By now, news of Ireland's coming bailout is not news to anyone. Unfortunately, upon entering into the EU, they caught the same bug as so many other small economies of the region: easy lending, easy money, big booms in housing and commercial real estate.
Followed, of course, by no lending, no money, and properties (and buildings) with little to no value when stacked up against the tremendous amounts owed on them. Sound familiar?
I first started to fume when Professor Paul Krugman, a Nobel Laureate with whom I often disagree, but actually respect, wrote an op-ed for the NY Times in which he chastised the bailing out of the Emerald Isle. To wit:
"Step back for a minute and think about that. These debts were incurred, not to pay for public programs, but by private wheeler-dealers seeking nothing but their own profit. Yet ordinary Irish citizens are now bearing the burden of those debts."
Now, this is the same guy who is somehow CERTAIN that we must continue to spend in tune with the Keynesian Model we've worn out completely, and who thinks that bailing out Too Big To Fail Banks was a GOOD idea. Apparently, Professor Krugman has some Irish in him, but not much American? That seems a harsh assessment, but isn't this the same economist who espoused the benefits of publicizing the losses of our Wall Street Buttheads??
Deep sigh.
Now, onto other outrageous crap:
According to my sources (see ZeroHedge.com, Lies Across America), Ireland is providing 20% of its own bailout money by seizing and utilizing pension funds.
In France, 36 billion Euros are being taken over by the Sarkozy administration to pay current debt obligations - from the government pension plan.
In Hungary, it was announced on November 25th, that all private pensions needed to be remanded to state control. It was a democratic choice: Give us your private pension funds, or we'll see to it that you face a minimum of 70% losses.
In Poland, their RRA (public retirement fund) is already being used to fund sovereign debt.
Well, we've done this sort of monkey business with our social security trust fund, right? I mean, it's ugly, but what can you do? Pay into your IRA, your 401(k), and pray the market doesn't tank and take 40% of your account value with it.
Oh, wait, that already happened. In 2008. Oops! Well, the market's going through the roof now, so who cares? Time to get back in the game, as they say!
And, as of February of this year, the Obama Administration is seeing to it that you do just that. You may have heard about "auto-enrollment"?? Here's the thing: Your boss will automatically start taking money from your check, and administering one of the Big Two retirement plans with it. There's all sorts of IRS language, but it's down to a boilerplate, and you don't have to do a thing. How nice for you!! I'd love to be making minimum wage somewhere - if in fact I could GET a minimum wage job - and know that on top of the 30% coming out of my gross pay for taxes, I can turn over another 3 to 5% to have some overpaid flunky rubber-stamp my retirement.
Now, don't get me wrong: you can opt out. I'm not clear on the procedure, but it is, I understand, not that hard. I have nightmare visions of "opt-out" eligibility dates, like open enrollment for health insurance, but I don't have anything to back it up, so I'll assume (for now) that if you don't want to contribute, there's a form for that.
Got me reading, though: apparently Italy tried the same tact in 2007. 75% of Italian Citizens opted out of the auto enrollment; the government regards it as a resounding failure. The UK is currently trying it as well: apparently they're up to 4% auto enrollment. New Zealand has an 18% opt-out rate.
And, here in the US, we have a triumphant "80% Take Up" rate. In other words, only 20% of automatically enrolled workers have opted to keep their money in their own hands. I see that as shameful; it is a slippery slope from "auto enrollment" to "mandatory enrollment", and the final pocket of the middle class is twisted empty, in the name of "austerity".
From savingtoinvest.com: the major points of the Obama package are as follows:
- Expansion of Automatic Enrollment to small business, creating as near a universal enrollment of working citizens as possible.
- Converting unused Vacation time to investment in the Big Two retirement plans.
- Encouraging Americans to take their federal tax refund in Savings Bonds.
I read this as cautionary in the extreme; first off, who handles all these retirement accounts? The big banks, that's who. The very assholes who got us into this mess will now pretend to be vested in our 'golden years' and their expenses. I don't buy it.
I also have issues with the idea of vacation time - and, one can easily extrapolate to sick time, personal days, and the advent of what may be called "retirement" days - days in which your entire days' pay goes to your IRA/401 (k). I'm familiar with the "use it or lose it" of vacation time - I considered it pointless, as it encourages workers to take time off they may not need/want to take.
The big kahuna of this whole thing, though, has to do with tax returns. If you, the Fed, take my cash dollars out of my paycheck, and then encourage me to accept a slip of paper symbolizing "your" Federal debt, we're gonna box, as the saying goes. Just like paying in too much during the year in the hopes of getting a "big" refund translates to giving the Fed an interest-free loan, I'm against it. To think that I could, at any time in the future, be FORCED to accept Savings Bonds instead of money scares the hell out of me. You should be scared too.
The take-away? Get your damned money OUT of your 401 (k), your IRA, and if you have to, stick it in a safe at home. Hide the stuff in Mason Jars and bury it. Hell, buy gold, or silver, or 2 years' worth of coffee, flour, corn, whatever you regard as a staple.
And, no, I don't think Roth IRA's are safe... yes, they're funded with after-tax dollars, so they should be safe, but really, in this era of the "last great money-grab", do you trust the bankrupt Powers That Be to leave any stone unturned? I wouldn't.
It's time you started using your head, and not counting on Uncle Sam to hold your hand all the way to the grave. That means getting financially educated. Step 1: Tell Uncle Sam to get his fingers off your damn paycheck. We'll talk next time about steps you can take to minimize your taxable income.
Until then, be safe, be smart, be ahead of the curve.
Brutal Truth
I'm not a big eater at Thanksgiving. I don't consider this virtue or vice; I can only reasonably eat so much at a time. It has to do with being full. Once there, I'm done. Can't help it. However, I love to cook, and I do so with gusto, happily preparing enough food to feed an awful lot of people, or a few people an awful lot. Thanksgiving is a great day to cook to my heart's content, and I'm glad to carry on the tradition this year with family and friends.
I couldn't help but think about food prices - I was buying food, after all (!) for this year's bonanza, and paying more this year than last, but what the hell, it's a holiday, right? So, I bought, and I will cook, and enjoy it, and hopefully so will the people who end up eating what I bring to the table.
What about next year? I've already told you about food inflation, fuel inflation, etc. What will we be eating next year?
Things you should be buying right now: wheat flour, rice, corn products, raisins, frozen vegetables, frozen fruits. You should also be buying things with which you may well be able to barter next year: honey, sugar, syrup, soda, beer and/or booze. If it costs money to make it or ship it to you, buy it. I don't eat white sugar, but plenty of people do. I'm not a big fan of soda, but I know people who can't get through a day without it. Same thing with coffee, although I AM a fan of that. Peanut butter. Equal. Vegetable and olive oils. Yeast blocks and packets. Salt. Rice - brown and/or white.
Do you use heating oil, Natural Gas, or Propane in your home? Top off the tanks. Even if you don't need it "right now", and even if it hurts the wallet. In six months, you can thank me. Or not, you'll have saved a bunch of much-needed dollars if you use that money while prices aren't spiking. I'm currently carrying 3-80 gallon tanks of propane on property. 1 is empty, and I'll refill it within 30 days. Note that 1 tank of propane lasts 6 months; I wish I had 5 more on hand; I'd fill those too.
Have you done anything yet about storing water? Get on it; in times of shortage and near-shortage, prices spike before the wells run dry. Google "water buffalo" - you can store water safely without a huge investment. And we all know you need water, no matter where you are.
Thanksgiving: yes, I'm grateful. I'm grateful for my health, my home, my loved ones, my friends, my pets, and beautiful weather (there's just nothing like going for a swim in November; I never get used to it). I'm grateful to live in a republic that still allows me to publish and express my opinions, even if they're not party line. I'm grateful to be able to stockpile provisions when I see bad things coming. I'm grateful that the "worst" is not yet here.
I'd be especially grateful if I were wrong about all of it. Obviously, I don't think I am, but how cool would that be?
I've been paying a lot of attention to Ireland, Portugal, and Spain this week. I understand, from my friends at ZeroHedge.com, that the "emergency fund" originally set up to protect EU member governments in time of crisis, will not be able to fund the bailouts needed by the three countries above. Not even with substantial help from the IMF.
I'm also watching the slow train-wreck that is the passing of "austerity" measures on the populations of these countries. You literally "ain't seen nothin' yet", as far as public unrest and civilian casualties. This is what happens when governments reward the elites that brought down this house of cards, and punish the people who saved them.
So, I guess, in the end, I'm grateful that "austerity" measures haven't taken hold here, yet. Don't take it for granted, though; somehow we 'Mericans voted in a bunch of the cronies and lap-dogs of the Wall Street interests. This will bring the "belt tightening" to the forefront of discussion, and don't think for a minute that you/we (the working class) will be exempt. On the contrary, they're looking to squeeze every last gasp of hope we had up the ladder to the top 1%.
So, eat, drink, hug the people you love. And stock up on staples for Black Friday, instead of cheap Chinese crap.
Then, maybe next year, you can be Thankful again.
Brutal Truth
After reading the latest and greatest on the financial front (can you believe we're finally talking about Sovereign Defaults? Who knew? ;/), I started thinking about ways to protect myself and my family/friends... and as usual, my tiny brain circled right back around to...
Russia.
No, no, not Russia as in 'failed democratic experiment now run by mafia-type business thugs'; not 'Glasnost' Russia; not Soviet Russia.
Russia the unconquerable. Russia the Great Bear, as in so damn big you'll never take it over unless they send you an invitation. And, maybe, not even then. As a student of Russian history (I liked it at first 'cuz they had a history of blowing each other up, then there was Rasputin, and they kicked Napoleon's ass before that), I find myself reaching back to the days BEFORE the history books were written. How in hell did they survive? No Central Planning, no uniform currency - the ruble is recent, in historic terms - a capitol that got re-located and re-named on a regular basis... and yet, this huge mass of people, spread across one of the largest land masses on the globe, well, did all right. How?
Village Rule. And, yes, I'm over-simplifying to make a point. But think of it: all of our lives we've been told that "Bigger is Better". Bigger cars, bigger companies, bigger houses, bigger credit limits... bigger banks, bigger government, bigger taxes, bigger cities...
To paraphrase: "How's all that Bigger Stuff workin' for ya?"
My hopeful synopsis: not really well at all. Big Agra. Monsanto. Citi. Bank of America. Any government that needs a "czar" for anything. Seriously? Drug czar, crime czar, car czar - speaking of Russian history (!)...
Okay, so the Hippies tried the commune thing... we now call it Planned Community, but the difference seems to be how much bed-hopping goes on. But my thought is that they were onto something, although I'd probably spin it a little differently. Which brings me to my point: Who would you want in your village?
Recent events within my extended family made me regret living so far away in a time of trouble. I would definitely want my family close. If someone needs help, I want to be less than a long plane ride away. Much as I love where I live, I'd have felt a lot better - and slept more easily - if I'd known I could do something to help. <sigh>...
So, what do we need from "outside" the village? Well, that's up to the members, I guess. Gasoline. Coffee. Water, if we're not self-sufficient. We need a farmer. Or two. A mechanic; a doctor. A builder. Electricity? Maybe. Heat? Not so much where I live, but hot water's a plus, and prevents all sorts of bacteria from spreading. Sewer? Septic?
Which leads me back to the beginning: Is it time to pull the plug? Leave the suburbs? Leave the cities? Food shortages, water shortages, supply lines too long to maintain... what about oil and fuel? Oil's up another $3.00 a barrel as of Friday morning.
And the last, most important thing to think about this weekend: what do I bring to the village? What is my value? How can I help? In a time of shortages and inflated prices, how much dead weight can a village take on?
This is a rare, morning post. I'm off to my day. I'd like to hear from any or all of you: who would you want in your village? And, how can we make it work?
Till then,
Brutal Truth
And it HAS been, since 2009. Quick review: the CPI - Consumer Price Index, published quarterly, monthly, or whenever they feel like it, is a measure of how much things cost. Which raises the fundamental question: "What things?" The gist:
- Cars
- Electronics
- Appliances
- Car Repairs
- Home Depot stuff
Notice anything missing? Not if you're in charge of the COLA (Cost Of Living Adjustment) for Social Security. Ask a retiree - there has been NO COLA for 2 years. Why? Because the prices of "things" have been going down - they're calling this deflation. Everything's really quite inexpensive now, thanks to Helicopter Ben and his ZIRP - Zero Interest Rate Policy. Great!
You've tumbled to it, though, haven't you? Everything's cheap... as long as you don't drive, heat your home, turn on the lights, or say, EAT.
If you're like me, you keep your grocery store receipts. I do this because I live on a budget that is occasionally so tight the "Indian rides the buffalo" in old speak. Though there have been times when the Indian didn't just ride the buffalo, they picked out china patterns and registered at Wal-Mart. 'Nuff said.
If you don't keep your receipts, you're stuck with a nagging feeling; could be gas, could be you're burning through more money than last time, but you're not sure how long ago, or by how much.
In 2008, there was rice rationing - remember? I was stunned... not that I'm a great fan of rice - it's okay, right? But the idea of any food being rationed in the US struck home. That same year, you had people dying in food riots from Haiti to Egypt. There just wasn't enough to go around...
TWO YEARS AGO.
Fast forward to spring of 2010 - in Russia, the leading grower and exporter of wheat. Record heat, record drought, and wildfires - remember? You may also remember this little nugget: President Vladimir Putin has BANNED export of ALL Russian wheat until AFTER next year's harvest. They will send some reserves, but it's not gonna be near what they generally ship to the world.
As of September 3, 2010, according to Bloomberg News, Wheat futures are up 74% year over year. They have also reported 7 deaths and numerous injuries during new food riots taking place NOW in Mozambique.
Aside from Russia's "problem" - this being one of the few things I will understate - there is a greater issue at hand: what is commonly being called "QE2" - Bernanke's latest round of Quantitative Easing. It has already begun - in fact, began in 2009, but apparently there were marketing problems that delayed the publication of it. According to Mr. Bernanke, somewhere in the neighborhood of $600 billion dollars will be henceforth printed and used to buy bonds. What bonds? Well, you know, whatever bonds they feel like buying. Through 2Q2011. Or longer. Depending. My friends at ZeroHedge.com have taken to calling it "QEXXXXX", since it seems endless.
According to Meredith Whitney, part of the program - again, begun in 2009 - equates to state bail-outs. Build America Bonds from California, Illinois, and Nevada are being underwritten by the Fed. If you buy a Califonia bond (it's debt), Uncle Sam underwrote 20% of the interest payment in 2009, and underwrites 30% of the interest this year. In Illinois, 30%. In Nevada, 40%.
So, now, Ben prints money so Cally can print money, only Ben will print 20-40% of the interest money on top of the Cally money just to make sure you get some of those wet-ink bills in your pocket if you're lucky enough to own a piece of the debt pie. Does this sound like a financial circle jerk?
It is, and I wouldn't even go into it, except that, being the circle jerk that it is, it undermines faith in the valuation of the dollar. Remember, we're on the hook for more money now than at ANY time in the history of America. COMBINED. Even with inflation adjustments. We're spending and inflating our way to the bottom, and the only reason we haven't hit it yet is because every other currency is in the same race. So, what do you, the prudent investor, do while all this crap is going on?
You invest in something else. Something... concrete. You could put your hands on it, if you wanted to.
Like oil. Or wheat. Or soy. Or corn.
Unfortunately, the whole world is full of people like you, watching the debasement, looking for something "solid" to invest in, something people need, and will continue to need...
And this is how, according to Drovers.com, corn, milk and dairy, meat, coffee, and cocoa are being driven by lots of interested buyers.
According to CNBC's Brian Shactman (10/25/10), eggs are up 11%, meat up 6% year over year. Apparently, due to competition issues, retailers have been absorbing most of this increase. Since mid 2009.
How much longer do you think they'll continue to do that? Remember also, that corn and soy are far more prevalent in our food supply - and FUEL supply - than you would immediately think. Got mayo? Main ingredient: soybean oil. Got bread? Made with soy milk. Got bread crumbs? Progresso: partially hydrogenated soybean oil.
Beer drinker? Check for corn. Yup, corn. Most lagers are now brewed with some combination of wheat and corn. Don't forget corn syrup: depending on how much packaged crap you eat, you'll find it in a LOT of places. Just like I found soy milk and high fructose corn syrup in my "all natural" whole wheat bread.
Okay, I've made my case; feel free to check my sources, and any others that pop up - it's the beauty of the internet in our modern world. Soooo...
What to do?
There are two things that inflation should always drive you to do:
1. Spend more now. Not as in, cheap plastic crap; as in staples. See above. Think about 3 months' worth of rice, flour, corn meal. Ever use honey as a sweetener? Get some. Get a lot. Turns out, we're running low on honeybees, too. Hell, think about 6 months' worth. Get some air- and water-tight containers. Store that stuff, and if the prices don't shoot through the roof, worst case scenario is you eat it all. If they DO go through the roof, your dollars then won't be worth near what they're worth now.
2. Get your money out of the banks. Do I need to remind you that 143 banks have failed this year? That the FDIC has been drawing on credit lines from the Fed to meet its obligations as bank after bank has failed? At this point, are you really earning any interest anyway? Do you want to have to wait for 6 months for your insured deposit to be returned to you if your bank should fail? Prepare for the worst (to be fair to the FDIC, this has NOT happened. Yet.).
And, finally - I say this as the smell of fresh whole wheat bread wafts from my oven - it's time to get "back to the kitchen". I can say two things about my ability as a baker: First, I'm not very good at it; my first two loaves of bread could have easily been used as wheel chocks for my truck. Second, I know, to the gnat's behind, exactly what's IN that bread, and I'm determined to get better at making it.
I'm happy to watch out for you, and warn you, whenever I can. But this is one of many situations where you can take the wheel, and drive yourselves around the obstacles I'm pointing out. Be prepared. Be smart. I'll keep you posted.
Brutal Truth
Hat Tip to Beth, and Maude Barlow. Beth because she's brilliant, and points me in the right direction on things I should know, and Maude, because she's been following this particularly important topic for years. Try Ms. Barlow's book, Blue Gold, dealing with the privatization and commoditization of water around the globe. If this doesn't scare you, you're dead.
A dear friend and mentor pointed out to me a few years ago her theory: the next "world conflict" would be about water. I would have laughed, but she already had a history of being right about a scary amount of topics. I studied. I researched...
And figured she was probably right, but maybe about a decade ahead of her time. Not unusual with really smart people; they see the trends while the rest of us grope around in the dark. I kept up with the latest and greatest, and didn't worry overmuch about it...
Until Beth found this interview on Alternet.org. And, yes, it's about WATER. Plain old drinking water. That stuff out of your tap, or your Dasani bottle...
And we're running out of it, at a dangerous pace. Like, next 2-3 years kind of pace. I have a lot of choices here, so I'm gonna start with what you should know, no matter what you are told by anybody else:
You - you personally - need to drink 1/2 ounce of water for every pound of body weight that you weigh. Every Day. No fail; this is what will keep you hydrated. You can up it a bit if you want to lose weight, but the hard and fast rule is 1/2 ounce per pound of body weight. DO NOT let anyone tell you otherwise. Lately I've seen several articles published - by fairly reputable, or at least widely-read publications - saying you don't need all that.
They LIE, to paraphrase Joe Wilson. They lie, and they're wrong. Go ahead, Google it. If it doesn't scare you, you're not listening yet. Pay attention. I'm gonna leave all the "black helicopter/conspiracy" crap out of it; but think how useful it would be to get people used to drinking less of what you KNOW DAMN WELL we're running out of? Okay, here's what I know:
California is planning no less than THIRTY desalination plants for the state - right NOW; that would be the "shovel-ready" type of planning. They know they're on the cusp of running short of water for basic life-support.
Michigan, in an ever-deeper drilling effort to reach the Olagalla aquifer (one of the biggest in the northern hemisphere, now vastly depleted), has started pulling up Lake water... as in Lake Michigan. As in, they're now drinking Lake Michigan, and the Olagalla is depleted near the empty point. And Michigan, from a population standpoint, is declining.
Wanna know if we're "over-drilling" for water? Google "sink holes". Water is what holds up the crust of the earth, and keeps us from falling down into it - water. Everywhere we've depleted, in the name of expanding population (see Mexico, Germany, etc.), there are sink-holes. BIG ones.
The Pentagon has assembled a brain trust to study the future of water; their results are titled "Global Water Futures", and involve such notables as Sandia Labs, Lockheed Martin, Coca Cola, Proctor and Gamble, and the Center for International Studies. These guys KNOW we're gonna get thirsty.
What's GE doing about it? Dow Chemical? They've focused a boat-ton of money and time on recovering and cleaning used water. These folks don't invest unless there's a very good - read, profitable - reason.
Last point: remember T. Boone Pickens? Made a fortune in natural gas, right? For the last 15 years, he's been buying water rights, anywhere he can get 'em. Worth a thought - this is a rich guy who follows his gut, and it's been right for a couple generations now. When this guy buys stuff, I research.
So should you.
Remember the "tap water" campaign? Tap water is okay to drink! Really! It's safe! You don't know what those bottlers are doing!
Try salmonella. Try cholera. Try recent outbreaks of both diseases in major cities (google Glendale, Arizona, for a recent rash). Try living in Chandler, Arizona, where the water literally comes out of the tap in chunks. Bottled water is WAY okay compared to that crap. Floaties in my water? Thanks, but no.
Okay, two "takeaways" for you. If you get nothing else out of this blog, realize that if you live in the southwest, or in southern Cally, you NEED TO MOVE. Sorry, that's all there is to it. Move out. Get out, while you're still hydrated. Do it soon. Hell, it's not like your home value's gonna come back, is it?? Pack. Go.
If you want to survive this crisis, you have to learn to capture and re-use water. In your home. Period. Google cisterns, water buffaloes, bleaching and boiling. FIND WATER, and keep it. The southwest and other desert-type areas are NOT fit for human habitation - that's why only the Mob would invest in the first place!
If you want to make money, invest in public utilities that actually OWN the water rights they utilize. This is important. Further down that road, if you're gonna homestead, buy a plot that INCLUDES water rights. They're going to be fought over - sooner than you think. If you're gonna break away from a city, and go it on your own (honestly, not a bad idea overall), get the DAMN WATER RIGHTS on your deed. I can't stress this enough.
What happens when you turn on the tap and nothing comes out? Where I live, power outages don't even make the local newspaper; no electricity, no water pump, no water. God love buckets and cisterns. Are you ready?
Brutal Truth
