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Daily Digest - Jan 9

Thursday, January 8, 2009, 6:59 PM
  • Obama taps spending watchdog, eyes Social Security
  • Obama calls for a whole new approach to end crisis
  • Obama warns of dire consequences without stimulus
  • The end of the financial world as we know it (hat tip Luke)
  • Obama assembles powerful west wing (Where is Chris Martenson?)
  • TARP wiped out by downgrades
  • Huge mortgage rally...
  • Same stores sales... down, but not out
  • MBA says commercial real estate market coming under pressure
  • Commercial property loses shelter
  • Flight to safety in 09, USD, gold, Euro, Yen
  • Paulson speaks (video)
  • Joseph Stiglitz and Martin Feldstein discuss stimulus (Charlie Rose video)

Economy

Obama taps spending watchdog, eyes Social Securit

WASHINGTON (AP) - Pointing with concern to "red ink as far as the eye can see," President-elect Barack Obama pledged Wednesday to tackle out-of-control Social Security and Medicare spending and named a special watchdog to clamp down on other federal programs - even as he campaigned anew to spend the largest pile of taxpayer money in history to revive the sinking economy.

The steepness of the fiscal mountain he'll face beginning Jan. 20 was underscored by stunning new figures: an estimate that the federal budget deficit will reach $1.2 trillion this year, by far the biggest ever, even without the new stimulus spending.

The incoming president has walked this same tightrope each day this week - advocating fiscal discipline and taxpayer largesse together at nearly every turn, though in every case with little detail to back it up. With less than two weeks to go before taking the helm at the White House, he'll make the same pitch on Thursday, delivering a speech laying out why he wants Congress to quickly pass his still-evolving economic plan.

 

Obama Calls for a Whole New Approach to End Crisis

President-elect Barack Obama said the ongoing crisis didn't happen by accident or through a normal turn in the business cycle, but rather it was the outcome from an "era of profound irresponsibility." He said bold action must be taken to prevent a bad situation from becoming dramatically worse.

"It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe," Obama said at George Mason University on Thursday.

"Only government can break the vicious cycles that are crippling our economy - where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit," he said.

Obama's recovery plan includes a $1,000 tax cut for the middle-class, as promised during the campaign, as well as infrastructure investments in energy, education and health care.

 

Obama warns of dire consequences without stimulus

FAIRFAX, Va. (AP) - President-elect Barack Obama warned of dire and long-lasting consequences if Congress doesn't pump unprecedented dollars into the national economy, making an urgent pitch Thursday for his mammoth spending proposal in his first speech since the election.
"In short, a bad situation could become dramatically worse" if Washington doesn't go far enough to address the spreading crisis, the Democrat said as fresh economic reports showed an outlook growing increasingly grim.

Since his November election, Obama has deferred to President George W. Bush on foreign policy matters such as the Middle East. But, with the worsening of the economic situation, Obama has waded deeply into domestic issues as he works to generate support for his plan to create jobs and jolt the economy into recovery.

In the speech at George Mason University outside Washington, Obama asked Congress to work with him "day and night, on weekends if necessary" to pass a revival plan within the next few weeks so that it can be ready for his signature shortly after he takes office on Jan. 20.

As Obama spoke, his economic advisers were on Capitol Hill to brief Democratic lawmakers on details of his economic plan. Senate Finance Committee members met privately to assess his proposals. The Senate Democratic caucus planned a late afternoon meeting, followed by a news conference by Majority Leader Harry Reid and other caucus leaders.

 

The End of the Financial World as We Know It (hat tip Luke)

AMERICANS enter the New Year in a strange new role: financial lunatics. We've been viewed by the wider world with mistrust and suspicion on other matters, but on the subject of money even our harshest critics have been inclined to believe that we knew what we were doing. They watched our investment bankers and emulated them: for a long time now half the planet's college graduates seemed to want nothing more out of life than a job on Wall Street.

This is one reason the collapse of our financial system has inspired not merely a national but a global crisis of confidence. Good God, the world seems to be saying, if they don't know what they are doing with money, who does?

Incredibly, intelligent people the world over remain willing to lend us money and even listen to our advice; they appear not to have realized the full extent of our madness. We have at least a brief chance to cure ourselves. But first we need to ask: of what?

To that end consider the strange story of Harry Markopolos. Mr. Markopolos is the former investment officer with Rampart Investment Management in Boston who, for nine years, tried to explain to the Securities and Exchange Commission that Bernard L. Madoff couldn't be anything other than a fraud. Mr. Madoff's investment performance, given his stated strategy, was not merely improbable but mathematically impossible. And so, Mr. Markopolos reasoned, Bernard Madoff must be doing something other than what he said he was doing.

 

Obama Assembles Powerful West Wing (Where is Chris Martenson?)

President-elect Barack Obama is assembling a new and influential cadre of counselors just steps from the Oval Office whose power to direct domestic policy will rival, if not exceed, the authority of his Cabinet.

Presidents have long strived to centralize influence in the White House, often to the frustration of their Cabinet secretaries. But not since Richard M. Nixon tried to abolish the majority of his Cabinet has a president gone so far in attempting to build a West Wing-based clutch of advisers with a mandate to cut through -- or leapfrog -- the traditional bureaucracy.

Obama's emerging "super-Cabinet" is intended to ensure that his domestic priorities -- health reform, the environment and urban affairs -- don't get mired in agency red tape or brushed aside by the ongoing economic meltdown and international crises. Half a dozen new White House positions have been filled by well-known leaders with experience navigating Washington turf wars.

But some see the potential for chaos within the administration.

"We're going to have so many czars," said Thomas J. Donohue, president of the U.S. Chamber of Commerce. "It's going to be a lot of fun, seeing the czars and the regulators and the czars and the Cabinet secretaries debate."

Carol M. Browner, who ran the Environmental Protection Agency in the Clinton administration, is taking on a broad new portfolio with responsibility for Obama's ambitious agenda on the environment, energy and climate change.

Bronx politician Adolfo Carrion Jr. is expected to serve in another new White House post, implementing Obama's education and housing agenda for cities.

Former senator Thomas A. Daschle will become the first Cabinet secretary in decades to have an office in the West Wing and a separate, newly created White House title: director of the Office of Health Reform.

 

TARP wiped out by downgrades

Meredith Whitney via ft. nothing new, but improved quantification.

Whitney further notes that deleveraging is still in its early stages and has much further to run, meaning that we will be living with bank selling for some time. take jpmorgan's estimate of what must be done with merrill's estimate of what's been done, and there are still years of asset deflation before us.

This underscores the need for banks to be reorganized via nationalization and cleansed of assets -- including syndicated receivables of credit cards, auto loans, commerical real estate and more beyond just residential real estate and leveraged loans -- that thusfar have not been written down to anything like realistic levels. without such a process, the banks are a capital sink of heroic proportion that could well bankrupt domiciling governments who decide they won't be allowed to fail but cannot bring themselves to nationalize.

Huge Mortgage Rally... Thanks Government!

The Federal Reserve on Monday kick-started its latest unconventional programme to boost the US economy, this time targeting mortgage-backed securities to help the slumping housing market, reports Reuters. The Fed plans to buy back as much as a ninth of outstanding, mortgage-backed bonds sold by mortgage giants Fannie Mae, Freddie Mac, and Ginnie Mae. The aim is to encourage buyers to return to the housing market or cut payments on existing home loans. The New York Fed began buying MBS guaranteed by Fannie, Freddie and Ginnie on Monday, part of a programme of as much as $500bn.

 

Same Stores Sales... Down, but Not Out

Despite a startling miss by Wal-Mart Stores Inc. (WMT), overall December same-store sales are tracking ahead of analysts' projections. Virtually all retailers have posted sales drops from a year ago, but for almost two-thirds of them the decline wasn't as much as expected, according to data tracker Retail Metrics.

 

MBA Says Commercial Real Estate Market Coming Under Pressure

The U.S. economic slowdown and credit crunch are beginning to affect the commercial real estate market in the United States, according to a report from the Mortgage Bankers Association on Thursday.

"Despite relatively modest new construction activity, the slowdown in job growth, retail sales and other aspects of the economy has led to lower demand for commercial space and to declines in net absorption of space," read the MBA's Commercial Real Estate/Multifamily Finance Quarterly Data Book. "As a result, supply is outpacing demand."

As a consequence, commercial/multifamily mortgage debt outstanding declined 0.1% compared to the previous quarter as government-sponsored enterprises and Ginnie Mae broadened their holdings of multifamily mortgages by $14 billion.

Mortgage debt outstanding declined 0.1% in Q3

 

Commercial Property Loses Shelter

Delinquencies on mortgages for hotels, shopping malls and office buildings were sharply higher in the fourth quarter ... New data from Deutsche Bank show that delinquencies on commercial mortgages packaged and sold as bonds, which represent nearly a third of the commercial real-estate debt market, nearly doubled during the past three months, to about 1.2%. ...

The delinquency rate will likely hit 3% by the end of 2009, its highest point in more than a decade, says Richard Parkus Deutsche Bank's head of research on such bonds, known as commercial-mortgage-backed securities, or CMBS.

 

Flight to safety in 09, USD, Gold, Euro, Yen

The USD remains stronger than one might think into the beginning of 2009. Between the latest Mid East tensions and general flight to safety it rallied again to 83 on the USDX when it looked like it might crack into the 70's again, the low being 70ish last year, before the USD rallied after April of 08, which caught the commodity and metals complex.

It's hard to say the USD rally last year alone caused the commodity and metals bubble to break, or did the pending world economic slowdown, which caused the speculators to bail out - and/or did the pending economic slowdown then force financial deleveraging on all fronts which flooded money back into the USD as people liquidated?

But, in any case, it's now obvious that there was flight to cash in the second half of 08, and the USD being the major currency still, it ends up being the main settlement currency when there is market deleveraging. So, the USD rallied strongly in the second half of 08 against practically all currencies, except perhaps the Yen which rallied on its own due in large part to carry trade unwinding during all the deleveraging in the second half of 08 too.

Gold spot holds up pretty well though

But, compared to general commodities which took up to an 80 pct bath, or general stocks which took a 40 plus pct bath before recovering a bit recently, gold spot prices held up comparatively well. (I know gold stocks got hit too, but that is a separate issue related to the gold spot price since gold stocks are much more volatile).

So, a very big question is where is the USD going and gold spot price going in 09?

 

Joseph Stiglitz and Martin Feldstein Discuss Stimulus (Charlie Rose Video)

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33 Comments

Davos's picture
Davos
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Re: Daily Digest - Jan 9

Purchasing Power of the US Dollar Since 1774

The.Techno.Luddite's picture
The.Techno.Luddite
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Re: Daily Digest - Jan 9

Davos, what do you think of this?

-------------------------------------------------------------------

Bailout Cost Exceeds All American Wars

 

"“The total value of the bailouts undertaken by the federal government in 2008 now exceeds the combined cost of every major war the United States has ever engaged in,
according to a comparison of war costs calculated by the Congressional
Research Service (CRS) and the value of the bailouts as calculated by
Bloomberg News or Bianco Research.

According to CRS, all major
U.S. wars (including such events as the American Revolution, the War of
1812, the Civil War, the Spanish American War, World War I, World War
II, Korea, Vietnam, Iraq and Afghanistan, but not the invasion of
Panama or the Kosovo War), cost a total of $7.2 trillion in
inflation-adjusted 2008 dollars.  

According to Bloomberg, the federal government has made commitments worth a total of $8.5 trillion in the bailouts of 2008. That includes actual expenditures as well as loan and asset guarantees."

------------------------------------------------------------------- 

The rest is at:

http://www.aim.org/on-target-blog/bailout-cost-exceeds-all-american-wars/

I'm not well versed enough in the underlying numbers and methodology
used to know if I should be as terrified by this article as it seems!  Especially since things are still spiraling rapidly out of control, even after all this "bailout"  money!

djhester1940's picture
djhester1940
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Re: Daily Digest - Jan 9

This comment caught my eye:

"Virtually all retailers have posted sales drops from a year ago, but for almost two-thirds of them the decline wasn't as much as expected, according to data tracker Retail Metrics." 

Every time I turn around there is some headline that indicates something or other exceeds expectations or fails to meet expectations.

My question is: Just who sets all these expectations?

Since I rarely see anything that meets expectations. I just wonder why we put so much emphasis on these expectations.

Don

gregroberts's picture
gregroberts
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Re: Daily Digest - Jan 9

Davos, this article might be of some help to you in finding news,

http://www.counterpunch.org/roberts01082009.html

Thank you for the great work you are doing on the Daily Digest.

Greg

DavidLachman's picture
DavidLachman
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Re: Daily Digest - Jan 9

They forgot the Cold War--which I bet has been our most expensive war. We are still paying for it--we have unpaid debt and interest from the Reagan military buildup. Also there is the clean up of the environment from some sites (like Hanford WA) will eventually cost more than I can imagine, if it is ever done. The War on Terror shouldn't be forgotten, although the fronts in Iraq and Afganistan were mentioned, there are real costs in other places and secret costs we don't know about yet (some budget is paying for all those "black" sites).....

Quellek's picture
Quellek
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Re: Daily Digest - Jan 9

First, I'd like to thank Davos for these daily digests. I've come to rely on them as effective summaries of the "real" news, though I can't say that these wonderful synopses are trending in a happy direction.

To that point, I am growing increasingly discouraged by Obama's moves. His appointment of a gaggle of Clinton retreads, beginning with the execrable Hillary herself, served as a body blow to all who'd naively bought into the promise of "change." Now, we read that Obama is faulting so-called entitlement programs such as Medicare and Social Security for the ballooning budget deficits risiing ad nauseum into the foreseeable future. While tragedy unfolds in Gaza, Obama hides behind his declaration that, "there is only one president at a time." Yet, he seems to feel no hesitation about stepping on Governor Bush's toes when it comes to statements regarding the prospects for an American economic recovery. Of course, he's not really encroaching on any sacred Bush policies when he criticizes Social Security, is he? He's even talking about expanding the size of our military and broadening our commitment in the failed attempt to democratize Afghanistan! Why in Obama's assessment of the many ills plaguing our economy is no mention being made of the bloated and obscenely expensive military footing this nation has been on for far too long? Fully aware that I'm committing a gross over-simplification, I'd suggest that if our empire doesn't take a look at the smoldering ruins of every empire that came before, we are doomed to share the same fate.

As has been observed by others on this site since Obama began outlining his proposed stimulus, it boils down (so far) to little more than handing "spendin' money" to consumers (not citizens?) and re-inflating the real estate bubble. I can't be as optimistic about the future as Chris and I fear that his faith in our fellow citizens is too generously granted. On an individual basis, people are essentially good and at least level-headed. It's the mob that you've got to watch out for and politicians play to the mob. This could be a defining moment in our country's history when we all stood up as adults, looked to one another for support, and decided to comprehensively change the course and character of our nation. I truly wish I could see that happening, but I remain doubtful.

RSLCOUNSEL's picture
RSLCOUNSEL
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Re: Daily Digest - Jan 9

Quellek:

Your observations confirm learnings from the Crash Course that indicate that maintaining the "status quo" is very much the prime directive.  The easiest way to do that is to recycle the leadership because it saves a lot of time and everyone is already trained in the game.

The solution to unraveling the credit crisis is quite simple but completely unacceptable to the ruling elite (of all parties).   Money gets printed for the "bailout" and pushed into the backdoor of financial institutions to "re-capitalize" the banks-- friends of the ruling elite.  Money will get printed for "infratructure" and watch where  that money goes - friends of the ruling elite.

If we are insolvent, sooner or later it must all unravel.  So, let's return to the Crash Course and understand that all money loaned into existence.  Further, money is multiplied by fractional reserve banking methods. That is A lends to B who leds to C who lends to D.    So you forgive the debt of D which forces C to restructure but, in turn, their debt is forgiven forcing them to restructure the balance sheets of B but, in turn their debt is foregiven and so on.

It is not Game Over.... it is game Start Over.  Reset the clock to zero.

The problem is that A, the orginal lender, really doesn't like this outcome. It's now a reverse Ponzi.  And, god forbid, D may actually be an individual citizen and common people unburdened from their debt may behave like free people.  And we wouldn't want that, afterall it took a long time to get them under the debt yoke.

Another solution is to sell assets to pay for the debt.  I suggest we sell Alaska obviously we are not going to use it for anything.

 

 

 

 

yoshhash's picture
yoshhash
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Re: Daily Digest - Jan 9

Davos-
Already a day old, but have you seen this? Nice comic relief from our resident clown Dick Cheney-
http://www.foxnews.com/politics/2009/01/08/cheney-says-saw-economic-cris...

Sandman3369's picture
Sandman3369
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Re: Daily Digest - Jan 9

Hey!  I don't live there anymore, but I was born and raised in Alaska, and I think we'd all be more predisposed to go our own way than be sold!  Wait, Palin in charge?  Talk like that could fan the flames of secession.  Oooo...  didn't I see that Russian ex KGB professor talking about the US breaking up.  Besides, I think Canada would buy Montana and North Dakota... I think we're all swimmin' together unless we sink

Mike Pilat's picture
Mike Pilat
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Re: Daily Digest - Jan 9

Quellek: You might be right in your observations, but I'm not going to be the one who fiddled while the republic burned. I certainly don't plan on sacrificing my own safety or security in the process, but to the extent that I am able, I will certainly do everything I can to make the issues that appear on this site appear in the minds of my friends, relatives, and contacts. There is no excuse for ignorance on a topic that affects all of our lives. And the truth really is the only way people can be set free from the lies and oppresions of the politicians and local crime bosses. Until the people are better educated, they will forever be subjected to the detriments of groupthink and all the evil that goes with it.

If Obama doesn't play this really well, he could get a lot more trouble than he bargained for. If things fall apart too rapidly and the hope and change he campaigned on don't materialize for Joe Sixpack, then I think people are going to start thinking as individuals once again. Let's just hope they understand that it pretty much was not the other Joe Sixpacks that caused the crisis. It was the corruption of the elitists and politicians that slowly took advantage and control over the many honest and hardworking Americans.

We face some serious problems, but I refuse to shrug my shoulders. There's fight in this dog.

Mike

Sandman3369's picture
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Re: Daily Digest - Jan 9

On a more sober note...  I think the boomers are in a little bit of denial (maybe a lot).  They definitely don't want things to be like it was for their parents and won't believe they let this happen.  My mom says I'm no fun to talk to anymore.... I've been warning friends and family for years, what changed?  Reality is sinking in folks.  This is when it gets fun. 

The.Techno.Luddite's picture
The.Techno.Luddite
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Re: Daily Digest - Jan 9

Yeah Sandman, I'm finding much the same feeling going on lately. I've been mentioning where the patterns look like they are headed for a few years now, to family, friends and associates.  And we changed our lifestyle a couple of years out based on what looked probable (got out of debt, simplified, moved to the family farm, etc).  People were often interested, though of course a bit in denial (usually just thinking we were obsessive and silly), but they were often at least curious to hear about the replay of some historical patterns we were talking and thinking about a lot.

Now, I'm getting more careful and subtle about the whole subject with most folks. Because it makes them angry!  They are still in denial mostly, but its angry denial.  And now, I'm understanding where that whole "shoot the messenger" idea comes from!

We have to be careful. In our situation, the external world could disappear and we'd be ok on our farm.  However, its violence which most frightens us as a possibility.  Hungry, scared, angry, well armed people are historically not very fun to be around!

Sandman3369's picture
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Re: Daily Digest - Jan 9

I heard gun sales went up after Obama was elected, but if buy one (and I've been thinkin') it won't be because of Obama.  Desperate people will do anything.  If we share, maybe they won't have too.

Mike Pilat's picture
Mike Pilat
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Re: Daily Digest - Jan 9

Techno Luddite: I praise your actions which exceed those of many (and so far myself).

I would point out one thing: While you are much safer and secure on a farm (and I will very soon be looking towards that future myself) I would point out that hungry people will squarely target you. During the Weimar Republic, it's widely reported that eventually, people took to the farms to plunder the tools and capital that they had. Eventually, farm plundering became a virtual necessity for some just to stay fed. Still, I think it's about the best you can do short of perhaps finding a safer country to live in. But that has its own complexities

I often try to wrap my mind around what the inevitable violence will look like once it hits and what pattern it is likely to follow. There is no truly safe haven but clearly rural areas are better than cities. Many have said that the sustainable revitalization of America should take place based on the 2nd Amendment, in which local militias are once again reborn and are used to protect the local community. It's an interesting point, and I think it makes lot of sense. The Feds and even the police from the big cities or states will be worthless. Rather, they are likely to be part of the problem.

I recently did a job rotation in New Orleans and man that city is still hurting big time from Katrina. Nearly all of my coworkers lost their homes and everything in them. As I spoke with them I heard countless personal stories, but one in particular stands out now:

One guy's next door neighbor owned a small jewelry shop in Chalmette (one of the lower areas of the city). She returned to the city soon after the storm to find complete disarray. When she returned to her shop, she found 3 armed police officers in uniform looting the shop and stuffing the jewelry into bags. She walked away, later justifying her inaction with: "Well they had the guns."

If this is anything like the future we face in highly populated areas, then we are in for a roller coaster. My circumstances prevent me from moving immediately, but I am implementing "Plan B" ASAP.

Mike

 

Mike Pilat's picture
Mike Pilat
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Re: Daily Digest - Jan 9

Sandman: Gun sales have exploded since the election. Obama has made it clear that he is no friend of the 2nd Amendment, but he obviously doesn't wish to provoke anything either.

"The beauty of the second Amendment is that it will not be needed until they try to take it." --- Thomas Jefferson .

As I personally look at the landscape now and it is more clearly than ever revealed to me where I have been a little excessive in spending money in the past, I acknowledge that a firearm is a very worthwhile investment for a number of reasons. I would NOT place self defense at the top. Here's what I would say:

1. It is a hard asset that will hold some value. Inherently useful, a gun will hold some value no matter what.

2. Learning to shoot well is an invaluable skill that can only enhance your life in the future. Having gun skills might make you just a little more valuable to your community in the future.

3. Hunting is always an option if need or want be.

4. In an absolute worst case scenario, there is the self defense purpose. This must be clarified. People must realize that avoiding conflict is far smarter than buying a gun to "defend against it." Likewise, you must be armed when the threat presents itself. This is a big 'if.' Finally, there are moral, legal, and psychological implications involved anytime a gun is used on another human. In my mind, all of these factors somewhat reduce a gun's usefulness for real world self defense.

Just my thoughts.

Mike

Davos's picture
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Re: Daily Digest - Jan 9

Hello Quellek: Anytime, just takes a few minutes and it is a pleasure to contibute to this community, I learn more reading the comments then a lot of the news I spend 3 hours a day reading. Take care

The.Techno.Luddite's picture
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Re: Daily Digest - Jan 9

Yep, I share many of your same thoughts and concerns.

I come from a mostly western background, where the attitude is very much "me against the world". In the high Rockies, Sierra, Cascades, plains and deserts . . . the cowboy attitude rules. People have their weapons, water tank and MRI's and they figure they are set.  But of course, the MRE's will run out, the game animals quickly all felled, along with the water tank, and somebody always has a bigger gun if the desperation gets high enough.  Strategically the only long term survival solution is have a sustainable/renewable food/water source (i.e. gardern/farm) and a community around you to protect and support you and each other. If its just you against the world, the world will win.

I've given much thought and planning to how to keep my kids, and family safe If things descend to the full bore violence/desparation level here.  I don't want to raise my children in an armed encampment. The kinds of defenses we would really need to be safe, would require our farm become a much darker place.  So instead, if things look like they are getting to that level, my idea is reaching out to some local hunter & soldier folks and their familys whom I know and trust in the area, and saying "we will trade you food and shelter if  you will live up on that Northwest hilliside and guard that part of the farm?"   With multiple people/families in multiple locations. If industrial agriculture/supply breaks down, we can keep a lot of people fed, and so we can all work together to make it happen.

"Every problem has a gift in its hands", my real hope is that if a radical shift like this happens, we will ALL rediscover family, community, local business and etc.    Good systems can only evolve via bad systems failing.  So this all isn't dark and gloomy to me! But extreme sports wouldn't be quite as exciting if there wasn't some danger. And for my family and myself I can't help but feel the tingle of risks as these big structural changes play out!  So, its scary.  But all we can each do is try to steer as hard as we can in the right direction.

 

Mike Pilat's picture
Mike Pilat
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Re: Daily Digest - Jan 9

Techno Luddite: Great post.

An interesting thought to toss around is if everyone had the sense of independence you have ("myself vs. the world") they wouldn't "need" to steal or be bailed out. If everyone took personal responsibility many problems would work themselves out. I see most of the problems coming from those who (at least initially) do not hold this viewpoint. The people who will be most disillusioned are the ones that trust the government and trust the system. Since they are not protecting themselves now, they might later find themselves thinking it's a "me vs. them" scenario. All violent conflict is destructive on many levels. I am hopeful, though not optimistic that this will be the case.

It's interesting to hear your strategy, which amounts to using a local militia. Many others have stated that revitalizing this concept at a very local level will actually be key for the many changes we are going to see coming. The benefits extend far beyond simple "protection" but also instill a sense of trust and interdependence in a community. Obviously, these are very important. Of course the Federal Government is likely to try to get involved for "our protection" and screw the whole process up. Local communities are not very lucrative for a power hunger group of Goverbankers and Centralized Politicians.

Mike

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castlewp
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Re: Daily Digest - Jan 9

Mike,

Didn't know if you read Mike Rupperts new blog post yet.  Great breakdown 

http://www.mikeruppert.blogspot.com/

Bill

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Mike Pilat
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Re: Daily Digest - Jan 9

Just checked it out, thanks for the tip!

"Great Breakdown" --- coincidence you chose the 'B' word??

It's hard to gauge exactly what Obama's plan is. And I'm sure the implosion of global industrial society is a scary thought for all political leaders. It's classic game theory here. Obama doesn't want to set our expectations too high, but at the same time, he doesn't want to ensure that a crash will happen any faster than the rest of the world because our citizens are demoralized.

As much as globalization bothers me, I acknowledge that right now, we'd be in big trouble without trade. Think oil. Even China, which has an export based economy, depends on oil imports.

Still, I can't quite seem to understand why a massive stilmulus is the order of the day for Obama if indeed he is trying to prepare us for collapse. And it's been very hard for me to understand what really runs through the politicians' minds given the disparity between many of their actions and certainly their words. 

I'd hate to be a politician now, but I've lived my life on the premise that (eventually) people respect and even thank you for speaking the truth, even when it's not pleasant. The praise you might receive later is proportional to the temptation the situation puts you in to lie or obfuscate. I hope Obama learns this pretty soon. 

As I see it, one of the primary things that might prevent massive crashes in the DOW would be China and others dumping dollars. At that point, there is really nothing left except for hyperinflation.

Mike

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Re: Daily Digest - Jan 9

Mike, I like the way your brain works!   I look back this morning at my late night post and realize I wasn't as coherent as I'd like on a couple of points.

I definitely agree that 99% of the population really hasn't been taught to think outside the work-paycheck-buy everything needed to survive so you can go back to work cycle.  I've always believed in the 'renaissance' man model.

A human being should be able to change a diaper, plan an invasion,
butcher a hog, conn a ship, design a building, write a sonnet, balance
accounts, build a wall, set a bone, comfort the dying, take orders,
give orders, cooperate, act alone, solve equations, analyze a new
problem, pitch manure, program a computer, cook a tasty meal, fight
efficiently, die gallantly. Specialization is for insects.

-Robert A. Heinlein

If more people were independantly minded, even a "me against the world" attitude is probably more sustainable than "the world must help me".   But even better is more of a "US working with the world".  Specialization is for insects, but different individuals, families, and communities will always have access to different resources, skill sets and etc.  So long term, being a member of a diverse community is the only really strategically safe bet for an individual or family to survive and thrive.

I don't want to have a local militia, I don't want my kids being raised around people feeling the need to be armed at all. And I desperately hope things don't get to that point in America.  However, history shows its a common pattern.  And, we have a resource: sustainable food & animal power, which we can use to help support a community around us.

-- - - -- - - -- - - -- - - -- - - -- - - -- - - -- - - -- - - -- - - -- - - -- - -

As a side note:  The underlying depressing reality of this all:  the Club of Rome pointed out in the "Limits of Growth" some 30+ years ago that we (humanity) would get to this point.  Ultimately economic collapse, war, environmental change, energy depletion, famine, waves of disease  . . . . all such things are generally symptoms of the underlying problem.  6+ billion humans is too many.  The long term carrying capacity for humans on earth, at minimum calorie requirements, is probably more around 4 billion or less.  So, at some point BIG changes will happen.

Here is a good blog, where the author's last entry was about the issue of economic collapse as a symptom of population. The second to the last response is mine (where I was trying to cheer the author up with a more philisophical big picture perspective!)

http://runaway-human-population.blogspot.com/2008/12/ultimate-sadness.html

Cheers,
~Todd

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Re: Daily Digest - Jan 9

Love that Heinlein quote, and I would also like to live in a world were militias and firearms were not necessary, but we don't live in that world so they are necessary.

Greg

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Re: Daily Digest - Jan 9

Todd: Good points. Being a Renaissance Man is the new wave of the future. People should know how to take care of themselves. Only then will they have the true capacity to help others in need.

I'm not particularly thrilled about a local militia, but I would welcome it with open arms over an armed IRS, National Military patrolling local streets in violation of Posse Comitatus, armed CIA, FDA, DEA, FBI...alphabet soup agents representing Federal level enforcement.

As a side note, our military's salaries are now GREATLY inflated and they are now accepting non US citizens to fight in Iraq (3,000 or so if I remember correctly). The problem with this is that it separates local citizens from the interests of their community. The government is trying to avoid a draft at all costs because of the blowback at home that would cause. But when soldiers' salaries increase to double or triple normal and are completely tax free, then I worry that we have a mercenary military that has lost its connection with service and true protection of the communities and states of America. Likewise, putting non citizens or potentially illegal immigrants in the armed services creates a bit of a conflict of interest if (when??) these soldiers are deployed on American streets. 

It's easy for me to trust the corner police officer who everyone knows by first name. It's not possible for me to blindly trust an armed, illegal immigrant, being paid a highly inflated salary and brainwashed and threatened by Uncle Sam. This is why the local militia is (unfortunately) absolutely necessary.

And I don't mean a condemnation of the many soldiers that are truly aware of what's going on. But I see the beginnings of a subset of our military forming, akin to the Gestapo or SS. Appeasement didn't work in WWII. Let us learn from history to stand our ground.

-----

Here's my thoughts on population.

There are too many people now to enable us to continue with this standard of living. The population trend that we see is that it might overwhelm the carrying capacity of the earth in all respects. But as it stands now, I would submit that at least in theory, we could support this many people if we radically changed our lifestyles. There is no way the earth can support all this oil, all these cars, etc. But if everyone had a subsistence farm in a small community, I think we could probably find a way. It might not be pleasant, but the world's population could survive. It would eventually contract as people found this lifestyle difficult, but I don't think it's impossible under all circumstances for this many people to live on the earth at least in the medium term.

Just my 2 cents. Thanks.

Mike

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Re: Daily Digest - Jan 9

Greg: I agree with you.

History and a study of human nature shows us that (unfortunately) if we all lived in a society where no one posed a threat, real or implied, to anyone else, eventually someone would create a weapon to take advantage of the trust of others.

The more I've become interested in gun rights and local militias, the more that the thought of all of that becoming absolutely necessary (for survival??) scares the living daylights out of me. But I'm not the type of person to allow myself to be unjustly taken advantage of and I would certainly hope to live in a community where trust is verified by action rather than exchanged for words. Frankly, I would not want anyone to treat me differently. People should respect and/or trust me based on my actions and not on faith alone.

It's a little hard to remain positive on this sort of subject because the lessons of history are so overwhelming. Here is a good defense of the second Amendment that outlines many of the prudent reasons to have a firearm and/or local militia: Gun Control

Mike

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Re: Daily Digest - Jan 9

A passing thought: its also good to remember that when one is on your own turf, in a complex (lots of hiding spots) environment. WIth lots of tools and allies. Using awareness, creativity, stealth, and planning.  Guns are not the only possible weapon.  They are a powerful weapon, but humans have been killing each other, and other species, for a LOT longer than guns have existed.   But guns are a valuable tool to have access to. But to me its also a symptom of how non self-reliant and techno-fix oriented we humans have become that we consider the ONLY real tool of self defense now a gun!

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Re: Daily Digest - Jan 9

Techno Luddite,

Your last post is spot on.
To paraphrase what you've already said, the first, last and most important weapon you possess cannot be taken from you. It can dull, but never rusts, and it rests solidly between your ears.

Owning guns opens a world of capability that's been discussed already.
But ownership is only a threshold to pass through - the most important aspects come through hard work and training.

If you do choose to be one of the prepared and committed souls who would have your people rely on your ability to defend them, concern yourself not with owning a gun, but with training with it, having sufficient supplies of ammunition and spare parts, and educate those around you.

 

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Re: Daily Digest - Jan 9

Luddite: You raise a great point again. Also see reply #15 above for more of my thoughts.

I think the best asset anyone can have is a nontangible: their mind(set). Basically creative, intelligent, and determined people will always find a way. If I believe guns would solve the world's problems, I'd be practicing shooting right now. But instead, I'm on this site, because I believe the insights I gain here are more valuable than the insights I gain at the shooting range.

Another point though: Human beings, as animals, are not particularly strong or resiliant. It is our minds and brains that have enabled us to conquer the earth (for better or for worse). Where our physical abilities were limited, we used our brains to apply science and design tools to assist us.

My point is that if we were to only rely on our brains and bodies, I suspect things would be pretty awful. So at some point, I think it's important to acknowledge that humans are fairly dependent on the tools they have created to make life easier. Obviously, the fewer tools we are dependent on, the better. But at some point, we become worse off when we have very few tools and have been essentially reduced to an animalistic level of competition with nature.

Some philosophy I suppose. Hopefully that made sense.

Mike

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Re: Daily Digest - Jan 9

Mike, you said:

Quote:

Another point though: Human beings, as animals, are not particularly strong or resiliant. It is our minds and brains that have enabled us to conquer the earth (for better or for worse). Where our physical abilities were limited, we used our brains to apply science and design tools to assist us.

To which I must digress. Look at life in China in the early 1900's. Look at life in Africa. Look at the wounds people sustain every day in Emergency Rooms around the world.

Survival is 90% mental. Our weakened, effeminate society resorts quickly to giving up whereas other cultures would see the conditions as an improvement.

Sierra Leone, Libera, Somalia, most of the middle East and culturals around the global live in conditions that we will never know barring a "Lucifer's Hammer" situation.

Humans are resilient beyond words.
We use science and technology for convenience, which has the predictable effect of weakening our will and ability to surive.

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Re: Daily Digest - Jan 9

Aaron: I agree 100%

Anyone that thinks the gun is going to protect them is as naive as those that believe the government will.

A gun is a tool, just like many others. But all tools require maintenance, training, and an understanding of how to use and apply their capabilities.

In an economic sense, it is scarcity that creates value. Guns are hardly scare and their price tag is not high enough to prohibit ownership for most people. What is at least somewhat scarce is the ability to use one effectively. If all hell broke loose, I would want to make sure that the most skilled local militia members had weapons to use, even if they did not initially own them. It only makes sense, so long as I trust the militia with weapons. A good shooter with a bad gun is armed more effectively than a bad shooter with a good gun.

But most scarce of all, I posit, will be the independent thinkers that have developed a strategy over time to deal with this crisis and have anticipated potential problems in advance. The non-status quo thinkers, if you will. I think it is most important to have taken concrete (scarce!) actions in advance to prepare for what might come. There isn't much value in simply owning things you don't know how to use. Likewise, there isn't much value in owning tons of FRNs if you don't know how to protect your wealth.

Interestingly enough, I believe that we will find in the future that the skills and knowledge that people have will be far more important than the tools they posses. People will be happy to share their tools and capital with those who can make most effective use of them, hopefully for the betterment of all.

Mike

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Re: Daily Digest - Jan 9

Mike,

We are one the exact same page brother. Very well said.
Another facet I believe is extremely undervalued is Communications.

HAM Radios can be had reasonably and are priceless in an emergency, the license is cheap, and it will add knowledge to your "toolbox".

The Swiss model of "militia" is extremely worthy of emulation, and their record for halting advance through their area of influence is well documented.

Great Dialogue on this thread!
Cheers brother!

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Re: Daily Digest - Jan 9

Aaron: I can't really argue with that, having read numerous accounts of Holocaust survivors myself.

But even those that have survived emergency rooms or even prison camps were benefitting from some of the most basic tools that humans have (shelter, warmth perhaps, etc.). I believe that mentality is critically important, but there is a clearly a bit of a balance to be had.

I guess, if I could play God, I would choose to weight my "capabilities" at 80% mental, 20% tools, if that makes any sense. I think mentality is critical, but getting access to a minimum number of basic tools makes a HUGE difference.

The more tools and material items one acquires, however, the more one becomes subject to the law of diminishing marginal returns. Eventually, the "tools" are but toys. American society is going to soon learn about this law in an intimate way. Big screen plasma tvs really do very little to make our lives better.

And herein also lies the argument for creativity. In nearly every hardcore survival situation you can read about, creativity and resourcefullness played a critical role. I view it almost like Chris has described the concept of money. In a world with NO tools, human resourcefulness and ingenuity will quickly find ways to create them. 

I think we agree more than we diverge on this really. I only meant to make the point that a minimum of the right tools can be a great asset. But the best "tool" is your brain.

Mike 

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Re: Daily Digest - Jan 9

Hmmm, yes. HAM radio might be something to look into eventually for me. You are right, communications are of great importance, especially when cell towers stop working.

The Swiss have a great model to emulate. As an aside: I've heard they build dynamite into all their bridges and can trigger it remotely. Being in the heart of the Alps, bridges would be critical to an enemy invasion.

Mike

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Re: Daily Digest - Jan 9
Mike Pilat wrote:

Techno Luddite: I praise your actions which exceed those of many (and so far myself).

I would point out one thing: While you are much safer and secure on a farm (and I will very soon be looking towards that future myself) I would point out that hungry people will squarely target you. During the Weimar Republic, it's widely reported that eventually, people took to the farms to plunder the tools and capital that they had.<SNIP>

It was also widely reported that during the disintegration of the former Yugoslavia, columns of hungry refugees walked right past potato fields and orchards laden with fruit because they didn't even have the energy to jump over the fences to raid the produce.. 

I don't know about Germany, except that a lot of people just died.....  Germany, I think, ended up having the second greatest loss of civilian life after Russia in WWII.... 

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