What Should I Do?

Argentina Street Riots

Preparing for Economic Collapse

Learning from the past – a personal account
Tuesday, May 21, 2013, 3:14 PM

We bring back to the forefront an article from contributor Fernando "FerFAL" Aguirre. With the many new sources of turbulence in the financial system and many new unknowns of how our predicaments will play out, we can always look to the past for guidance. The following is an account from a long time Peak Prosperity member who has lived through economic collapse. FerFAL experienced the hyperinflationary destruction of Argentina's economy in 2001 and continues to blog about his experiences and observations of its lingering aftermath. His website and his book Surviving the Economic Collapse offer windows into the probable outcomes to expect during a collapsing economy. Note: Our site's What Should I Do? Guide offers specific guidance relevant to a number of the steps FerFAL recommends below. Review, Learn, and Get Prepared.  Better a year early than a day late. 

How can I prepare for an economic collapse? is one of the most common questions I get. It usually takes me a second to start to explain how complex such a question is. It’s like asking an auto mechanic, Say, how do you build a car? or asking a computer engineer, What’s all that stuff inside my laptop?

I do have some first-hand experience in this matter, though. The economy in my country, Argentina, has gone through various crises, but none as large as when the economy collapsed in 2001 after a decade of apparent prosperity. The currency devaluated, and Argentina defaulted on its USD$132 billion debt, the largest default ever. The middle class took to the streets after bank accounts were frozen, and the president was forced to resign, escaping the presidential building in a helicopter.

What I’ll do is provide five quick foundational steps, based on what I know, for you to follow so as to be better prepared if something like what happened in my country ever happens in yours.

Steps for Greater Resiliency

Step #1: Secure a percentage of your savings in bullion.

Five years ago, even the most paranoid person claimed that you would never see “nationalized” banks in the USA. The gung-ho survivalists claimed the entire country would go up in flames and open revolts would start before something as insane as a $700+ billion bailout to save the "too big to fail" rich elite was laid on the backs of the American working class. Yet here we are.

When I try to explain this very important issue to my American friends, they tell me that banks would never steal people’s money because there are laws against that in the USA; their money is insured. We had those same laws in Argentina, but still it happened. We had a constitutional right to private property. Yet the constitution mattered little during the collapse. Go right ahead sue the government of the United States if something like that ever happens. Maybe you’ll get some of your savings back in a few years. If they feel like returning it.

What people don’t understand is that laws are written by men, not some greater power. As soon as those running the show feel an emergency decree or law is in order, existing laws are simply rewritten. They may even be ignored altogether! What do you do if something like that happens? You may complain, you may sue, but you’re not changing the cold hard fact that as of right now, that bank door is closed, that ATM has no money in it, and you still have to survive. This is something Argentines have experienced and know very well. Hundreds of thousands of us have banged the doors of our banks for years without a penny being returned. You still sued, and waited, and spent the little money you had by hiring a lawyer. You lose, they win…unless you have some of that money at hand before they decide to steal it.

Every single Argentine wishes he could go back in time, close his bank account, and put that money into gold. We would all do that if we had a time machine. Since you can't guess the future, all you can do is estimate what can happen and play the odds in your favor. In the event of a full economic collapse, if you have 20% of your savings in physical gold and silver, that’s a percentage of your savings that is spared. It's not an investment; don’t go crazy over gold and silver going up or down a few dollars. Just be content that it's not getting any lighter as it sits in your safe. If the economy collapses or even if there’s simply inflation (as there clearly will be), that percentage of your savings in precious metals is safe and will likely go up in price beyond its standard purchasing power as things get worse.

During the first stages of a severe economic crisis, you will see ATMs running out of money fast, and many stores won't be accepting credit cards. As the saying goes, “Cash is king” during those times. Your precious metal can be sold to a dealer, but you better keep that stored for now. When everyone is running around looking for an ATM with a few bucks in it, having a month's worth of expenses in cash means you won't be one of them. Why not more than a month´s worth of expenses? Because if the economy fully collapses, that paper money will lose its value within hours. It may drop 50%, 60%, or 75%, as happened in Argentina. Who knows? All you know is that as the currency loses value, the value of the precious metals you have stored goes up in proportion. Still, during those first days, a wad of cash gets you what you need.

So, Step #1 is acquiring precious metals (I generally recommend 20% of your savings but each person is a separate case) and a month’s worth of expenses in cash, kept safe at home.

Step #2: Stock up on food.

The more you have, the better. There may be periods of civil unrest like the ones we saw where stores are being looted and closed after that. There may be problems with resupply because of logistical complications. It's better if you already have 6 to 12 months worth of food in your expanded pantry. Also, keep in mind that the food you buy now will be considerably cheaper compared to post-inflation prices.

This large supply of food will bring peace of mind in case of job loss, as well. Who knows how long it will be before you find another source of income? After the 2001 collapse, some people genuinely spent YEARS looking for a job without finding any. I can’t emphasize enough the peace of mind it brings knowing you still have some time, and that you can, in fact, put food on the table the following night.

The food should be long-term storage type, requiring little or no cooking, at least for some of it. Water is also essential, so having a two-week supply is advised. The minimum amount is a gallon per person per day, and you should double that for flushing toilets and taking an elemental bath in case the water service is interrupted.

Step #3: Acquire the essentials by putting together a survival/emergency kit.

This will include your typical camping gear: a tent, sleeping bags, a stove (have enough fuel for it in case services are disrupted), first aid kit, medicines, LED flashlights, and several spare batteries. Depending on how bad civil unrest gets, there may be problems with the infrastructure. After the economy collapsed in Argentina, the power company simply couldn’t afford the repairs needed, and it hadn’t planned for something like this. Rolling blackouts became common, and having LED lights and rechargeable batteries was a blessing. You could easily spend two or three days without power during the summer. At one time, downtown Buenos Aires was left without power for five days. Imagine the complications this brings. If natural gas service is interrupted, you may need other ways of cooking. A camping stove and enough fuel will get you through it.

Step #4: Improve your personal and home security.

If you ask any Argentinean what concerns him the most, 9 out of 10 people will have the same answer: security. In second place is the economic situation. Ten years after the economic collapse, things are nothing like they used to be. Half of the middle class became poor and its standard of living has decreased considerably. We’re still a high-risk economy, and it shows. Inflation is still rampant and can be anywhere from 5% to 10% per month, usually hitting the middle class the worst. But that’s something we’ve grown used to. That’s something we can live with.

What concerns Argentineans the most is the crime problem, and the out-of-control violent crime we suffer is the major legacy of the 2001 economic collapse. Poverty sure didn’t help, nor did social segregation. But the greatest cause responsible for the crime levels we suffer is our own government. The liberal government that took control after the collapse considers criminals to be poor victims of brutal capitalism. The unofficial stance is that criminals have a right to steal, murder and rape in their view, it's how the “poor” get back at the rich and middle class who thrived during the 1990s. Of course, with a government like that, the crime problem just keeps getting worse.

During the first days after the economy collapsed, civil unrest, rioting, and looting were out of control. A state of siege and military law was declared, enforcing curfew hours after 10 pm. This lasted a few months, and for months after that, while order was recovered in the capitol district, there were still occasional revolts and looting. The sense of lawlessness extended way beyond the visible accounts depicted by the TV and general media. It's during times like these that you realize you must have means of defending yourself and your family.

My advice is to make your home as secure as possible against criminals that may take advantage of the lack of control during the worst of the rioting. After that, a better security plan for the entire family must be worked out. As things get worse, you understand that you can no longer afford to be lax about your personal and home security. Those that are quickly become vicitims. With a more secure home, you may want to consider having a weapon to defend yourself. Certainly not an easy decision, and one you must be extremely serious about. If you have the self-control and maturity to handle one, having a firearm and getting the minimum training to know how to use (it if it ever comes to that) is something you should consider doing.

Crime and insecurity will be one of the greatest threats people all across the USA will suffer, and very few will be ready for it. It won't happen one dark gloomy night after watching the latest horror movie. It will happen in the Walmart parking lot at 3 pm, with plenty of people around (people who will hurry out of the way, pretending not to see anything). You’ll be thinking about what you just bought, that you maybe should have bought Lucky Charms instead of Corn Flakes. That’s when the nice-looking person with two other buddies, all well-dressed (with neat haircuts, too), will pull a gun on you. Developing a sense of awareness will be the most important part, as well as making the rest of your family comprehend that times have changed and you can no longer be careless regarding security. 

Step #5: Embrace a different mindset.

When Argentina went through its economic collapse, people handled it differently. Maybe the most common response was denial. The “I can't believe this is happening “ attitude was pretty popular. Others complained, but you soon understood that it changed nothing: It only made you feel more miserable, more stressed, and that was something you could do without. Others just ended their misery. Suicide rates doubled after the collapse, with people sometimes jumping under the train at early rush hour in a desperate attempt to make their misery noticed by others.

What you need to do is become more positive, more active. Be someone who, while accepting those things you can’t change, does something about the things you can. Get involved now. Do what I just recommended right now; it will bring you peace of mind. Remember to stay positive and put every problem into perspective. Complain less. You’ll have enough to complain about when inflation gets worse. Soon you'll understand that material things can be replaced, and you become more grateful for what you have instead of worrying about what you don’t.

It's essential to keep a positive attitude. Being someone who gets easily depressed will be the end of you as the economy worsens. Problems much worse that what you are used to will be a daily occurrence. You’ll just have to roll with it and learn to cope with the new world you live in. Reinforce your relationships with people. Fight stress by finding a hobby you enjoy, hopefully one that has a practical side as well. After the collapse, lots of people started their own businesses when they realized there were no jobs to be found. It would be better if you get started now, just in case you ever need it in order to earn a living.

These are my recommendations. I know many people could have used such advice back when our economy collapsed.

Some common questions regarding hyperinflation

How quickly does it happen?

These events occur fast, but there are warning signs: lack of investment, higher interest rates, unemployment. When banks start coming up with excuses so as to not give you your money right away when closing an account, that’s usually not a good sign.

As for inflation and hyperinflation, they happen right in front of your eyes. It actually happened to me that the price of an item I picked in a store almost doubled in price by the time I reached the cash register. The employee just placed the sticker with the new price over the old one (no time to remove them) Employees rushed around changing prices several times a day, all day long, during the ongoing crisis. It was fun to peel back the stack of stickers with the different prices and see how they had gone up in a matter of hours. Rioting happens fast, too. Once the banks close, rioting is just minutes away.

What happens to your savings/investments?

I didn’t have much but managed to close my account just a day before the banks closed their doors. My parents are accountants and saw the signs mentioned earlier. When we went to the bank, a nice lady told us they didn’t have USD$1,000 in the bank. Our jaws just dropped. That same day we went to the main branch and closed the account my sister and I had. The next day all banks closed and the accounts were frozen.

As for real estate, that was a pretty safe investment. Eventually rents went up to compensate for the devaluation. Of course, you were much better off with your money in bricks and mortar than in a bank account.

How does the populace react?

Violently, as you’d expect when your life savings are stolen from you.

What is the government saying/doing?

Laws were changed to make everything nice and legal. The excuses then-president Fernando De La Rua came up with in his speeches during the crisis just made everything worse.

Just days before the bank holidays, they promised none of that would happen. Same thing before the devaluation. They swore on their mothers' names that they wouldn’t do such a thing then did it the following day. Politicians tend to do such things, and they are all similar worldwide.

What happens to the capital markets?

The stock market dropped like a rock, then shut down. What surprised us the most was how everything was simply frozen in expectation. No one wanted to spend a single cent, not even to buy half gallon of paint for a work site, because you just didn’t know what would happen in a matter of hours, let alone next week. The biggest investors had sold and left the country months before everything went down. Another sign to look for.

Does violence and crime become an immediate concern?

Yes, it does. While stores were the more common targets, houses were looted, too. The best thing to do was stay home, have a defendable position, and be armed. I had looters not 20 yards away from my home. What do you do if they rush your home? Can you just open fire on them? What will they do when/if you do? All these things flash into your mind.

A significant amount of people behave themselves because they believe there’s a punishment if they do otherwise. Once that fear is removed, because the authorities have clearly lost control, you see the worst of people’s nature. It's not a pleasant thought, but it's better to be ready.

Take care.

~ Fernando “FerFAL” Aguirre


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68 Comments

Rector's picture
Rector
Status: Gold Member (Offline)
Joined: Feb 8 2010
Posts: 333
I Guess Everyone is Too Stunned to Comment

To all CM.com visitors:

All the signs are in place, the stage is set, and the clock is running.  You pay for insurance every day for far less probable events.  Awareness without action results in deep regret.  We are too far down the road to turn this around through political action or letters to the editor.  Get your family ready whether they like it or not. 

Thank you Fernando.

Travlin's picture
Travlin
Status: Diamond Member (Offline)
Joined: Apr 15 2010
Posts: 1322
Terrific

This is terrific.  I knew FerFAL would be good, but he exceeded my expectations.  I consider him the best source available for this type of information.

Travlin 

 

joesxm2011's picture
joesxm2011
Status: Silver Member (Offline)
Joined: Mar 16 2011
Posts: 243
Thanks for the article

I have been reading your book and most of the articles on your site.  Thanks for taking the time to make an article for this site.

You are right that your version of the "grey area" collapse is much more shocking to most of us than the "zombie shooting gallery TEOTWAWKI" scenario.

I, for one, am not looking foward to a situation where the danger from crime has risen 500% but the authorities still pretend that they are in control and will be coming to second guess and probably arrest you after an event has occurred.

If things are just going down hill and you still have to go to work, who will guard your house while you are gone.  I am surprised more break-ins do not happen now with so many people off to work every day with a very predictable schedule.

Thanks again Fernando.

Joe

Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1840
Paradigm Shift, Pyramid Shift

Rector wrote:

You pay for insurance every day for far less probable events.  Awareness without action results in deep regret.  We are too far down the road to turn this around through political action or letters to the editor.  Get your family ready whether they like it or not.

"You pay for insurance every day for far less probable events." Paradigm shift. Wow! I had never thought about it this way before. So true. I spend over a thousand dollars each year for auto insurance. I spend a few hundred each year for renter's insurance, etc. We do pay for insurance every day for far less probable events. And yet I think of it as money well spent, because I know of people who have gotten into more serious accidents, people who have lost their homes. I think next time someone starts questioning me, I'll ask them how much they pay for home or auto insurance, and whether they've had to use it in the past several years, and whether they think the money is well spent anyway.

Well in Argentina, they lost their economy! And we've have real examples of what has happened in other countries. The writing is on the wall for America as well!

Pyramid Shift
On a related topic: To those of you who may not have read it, I want to quote a very relevant passage from another essay that "FerFAL" wrote a few years ago, emphasis mine:

"FerFAL" wrote:

It’s 1:06 AM over here. I just finished showering and my wife and son are asleep. I was putting shampoo on my hair, thinking about what I wrote today on this post, and remembered the exact moment when I realized along with several other people, not only that TSHTF (that we all knew) but that the world we once new no longer existed, and that this was not a hurricane, this was an ice age period, it wouldn’t just go away.

We understood it the same way a kid understands photosynthesis: Because a teacher coldly explained it to us, even used graphics. I slept 5 hours yesterday, 2 hours the day before yesterday. Saturday night I didn’t sleep at all. I’m already used to it. Deadlines at the University, staying late at night, drawing in CAD 3D, waiting until Renders are ready. It’s a competitive world out there, and no one sympathizes with what you are going through, they just want you to perform as expected, and the standard is always high

It happened 4 years ago, almost a year after the December 2001 crisis. It was a social studies class and this teacher, don’t remember if it was a he or a she, was explaining the different kinds of social pyramids. God! Now I remember more! We even had a text book with those darn, cruel pyramids!

The first pyramid explained the basic society. A pyramid with two horizontal lines, dividing those on top (high social class) those in the middle (middle class) and the bottom of the pyramid (the poor, proletarian). The teacher explained that the middle of the pyramid, the middle class, acted as a cushion between the rich and the poor, taking care of the social stress. The second pyramid had a big middle section, this was the pyramid that represents 1st world countries. 1 which the bottom is very thin and arrows show that there is a possibility to go from low to middle class, and from middle to the top of the social pyramid.

Our teacher explained that this was the classic, democratic capitalist society, and that on countries such as Europeans one, socialists, the pyramid was very similar but a little more flat, meaning that here is a big middle section, middle class, and small high and low class. There is little difference between the three of them.

The third pyramid showed the communist society. Where arrows from the low and middle class tried to reach the top but they bounced off the line. A small high society and one big low society, cushioned by a minimal middle class section of pyramid.

Then we turned the page and saw the darned fourth pyramid. This one had arrows from the middle class dropping to the low, poor class.

“What is this?” Some of us asked.

The teacher looked at us. “This is us”

“It’s the collapsed country, a country that turns into 3rd world country like in pyramid five where there is almost no middle class to speak, one huge low, poor class , and a very small, very rich, top class.”

“What are those arrows that go from the middle to the bottom of the pyramid?” Someone asked.

You could hear a pin drop. “That is middle class turning into poor”.

I won’t lie, no one cried, though people rubbed their faces, held their heads and their breath.

No one cried, but we all knew at that very moment that all we thought, all we took for granted, simply was not going to happen.

You see, the income from the middle class is not enough to function as middle class any more. Some from the top class fall to middle class, but the vast majority of the middle class turns into poor” Said the teacher.

I don’t know how many people in that room suddenly understood that he/she was poor.

The teacher continued “You see, we have a middle class that suddenly turns to poor, creating a society of basically poor people, there is no more middle class to cushion tensions any more. Middle class suddenly discovers that they are overqualified for the jobs they can find and have to settle for anything they can obtain, there for unemployment sky rockets, too much to offer, too little demand. You see they prepare, study for a job they are not going to get. You kids, you are studying Architecture because you simply wish to do so. Only 3 or 4 percent of you will actually find a job related to architecture.”

We all sat there, letting it all sink in. After a few months, it all proved to be true. Even the amount of students that dropped out of college increased to at least 50%. They either saw no point in studying something that would not make much of a difference in their future salaries, had no money to keep themselves in college, or simply had to drop college to work and support their families.

The essay/thoughtstream by "FerFAL": is published in various places throughout the web, so it is easily found. Below is one of the locations where it has been posted with permission:
http://www.jcharper.net/index.php?option=com_content&view=article&id=155:voice-of-experience-argentina-collapse&catid=14:stuff-happens&Itemid=12

Book
I highly recommend "FerFAL's" book, "The Modern Survival Manual: Surviving The Economic Collapse". While self-published, and English is not his first language, the material is very engaging, easy to read, and goes into much more detail.

Web Sites
"FerFAL" has many blog posts and YouTube videos as well:
Older, but still active blog: http://ferfal.blogspot.com/
New web site: http://www.themodernsurvivalist.com/

Poet

idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Look at this link on

Look at this link on Argentina's Gold Reserves. http://www.24hgold.com/english/stat_country_detail.aspx?titre=Central%20Bank%20Gold%20Reserves%20(in%20Ounces)&pays=Argentina&deid=19576B1670

Looks like the Gold left the country a little ahead of the problems also. Looks to me like Gold is always pretty valuable in a man made world.

Argentina SOLD ALL ITS GOLD RESERVES at the bottom of the market in December 1997 - and reportedly bought U.S. T-Bonds at their high.

FerFAL's picture
FerFAL
Status: Bronze Member (Offline)
Joined: May 13 2011
Posts: 25
Thanks everyone for the

Thanks everyone for the comments and nice words.

These are times to be cautious yet realistic. Some common sense preparedness will go a long way.

As Rector well said, you pay for insurance for things that are far less likely than losing your source of income during an unstable economy. Even getting mugged or suffering a home invasion is becoming more and more common.

Yet so many people think that stocking up on food or having precious metals is a waste of money.

Sometimes people say they are down on their luck and can't afford to stock up food. Its specially those people that can't afford not to!

FerFAL

Augustine's picture
Augustine
Status: Bronze Member (Offline)
Joined: Oct 13 2009
Posts: 36
Like a memoir

As a Brazilian, reading this fine article was like reading a memoir.  Brazil followed a similar path for over 20 years. 

Although inflation had been a common plague in the 20th century in Brazil, in the 70's it reared its head to not put it down again until the mid 90's.  However, before getting there, the 80's were particularly rocky as inflation reached triple digits.

In order to control inflation, but never addressing the root, many economic shocks were inflicted in the population.  Since the root was public deficit and its financing by printing money, inflation was actually the goal in order to wipe it out.

At first, major currency devaluations were pursued in the attempt to blatantly inflate the public debt out of existence.  Instead, the newly minted money was regarded as a new opportunity to increase the size of the state, increasing the public deficit even more.  This cycle went on for a few years with the obvious effect of raising the inflation levels year after year.

It didn't take long for people to lose any notion of prices, since the most common sound in grocery stores was of the labeling machines (I can only imagine how more convenient bar-codes are in an inflationary environment).  Therefore, seeking a "stable" monetary reference, the informal unit of accounting became the dollar and its exchange rate was mentioned on the radio throughout the day, which people used to do quick mental calculations when shopping to compare prices among vendors.

I remember that the price of gold was always mentioned at the end of the day when the newscasts would assess the damage by inflation on that day.  However, it was quite difficult to buy gold, since one had to go through dealers which operated in the mercantile exchange and the minimum quantity was rather large, excluding but the very wealthy to protect their savings.

As a consequence, even though no other currency could be used as legal tender, the dollar became the de facto currency for major transactions between private people, like paying in for an used car or even real estate.  As a matter of fact, assets became the only way to store one's wealth, leading to an even higher inflation in them, when it was quite common that an used car would be sold for a profit even a couple of years later.

As inflation kept on going up, the government resorted to heterodox economic shocks, or economic experiments on a whole population of fancy economic theories by scholars with titles from Ivy League universities or prestigious European universities.  These scholars, whose academic credentials placed them among the very wealthy, having never hold a job in the real world and much less balanced a checkbook to budget their groceries expenses, had the bad habit of accepting nominations to become economy ministers.

They tried everything between Cambridge and Chicago, from Keynes to Friedman, controlling variables of economic equations on an entire country and seeing what happened.  They tried government spending to raise the GDP, but it didn't work; then price controls, just to make the shelves in the grocery stores empty; then freezing bank withdrawals to limit the velocity of money, just to collapse consumption and cause massive unemployment.

And all along, no law mattered.  Arbitrary taxes were slapped on items under the guise of their being consumed by the "rich", like new cars, but quickly everyday items were taxed too, like makeup and gas.  Sometimes they weren't called taxes, but some sort of patriotic fee, which some people decided to sue against, only to get laughable, inflated-away amounts back years later.

And flight was not an option, for until the early 80's, a compulsory deposit of $1000 (worth months income) was required for trips abroad.  Capital controls were brutal, and capital expatriation had to be done via the central bank as a way to create an impossibly long bureaucratic delay.  I remember that even to subscribe to foreign magazines it was necessary to file several forms to justify the conversion of funny money into dollars (Brazilians were allowed to have transactions in foreign currency in credit cards only ion the 90's).

In my experience, an economic collapse doesn't happen suddenly.  It's a very slow process akin to the proverbial boiling of a frog.  Inflation doesn't happen suddenly either; it's always surreptitious at first, but steady.  When it reaches high levels, only then does it quickly rises and may reach hyper-inflationary levels, but it took Brazil almost two decades to go from double-digit annual rates to four digits.

Rather, the economy is destroyed in slow-motion.  First, the Brazilian industries were regulated until they choked.  Then, import controls rewarded inefficient and corrupt industries.  With public deficit mounting up, the government became the only creditor, drying up capital from the financial system, since it was the only creditor able to pay loans back with freshly minted money.  At the same time, this squashed industries, unable to turn out profits equivalent to an incredible inflation rate, which, unlike banks, had to actually produce something to gain income and to keep their operations.  It goes without saying that without access to capital, industrial innovation died completely.

The need to turn huge profits quickly in a market with a quickly dwindling middle-class led industries to turn to the only entity with money to spend: the government.  Government contracts were sought after violently - literally, but more commonly with liberal application of "grease".  The effect was that corruption became the norm in a country where it had never been tame.

And this is perhaps the worst effect of the economic collapse, ultimately by design by an irresponsible profligate government: the morals were corrupted by the need to turn a quick buck no matter the cost, bribing whoever needed to get a contract.  Virtual business gangs were formed, especially by former government officials and members of the - ruling - military, who had government contacts and intermediated the bidding process between corrupter and corrupted for a nice fee.

But not only in the business sphere, the moral corruption spread throughout the Brazilian society. Frustrated with the government and seeing how corrupt it was, impotent to change anything, the same modus operandi was adopted by the average Brazilian.  Nothing else mattered, especially life, which became quite cheap, just a black hole of ever more expensive food.  Crime gangs came up with violence never seen before.  Many became pirates on land, robbing trucks, trains and barges, no matter the merchandise and killing even those who didn't pose a threat to them, like truckers and engineers.

The prevalent moral code was: do what thou wilt and everyone else be damned.  What used to be a quaint, peaceful country, with a harmonious living of many races and ethnicities, became a crime war zone on the streets, a corrupt business place and a treasonous personal environment.

Brazilian culture, which enjoyed high quality in literature and the arts, became a cauldron of soap operas.  The crassness became the norm and any higher cultural expression was sneered at as useless.  The former president, Luis Lula da Silva, who dropped out of middle-school, boasted for not being able to speak Portuguese correctly, making it a virtue, though most of the population was much farther ahead of him (to illustrate this, imagine if in a decade everyone spoke like rappers).

Unfortunately, America today seems to me very much like Brazil in the late 70's.  America is following exactly the same path, but finds willing accomplices to convince the people that it will lead to a different destination.  As an immigrant, a refugee from economic and criminal insanities who found a comfortable and peaceful life to raise my family in America, my heart is torn at the dishonesty in the American politicians, an all too familiar dishonesty.

However, thanks to the Internet I have access not only to invaluable resources like this site, but I can also protect my meager savings from collapse by being able to diversify away from the dollar into assets.  Neither I nor my father had access to the same information and diversification that I can now have back in Brazil.  So, while this time it is not different, I am confident that I and my family will fare differently.

thc0655's picture
thc0655
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Joined: Apr 27 2010
Posts: 534
Destroying social constraints becomes the nightmare

One of my biggest concerns is the violent crime and corruption that will grow out of our economic collapse.  FerFAL and Augustine have lived through it and they both highlight it.  Most people largely obey the law because of fear of being caught by the police and punished by the criminal justice system.  They also obey the law because of the strong disapproval of their family, friends and neighbors.  But the coming desperation of the common person, the corruption they see all around them (especially among the wealthy and powerful), and the obvious fact of how overwhelmed the police and courts are will cause them to feel released from these social constraints and commit crimes and engage in corruption they never would have before such a sea change in society.  A healthy society can cope with the criminal actions of the 2-5% of people who are, under normal circumstances, committed to a corrupt and/or criminal lifestyle.  No society can handle 40-60% of the people committing theft, burglary, robbery and all manner of scams, frauds and ripoffs out of desperation to survive or just plain anger and greed.  This effect which is coming our way could be greatly diluted if there were a large number of successful prosecutions and public shaming of the people who most contributed to our problems and profited from them.  But it looks like nothing like this is going to happen, and we are therefore doomed to a dog-eat-dog future until our society is burned nearly to the ground and starts to rebuild.  On the other hand, America has seen two great spiritual awakenings in our past and we can always hope for something like that again.  I'll be hoping and praying, while making preparations for the far more likely and dismal outcome.

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FerFAL
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Thanks Augustine fo sharing

Thanks Augustine fo sharing that. We south Americans are unfortunately a steap ahead in events. After what happened with the economy, they are going after what's left of the middle class and conservative values. We're becoming this liberal socialist blur with no sense of decency.

Brute illiterates are much easier to control I suppose. For example, we're now seeing our government unnoficialy making durg abuse legal, along with a strong media campaign. The motto seems to be " Who didn't do drugs at least once?" If a reporter says he didn't he is quickly mocked and shunned as if not having done drugs before makes you a fool. Its like an elementray school in the bad part of town all over, but with adults with political charges.

Why on earth would our own government so outspokenly approve the use and abuse of illegal drugs?

Maybe iliterate isn't enough any more, they want the mass to be junkies too.

FerFAL

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Come on, I don't think is going to be as bad

I think the US will experience a deep crisis, but it wont be as bad as what we have experienced in SA. I know what I'm talking about, because I'm from Venezuela. I saw my comfort world crumble after the riots of 1989 that were a prelude to Hugo Chavez first coup attempt. After 20 years a lot of water has passed below the bridge and now Venezuela, an oil producing country that bought all argentinian debt after Kirshner went into power, has more weekly violent deaths than, Irak, Afganistan & Pakistan combined and is under military leftist rule, on the road to and oil rich Cuba. The US does not have the huge shantytowns around cities and monoproducing limited output of a third world nation. The middle class is large and they do have a lot of natural resources, structures in place and everyone owns a gun. In Venezuela only the bad guys carry weapons....That in itself should be enough to restrain social misfits and the apocalyptic future explained here.... Things will be bad in the US but never like ours, because their starting baseline is different...They already suffered a depression and were able to cope.....And if thats starts to happen in the US no place will be safe around the world and we might as well kiss our collective asses goodbye. right now, I'm living in Spain and even when things are real bad, normal people aren't rioting over here like greece or the middle east. Balanced people understand that bad times are xoming again and only astrong social network will cope. As to avoid another civil war...The problem we experienced in SA were greedy corrupt politicians and lack of education that foster extreme poverty..... I think the middle class in the US is better informed so I see no point in scaring people....I'm sure there will be some sort of unrest but I think people will behave and prevail in the long run...this web site is an example of preparedness of US society. I never saw anything like this in the years previous to the ascent of crazy chavez to power in 1998

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idoctor
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Great posting from South

Great posting from South America!! Thanks Idoc

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pinecarr
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Ferfsl, great post;

Ferfsl, great post; thank-you!  I have learned so much from you, from your personal experiences dealing with economic collapse.  Thank-you for helping us see where we, too, may be headed!

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Thanks Pinecarr, glad you

Thanks Pinecarr, glad you liked it.

If anyone has questions and such, I'll keep checking this thread and do my best to answer them.

FerFAL

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Thank you

Thank you so much for writing this article. During the last year I have become aware of the state our global economy is in, and I have been doing my best to prepare for all that. Eventhough the situation overhere in the Netherlands seems still in controle, we very much depend on the rest of Europe and ofcourse the US.

Allthough the information Chris is providing has been a true blessing, I still had some questions about how things might turn out for real, and you gave me a glimpse by telling about your experience.

Not very appealing to look at the future like this, but better to be prepared.

So thank you!

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Re: Come on, I don't think is going to be as bad

ScubaBonaire wrote:

I think the US will experience a deep crisis, but it wont be as bad as what we have experienced in SA. ...................... As to avoid another civil war...The problem we experienced in SA were greedy corrupt politicians and lack of education that foster extreme poverty..... I think the middle class in the US is better informed so I see no point in scaring people....I'm sure there will be some sort of unrest but I think people will behave and prevail in the long run...this web site is an example of preparedness of US society. I never saw anything like this in the years previous to the ascent of crazy chavez to power in 1998

Do not underestimate the greed in America (Unfortunately, I see that trait entrenched in my country India too ). As for education, the middle class here is literate but definitely not educated. Otherwise, we would not see the kind of personal debt crisis that we are seeing. The people who visit this website are either getting out of the mainstream society or are already out.  The mainstream people who do not take the time to prepare will have the same experience as the South America crises.

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Poet
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Questions For FerFAL: Poor, Elderly, Sick, Minority, Children

"FerFAL"

Thank you for offering to answer some questions. Here are a good number of questions that I have for you. I know these are a lot to ask, but it is because I love my family and dear friends so much, that I ask these questions.

(Perhaps you can give consideration to the fact that I have purchased your book via Amazon, via your link? *grin*)

If you cannot answer all of them, or if these are too many, then please feel free to answer the ones that you want to or can. Thank you.

What advice would you give to those who are disadvantaged:

1. The poor. How do the poor survive in Argentina? If someone in America were very poor and with few resources (let's say they lost their job and have used up their savings to survive and now depend on the government), would that significantly change the advice that you have given in this post? Is there any additional, specific advice or suggestion or strategy would you give regarding survival for those who are poor?

1. The elderly. How do older, weaker people survive in Argentina? Many Americans have no retirement savings. They are (or wil become) wholly dependent on the government for Social Security payments, Medicare for health care - and we know that this system, though modest, is likely to be drastically reduced. What is it like for elderly Argentinians in such situations? What kind of survival strategies would you suggest for the elderly, including those with no adult children to take care of them?

2. The physically disabled or those with chronic medical issues - There are people in wheelchairs, or the elderly who are weak or sick. There are also people who are otherwise able to work, but requires regular medicine or insulin (which may be expensive), or people who needs daily care. How do these people (like diabetics) in Argentina survive? What advice would you give them?

3. Minorities - People not of the dominant race (White) or the dominant religion (Protestant Christian) in America. As you know, about 30% of Americans are minorities, and American discrimination and prejudice has its own history that is different obviously from Germany or Brazil (or Argentina). Is there major racism in Argentina? Has it increased with the economic hard times as people search for others to blame (like Germans did the Jews)? Since in some states and cities in America, the visible minorities make up less than 10% (sometimes less than 2%) of the population, what suggestions, strategies, and advice would you offer to minorities so they and their families can stay safe and prosper?

4. Children - I know you have young children. I happen to have two twin babies born late last year. What suggestions or advice would you give to parents of young, vulnerable, innocent children? How do you raise them? And what suggestions or advice would you give to children as they grow older at each stage in life: let's say at age 4, at age 8, at age 12, and at age 16? What stories do you tell them, and how do you keep them positive, optimistic, yet smart about the streets and the increased brutality and corruption that you have seen in Argentina in the past 10 years?

I know things will be tough in the years ahead. Just thinking about family members who are poor, elderly, weak, and a minority on top of all that, makes me very concerned.

Thank you in advance, sir.

Poet

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Marteen
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Community building

Very good article.

My wife was on an aprenship in argentina's capital during this bank holiday season. I just moved to nigeria from venezuela and she still wanted to complete her study in Argentina. This were interesting but very scary times.

Insecurity was indeed a major problem and food very scarse. She is a world optimist but became a realists when she saw all the violence on the streets.

As she was a student and living together with students there was also a strong atmosphese of helping each other. Defence of the neighbourhood and sharing food was the means of survival.

Community building is something we have lost during the last 30 years. Defenitely in Europe where nobody goes to church. Everybody is busy with shopping or sport on sunday. House and car to show-off.

Community building is so important. Together we stand strong against armed gangs and foney polititians.

Marteen 

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Leaving the country?

Great piece FerFAL! Succinct, to the point, and experience-based information, very nice.

I would only have one question. What happened to the country's exit points during the crisis? Right now, I am living in Japan, in a gamble that things might turn better here than Canada (but it looks less and less probable), which would leave me the choice of going back to Canada if things go south(er) here. My main concern is, when the SHTF in Argentina, what happened with the ports, the airports, the trains, buses, border control (although I doubt I would have any problems with Japanese immigration leaving the country), etc.? Thank you very much in advance for any info you may have!

Samuel

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Augustine wrote: As a

Augustine wrote:

As a Brazilian, reading this fine article was like reading a memoir.  Brazil followed a similar path for over 20 years. 

Awesome post, Augustine.  Thanks!

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Great posts

I (we) really appreciate the posts from South America.  Thanks for taking the time to share.  History doesn't repeat itself, but it rhymes.

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Thanks for all the thoughts

Thanks for all the thoughts FerFAL and Augustine. But I do have to take issue with one statement, "We're becoming this liberal socialist blur with no sense of decency."

I think that's a bit of an unwarranted political bias. The US is anything but socialist, it is the antithesis of socialism. For an example of socialism look to Sweden. Sweden is on one of the best economic footings as far as any western nation is concerned, which admittedly isn't saying much (and it doesn't even have oil to artificially prop up its currency!)

The US and Canada wouold be better described as being fascist, rather than socialist; in other words, corporate and government powers have merged into one for the purpose of stealing wealth from citizens. In socialism, individuals work to support the collective. Now, under fascism, the collective works to support a few elite individuals.

What we have is an "anything goes" style of crony capitalism where Americans are willingly letting themselves be raped by big banks, big oil, and the big governments that are controlled by those corporations, in the name of some patriotic delusion of free and unregulated markets. America the free! Any regulation is bad! Even if it means the unregulated banks can get away with murder! That's OK because in America we must strive for FREE markets!!!

Unfortunately, unregulated markets do not work.

Wasn't it Plutarch who said, "An imbalance between rich and poor is the oldest and most fatal ailment of all republics."

And Mussolini:

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."


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Just ordered your book.

I have been hearing about "Surviving the Economic Collapse" for a long time so I took this as a opportunity to order it.  I look forward to reading it soon.

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Poet wrote: "FerFAL" Thank

Poet wrote:

"FerFAL"

Thank you for offering to answer some questions. Here are a good number of questions that I have for you. I know these are a lot to ask, but it is because I love my family and dear friends so much, that I ask these questions.

(Perhaps you can give consideration to the fact that I have purchased your book via Amazon, via your link? *grin*)

If you cannot answer all of them, or if these are too many, then please feel free to answer the ones that you want to or can. Thank you.

What advice would you give to those who are disadvantaged:

1. The poor. How do the poor survive in Argentina? If someone in America were very poor and with few resources (let's say they lost their job and have used up their savings to survive and now depend on the government), would that significantly change the advice that you have given in this post? Is there any additional, specific advice or suggestion or strategy would you give regarding survival for those who are poor?

1. The elderly. How do older, weaker people survive in Argentina? Many Americans have no retirement savings. They are (or wil become) wholly dependent on the government for Social Security payments, Medicare for health care - and we know that this system, though modest, is likely to be drastically reduced. What is it like for elderly Argentinians in such situations? What kind of survival strategies would you suggest for the elderly, including those with no adult children to take care of them?

2. The physically disabled or those with chronic medical issues - There are people in wheelchairs, or the elderly who are weak or sick. There are also people who are otherwise able to work, but requires regular medicine or insulin (which may be expensive), or people who needs daily care. How do these people (like diabetics) in Argentina survive? What advice would you give them?

3. Minorities - People not of the dominant race (White) or the dominant religion (Protestant Christian) in America. As you know, about 30% of Americans are minorities, and American discrimination and prejudice has its own history that is different obviously from Germany or Brazil (or Argentina). Is there major racism in Argentina? Has it increased with the economic hard times as people search for others to blame (like Germans did the Jews)? Since in some states and cities in America, the visible minorities make up less than 10% (sometimes less than 2%) of the population, what suggestions, strategies, and advice would you offer to minorities so they and their families can stay safe and prosper?

4. Children - I know you have young children. I happen to have two twin babies born late last year. What suggestions or advice would you give to parents of young, vulnerable, innocent children? How do you raise them? And what suggestions or advice would you give to children as they grow older at each stage in life: let's say at age 4, at age 8, at age 12, and at age 16? What stories do you tell them, and how do you keep them positive, optimistic, yet smart about the streets and the increased brutality and corruption that you have seen in Argentina in the past 10 years?

I know things will be tough in the years ahead. Just thinking about family members who are poor, elderly, weak, and a minority on top of all that, makes me very concerned.

Thank you in advance, sir.

Poet

Hi Poet, thanks for buyig my book, hope you liked it.Wink

I'll od my bet to answer them but as always many of these questions could have several pages worth of replies. Short answers are usualy incomplete or plain wrong when i comes to such complex issues, and its always complex when studying people, especially masses of them.

1.Poor survive however they can. Real poor live here live in shanty towns, simple boxes made with scavanged material. Those that manage to afford it end up building a brick and mortar room or two, just a cube with a door and window. You see these all over Argentina, also in the favelas of brazil. Very simple constructions, just boxes one next to the other. When they run out of space they start building one on top of the other.

Begging, doing very odd jobs, stelaing, selling drugs or thugging for the government. The widespread socialisim is strong in South America thanks to poverty, poverty they make sure keeps exisiting. One way to survive is joining the official socialist government politicl party and gainig favors such as welfare for their kids and themselves. All these things, unlike in USA, are NOT for everyone. You only get to these welfare and other government plans if you belong to the party, go to the marches and rallies in favor of the government and become crash force when anti government protests take place. Scavenging for paper and cardobaord to survive has become pretty standard since 2001. At night the city is full of carts and people pulling them, collecting paper, sometimes eating off the trash directly, a half eaten yuppie sandwich or McDonalds meal. You must understand that "poor" is very different depending on SOuth American standards and USA standards. WHat you guys call poor, its really nothing like our "poor". Our poor really have nothing at all, nothing. IN that case all you can do is hope to achieve a minium level of education, try to find a job of some sort and get yourself out of shanty the "villa". Most likely, if you're a SA poor you probably have a serious drug abuse problem, the brain half dead thanks to smoking paco drug.  For poor people in USA, things are a bit easier than over here. If you do an effort, go to comunity college so as to gain some useufl skill you can do better. Here, its very different to escape the "villas" even if you try hard.

2-Many simply dont, they die. Specially if they had no investments, no family to care for them and only rely on gov. public health you're as good as dead. The quick answer is simply that poor elderly dont survive in Argentina, at least not for long. The reitirement is just not enough, and the problem is getting worse since our government ,  for our own benefit of course, stole our privately owned retirement funds. Better hope you invested and own some property to get rent from or have family that cares for you and actually has the income to help you. IF not you just dont live long. If you really have no money and no family, all you can do is try organizing as best as you can with other old folks, learn form them, see waht plans work. In certain places they have free homes for the elderly that are slightly better than the average walking corpse storage home.Oh, the description is accurate, I've been to these places. I'd rather die mylsef than end up there. Again, some of these places are sliglhy better, like living in a prison that at least has a small popualtion of rats and roaches and isnt' overrun with them. You better make sure you have investments so as to take care of yourself when you get old.

3-My advice would be to take advantage of being a minority. In Argentina the official stance is that the white middle class owes the poor and minorities. ( in Argentina that would be immigrants from Bolivia, Paraguay or people from the more native provinces) generally speaking if you are either poor or darker skinned its going to be eiaser for you to get in line with the current government political footsolidiers. I beleive that in USA these days being a minority has certain benefits as well, and there's organizations that recieve public fundings that can help you out.Use that to your benefit. Use the system and at least get some of the money that is being taken from your through taxes back.

4-Another huge topic! Try using the search function in my website, www.themodernsurvivalist.com or www.ferfal.com, joing the forum at the modernsurvivalist, there's a thread going on right now about parenting and education.

Basically what I do with my kids is give them the tools so that they can survive. Schools are tough around here. Even in private ones (which are very common) a kid has to know how to defend themselves. In Argentine public schools kids (yes, small ones) shoot and stab one another, thats why you dont send your kid to them if you can help it. In private ones there's stil social violence, expect bullying and school fights. My son is 8 and he's already been in several fights in the school yard. I'm not tlaking about a slap or punch, but bloody noses and faces. Doesn't sound nice, does it? But tis the way it is. You can either do your best to teach your kid how to defend himself like I do or let him be a victim his entire adult life. In my experience its better to teach them how to defend themselves. My son got into a very violent fight with a bully once, he messed the boys face so bad the rest of the boys didnt' bother him after that. A few weeks later this same buly came and asked him if he would like to be his friend. It is a bit like a jungle. As for how you handle what's going on in the country I sometimes used to turn off the news if the incidnet described is too violent. These days I try to explain everything as well as I can, given his age, so that he knows whats going on, the violence, the poverty. At younger ages you want to avoid them, better for them to feel in a safer world, correct? but its not that easy, not when these things happen all around you.

Example, this time we were walking with my family, my son, then age 5, asked why that boy was all dirty and barefoot (a poor street kid) another time he asked me why a coupe of boys were eating out of the trash, kids about his same age, 5 or 6. You want them to feel safe at a young age but sometimes you have no other option but to explain them as well as you can and without making drama whats going on. Some parents go into denial, but kids still see all this and I think its worse if you dont guide them so as to understand it better.

Take care and see you around!

FerFAL

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FerFAL
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guardia wrote: Great piece

guardia wrote:

Great piece FerFAL! Succinct, to the point, and experience-based information, very nice.

I would only have one question. What happened to the country's exit points during the crisis? Right now, I am living in Japan, in a gamble that things might turn better here than Canada (but it looks less and less probable), which would leave me the choice of going back to Canada if things go south(er) here. My main concern is, when the SHTF in Argentina, what happened with the ports, the airports, the trains, buses, border control (although I doubt I would have any problems with Japanese immigration leaving the country), etc.? Thank you very much in advance for any info you may have!

Samuel

Hi Samuel,

Even though no port or airport here closed for more than a day or two, yo might want to keep in mind two things;

1) Access to the airport. Even if opened, there may be roadblocks and/or gas stations closed. MAke sure you know several alternative routes to reach the airport or other exit points, and you have the vehicle and fuel to do so.

2) Paper and money. In Argentina 2001 one you would have faced a couple problems. With accoutns forzen you cannot buy the tickets and get the money to leave. That's why of point 1) of my post.  If you can afford it, besides the month's worth of expenses cash, it makes sense to have enough cash to buy tickets for the family plus some more for travel expenses. That way you wont have to sell the precious metals first so as to get the cash and buy them. Finally papers. The goverment will probably have other things in mind or down right just make it complicated for you to leave. Here they took up to a year to issue you the passport, even today it takes months. Get your papers and your passport now! We keep a small bag with them, some money and other important documents.

FerFAL

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FerFAL
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Mark_BC wrote: Thanks for

Mark_BC wrote:

Thanks for all the thoughts FerFAL and Augustine. But I do have to take issue with one statement, "We're becoming this liberal socialist blur with no sense of decency."

I think that's a bit of an unwarranted political bias. The US is anything but socialist, it is the antithesis of socialism. For an example of socialism look to Sweden. Sweden is on one of the best economic footings as far as any western nation is concerned, which admittedly isn't saying much (and it doesn't even have oil to artificially prop up its currency!)

The US and Canada wouold be better described as being fascist, rather than socialist; in other words, corporate and government powers have merged into one for the purpose of stealing wealth from citizens. In socialism, individuals work to support the collective. Now, under fascism, the collective works to support a few elite individuals.

What we have is an "anything goes" style of crony capitalism where Americans are willingly letting themselves be raped by big banks, big oil, and the big governments that are controlled by those corporations, in the name of some patriotic delusion of free and unregulated markets. America the free! Any regulation is bad! Even if it means the unregulated banks can get away with murder! That's OK because in America we must strive for FREE markets!!!

Unfortunately, unregulated markets do not work.

Wasn't it Plutarch who said, "An imbalance between rich and poor is the oldest and most fatal ailment of all republics."

And Mussolini:

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."


Hi Mark, you're right it is a political stance. I think socialism and communisim are the cancer that's destroying countries in South America, destroyed Spain and is causing severe damage in USA.

We have the Kirchenrs, Lula in Brazil, Chavez in Venezuela, Evo morales in Bolivia, all socialists, all authoritarians destroying their countries, making sure the population remains poor so that they have their support. Of course capitalism is the monster they have to make up so as to have someone to join forces against.

Take a look at Spain. A country that went through some golden years, only to be destroyed by that socialist idiot, Zapatero.

What's going on in USA right now with all the redistribution plans and Obama's actions, its text book Peron style socialism. Sometihng I've never thought I'd see in USA. Google it up, you'll find several articles about the paralelisms between Peron, socialism and Obama. Its scary, but they even make entire same sentences in their speeches.

There's a difference between unregulated markets and big brother socialist madness we are seeing these. There should be a government, a strong but small one, setting the minimum nescesary rules so that no corporation abuses its power, but at the same time not being so big that there's no difference anymore between the government and the corporations that pretend to run things.

FerFAL

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Rector
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Interested to know about debts

I am buying your book afterbthis article so forgive me if I'm impatient for the answer but I have been wondering about how debts were resolved under this situation. Did the government redenominate debts with inflation? Did the creditors just forget about it? Were assets seized, foreclosed, or repossessed? Did debts get inflated away? Were you able to pay stuff off, or did the payments wipe people out? I suspect most of us have at least some car or mortgage loans to worry about, so your answer will no doubt be of interest. Thanks again for putting so much time in answering these questions for us.

Rector

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Rector
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Damn ipad

Damn ipad

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Rector
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It's possible for both to be true and neither to be the cause

I agree that America suffers under the ills of corruption and crony capitalism. That's a fact. But it is also true that our fiscal catastrophe is the direct product of excessive socialist entitlement programs and a leviathan federal bureaucracy. We have the worst of both worlds and both are adding to our malaise. Turning the USA into another USSR wouldn't solve the problem and neither would unbridled greed. We are way past left-right talking points now.

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howdy

Great to see you here, Fernando. I have your book and read your blog daily, have reco'd it to numerous folks.

Keep up the good work.

CS

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Rector wrote:I agree that

Rector wrote:
I agree that America suffers under the ills of corruption and crony capitalism. That's a fact. But it is also true that our fiscal catastrophe is the direct product of excessive socialist entitlement programs and a leviathan federal bureaucracy. We have the worst of both worlds and both are adding to our malaise. Turning the USA into another USSR wouldn't solve the problem and neither would unbridled greed. We are way past left-right talking points now.

It seems to me that every nation regardless of its governmental structure pursues endless growth.  To me, that is the root cause issue, not entitlements or beauracuracy.  Entitlements and Beauracuracy are the unintended consequences underlying the expectation that the future can always be bigger than the present and as such, we can affort to pay for the overheads.

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earthwise
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What he said.

Rector wrote:
I am buying your book afterbthis article so forgive me if I'm impatient for the answer but I have been wondering about how debts were resolved under this situation. Did the government redenominate debts with inflation? Did the creditors just forget about it? Were assets seized, foreclosed, or repossessed? Did debts get inflated away? Were you able to pay stuff off, or did the payments wipe people out? I suspect most of us have at least some car or mortgage loans to worry about, so your answer will no doubt be of interest. Thanks again for putting so much time in answering these questions for us. Rector

Most pertainent questions, Rector. It's a subject that is constantly in the back of my mind and one that I've seen posed on this site numerous times.

Anxiously awaiting FerFAL's reply on this one.

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Another Question

FerFAL,

I'm tremendously glad to see your contribution here! Thank you kindly for taking the time to share your experiences with the CM.com community. I've been following your saga for a few years now, and am glad we have such a strong, rational voice that can approach this situation diagnostically and experientially.

Some questions I've been wondering about are regarding Universities and education. 
1. Did they keep operational, and were degrees recognized post-collapse, or was it a situation where most academic/scientific careers were only as useful as what they actually produced?

2. Were students forced out by inflationary expenses?
 
3. How has education (and especially post-educational experiences, like that of M.D.'s) changed in "Post Collapse" Argentina?

Sincerest thanks, and, Cheers!

Aaron

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Mark_BC wrote: Thanks for

Mark_BC wrote:

Thanks for all the thoughts FerFAL and Augustine. But I do have to take issue with one statement, "We're becoming this liberal socialist blur with no sense of decency."

I think that's a bit of an unwarranted political bias. The US is anything but socialist, it is the antithesis of socialism. For an example of socialism look to Sweden. Sweden is on one of the best economic footings as far as any western nation is concerned, which admittedly isn't saying much (and it doesn't even have oil to artificially prop up its currency!)

The US and Canada wouold be better described as being fascist, rather than socialist; in other words, corporate and government powers have merged into one for the purpose of stealing wealth from citizens. In socialism, individuals work to support the collective. Now, under fascism, the collective works to support a few elite individuals.

What we have is an "anything goes" style of crony capitalism where Americans are willingly letting themselves be raped by big banks, big oil, and the big governments that are controlled by those corporations, in the name of some patriotic delusion of free and unregulated markets. America the free! Any regulation is bad! Even if it means the unregulated banks can get away with murder! That's OK because in America we must strive for FREE markets!!!

Unfortunately, unregulated markets do not work.

Wasn't it Plutarch who said, "An imbalance between rich and poor is the oldest and most fatal ailment of all republics."

And Mussolini:

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power."


Thanks FerFal for sharing your experiences of the Argentinian crises, and for expressing your political leanings, it helps us add some perspective.  And thanks to the others from South America for sharing their experiences as well.

Your perception that the economic and social problems of Argentina were caused by "liberal" governments may indeed be the case, but I have to agree with Mark_BC that here in the U.S. the opposite has happened and that our problems grew from 1980 when conservative politicians handed over control of our economy and government to the Oil and FIRE interests.  The transfer of wealth from middle and lower incomes to the richest, the denial of potentially devastating environmental problems, and refusal to transition to sustainable and renewal energy sources, has only compounded our problems.

That being said, the U.S. is not like any of the South American countries.  Our problems are far more political than economical.  We have powerful advantages over most of the countries of the world.  We have a fairly well educated public, we still have fairly strong democratic institutions, we still have the worlds biggest economy, we still have the worlds reserve currency, we have the worlds largest gold reserves, and our system still promotes ingenuity.  Unfortunately, we still have a public which succumbs to the propaganda of the Oligarchs, which claims that by handing our democracy over to them, they will take care of the rest of us.

I don’t see the U.S. going down the same path as Argentina, but I also don’t see us making the decisions that could turn this completely around.  Time is running out, but it’s not over till it’s over.
I do have a question.  Were the stock trading accounts frozen with the bank accounts during the crises?  

In the Soviet Union, capitalism triumphed over Communism; in this country, capitalism over democracy.

fran lebowitz

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Rector wrote:I am buying

Rector wrote:
I am buying your book afterbthis article so forgive me if I'm impatient for the answer but I have been wondering about how debts were resolved under this situation. Did the government redenominate debts with inflation? Did the creditors just forget about it? Were assets seized, foreclosed, or repossessed? Did debts get inflated away? Were you able to pay stuff off, or did the payments wipe people out? I suspect most of us have at least some car or mortgage loans to worry about, so your answer will no doubt be of interest. Thanks again for putting so much time in answering these questions for us. Rector

In some cases, specially with public banks, you'r debt was restructured to a middle ground exchange rate. SO yas, you where better off if you got a loan in dollars and only paid back half the real value of them. In some other cases, other banks and specially private loans they demanded dollars and you had to pay back whatever it was given its current exchange rate.

Yes, lots of people lost thier homes, cars and business. Creditors didn't just forget about debts. Even worse, people actually died becuase the moeny they neede for life saving surgery was frozen in the bank accounts and the judge just took too long to rule in favor of the victim.

FerFAL

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capesurvivor wrote: Great to

capesurvivor wrote:

Great to see you here, Fernando. I have your book and read your blog daily, have reco'd it to numerous folks.

Keep up the good work.

CS

Thanks Capesurvivor, good to see you too!

FerFAL

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we_are_toast wrote:Mark_BC

we_are_toast wrote:

Mark_BC wrote:
I do have a question.  Were the stock trading accounts frozen with the bank accounts during the crises?  

In the Soviet Union, capitalism triumphed over Communism; in this country, capitalism over democracy.

fran lebowitz

Hi, no they werent forzen, they crumbled with the announcements of course, closed for  a day or two but where not frozen like bank accounts.

FerFAL

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Alpha Mike

Alpha Mike wrote:

FerFAL,

I'm tremendously glad to see your contribution here! Thank you kindly for taking the time to share your experiences with the CM.com community. I've been following your saga for a few years now, and am glad we have such a strong, rational voice that can approach this situation diagnostically and experientially.

Some questions I've been wondering about are regarding Universities and education. 
1. Did they keep operational, and were degrees recognized post-collapse, or was it a situation where most academic/scientific careers were only as useful as what they actually produced?

2. Were students forced out by inflationary expenses?
 
3. How has education (and especially post-educational experiences, like that of M.D.'s) changed in "Post Collapse" Argentina?

Sincerest thanks, and, Cheers!

Aaron

Hi Aaron,

1-This went down in December during the holydays. Some universities may have closed for a day or two but not more than that, specially the public one UBA. Academic titles are still good, what you saw most after the collapse is a quick deterioration of the education quality, the infrastructure is also bad, pitiful in some cases. Occasionaly you hear of students blocking a street in protest becuase of lack of funds or because the building they study in is literally falling apart. What we saw after the crisis was a surge of leftisit, pure Marxist movement in the student community. Chairman Mao booklets being given away in the univesrity door. Pretty sad.

2-Some where. In other cases lots of people started going back to the universaity because of the 25% unemployment. No work, so at least you studied in the pulic (free) university. Yes, there's free universities here. They are not as good as they once where but its still free.

3-It has gone down in quality considerably. The Mao-Marxist brainwasihing isn't helping either.These are mostly promoted by "students" political organizations that do everything but actually study.

FerFAL

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Mark_BC wrote:The US is

Mark_BC wrote:
The US is anything but socialist, it is the antithesis of socialism...

The US and Canada would be better described as being fascist, rather than socialist; in other words, corporate and government powers have merged into one for the purpose of stealing wealth from citizens. In socialism, individuals work to support the collective. Now, under fascism, the collective works to support a few elite individuals.

Whenever the state becomes the owner of the means of production, it's socialism.  But this is the classic definition and there are subtle ways of achieving virtually the same while being still able to put on a capitalist face.  I could mention the examples of Amtrak, the USPS, GM, etc.  But the more insidious example is when the state has the monopoly of money.  Thanks to fiat money, the state owns the financial system, when it's irrelevant to own any industry at all.  When Marx wrote about capitalism, there was still a thing as gold money, AKA honest money.  Marx is now in the category of amateurs.

Moreover, textbook socialism is not real-world socialism.  Socialism is a kleptocracy, the replacement of an elite for another with even lower moral standards.  The ruse is that it's all for the common man, but the common man was the one suffering the most.

I have friends who emigrated from behind the Iron Curtain and they tell stories of privilege and corruption, everything for those with ties to the powerful and the law and the police force for those without.  It's nothing but Argentina or Brazil on steroids.

In this sense, if the USSR was 100% real-world Socialism, Argentina or Brazil are 70%, Europe, 60% and the US, 50%.  It's merely a matter of degrees and grays.

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Border with other countries

Fernando,

However, the borders with other SA countries are mostly uncontrolled, opening the possibility of crossing it to Brazil, Uruguay, Paraguay or Chile.  Though most countries wouldn't be significantly better than Argentina normally, in times of crisis they might be viable alternatives.  Why didn't this happen, besides the fact that the population, without money or portable assets - precious metals - was virtually imprisoned in Argentina?

And, of course, Chile is the only functioning country that is not so much of a kleptocracy, where the people get some sort of developed economy and a more liberal - in the classic sense - economy in SA.

TIA

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Rector wrote:I am buying

Rector wrote:
I am buying your book afterbthis article so forgive me if I'm impatient for the answer but I have been wondering about how debts were resolved under this situation. Did the government redenominate debts with inflation? Did the creditors just forget about it? Were assets seized, foreclosed, or repossessed? Did debts get inflated away? Were you able to pay stuff off, or did the payments wipe people out? I suspect most of us have at least some car or mortgage loans to worry about, so your answer will no doubt be of interest. Thanks again for putting so much time in answering these questions for us. Rector

At least in Brazil, many contracts were unilaterally rewritten thanks to the banks being joined at the hip to the government.  After all, as I said in my post, they had a symbiotic relationship: the banks were the only ones who could loan to the state, while keeping face about printing money through fractional banking, and the state was the only one who could reliably pay loans back with positive actual interest - interest rate above the inflation rate - thanks to the same printing presses.

After that, all loans were index by a basket of inflation indexes, so that no monthly payment would be the same as those before.

HTH

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Don't pay attention to labels

we_are_toast wrote:
Your perception that the economic and social problems of Argentina were caused by "liberal" governments may indeed be the case, but I have to agree with Mark_BC that here in the U.S. the opposite has happened and that our problems grew from 1980 when conservative politicians handed over control of our economy and government to the Oil and FIRE interests.  The transfer of wealth from middle and lower incomes to the richest, the denial of potentially devastating environmental problems, and refusal to transition to sustainable and renewal energy sources, has only compounded our problems.

Don't pay attention to the labels that the GOP and the DNC use for themselves or for others.  They're the same statist crowd.  Both support and are supported by a plutocracy. 

The process that you described could be said as done by Clinton, the Bushes and now Obama, they're all sons of the same mother, if you get my drift.

And, this very same process is what took place in Argentina and in Brazil.  Make no mistake, in both these countries the rich were doing very well, thanks to their connections to the governments.  Isn't it the same with Halliburton and GE or the UAW, a transfer of wealth from the people to the conenected?

we_are_toast wrote:
That being said, the U.S. is not like any of the South American countries.  Our problems are far more political than economical.  We have powerful advantages over most of the countries of the world.  We have a fairly well educated public, we still have fairly strong democratic institutions, we still have the worlds biggest economy, we still have the worlds reserve currency, we have the worlds largest gold reserves, and our system still promotes ingenuity.  Unfortunately, we still have a public which succumbs to the propaganda of the Oligarchs, which claims that by handing our democracy over to them, they will take care of the rest of us.

I think that all these traits are in decline in America thanks to the plutocracy that has governed this country for the last few decades.  And this general decline has already led to economic problems that are only now surfacing, while running deep in the fabric of the country.  I don't really think that an economical problem is immune from political problems and vice-versa and one usually leads to the other.

And it's not so much a matter of education.  Argentina used to be best educated country in the Americas before falling to Peron's charms.  Germany was the country with most college degrees in the world when it embraced National-Socialism and about half of the SS officers had PhDs.  So, one thing is literacy, another true education; and both are useless if not guided by solid moral principles that only a family can give and a sound community encourage.

we_are_toast wrote:
I don’t see the U.S. going down the same path as Argentina, but I also don’t see us making the decisions that could turn this completely around.  Time is running out, but it’s not over till it’s over. I do have a question.
Of course that the US won't follow the same path as Argentina, the different histories result in different paths.  However, both paths lead to the same result: the crushing of the common man and widespread squashing of savings while those who ran the country to the ground benefit from the decline and manage to fool a whole population to consent to their remaining in power.
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This time is not different

Fernando,

Unfortunately, it seems that many Americans still fool themselves that America is different, while to us SA and also to emigrants from the Communist block it's quite evident that America is not different.  It is not different because people are the same, even if the historical and geographical conditions are different and they express the same behaviors in different ways, yet leading to the same results.

Seu amigo,

Evandro Menezes

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ScubaBonaire wrote:I think

ScubaBonaire wrote:
I think the middle class in the US is better informed so I see no point in scaring people....I'm sure there will be some sort of unrest but I think people will behave and prevail in the long run...this web site is an example of preparedness of US society. I never saw anything like this in the years previous to the ascent of crazy chavez to power in 1998

More than 50% of the population in the US is recipient of welfare.  Guess which way they'll vote the money from the rest of the population?

All that's needed is a majority of  the people to buy the con by the politicians.  I grew sick and tired of sharing much better ideas for Brazil among my circle of friends just to see each and every promising politician to lose miserably at election time.

To give you an idea, last year, the most voted ever representative for Congress was a popular illiterate singer.  Because literacy is a requirement to serve in an elected office in Brazil, it was found that his application had been filled in by a party bureaucrat.  But that's OK, the electoral justice had him write some 1st-grade sentences to evaluate his literacy and approved his election.  Now, he leads the congressional commission on education.  I kid you not.

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Let me just add some points

Let me just add some points to Fernando's reply to these questions.

On the elderly, SA families are far closer physically and emotionally than in America.  So it's not uncommon for the adult children to help their parents.

On minorities, at least in Brazil, racism was never violent and was quickly replaced by economic discrimination.  And, more recently, the ruling Workers' Party (which was founded by patricians and academics) came up with the stupidity of Affirmative Action in a country where 50% is non-white.

On children, CM nailed it: homeschooling.  Enough said.

HTH

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Thanks Augustine &Fer

Like I said before, economies of scale work in favor of big countries like the US....and since everyone is connected to the web the information multiplies and travels exponentiallly...the simple fact of americans asking us about a plausible future of hyperinflation shows their ability to plan ahead and some kind of foresight...to give you an example, a web like this one or max keisers or alex jones, would be closed in a heartbeat in venezuela and their owners in jail or in exile....however in the US they're still on, so I guess the government is not all that omnipotent and they do fear the masses... Let me tell you about Venezuela...back in the 70s we had a great economy...we were the first country of the northern part of SA, we had a lot of inmigration from Colombia, Italy, Spain, Portugal, even Argentina. We were developing fast just by selling our own oil production to the US...the currency was good...one Bolivar was one quarter....and everbody was having a better life. Heck, I went to college in the States with a government scolarship...But there was no border control, and the middle class was growing, but the shantytowns grew faster and exponentially there was also the cuban element that was spreading communism in the poorer areas with a socilialist government getting more and more corrupt because of the oil revenue...There were no weather limitations, no winter, no scarcity.....and all of the sudden the soviet union dropped the prices of oil and, us who were the founders of OPEC, found ourselves with no price control, devaluation, and pretty bad politicians...and a printing press In just ten years we had massive devaluations with the logical social degradation, and the tipical banana dictator appeared...You all know him by now....I was lucky enough to escape because I married a Spaniard, but I left all my family and friends behind me...I help them now, but it feels like I'm dead...we chat thru Skype and all, but is not the same....My little nephews don't even remember me....I guess thats one bad thing derived from economic hardship....When I travel back, not too often, I see all the decay and radicalization of the left and right dicotomy...I also travel to the States and I see a bit of a difference in the infrastructure, but I don't see the global decay I saw happening in Venezuela in 15 years.....That's why I think that America will prevail...Maybe they need a reality touch, but it wont be final....It seems thye will ahve another chance after all.... In spite of Obama and the Fed....They have too much momentum..We in SA never got the necessary speed to overcome entropy. For instance Brasil is a great country, but half of its population is poor, that's going to be a drawback in the long run..anb btw Agustine, I don't think half of America is in foodstamps now....40 million tops

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Collapse and the environment

FerFal et al - was there a noticeable change to the way industry viewed or dealt with environmentaln controlsn in a collapse?

seems entirely probable that industry will try to get away with as much as it can and if that means ignoring environmental waste control because the epa/whoever isn't functioning then they will. This suggests massive pollution in the energy, agriculture and other sectors. In light of the Fukushima disaster it's not a mental stretch to see it happening in the US/Europe without people being told (ie. A cover-up). One could even argue that this is already happening with dead zones in the gulf coats, bp horizon and the current fracking stories.

The problem with a loss of environmental regulation is that it can have a global impact that lasts generations.

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Environmental Controls

jumblies wrote:

FerFal et al - was there a noticeable change to the way industry viewed or dealt with environmentaln controlsn in a collapse?

Environmental laws are relatively recent in SA.  So, though I cannot say anything about it in Brazil then, I can say that due to the rampant corruption, since the government was the richest institution in the country, laws were greased to bend to whichever direction the corrupter wanted.  Worse yet were the legislations created to favor particular groups, but this is well known in America too under the name "campaign contributions" by lobbyists.  Americans are truly creative at saving face by just calling bad good.

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Welfare

Scuba,

In a way, though Max Keiser and Alex Jones are not shut down yet - I say yet because just recently Hilary Clinton has declared foreign news media like Al Jazera and Russia Today, this where Max Keiser's program is aired, as anti-American - they are either ignored or ridiculed by the lapdog media, thereby weakening their potential to create a critical mass for change among the population.

As I see it, what happened in Venezuela has a great potential of happening in the US, though at a much slower pace.  The reasons for the collapses may be different, but they will unfold in the same way as they did in Venezuela, Brazil or Argentina and yield the same results.  If this has been true to the Romans, the Bizantines, the Turks, the Austro-Hungarians, the English, why wouldn't the American empire follow the same route?  America is not an exception.

More than half of the US population is a net receiver of the government largess, while only a fraction of these receive food stamps, which is a form of government largess but by no means the only form.  If one counts other largesses like unemployment benefits and social security income, my statement holds true, as well as my cynical question to whom these recipients will vote the fruits of the labors of the other half.

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I think the concerns

I think the concerns jumblies expresses are spot on.

Late last year, Chris and I were at a panel moderated by a member of a former Presidential administration who oversaw US Environmental policy. Chris raised the peak oil threat during the panel and it was depressing to see how the other "experts" there worked to avoid/dismiss the topic.

What was more depressing, though, was our conversation with this administration official afterwards. Away from earshot of the others, he admitted that peak oil is a very real and huge threat. And he felt a great personal sadness at his expectation that the environmental controls & policies he has spent his career working to put in place will be thrown out the window as an increasingly desperate US (as well as other countries) looks to fill the coming energy production gap.

As much as I hate to say it, I think mindless damage to our environment during the last stages of our pre-peak energy system is a sure bet.

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Sounds about right

Adam,

Your post is, at once, spot on and depressing.  You confirm my own expectations but further discourage me in my hopes that we are wrong.  It is even more depressing that high governmental officials know these things but can't muster the political will to confront real problems.  The whole subject affirms my impression that we are led by idiots and cowards.  And, I am increasingly in good company in those beliefs.

Look away, look away, enjoy the bread and circuses.

Doug

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