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Friday, October 23, 2009

Everything you know is wrong

If you haven't bought gold bars, canned tuna fish, and ammo yet, this story may change your point of view: They're thinking of downgrading U.S. Treasury bonds below AAA status, because the country's in so much debt that its promises are no longer risk-free. In every finance talk I've ever heard, this was unthinkable. Now it's just another day at the ever-crumbling office. But hey, look! It's balloon boy! Jon and Kate! Swine flu!

Comments (27)

The last year has been a band aid. There's still a gaping wound underneath, and the adhesive is starting to wear off.

I read we're heading into the commercial real estate portion of the meltdown.

Civilian consumption of ammo has pushed it into short supply since last November.

Someone would have to explain to me why, if the credit or inflation risk is so high, the yield on one-year treasuries is less than one third of one percent (0.0033). On the other hand, a rating of AAA by Moodys or S&P in recent years hasn't meant all that much, has it?

Ammo is in short supply. Get a couple of those new audio weapons, some hand crank & solar powered generators, rechargeable batteries, a video recorder, and lots of clean water. Some body armour. A large Swiss Army knife. A first aid trunk. Maybe a few stacks of comic books, too (maybe include R.Crumb's new illustrated Book of Genesis). And some geese. Flint & steel, for sure. UV sunglasses. An automatic wrist watch. A dog. Some rye whiskey. And a theme song.

Okay, you all are scaring me again. I do not have one thing on Mojo's list and I am sure there are other's that also have what will happen to us? Do you really think this will happen?

The Sky is Falling !
The Sky is Falling !
The Sky is Falling !

New Jersey pays Goldman Sachs for bonds that don't exist:

Someone would have to explain to me why, if the credit or inflation risk is so high, the yield on one-year treasuries is less than one third of one percent (0.0033)

1) The Fed has forced down interest rates and expanded the money supply (more "stimulus"), and 2) one year is a very short time horizon, so the risk should be much lower.

The risk of default on government bonds is still pretty low, but we shouldn't be pushing ourselves any further in the direction of increasing this risk. What we've seen in the last several months has not been reassuring.

Can't afford the gold bars, but I have plenty of the other two.

EternalHope: Guess you and the others better start preparing, relying on others (or worse, the government) is and always has been a huge mistake.

Gold and tuna won't help much, but ammo is your friend. When it hits the fan the strong will simply take from the weak. Those loading up only on supplies are only doing it till such time the armed ones decide they want to take it from you. There will be no civility in a collapsing civilization. On the bright side I can finally stop saving for retirement.

A good preview of what happens when government fails can be found in the film, "Trouble the Water"(2008), which is structured around footage made by people who remained in the Lower Ninth during Katrina.

As to things financial believed true requiring revision, the hearing for summary judgment in a crucial matter regarding the theft of WaMu by the FDIC's Sheila Bair in collusion with JPM's Jamie Dimon was held in DE yesterday:

What can we do about our still-fragile national economy? The previous president told us to shop. The current administration has reinforced that admonition. It is, after all, a consumer-driven economy. So buy domestic product.

Someone would have to explain to me why, if the credit or inflation risk is so high, the yield on one-year treasuries is less than one third of one percent (0.0033)

Allan, that's because the Fed is debiting its account (merely a book entry, there aren't any real assets) to buy treasuries or to lend to banks that in turn are buying treasuries -- all of this drives the price of treasuries up and interest rates down.

In effect, the Fed is borrowing money from the United States at an interest rate of zero and then lending it back to the United States. Any return is positive -- for the Fed at least.

The Fed is doing this in such quantity that the US dollar is rapidly de-valuing which eventually should drive up inflation and interest rates. For now with big declines in consumption, sharp decreases in business investment and imports, with unemployment in the 10 percent range, and folks still skittish about investing in equities, price inflation and interest rates remain low.

There are really only two ways out of this mess. One is rapid inflation and high interest rates when the economy re-energizes. The other is a long-term slump where we have years of double digit or near double-digit unemployment. With the rapid growth of government crowding out the private sector and business investment we may be fortunate enough to avoid inflation, but not so fortunate if we are looking for a job.

Gold and tuna won't help much, but ammo is your friend. When it hits the fan the strong will simply take from the weak.

You're very late in your prediction--that's already happened.

Those loading up only on supplies are only doing it till such time the armed ones decide they want to take it from you.

I've always found it charming how people think some guns around the house will protect them from other people with guns.

There will be no civility in a collapsing civilization.

That always works in a Mad Max movie. But in real life, when humans try and go it alone, they die out. No amount of ammunition, canned goods, or bazookas is going to do more than ensure a small bit of short-term survival. this is why the apocalyptic folks puzzle me--they seem unable to think in segments of time longer than a few years.

On the bright side, I can finally stop saving for retirement.


I've always found it charming how people think some guns around the house will protect them from other people with guns.

They're a lot more effective than any of the alternatives. Just having the gun isn't enough unless you practice and train better and more often than those who would wish to do you harm. Two classes per year at a decent training facility and you'd be better trained than 80% of law enforcement officers. Like everything else in life, it's an odds game. Firearms improve your odds.

That always works in a Mad Max movie. But in real life, when humans try and go it alone, they die out. No amount of ammunition, canned goods, or bazookas is going to do more than ensure a small bit of short-term survival. this is why the apocalyptic folks puzzle me--they seem unable to think in segments of time longer than a few years.

So what's the alternative? Huddle with the other sheep in the Rose Quarter? Nobody said you had to go it alone, it makes sense to prepare ahead of time with like-minded individuals so if a disaster did happen you'd already have community support and pooled resources. Honestly, what's your alternative?

"Huddle with the other sheep in the Rose Quarter?"

Yeah, like the masses in the SuperDome when Katrina hit. But no guns allowed, since the police like passive sheeple.

Or, as Joey says: "Be prepared with other prepared people". As in a Village of The Prepared. HRC's it takes a Village! lol

Yep. People with guns willing to defend and protect themselves and other people. Not in a silo, alone, but in a community together, bartering among themselves for what they need. The hunter barters venison jerky to the farmer who has dried corn meal.

Of what value is "eternalhope" (unprepared beforehand) in such a scenario? Sorry, but not much value added for that person.

I guess I'm having a hard time reconciling the concern about the national debt on this blog post and the support for the public health insurance option on other posts. Shouldn't we work for a few years to fix the debt issue again before we proceed down the path of committing to almost $900 billion more in spending over the next 10 years. Isn't the point that we can't afford it right now because of the debt we've already piled up over the last several years.

Gold is pretty useless in the utilitarian sense. Ammo, on the other hand, may become the new currency when the s&%t hits the fan. And if there's no collapse of civilization - you can go to the range and blast away to your heart's content!

Firearms improve your odds.

Except, apparently, in Iraq and Afghanistan. And Vietnam. And so on.

So what's the alternative? Huddle with the other sheep in the Rose Quarter? Nobody said you had to go it alone, it makes sense to prepare ahead of time with like-minded individuals

My alternative is to try and live in (and create) a world where everything isn't black (guns) and white (sheep).

I read that unless we (globally) shift into reverse on our CO2 generation by 2014 we're all toast anyhow. Oh, but, that's unless Cheney and his neo-con buddies get a limited nuclear war going. Nuclear winter would be great for the oil barons.

The biggest dilemma with climate change is that -- assuming it is a problem jeopardizing our future -- we're not smart enough to fix it.

Here's something probably worth reading, 'Social Collapse Best Practices,' written by a guy who already did it -- got collapsed on by his 'society', money defaulted, food stores closed, ammo was 'currency', the whole nightmare.

In 1990, when USSR dis-assembled and all the States ('Republics') in the bundle detached, and each went back to its own sovereign countryside, being itself.

That sort of foreshadows the USA situation. If a dollar bill is worthless, then what connection do I have with Texas, or New York, or WashDC? None. They say some company in Texas (Enron) 'owns' the (PGE) power lines from the hydroelectric dam to my house and 'owns' the electricity in the wire! Well, I got news for some company in Texas when them and me no longer have a common currency between us, (dollars): These rivers, dams, electrons, and wires 'belong' to folks and operations around here, this countryside, and Texas can go pump oil ... or pound sand when they've pumped it dry.

In a word: Local. Makes sustainable. Then you have food to eat. Water, clothing, shelter, and cooperative social combine also sustains one and sustains all. Option: none.
(The ones stocking ammo make me wonder if it ever occurs to them that not stocking food means the ammo is useless in a week -- when they're dead of starvation. What are they going to do, 'harvest' roaming dogs and cats to eat? Invade a McDonald's?)

Don't take my word for it. Dmitri Orlov offers an education in survival, describing how he lived for two years after his 'nation' broke down and broke up around him.

ecohuman, judging from past scenarios of social collapse, it wouldn't be anything like what's going on in Iraq or Afghanistan. I'm surprised you'd attempt to draw that parallel.

I assumed our conversation was in reference to when all other efforts to create the world we want has failed. I'm asking you, in that situation, what will you do, since it seems you view people who do prepare for it or another disaster in a negative light.

Tensk, I'm shocked. I think I agree with about 95% of that post of yours! The only part where you might be a little out of touch is I don't know a single person who stores ammo but not food and water, and I know A LOT of those types.

Gary K. - What you are proposing is financially responsible - and LIBERALS will never allow that to happen on their watch. All you have to do to see this happening at the state level is look at the 9% State budget increase during the worst recession in this state since the 1980s.


The guys with ammo have made it clear they will do whatever it takes to survive. Some of them will simply use their weapons defensively, to protect their own stockpiles. Others wouldn't think twice about stealing from you and yours in order to survive.

Personally, I don't believe that a 50% decline in the dollar is likely in the short term, but it could certainly happen over a few years. That doesn't necessarily lead to social chaos, but it would impoverish much of the middle class.

A more likely scenario is 1970's style stagflation and unemployment that remains high. But the odds are still against that outcome.

Ammo is a great thing to have...and I have a lot of it in various calibers, mainly M2 Ball and 7.62x54r...but there is a better commodity for barter should a real societal collapse occur.

Orlov touches on this, with a funny anecdote and a family recipe. Moonshine. Booze. The Juice.

Of course, he also takes up many pages railing about how the right of Americans to own firearms will most likely result in a bloodbath, while simultaneously advising his terrified groupies to become buddies with people who have firearms and know how to use them, like ex-military personnel. Strangely, he never addresses the bloodbath that resulted in Russia when the Bolsheviks murdered dozens of millions of unarmed civilians in this context of gun control, but yet he is adamant about both of his seemingly contradictory points. I suppose if I had been reared in a culture where only criminals and police had weapons, I might advise people to buddy up to armed criminals/police, too, instead of advising them to learn about weapons their own damn selves.

It's probably a cultural thing.

He's absolutely correct about booze as currency, though.

I know how to brew wine and beer, meads and metheglyns, hydromels and so on, but I'm afraid that when it comes to moonshine, I'm terribly behind.

Gotta get that still set up...


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Lange, Pinot Gris 2015
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