SHTF Tipping Point?

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Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
Joined: Jan 4 2009
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SHTF Tipping Point?

I haven't seen this topic discussed in any detail in any other threads yet - fascinating material IMO.  Has anyone out there run into this?  When/if this starts happening, does that make the crisis personal and will that be what it takes for people to sit up and take notice?

When friends, family beg for bailouts.Having plenty of money in a down economy can create a special kind of stress -- when people you know come looking for financial aid. How much should you help?By BusinessWeek  After the economy tanked last fall, Rob DeSantis' phone began ringing. Suddenly friends, family and neighbors were begging him for financial help. It's not hard to see why. DeSantis is ultrawealthy, having co-founded Ariba, a dot-com-era startup that pioneered online purchasing for large companies. In one week in October alone, DeSantis says, the requests totaled half a million dollars. In December came an additional $1.5 million in pleas.  The cries for help moved him profoundly. "My first thought when they call is, 'Oh, no, not you, too,' and it makes me want to help," says DeSantis, who is working on a book and looking at deals in green technology. "They want to keep their house, their company, whatever. It pulls on your heartstrings."  DeSantis has plenty of company these days. There's the billionaire whose brother-in-law stopped speaking to him after he refused to increase the man's small-business loan. The two friends who fell out after one asked the other to pay off her mortgage. The 21-year-old trust-funder whose strapped friend was caught shoplifting just before Christmas. He hadn't heard from her for a year, and suddenly she was on the phone asking whether he could bail her out of jail. "This hurt," he says, "because it told me she looked at me as a sort of bank."
As the government bails out one industry after another, America's affluent are doing the same for their friends and families. And just as the feds' largesse can have unintended consequences, so can the personal bailout. Givers can feel put upon, recipients beholden. Like many in his position, DeSantis sought professional help. He called his wealth therapists: Joan Indursky DiFuria, a commodities executive turned family counselor, and psychologist Stephen Goldbart, who together run San Francisco's Money, Meaning & Choices Institute.
 In recent months, DiFuria and Goldbart say they have been rushing from mansion to pied-à-terre, helping the moneyed class figure out how to deal with down-and-out friends and relatives without turning them into welfare cases. DiFuria says clients are plagued with thoughts like: "Should I be helpful? In what way should I be helpful?"  Fixing others' lives Like many people who start life in humble circumstances, DeSantis says he has struggled with "being good at being rich." When Ariba went public in 1999, DeSantis fleetingly became a paper billionaire at age 38. It was a head trip for a guy who grew up in a 900-square-foot house. That, in part, is why DeSantis' financial adviser introduced him to Goldbart and DiFuria in 2002. At the time, the therapists were helping other extremely rich people handle what Goldbart and DiFuria had dubbed sudden wealth syndrome.  DeSantis' first impulse was to shower the people he loved with lucre -- to transform lives with one check. It wasn't long before his largesse began to backfire. One recipient in particular stands out. DeSantis paid off all of the person's debt -- an act of generosity that cost him about half a million dollars.  Do you have a spending problem? You probably know what you're supposed to do with your money, but how often do you do it? "I wanted to give him a get-out-of-jail-free card," recalls DeSantis. When the economy tanked last fall, guess who came knocking? DeSantis' beneficiary was looking for another handout, pleading that without it, he would lose his house and slide into bankruptcy. DeSantis set up a session with Goldbart and DiFuria in November. He was torn up with anxiety. He felt that if he didn't help the guy, no one would. Over sandwiches and bottled water in DeSantis' home office, Goldbart and DiFuria reminded him of the best practices they had worked on for giving: analyzing each request on a case-by-case basis, outsourcing the negotiation and management of the requests to a third party, and seeing if there were nonfinancial ways to help friends in need.  They discussed what had happened the last time DeSantis had helped this person. How after bailing him out, DeSantis had watched the man quit his executive-level job at a major corporation, run up his credit cards and use his house as an ATM. How DeSantis had tried positive persuasion to get him to change his free-spending ways: "Hey, you're in a great position to be thinking about what you'll be doing," DeSantis would say. How the message never seemed to take.  "I feel like I've hurt him more than I have helped him," DeSantis told Goldbart and DiFuria. The therapists were emphatic. "If you don't break off this trust-fund syndrome, Rob, you'll always be enabling him," Goldbart said. Armed with that advice, DeSantis turned down the request. And then something amazing happened: After being cut off, DeSantis' supplicant got a job and saved his house from foreclosure.  "I have made the decision to not help anyone to just make it go away," DeSantis says. "If there is acute short-term pain I can bridge, I've done that. But if it's a 50-year problem, there are other ways."  Former Charles Schwab CEO David Pottruck and his wife, Emily, an author and social activist, are among the Bay Area's leading philanthropists. Besides donating millions of dollars to charities over the years, the Pottrucks have given generously to friends and family, often to people David grew up with. In most cases, the Pottrucks bailed out people with no questions or strings attached.  But now and then, Emily was rankled by some recipients' seeming sense of entitlement. "I think there are people out there who think, 'Oh, well, he's so rich, what does he care?'"
Even before Wall Street collapsed in September, the couple were inundated with requests for money. The amounts ranged from thousands to hundreds of thousands of dollars, for everything from living expenses to tuition to house payments. Like most couples, the Pottrucks sometimes argued about money, especially their philanthropic choices. After hearing them agonize over how much money to give their children, a banker friend recommended they see Goldbart and DiFuria.
 

 At first, Emily was deeply skeptical about how two therapists could help with financial matters. "I thought, 'Gag me with a spoon,'" she recalls.  Then, during a six-hour retreat at the Pottrucks' San Francisco home, Goldbart and DiFuria investigated the couple's values about money, what was important to them in life, how much money they should give their kids and how they could strategically go about achieving their philanthropic goals. By the end of the session, Emily felt she and David understood each other's money values better than they ever had. They had different priorities, but that didn't mean they had to judge each other.  As all the requests for money began rolling in, Goldbart and DiFuria counseled the couple to provide for needs, not wants. They told the Pottrucks it was not necessary to give carte blanche; in some cases, loans would be appropriate. They also taught them how to ensure that the gift and loan agreements were on their terms, not the recipients'.  Emily put this advice to use with two people last fall. After hearing the requests and empathizing with the circumstances, Emily politely responded that they would be happy to extend a loan but that they should also talk about a reasonable repayment plan. One person took them up on the offer. The other "we haven't heard back from," says Emily.  Every four months, Goldbart and DiFuria meet with two 20-something siblings at the Executive Inn & Suites in Oakland. Two adjoining rooms become their makeshift retreat center. Three years ago, the brother and sister lost their father, a self-made multimillionaire. They began seeing the therapists because the trustee of their estate didn't want the wealth to negatively affect them.  Last fall, the son mentioned that he had a friend who needed several thousand dollars. "He wanted to sort of look at it as if I was a bank loaning him money," he told the therapists. Goldbart and DiFuria reminded the son of an earlier occasion on which he had lent money to a friend. "They reminded me of how it changes the relationship when you do that," the son says. He recalls feeling as though he were playing the father role. Goldbart and DiFuria proposed giving anonymously. The son had another idea:  "If a friend is spending more money than they own, I'd be more than willing to pay for a couple of sessions with a professional regarding debt and money management," he says. "Treating the symptom, throwing money at it, isn't going to provide long-term benefit for anybody."  This article was reported and written by Michelle Conlin for BusinessWeek. 

 

Dogs_In_A_Pile's picture
Dogs_In_A_Pile
Status: Martenson Brigade Member (Offline)
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Re: SHTF Tipping Point?

Apologies for the formatting blowup - still worth a read despite being cumbersome.

Cloudfire's picture
Cloudfire
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Re: SHTF Tipping Point?

 

Hi, Dogs;

Yes, a fascinating subject that has been on my mind.  I can envision this problem for me as TSHTF.  I've tried to preempt this scenario by talking with friends and family about the various way they could be preparing for the deepening crisis, usually adding that I'll be glad to help them get prepared, but once TSHTF my ability to help will be limited.  Privately, I've already resolved to help those who have taken at least some appropriate actions to become self sufficient.  But, for those who keep their heads in the sand, waiting for the government to bail them out, I leave them to whatever the government provides.  This may sound harsh, but no lifeboat can afford to take on victims who are unwilling to paddle.

 

glen12's picture
glen12
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Re: SHTF Tipping Point?

I expect the tipping point will be the failure of a large 10 year Treasury Auction, which could happen as early as within the next few months.  At that point, the Federal Reserve will openly (and will say that they are doing so as obligated by law) directly monetize that debt.    The dollar rally will end and abruptly reverse. 

How fast, and in what ways, things degrade after that can only be speculated about.  But for sure it means higher interest rates, higher prices, further pressure on leveraged real estate purchases.  And I expect those changes to be sharp and quick.

 

Mike Pilat's picture
Mike Pilat
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Joined: Sep 8 2008
Posts: 929
Re: SHTF Tipping Point?

I was recently on a food storage site that Chris recommended. The site had an LDS twist to it and I found it interesting that amongst all of the food storage and food calorie calculator info, there was a link for "should I share my food with others?" This is certainly a topic worth discussing. I, myself, would find it much easier to help anyone who has heard the message and at least tried to prepare by making an effort. But I've told my message to some that just haven't cared at all and might still be in denial when the fan speeds up. In that case, I wonder if their pride would even allow them to come back and say "I blew it, I could use some help."

Cloudfire's picture
Cloudfire
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Re: SHTF Tipping Point?

.

Amanda V's picture
Amanda V
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Posts: 262
Re: SHTF Tipping Point?

Mike.  Which site was the calorie counting one ?  Could you please post it here.  I would appreciate that so I can have a squiz.

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
Joined: Sep 8 2008
Posts: 929
Re: SHTF Tipping Point?

Amanda: Check out these two sites. I haven't had a chance to check everything out in depth, but the second one offers a bunch of free software and modules related to food storage.

http://caloriecount.about.com/

http://www.softlist.net/products/food_storage.html

Enjoy!

Mike

 

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