1. What is the track record of the predictor?

2. What’s his forum: both the place he‘s speaking from and his audience?
In the Leo Lewis (Asia Business Correspondent) article in the business.timesonline.co.uk of 2/22/10 – sourced from lifeaftertheoilcrash.net – entitled “Buy farmland and gold,’ advises Dr. Doom”, we get Marc Faber. He is “…the notoriously bearish market pundit, who predicted the 1987 stock market crash…” and he’s speaking “… in Tokyo at a gathering of 700 pension and sovereign wealth fund managers.”
Here’s some of what the article and Mr. Faber had to say:

• “Speaking today, Dr. Faber said that investors, who control billions of dollars of assets, should start considering the effects of more disruptive events than market volatility. “The next war will be a dirty war,” he told fund managers. “What are you  going to do when your mobile phone gets shuts down or the internet stops working or the city water supplies get poisoned?”

• “He also said that they should consider holding part of their wealth in the form of precious metals “because they can be carried.”

• “At the heart of Dr. Faber’s argument is a fundamentally gloomy view on the U.S. economy and its capacity to service a growing mountain of debt.”

• “His belief, fund managers were told, is that the U.S. is going to go bankrupt.”

Micro: From a number of sources (i.e., drudge.com and survivable.com) earlier this week, we got information that says: “Citigroup Warns Customers It May Refuse To Allow Withdrawals”. This specific article is the one we’ll reference. It is by John Carney, posted on business insider.com on 2/19/10.
Here’s some of what it says:

• “… we heard that Citigroup was telling customers it has the right to prevent withdrawals from checking accounts for seven days.” This information was presented  “… on statements received by customers all over the country.”, and said in part: “ While we do not currently exercise this right and have not exercised it in the past, we are required by law to notify you of this change.”

• “It seems that this is something of an error. The seven day notice policy only applies to customers in Texas, Ira Stoll reports at the Future of Capitalism. It was accidentally included on customer statements nationwide.”

• “UPDATE: According to Stoll, Citi issued a statement saying that it had been required to make this change by federal regulations–and it no longer sounds like it’s limited to Texas.”
• 
  “UPDATE: Citibank has now released the following statement by way of explanation: … ,we have never exercised this right and have no plans to do so in the future.”

PH Comment: That banking institutions would have the foregoing power to prevent withdrawals at their discretion should provide the prudent home with at least a couple of considerations: have your money in at least two banking institutions to increase the chances of being able make a withdrawal from one, and have an emergency “cash stash” around the house (in at least two fireproof places and checked with a counterfeit detector pen) to enable your home to function in an emergency.

If there’s a real emergency, such as one without electricity, cash may be the only thing that works.

Until next time: keep your eyes on the horizon as the weathers moving fast.

“From Jan 1, 2011, every transaction above 1500 euros between natural persons and businesses, or between businesses, will not be considered legal if it is done in cash. Transactions will have to be done through debit or credit cards.”

LATOC Comment: “Welcome to the NWO. Coming to a country near you soon.”

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

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.

More Middle -East Tensions: We spoke a short while ago about the oil-critical Strait of Hormuz and  now we see this headline over at newsmaxworld.com on 12/14/09: “Iran Working on Secret Nuclear Trigger”. Here are some of the articles key points:

• “LONDON – Confidential intelligence documents obtained by The Times show that Iran is working on testing a key final component of a nuclear bomb.” The notes, from Iran’s most sensitive military nuclear project, describe a four-year plan to test a neutron iniator, the component of a nuclear bomb that triggers an explosion. Foreign intelligence agencies date them to early 2007, four years after Iran was thought to have suspended its weapons programme.”

• “The technical document describes the use of a neutron source, uranium deuteride, which independent experts confirm has no possible civilian or military use other than in a nuclear weapon. Uranium deuteride is the material used in Pakistan’s bomb, from where Iran obtained its blueprint.”

And this from foxnews.com on 12/16/09: “Iran Test-Fires Its Longest-Range Missile” (from 12/16/09 AP):

• “TEHRAN, Iran — Iran on Wednesday test-fired an upgraded version of its most advanced missile, which is capable of hitting Israel and parts of Europe.”

• “LIVESHOTS: Important Points About Iran’s Missile Test”

• “The two-stage Sajjil-2, and is powered entirely by solid-fuel while the older, medium-range Sahab-3 missile uses a combination of soild and liquid fuel in its most advanced form.”

• “Defense Minister Gen. Ahmad Vahidi  … He said the new version (the Sajjil-2) can be fueled more quickly and flies faster than previous ones making it harder to shoot down … ”

• “Solid-fuel missiles like the Sajjil-2 are more accutate than the liquid fuel missiles of similar range currently possessed by Iran. They are also a concern because they can be fueled in advance and moved or hidden in silos.”

PH Comment: The net-same as our last comment on the Strait of Hormuz situation: If we had to place a bet, it would be placed on war.
Prepare families, prepare.

Conversations With ‘Pop’ Smith: PH Question – ‘Pop’, a lot of prepping/posting folks are making                                suggestions for preparedness items as gifts during this holiday season. Any thoughts here?
‘Pop’: It’s a great time for giving preparedness gifts, what with the sales and all, as they’re sure to stimulate focus and interest on/in  preparedness. That’s especially important in these times. Here are a couple of inexpensive gifts (“stocking stuffers”) that should always prove useful:

1. A good-quality manual can-opener

2. A pair of good-quality toenail clippers

3. An eye glasses repair/maintenance kit with added spare parts (screws, etc.).

Also, I haven’t seen it mentioned much but this a great time to acquire/expand your stores with “seasonal” food items that are especially offered for holiday use at very cheap prices. Here are some of the items that I take advantage of:

1. sugar

2. baking soda

3. baking powder

4. hard candy

5. canned yams

6. cranberry sauce

just to name a few. Keep seasonal foods in mind (they can be eaten any time of year) and watch your expiration dates.
Merry Christmas!

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

The Economy - “America Without a Middle Class”: A few posts ago, PH posted clips from the Financial Times posting, “We must get ready for a weak-dollar world” and Charles Hugh Smith’s post/view on “The Grand Failure of Government to Limit Concentration of Power”.

Photo credit: aka_Kath

Today we’re posting excerpts from the excellent Elizabeth Warren (“Chair of the Congressional Oversight Panel created to oversee the banking bailouts“) article of December 4, 2009 in The Huffington Post (huffingtonpost.com), “America Without a Middle Class” , to illustrate some of the results of a weak dollar combined with a concentration of power in our government. Here are those excerpts:

• “Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can’t make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street. Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. … ”

• “The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970’s.”

• “Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking of themselves.”

• “The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them prospered at their expense. Consumer banking — selling debt to middle class families — has been a gold mine.”

• “And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses.”

• “Pundits talk about “populist rage” as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern wall street.”

Conversations With ’Pop’ Smith:

PH Question:“ ‘Pop’, we were a part of a conversation on family preparedness this week and someone reminded us to check and make sure our “two’s and three’s” were in place. What are the “two’s and three’s”?
‘Pop’: The “two’s and three’s”, as far as I know, are a local expression referring to the back-ups a lot folks in the our preparedness community have for their important/critical preparedness items. Some examples: for most of us, two pair of glasses would fall within the “two’s” while the ways and means to make a fire contained in our Get Home or G.O.O.D. bags might fall within the “three’s – say, a magnifying glass, waterproof matches and magnesium block with a flint-type rod.

Also, the twos and threes can, and will, vary. Someone with very bad eyesight might want three pair of glasses as a back-up, another person with a large amount of stored food in cans might feel comfortable with only two can-openers. It’s a personal judgment call.

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

The Dollars Decline: Today’s post headline comes to us from the Financial Times (ft.com) of 11/29/09  via survivable.com of 12/01/09. The article is by Jeffrey Garten and is entitled “We must get ready for a weak-dollar world”.

Photo Credit: SqueakyMarmot

Here’s a portion of this important piece:

• “The roots of this situation are well known. The American budget deficit of this past fiscal year reached 10 per cent of gross domestic product, the largest since the aftermath of the second world war. Meanwhile, the net external debt of the US nearly tripled last year. To $3,500bn and it is projected to increase by nearly $1,000bn every year for the next decade. All this underestimates the problems of a country where unfunded liabilities for baby boomer entitlements are in the stratosphere, infrastructure deterioration is scandalous and many large states are out of money. To close the gaps. Taxes would have to be raised to sky-high levels and spending brutally slashed. It would take a miracle if America’s political system – one rife with vicious partisanship and riddled with well-financed special interests – could do either, let alone both.
• Washington will therefore have little choice but to take the time-honored course for big-time debtors: print more dollars, devalue the currency and service debt in ever cheaper greenbacks. In other words, the US will have to camouflage a slow-motion default because politically it is the easiest way out.”

U.S. Government Failure: To hand-in-glove the above piece, this observation from yesterday’s Of Two Minds blog (oftwominds.com) post by Charles Hugh Smith entitled “The Grand Failure of Government to Limit Concentration of Power”:

• “This, then, is the grand failure of government: due to the concentration of power accumulated by those with asymmetric stakes in the game, any attempt to limit a concentration of power is thwarted by status quo. All the issues which so worried Madison in “The Federalist Papers” have come to full flower: the power of the State has been legally channeled into Elites which have nothing to fear from any branch of the State because they are the State.”

PH Comment: So here we are. “We The People” are on our own. No one is coming to rescue us and the boats have all been taken or burned. We build from here.

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

Our posting and commentary on the foregoing is the product of: a conversation with an older acquaintance with degrees in economics, business (and more than 30 years national and international business experience) as well as some re-reads. Our acquaintance is negative and nervous and so are we.  Here’s why:

• “Societe Generale has advised clients to be ready for a possible “global economic collapse” over the next two years, mapping a strategy of defensive investments to avoid wealth destruction.”
• “ In a report entitled “Worst-case debt scenario”, the bank’s asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders creating a fresh set of problems.
• Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of “deleveraging”, for years.”
• “Governments have already shot their fiscal bolts.”
• “The underlying debt burden is greater than it was after the Second World War … Ageing populations will make it harder to erode debt through growth. “High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt,” it said.”
• “Inflating debt away might be seen by some governments as a lesser of evils.”
• “Private debt is also crippling. Even if the US savings rate stabilizes at 7pc, and all of it is used to pay down debt, it will take nine years for households to reduce debt/income ratios to the safe levels of the 1980’s.”

PH Comment: In the conversation with our acquaintance referenced above, I said that from an average mans observation I would have to ask the question, “How could America possibly pay all of her debts and promises?”. My acquaintance just smiled and said, “We can’t.”

Conversations With ‘Pop’ Smith:

PH Question – “’Pop’, The last time we talked you gave us an idea of what you were working on now to prepare this week and this quarter. Could you give us an idea about how you set these weekly and quarterly projects up?”

‘Pop’: I use a notebook and a pencil or ballpoint pen and set up a week, say 11/10 to 11/17. Then I write down three projects I want to get done during that week.

It’s as important to write down the dates/time frame as it is each of the three projects because it’s the writing down of these things that makes them a personal commitment to yourself to try and get them done and on time. When I get one done, I mark it off. If I don’t get but say two of them done this week, then I circle the unfinished project and make it number one or two next week.

OBTW, I leave a couple of lines clear below each project to comment on how it went, how to do it better next time or why I didn’t complete it. Also, I’ve learned not to beat myself up over not completing a project if there’s a good reason; I just write the reason down and move on.

OBTW again, by keeping a record of your projects along with comments, you eventually get a pretty good idea of what you can get done and you then tend to make your projects more realistic in terms of both your time and talents.

I set my quarterly projects the same way save for a bit more space left for comments.

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

“A report by University of California, Berkley economics professor Emmanuel Saez concludes that income in the United States is at an all-time high, surpassing even levels seen during the great depression.

The report shows that:

• Income inequality is worse than it has been since at least 1917
• “The top 1 percent incomes captured half of the overall growth over the period 1993-2007”
• “In the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth.”
• As others have pointed out, the average wage of Americans, adjusting for inflation, is lower than it was in the 1970’s. The minimum wage, adjusting for inflation, is lower than it was in the 1950’s. …”
• “Of the 535 members of Congress, over 44% – 237 to be exact – are millionaires. …”

U.S. Moving to 3^rd World Status?: On November 16^th, 2009, Mike Folkerth – King of Simple  (mikefolkerth.com) gave us this guest post by Greg Chadwick under Mr, Folkerth’s post title “A One-Way, Non-Stop Ticket to 3^rd World Status On A Slow Train”. It seemed to us insightful and at least as good a guess concerning an economic collapse coming to/in America as any we’ve read recently. Here are some of Mr. Chadwick’s views:

• “First, we need to understand that collapse isn’t coming, it’s already here. Large numbers of people are already unemployed, homeless, and hungry, for them, depression has already arrived. Virtually everyone in the US has experienced a significant erosion of purchasing power since the Seventies. But notice it didn’t happen overnight. We lost a little here and there; nothing sudden or dramatic.”
• “One day soon the dollar will no longer be the world’s reserve currency and we will need to pay for oil with something other than dollars. Our largely worthless dollars won’t give us a favorable exchange rate in the way of purchasing power so we will learn to drive and eat less and walk more. …”
• “The government and the mainstream media will acknowledge that we are going through a rough patch. However, they will assure us that recovery is just around the corner, just like nuclear fusion, which has been just around the corner for the past fifty year, and most will believe them. They will do their best to distract us with nonsense. …”
• If we expect to live well in the coming years, we need to take action now . This is no different than buying homeowners insurance. Anyone who waits until his house is on fire to buy a policy could find himself living under an overpass. …”
• “What does the future look like? Just like today, except that it will be a little worse. There will be relentless deterioration, mostly imperceptible, too slow to cause alarm, and certainly not enough to trigger a flight or fight response. For most people the alarm will never go off.”

PH Comment: Mr. Chadwick makes some solid points concerning our economic history – recently. What we feel he may not be considering are possible events along the lines of a war in the middle-east, civil unrest in the US, or terrorism here in America – another more deadly strike. Any of these, or other events, could produce rapid deterioration and/or worse.

For the prudent family, it would appear to us that a strong program of preparation (water, food, medicine, self-protection, etc.) for harder times is in order. This program would, as we have said in the past, center around faith, family friends, and neighbors. We need to get to work on this as the time may very well be short.

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

“… There’s been a pretty significant development in regards to peak Oil that’s worth drawing particular attention to. From yesterday’s UK Guardian, …The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims [the agency] has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while      overplaying the chances of finding new reserves.”

A bit later in the article:

“Many inside the organization believe that maintaining oil supplies at even 90m To 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organization was that it was ‘imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

PH Comment: It seems that all governments want important information skewed to meet their particular ends and it’s with this in mind that we continue to recommend having a number of reliable sources for your information.

Life After The Oil Crash has proven itself in this regard to PrudentHome.

Conversations With ‘Pop’ Smith: Question – ‘Pop’, in our last conversation you said that you thought that we were in the “Long Recovery” and that you were preparing for sustained hard times. Are you prepared?

‘Pop’ Smith’: No, I’m not prepared but I am continuing to prepare given our time and resources. To give you an idea of what we’re doing this winter;

1. We’re expanding and preparing our garden area to more than twice the small size we had this past spring
2. We’ve just finished an inventory of the over-the-counter drugs in our family medical kit and separated those that need to be replaced (old or expired) ASAP.
3. We’re changing out our oldest stored water for fresh and expanding our reserves by about 20%.

This past week we set up a jar for pocket change to help finance an expected and expanded seed purchase for our 2010 spring garden as soon as the catalogs begin to arrive. We plan on wiping down our garden tool handles (wood) and walking sticks with linseed oil for preservation and protection. And finally, we’ve changed out some of our more recently stored honey into mason jars from less reliable containers.

Our goal is to accomplish some three small jobs each week and three larger jobs each quarter at a minimum.

Thanks, Pop.

Chapter I, con’t: “Size of your garden”

• “As a rough gauge, take the 2,00-square foot wartime allotment plot in the United Kingdom. Britain’s cool and frequently cloudy summers mean that most vegetables grow more slowly than they usually do in the United States or southern Canada. But on the plus side, the mild English winters allow gardeners in many areas to harvest frost-hardy crops year-round. The wartime British were not expected to make a complete family diet pot of 2,700 square feet of vegetables. Their staff of life was bread from the local baker. … Probably during the war years vegetables, including potatoes, did not make make up more than a third of the family’s total caloric intake.”
• “ … If your goal is to produce not half, but nearly all the calories and nutrition needed year-round, and your family can depend on the ordinary potato as their healthful staff of life, then you can add more land in order to produce sacks and sacks of nutritious spuds or sweet potatoes. … The good thing about potatoes is that working plots of this scale (from 500 t0 750 square feet per each adult depending on water conditions/SS) can be done entirely with hand tools. To produce the same amount of nutrition by growing cereal grains would require five to ten times as much land per person. The healthful potato is really the thing for getting through hard times.”

PH Comments: We are in strong agreement with Mr. Solomon in his comments regarding the nutritional value found in both Irish and sweet potatoes (and recommend growing both where possible) but again we part company as regards his method of gardening requiring relatively large amounts of land.

Based on our own experience, our observation that the average homeowner/gardener in America has significantly less land to work with than Mr. Solomon proposes,  and at least two major gardening methods that require relatively little land and have proved reliable/productive here and around the world: we support/advocate the more intensive gardening systems found in John Jevons’ “ ‘How To Grow More Vegetables’ “ and Mel Bartholomew’s “Square foot Gardening”.

We plan to continue reviewing Mr. Solomon’s excellent book (and to continue commenting where we think appropriate) coming up as he has produced a wealth of gardening information and insights for dealing with gardening in hard times.

Until a little later then: keep your eyes on the horizon as the weathers changing fast.