Iran Again: A weather report attempts to give an idea of upcoming/incoming weather in order for its viewers/listeners/readers to have some advance notice of the coming weather conditions and events, especially those that could produce dangerous results, and prepare accordingly. Here’s a bit of weather PrudentHome thinks is worth watching for:

• “US raises stakes on Iran by sending in ships and missiles” is the title of this Chris McGreal piece from The Guardian (guardian.co.uk/world/2010/jan31) made available via Drudge Report (drudge report.com) on 2/1/10. Here are some of its key points:

• “Tension between the US and Iran heightened dramatically today with the disclosure that Barak Obama is deploying a missile shield to protect American allies in the Gulf from attack by Iran. The US is dispatching Patriot defensive missiles to four countries — Qatar, United Arab Emirates, Bahrain and Kuwait — and keeping two ships in the Gulf capable of shooting down Iranian missiles. Washington is also helping Saudi Arabia develop a force to protect its oil installations.”

• KEY POINT: “Washington is also concerned at the threat of action by Israel, which is predicting that Iran will be able to build a nuclear missile within a year, a much faster timetable than assessed by the US, and is warning that it will not let Tehran come close to completion if diplomacy fails”

In an economically/financially  fragile world, a major war in the Middle East, with its almost certain effect of reducing oil availability, could/would be devastating to the industrialized nations of the world and their peoples: that includes the USA and us.

Until next time; keep your eyes on the horizon as the weather’s moving fast.

Photo credit: KaCey97007

2. Static to Lower Wages/Incomes: Regardless of “overall” economic models that may show increases in incomes, employment, etc., the average American will have less money to deal with the expenses of family; both necessary and elective. A quick look at Social Security payments will provide an example here.

3. A Generally Weaker & Weakening Dollar: This will be due primarily to increasing levels of federal debt and the fact that this debt is being met with borrowed and newly printed money. These responses will push up prices, especially imports, and thereby contribute heavily to #1. Pay particular attention for a continuing erosion of the U.S. dollar (for our debt policy stated above) as the world’s reserve currency. More countries will begin doing business between themselves through the exchange of their respective currencies and/or barter. More countries will ask for payments in currencies other than the U. S. dollar (such as the Euro) and/or call for a “market basket” of currencies or an internationally recognized unit of value. Also watch for countries reducing the U.S. dollar as a portion of their reserves.

4. A Lower Standard of Living for The Average American Family: This will be a result if #’s 1-3 and a
continuing weak economy with weak employment (U6) stretching far into the future. Look to the real employment numbers (and other important statistics) from sources like John Williams’ shadowstats.com NOT the federal government.

5. Increased Civil Unrest Over That Of 2009: It might be due to higher food prices, higher taxes/fees,  jobless benefit cuts (the states are running out unemployment money) or some government policy or another but the increasing level of citizen dissatisfaction with current conditions almost assures an increase in  civil unrest (and a government response) to further significant disruption in American’s day-to-day lives.

6. Increased Terrorist Activity In The U.S. & The World: Terrorism appears to be expanding all around the world. It’s message is resonating and captivating not just among the poor but with the affluent young also. Whether in Yemen or London, more are being influenced to support and/or  join this movement. The result of terrorists recruiting successes will nearly guarantee more terrorist activity and attacks in the U.S. and around the world. The individual that called this “The Long War” was spot on!

7. A “Black Swan” Event: (“the existence & occurence of high-impact, hard to predict and rare events that are beyond the realm of normal expectation”) Here are three possibilities with any of the three providing major repercussions (especially #1):

• War between Israel and Iran resulting in a closing of the Strait of Hormuz (at least)
• and a dramatic reduction in oil availability for the industrialized world (at least).
• The failure/disintegration of a major nation such as Mexico or Pakistan.
• Bankruptcy of a major nation such as Greece, the Baltic’s, or one from Eastern Europe.

Until next time; keep your eyes on the horizon as the weathers changing fast.

Photo credit: Mike Gadd

The Straight of Hormuz: If you’ve read much of PrudentHome over time then you’re familiar with our periodic updates on events concerning the ongoing friction between Israel and Iran. We’ve covered this area, almost alone among the preparedness and survival blogs, because we believe it represents a potentially critical flashpoint of conflict that could dramatically reduce America’s ability to function as an industrial nation by closing or substantially restricting the flow of oil through the Strait of Hormuz.

The following article from WorldNet Daily (wnd.com) on 12/7/09 entitled “Navy: Iran able to shut down oil route – Nearly 1/3 of world’s supplies pass through Strait of Hormuz” (excerpted from Joseph Farah’s G2 Bulletin) brings our concerns to greater light. Here are some of the articles key points:

• “The Office of Naval Intelligence has confirmed that Iran can shut down the strategic Strait of Hormuz through which move more than 30 percent of the world’s oil supplies pass according to a report from Joseph Farah’s G2 Bulletin.
• The report was posted on the website for the ONI, but abruptly removed after about a week.Before its unexpected removal, G2B was able to obtain a copy of the unclassified report …
• “World economies would suffer a “serious economic impact from a sustain closure of the Strait of Hormuz due to greatly reduced supplies of crude oil, petroleum supplies, and (liquefied natural gas), “ ONI said.
• The report also pointed to Iran’s naval modernization to help carry out such a closure. Indeed, the report said that Iran not only is expanding its current arms inventories but is adding “increasingly sophisticated systems” which it has acquired from China and Russia.”

PH Comment: This informative article continues on, mentioning the types of sophisticated arms systems that Iran has and is thought to be acquiring. But perhaps the most important piece of information the article presents is the admission on the part of the U.S. Navy that it cannot keep the Strait of Hormuz open if Iran moves to shut it down.

To our knowledge, the U.S. Navy has never admitted anything like this before; at least in public.
Also, we’ve recently heard from an interview with  a former U. S. Ambassador that, in his opinion, UN sanctions on Iran – past, present, and future – will be too little and too late. Iran is too close to actually having a nuclear weapon to be influenced by any level/type of sanctions.

So here we are: either Iran is allowed to become a belligerent (some say) nuclear power in an area of critical significance to the industrial nations of the world or … war to change her standing and mind. If we had to place a bet it would be placed on war. Prepare families prepare.

Until next time, keep your eyes on the horizon as the weathers changing fast.

US National Security – Imported Oil and Food: Energy Bulletin (energybulletin.net) on 6/1/09 presented a post authored by Rick Munroe: “Review of Rand study, Imported Oil and US National Security (May 2009)”. Although this was a summary of the full report, there were three areas of concern that seemed to stand out as particularly pertinent to the American family.

Here are some of the highlights:

• b. Policy recommendations: “… on corn ethanol: “Using corn for ethanol is economically inefficient and has harmed US national security.”
• c. Agri-food concerns: “The UK – truckers blockade indicated how quickly a fuel supply shortage can cause a food supply crisis. The vulnerability of the agri-food sector is particularly noteworthy. When oil prices spike, there is a direct and fairly immediate effect on the price of food (and eventually on the viability of the import-export model itself). Any threat to food imports must be offset by domestic food production. However most family farmers cannot readily absorb high fuel prices, so they may be forced to curtail on-farm activities at the very moment when their nation needs them to produce more, not less. Given the seasonal narure of most agricultural production, a price spike during the critical months could effect an entire year’s production”
• e. Civil disorder: An important Energy Bulletin reviewer’s observation of a possible short-coming in the report – “The authors appear to have complete faith in the “unseen hand” to efficiently sort out all resulting difficulties during a major fuel emergency. There is barely a hint in this study of the potential for civil disorder despite the nation’s extreme dependence on oil products, it’s suburban configuration and it’s reliance on just-in-time delivery for many essential goods. Nor is there any consideration of how low-income Americans may react to suddenly being immobilized by fuel poverty.”

Betting the farm: Why Jim Rogers Is Betting The Farm is the Lew Rockwell (lewrockwell.com, on 6/2/09) headliner to the Garry Whit piece in The Standard (thestandard.com.hk) on 6/1/09.

The article speaks to commodities in general but food in particular regarding future prices and investment possibilities. One of the worlds most savvy investor’s observations/opinions are highlighted but it may be more valuable to the average family to look at the root causes for future food price escalations. Here are some of those causes;

Long term: “…the rising global population will be a fundamental driver of the rising price of food.” Also, “.. global warming. Dry places getting dryer and wet places getting wetter and this is playing havoc with farming.” In addition, “ Rising wealth leads to rising food consumption, but it also leads to more meat consumption, Raising cattle or sheep requires significantly more grain and stimulates demand… .”

Short term: “ …the credit crunch.”, as “Farmers cannot get the finance they need to buy the inputs (i.e. seed, fertilizer, and pesticides) that go into growing food.” Also, “A tumbling dollar is likely to cause food prices to rise …. Debased currencies stimulate an appetite for investment in real assets.”

The two articles we’ve reviewed today point clearly to the need for the prudent home to develop both a significant home storage program for food (and essentials) and a home food production program for sustainable family welfare.

Until next time, keep your eyes on the horizon as the weathers changing fast.