Document the Collapse

Mother of All Bailouts

2008-09-23T14:53:00.000-07:00

I don't claim authorship of this term, but the MOAB was originally coined by James Welsey Rawles over at www.survivalblog.com. Indeed, this is the most frightening turn of events, twin 500 point Dow drops, suspension of short selling, and now Helicopter Ben and that Thug Paulson are threatening congress with the Big "R" word to get their Wall Street buddies a $700 Billion bailout.

I could get snarky and vile about it, but I'm going to reprint the best blog every on the subject.

(Under Fair use:)

Mushroom Cloud over Wall Street as US Constitution Burns
Sep 22, 2008 - 10:36 AM

By: Mike_Whitney

These are dark times. While you were sleeping the cockroaches were busy about their work, rummaging through the US Constitution, and putting the finishing touches on a scheme to assert absolute power over the nation's financial markets and the country's economic future. Industry representative Henry Paulson has submitted legislation to congress that will finally end the pretense that Bush controls anything more than reading the lines from a 4' by 6' teleprompter situated just inches from his lifeless pupils. Paulson is in charge now, and the coronation is set for sometime early next week. He rose to power in a stealthily-executed Bankster's Coup in which he, and his coterie of dodgy friends, declared martial law on the US economy while elevating himself to supreme leader.

"All Hail Caesar!" The days of the republic are over.

Section 8 of the proposed legislation says it all:

"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

Right; "non-reviewable" supremacy.

Congress, of course, is more than eager to abdicate whatever little authority they have left. They're infinitely grateful for their purely ceremonial role, the equivalent of Caligula's horse, albeit, with considerably less dignity. Has even one senator spoken out against this madness, which--according to informal internet polls--is resoundingly rejected by the voters? Does it concern the members of congress at all, that the present financial crisis was brought on by the proliferation and sale of trillions of dollars of mortgage-banked garbage which were fraudulently represented as Triple A rated bonds by the very same people who now claim to need unprecedented and dictatorial powers to fix the problem? Or are they more worried that the steady torrent of contributions which flows from Wall Street to congressional campaign coffers will be inconveniently disrupted if they fail to ratify this latest assault on democratic governance? The House of Representatives is one big steaming dungheap that should be leveled and turned into an amusement park instead of a taxpayer-funded knocking shop. What a pathetic collection of cowards and scumbags.

Bloomberg News: "

"The Bush administration sought unchecked power from Congress to buy $700 billion in bad mortgage investments from financial companies in what would be an unprecedented government intrusion into the markets. Through his plan, Treasury Secretary Henry Paulson aims to avert a credit freeze that would bring the financial system and the world's largest economy to a standstill. The bill would prevent courts from reviewing actions taken under its authority.

"He's asking for a huge amount of power,'' said Nouriel Roubini an economist at New York University. ``He's saying, `Trust me, I'm going to do it right if you give me absolute control.' This is not a monarchy." (Bloomberg)

The banksters own this country, always have; only now they've decided to strip away the curtain and reveal the ghoulish visage of the puppet-master. It ain't pretty.

Paulson decided that the financial markets needed an emergency trillion dollar face-lift just weeks before his former business partners at G-Sax were dragged off to the chopping block. Was that the reason? Everyone on Wall Street knew that the bulls-eye had already been ripped from Lehman's bloody back and was about to be fastened on Goldman's. Now, it looks like they will escape their day of reckoning due to Paulson's eleventh-hour reprieve. Nice touch, eh?

From the proposed legislation: LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS

"(3) designating financial institutions as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them."

Market Ticker's Karl Denninger summed this up best: "This is the de facto nationalization of the entire banking, insurance and related financial system..That's right - every bank and other financial institution in the United States has just become a de-facto organ of the United States Government, if Hank Paulson thinks they should be, and he may order them to do virtually anything that he claims is in furtherance of this act.....The bill gives Paulson the ability to nationalize unlimited amount of private debt and force you and your children to pay for it."

Denninger again: "The claim is that this is intended to 'promote confidence and stability' in the financial markets.
It will do no such thing. It will instead strike terror into the hearts of investors worldwide who hold any sort of paper, whether it be preferred stock, common stock or debt, in any financial entity that happens to be domiciled in the United States, never mind the potential impact on Treasury yields and the United States sovereign credit rating.

I predict that if this passes it will precipitate the mother and father of all financial panics." (Market Ticker)

Amen. The transformation from a free market to a centralized, Soviet-style economy run by men whose judgment and credibility is already greatly in doubt; does not auger well for the markets or the country. Anyone with a lick of sense would cash in their chips first thing Monday and look for capital's Elysium Fields overseas or as far as possible from the circus sideshow now run by G-Sax ringleader, Colonel Klink.

Paulson's Chicken Little routine might might have soiled a few senatorial undergarments, but let's hope the American people are made of sterner stuff and will reject this charade. The conversation should be shifted from conceding more authority to hucksters in pin-stripes to indictments for securities fraud. Even the most economically-challenged nation ought to be able to afford a few sets of leg-irons and a couple hundred jail cells. That's all it will take. That, and a couple brisk dunks on the waterboard. Glub, glub.

Paulson's plan to revive the banking system by buying up hundreds of billions of dollars of illiquid mortgage-backed securities (MBS) and other equally poisonous debt-instruments; ignores the fact these complex bonds have already been "marked to market" in the recent firesale by Merrill Lynch. Just weeks ago, Merrill sold $31 billion of these CDOs for roughly $.20 on the dollar and provided 75 percent of the financing, which means that the CDOs were really worth approximately $.06 on the dollar. If this is the settlement that Paulson has in mind, than the taxpayer will be well served. But this will not recapitalize the banks balance sheets or mop up the ocean of red ink which is flooding the financial system. No, Paulson intends to hand out lavish treats to his banker buddies, while interest rates soar, pension funds collapse, the housing market crashes, and the dollar does a last, looping swan-dive into a pool of molten lava. Thanks, Hank.

Economist and author Henry Liu summarized the current maneuvering like this: "The Fed is merely trying to inject money to keep prices not supported by fundamentals from falling. It is a prescription for hyperinflation. The only way to keep price of worthless assets high is to lower the value of money. And that appears to be the Fed unspoken strategy."

Indeed. The Fed and Treasury have decided to backstop the entire global financial system (foreign banks can access the Fed's facilities, too!) with paper money which is rapidly losing its value. Watch the greenback tumble tomorrow in currency trading.

Congress is getting steamrolled and the American people are getting snookered. Consumer confidence--already at historic lows--is headed for the wood-chipper feet-first. Something has got to give.

One minute everything is hunky-dory; the subprime meltdown is "contained" and "the fundamentals of our economy are strong".(Paulson) And, less than a week later, congress is forced to surrender their constitutionally-mandated right to oversee spending in order to forestall economic Armageddon. Which is it? Or is the real objective just to keep the country on an emotional teeter-totter long enough for all state-power to be subsumed by the Wall Street Politburo?

No one knows what will happen next. We are in uncharted waters. And no one knows what the political landscape will look like after the dust settles from this outrageous power grab. According to Paulson, things are so dire, the entire nation will be reduced to smoldering rubble and twisted iron. But can we trust him this time after his long litany of lies?

Isn't it about time to send the cockroaches scuttling back to their hideouts and bring in the cleaning crew to hose the whole place down? It sounds like a job for Ralph Nader, a man of vision and unshakable integrity. Give Ralph a badge and let him deploy his Raiders to Wall Street armed with bullwhips and tasers. Let them post a guard in every CEOs and CFOs office and every boardroom on the Street---and if even one decimal is accidentally moved to the right or left on the corporate ledger; clap them in leg-irons and drag them off squealing to Guantanamo. That's how you clean up Wall Street!

Don't let the prospect of a national crisis trick you into giving up your freedom, America. The people behind this scam are the same landsharks and flim-flam men who polluted the global marketplace with their snake oil and toxic sludge. These are the fraudsters who manufactured the crisis to begin with. This is just the latest installment of the Shock Doctrine; engineer a crisis, and then, steal whatever is left behind. Same sh**, different day. Be resolute. Don't budge. Our economic foundations may be crumbling, but or determination is not. This is our country, not Goldman Sach's. The people who destroyed America must be held to account. Their time is coming. Justice first.

By Mike Whitney

Email: fergiewhitney@msn.com

Mike is a well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.

The 12 steps, and a non-bank run.

2008-07-26T19:17:00.000-07:00

Earlier I reported on the 12 steps to an economic disaster.

12 Steps towards economic collapse.

1. Housing recession.
2. The subprime mortgage loss continues.
3. Losses on unsecured debt: Credit cards, car loans, student loans.
4. Downgrading of monoline insurers' credit rating.
5. Meltdown in the commercial property market.
6. Bankruptcy of large regional or national banks.
7. Big losses on leveraged buyouts.
8. Wave of corporate defaults - insurers bankrupt.
9. Meltdown in shadow financial market: Hedge funds, margin calls and short sells.
10. Collapse in stock prices
11. Drying up of liquidity in financial markets, interbank loans, and money markets.
12. Vicious circle of losses, capital reduction, credit contraction, liquidation, and fire sales of assets.

Seems step 6 continues. Even with the dissolution of IndyMac, the bailout of Fannie Mae and Freddie Mac, the Feds are quietly shutting banks down and allowing consolidation of banks.

Take for instance the quiet closing and takeover by Mutual of Omaha of 1st National Bank of Nevada and First Heritage Bank. No fanfare, no lines, just closed on Friday, reopened on Monday under new management.

(Fair use rules apply).

By AMANDA LEE MYERS, Associated Press Writer

PHOENIX - Customers of two banks closed by federal regulators were assured that every penny of their money was protected, preventing lines of angry accountholders from forming Saturday.

The calm response was a stark contrast to the hundreds of angry customers who waited for hours earlier this month in Southern California to demand their money after IndyMac Bank's assets were seized.

The 28 branches of the 1st National Bank of Nevada and First Heritage Bank N.A. — owned by Scottsdale, Ariz.-based First National Bank Holding Co. — were closed Friday by the FDIC.

But Mutual of Omaha Bank bought all of the two banks' deposits, even those over the amount protected by FDIC insurance limits. IndyMac customers had to take a loss on whatever amount they had in the bank over the insurance limits.

One 1st National Bank of Nevada in downtown Phoenix didn't even have a note outside to tell customers about the trouble Saturday. But there were no customers outside to tell.

"I feel like the Maytag repairman — there's just not much to do on the customer side of things," Federal Deposit Insurance Corp. spokesman David Barr said. "There's going to be no impact on the depositors whatsoever, except basically a name change," Barr said.

Insurance limits are typically $100,000, but some accounts, such as joint accounts, can have more money protected, Barr said.

On Monday, Mutual of Omaha will open the banks as its own branches, Barr said. During the weekend, accountholders can access their funds by writing checks or using ATM or debit cards.

Jeff Schmid, chairman and CEO of Mutual of Omaha Bank, said the acquisition of the new accounts aligns with the company's growth strategy to get aggressive with banking.

"We're very optimistic about these markets," said Schmid, who was in Scottsdale on Saturday to speak with his new employees. "This could be our finest hour."

Mutual of Omaha Bank has $800 million in assets and operates 14 retail branches in Nebraska and Colorado. It's a subsidiary of Mutual of Omaha, a 99-year-old insurance and financial services company with more than $19 billion in total assets.

The Office of the Comptroller of the Currency said in a news release that 1st National was undercapitalized and had experienced substantial dissipation of assets and earnings "due to unsafe and unsound practices."

Those practices "also weakened the bank's condition and seriously prejudiced the interests of the bank's depositors and the deposit insurance fund."

Another news release said First Heritage was critically undercapitalized and was likely to incur losses that would deplete all or nearly all of its capital.

As of June 30, the closed banks had total assets of $3.6 billion. That's down from $4.1 billion six months earlier. Most of the assets are in 1st National, while First Heritage N.A. accounts for $254 million.

The FDIC said the takeover of the failed banks was the least costly resolution.

Calls to 1st National executive vice president Joe Martony were not returned Saturday. No one could be reached at the First Heritage N.A.

1st National has 10 branches in Nevada and 15 branches in Arizona. First Heritage N.A. has three branches in Southern California.

-----
And speaking of not looking at the man behind the curtain, Ford posted it's biggest loss EVER. Once again, the economy is strong, right?

From Business Week (under fair use).
Ford's Worst Quarter Ever
Problems at its credit arm and a writedown of assets, plus a poor economy and high gas prices, led to a second-quarter loss of $8.7 billion

by David Kiley

Ford Motor (F) reported a second-quarter loss of $8.7 billion, its worst single quarter in history.

Much of the loss was due to a writedown in the value of assets, and losses on falling values of SUVs coming off leases back to the automaker's Ford Motor Credit arm. But, like a kid who wrecks the family car and tries to distract his parents from the bad news by offering to paint the house, Ford unveiled a plan to make over its lineup with more small, fuel-efficient vehicles in the next two-and-a-half years—faster than Wall Street had expected.

Ford's plan to achieve a net profit in 2009 after losing $15.3 billion the past two years had already been thrown off track by the worse-than-expected housing meltdown and high gas prices. But the huge second-quarter loss was a setback Chief Executive Alan Mulally did not anticipate until a few months ago when SUVs like the Ford Explorer (BusinessWeek.com, 9/1/06), Ford Expedition (BusinessWeek.com, 2/19/07), and Lincoln Navigator (BusinessWeek.com, 4/2/07) started losing thousands of dollars in value in a matter of weeks at auctions where off-lease vehicles are sold. Skyrocketing gas prices have cratered demand for such vehicles.
Whipsawed Stock

Ford shares were trading down 9.5%, at 5.46, in midday trading on the New York Stock Exchange. Ford has been a volatile stock over the past two months, trading between 4.30 and 8 a share. The company has been whipsawed between a surprise first-quarter profit, subsequent changed forecasts in profitability and cash burn, and an investment in the automaker by financier Kirk Kerkorian, who paid 8 per share for a stake in Ford.

The second-quarter loss was $3.88 per share, compared with net profit of $750 million, or 31¢ a share, in the same quarter last year. The loss includes $8.03 billion worth of write-offs because of a decline in value of North American assets and Ford Motor Credit's lease portfolio. Even excluding those special items, Ford lost 62¢ a share, worse than Wall Street expected. Twelve analysts surveyed by Thomson Financial, on average, expected only a 27¢ loss. Ford's second-quarter revenue was $38.6 billion, down $5.6 billion from the year-ago period. Analysts expected $34.6 billion.

What Oil means to China.

2008-07-07T11:33:00.000-07:00

Pardon my absence, part of the fun of self-employment is that the blog sometimes has to take a backseat to making money.

File this under the tinfoil-hat section, but what if the US wanted to wage an economic cold-war against China? What would it look like. In the past, the US waged an economic war against the Soviet Union, and did so by taxing the USSR's industrial production capacity through an arms race. Clearly, China's ability to fight that kind of war would be a no-brainer, so what is China's Achilles heel?

Energy. Cheap energy to be precise. As long as shipping is cheap, the Chinese have an economic advantage. But if oil suddenly became expensive, Western countries would find that it's better to do their finished goods at home, and save the cost of shipping. And even if it devalues the US dollar, that's OK, because it leaves the Chinese out of work and holding a bunch of worthless dollars. IOW, bankrupt.

Something to consider as you read the following.

From the Telegraph (UK)
Under fair use.
Oil price shock means China is at risk of blowing up
By Ambrose Evans-Pritchard
Last Updated: 12:33am BST 07/07/2008

The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia.

The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete.

No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century.

Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin.

Products are sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a 40ft container from Shanghai to Rotterdam has risen threefold since the price of oil exploded.

"The monumental energy price increases will be a 'game-changer' for Asia," said Stephen Jen, currency chief at Morgan Stanley. The region's trade model is about to be "stress-tested".

Energy subsidies have disguised the damage. China has held down electricity prices, though global coal costs have tripled since early 2007. Loss-making industries are being propped up. This merely delays trouble.

More on energy
"The true impact of the shock will only be revealed over time, as subsidies are gradually rolled back," he said. Last week, China raised internal rail freight rates by 17pc.

BP 's Statistical Review says China's use of energy per unit of gross domestic product is three times that of the US, five times Japan's, and eight times Britain's.

China's factories "were not built with current energy levels in mind", said Mr Jen. The outcome will be "non-linear". My translation: China is at risk of blowing up.

Any low-tech product shipped in bulk - furniture, say, or shoes - is facing the ever-rising tariff of high freight costs. The Asian outsourcing game is over, says CIBC World Markets. "It's not just about labour costs any more: distance costs money," says chief economist Jeff Rubin.

Xinhua says that 2,331 shoe factories in Guangdong have shut down this year, half the total.

North Carolina's furniture industry is coming back from the dead as companies shut plant in China. "We're getting hit with increases up and down the system. It's changing the whole equation of where we produce," said Craftsmaster Furniture.

China is being crunched by the triple effects of commodity costs, 20pc wage inflation, and sagging import demand in the US, Canada, Britain, Spain, Italy, and France.

More on economics
Critics warn that Beijing has repeated the errors of Tokyo in the 1980s by over-investing in marginal plant. A Communist Party banking system has let rip with cheap credit - steeply negative real interest rates - to buy political time for the regime.

Whether or not this is fair, it is clear that Beijing's mercantilist policy of holding down the yuan to boost exports share has now hit the buffers.

Foreign reserves have reached $1.8 trillion, playing havoc with the money supply. Declared inflation is just 7.7pc, but that does not begin to capture the scale of repressed prices, from fuel to fertilisers. "There is a lot more bottled-up inflation in this economy than meets they eye," says Stephen Green, from Standard Chartered.

Inflation merely steals growth from the future. It defers monetary tightening until matters get out of hand, which is where we are now. Vietnam has already blown up at 30pc. India is on the cusp at 11pc, so is Indonesia (11pc), the Philippines (11pc), Thailand (9pc) - leaving aside the double-digit Gulf.

Of course, oil prices may fall again. They plunged to $50 a barrel in early 2007 after the Saudis raised production. The scissor effect of slowing global growth and extra crude later this year from Brazil, Azerbaijan, Africa, and the Gulf of Mexico may chill the super-boom.

The US Commodities Futures Trading Commission is on an "emergency" footing, under orders from the Democrats on Capitol Hill to smash speculators. If it is really true that investment funds have run amok, we will soon find out.

I suspect that the energy markets have fallen prey to their own version of the "shadow banking system" that so astonished regulators when the credit bubble burst.

I also suspect that Hank Paulson and his EU colleagues have a surprise up their sleeve for the late-cycle über-bulls. Those who claim that derivatives (crude futures) cannot drive spot prices have overlooked a key point. The Saudis and others use the IPE Brent Weighted Average of futures contracts as their pricing mechanism. Futures now set the spot price.

But even if oil comes down for a year or two, the mid-term outlook of the International Energy Agency warns that crude markets will be tighter than ever by 2012. Call it Peak Oil, or just Peak Non-Cooperation by the dictatorships that control most of the world's remaining 5 or 6 trillion barrels (Mankind has used one trillion so far).

Come what may, globalisation has passed its high-water mark. The pendulum will now swing back from China to America. The mercantilists will have to reinvent themselves.

``We're only about a third of the way through the writedowns''

2008-06-18T18:21:00.000-07:00

Yes folks, you thought $4 a gallon was bad, the subprimes were bad, just hold on to your hats. Bloomberg is reporting that Global writedowns could top $1.3 Trillion. From Wikipedia's definition of what a writedown is:

Many of the consequences of the subprime crisis at financial institutions are referred to as a "write-down", which is synonymous with a write-off[1].

While a write-off in banking refers to a bad loan that is declared uncollectable, removing it from its balance sheet, a write-down, according to Investopedia, means:[2]

Reducing the book value of an asset because it is overvalued compared to the market value.

So while a "write-off" removes the loan from the balance sheet, a "write-down" reduces the value of the loan in the balance sheet. Despite this difference, both terms indicate that the loaned money in question has no chance of being recovered.

Yep, this is contraction of the money supply that mirrors the expansion of the money supply that fractional reserve banking creates.

(under fair use)

June 18 (Bloomberg) -- John Paulson, founder of the hedge fund company Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.

``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''

Paulson, whose New York-based company manages about $33 billion, made bets last year that subprime-mortgage debt would fall after he noticed ``bubble like'' prices. His Paulson Partners fund rose 18 percent a year since it started in 1994, and his main subprime-debt fund rose 591 percent last year. Banks and securities firm worldwide posted more than $395 billion in losses and writedowns since the subprime crisis started last year.

The U.S. is heading into a recession as falling home prices weigh on consumer spending, Paulson said. The second half of this year will be worse than the first as the economic slowdown spills into 2009. Signs of stress are ``accelerating'' in the housing market, and he's betting on falling securities prices, he said.

``I don't consider myself a bull or a bear,'' he told the audience at Monaco's Grimaldi Forum. ``I'm a realist.''

A Royal Bank of Scotland Group Plc strategist agrees that stock and credit markets still face the worst in a slump that started almost eight months ago.

`Most Bearish Period'

``Mid-July through to October is likely to be the most bearish period we will experience in the bear market that began in the fourth quarter of last year,'' Bob Janjuah, a credit strategist at the bank in London, wrote in a report dated June 11.

The MSCI World Index has lost 13 percent since reaching a record in October. The index is down 4.1 percent this month after the Federal Reserve and the European Central Bank policy makers indicated interest rates may need to increase as the threat of inflation intensifies.

The economic slowdown and inflation have put central bankers ``into a dangerous corner'' where the chance of a ``major policy error has just super-spiked,'' Janjuah wrote.

Ambac Financial Group Inc., the second-biggest bond insurer, is ``the most leveraged, troubled company out there,'' Paulson said. It's at risk of being downgraded to non-investment grade, he said. Ambac spokeswoman Vandana Sharma declined to comment.

Ambac shares have lost 92 percent of their value this year after losses on subprime mortgage securities caused the company to lose its AAA credit rating at Fitch Ratings. Ambac, which said today it will terminate its ratings contract with Fitch, fell 7 cents, or 3.3 percent, to $2.07, in New York Stock Exchange composite trading.

`Deteriorate Significantly'

The housing and credit-market slump pushed Ambac to three straight quarterly losses after more than a decade of profit. It has written down $5.2 billion since the collapse of the U.S. subprime mortgage market last year.

Paulson's outlook is consistent with the view of hedge funds meeting in Monaco this week. More than 80 percent of the 1,300 fund managers, investors and service providers gathered in Monaco for the annual conference said they expect the credit crisis will continue, according to a GAIM survey. About 23 percent said the situation ``will deteriorate significantly.''

Bill Browder, founder and head of Hermitage Capital Management, said securities firms have a ``vested interest'' in claiming an early end to the crunch. ``If we're in the seventh or eighth inning, this is a 100-inning game,'' he said.

`$10 Trillion Opportunity'

Paulson's speech was the biggest draw at the event, which comes as the hedge fund industry endures some of its worst performance in nearly two decades, rising just 0.13 percent through May, according to Chicago-based Hedge Fund Research Inc.

``John Paulson has of course been very successful by making the right trade last year,'' said Manuel Echeverria, chief investment officer of Optimal Investment Services SA, a Geneva based investor with about $10 billion under management. ``We'll have to see what he's going to do now that the trade has run out of juice.''

Paulson said he's preparing to buy distressed securities such as bank loans, call them a ``potentially $10 trillion opportunity.'' While it is still ``premature'' to invest in many of them, he sees ``opportunities this year'' to buy mortgage backed debt, he said.

He hired employees this year to research securities firms such as Citigroup Inc. for long-term investment positions. ``We're trying to see the right entrance point,'' he said. ``If you invest too early, you lose money.''

Getting from bad to worse

2008-06-17T18:15:00.000-07:00

So my brother the CPA sends me more stuff, and it seems the mortgage world is about to go supernova. Subprimes went first, now it looks like the prime market is about to implode as well.

I'll never understand, if he sees the storm coming, what the hell he's doing in NYC.

(Under fair use)

NEW YORK (CNNMoney.com) -- When Lehman Brothers reported a stunning $2.8 billion loss Monday, it was just the latest sign that bad mortgage loans continue to be a problem for the financial markets and the economy.

But subprime mortgages could only be the beginning. Many economists and market experts are worried that other problems are lurking that could cause a new credit crisis for consumers and businesses.

Meredith Whitney, the banking analyst for Oppenheimer & Co., estimates that the credit problems will continue to dog financial markets into 2009. She thinks future losses will dwarf the roughly $25 billion set aside by Wall Street firms so far to cover them -- perhaps reaching $170 billion by next year.

Other experts agree that the worst is not yet over.

There are several types of loans raising concerns, ranging from prime mortgage loans to credit cards. Much like subprime mortgages, many of these loans were packaged into securities traded on Wall Street. And many of these loans are beginning to see rising defaults and delinquencies, just as subprime mortgages were a year ago.

These defaults are nowhere near subprime loan levels and few think they will ever get that bad. But if defaults keep rising, this can cause the same kind of problems in the markets for those securities, leading to widespread losses for investors.

"There are plenty of additional problems on bank balance sheets," said Kevin Giddis, head of fixed income sales, trading and research for investment bank Morgan Keegan. "The bigger problem is we don't know how far it goes. Those problems remain well hidden for a reason."

But if they do eventually surface, it would mean higher costs and tighter credit for consumers. And that in turn could lead to an even longer slump for the economy than currently forecast.
Prime loans "the next shoe" to drop

Giddis worries most about prime mortgage loans, those made to borrowers with good credit histories.

A survey from the Mortgage Bankers Association showed that at the end of the first quarter, nearly 2% of prime loans were either 90 days or more past due, or already in foreclosure. That's more than twice the rate from a year ago, an even bigger spike than the jump in subprime delinquencies during that period.

"We've pretty much gone to the wall on subprime," said Giddis. "The problem that is going to face financial institutions now is the good borrower. It's the other shoe to drop."

Jay Brinkman, the MBA's vice president for research and economics, said the problem for prime loans isn't as much bad loans being made but a weakening economy causing job losses for borrowers. Making matters worse, many homeowners find it tough to sell because of a record drop in home values.

This unprecedented drop in home values is therefore likely to lead to record prime loan foreclosures, losses that were never forecast when the mortgages were written and then sold to Wall Street.
Will wheels come off of auto loans?

Prime mortgages aren't the only part of the credit market showing early signs of rising problems. Auto loan defaults are also increasing steadily, according to figures from the American Bankers Association.

The delinquencies on the most prevalent type of car loan rose to 3.13% at the end of the fourth quarter of last year, according to the ABA, the highest rate since 1990. Delinquencies were up 22% from a year earlier.

In addition, high gas prices have led to a continued decline in the resale value of many light trucks, such as SUVs and pickups. That's lead to a loan-to-value ratio of 94% for all autos in the most recent reading for April, up from 88% as recently as 2005.

John Silvia, chief economist with Wachovia, said this raises worries about consumers dumping vehicles they can no longer afford to drive in a period of $4 gas.

"If someone has a durable good that is inefficient, they're going to be more willing to walk away from it," he said.
Equity lines, credit card woes also rising

Credit cards and home equity line delinquencies are rising even faster than those of auto loans, according to the ABA figures. Nearly 1% of home equity lines of credit were delinquent in the fourth quarter, according to its report, up 68% from a year earlier. Delinquencies reached their highest level since 1991.

In addition, 4.5% of the money owed on credit cards was delinquent in the period, up from 3.54% a year earlier. James Chessen, ABA's chief economist, expects that delinquency rates for credit cards and home equity loans will continue to rise throughout the year.

"No relief for consumers is in sight as food and gas prices remain stubbornly high and income growth is anemic," Chessen said.

And while credit card delinquency rates are not high by historic standards, the Federal Reserve's most recent loan officer survey shows tighter credit standards for both those loans and home equity. That's a sign that lenders and investors are trying to back away from those markets as well, said Scott Hoyt, senior director of consumer economics at Moody's Economy.com.

Add all that up and it's just more bad news for consumers, and the economy that depends on their spending.

"This obviously impacts their ability to spend, their confidence, their ability to service their debt and it's going to continue even as the economy recovers," said Hoyt.

-----

I still contend stocking a goodly amount of food and water is always a good idea. So take a lesson from the Mormons, these folks know how to do it.

Credit Default Swaps, DMZ's in Washington.

2008-06-05T12:05:00.000-07:00

So my brother the accountant points me to this article in Time dated 17 May 2008

(Used under Fair Use)

As Bear Stearns careened toward its eventual fire sale to JPMorgan Chase last weekend, the cost of protecting its debt, through an instrument called a credit default swap, began to rise rapidly as investors feared that Bear would not be good for the money it promised on its bonds. Not familiar with credit default swaps? Well, we didn't know much about collateralized debt obligations (CDOs) either — until they began to undermine the economy. Credit default swaps, once an obscure financial instrument for banks and bondholders, could soon become the eye of the credit hurricane. Fun, huh?The CDS market exploded over the past decade to more than $45 trillion in mid-2007, according to the International Swaps and Derivatives Association. This is roughly twice the size of the U.S. stock market (which is valued at about $22 trillion and falling) and far exceeds the $7.1 trillion mortgage market and $4.4 trillion U.S. treasuries market, notes Harvey Miller, senior partner at Weil, Gotshal & Manges. "It could be another — I hate to use the expression — nail in the coffin," said Miller, when referring to how this troubled CDS market could impact the country's credit crisis.

Credit default swaps are insurance-like contracts that promise to cover losses on certain securities in the event of a default. They typically apply to municipal bonds, corporate debt and mortgage securities and are sold by banks, hedge funds and others. The buyer of the credit default insurance pays premiums over a period of time in return for peace of mind, knowing that losses will be covered if a default happens. It's supposed to work similarly to someone taking out home insurance to protect against losses from fire and theft.

Except that it doesn't. Banks and insurance companies are regulated; the credit swaps market is not. As a result, contracts can be traded — or swapped — from investor to investor without anyone overseeing the trades to ensure the buyer has the resources to cover the losses if the security defaults. The instruments can be bought and sold from both ends — the insured and the insurer.

All of this makes it tough for banks to value the insurance contracts and the securities on their books. And it comes at a time when banks are already reeling from write-downs on mortgage-related securities. "These are the same institutions that themselves have either directly or through subsidiaries invested in the subprime market," said Andrea Pincus, partner at Reed Smith LLP. "They're suffering losses all over the place," and now they face potentially more losses from the CDS market.

Indeed, commercial banks are among the most active in this market, with the top 25 banks holding more than $13 trillion in credit default swaps — where they acted as either the insured or insurer — at the end of the third quarter of 2007, according to the Comptroller of the Currency, a federal banking regulator. JP Morgan Chase, Citibank, Bank of America and Wachovia were ranked among the top four most active, it said.

Credit default swaps were seen as easy money for banks when they were first launched more than a decade ago. Reason? The economy was booming and corporate defaults were few back then, making the swaps a low-risk way to collect premiums and earn extra cash. The swaps focused primarily on municipal bonds and corporate debt in the 1990s, not on structured finance securities. Investors flocked to the swaps in the belief that big corporations would seldom go bust in such flourishing economic times.

The CDS market then expanded into structured finance, such as CDOs, that contained pools of mortgages. It also exploded into the secondary market, where speculative investors, hedge funds and others would buy and sell CDS instruments from the sidelines without having any direct relationship with the underlying investment. "They're betting on whether the investments will succeed or fail," said Pincus. "It's like betting on a sports event. The game is being played and you're not playing in the game, but people all over the country are betting on the outcome."

But as the economy soured and the subprime credit crunch began expanding into other credit areas over the past year, CDS investors became jittery. They wondered if the parties holding the CDS insurance after multiple trades would have the financial wherewithal to pay up in the event of mass defaults. "In the past six to eight months, there's been a deterioration in market liquidity and the ability to get willing buyers for structured finance securities," causing the values of the securities to fall, said Glenn Arden, a partner at Jones Day who heads up the firm's worldwide securitization practice and New York derivative.

The situation is already taking a toll on insurers, who have been forced to write down the value of their CDS portfolios. American International Group, the world's largest insurer, recently reported the biggest loss in the company's history largely due to an $11 billion writedown on its CDS holdings. Even Swiss Reinsurance Co., the industry's largest reinsurer, took CDS writedowns in the fourth quarter and warned of more to come in the first quarter of 2008.

Monoline bond insurance companies, such as MBIA and Ambac Financial Group Inc., have been hit the hardest as they scramble to raise capital to cover possible defaults and to stave off a downgrade from the ratings agencies. It was this group's foray out of its traditional municipal bonds and into mortgage-backed securities that caused the turmoil. A rating downgrade of the monoline companies could be devastating for banks and others who bought insurance protection from them to cover their corporate bond exposure.

The situation is exacerbated by the heavy trading volume of the instruments, the secrecy surrounding the trades, and — most importantly — the lack of regulation in this insurance contract business. "An original CDS can go through 15 or 20 trades," said Miller. "So when a default occurs, the so-called insured party or hedged party doesn't know who's responsible for making up the default and if that end player has the resources to cure the default."

-----

I also ran across this: Seems the DC police have decided a little Warsaw Ghetto treatment is what we need. I'm so glad the DC police cheif said it was OK.
From the DCist.
(Under Fair Use)

June 4, 2008
Police to Seal Off D.C. Neighborhoods
Can you say Police State? The Examiner has the scoop on a controversial new program announced today that would create so-called "Neighborhood Safety Zones" which would serve to partially seal off certain parts of the city. D.C. Police would set-up checkpoints in targeted areas, demand to see ID and refuse admittance to people who don't live there, work there or have a “legitimate reason” to be there. Wow. Just, wow.

Some of the words used to describe such a plan by those quoted in the Examiner story include "breathtaking" and "cockamamie," but that hardly begins to scratch the surface. Interim Attorney General Peter Nickles actually said that measures of this sort have "been used in other cities.” Which cities are those, Mr. Nickles? Warsaw?

Today's proposal appears to be a desperate attempt by the city to tamp down recent violence that has ravaged the city, especially in Ward 5. The "Neighborhood Safety Zones" would last up to 10 days. It's a struggle to think of words to describe such a plan other than authoritarian or ghettoization.

The full description of this plan from the mayor's press release is below.

The Neighborhood Safety Zone initiative has been developed to help increase security for those who live in high-crime areas around the city and to help residents reclaim their communities. The program will authorize the Metropolitan Police Department to set up public safety checks to help safeguard community members and create safer neighborhoods in the District by increasing police presence aimed at deterring crime.

The safety zones will be established only upon request by a District Commander where there is evidence to support the existence of neighborhood violent crime, such as intelligence, violent crime data, police reports and feedback and concerns from the affected community.

Potential Neighborhood Safety Zones must be approved by the Chief of Police, and will be in effect for a maximum of 10 days. Public safety checks will be established along the main thoroughfares of the established neighborhoods. Anyone driving into a designated area may be asked to show valid identification with a home address in that neighborhood, or to provide an explanation for entering the NSZ, such as attending church, a doctor’s appointment or visiting friends or relatives. Pedestrians will not be subject to the public safety checks.

“The Neighborhood Safety Zones is just another tool MPD will employ to stop crime before it happens. The Neighborhood Safety Zone initiative will help residents terrorized by violent crime to take back their neighborhoods,” said Chief Lanier.

Initiatives such as the Neighborhood Safety Zones have been accepted by federal courts as a legitimate law enforcement practice in keeping with the Constitution’s Fourth Amendment. The constitutionality of the NSZ initiative has been reviewed by the D.C. Office of the Attorney General.

The NSZ will be launched next week in the Trinidad area.

2008-05-30T16:02:00.000-07:00

Forgive my delay in posting, it seems real-life sometimes gets in the way of blogging.

It seems the cash-strapped Florida legislature is not going to hold a tax-free hurricane preparedness week, as in the pats. The Florida government used to offer a 1 week tax holiday on storm preparedness items, e.g. batteries, flashlights, camp stoves, coolers, etc. would be tax free for 1 week. This could be 6-7% savings depending upon which county one lives in.

Well, now it's time for the state to promote retail sales instead of reducing you tax burden.

May 30, 2008

Contact:

GOVERNOR'S PRESS OFFICE
850-488-5394

ST. PETERSBURG – Governor Charlie Crist today joined state and local emergency managers and the Florida Retail Federation to promote Florida Hurricane Preparedness Week, May 25-31, 2008. He announced that some Florida retailers will be hosting special sales on hurricane supplies, beginning Friday, May 30, and continuing through June 8. Governor Crist and officials also accompanied Sandra Jackson of St. Petersburg and three of her children to shop for hurricane supplies at the Home Depot in St. Petersburg.

“Florida retailers have stepped up to the plate during tough times to help Floridians get ready for this hurricane season,” said Governor Crist. “We applaud their commitment and partnership to the safety of all who call the Sunshine State home.”

The Governor announced that the Florida Lottery and the Florida Retail Federation have partnered with Emergency Management this year to increase public awareness efforts across the state. Emergency supply lists will be available in more than 13,000 Lottery retailers from the Panhandle to the Keys. The Florida Lottery will also work with its existing broadcast media partners to place preparedness messages in both English and Spanish during select television and radio events.

“The Florida Lottery is proud to play a part in preparing Floridians for the upcoming hurricane season,” said Florida Lottery Secretary Leo DiBenigno. “For 20 years, the Lottery has provided billions for education in the Sunshine State, and we are glad to support emergency managers statewide to help raise awareness and keep our residents and visitors safe.”

“Florida is a great place to live, work and play,” said Governor Crist. “However, with this paradise comes the responsibility for all who call the Sunshine State home to get a plan and prepare for the 2008 Hurricane Season.”

Rick McAllister, president and chief executive officer of the Florida Retail Federation, explained how retailers across the state have stocked their shelves with emergency supplies, and they encourage residents to visit stores in their local community to get prepared for the upcoming hurricane season.

“Floridians can use the emergency supply list as they prepare themselves and their families for any type of disaster, especially hurricanes,” said McAllister. “We encourage everyone to check and replenish their emergency supplies so they are ready before an event happens.”

All of the participating Florida retailers are actively engaged in hurricane and disaster preparedness. Some Florida retailers will make special savings available on common disaster-supply items during the 10-day event. Check your local newspapers for the sales and promotional prices that may be taking place in your area.

“All Floridians need to get a plan and prepare to the best of their ability,” said Craig Fugate, director of the Florida Division of Emergency Management. “Residents should stock up on emergency supplies for the hurricane season.”

Some of the items included on the emergency supply list include:
· Flashlights and portable, self-powered light sources
· Portable radios, two-way radios and NOAA weather-band radios
· Flexible waterproof sheeting (tarps)
· Gas or diesel fuel containers
· Batteries
· Medications
· Ice chests or other food storage coolers
· Portable generators
· Carbon monoxide detectors
· Storm shutter devices
· Pet carrier and supplies

Florida Hurricane Preparedness Week is running in conjunction with National Hurricane Preparedness Week activities being conducted across Florida and other coastal states. For more information go to www.FloridaDisaster.org or http://www.nhc.noaa.gov/HAW2/english/intro.shtml. The 2008 Atlantic Hurricane Season runs from June 1 through November 30, 2008.

-----

This past weekend I attended the Southern Classic Gun show in Miami. One of the lessons learned: shop carefully. Many dealers were asking FAR too much for weapons that were in crappy shape. AK47's going for $700, used Glocks for $500. Just awful stuff.

One nice find was a Ruger Speed Six in good condition for $400, which C, My Favorite Lesbian, got for $375 out the door.

One thing that is interesting is they were selling Mosin-Nagants for the $200 range. After some consideration, I decided to apply for my 03 C&R FFL license, which is $30 for 3 years. Just the savings alone on one Mosin justifies the license cost, and permits the shipping of C&R firearms without needing a an 01 dealer to process it.

Get your own 03 C&R:
http://www.surplusrifle.com/shooting2005/howtogetyourcurionrelicffl03/index.asp

http://www.atf.treas.gov/dcof/index.htm
The form is F7CR 5310.16 Application for License (Collector of Curios and Relics) Under 18 U.S.C. Chapter 44, Firearms

Update: The requested forms arrived in 4 days. I'll update on the processing time once I send them out.

Hoovervilles, already?

2008-05-21T16:11:00.001-07:00

This one got forwarded to me by my wife, from CNN:

SANTA BARBARA, California (CNN) -- Barbara Harvey climbs into the back of her small Honda sport utility vehicle and snuggles with her two golden retrievers, her head nestled on a pillow propped against the driver's seat. A former loan processor, the 67-year-old mother of three grown children said she never thought she'd spend her golden years sleeping in her car in a parking lot.

"This is my bed, my dogs," she said. "This is my life in this car right now."

Harvey was forced into homelessness this year after being laid off. She said that three-quarters of her income went to paying rent in Santa Barbara, where the median house in the scenic oceanfront city costs more than $1 million. She lost her condo two months ago and had little savings as backup.

"It went to hell in a handbasket," she said. "I didn't think this would happen to me. It's just something that I don't think that people think is going to happen to them, is what it amounts to. It happens very quickly, too."

Harvey now works part time for $8 an hour, and she draws Social Security to help make ends meet. But she still cannot afford an apartment, and so every night she pulls into a gated parking lot to sleep in her car, along with other women who find themselves in a similar predicament. There are 12 parking lots across Santa Barbara that have been set up to accommodate the growing middle-class homelessness. These lots are believed to be part of the first program of its kind in the United States, according to organizers.

The lots open at 7 p.m. and close at 7 a.m. and are run by New Beginnings Counseling Center, a homeless outreach organization.

It is illegal for people in California to sleep in their cars on streets. New Beginnings worked with the city to allow the parking lots as a safe place for the homeless to sleep in their vehicles without being harassed by people on the streets or ticketed by police.

Harvey stays at the city's only parking lot for women. "This is very safe, and that's why I feel very comfortable," she said.

Nancy Kapp, the New Beginnings parking lot coordinator, said the group began seeing a need for the lots in recent months as California's foreclosure crisis hit the city hard. She said a growing number of senior citizens, women and lower- and middle-class families live on the streets.

"You look around today, and there are so many," said Kapp, who was homeless with her young daughter two decades ago. "I see women sleeping on benches. It's heartbreaking."

She added, "The way the economy is going, it's just amazing the people that are becoming homeless. It's hit the middle class."

She and others with New Beginnings walk the streets looking for people and families sleeping in their cars. The workers inform them about the parking lot program.

New Beginnings screens people to make sure they won't cause trouble. No alcohol or drugs are allowed in the parking lots.

"What we are trying to do is we pull bad apples out, and we put good apples in the parking lots and really help people out," said Shaw Tolley, another coordinator with New Beginnings.

Most of the time, the lots are transition points. New Beginnings works with each person to try to find a more permanent housing solution.

"It saddens me when they live in their vehicles," Tolley said. "It is not the most ideal situation for senior citizens and families, but it is reality."

He added, "We need to engage this problem. This is reality."...

Beating peak oil: the SUV of bikes.

2008-05-20T13:35:00.000-07:00

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Show up to work to find yourself out of a job

2008-05-19T17:46:00.000-07:00

Yup. The economy is starting to look like this: Employees at Roadhouse grills all over the Southeast showed up for work today to discover they had no jobs, and maybe no final paychecks. The picture included on this post is of a chained up front door to a Roadhouse Grill near where I live (I do not work for Roadhouse). Check out the story from the Palm Beach Post:

Friday, May 16, 2008

WEST PALM BEACH — With the swing of a gavel Tuesday, Roadhouse Grill was gone.

The restaurant doors were chained shut without notice. Employees were left without final paychecks. Assets were abandoned.

It was not how John Metz wanted the deal to go down.

The West Palm Beach turnaround man who bought the beleaguered steakhouse chain last fall was reportedly just two weeks away from a sale that could have paid the rent and kept an estimated 2,000 workers on the payroll.

But lawyers on the case said tighter bankruptcy deadlines and increasingly impatient landlords turned Roadhouse into roadkill.

When a loan to cover unpaid rents fell through, Roadhouse was forced this week to shut down its restaurants and liquidate its assets, Craig Kelley, Roadhouse's West Palm Beach attorney, said Friday.

A few more days could have changed the story.

The fine print of a 3-year-old change in bankruptcy law gave Roadhouse until May 5 - 210 days after it filed for Chapter 11 bankruptcy protection in October - to agree to pay $1.25 million in unpaid rents, Kelley said.

Landlords in six states, including Florida, weren't budging. A U.S. bankruptcy judge gave the company until May 9 to fork over the cash

With that deadline looming, Kelley said a big-money buyer, a publicly traded company he declined to name, was circling, willing to pay an estimated $4 million for the steakhouse.

But now? It's worth zip. Not even the restaurants' equipment and furnishings are valuable enough to auction off.

"The landlords are not going to get paid. They'll get their properties back, but they won't be paid," Kelley said.

Tampa investor MCF Development LLC was going to lend Metz the $1.25 million, but the two couldn't agree on terms in time. The money was waiting in escrow when the judge said time was up, Kelley said.

Without the cash, Roadhouse had to give up the leases and convert to Chapter 7 bankruptcy.

Roadhouse's 21 remaining locations, including restaurants in Delray Beach and Greenacres, were closed overnight after the ruling Tuesday. Employees showed up Wednesday morning to find chains on the doors.

"We had no choice but to close it down immediately," Kelley said. "We had to chain the doors, because if steaks and bottles of booze started walking out the door, Roadhouse's principals would be personally liable."

Boca Raton trustee Robert Furr was appointed to liquidate the company's assets. On Friday, he said he would have to abandon the equipment and furniture left at the 21 restaurants. Auctioneers said they could have brought about $20,000 at each location, but it would have cost more than that to set up the sale, Furr said.

Remaining assets amount to little more than $75,000 in cash, Furr said. That means that it is unlikely the out-of-work employees will ever get their final paychecks.

-----

So I got to talking with my brother, the CPA, about information for this blog. As I write, I'm perusing websites on the financial crisis, and I realized I've been focusing on the concrete examples I see daily: the real estate mess, etc. There's a whole shadow financial world that is also in crisis, and the cause is pretty clear. It has nothing at all to do with 0ne given thing, but a perfect storm of problems all peaking at the same time.

I recently stumbled upon a set of videos starring Lindsey Williams and the Energy Non-Crisis. This was shot in 2006, and is quite scary. I'm posting only the first part (of 9) , but you can follow the youtube chain and see the other 8. Good stuff.

Sanford and Son economy: spent brass worth dodging bullets

2008-05-16T07:35:00.000-07:00

I'm not the originator of this idea, I'm stealing it from cryptogon.com. The descriptive term "Sanford and Son Economy" is so apt, so perfect for what you're seeing and going to see, it just can't be passed up. So I give credit where it's due, and reserve the right to shamelessly steal the term.

From the AP:

Military cracks down on scrap-metal scavengers

By CHELSEA J. CARTER – 3 days ago

TWENTYNINE PALMS, Calif. (AP) — Hundreds of Marines were conducting a combat training mission in the Mojave Desert when an air patrol spotted something kicking up dust: A civilian pickup truck speeding across the barren landscape.

Behind the wheel was a suspected scrap metal thief who had been combing the Marine Corps Air Ground Combat Center for spent brass shell casings. His intrusion onto the base was the 12th time in six months that scavengers had inadvertently halted combat exercises.

Bombing ranges have become prime hunting grounds for so-called "scrappers," who are motivated by soaring commodity prices to take greater risks in their quest for brass, copper and aluminum. The scavenging causes headaches for the military, which cannot patrol every inch of the remote bases where spent ammunition, shrapnel and unexploded ordnance are easy to find.

"This is not just some petty crime. This is dangerous business," said Andy Chatelin, director of range management at Twentynine Palms, which at 932 square miles is the world's largest Marine Corps base.

Illegal scavenging of military munitions has long been an issue at military bases. But as metal prices have climbed in the past two years, scavengers have become more numerous, more audacious and more sophisticated.

After he was spotted by troops last December, the pickup truck driver barreled directly at a Marine, who fired five shots at the vehicle. The driver swerved, flipped over and spilled hundreds of dollars in collected metal. He was taken by helicopter to a hospital and later charged with attempted murder.

The military loses hundreds of thousands of dollars every time it is forced to halt training. And when scrappers make off with unexploded ordnance, the public is at risk.

The Pentagon estimates up to 10 percent of all ordnance such as bombs, missiles and grenades fails to explode on impact. Some of it is left behind in training areas.

In May 2007, two suspected scrappers removed a Vietnam-era missile from the Twentynine Palms base. It later exploded in their Barstow home, killing both men and destroying the apartment. Earlier this year, two workers were injured at a Raleigh, N.C., recycling plant when ordnance suspected of coming from nearby Fort Bragg exploded.

"The expense we have to go through, not just to guard against the loss of training time, but the chance of this hazardous material getting out into the public, is enormous," said Ronald Pearce, who oversees a training range in Yuma, Ariz., where the Marines and Navy practice aerial assaults. "You just can't look the other way and condone it."

No one knows how much scrap metal lies discarded on U.S. military bases because there are no records of the tonnage of exploded and unexploded ordnance. The number of illegal scavengers is also unclear because the military can only confirm a theft when there is an arrest.

After meeting with the Defense Department last month, the Institute of Scrap Recycling urged its members to stop accepting military scrap without knowing the source of the material. It also recommended the military create a system to account for the material it uses.

The Pentagon said it's impossible to calculate the cost in interrupted training — including lost man-hours and wasted fuel — but they have begun tracking lost training time, which can climb into the hundreds of thousands of dollars.

At the Marine Corps Air Station in Yuma, officials estimated they lost nine hours of aerial training between January and March.

To catch thieves, bases are combining technology with foot patrols and relying on help from sheriff's deputies.

The Twentynine Palms base is using cameras to conduct video surveillance of base borders. It also has assigned Marines from its Special Reaction Team, similar to a SWAT team, to work primarily on nabbing scrappers and trespassers.

But they are often up against a savvy enemy that uses high-tech communications and GPS systems, and often works in teams.

During a recent patrol at the base, Marines hunted for scrappers in gullies, desert washes and mountain crevices where some thieves had previously hid from helicopters under camouflage netting.

Last year, Marines found an abandoned car in the desert and a dead man nearby, plus a second man who was on the brink of death from dehydration. The pair were believed to have been prowling for scrap metal. Similar deaths were reported in Yuma.

The military said most scrappers arrested in the past several years appeared to be either illegal immigrants or drug users looking for easy money. If convicted on federal charges ranging from trespassing to theft, they face up to 20 years in prison.

Because the Twentynine Palms base is so vast, officials cannot erect and maintain fences. Instead, they have posted signs warning against trespassing, only to see those signs stolen for the metal.

"We've seen all types," Sgt. Timothy Warren said as he scanned the mountains with binoculars, looking for scavengers. "We've even arrested one guy, sent him to jail and then arrested him again a few days before he's even gone to court."

Grocery pushback

2008-05-12T09:55:00.000-07:00

Part of the solution for surviving the big C is how to feed yourself. I live in a major urban center, and I have no reasonable way to feed myself without the help of the local grocery chains. Groceries are some of the most powerful tools for stretching your deflating dollar and shopping wisely can mean the difference between paying bills and doing without lights.

To that end, I offer the following:

Tips for taming rising grocery prices

By Linda Stern

WASHINGTON (Reuters) - Gasoline isn't the only necessity of life that has gotten painfully expensive. Prices are rising sharply on eggs, rice, poultry, milk and bread -- all of the dietary staples.

Families with stagnant salaries who have been barely affording the rising cost of health care, driving and home heating and cooling now also have to figure out how to squeeze in eating.

And it could get worse before it gets better.

Some say prices of meat, pork and poultry have been held artificially low in recent years. The conversion of fields previously used for soy and feed grain into corn for ethanol will continue to have an impact. Corn, which finds its way into many food items -- as corn syrup for one -- has more than doubled in price the last two years.

But put that all in perspective: Food prices have actually been fairly stable for more than a decade. According to the latest Department of Agriculture figures (from 2006), American households spend less than 6 percent of their income on food -- that's less than in any other country.

Fortunately, there are almost as many ways to save on food as there are to eat. Frugal eating often dovetails with nutritious eating -- the most expensive foods often are the least healthy. Here's how to eat well and still have some money left for dessert.

-- Use the best advice from folks who have already done it. The blogosphere is full of frustrated home economics teachers who are more than happy to share their best frugal tips and recipes. A few places to start are:

here;

www.frugalfamilykitchen.com;

www.mommysavers.com; and

www.cheapcooking.com.

-- Coupon carefully. If you're willing to put in the time and effort, you can buy a basket of groceries for pennies on the dollar. It involves using coupons, shopping sales, finding stores that double coupons and putting it all together carefully. One site to check for more information is www.hotcouponworld.com.

You can find coupons to match items on sale at your local grocer at www.thegrocerygame.com. Beware: Unless you're using good coupons on products you would buy anyway, this can be a spending trap instead of a money-saving deal.

-- Buy some good containers. Roughly 13 cents of every food dollar goes to packaging and advertising, and you'll spend a lot more than that if you are always buying 100-calorie snack packs and tiny bags of chips to send to school with your kids. Buy some reusable containers, buy your favorite products in bulk and make your own individual packages.

-- Use meat for flavor, not bulk. A mixture of meat and beans over pasta or rice will satisfy those who love the taste of meat and poultry, but cut costs significantly than eating large cuts of meat.

-- Make your dollar buy more nutrition. Instead of buying sugar-coated cereals, white bread and chips, buy items like whole-grain bread and oatmeal. Instead of candy, buy fruit. Popcorn that you pop yourself has been heralded for generations for being cheap, fun, nutritious and tasty.

-- Buy frozen fish. Almost all of the "fresh" fish you buy has been frozen and thawed. Fish from the freezer section has often been frozen on the boat, so it's equally fresh -- and cheaper.

-- Do your own work, as a family. You're spending more on labor than on food when you buy lots of presliced, prewashed, preseasoned foods. Yet all the experts seem to agree that family mealtime is an important ritual. Extend the ritual by getting the whole family in on the slicing, dicing, cutting and stirring that dinner requires, even if it's just a once-a-week cooking session. You'll save money and maybe bond a little.

-- Eat out judiciously. Last year restaurant prices actually rose less than grocery prices, but it still costs a lot more to eat out than to cook at home. Americans typically spend about half of their food budget eating out, according to the Agriculture Department. Cut the cost without cutting the fun by mixing it up: Have appetizers and drinks at home before going to the restaurant, or have dessert at home. Or buy a precooked, carry-out chicken, but fix your own side salad.

-- Stock up on sales. You know you're always going to use pasta, lightbulbs and toothpaste, so buy a bunch on sale. Sure, this is inflation mentality, but double-digit price increases on food means we're in an inflationary environment, food wise. Furthermore, if you already have easy, good food in the pantry, you won't have to run out at the last minute and buy over-priced convenience items just to throw together dinner.

-- Grow your own. Oh sure, anyone who's gardened has thrown too much money at their tomato plants. But some crops are more worth growing than others. Basil and other herbs, hot peppers, eggplant and lettuce are some items that are very easy to grow and are never cheap at the grocer or farm stand, even when they are in season.

-- Make it fun. Save with a goal in mind so it becomes a game and not just drudgery. Shave $10 a week off of your food bill (that's less than 10 percent for the typical household), and you can all do something special, like go see a movie at the end of every month -- Of course you'll bring your own snacks.

(Editing by Maureen Bavdek)

Step 6, bank collapse.

2008-05-10T14:49:00.000-07:00

Well, the list of indicators of economic collapse trucks right along. Apparently, the regulators are starting to show up at regional banks to keep them from failing.

Federal regulators close Arkansas bank ANB Financial
Friday May 9, 8:45 pm ET

ANB Financial banks closed by federal regulators over 'unsafe and unsound' practices

BENTONVILLE, Ark. (AP) -- Federal regulators says they've closed ANB Financial National Association banks after discovering "unsafe and unsound" business practices there.
David Barr, a spokesman for the Federal Deposit Insurance Corp. says many customers served by the bank's nine locations had accounts under $100,000, which will be fully insured by the government. Barr says customers can continue to write checks and draw money from ATMs through the weekend.
Barr says Pulaski Bank and Trust Co. agreed to assume control over ANB Financial's bank locations, which will be open Monday.
As of Jan. 31, federal regulators say ANB Financial had about $2.1 billion in assets and $1.8 billion in total deposits.
It was the third closure this year of an FDIC-insured bank. Douglass National Bank, a Missouri bank with $58.5 million in assets, was shut in January; another Missouri institution with assets of $18.7 million, Hume Bank, was shut down in March.
Both were dwarfed in size of ANB Financial, where regulators found lax lending standards, mostly for construction and development loans for projects in Utah, Idaho and Wyoming, as well as Arkansas.
Observers have been watching for signs of bank distress resulting from the mortgage crisis. Profits at federally insured U.S. banks and thrifts plunged to a 16-year low in the fourth quarter as institutions set aside a record-high amount to cover losses from sour mortgages.

Yup kids, the game is afoot. While ANB hasn't got the name recognition of Bank of America or Citicorp, $2.1 billion is not a small bank. Pulaski, which now controls ANB has assets of only $1.3 Billion. By comparison, Bank of America's assets are $1.7 trillion, Wachovia's are 1.2 Trillion, Citigroup's are $1 trillion. While not a major player, the ANB collapse looks tied to the general meltdown of subprimes. For a state bank, ANB is a major closure.

Why is this happening in Arkansas and Missouri? Unknown at this point, perhaps these are the weak spots.

The human part

2008-05-05T06:41:00.001-07:00

So I'm back from FPG, and I'm sunburnt, tired, but refreshed in a significant way: I got to see human beings interacting in an intentional community. Granted, it's a 4-day festival, but it's a campout and a chance to use skills. Also, it's people drawn together twice a year for common interest.

This was my third FPG, and I'm planning the fourth as I write this. It's a low pressure, "luxury" camping trip. IOW, I drive the car in, set up and have access to running water, showers and flush toilets.

For me, it's a time to enjoy camping, survivalism lite. To enjoy the connections to other people in an intentional community. To share without feeling exploited. Festival is like that, and it's an important part of what I believe will be post-collapse society.

Most of us live in a sea of strangers. The majority of folks now live in cities or attached suburbs, and the idea of knowing your neighbors is vanishing. This alienation, this distace, is vastly different from the kind of society humans evolved in - small to medium sized tribes. You knew your neighbor, and he was probably your third cousin. Connection was constant. You knew people would watch your back, and you could trust them not to jack your stuff. Why? Because if your neighbor started walking your dog, everybody knew who's dog it was.

Likewise, human beings need tribes, but the nature of the postmodern world fueled by cheap oil and electronic isolation is subverting that need. People "connect" virtually, but that is a poor substitute for the real thing. In a post peak oil world, it'll just plain cost too much to be so far from your neighbors.

So the alternative is neo-tribalism. A permaculture based economy with the tribe at it's core. Mainly for two reasons: it's more efficient and it solves the needs of people. Many hands making light work. Sustainable agriculture, sustainable building practices and sustainable energy.

The payoff is that people are happier in tribes. Needs get met, and one thing the peak-oil and survivalist crowds aren't big into is the social needs. Tribes are intense, social environments that satisfy so much more than shoppertainment could ever hope to. They are anti-consumerist, and the real solution to the root cause of the angst that plagues the city.

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In a previous post I listed the 12 steps to economic collapse. I stated that we had surely seen steps 1, 2, and 4. What was missing was step 3, and well, we've finally found it. The Fed is allowing banks to put up unsecured debt, car loans, credit cards and student loans, as collateral for borrowing from the Fed. This is a very bad thing.

From the NYTimes:

Fed Takes Steps to Add Liquidity

By STEVEN R. WEISMAN

Published: May 2, 2008

WASHINGTON — The Federal Reserve announced new steps on Friday to help ease tight global credit markets by increasing the size of its cash auctions to banks and allowing financial institutions to put up credit card debt, student loans and car loans as collateral for Fed loans.

The Fed also acted in coordination with central banks in Europe to make it easier for European banks to obtain dollars in currency swaps.

In a terse statement Friday morning, announced just before the government reported that 20,000 jobs were lost in April, the Fed said that it was acting to counter “persistent liquidity pressures” in credit markets in Europe and the United States.

The Fed’s action came as some analysts are saying that a measure of stability has returned to American financial markets after months of turbulence. Nevertheless, the Fed has made clear that it remains concerned about the risk from credit markets seizing up because of losses from bad loans, particularly in the housing sector.

Two days ago, the Fed signaled its continuing concern about the economy, lowering short-term interest rates by a quarter of a percentage point, to 2 percent from 2.25 percent, while signaling that it would not be lowering rates again for a while.

The actions Friday involved two lending facilities set up recently by the Fed to meet the needs of banks, investment banks and other financial institutions hit by the credit crisis after a series of disclosures about the shakiness of their packages of subprime mortgages.

One of these new entities, the Term Securities Lending Facility, can lend up to $200 billion to 20 different banks and investment banks known as “primary dealers.” Until now, the primary dealers could put up mortgage-backed securities as collateral for these Fed loans.

The Fed’s action Friday will allow them to expand the type of collateral that can be pledged to include student loans, car loans, home equity loans and credit card debt, as long as it is highly rated.

In general, dealers have had difficulty obtaining loans with such collateral because such debt cannot be bought and sold in current market conditions, and lenders fear its value is nearly worthless. However, the Fed maintains that the collateral it is now willing to accept will be sound and assessed at a realistic value....

Update

2008-04-28T10:28:00.000-07:00

This is a small update to the readers of this blog (all six of you). There will be no posts May1-4 2008, since I'm going away on a camping trip to the Florida Pagan Gathering. I don't intend to blog from the Ocala National Forest, and I certainly don't expect to do much work. But afterwards, I'll get back on a regular schedule.

Will be trying out a few camping ideas, and might post on which ones work.

There is no spoon.

2008-04-27T18:14:00.000-07:00

So it's a Friday night and all this talk on the news has me craving Persian food. Persian food, specifically the good folks over at Rice House of Kebab in Doral. For those of you not down with life in the 305, Doral is the newest subdivision in the Dirty dirty's collection of ethnic enclaves. Mostly Venezuelan and nuvea riche. The kind of place you see a lot of SUV's and fresh housing tracts.

So back to Rice. It's an awesome idea, fast food Persian style. Get your Kebabs or Kubideh to go, or eat them while watching CNN or ESPN on the big screen TV. Nice place, super clean, friendly staff.

So I go in and see the owner, super nice guy named Reza. From Iran, lived in the US a long time, lived in Texas, Iowa and now Miami. So I walk in and jokingly ask him how the business is given rioting over rice and limits of rice sales at Sam's Club and Costco.

Dead seriously, he looks at me and says it's bullshit. There's no shortage of rice. There's rioting because dealers raised the prices in poor countries, and then are using fear of riots to imply that there's a shortage, raising prices and encouraging hoarding. He should know, he buys it in quantity.

He goes on to tell me that the vendors have been pushing this for months. Ratchet up the price, and then offering "discounts" on bulk.

What he says is indicative of how the market in the current long collapse is getting played. Everyone is on edge. People expect a riot or something in response to the $120/barrel price of oil. Hoarding would have been a good idea if you'd gotten started years ago.
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Keeping with this, James Rawles on survivalblog.com posted a letter from a fan reporting at what he'd seen in the warehouse clubs. It's pretty indicative of what's really going on.

James,
I visited COSTCO store in Woodinville, Washington Saturday morning, right at the store's opening time. I had my doubts about the reality of the shortages, and needed to shop, anyway, so I thought I'd check it out for myself. They had eight big warehouse guys escorting two pallets of rice out to the showroom floor just about the time I arrived. Six of the eight then stayed with the rice, handing it out to customers as needed. Both pallets were completely sold out by the time I left the store about 45 minutes later.
I talked with two of the warehouse guys independent of each other, playing dumb and asking what was going on. Both said they were receiving normal shipments, just as they always had, but that customers were spooked and buying a lot more than normal. Both told me they expected their next rice shipment on Tuesday. One of them also told me (then showed me) that they were completely out of "general purpose" flour, and only had specialized bread-making flour in stock. Both swore up and down (and I have no reason to think they were being less than honest) that there were no shortages, just a run on things that they blamed on the media. There was enough cooking oil to fill a swimming pool, no shortages there. - Jeff F

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So what does one do? Well, clearly with the Wall Street Journal calling for "load up the pantry" as a hedge against food prices, folks who don't do this need a plan from those who do. The alternative is getting a lot of food you won't eat, don't know how to cook, or don't know how long to keep.

My advice, talk to your local Latter Day Saints.

The Mormons? The Mormons. They've had this preparation mentality for 150 years, and these guys are the experts on how to load a pantry for self sufficiency. The recommend their members stock up for a year minimum, and will teach you how for free. You don't have to become a Mormon either.

http://www.providentliving.org/channel/0,11677,1706-1,00.html

Another direction is the $5/week food storage plan, where you add $5 worth of food every week to your regular grocery bill. While not all of the suggestions are great (I mean, really, are you going to eat that much tomato soup?), the idea is sound and builds good reerves of staples.

http://www.themormonchannel.net/tmc/1yrfor5.html

Another track is canning and drying food to maximize storage life and space.

http://www.uga.edu/nchfp/

At the end of the day, this crisis is going to last a long time. Food preparation is not as sexy as discussing what caliber of rifle works best against mutant zombie bikers, but a smart plan about storing food is more apt to keep you alive.

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This has to be the funniest thing I've seen in a long time. It's the "Lil Looming Disaster Pillow" from the Baby Bush Toy Company.

"This bright and charming pillow ensures that your child never forgets that the world is full of bad people plotting evil deeds."

Check 'em out at Baby Bush Toys.

Rental slavery replaces wage slavery

2008-04-25T09:19:00.000-07:00

So I happen upon this site www.insurgentamerican.net, and while the politics can get a little lefty for my tastes (I'm neither left nor right, I'm "Leave me alone"), there's and incredibly thoughtful pdf on that site about how we got into the credit crisis we did.

Short version of the story is that we put ourselves in the crunch by buying into something we should never have. In short, everybody wanted to become Petit-bourgeoisie by becoming landowners. Those that had the means were making money without working by renting property to those who couldn't afford to buy. The article refers to them as rentiers. The rentier class makes money for free, after the costs are paid for: mortgage, taxes, upkeep. This is how fatcat landlords become fat.

The problem is that banks make money on long term investments like mortgages, so they have an interest in getting more debtors owning land and assets under mortgage or as security for loans. So began the two-pronged attack - make more homeowners through predatory lending, and hook them into a cycle of debt when the bubble collapses. So credit became a drug, people could borrow on interest onlys, negative amoritization, and zero downs. Folks could make money renting off lots to others, and since all land appreciates, everybody would be leisure class, living the rentier lifestyle of making money from nothing.

Of course, the bubble has to burst at some point, and it did. The problem was that the Fed kept pushing interest rates down to combat inflation, adding more cheap money to an already flooded economy. Everybody's property value soared, disguising the fact that that price reflected speculation and hid the declining value of the dollar. Wealth moved to real estate, and the fallout was that homebuilders built, rentiers bought on credit, and eventually no one but rentier class could afford a house. Then the bottom dropped out.

This who scenario happened once before, in the 1920's, as the Fed made cheap money available and the rentier hopefuls looked to the Stock Market as the source of free money. We all know how that bubble burst, and we are living the early stages of it again, only this uses our houses as collateral.

The road to serfdom.

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This comes courtesy of my brother, and the AP.

Shiller: Housing slump may exceed Depression

Bailouts will be needed so millions don't lose homes, top economist says

NEW HAVEN, Conn. - An influential economist who long predicted the housing market bubble cautioned Tuesday that the slump in the U.S. housing market could cause prices to fall more than they did in the Great Depression, and bailouts will be needed so millions don't lose their homes.

Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said.

"I think there is a scenario that they could be down substantially more," Shiller said during a speech at the New Haven Lawn Club.

Shiller's Standard & Poor's/Case-Shiller home price index is considered a strong measure of home prices because it examines price changes of the same property over time, instead of calculating a median price of homes sold during the month.

Shiller, who admitted he has a reputation for being bearish, said real estate cycles typically take years to correct.

Home prices rose about 85 percent from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Shiller said.

"Basically we're in uncharted territory," Shiller said. "It seems we have developed a speculative culture about housing that never existed on a national basis before."

Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy.

Shiller, who said it's difficult to forecast prices, endorsed legislation proposed by Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners.

Gas, path to freedom.

2008-04-24T10:02:00.000-07:00

This is the first in a series of photos that will be published on this blog on a running basis. Pictures say more than words can sometimes, so a running tally of gas prices will be posted.

While gas prices alone do not a collapse make, they can be indicative of the direction of the economy. Cheap gas = strong economy. Almost everything you get comes to you from somewhere, and that requires fuel.

It's also an indicator of what your money is worth. When the cash becomes worthless, then the amount of FRNs required to buy something goes up.
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One of the solutions I love is the one taken by a family in California who publish a website called
Path to Freedom at http://www.pathtofreedom.com/. They aren't just talking the talk, they are walking the walk.

2008-04-22T06:27:00.000-07:00

I'd like to wish those concerned a happy Earth Day. Truthfully, Earth Day hasn't meant much more than advertising just how green people who aren't usually green are. You don't see much greeness from MSNBC, but the Today show had a segment on recycling your electronics, and their logo was green.

Big deal.

Real green would include ways to get off oil entirely. Convince people to carpool, to ride bicycles or motorbikes. What a scam.

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I participate regularly on survivalistboards.com, and last month we had an interesting post about the economy. Someone posted from another source the following list. It gives one pause to consider the state of the economy.

12 Steps towards economic collapse.

1. Housing recession.
2. The subprime mortgage loss continues.
3. Losses on unsecured debt: Credit cards, car loans, student loans.
4. Downgrading of monoline insurers' credit rating.
5. Meltdown in the commercial property market.
6. Bankruptcy of large regional or national banks.
7. Big losses on leveraged buyouts.
8. Wave of corporate defaults - insurers bankrupt.
9. Meltdown in shadow financial market: Hedge funds, margin calls and short sells.
10. Collapse in stock prices
11. Drying up of liquidity in financial markets, interbank loans, and money markets.
12. Vicious circle of losses, capital reduction, credit contraction, liquidation, and fire sales of assets.

The real question wasn't if these are truly a problem, but guessing where the US economy is right now. Kind of a pin-the-tail on the donkey exercise.

After some thought, I'd have to say that Ben Bernanke is really screwing the pooch. We've seen examples of #'s 1, 2, and 4, plus the Bear Sterns thing last month, it's hard to say what's the real state of the economy.

At least in my area, I haven't seen a meltdown in the commercial property market, but I have seen slowing. Why unsecured debt hasn't shown big losses yet is unknown - I imagine that the subprime crisis hasn't really hit it's stride, but may when the majority of adjustable mortgages reset this summer. Combine that with $4.00/ gallon gas, and you may be looking at the formation of an economic perfect storm.

So what to do? Most importantly, pay off your debts. Shrink your credit exposure. Pay off the highest interest rate credit card first, then the next highest, etc. Get a smaller car or a motorcycle. Get off petroleum as much as possible. Carpool and combine trips.

Next is get out your adjustable rate mortgage NOW. If you can find a lender you can work with, get into a fixed before they screw you. Find a good 30 year fixed with a doable rate.

After that, work on lowering your expenses.

Edit: Some interesting news I happened upon today through JWR's Survivalblog.com.
Retailing Chains Caught in a Wave of Bankruptcies

Maybe I spoke too soon about the meltdown in the commercial markets.

Introductory post

2008-04-21T16:40:00.000-07:00

Greetings:

Firstly, I need to lay out the philosophical groundwork of this blog. I believe that the modern oil-fed First World economy is completely untenable, that it carries within itself the seeds of it's own collapse. I contend that the present "Long Crisis" is symptomatic of a deeper problem, not the problem itself as the government and media focus on.

Which leads to two logical questions:
What sort of events should we expect with the collapse of western culture and how do we get ready for it?
What should we replace it with?

The answer to the first is pretty grim. Bad stuff, in all kinds of different spheres. I'm no anthropologist, but I will attempt to document aspects of the Collapse and present practical information for surviving it. None of it is good, most of it is angst ridden, doomer and dark. The short term is to adopt a survivalist/prepper attitude. Good sites and blogs exist for the survivalist, and information I have gathered will be presented from time to time. Practical stuff, smart stuff, stuff I have tried personally, and stuff I'm considering.

The answer to the second is much more positive, yet a bit revolutionary. We as a culture need to radically rethink the way we do things. We need to create a sustainable basis for human existence in a way that will ensure the continued existence of ourselves, our culture and our children. To this end, there is a very pro-sustainable and pro permaculture trend in this blog.

In addition, I believe there needs to be a radical rethinking of how we interact with each other from a social POV. To this end, I advocate a neo-tribalist POV, and a near anarcho-capitalist POV. Goverment, if any, should be the size of a postage stamp.

I don't think the transition will be easy, even if it goes along with my hopes. But no doubt a transition is taking place, and we can either benefit from it, or be consumed by it.

Let the games begin.