happen the following day because I was so immersed in the event. How many of us have filled the gas tank because of an offshore event? And then not much happened. Still--I think it's better to be prepared. Especially if you have a family. I remind my girlfriend, what are you going to say to the kids when they're hungry and all you have is non-edible "stuff"?
Years ago when any fool could make money flipping houses I was disturbed that little thought/money was going into sustainable culture. I knew it couldn't last. Sure, you make 500K selling your house, but then you have to loan your kids 200K for a downpayment. What crazy nonsense. I felt it would crash any day. It took a few years.
When I sense things are getting worse, I review the I&S Lifeboat strategy. Like the other day, I sold some PM to pay off a student loan, the only remaining debt I had. I felt it was better to remove the Gov't guaranteed hand in my pocket and not have them garnish my future wages due to non-payment from lack of income. It felt really good deleveraging from something that could have dire consequences down the road. Would it go bad for me by keeping the debt? I don't know. But I feel really good about getting rid of it.
I did learn a valuable lesson about PMs. Yes--they have value. But you have to do the transaction. This involves security, privacy, and trusting a third-party (U.S. Post Office). It took almost two weeks for the mint to receive the PM because of the shipment being certified/insured. Apparently it travels via a lock-box to the final destination. What if the Post Office goes on strike? Or they shutdown? Then I got a check from the mint after a few days and had to wait for it to clear. The entire process took me three weeks. Then it took five days for the student loan to process and clear. ALL I wanted to do was pay off the student loan. But I had to jump through all sorts of hoops to make it happen.
Food for thought... consider doing the above when the system doesn't work so well.
@ I.M.Nobody
Hey, I like all you guys. Everyone has a different slant on the situation. But I don't think I&S need to be defended. Afterall, they can respond when the need arises.
I mean, sometimes, it seems people are married to TAE. You know, say something about the founders and a fight breaks out. It's better to just ignore some/most of it. This type of communication is only one-dimensional. We don't always say what we mean, even if we mean well.
Some are accused of being trolls, etc.. I don't even know what the hell it is. But really, who cares. We wouldn't go into a town meeting and accuse someone of "trolling."
I do read TAE every day. And ALL the comments. Most of the time I don't have anything to share/add. I like seeing how other people think and approach/solve the situation. People have all sorts of things going on. It's pretty interesting :)
Stoneleigh said...
"Many, of course, have already fallen off the back of the bus, and that number is set to grow rapidly."
---
I remember a program by Ophra where she devoted the whole hour about the poor in USA. It was before the financial meltdown.
The numbers stuck in my mind.
30 million people.
10% of the population.
That's 100% of the population of Canada.
Yes, there were that many that never got on the bus.
Everyone is ignoring them. As if they were invisible.
Seniors are also invisible to a large percentage of the population.
jal
@ jal
On seniors... I agree.
Years ago I read Alvin Toffler's "Future Shock" and I couldn't help but think that things are changing so fast, that in the future many would just pick a spot to get off the bus. And stay off. I.e., pick an era they were comfortable with (Reagan, pre-housing bust, etc..) and choose to live in that paradigm.
I think at some point, it just becomes too disturbing to make the change. Red pill or blue? Perhaps, the bio-chemistry just isn't in place to dissolve neurons and remake new ones. I don't know.
I get frustrated at times with the unawareness, even lack of desire, from others I interact with regarding what is going on around us. I feel like the boat is going down, and while I may be able to swim, others are pulling me down with it.
Many seniors really are stuck. Fixed income. Hoping it continues, even if it is a dividend from a corporation that is raping S. America. So many hope(d) to retire with a nest egg from home equity. And now it's gone. How are your kids going to take care of you when they're poor?
At some point, the window closes. The music stops and you grab the nearest chair. If there is one. The most poignant example of this is the movie, "Wrestling Ernest Hemingway." Sad. True. And beautiful.
Am rambling. But I feel I need to include the senior card in the deck. Future preps. Community. Etc..
And in the meantime, Niall Ferguson on the Future Of The Eurozone,
cheers,
Alex
John Patrick,
Speaking for myself, I never really comment out of a desire to defend a specific person, only a person's ideas or arguments that I also agree with. Frankly, I think some of the recent commenters who posted about the timing of the next "big crash" and personal preps are completely misunderstanding the substantive arguments made by I, S and many others here at TAE. That's easy to forgive, because those arguments not exactly ones that can be neatly gift-wrapped with a bow on top, available for next day overnight delivery. But what's more frustrating is when people act like they understand the underlying argument, and then throw out accusations about how someone was wrong and how it did or would have cost them a lot of money to follow the timeline, or whatever.
That just confuses the entire issue of what's actually going on in the world, IMO, and casts a dispersion on the very nuanced views held by many here at TAE, that are more or less aligned with those of its founders. Those "big picture" ideas should always be defended, because if they are not, then others start to think there is actually some validity to the accusations. And that undermines an entire way of thinking that has been crafted here at TAE. It's not about homogeneity or everyone thinking the same things, but about standing at one of the highest possible vantage points and making well-reasoned, coherent arguments about what's happening and where we are headed. How you use those ideas in your personal life is, obviously, up to you. I'm sure everyone here has some major obstacle in their life that does not submit itself to any easy "solutions", so we just have to get creative and do the best we can with what we have.
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I did learn a valuable lesson about PMs. Yes--they have value. But you have to do the transaction. This involves security, privacy, and trusting a third-party (U.S. Post Office)
Ding ding ding! We have a winner here!
This is what PM pushers fail to realize. Ammo, batteries, cigarettes and coffee cans are the next currency, at least for some time.
The next power currency, that is. Dollars will still be in existence for some time.
Just want to chime in on the question of planning and for what time frame. I think I have an edge that I wasn't aware of having. I am a woman, former wife and mother. I spent most of my life without the power or means to affect my own plans. Very,very dependent.That said I learned how to assess the needs of a husband on many levels, many time frames. I thought about the needs of my children, real or imagined, current and future. I just forgot to think about myself. That said I realize I have a lot of experience juggling multiple needs in conditions where the means were not under my control. I say now that I know something that will be useful in adapting to collapse.
I live like that, always considering that my safety net may not catch me, that I may be evicted from my nest. I confess I am experiencing physical manifestations of stress. Dr. Gabor Mate's work is helping me deal with that.
I just want to say to those fearful of the future you really are capable of planiing for more than one time frame at a time. There really is the helping hand/insight/knowledge just when you need it. A kind of just in time delivery system:)
I am going to offer advice now. Deal with stress. Stress attacks the immune system. In a future with broken medical systems it is prudent to know oneself, know one's body.Smile a lot!
French nuclear power plant explosion heightens safety fears
The plants seem to be exiting the bathtub. Humans will find it too slippery to climb out, unfortunately.
pastetense
If you don't think Milton Friedman was closely connected with crony capitalism, you might read Naomi Klein's chapter on Chile in The Shock Doctrine. Friedman was General Pinochet's personal economic advisor and was the de facto economic maestro of his fascist government. My ex-girlfriend is Chilean and was in the university when Pinochet overthrew and murdered Allende. Her family was upper middle class right wing so she heard both sides. The one thing everyones agrees is that the "Chicago Boys" took over the economy of fascist Chile.
=============
As to commenters defending criticisms of I&S ideas. None of us are clones here to be sure, but we would be pretty stupid if we spent a lot of time hanging out here or even became affiliated with this web site and didn't subscribe to their big picture. If I woke up one morning and said most of the premises of TAE are 100% wrongheaded, then I would move on.
Also, I&S are both quite busy now. They don't have the time to respond to all the comments. Additionally, Ilargi doesn't have the patience or desire to respond in detail in the same fashion that he writes a leading article.
Someone criticizes their ideas. Someone responds with a counter argument. Then hopefully a crafted response criticizing the counter argument or (rarely) a .....Hmm. You're right. That's a good part of what the commentariat is suppose to be about. So what's the problem?
el gallinazo said:
So what's the problem?
People want a straight solution. There is none, but this is very hard to accept, when the carpet has never been pulled from under their feet. It`s certainly understandable, but blaming people who offer some pretty darn good solutions is not understandable.
Hey, I could complain that I don`t have money, so this might be all BS!
Community?! Don't make me laugh! I can't convince people with university (technical or science) degrees that house prices don't go up indefinitely! Tell them about peak oil and I'm instantly wearing a tin-foil hat! Eat bacon and lose weight?! You must be crazy, doctor said you'll die from all that cholesterol creeping through your system! So what if you look and feel like 20 years old again?!
The power of denial is amazing.
Oh, I forgot!
Not owning a car?! Biggest sin of all! Kinda like a pariah for not moving your ass at 5-7 litres of highly refined petroleum a day. You don't understand, I'm told, having a car is essential in Canada. You simply cannot function without one. Guess what, I did and do.
/rant off
Pfeew
Jeotsu,
It is not only the age or the financial means/source of the readers that varies, but where you are geographically plays a huge role (IMO) in what and how you should be preparing. And I'm not just talking about growing seasons, or how cold it is in winter. Every place has different risks and advantages, be they geographic, cultural, political, etc.
Exactly. When I lecture, I stress the importance of knowing the advantages and disadvantages of one's current location, of understanding one's local reality in the absence of the homogenizing effect of trade. The issues will vary enormously from location to location. I try to reflect this when I speak in different areas.
And don't forget, people can walk. They can walk a long way. I sometimes wonder what Europe would do if a half-billion starving people in east and south asia decided to walk there, because they heard there was food.
Migration on a grand scale is a given in this century. There are too many places where people are hitting natural limits all at once, and when they do they look for living space elsewhere, as humans have done since time immemorial. Many areas are going to look very different ethnically and culturally in the future than they do now. Fortresses can only keep people out for so long.
p01,
Eat bacon and lose weight?! You must be crazy, doctor said you'll die from all that cholesterol creeping through your system! So what if you look and feel like 20 years old again?!
It's great isn't it :)
The only ones left with any confidence at all are the New Dumb.
And ever since the start of 2009, also the Democratic Party Kool-Aid drinkers who have turned cognitive dissonance into something of an art-form.
Economics is not about choosing who has the most attractive theory. This is about power, capital reproduction at all costs and flow of wealth towards the ruling class.
Picking on dead market theorists for "where it all went wrong" is ignorant of economic history.
Economists are defenders of the status quo via explaining the world using post hoc reasoning and scapegoating when needed. They demonized Hayek for decades and now are starting with Keynes as the future comes into view.
And when the world changes, they will explain it again and the ruling class will pick new theories that benefit their perceived interests the most. Which usually has to to with directing maximum wealth flows to them.
@ board
Timing is important to us. We're still holding on to our cash and wondering about the right time to purchase a few acres in VT, build a tiny home, etc. Right now we sort of sit and watch, but wonder if things will quickly deteriorate and we might not even be able to move up north. Travel might become restricted. Prices in VT have only declined about 10%, whereas, in the area of FL where we reside prices have declined an average of 80%! Our paid for home in FL won't sell at all, not even for $30,000, so eventually we might have to just abandon it. In the meantime, though, my spouse has a job here in FL, not scheduled to retire for some years (age 59 now) so we're sticking to the status quo for the moment while paying for our son's education at a local state university.
We're planning on visiting VT in the autumn. Should we buy a few acres then at a higher price than perhaps projected in the future or should we continue to hold on to our cash (lifetime savings)?
Thank you kindly for any thoughts you would like to share.
@ el g
I really like reading the stuff here. Lot of great talent. But I still feel I&S do not need to be "defended" anymore than someone has to defend the saying, "There will always be poor...".
The truth stands on its own power, is not weak, and does not need to be defended. That's where I'm coming from. I&S (and others) have shared some ideas that really do stand on their own. I know some people pop in here, are possibly new, and like me are not going to search the entire archives for an answer. A big part of being here is interacting with the host and board. The sense that a live person will chat with me and help, if needed.
I realized with the Alex and Stoneleigh conversation, that it's possible to prepare for multiple timeframes and personal circumstances. Though, when I think of the great ancient teachers, it seems they went down with the ship. They tried to help others, wise prescriptions. But they had no escape plan. Or plan-B. Something I'm thinking about with regard to family. I can only prep so much, and at some point, will have to join hands with friends and walk into the unknown.
@ p01
I could have exchanged the PM at a local pawn shop, etc.. and paid a high premium. But still, if cash is in short supply down the road, how much cash do you think the local dealers will have on hand? Because of the issues I had with one transaction, I personally think silver is a better hedge because it's closer (in small units) to what the "everyman" is capable of dealing with. (part of me thinks I'd do more good giving all the stuff away...)
I.M. N
"And muchtooloose, you know nothing about Ilargi.
Maybe, but I do know who he posted as on TOD and I doubt you do. But that is neither here nor there and I think ilargi can fight anything he considers a battle himself, don't you?
As far me as being wrong or right, I don't doubt it. I find that, at times, when I talk to my son that things I thought were right could be looked at in quite another way. So?
Better to voice ones ill formed opinions and learn, than to keep silent and remain an insular cretin.
About STFU, I am pretty sure it is not complimentary but I am in total ignorance of that acronym and you do pique my curiosity to no end, so would you oblige?:)
Ahimsa
My two cents (and of course that is exactly what it is worth) is that if you are not too unhappy living where you are, the best thing would be to wait a year or too. I know you are not happy with the climate change in your area. New England has been the part of the country (other than DC for obvious reasons) to be least affected by the crash. Not exactly sure why. Meanwhile you are saving money and sponsoring your son's education. Moving now would really stress out your cash flow.
@ Ash
I agree with what you're saying. But I think we all know that a certain amount of "work" is required for anyone (me included) to fully understand something. Verbal logic only go so far, and really only works when the recipient wants to hear it. /@Ash
On prepping... I've learned from my career talent (teaching technical subjects) that one can only prep so much. You research the material, think about presentation styles, adult learning, arrange the seating, etc.., and then the curtain rises and the show goes on. I feel only about 20% can be pre-planned. The rest is dynamic interaction which is almost always unknown. And really, it has to be for it to be alive and relevant. Sometimes the student just wants an answer. But it works best if they can come to their own conclusion via sound thinking. Then they "own" it and are not borrowing from me to live as a functioning adult.
The same with prepping and lifeboat strategies. There is no clearly defined path, but rather it's about making right/good choices in the moment. These, will be carried and amplified in and of themself, where exponential goodness is returned to the seeker. (credit to "The Wise Man's Fear" by Patrick Rothfuss)
Hey Kunstler get a load of this!
I was sitting on the can looking at a historical atlas of US railines had my mind blown on what once existed in the US. In my mind there were a couple of lines going north and south and a few going west but see this One can 'zoom' into it to see the individual lines
Like a spider web or a map of present day airline routes ... looks like there is a long way back to the future (if there is one of course).
Can anyone tell me when Milton Friedman or anyone in the private market put a gun to anyone's head and insisted that person to spend their savings on a certain product/service???
every year the government does just this when they demand you pay your "fair share" of taxes...
/unlurk
@Ahimsa
...contrary to what El Gall says, I think you should look to buy sooner - the owning of a bit of dirt is a necessary step, but not sufficient to see you through. Remember, the difficult part of the equation (if, unlike me, you can *afford* the land...) is learning to cultivate and care for it - and the specific knowledge is highly dependent on location.
So I would get started on some small-scale forest-gardening set-up in a region you intend to stay asap. If you have the funds, you could look to get a smaller piece if land in the area that appeals, start building community and knowledge, then buy more land in the area as reality bites and people decide to sell cheaper. Or, you could just develop skills then offer to teach others or put time into a shared project later.
You can do a lot with relatively little land, if you pay attention.
/relurk
For those who feel timing of the collapse is critical to their lives, within a resolution of a few years, I can offer one piece of advice:
work towards having less dependence on timing of systemic collapse
A common theme in most alternatives for preparing is reducing dependence on the system (i.e. increasing individual and community resilience). Dependence on timing is perhaps one of this most brittle forms of dependence, since there is no way one can predict the behaviour of such a complex system with timing at that level of precision.
Of the long run, history (written or oral) will recall this period as a period of rapid decline of industrial civilization, whether it takes a year or a couple of decades.
mthierauf said...
Can anyone tell me when Milton Friedman or anyone in the private market put a gun to anyone's head and insisted that person to spend their savings on a certain product/service???
Ha! I have photos of that!
Seriously, let's both put joking aside.
wow p01 you really put me in my place :eyeroll:
you didnt address the second half of my statement
mthierauf said...
you didnt address the second half of my statement
Because it makes some sense.
CHS gives a hint today of his idea of timing. As we would say in the Virgin Islands, Soon come to a theater near you.
http://www.oftwominds.com/blogjuly11/cognitive-dissonance6-11.html
Martin Wolf"s excellent analysis at FT,
" The Moment of Truth for the Eurozone "
""Can anyone tell me when Milton Friedman or anyone in the private market put a gun to anyone's head and insisted that person to spend their savings on a certain product/service???""
That's funny because the spread of the all encompassing market, over the past few centuries, has been one of literally holding guns to heads, coercion and mass dispossession.
The elites hold that the common good is an undefinable and therefor empty notion. They maintain that it is up to society’s leaders (them) to tell the masses what is in their own interests. They snatch up every corner of add space to foster the myth that consumer choice is synonymous with democracy and freedom (including brand blue and brand red politics). They justify America’s decadent economic inequality as necessary for the “accumulation of capital” (the “rising tide floats all boats” gem). They engage in military campaigns abroad to spread the “good news” of capital, privatized national resources, and bourgeois consumerism.
Systemically a junky-mentality is fostered. We confuse powerful cultural stressors for personal and social benefits. Among those stressors, inequitably distributed essential resources with even more inequitably distributed unessential wealth, and a constant culturally-induced striving for perennially unsatisfiable desires that often conflict with basic bio-cultural needs.
Solid comments on the utility of preparation, too many variables to formulate any failsafe prep strategy. One thing hasn't been mentioned specifically, densely populated urban locations.
Bad location for self-sufficiency?
Rural settings might have more embedded skillsets?
At the heart of all of these comments is a fear of death and a rigid belief in the separate being called "I". This stance begets a position of narrow self interest; a position that is to blame for the ecologic and economic catastrophe this world is facing.
If you study the true nature of being, you'll see you are just awareness. You're human potential is unique from an evolutionary standpoint in that you hold the ability to be aware of your awareness. But there is no guarantee you will learn how to use that ability. Our culture has shunned that ability and lost track of the wisdom traditions of the past that exalted understanding and positive freedom as the ultimate ends of human existence.
Instead, we turned our focus to those things we could measure and that fit within the narrow view of a jaded faith in external, object oriented religion. We choose not to focus on what served us as unique beings, but rather what served our more basal animal instincts - our drive for feeding desire and urges with external comforts.
After a few thousand years of playing this out, we've nearly succeeded in wiping out the potential to get back on course towards truly living out the full possibility that exists for us as uniquely self-aware entities.
So, while it's natural for many to face this crisis from a standpoint of "what can I do to protect ME", doing so does nothing to further the cause of shifting the paradigm that is killing the planet...nor does it offer any peace or higher-order possibility for those engaging it.
At all times, it is possible to see deeply into life. The game we are given to play -- the external circumstances, objects, and sense perceptions coming into our awareness -- is often well outside our control. However, we have the ability to make meaning out of that experience in a myriad of ways.
I can only suggest to readers here that they seek out some way of opening to that possibility. It is not a passive renunciation of duty. It is a reorientation of drive that puts the benefit of the whole above the narrow self-interest of a fictitious individual.
Rest assured, some day you will die. Everyone does. Become intimately aware of this fact and you will find a new freedom in your daily life. You will still act to do what is good and expedient -- probably ten-times more effectively because you won't be wasting energy on fear and projection of some uncertain suffering in an imagined future.
Best of luck.
" but I don't perceive what you propose that folks do about the present situation"
That's kind of a bitch, isn't it. Too early for institutional dismantling and too late to fix the system(not that it could be).
We're left navigating a disintegrating system on it's death bed trying desperately to take the world and everybody down with it.
LIke I have repeatedly stated "life boat" strategies are good in a put-your-mask-on-first kind of way or if you are >60. But, beyond that it is short-sighted and narrow in scope.
Gold coins and canned food, when thrown with precision and sufficient force, can only hold of the masses for so long.
Probably the first step is to acknowledge that the integrity and lastability of your individual survival is intrinsically connected to social survival. And that is no fun to think about because it runs contrary the bootsrapper, maverick mentality that has been cultivated for so long.
However, Bolivia is on the right track.
From their new constitution:
"Earth is defined by the legal text as a dynamic and “indivisible community of all living systems and living organisms, interrelated, interdependent and complementary, which share a common destiny.”"
""The economy must operate within the limits of nature and the country is to work towards energy and food sovereignty while adopting renewable energy technologies and increasing energy efficiency.""
""The initial proposal for the law states: “Living Well means adopting forms of consumption, behaviour and conduct that are not degrading to nature. It requires an ethical and spiritual relationship with life. Living Well proposes the complete fulfilment of life and collective happiness.”"
They Institutionalized the most up to date and sophisticated scientific world view. Which makes them the most advanced country in the world.
When we understand this Symbiotic relationship of life, we begin to see that as far as 'relationships' are concerned, our relationship to the planet is the most profound and important. This 'relationship' sets the stage for our individual relationships. The medium by which this is expressed, is Science, for the Scientific Method has allowed us insight into these natural processes, so we can better understand how we 'fit' into this life system as a whole
The interconnection of the whole of life is undeniable in the most basic sense, and it is this perpetual 'relationship' of total interconnectivity that is not fully realized by society overall. Thus, our modes of conduct and perception are largely out of line with nature itself... and hence destructive.
Bolivia is choosing to try and be winner in the long term game of species and social survival. Unfortunately, they can't do it along and are not the dominant social order of the world and hence, Morales, probably has a big bulls eye on his back.
Hopefully, if we are lucky, Stoneleigh's optimistic economic forecast will come to fruition to break the cultural trance and stop our elite led doomsday march.
DPW, Excellent!
Prechter and Stoneleigh, and a few other brave souls, have vehemently defended the US dollar as one of the few (only?) possible safe havens in a worldwide economic implosion. It's simple advice on the surface, but the ramifications of holding US dollars are far more complex, especially if you are not in the U.S. It seems that just holding cahs these days requires serious financial management advice! This is what I have learned so far:
1) There is always a spread in converting your money to U.S. -- anyone who has gone on a trip and exchanged their money for a foreign currency has encountered this. While the spread narrows (i.e., costs you less in "penalties" to make the exchange) when you exchange much larger sums of money, you still incur a loss to make the change. This must be factored in to the equation. So once you're in US dollars what do you do with it?
2) Keeping US dollars in a bank is apparently risky. But when we're talking large sums of honestly-earned money, it always starts in the bank. So do you trust the bank? We're warned by TAE that we should NOT trust the banks. Deposit insurance schemes are even potentially unreliable in a major meltdown, as they'll quickly be exhausted. I've only just learned that major overseas banks have even opted out of the deposit insurance schemes, since their "double-A" rating from Standard & Poor's alleviates the need for deposit insurance! Yikes!
3) Keep in mind you will earn 0% on your US dollar holdings in the bank, outside the U.S. In Canada you earn 0.5% (yes half a percent). In the current inflation climate (arguably very transitory and poorly measured, I know) you are losing money every day on your US dollars.
3) So if you don't trust the bank, where do you put it? Treasuries? Most people don't even know how to buy US treasuries. And I'm not even sure ordinary foreign individuals can do it from outside the US? Here is where the cost of engaging financial management advice comes in. There is a fee for this obviously. I haven't yet gone down this road so I don't even know what it would cost me, if I can even buy US treasuries at all.
4) If you can't or don't want to buy treasuries, then how else do you get your US dollars out of the bank? As an overseas holder of US dollars, I have learned that I am charged 1.1% to withdraw US dollar cash, even though my money is held in a US dollar account with my bank. Yes, they CHARGE me to withdraw my cash. I find it despicable. The hold the banks have over us is insidious. They try to stop us from accessing our own money at every turn. Apparently having the privilege of holding my money in their bank is not enough anymore. They also have to penalize me for daring to withdraw it.
6) Once you've paid that penalty to withdraw it, you then have to store it safely. Bury it in your yard? This requires some research and skill too. There are many factors to consider. What kind of container? Who should know about it? How deep do you go to protect it from the heat of a fire, for example, which can scorch the earth in a hot enough blaze. Then there are safety deposit boxes in ex-bank institutions. They will charge you a few hundred at least, every year, to keep that safety deposit box. Given these ex-bank institutions are not as rich as banks, then one must question the integrity of their security measures.
It's so complicated just to hold US dollars. The elites have quite handily made it very difficult to keep you money outside the system. This is a huge area of discussion, in my mind, that goes beyond the edict to "hold cash." I probably need to read a good book on the subject, if anyone knows of one.
...we've nearly succeeded in wiping out the potential to get back on course towards truly living out the full possibility that exists for us as uniquely self-aware entities.
One of my favorite pastimes is to think about what "getting back on course" might be. As I began to work it out, I began to see how such a course includes overshoot--it cannot be avoided and should not be feared or considered a failure. It's part of how things are and seeing what it all means is part of the wonder of being self-aware humans. How we live with death determines how we live.
" As I began to work it out, I began to see how such a course includes overshoot--it cannot be avoided and should not be feared or considered a failure""
http://www.guardian.co.uk/environment/2009/apr/15/consumption-versus-population-environmental-impact
Consumption dwarfs population as main environmental threat
A small portion of the world's people use up most of the earth's resources and produce most of its greenhouse gas emissions, writes Fred Pearce. From Yale Environment 360, part of Guardian Environment Network
Indeed, Capitalis Pathologus Consumerous is in deep overshoot and headed for a massive catastrophic die off. No, it should not be feared - but it should be a learning experience.
http://www.dailygalaxy.com/my_weblog/2007/11/the-consumer-pa.html
Scientists Find that Low Self-Esteem & Materialism Go Hand in Hand
Daily Galaxy
"Researchers have found that low self-esteem and materialism are not just a correlation, but also a causal relationship where low self esteem increases materialism, and materialism can also create low self-esteem. The also found that as self esteem increases,materialism decreases."
I do not fear die-off, but I fear kill-off, this being worse than total extinction, and nothing new may be learned from it.
Apologies for boring the board.
While dismissing the puppet prez. from office for gratuitous warmongering wouldn't change much in the nature of collapse, it might slow the administrations usurpation of power so that further warmongering is slightly reduced.
Firstly, by lawful immunity from criminal prosecution of actions inherent in the functioning of office, congresspeople cannot be criminally prosecuted whatsoever for voting the wrong way on impeachment matters or not commencing such procedures. Yet, by authority of congress, they may be impeachable or otherwise [retroactively] dismissable from congressional office for an offense pertaining to unconscionable conduct [by malvoting in impeachment procedures], but then only if the president was successfully impeached [for offense of treason] by supermajority, removed from office and afterwards criminally convicted for the same charge [and by same evidence] as the impeachable offense.
Although congressional impeachment proceedings are not a criminal court, and impeachable offenses themselves carry no criminal charge, any evidence upon which impeachment [specifically for treason] may succeed is equally admissible as evidence for criminal prosecution on a similar charge, although there may be no lawful obligation to afterwards criminally prosecute [for treason] even if the prez. was impeached on a distinctly criminal offense [of treason].
Were members of congress to vote for impeachment of the POTUS [on offense of treason], but no supermajority was reached, rather than attempt a congressional blood-feud by persecuting
malvoters, the only conscionable recourse for such members as proponents of impeachment would be to resign, or to retry impeachment voting [on different offenses] until it succeeds.
Lastly, launching cruise-missiles at a sovereign territory is indeed an act of war, very much so, as is [kinetic involvement in] enforcing aerial or naval blockades. Publicly denying this simple fact may serve as evidence for mental incapacitation, as the POTUS and congress are required to be able to discern war from peace at all times.
@ Skip Breakfast
Yes, it's a real pain getting tangible fiat US $ to hold in your hand. And yet all of the HI financial consultants aka PM/stock/commodity peddlers would have us believe its practical value is rapidly approaching zero. You'd think the banks would be giving it away!
progressive populist said:
I can depend on that apple tree to produce apples, I know that the chickens will lay eggs regardless what the FED does.... What's not to like?
Sounds good if you have reliable sources of water and feed for your trees/chickens.
Location considerations aside, it is
practically difficult to find other people who are dependent, trustworthy and skilled to plan and eventually hunker down with when the Weinen, Klagen era is no longer an unpleasant mental abstraction.
@ muchtooloose
About STFU, I am pretty sure it is not complimentary but I am in total ignorance of that acronym and you do pique my curiosity to no end, so would you oblige?:)
Ah, very well then I shall explain that it is not any kind of denigration of person or character. I think A piqued curiosity is a wonderful thing and will therefore allow you to retain it, if you wish. :)
Oh yes, about TOD a place where I was a daily reader almost from its inception. I don't go there anymore, but I was still lurking long after TOD:Canada was created.
""While dismissing the puppet prez. from office for gratuitous warmongering wouldn't change much in the nature of collapse""
Warmongering is a symptom of the dominant elite facing collapse, as is the erosion of civil liberties and the security state. Those laws no longer serve the elite.
There is a dangerous idea that there is some sort of "rule of law," when there is nothing but the law of rule. The idea of the rule of law was meant to replace the idea of fiat law by the few, or as a form of divine right. It implies (the rule of law) that there is some form of objective law equally applied, when this is not the case at all. That is because the presiding body of any state(with a few exceptions), that is its government and consequent institutions are merely the franchise of an elite - therefore, the structure of the attendant laws (and the findings of the declared corpus) always favor the few.
It is in not ascertaining the nature of the given states that we dash ourselves upon the rocks of the declared laws (which mirror one another in the states). The state is the make-up primarily of class distinctions, hence "law and order" should be seen as its opposite, order and law. Order not in the sense of the opposite of chaos, but order in the sense of maintaining the hierarchy and the rule of the dominant few. Because this is the major design of any and all states as currently structured , any body which raises itself as the overall beneficent adjudicator of law will hold the same class prerequisites - nothing else will be allowed. The only remedy either severally or totally in the sense of the current global system, is the overthrow of such by the people.
Now, governance is different from the "state", but that is another discussion.
"Humanity is near to breaching the sustainability of Earth, and needs a technological revolution greater and faster than the industrial revolution to avoid "a major planetary catastrophe," warns a new United Nations report."
http://www.ens-newswire.com/ens/jul2011/2011-07-05-02.html
Overview of the UN World Economic and Social Survey: The Great Green Technological Transformation
http://www.un.org/en/development/desa/policy/wess/wess_current/2011wess_overview_en.pdf
I'm sure the "magic" of the Free Market will take care of things. If by take care of things we mean continue to f*&% up the environment upon which all human life depends.
Paul Farrell channels Naomi Klein in MarketWatch (which is ironically owned by Ruppert Murdoch)
http://www.marketwatch.com/story/7-reasons-us-needs-a-good-depression-now-2011-07-05?pagenumber=1
I think Farrell has his vector arrow correctly aligned but he is a little off on the current magnitude.
Speaking of impeaching President Obama sends me back on memory lane , to the early days of TAE which coincided with Obama's campaign for the presidency. At the time Stoneleigh expressed that for Obama the presidency would be a poisoned chalice. Seems so now doesn't it...How different the world is now from then and in such a short time historically speaking.
If back then someone had told me that Obama would send out the drones I simply wouldn't have believed it. If someone back then had told me that Obama would remain silent while gov't goons fondle little children I wouldn't have believed it.If someone back then had told me that Obamaville tent cities would blot the landscape I simply wouldn't have believed it. If someone had told me that the torture techniques of the Bush era would expand under Obama I definitely wouldn't have believed that.If someone had told me that Obama would not only invite the vultures of finance into the inner sanctum but name them privileged advisors I wouldn't
have believed that possible.If someone had told me, back then...
The best is long gone and now I believe only the worst.
I am quite ho-hum, well conditioned to corruption as the new normal. Corruption in high places and low is now a global pandemic.
scandia,
We have all come a long way since the final run of the Hopers and Changers. It is a testimony to the skill of the shape shifters that the run lasted even as long as it did. I recall sensing that something was very wrong a shortway into his first speech after his meeting with AIPAC.
Disappointing to be sure, but perhaps there is some value in knowing through which channel the real bosses send their instructions.
Greece! Resistance is futile. You will be assimilated.
Blondie
Thank you for your words of wisdom. I will send David Rockefeller a Hallmark thank you card with a donation enclosed.
@ DPW
Thank you. I learned something valuable today.
I found Tom many years ago through a random post on Prog Archives. He has provided me countless hours of heart-soothing songs.
Enjoy his End Of The World News; sponsored by G-d.
Don't know who sponsored this EOW. maybe the free markets? Discovery of agriculture? Nature itself through genes (my favourite theory, BTW)?
I hope it soothes at least one more heart.
So if you happen to be an anal retentive perfectionist-type this doomsday preparation work has to be hugely stressful. Especially when you consider that adaptability, flexibility, and just plain luck will be large factors in your survival.
-
*
-
@DPW - Great post. Thank you.
*
El G-
It's Free Market Nihilism. All social values, institutions, natural systems will be swept away before the tidal wave of unrestrained corporate greed. Whatever remains will be declared right and just. The starving masses simply failed to pull hard enough on their bootstraps. What they were barefoot? Well most don't need shoes anyway, they live in the tropics.
Scandia
Actually, someone did try to tell you. Namely Webster Tarpley in Obama: The Postmodern Coup - Making of a Manchurian Candidate which was published in June of 2008. Tarpley is hard to read. He is brilliant and organized but his constant invective and diatribes wear one down. Constantly preaching to the choir is counter productive. He must use 30 animal invectives for players he doesn't like, the most offensive of which is "vulture." Nobody likes a hard working sanitation man.
The infamous Zbigniew Brzezinski took Obama under his wing after the failure of the Carter re-election when this Dr. Strangelove persona returned to Russian Studies at Columbia University in 1981. Brzezinski, like Kissinger, worked for David Rockefeller. Once Obama's talent as a Manchurian candidate was recognized, there was, so to speak, no stopping him. Things were arranged. Also, even a cursory examination will reveal that Obama's biological father, mother, and step-father were all affiliated with CIA front groups, though detailed narratives of this are available if one wishes to seek them out.
To say that Obama took up a "poisoned chalice" is a little naive. The man sold his soul to the devil in his early twenties and he has already dispensed a lot more poison upon the world in his puppet president role than he will ever imbibe. Of course the MotU use these types of people and then throw them away when they are no longer useful, so his life may yet not be one of unbridled joy. CHAINS WE CAN BELIEVE IN!
Short utube from Arizona. A lady wants to speak in front of city council, major defends her right to speak - and police collects the lady away. Room is full of people but nobody even stands up. Words "docile" and "impotent" come to mind...
p01
"Nature itself through genes (my favourite theory, BTW)?"
The gene theory of everything is so 20th century :-) You might check out The Biology of Belief by Bruce Lipton. VK turned me on to it and I am working my way through it right now. Will probably give you a few pauses for thought. Lipton is not a science writer but was a tenured professor of cellular biology at U of Wisc.
Though the question of how placebos work has in the main been ignored by medicine, recently some mainstream medical researchers are turning their attention to it. The results of those studies suggest that it is not only wacky, nineteenth-century treatments that can foster a placebo effect but also modern medicine's sophisticated technology, including the most" concrete" of medical tools, surgery.
A Baylor School of Medicine study, published in 2002 in the New England Journal of Medicine evaluated surgery for patients with severe, debilitating knee pain. [Moseley, et aI, 2002] The lead author of the study, Dr. Bruce Moseley, "knew" that knee surgery helped his patients: "All good surgeons know there is no placebo effect in surgery." But Moseley was trying to figure out which part of the surgery was giving his patients relief. The patients in the study were divided into three groups. Moseley shaved the damaged cartilage in the knee of one group. For another group, he flushed out the knee joint, removing material thought to be causing the inflammatory effect. Both of these constitute standard treatment for arthritic knees.
The third group got "fake" surgery. The patient was sedated, Moseley made three standard incisions and then talked and acted just as he would have during a real surgery - he even splashed salt water to simulate the sound of the knee-washing procedure.After 40 minutes, Moseley sewed up the incisions as if he had done the surgery. All three groups were prescribed the same postoperative care, which included an exercise program.
The results were shocking. Yes, the groups who received surgery, as expected, improved. But the placebo group improved just as much as the other two groups! Despite the fact that there are 650,000 surgeries yearly for arthritic knees, at a cost of about $5,000 each, the results were clear to Moseley: "My skill as a surgeon had no benefit on these patients. The entire benefit of surgery for osteoarthritis of the knee was the placebo effect." Television news programs graphically illustrated the stunning results. Footage showed members of the placebo group walking and playing basketball, in short doing things they reported they could not do before their "surgery." The placebo patients didn't find out for two years that they had gotten fake surgery. One member of the placebo group, Tim Perez, who had to walk with a cane before the surgery, is now able to play basketball with his grandchildren. He summed up the theme of this book when he told the Discovery Health Channel: "In this world anything is possible when you put your mind to it. I know that your mind can work miracles."
And for those of you feeling depressed by current events, here is some interesting news:
Given the power of the placebo, it is no wonder that the $8.2 billion antidepressant industry is under attack by critics who charge that
drug companies are hyping the effectiveness of their pills. In a 2002 article in the American Psychological Association's Prevention &
Treatment, "The Emperor's New Drugs," University of Connecticut psychology professor Irving Kirsch found that eighty percent of the effect of antidepressants, as measured in clinical trials, could be attributed to the placebo effect. [Kirsch, et al, 2002] Kirsch had to invoke the Freedom of Information Act in 2001 to get information on the clinical trials of the top antidepressants: these data were not forthcoming from the Food and Drug Administration.
The data show that in more than half of the clinical trials for the six leading antidepressants, the drugs did not outperform placebo, sugar pills. And Kirsch noted in a Discovery Health Channel interview that: "The difference between the response of the drugs and the response of placebo was less than two points on average on this clinical scale that goes from fifty to sixty points. That's a very small difference. That difference clinically is meaningless. "
Placebo effect...
When he had said this, he spat on the ground, made mud with the saliva, anointed the blind man’s eyes with the mud, and said to him, "Go, wash in the pool of Siloam". So he went away, washed, and came back seeing.
John 9:1-23
Makes you wonder.
Rare footage of Professor Brzezinski advising President Jimmy Carter - both Rockefeller appointees.
http://www.youtube.com/watch?v=59YKlP--PhU
>>And I have to say, I'm wondering if she is going to revise her timeline. I recall at at the beginning of 2010 she was saying 6 months to at most 2 years as a timeframe for the start (resumption) of the crash. That means by the end of this year.<<
it is better to be two or three years early, than to be 1 second too late.
truthfully, prepping takes time.
thank goodness stoneleigh underestimated the absurdity of the crowd and their desire to run into the wall teeth first.
i am putting the extra time to good use. it probably still won't be enough.
Tony Blair joins Huffington Post,UK
He is going to blog " for free ".
Oh how I wish he would go away, far,far away.A cell at the court for crimes against humanity would be nice.
@board - Be sure to watch the video that lauttri posted about the Arizona lady getting arrested trying to speak at the city council meeting.
This happened to my spouse in Ohio in July 2010. The police chief actually had spouse booked into jail.
The county prosecutor, after reviewing the facts, had the judge to dismiss the case in December 2010.
We have an attorney who should be filing a lawsuit soon. There is much more to our case which will be detailed in the lawsuit.
El g
And here I was thinking that antidepressants would be right up there with soap, toilet tissue etc to hoard as barter items when the SHTF....But just because the findings were published in a professional journal doesn't mean that they are valid. Science has gone political, too...for a long time.
seychelles said...
Science has gone political, too...for a long time.
=============
Sure science has gone corporate, particularly medical science. The nasty details can be found in
Overdosed America: The Broken Promise of American Medicine (P.S.) by John Abramson
However, when a piece of science done by a competent researcher flies in the face of corporate profits of Big Pharma, 99 times out of 100, it's valid.
Generally speaking, medicine's "miracle drugs" and treatments have not been major factors in improving the public health. In a few cases they've made a nice contribution, but overall not much. A great read on this subject is Ivan Illich's book Medical Nemesis, available free online. The first 20-30 pages of that book are an eye-opener, as Illich lays waste the myth of medical effectiveness.
The big health gains, which lead to the population explosion of the 19th and 20th century, were much more a result of public health initiatives such as water filitration technologies, sanitation and better nutrition, than modern medicines.
Re.:
lady getting arrested trying to speak at the city council meeting.
I've had the pleasure of going to Quartszite, AZ.
Its a nice small community in the middle of nowhere.
You might even consider it as a good place to go to escape the upcoming turmoil.
However, the video demonstrates the lack of understanding of the general population of the accepted procedures for democratic meetings.
You saw it coming.
"LAW AND ORDER" is going to be determined by the person with the guns on his side.
This is one incident of many that could divide a community and you could find yourself caught in the crosshair of a feud.
Welcome to the new age of "LAW AND ORDER".
jal
To follow up to my ramble about meaning-making and our unique human ability to take a wide-view of our collective life...here are a few links:
1) David Foster Wallace's speech "This is Water":
http://moreintelligentlife.com/story/david-foster-wallace-in-his-own-words
2) EF Shumacher "A Guide for the Perplexed" (seatch Amazon)
3) The Untethered Soul by Michael Singer -- speaks very clearly to all and doesn't rely on any one god/buddha/sun/spirit/shakti.
Also, apologies for some of the typos and readability issues in my previous post; typing at work and taking breaks ;)
Or simply this:
Desiderata
by Max Ehrmann
Go placidly amid the noise and the haste,
and remember what peace there may be in silence.
As far as possible, without surrender,
be on good terms with all persons.
Speak your truth quietly and clearly;
and listen to others,
even to the dull and the ignorant;
they too have their story.
Avoid loud and aggressive persons;
they are vexatious to the spirit.
If you compare yourself with others,
you may become vain or bitter,
for always there will be greater and lesser persons than yourself.
Enjoy your achievements as well as your plans.
Keep interested in your own career, however humble;
it is a real possession in the changing fortunes of time.
Exercise caution in your business affairs,
for the world is full of trickery.
But let this not blind you to what virtue there is;
many persons strive for high ideals,
and everywhere life is full of heroism.
Be yourself. Especially do not feign affection.
Neither be cynical about love,
for in the face of all aridity and disenchantment,
it is as perennial as the grass.
Take kindly the counsel of the years,
gracefully surrendering the things of youth.
Nurture strength of spirit to shield you in sudden misfortune.
But do not distress yourself with dark imaginings.
Many fears are born of fatigue and loneliness.
Beyond a wholesome discipline,
be gentle with yourself.
You are a child of the universe
no less than the trees and the stars;
you have a right to be here.
And whether or not it is clear to you,
no doubt the universe is unfolding as it should.
Therefore be at peace with God,
whatever you conceive Him to be.
And whatever your labors and aspirations,
in the noisy confusion of life,
keep peace in your soul.
With all its sham, drudgery, and broken dreams,
it is still a beautiful world.
Be cheerful. Strive to be happy.
Cutting Salt Does Not Lower Mortality.
True, but if it makes healthy people insulin resistant, then we can sell a whole bunch'o drugs and profit! Win-win!
--Big Pharma
Ho Ho Jal,
"I've had the pleasure of going to Quartszite, AZ.
Its a nice small community in the middle of nowhere.
You might even consider it as a good place to go to escape the upcoming turmoil."
Well bleach my grining skull bones a dazzling shade of white, you do have fine sense of humour!
If I may be so bold as to make a comment about Ilargi's opening monologue:
Default swaps are a zero sum game until one of the counterparties defaults. When a major counter party defaults it becomes a lose-lose game unless the taxpayer can be forced to pick up and supply the default money, as was with case with the NY Fed under Turbo Timmay and AIG. The Banksters are so interconnected with this garbage and it is so huge (nominally conservatively estimated as 10X the planet's GDP) that if Timmay hadn't covered AIG's default, then the whole house of cards would have collapsed beyond repair in the fall of 2008.
This leads to examining Moody's and S&P making noises that they won't bow to Troika pressure and will consider the bogus Greek pseudo CDO that the French banks have proposed as a triggering default. The Owners are in a dilemma. If the swaps writers welch on their bets, well, that's the end of the swaps business. Who wants to be stiffed by the track if their horse comes in first? And the owners need the swaps as its their last chance to keep expanding the credit markets. But if a triggering event occurs, the whole house of cards could collapse beyond remediation. Tough situation.
Since prior to a triggering event swaps are a zero sum game, there is just as much money to be gained, immediately afterwards, as lost in the casino. It appears the gainers have put more heat on the thoroughly corrupt arbiters of credit. Or maybe they are waiting for a counter offer from the Troika. If a default event does occur, they probably won't attempt to make any bail out through the Treasury like Hankenstein did, but the NY Fed will just print the trillions to cover the counterparties. Bring beer and popcorn.
"Draft said...
Here's what I think is going on here: confirmation bias. Stoneleigh expects a crash. Let's say there's a minor to medium downturn and/or recession between now and the end of 2012. I bet that will be seen as the predicted "crash" regardless of its magnitude - if you keep predicting the same thing, you'll eventually be right (not saying she's doing this, but she might be headed in that direction)."
Precisely. And in this regard, timing is not only important but critical -- less you end up whittling away the next 20+ years in continuous 6-12-18 month chunks of thinking the crash is "right around the corner".
Also, this is important, not just for people who play the market, but for those who choose to rent versus buy because they do not want to take on any debt.
As I have noted before, I know someone who fell prey to the siren song of deflation back in 1987. He was convinced it was "imminent" in 88, and when that didnt happen, he revised it to 89, then 90, 91 & so forth. It is now 24 years later and he still believes deflation is "imminent".
So yes, while part of his problem is his nest egg is stuck at 1987 values (yet paying 2011 prices). The biggest problem is he sold his house in 1987 and has been renting since!
In this case, timing was incredibly important. Had he not listened to (primarily Prechter) back in 87, and sold his house, he would have it well paid off by now and be living rent free. Instead, he is in his 24th year of renting with no end in sight.
I agree with many here that timing doesnt matter if it happens now versus 1-2 years from now. Still, make no mistake, if you continuiuosly push the event horizon into the future, the failure to time this better can destroy you.
Alex'
You ask to see a example of one who is trying to "Have a foot in each camp."w/o going into debt.
Me.
I have a high skill ,very techy type work.I travel way too much....
But I am doing my dead level best to prep for a "low-energy" future.
Not Mad Max....
I know the odds.I would make it through a few gunfights.[Not many].
But there is a 6 foot fence w/12 foot pipe...my "deer" fence,gates that only open from the inside.Mrs snuffy and I are becoming very aware of real security items that we face.There are gradual steps we are taking
Memosa,our sweetheart night watch doggy defense,now has a junior pardner,selected by my wife...a English mastiff.
The size of a small horse.
I was initially worried a bit as he was a year old and could have developed bad habits.None seen so far....and he spends his days sleeping...and nights patrolling the place ,investigating every sound or smell..120 lb. of fanged
"WTF are you?, WHY are you here?.
These critters were bred for a thousand years for exactly this..a complete wuss with all other "House"members,and a fanged terror to all that goes bump in the night.
One of those real serious intense,meaning...this is life planning stuff...with mrs snuffy came up.3 years and change ,she retires.NOW is the time we look for something resembling lasting[?]medical care.We have a three year time frame to try and pay off the house,continue prep for a very unsure future.
Many here at TAE are fixated on time,timing....[!]
I am not one who wants to "time" things so that I walk into my "new"life as we watch the old ways collapse.Better 5 years too soon than 5 minutes too late...
If it blows up in the next 3 years,...such is life...I will deal with it as best I can,with my bees,my place,and what I have for a skill set.It could break bad, or worse....and was pointed out earlier in this commentary...we do not get out alive...
Might be that one is never really an adult until they come to that personal understanding...
.....................
Major doomstead work...new blueberry field 25 plants I will be fighting to keep alive thru the dry spell.These are old,OLD bushes that I am gambling on a transplant.Grandfather had a nice 3-5 thousand come in a year in blueberry sales,from a patch much smaller than I am putting in....I will cut back the bushes hard next week to try and balance the root loss and unneeded green&berries.
I have 18 artificially inseminated queen bees showing up too soon,and Nuc hive to get in payment for there work..and a beekeepers work is never done
I am really busy in meat-world things,but,if you expect to survive and prosper regardless of whats going on,busy and "productive" have to be given attitudes.....which means I stop yakking and get "productive"as my other half would say...
Bee good,or
Bee careful
snuffy
DPW,
Very interesting stuff, and great poem by Max. Are you familiar with Peter Russell and the "Spirit of Now"? If not, I recommend you search engine some of his work.
Jal...
My advice is pick a "middle of no where" that's not also in the middle of a desert.
People have been giving up on high rise living in the desert since long before the JIT supply chain happened.
Last night's "storm" was interesting ... they always are...
"Alex said...
What are "depression resistant careers"?
Good rule of thumb may be jobs you can easily explain to children and they will understand what that entails. Every child has an understanding of Policeman, Fireman, Doctor, Lawyer, Butchter, Baker, Candlestick maker. These are jobs that have been around for centuries and likely will be for many more.
I made this revalation when I looked around at some of my friends (professionals) and realized I really dont understand what they "do". Their positions involve words like "consultant" and "analyst" in the title. My guess is their jobs didnt exist more than 30 years ago, and likely wont exist if the SHTF.
The Anonymous, "Good rule of thumb may be jobs you can easily explain to children and they will understand what that entails. Every child has an understanding of Policeman, Fireman, Doctor, Lawyer, Butchter, Baker, Candlestick maker. These are jobs that have been around for centuries and likely will be for many more."
I believe you are being way too generous. While almost every job will technically still exist for many years into the future, in so far as there are some people out there performing them, that doesn't mean they are "depression resistant" by any means. For example, as a whole, the field of law is drastically over-populated with potential attorneys, and not nearly enough open positions.
Jobs that are highly dependent on private and public credit or a relatively wealthy middle class supplying a stable/increasing base of aggregate demand for goods/services, such as all of the ones you mention, will be quite nonresistant to the ongoing Depression.
Don't let the word "analyst" bother you too much. In the IT world it sounds better to say, "I'm a network analyst." rather than saying, "I'm an electronics repairman.".
*
For you lefties it's "the man" giving you a fancy title instead of real money in your salary.
-
Bluebird, I have a long time friend who's bubble just burst.
He's unemployed, living with his stepmother and trying to get by doing whatever he can. He's a Navy Veteran and Software Engineer. Last I heard he's behind on his car payments.
Now everything that has ever happened to him, is my fault. I've let him down. It's my fault he's losing his car. It's my fault that a mutual friend committed suicide fifteen years ago. It's my fault that he's having an emotional breakdown. It's my fault he doesn't have a job.
I guess I can add one more. It's my fault for thinking his situation isn't really that bad. He has a place to live and chance to start over. I've been through long periods of unemployment. Fought and won against foreclosure twice. I've been through two successful, then failed businesses. Completed a Chapter 13 with the odds heavily stacked against me. (My attorney constantly lied to me about filing paperwork that was never filed and giving me made up figures for the payment schedule). I'm now wrapping up the last of my IRS problems.
I see my friend as a canary in the coal mine. He's never really seen any sort of hard times in his life. i know many people like him. When things go sour, they are going to become mentally unstable. They will be unpredictable. Many will be unsafe to spend much time with.
I think your plan of keeping quiet around people who don't want to see it coming, is a good one.
New post up.
Why some countries fall into the financial black hole faster than others
.
El g
Prescription medication gatekeepers for big HMO insurers like to have this (Kirsch) type of document "on file" to wave in subscribers'/physicians' faces in moments of denial.
For patients with very severe depression, the benefit of FDA-approved antidepressants over placebo is substantial. Fawcett J. et al, JAMA 303(1): 47-53 (2010).
"Ash said...
I believe you are being way too generous. While almost every job will technically still exist for many years into the future, in so far as there are some people out there performing them, that doesn't mean they are "depression resistant" by any means. For example, as a whole, the field of law is drastically over-populated with potential attorneys, and not nearly enough open positions.
Jobs that are highly dependent on private and public credit or a relatively wealthy middle class supplying a stable/increasing base of aggregate demand for goods/services, such as all of the ones you mention, will be quite nonresistant to the ongoing Depression."
I think you assume too much. For starters, when I say "Doctor" and "Lawyer", I am merely ascribing titles to the "basic healthcare" & "mediation services" that Stoneleigh herself says will be "depression resistant". I am in no way thinking it will be BAU for these folks. As the squishdown continues, they will be hit as their clientele loses their ability to pay. I envision a time where they may have to take payment in the form of chickens and what not, but rest assured, they have a good chance of being paid.
As for lawyers specifically, I think you might be surprised how in demand their services can be if it gets as bad as some think. At the top level, there are some odd trillions of derivatives that need to be unwound -- who do you think will be doing the unwinding? Billions of dollars of debt that needs to be discharged -- who do you think will do the discharging? Bankruptcies? Foreclosures? etc. Indeed, if the turmoil is as great as some imagine, I can easily see 10 years of work ahead.
Beyond that, it really depends upon what sort of semblence of a rule of law we have. I see alot of re-writing that needs to be done, along with practical application thereof & challenges thereto. For example, Stoneleigh herself has opined that bankruptcy may no longer be an option in the future. If so, no matter how bad someone's financial situation is, if the choice is hire an attorney or face debtors prison, its reasonable to assume they will do whatever it takes in order to keep their liberty.
Bottom line, the enemy of the law profession is stability. If everything is going fine, no one needs their services. However, if there is a tremendous amount of volatility (either in a positive or negative direction) in the future, those that provide "mediation services" could very well remain heavily in demand.
@ Ash: I've read Peter Russel's "Brain Book", but not "The Spirit of Now". I'll look into it some.
I am really enjoying "The Untethered Soul"...I've read a huge amount of spirituality and philosophy books over the years. This is a really straightforward one with much of the dogma stripped away.
Another is Daniel Siegel's "Mindsight". He writes some pretty technical stuff for his neuroscience community, but also writes some more layman stuff too. Mindsight so clearly explains how our brains work it's almost scary. Of course, there is a gap between knowing and doing...and really knowing...embodying if you will.
And he has a few Ted Talks, so that helps.
Location, location, location
What's the best USA location to ride-out the upcoming collapse?
State/County/City or Town etc. ???
Reasons too please.....explain your thinking.
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