Reading time: 10,900 words, 25 to 40 minutes
The global economy is entering another recession and this time it will be longer, deeper and more painful than the last one. Even the ass media is beginning report on the global economic slowdown. The U.S. never recovered from the last recession, China’s growth slowed for the last six quarters and has cut interest twice in as many months, the European periphery is in depression; even Germany is slowing down, India can’t keep its electric grid going, Brazil’s economy is declining, Argentina is perpetually defaulting again, Australia’s housing bubble is collapsing and Canadian real estate sales are falling with prices about to follow.
If you’re pressed for time, you can stop reading now. If you want the details and recommendations for riding out the coming shit-storm, keep reading. Beware: there’s lots of disturbing information and scary charts.
– Copper forecasting turning points in the global economy is about to crash
– The Baltic Dry Index as a leading economic indicator is bottom bouncing
– The Canadian real estate bubble is bursting
– Government incompetence is destroying us
– Consumer Sentiment forecasts another recession
– Lots of scary charts
– No recovery
– Official inflation numbers are bullshit
– Official unemployment numbers are bullshit
– The Greatest Depression in history
– America’s endless wars
– There will be bloodshed but no revolution
– Global drought – another Dust Bowl?
I’ve been watching our economy deteriorating since 2005 when I convinced my business partner it was time to sell our commercial real estate properties on the premise that it’s better to be too early than too late. I’ve been researching, writing and emailing to family and friends “doom and gloom” articles since 2007 forecasting another Depression that will make the last one look a walk in the park. I began this blog in 2010 to reach a wider readership and help more people avoid a painful future.
As far as I know (feel free to correct me), the only mistake I made in these economic articles so far was forecasting Hillary Clinton as the next U.S. president in 2008. As a political science major I should know better than to predict elections. So, if my scorecard doesn’t scare the shit out of you, nothing will.
And, I’m neither surprised nor disappointed that more people haven’t followed my advice. The Pareto Principle (the 80/20 rule) governs much of human behavior. When I sent my first doom & gloom article Crash of 2007 – Economics 101 in September 2007 to everyone on my email distribution list, I asked if they wanted to receive future updates and exactly 20% said “Yes”. In other words 80% of people prefer to live in La-La Land. That’s their problem. Don’t let it be yours. By the way, it’s still an excellent Coles Notes version of basic economics unencumbered by Keynesian idiocy.
We humans have a number of primitive survival traits that helped us when we were swinging from the trees or walking the ancient Savannah. However, some of these traits have become biases that work against us in modern times.
The Normalcy bias causes us to underestimate the possibility and the effects of a disaster. The Recency bias is a habit where we rely on recent experience as a baseline for future events. Laurence Gonzales in his book “Everyday Survival: Why Smart People do Stupid Things” wrote about the 57 people who were killed when the Mount St. Helens volcano in Washington State erupted in 1980. Despite repeated warnings, they were lulled by their recency bias and either refused to leave or sneaked into the park past road blocks.
The plasticity of human beings can also work against us. We resist sudden change yet we accommodate slow, gradual change. An analogy is a frog in boiling water. Put a frog in boiling water and he jumps right out but place him in cool water that is slowly brought to a boil and apparently he’ll stay (I’ve never tried this so I can’t verify it). The danger of this Creeping Normalcy is that it can become a ‘death by a thousand cuts’. The risk in our gradual economic decline is we cannot see the forest for the trees so we are reluctant to prepare for this continuing collapse until our cupboards are empty, store shelves are bare and we have no money to buy anything anyway by which time it’s too late.
The first step in solving a problem is admitting to the problem (and then, for us 6 Sigma types, defining its root cause). The first step to overcoming our dangerous biases is understanding and recognizing them in ourselves. I admit it’s easier said than done and I hope we’re not too late. Use the following article as your litmus test to see if you recognize your biases. If nothing else, at over 10,000 words, it will certainly test your patience.
Scary Copper Chart
Copper has widespread applications in most sectors of the economy. The demand for copper is reflected in its price. It is sometimes called “Doctor Copper” because of its ability to predict turning points in the global economy. The price of copper is a fairly reliable leading economic indicator (in forecasting the future).
A technical pattern called ‘Head & Shoulders’ is a chart pattern generally regarded as a reversal indicator. Once the right shoulder is formed, the chart (price) plunges and forecasts a severe economic downturn. See the example below.
Copper is forming this classic “head & shoulders” pattern below. The left shoulder formed last October and November (months O & N). The head formed from February to April (F to A) and the right shoulder in June and July (JJ) is beginning to fill in. If the pattern holds, then the price of copper is about to plunge indicating another global recession ahead.
Chris Laird – Prudent Squirrel
Baltic Dry Index – Another Scary Chart
The Baltic Dry Index, like the copper chart, is also a very reliable leading economic indicator (in forecasting the future). It measures global sea shipping freight rates for 23 major global shipping lanes of dry goods – commodities like grain, coal, iron ore, etc. Thus it is a barometer for measuring demand for commodities and is NOT subject to government manipulation and distortion like so many bullshit government statistics.
The Index below has plunged to 2008 recessionary levels and has been “bottom bouncing” all year. This indicates another recession is imminent.
The recovery from 2008 was helped with trillions of dollars of government stimulus spending. That money is no longer available because of massive debt-loading and even if it were, the effect of spending grows weaker with every stimulus. Prior to the last recession, one stimulus dollar created two or three dollars of economic growth. Today, the effect of one stimulus dollar is measured in pennies. Massive government stimulus spending no longer works and governments realize that. All that’s left now is monetary policy i.e. lowering interest rates. That no longer works either as interest rates are close to zero.
Put another way, governments are out of ammunition to fight the next downturn. As I’ve said numerous times, we are long past the point of no return. We’re circling the drain.
“Governments are not really trying to save the system anymore,” said Satyajit Das, a banking expert in Sydney, Australia almost four years ago. “They now realize that’s impossible. They are just trying to manage the decline.”
Canadian House Bubble Bursting
Garth Turner, July 2, 2012 reported that “June was a disaster, as this pathetic blog told you would happen.”
• Sales of detached houses crashed 37%
• Prices have declined for four consecutive months, the first such occurrence in 16 years.
• The average SFH has lost almost 13% of its value, likely one-third or less of what’s coming.
• Condo sales were down 20%. Prices were down 6% in a single month.
• Listings of detached homes have exploded higher 27% over this time a year ago.
Don’t believe the so-called “housing authorities” like real estate boards whose job is to keep pumping the market with dubious statistics. Garth Turner says, “a house can sell for 25% less than its original ask, and be recorded in the official stats as going for 97% of its [revised] list price.” This is how the real estate industry sucks in the unwary at a time you should be selling, not buying
In Barbarians he reports that in Vancouver’s Westside “supply is overwhelming demand” and the next victim will be price. ”The average number of detached listings in the hood over the last three years was 589.” During the last recession “when panic cause a wave of selling, active listings never exceeded 1053. But today there are almost 1,100 houses for sale.” Do the math. This is serious shit!
Ho goes on to say that a “balanced” house supply is between five and eight months supply. Below five is a seller’s market. We are now at ten months’ supply and climbing. The bubble has burst and not just in Vancouver where he predicts a 40% drop in prices or more.
Across the channel in Victoria, “Last year saw the lowest raw sales number for detached homes in 27 years, and now prices have started their inevitable slide. Down 6% so far. Just the start.”
In Toronto, Canada’s center of the universe, where many feel “it’s different this time” it turns out that it’s not different after all. Listings are lower on a per capita basis and bidding wars have stopped. Sales are down 8% from last summer. Prices inevitably will be the next shoe to drop.
The Canadian Government, like most governments, got the memo too late. In the face of a natural downturn, Ottawa cut mortgage amortizations to 25 years, killed cash-back loans and made mortgages harder to score for new buyers. This will accelerate the housing downturn.
In The Exit Turner says:
• The correction’s arrived. This is not a localized phenom. Everywhere that prices exceed the grasp of average families living there, they will go down. It’s not different anywhere, which certainly includes Calgary, Winnipeg, Saskatoon, the GTA and everywhere in BC that people outnumber moose.
• Immigrants won’t save the market. They’re having a hard enough time saving themselves. Not the Chinese, Iranians, Indians or Americans. Global demand for Canadian real estate is an insignificant factor. If it were otherwise, don’t you think the real estate industry would have generated some stats proving it? There are none. This is why.
• It all just gets worse as new rule changes click in. Twenty-five year mortgage maximums have been with us for one week. Cash-back loans still exist. Million-dollar houses are still closing with CMHC insurance. Borrowing standards are still lax. And half the country is completely unaware houses are now less affordable. Just wait.
• If you can’t sell, you’ve got the wrong price. Waiting for the market to come back is futile. It won’t happen. Buyers have slipped to the sidelines because they no longer qualify, or they know where this is headed. Why would anyone close a deal today when the same property, or better, will cost less in a year?
• So, don’t buy yet. A Brampton McMansion might be 16% cheaper than it was in the Spring, but it’ll cost 15% less again by Christmas. How long the slide will last, or how slow the trip back is unknown. The last time GTA prices tanked, peak-to-trough-to-recovery was 14 years.
In Outrageous he offers these insights:
• The market is outrageously weaker than Canadians are being told.
• Those who come here and claim a 15% price drop nationally will just roll us back a couple of years (so who cares?) have no idea how much this will change lives, and cities.
• The next interest rate moves will be up, not down. The new federal regs on mortgage amortizations, cash-backs, million-dollar exclusions, thinner HELOCs and tighter borrowing have not even started to impact.
• In short, fear of repeating the US experience now has government scrambling to chill sales and crash prices.
• Canadians have more debt than Americans ever did and live in houses twice as expensive. This means real estate here poses double the risk of markets there.
• This is not obvious to most people because almost everybody wants things that go up, and will pay a premium to get them.
• The phenomenon of recency makes us believe rising markets will swell forever, and falling ones will plunge without end.
In We are Not Alone he says
The Mainland Chinese invasion was largely a myth, I said. Vancouver prices would fall after having reaching an apex of unaffordability. Sales would plunge, listings rise, and Global TV anchors look like the world-class dorks they truly are. And, lo, it hath come to pass.
The latest numbers confirm this is not a summer lull, but a market in full retreat. Like this was a surprise.
• The price of a detached house, which sat at $1.235 million in February, has plunged $194,000 in just five months and is back at late-2010 levels. Lots more to come.
• The number of active listings has swollen by 24%. Meanwhile sales have tumbled 28%.
• There are 7,973 detached houses for sale, and last month just 787 changed hands. That’s a 10-month supply, meaning this is turning into a mama of a buyer’s market. (But don’t buy yet!)
• Average condo prices have retreated to 2009 levels. More to come there, too.
• Residential sales are at a 10-year low, down 18.4% from last year with a plunge of 11.2% from just June to July.
• In fact July sales were the lowest in 12 years, and ran 31% below the 10-year average.
• The ratio of sales to listings is barely above 11%, which means each month 89% of houses go unsold.
Given this negative momentum, the Vancouver market could lose 40% of its value before stabilizing at a bottom sometime in the near future. How near? Impossible to tell, but no sane buyer should try to catch this falling knife. It could be two or three years before underwear comes into view. Perhaps much longer.
In Vegetables he reports that
• Sales have crashed 50% in the GTA and are on a similar trajectory in most centres
• an unstoppable surge of new projects coming to market at the worst possible time
• most new buildings have the life expectancy of a Kia – and [there] you have the fixings for a real estate implosion
And finally, August 9, 2012, in The Problem Turner reports, “Not only are Toronto new condo sales falling apart and yesterday more than 10,500 Vancouver realtors sold nothing, but construction is tanking. This is dismal news for a BC economy where building, selling and fluffing houses now accounts for 31% of the economy. Housing starts across Canada plunged 6.5% in July, and for the first time in seven months they’ve dropped through a key trend line.”
More Government Incompetence
I previously compared Sweden’s management of their financial crisis in 1980 to the aftermath of Japan’s bursting real estate bubble. Sweden did NOT bail out their banks and their shareholder. The let them go under and within two years Sweden’s economy was on the mend. Japan DID bail out their banks and their economy has flat-lined ever since. There was a time we said we’d have to learn to speak Japanese to be able to talk to our future bosses. We haven’t heard that sentiment since 1980 (we say it about China now but that too, will soon end). Japan has essentially been in a depression for 22 years and there’s no sign of recovery.
Have other western central banks and governments learned from this? Of course not! They’re Keynesian idiots. They’re not even incompetent Keynesians. Keynes never advocated perpetual government spending. So, we are led by idiots and we are doing the Japan thing i.e. economic depression.
Sweden is not the only example of ‘good’. During the 1997 – 98 Asian financial crisis, South Korea and Indonesia did the Swedish thing. They HIKED interest rates, CUT government spending, deregulated and let their zombie banks FAIL. It was painful but today they are among the most successful and dynamic economies in the world.
We in the Anglo world, (U.S., UK, Canada, etc.) are doing the Japan thing which is the exact opposite what Sweden, South Korea and Indonesia did. Our incompetent governments have CUT interest rates, SPENT trillions of dollars created out of thin air, BAILED out the zombie banksters and we’re REGULATING the crap out of everything.
We know what works. We know what doesn’t work. Yet, we’re doing what has been proven DOES NOT WORK. Japan, Sweden, S. Korea and Indonesia proved it. If you think this won’t end in a vale of tears, you have your head stuck where the sun don’t shine.
Still More Government Incompetence – Ignorance of Demographics
In 1996, Davie K. Foot wrote a book on demographics called “Boom Bust & Echo 2000”. Demographics is the statistical study of populations and of great importance is the study of demographic trends which describes the historical changes in demographics in a population over time. Demographics is neither new nor rocket science. Foot’s book has been around for sixteen years now.
In the 1950’s there were 22 working people paying taxes to support each retiree. Back then, public pension plans were not ‘funded’. Rather they were paid out of tax revenue. In the U.S. this is still the case (in Canada it is funded but reliant on economic health). There are now less than 3 workers for every retiree and pretty soon there’ll be two. Mathematically this is impossible. Either workers will be taxed to death or pensions will simply disappear. Likely both. That governments (federal, state, cities, etc.) could not see this is not a conspiracy. It’s simply incompetence on a monumental scale.
They could have funded and budgeted for the inevitable. After all, the inevitable is inevitable by definition. And, demographics is not rocket science but ignorance of demographics demonstrates incredible government incompetence. Both taxpayers and pensioners will feel the pain of austerity and diminished standards of living.
USSA – United Socialist States of America
You wonder why America is in such deep shit? Because the land of the free has become the Socialist land of the freebie.
Check out this 3.5 minute video.
For those of you who don’t know, Rosie the Riveter (below left) was an icon for the American women who worked in factories during WW II making munitions and war supplies.
How things have changed!
Another Scary Chart – Consumer Sentiment
Chart & its comments by Michael J. Panzer – Financial Armageddon
Over the last four decades, consumer sentiment has tracked payrolls except for the painful 1980’s double dip recession where they diverged. It’s doing it again. History doesn’t have to repeat but all indications are that we’re entering another recession and this one will be longer and more painful. The similarities with the painful downturn within the last Great Depression during the years 1937–38 are also becoming painfully obvious.
Real Inflation Trumps U.S. Recovery
Inflation, not bullshit government ‘headline ‘ inflation that the ass media reports but Real inflation as measured by Shadowstats puts the lie to the so-called U.S. recovery. Remember, governments GDP statistics, the so-called ‘growth’ numbers are NOT adjusted for inflation.
Using the government’s bullshit numbers in the top chart it appears the U.S. is in recovery from the last recession. However, using Shadowstats numbers in the bottom chart, the U.S. economy is NOT recovering; it’s bottom-bouncing. See the scary charts below. The top chart shows the effect of bullshit inflation on the GDP. The bottom one shows REAL inflation.
In 1980 and again in 1990, most western governments and particularly the U.S. began cooking inflation statistics to downplay the real rate of inflation.
WHY did they do this? One reason is to support lower interest rates so governments could continue their spendthrift ways. Another reason is to curb public pension increases to save the government money at the expense of pensioners’ living standards. Another reason is to curb wage increases which are often tied into the ‘cost of living’. Now you know why your paycheck buys less and less and why you never seem to get ahead.
HOW did they do this? A number of ways. Substitution in the ‘consumer basket of goods’ used to calculate inflation is one way. If the price of steaks goes up a lot, it increases the inflation rate. So, they eliminate steaks from this ‘basket’ and measure the price of hamburger instead. The fraudulent argument is that consumers, when faced with higher steak prices will switch to hamburger.
Another way to cook inflation statistics is to to altogether eliminate sectors like food and energy prices from the ‘basket’ and publish bullshit “core” inflation numbers. The fraudulent argument is that food and energy are volatile. (Yeah, so?) You eat food don’t you? Volatile or not. You need energy (gas, electricity, etc.) don’t you?
Another way to cook inflation statistics is using ‘hedonics’. This measures the utility or quality of something. If you think this is a judgement call rife for manipulation, you’d be correct. Here’s how it works. Suppose the price of laptop computers remains roughly the same from one year to the next. And let’s suppose the power of these laptops doubles. Then, the same number of dollars buys twice the power. Thus it is calculated as a 50% price DIS-inflation for laptops which reduces the over-all inflation rate.
So, let’s see how these fudged inflation numbers affects so-called economic growth as measured by GDP. We’ll drop the decimal points and use round numbers since decimal places of government’s bullshit numbers are statistically insignificant anyway (‘rounding errors’). Using government bullshit numbers, since the economic growth numbers are NOT inflation adjusted then the so-called 2% growth is wiped out by 3% inflation. This means (using government BS numbers) 2% minus 3% = 1% contraction of the economy.
However, using REAL inflation numbers from Shadowstats where John Williams uses the same methodology used prior to 1980 (before manipulation), the REAL inflation rate is 10%. This means 2% (growth) minus 10% (inflation) = the U.S. economy is SHRINKING 8% A YEAR. Some recovery!
Don’t you just love how your government screws you over? Do you really believe the government has your best interests at heart? Government exists to preserve its power, increase its control, grow in size, protect its bureaucrats’ jobs (at least until they get thrown under the bus) and serve the interests of the banksters who fund politicians’ re-election and ensure their obscene pensions. Sorry, but you don’t even exist in that equation.
Amerika is Canada’s largest trading partner. The economy of Canada’s biggest customer is shrinking 8% a year. Year after year after year. How long can the Canadian economy survive when its best customer can’t pay its bills anymore? China, too relies on Amerika (and Europe whose economy is also imploding) in order to buy its crappy products. Small wonder the Chinese economy is also slowing down and disappointing those who thought China could save the world.
Bullshit U.S. Employment Chart
Chart of the Day, August 3, 2012 says,
“The latest jobs report came out today with the Labor Department reporting that nonfarm payrolls (jobs) increased by 163,000 in July. Today’s chart puts the latest data into perspective by comparing nonfarm payrolls following the end of the latest economic recession (i.e. the Great Recession — solid red line) to that of the prior recession (i.e. 2001 recession — dashed gold line) to that of the average post-recession from 1954-2000 (dashed blue line). As today’s chart illustrates, the current jobs recovery is much weaker than the average jobs recovery that follows the end of a recession. Today’s chart also illustrates that the jobs market continues to improve at a fairly steady pace — a pace very similar to what occurred following the recession of 2001.”
Unfortunately, the above chart is complete and utter bullshit. It’s based on ‘official’ government numbers. The Amerikan government cooks the employment numbers just like it cooks inflation numbers. How? There are a number of ways.
One way is “seasonal adjustments” which is a bullshit fudging technique based on just about whatever it takes to make the numbers look good and is constantly changing depending on which way the wind blows. Don’t forget, this is an election year in the U.S. as well as several European countries and the once-a-decade leadership change in China so it’s in a lot of governments’ best interests to cook the employment numbers.
Another way is publishing ‘U3’ numbers which does NOT include the following:
– the unemployed whose unemployment insurance has run out so they’re labelled “discouraged workers”
– does not include those who have stopped looking for jobs because there are none – the REAL discouraged workers.
– does not include those who are unable to find full-time work and are forced to work part-time.
– also does not include those who work less than 35 hours a week. One hour a week is considered “employed”.
Still another way they cook the employment numbers is through the “Birth-Death Ratio” which ESTIMATES the number of small businesses starting up VS those going out of business. The majority of workers work for small businesses. Large corporations make the ass media headlines but large corporations employ only a minority of workers. Small business drives the economy.
The government uses this Birth-Death number based on a healthy, growing economy of the past where between 100,000 and 200,000 jobs are supposedly created every month by small businesses. However, the economy is NOT healthy NOR is it growing; it’s shrinking 8% a year. This B/D model is a pathetic attempt to manipulate unemployment numbers in advance of the Presidential election this November.
By the way, John Williams Shadowstats calculates U.S. unemployment at more than 22%. Records weren’t kept during the last Great Depression but unemployment was calculated at 25%.
The following shows how seriously small U.S. businesses are getting hammered and demonstrates the flaw of the Birth/Death model. This is from the “Financial Armageddon” blog in a sarcastically titled article “Doing Real Fine”
“A shocking figure from the Wave [Accounting] survey [of their 250,000 micro and SMB customers] relates to how well the business owners were able to meet their basic needs through their business. An incredible 52 percent of American small business owners can’t put food on the table through the earnings from their business over the past 12 months.”. Yet the government continues to add between 100,000 to 200,000 fictitious jobs to their employment numbers as though the economy were healthy for small businesses.
REAL U.S. Employment Chart
Another way of looking past the bullshit headline numbers is the U.S. Bureau of Labor Statistics employment report. I repeat, this is the EMPLOYMENT report, not UNemployment. It does NOT make the headlines and is less likely to be cooked. In July there were 142,220,000 Amerikans working, down from 142,415,000 the previous month. That’s a DROP of 195,000 workers. Yet, the headlines tell us 173,000 fictitious, seasonally adjusted, birth/death bullshit jobs were added. And remember, the U.S. needs at least 150,000 new jobs a month – REAL jobs, not fictitious ones – just to keep pace with births and immigration. I repeat; that’s just to break even. The U.S. needs many times that to recover the millions of jobs lost since the last recession began.
According to Michael Snyder of Economic Collapse Blog who provided the Employment-Population ratio chart above, “In July, the employment to population ratio dropped from 58.6 percent to 58.4 percent. Overall, the percentage of working age Americans that have jobs has now been under 59 percent for 35 months in a row.”
Increasing Duration of Unemployment
If that’s not bad enough, it’s taking longer to find a job in Amerika than ever and the duration has been increasing with no signs of let-up.
See the chart below.
Ass Media’s U.S. Unemployment Headlines
This is how the ass media’s propaganda downplays U.S. unemployment. Below are some recent New York Times headlines:
• Slight Decline in the Jobs Outlook
• Latest Data Doesn’t Move the Political Needle
• A Downward Trend, and Maybe a Nail-Biter
• ‘Soft Patch’ on Jobs, With Election on Horizon
In other words, “Move along folks; nothing to see here …”
What If They Gave a Depression and Nobody Came?
It’s hard to believe the U.S. is in a Depression because we don’t see the long ‘breadlines’ we saw at soup kitchens during the last Great Depression. This is an invisible depression. Nowadays, almost half of U.S. households (49%) receive one form of public assistance or another and one in SEVEN Amerikans is on “food stamps”. So today, the breadlines are in grocery stores not at soup kitchens.
During the last Great Depression, few called it a Depression until AFTER it ended. People didn’t call it a Depression; they called it ’hard times’. Today, because it’s invisible, it’s difficult for people to accept the emotionally loaded term “Depression”. And some countries, especially resource rich countries like Australia and Canada have so far escaped the worst of it thanks in large part to China which went on a wild spending spree stockpiling commodities and building dozens of empty “ghost cities”. Those cities still stand empty and the Chinese economy is now slowing down as it battles rising inflation, unemployment and internal disorder as both its major customers, America and Europe are collapsing and buying less.
Australia’s housing bubble has burst and Canada’s is about to do so. This time we won’t have either China or India to artificially prop us up. This time the downturn for resource countries will be deeper and longer.
You’ll notice I called it the “last” Great Depression. The one before it (1873 -96) lasted 23 years and made the last Great Depression (1930s) a walk in the park. Incidentally, they both culminated in two major World Wars.
In “The Future Tense” we see “A historical review of the 80 year cycle of depressions, paradigm shifts, and revolutions. We entered the last depression in 1929 and entered our most recent depression in December 2007, (which we are currently still in) 80 years later. The brunt of the pain in our current depression will be felt at the back end, (2012 – 2015) where the value of many assets will collapse and create once in a lifetime investment opportunities.”
See The Largest Event In Human History YouTube video below.
Even the perennially optimistic, establishment mouthpiece John Mauldin is getting worried and starting to see the light in “Uh oh. Recession Coming?” so I won’t take any cheap shots at him this time.
“The June reading on the ISM was much weaker than expected, falling to 49.7 from 53.5. This is the first time the index was below 50 since July 2009 when the economy was first emerging from recession
“Beneath the headline, various indices plunged with new orders falling below 50 (from above 60) while new export orders declined below 50 as well
“Interestingly, despite declines nearly across the board, the employment component held up relatively well, remaining in the upper 50s
“This is not good. Not good at all. Despite the decline of manufacturing’s importance to the U.S. economy, the ISM Manufacturing Index remains a premier economic indicator and a reading below 50 in June is incredibly, incredibly worrisome. We had speculated after recent employment reports (the monthly report as well as recent jobless claims releases) that the odds of a recession had meaningfully risen. While an ISM reading below 50 does not mean recession for the broader economy, it is still a terribly weak number, especially so in context of expectations (looking for 52.0).
“We are not yet ready to revive our 2H recession call, something we believed was possible as recently as last September. However, as more and more weak economic numbers build on each other and indicators such as the ECRI leading index suggest weakness if not recession, investors have to begin, at a minimum, considering the possibility.”
The NEXT Greatest Depression
If the Great Depression of 1873-96 made the last Great Depression look like a walk in the park, the NEXT Greatest Depression will make 1873-96 look like a Sunday School picnic. Why? Because we are now so globally interconnected that any major country that goes down now will bring the whole house of cards down with it. Because in the past governments had the wherewithal to cushion the collapse whereas now they’re out of ammunition. Because in the past, governments went into the downturn with a surplus, now they’re deep in debt. Because we have always had some corruption, scandal and malice but never to the degree and brazenness we see today.
Because this Depression has been five decades in the making we are guaranteed a long, painful descent. A reader, Chicago999444 posted an astute analysis on The Burning Platform “L@@k WTF Chart of the Day”
Every social disease and financial problem of our time has its roots in the Post WW2 era. The 80s were only the 50s on steroids. You can call it the “high” if you want, but it is always at the peak that the problems take root. That was when we made it our religion to borrow our way to bliss. That was when we promoted, with government force and taxpayers money, the pattern of development, suburban sprawl, that makes us the most copious consumers of fossil fuels. That was when our policy makers, with the best intentions in the world, decided every lower-middle-class and middle-class family should live in a house in an auto suburb far from the city, accessible only by the new interstate system we put into place, with defense as the flimsy justification for this monster waste of resources and money that destroyed our cities, our railroads, and millions of acres of good farmland.
The Canadian Depression’s Re-Set
Is there an upside to this Greater Depression? Yes, there is if you live long enough. It’ll be painful depending on how prepared you are but it will eliminate the parasites. There won’t be any money for them to suck off the system simply because the ‘money tree’ will be bare. The corrupt country of Quebec will lose their perpetual welfare checks funded by the rest of the Canada.
So will the so-called First Nations or Aboriginals or Natives or Indians or whatever they call themselves this week. No money means no more shaking down the taxpayers. They talk about independence but for most it’s just talk as they rely on government funding. Future economic circumstances will force them to really become independent instead of trying to turn back the hands of time five hundred years. They’ll either learn to fend for themselves or starve. There are examples of successful Canadian Aboriginals.
And, the Maritimes provinces’ perpetual unemployment insurance will also grind to a halt. Governments have established fish canneries so people can work part of the year to become eligible for unemployment insurance the rest of the year. Rinse, repeat (politically correct Kanadian propaganda calls it Employment Insurance). However, that too will stop when the money runs out. People will have to go to where the jobs are. And, don’t tell me you have your ‘roots’ there. People don’t have roots. Vegetables have roots. People have feet. Learn to use them or starve.
As you can see, I’m not pulling my punches anymore as we approach the event horizon. I couldn’t care less who I upset. Get over it. I’m writing for the 20% who get it. The other 80% are screwed. Don’t be one of them.
Another Scary Chart – Money Velocity
Ed Steer of Casey’s “Gold and Silver Daily” report, July 19 provided the above chart and said “the M2V chart to be the most telling because it’s the lowest velocity ever recorded. The velocity measure means no one is spending, they’re hanging on to their money for dear life. There is almost no lending or borrowing going on, either. In other words, for all intents and purposes, we’re in recession and the National Bureau of Economic Research will probably recognize that whenever they get around to it, which is usually 6-12 months after the fact.”
Another Scary Chart – U.S. Federal Surplus/Deficit
What happens when government spending keeps increasing and tax revenue’s decrease? The chart below shows the U.S. deficit – the annual shortfall between tax revenue and government spending.
Notice where the zero is located. That’s the break-even point. Above that is surplus, below zero is deficit. The chart goes back more than a hundred years. It gives new meaning to what Michael J. Panzer called “Cliff Dive”.
The U.S. Federal government is broke. Dead broke. No wonder the Amerikan credit rating agencies keep carpet bombing Europe and the Amerikan ass media focus on the Eurozone’s troubles. It’s to divert attention from troubles at home. America is in worse economic shape than Europe but you’d never know if from the ass media.
“Move along folks, nothing to see here either …”
Boob Tube = Idiot Box
By the way, do you still watch the boob tube? Why? It’s turning your brain to mush. Like sponges, viewers absorb rapid-fire propaganda foo fast for analysis and critical thinking. It’s entertainment, not news. It’s propaganda, not reality. It manufactures a culture of fear designed to keep you in a perpetual “State of Fear” (read Michael Crichton’s excellent book of the same name) with nonsense issues like terrorism (more die in car crashes in a month than terrorism in a year), the justification for more wars, the latest flu scare, GMO crops, global warming, mass hysteria, information warfare, teen moms, killer kids, mutant microbes, road rage, school violence, Michael Moore fear-mongering and the list goes on and on.
So how come Economic Collapse isn’t on their fear agenda? Hmm?
I threw away my TV in 1988 and got a life. As a recovering propaganda victim for the last twenty years I feel like Johnny Nash’s song “I Can See Clearly Now” with a well-developed, bullshit-detecting perspective.
Get rid of your Idiot Box and you too can stop being a zombie.
Debt, Debt and More Debt
One of many reasons the next downturn will plunge the globe into a major depression is NONE of the major causes of the last recession have been solved.
These causes have been outline in previous posts so I won’t go into time-consuming detail here. Briefly they include fiat currencies printed out of thin air and based on nothing but trust in politicians to spend responsibly, central banks that price control money (interest rates) that lead to misallocation of capital, worthless derivatives between ten to twenty times the global economy that are also created out of thin air and allowed by regulators to be valued at book value, self-enriching cronyism of the ruling bankster oligarchs, corrupt politicians, rigged stock markets and the list goes on and has been covered in great length before.
However, one of the biggest causes of this economic crisis is debt; both public (government) and private. The only solution our insane politicians and central banksters have to solve the debt crisis is going deeper into debt. This will NOT end well. To give you an idea of the massive increase in U.S. debt, see the two charts below. By the way, most other countries look the same or worse so don’t think this is just an Amerikan problem.
The top chart is the debt in dollars adjusted for inflation. The bottom chart is debt ratio to GDP (notice that World War Two debt was being paid off until Ronald Reagan got in power in 1981. Thanks Ronnie!)
How will this mountain of debt end? Unfortunately, NOT WELL!
Scary Historical Note – Starving Kids
The following is from Roger Wiegand in “The Ship of State Is Rudderless”
“In the Great Depression of the 1930s in the United States, there was no welfare nest, no unemployment checks and no food stamps. Either you found a way to feed yourself and your friends and family or, you starved. There is no way to count the dead who had starved in the 1930s, but it was reported that over 250,000 little defenseless American children were tossed out of their homes by parents who could not feed them. These kids went on the road in desperation and most of them were never heard of again — ever.
“We are not saying this sad event happens again, but keep in mind there are [untold] thousands of underage kids living on the streets as they departed dysfunctional homes for many reasons.”
Just as breadlines in front of Depression era ‘soup kitchens’ have been replaced with ‘food stamps’ in grocery stores, street kids may become another invisible and tragic repeat of history
Amerika: Gangster Nation
The drum beat of war continues and the ass media is the main cheerleader. Half a dozen current wars in progress and the Evil Empire wants MORE. President Obummer, the winner of the Nobel Peace Prize has instigated more wars than any other president in Amerikan history. That these endless wars are bankrupting Amerika doesn’t seem to matter. The ass media keeps vomiting stores of a military build-up outside Iran. Several years ago there were three Amerikan aircraft carriers there. Now there’s one or maybe two, at most three depending on the news source. Some “build-up”! This is propaganda at its finest and it feeds the Amerikan war mentality, the perpetual State of Fear and justifies the continued loss of civil liberties.
It’s more than oil. As mentioned previously, it’s about resources; ALL resources not just oil. It involves stealing someone else’s resources or preventing someone from stealing your resources or preventing someone from stealing someone else’s resources and thus upsetting the balance of power. It’s all about positioning the military and gaining allies for greater access to resources to feed the insatiable appetite of the Amerikan military-industrial complex and the greed of the sociopathic banksters that fund them.
The U.S. is encircling Russia and China. NATO has expanded eastwards and encompasses more and more of the former Soviet nations bordering Russia. Iraq and Afghanistan, both “failed” and expensive wars created stooge states allied to Amerika. Turkey, India and Pakistan are allies, albeit some are more reluctant than others in order to encircle and contain Russia and China. The U.S. is even getting friendly with Vietnam. The two hold-outs are Syria and Iran both of whom, not coincidentally are the target of the ass media’s war hysteria.
Economic Impact of Global Drought
My previous post Drought Alert – Higher Food Prices outlined the effect of the global drought on food prices and what you can do to prepare (start stockpiling if you haven’t already).
There are other adverse effects of this drought. The resemblance to the ‘Dirty Thirties’ of the last Great Depression is more than coincidence. Both occurred at the worst possible time; during an economic decline when incomes were reduced thereby making it even more difficult to budget for higher food costs. This is neither coincidence nor divine, neither of which I believe in.
The green-circled drought maps below shows the similarity between 2012 and the 1934 “Dust Bowl”.
There are other serious, long-term ramifications of this drought as outlined by William Pesek in Corn’s 60% Surge Is More Dangerous Than Euro Mess
– Coupled with exploding demand for food, the phenomenon is causing violent commodity-price volatility at the worst possible time for Asia.
– Rising food prices limit how much central bankers can cut interest rates to safeguard growth.
– More troubling would be the potential setback to poverty-reduction programs for decades to come.
– When food prices rise sharply, families cope by pulling their kids out of school and eating cheaper, less nutritious food, which can have catastrophic lifelong effects on the social, physical and mental well-being of millions of young people.
– Many Asians are preoccupied by the struggle to get enough to eat [and] that increases the threat of instability, never an ideal setting for a flourishing economy.
– Food inflation, remember, was among the crucial forces behind the Arab Spring protests.
– [Food] price increase means consumers will have to divert spending to food while the cost of other goods rises as well. This raises the specter of stagflation.
– As U.S. droughts remind us, the world’s food chain has become more interconnected at a time when weather has rarely been so erratic.
– On top of it all, water is becoming scarcer. It’s the new oil.
Pesek proposes two solutions, neither of which are likely to happen.
“The quickest fix is increased investment in infrastructure and smart government policies. The first remedy might be easy if not for the traumatized state of the world economy. Strapped nations want the private sector to step up, but market turmoil is reducing appetite for risk-taking.
“The second would be more plausible if farsighted leadership were present. How many U.S. politicians are brave enough to end all the policies that encourage massive supplies of corn to be squandered making ethanol?”
There are many other adverse economic effects of the drought. Lower water levels have reduced hydro-electric power generation. This has also increased costly fossil fuel burning and its attendant environmental impact. Increased grassland fires and hotter forest fires are another effect. Not only does this impact the economy but hotter fires burn organics out of the soil, increasing run-off, soil depletion and extending the time for regeneration.
Another drought effect is increased transportation cost. As a logistics guy I can tell you most people underestimate the amount of bulk freight the U.S. barges on the Mississippi River. Here is a quote from The Mighty Mississippi to Run Dry?
The Mississippi on average is about 13 feet below normal—and a whopping 55 feet below where it was at this time last year. On some stretches, the water level is perilously low. On July 17 it was reported that a 100-mile stretch of the Platte River in Nebraska, had dried up.
For each one-inch loss of water, the standard barge must unload 17 tons of cargo—that is a loss of 204 tons, per barge, for every one-foot loss. A typical tow on the upper Mississippi river may have 15 barges. A one-foot loss of water translates into a loss of 3,000 tons of capacity. Tows on the lower Mississippi River may have up to 45 barges, resulting in a loss of capacity of over 9,000 tons. It would take almost 600 semitrucks to haul the freight unloaded by one large barge grouping under those conditions! There are thousands and thousands of barge strings that ply the Mississippi each year. The shutdown of the Mississippi would be an absolute catastrophe!
Already, the cost to ship bulk goods is rising. As the weight that can be put on barges shrinks, the cost per unit weight is rising. And that translates into higher costs on the consumers’ end. Products that are already only marginally profitable may not be economic at these higher transport costs.
The last time the Mississippi shut down due to low water was in 1988. Then just a small section of the river became unnavigable—but it cost the shipping industry $1 billion.
If the Mississippi shut down today, sources quoted by nbc estimate that the direct costs to the economy would be a massive $300 million per day—a cost that would skyrocket exponentially if the river did not reopen after more than a few days!
We are still a few feet of water away from that, but the summer isn’t over either.
Above is a picture of a buoy used to help guide barges on the bank after the water level dropped on the Mississippi River, near Wyatt, Missouri. Some barge operators have lightened their loads or stopped running altogether on the lower Mississippi because of low water levels.
Making matters worse, last year’s record floods stirred up debris and changed the location of underwater obstructions. “The number of barges going aground is rising. Shipping lanes are narrowing. And traffic is slowing. On Tuesday, a barge grounded in Minnesota. It took 24 hours to clear it, and another day to dredge the channel before other barge-trains could pass. The same day, another barge got stuck in La Crosse, Wisconsin. It took about a day to get traffic moving there again. CBS News says barge traffic is getting hung up all up and down the Mississippi, even in areas that normally don’t have any problem.”
CONCLUSION: climate change creates more extreme weather; flooding in some areas, droughts in others, hotter in some areas, colder in others and so on.
Global Warming Hoax
I am NOT convinced that so-called human induced Anthropic Global Warming (AGW) is responsible for this climate change. AGW is a hoax based on junk science perpetrated by rapacious banksters and supported by their government stooges. Follow the money. Governments have a vested interest in carbon taxes to compensate falling tax revenues. Of course, this will affect your wallet as it will make everything more expensive. And the psychopathically greedy banksters see immense profits in trading ‘carbon credits’ and another opportunity to create gazillions of new ‘derivatives’ which, when they turn toxic and fail are again bailed out by governments at the expense of unwitting taxpayers.
Carbon dioxide is NOT poison; it is plant food. Without oxygen-producing plants, we animals would suffocate. The incredible amount of methane produced by termites and cow farts has far more insulating ability than carbon dioxide. In fact, water vapor (clouds, humidity, etc.) is more insulative than CO2. Do you see anyone advocating a water ban?
However, climate does change. It’s been changing for 4.5 billion years since the earth’s beginning. It will continue to change long after humankind is gone. AGW is based on junk science but that does not alter the fact that the climate is changing (for whatever reason) and that weather is becoming more extreme and more dangerous to our health, the economy and our future. For one possible explanation to climate change see my brief article Cosmic rays, global warming, bubbles and droughts.
Revolution? Don’t Hold Your Breath
A number of commentators expect the American public to rise up against their corrupt masters. Good luck with that! American education and the ass media are so dumbed-down they don’t know how dumbed-down they really are. Considering the level of corruption the U.S. has achieved, if there were going to be a revolution, it would have started by now.
Consider the equity (stock) markets. The average investor knows the market is thoroughly rigged. Every Friday afternoon, no matter how bad the week was, stocks are mysteriously wafted higher and the money-honeys all proclaim a new era of investing has dawned. We have are flash crashes, reverse trades, high-frequency trading, front running, quote stuffing, naked shorting, fraudulent accounting, churning, insider trading, manipulation, intervention and outright fraud.
Consider the level of corruption. Also, consider it is growing, more open and brazen than ever.
Zero Hedge who I highly recommend commented on Bloomberg’s story “Unsealed Documents Expose Morgan Stanley Forcing Rating Agencies To Inflate Ratings”
“So to summarize: Fed manipulates capital markets, HFT manipulates bid ask spreads, “self-policing” CDS pricing market groups fudge the prices on trillions in Credit Default Swaps, bank cabals collude and manipulate short-term interest rates, and now banks are confirmed to have manipulated the ratings on tens of billions of bonds using monetary incentives and threats. Is there anything in this “market” that was fair over the past several decades, and was actual price discovery ever actually possible? Because by now it should be very clear going forward all the things that actually make a free and fair market are forever gone, and that without endless fraud and manipulation by all the market participants who realize that anyone defecting the ponzi group means immediate and terminal losses for all…”
Yet, there’s no revolution on the horizon. Don’t hold your breath.
Amerika does not have a monopoly on corruption. It’s systemic and world-wide. The so-called LIBOR Scandal is but one small piece that the ass media has finally begun to report but as I posted in early July it’s but a LIBOR Distraction.
The fact that the ass media has been allowed to report it should be evidence enough that’s it’s blown out of proportion and is likely lawyer-driven. That there’s money to be made means it will be in the headlines far longer than it deserves and the big settlements that will inevitably ensue are just a few corrupt sharks eating one another. It won’t change the too-big-to-fail banks nor end the corruption and manipulation of central banks.
You can also forget about Occupy Wall Street. That’s but a false flag and a controlled diversion.
There won’t be another American revolution and whatever local uprisings there are will be put down in short order. People say “they’ll have to pry my gun out of my cold, dead hands.” Oh, yes indeed they will. You’ll be labelled a terrorist and eliminated with “extreme prejudice”. How much chance have you got against a well-trained military equipped with advanced body armor, Armored Personnel Carriers, drones and chemical/biological weapons? Answer: none.
Consider ObamaCare, New York Mayor Bloomberg’s assertion that he has the authority to tell you what size soda you’re allowed to buy, Janet Napolitano’s TSA “pat-downs,” Ken Salazar’s “boot on the neck” attitudes that help gas prices climb, the claim that the president can decide what is and what is not actually part of a religion, and the continuing economic disaster that surrounds each and every citizen. Each of these things affects most people personally and yet there is no pushback.
Consider some of the most recent events in America:
• The Patriot Act (Passed in 2001 and extended in in 2011 with additional controls) expands law enforcement powers and removes civil liberties and constitutionally guaranteed rights.
• The National Defense Authorization Act, passed on 31st December, 2011, allows the indefinite imprisonment by the military of any “suspects” (including American citizens on American soil) without allowing due process of law.
• The MAP-21 Bill which allows the Internal Revenue Service to suspend the passport rights of Americans, based on the premise that their tax obligations may be unfulfilled.
• The National Defense Resources Preparedness order, created in March, 2012, allows the President to take over control of all food, water, labour and industry in the US, “to promote national defense.”
• 30,000 Drones to fly over the US allowed by executive order, February, 2012, providing the government with an Orwellian surveillance ability and a killing capacity ranging from selected individuals to entire communities.
• FEMA Interment Camps to be constructed in every state, with 3 – 15 in each state, for an undisclosed purpose.
each with hundreds of thousands of 4-5 person coffins stored near city centres around the country. [Oops, somebody got to somebody, else why close a free YouTube account?]
• 450 million hollow point bullets ordered by the Department of Homeland Security To be used domestically. (The DHS is not responsible for addressing national invasions or overseas wars; it exists solely for the control of internal disorder. Hollow point bullets are not intended for sharpshooting – they are designed specifically to maximize tissue damage.)
– Governments are bankrupt and directly stealing from their citizens, nationalizing pensions, shuttering banks, imposing withdrawal limits and capital controls. As Simon Black – Sovereign Man says, “Bankrupt government have very few options, and they all involve bleeding their citizens for every last nickel. It’s a despicable practice that dates back thousands of years to ancient Sumer and the Roman Empire.”
– Beware this fall. According to Macleans, July 16, 2012 “Chart of the Week”, “Since 1970, there have been 147 banking crises worldwide. Most of them began toward the end of the year.” A bank crisis is not inevitable but the Eurozone crisis isn’t getting better. It started in Europe in the last Great Depression before spreading world-wide. See the chart below.
Macleans goes on to say, “European investors take note.” As usual, the media greatly underestimates the fragility of global economies. More important they fail to realize how interconnected global finance and economies are nowadays. It’s not just European investors that should take note but global. Watching this so-called “financial crisis” unfold for the past five years, starting with the collapse of two of Bear Sterns’ hedge funds in June, 2007, it became more and more obvious that the contagion of a financial collapse would spread world-wide just as it did in the last Great Depression when the collapse of an Austrian bank triggered a global financial collapse. Bear Sterns understood it all too well and, rather than let those funds sink, they ponied up millions of dollars to compensate investors (legally, they didn’t have to) but it was too late for the Bear as it too disappeared into the insatiable maw of JP Morgan Chase.
– You better keep lots of cash under the mattress in preparation for a “bank holiday” when financial institutions are shut down to prevent bank runs. It’s not inevitable but if it happens it won’t be long now. An IMF working paper, “Systemic Banking Crises Database: An Update” shows that financial crises are more likely to begin in September than in any other month. Again, see the chart above.
– Don’t expect the internet to last forever. Once it becomes too threatening to the elite, they’ll pull the plug.
– Expect to see more resource nationalism and theft. Not just oil in the Mid-East, Syria and Iran but this summer’s drought will make water the new oil. Amerika will drain the Ogallala aquifer faster than ever and begin eyeing Canada’s abundant water supply.
– Expect to see taxes, taxes and more taxes. Cities, counties, municipalities and local governments are broke. Many are starting to declare bankruptcy, especially in California. This will spread. Services will be cut but taxes will increase. This is happening not just in America but world-wide as the economic decline continues. The next tax grab will be increased property taxes. After all, governments are broke, desperate and they have a captive source – that’s YOU, the homeowner. It’s not like you can pick up your home and move it elsewhere. Selling it gets more difficult as prices plunge. If you can’t pay, that’s too bad. They’ll confiscate your home, sell it and throw you out on the street. They don’t care. What can you do? If you can sell your home, do so NOW. Then rent. You won’t have to rent forever. As real estate crashes over the next few years, there’ll be tremendous bargains. I’ve been saying this for years. I predicted it in 2005 when I convinced my partner to bail out of our commercial real estate on the principle it was better to be too early than too late.
– Global currency collapse is getting closer too but it’s probably still about two years away, perhaps 2014. However, these things are hard to time. If you have investments, make sure you have paper copies of all records because computer systems are unreliable and can be manipulated.
– The next downturn will be deeper, longer and more painful than the last one, including resource-based countries like Australia, Brazil and Canada that had weathered the last one fairly well. Canada’s unemployment numbers for July were an unmitigated disaster. The official UI rate is at 7.3% and rising (the real rate is anyone’s guess).
– The debate still rages – are we in for deflation or inflation or hyper-inflation? Will it be an inflationary depression or deflationary? Beware simplistic ‘either/or’ thinking. As I’ve mentioned before we’ll see BOTH by which I mean asset deflation and cost inflation. Your house, salary, pension, investments, insurance payouts, etc. will be worth less. Expenses like food, gas, insurance premiums, etc. will cost more. THAT’S a Depression, boys and girls!
Pre¬pare for an Eco¬nomic Collapse and Depression:
What will an economic collapse look like? Here’s an interesting comment from Brandon Smith, a reader of Agora Financial’s “Whiskey and Gunpowder” on August 7, 2012.
“I expect the event will be spectacular in some ways, but subdued and subversive in many other ways. Triggers may be swift and startling, but the reactions of the populace slow, uncertain, and presumptive. There will be fissures in our foundation, but the complete extent of the danger may take a few more years to become evident. While the public continues to maintain its fixation on some Mad Max nightmare scenario, the real collapse will be taking place right under their noses in the form of 25%-50% increases in food and fuel, tightened job availability with pensions swallowed by austerity, food lines hidden by food stamps until the government finally defaults and pulls the rug out from under entitlement programs, etc. For a time, it will look and feel like a slightly darker version of today, and not the cinematic melodrama that we have come to envision. The worst of times that we often find extolled in the pages of history books come at the cost of years of almost equal disparity, and usually, the lead up is far more difficult to handle than the finale…”
What you can do
If you have some wealth, convert some (10% to 25%) of your assets into gold & silver and tell NO ONE.
If you have some wealth, diversify some of it in different countries and currencies.
Keep cash accessible in a safe place (not a financial institution).
Convert variable interest rate loans and mortgages into fixed rates for as long a term as possible.
Pay down your debts, get out of debt and stay out of debt. When the shit hits the fan, cash will be king.
Stockpile food and water reserves for at least a few weeks or better yet months
Stockpile meds and first aid kits.
If you don’t have a budget, make one. You need to see where your money goes.
See where you can reduce or eliminate spending. There are usually some things you can cut from your budget and spending.
If you don’t already have one, start an emergency fund. Save enough to get through as many months as you can and don’t put this cash in the bank.
Don’t put all your money under the mattress in case of robbery, fire or other disaster.
Stockpile durable goods. See my Stockpiling article and 72 survival articles Beans Bullets Bullion and Bible as well as 120 Powerful Pieces Of Advice For Preppers
The scope of this preparation can seem overwhelming. Don’t get discouraged. Take it one small step at a time. Incorporate it into your daily life until it becomes habit.
Water is more important than food. You can last a month without food but only three days without water.
Stockpile water in food-grade containers, drain and re-fill every 6 months. Don’t rely on the taps running forever.
Don’t tell ANYONE what you’re doing. Swear your kids to secrecy and tell them their lives depend on it.
Don’t broadcast your preparations over social media. Normal civilized people can become dangerous when hungry.
You’re not just preparing for yourself and your immediate family. Consider extra preparation. Unprepared friends and relatives may need help.
Get off the grid as much as possible and increase your self-sufficiency (gardening, chickens, solar panels, generators, etc.)
Everything you learn will become useful, perhaps even life-saving in the future.
Stay healthy, eat right, get proper rest and do all the things Mom told you. You’ll need your strength. So will your loved ones.
Don’t believe the government (they’re the problem, not the solution).
Don’t believe anything you see or hear on TV. It’s not called the “idiot box” for nothing. Radio too is just ass media propaganda.
Nothing ever works exactly according to plan so be prepared for flexibility and improvisation.
Get to know your neighbors whether you like them or not and be prepared to look out for one another. You can’t go it alone.
Don’t expect help from the police. Detroit is now policed only eight hours a day. Soon it will be none. If you can’t defend yourself, who will?
Most important of all is attitude. From the various survival courses I’ve taken, the three most important survival skills are attitude, attitude and attitude. DON’T give up. As Michael Snyder says, “beyond any physical preparations, I also believe that it is absolutely crucial to prepare mentally and spiritually. The times that are coming are going to be incredibly challenging. They are going to require a great deal of physical, mental, emotional and spiritual strength.”.
Much of this has been said before, but since you weren’t listening, I had to say it again.
So, will this be the end of the world? No, but it will certainly be the end of the world as we know it. Things will never be the same so if you haven’t already prepared you better start now because you’re running out of time.
August 11, 2012
P.S. I’m printing Amerika with a ‘K’ nowadays in honor of the freedom and liberty the United States once had but has since surrendered for the illusion of security.
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Yikes. I’m happy I’m not you. Thank you. 😌