I don’t know if you’ve noticed this, but during this week, for the first time that I can recall, the news stations focusing on the story of our suffering economy started mentioning, at albeit a minimal amount, the possibility of having another Depression. I sat staring at the television for a number of minutes unable to fully ascertain what I had just heard.
It had gone beyond the argument about whether or not we were actually in a Recession (had their been 2 quarters of negative growth?) for that one little scary word to come out.
It has been over 2 years now since I went from a $90,000.00 a year job, through a full year of unemployment and job searching, to my part-time, low pay job as an adjunct instructor (read part-time employee without benefits) at a Community College. I was in the first wave of losses brought on by the Bush Administration… and my wave has gone so fare as to no longer be considered among the un- or under-employed.
Now there are tens of thousands of us, no longer able to collect unemployment so no longer counted in the ranks of the jobless.
My wife and I have cut down on so much of our lives… the number of movies we see, the amount of food we buy, etc., that it is unbelievable. We’ve sold down our properties as well as we could (we had to rent out Elly’s former townhouse in Hagerstown because the prices were going down so fast that it wouldn’t be worthwhile to sell it right now… we were lucky with my Greenbelt townhouse and her other one on th other side of Hagerstown – that got sold just in time) and bought into a lower-cost part of the country in West Virginia.
The retirement funds I have had invested, some for almost 45 years, have started to go down because of the dwindling stock market, and I have no where else to re-invest right now. I can only hold out and hope that TIAA-CREF crawls back up before the year is over.
So… what would we all do if a Depression did hit? Would we get around the phenomenal debt that the Bush Administration has built up on it’s Iraq war that will be cursing our children and grandchildren for years to come (and continues to suck what is left out of our economic future)? Will our food supplies get so expensive that potential workers forced into breadlines? Will corporations and banks continue to get federal support while individual citizens are considered rubbish?
It sometimes seems that it could actually be so. And to hear the words discussing it uttered on TV hits a new and frightening low.
time is very, very short.
Financial collapse this year, perhaps this season.
Commercial collapse–your local stores and markets quit functioning and close–follows.
What to do?
The general rules:
Get out of debt. Use credit only if you plan to max out and then disappear. But that is a risky game, not for the faint-hearted. Also, hyperinflation (see below) might save you from your debts, but banking laws are now regularly rewritten in favor of the lender, so this too is a high-risk approach.
Diversify. Back away from the dollar, and everything connected to it (stocks, bonds, etc.) Real goods (like storable food, liquor, tobacco, quality supplies and parts, well-made tools) will hold value. Gold is nice, but remember it leaves a paper trail, and though legal now, will surely be confiscated without recompense if you live in the US–like the Liberty Dollar already has been.
No paper trail. Seriously. No trail in somebody’s computer, either. Cut up your credit cards: Pay cash. Money well-spent–on real goods–is money that is somebody else’s problem when the dollar hyperinflates. How likely is hyperinflation? It depends on what the Federal Reserve Bank and the US Treasury do, but current policies, if continued, guarantee total destruction of the dollar within a few years max. Forget your pension: If you cannot cash it out and then convert to real goods with durable value, it is gone.
Could the dollar deflate? Not likely, but, what diversify means is, yes, hold on to a few of them, because you never know.
Diversifying means accepting losses in those things that go bad, gladly, because SOME things will remain good. Diversifying is necessary because of the difficulty of predicting which is which.
Property that can be put to good use (shelter, food-growing) will hold real value, but not paper value. This is not bad: Property taxes should go down–but right there is the heart of that particular gamble.
Good luck.
I’d like to take issue with something: during the Great Depression, even before Hoover was finally ousted from power, there was a massive backlash against pro-lender and pro-bank activity. (Look at culture from the time – not trusting banks with money at all is viewed as sensible and mainstream!) And the Gilded Age was in no way less autocratic or imbalanced than the Reagan Age. Even when it comes down to media control, most news sources were controlled by the very Robber Barons that had caused the crash.
This isn’t new, it’s happened before. While it’s true that it’s going to be bad, preaching doom-and-gloom is counterproductive. What we should be doing is advocating loudly, publicly, and repeatedly for progressive policies. Redefine the face of poverty, make people look favourably on social assistance, welfare, safety nets, public works, heavy regulation, fiercely progressive taxation, and all the other tools that FDR used to end the Great Depression and build the economic prosperity of the mid-20th century.
The fact that Obama’s already doing this makes me optimistic about his economic policies should he be elected.
…preaching doom-and-gloom is counterproductive…
agreed, but it’s certainly advisable to position oneself in the most advantageous circumstance as possible.
a friend of mine, who’s much more knowledgeable about economics and the current situation is, putting it mildly, very concerned about what’s transpiring in the economy, and the markets in particular.
he’s opined that taking the tax hit on the retirement fund withdrawal that it would take to pay off the mortgage on your house is a very good idea.
one rationale being that due to the market decline, the 401k’s, irta’s or whatever, are worth less every week; the second being that real estate, in the long run, will continue to have more validity as a repository for your investment dollars than 99% of the alternatives; and three, if/when push comes to shove, you’ve at least got a place where you and your family and friends can live.
the issue of property taxes being a relatively small concern, because, if the bottom falls out… which is not unlikely… your local tax assessor is more than likely to be more reasonable than a banker.
imo, his opinion deserves serious consideration depending on your circumstances as well as whatever prospects and alternatives are available to you.
YMMV
he’s opined that taking the tax hit on the retirement fund withdrawal that it would take to pay off the mortgage on your house is a very good idea.
That’s interesting, because it had occurred to me recently that the falling dollar was going to be a bit of an equalizer in that people with more money in their retirement accounts were going to to take bigger hits than people with less.
But what is different this time is that there are no real resources to pay for any of it.
And the two great success of the Iraq War have been (1) to enrich Bush’s friends and (2) to destroy American credit, so there are no financial means to pay for government services either. This was basic Republican strategy, successfully implemented.
In the early 20th century the US had a functioning farm infrastructure, a functioning industrial infrastructure, and cheap energy to run all of it. Only the financial system–due to the usual criminal activity at the top–had gone bad.
This time, none of these are true. Peak oil for the US was mid-1970s; we have been running on borrowed energy ever since. During the intervening decades the industrial infrastructure has been looted out and the farming infrastructure has been largely destroyed. (Yes, there are still some local organic farmers, and yes, there are CSAs; these will be very important as the agribusiness of industrial farming goes haywire). This means we are facing something like the Great Depression, but without the physical means to survive or recover. This is a very major difference.
Obama is impressive and inspiring, but he is also totally corporate. There will be limits to what he can do, and I have no idea what his policies will be–good or bad. He cannot be another FDR, because the resources for a New Deal are not there. But also, and at least as important, he cannot save capitalism for the Capitalists–as FDR did–because capitalism depends upon ever-expanding resource use, and those resources are no longer there. Capitalism cannot be saved.
The Capitalists know this, more or less, and are in something of a panic. They are hoping to transition to a combination of fascism and feudalism, but in a declining-energy environment, this is easier said than done. Nonetheless, they will expect of Obama that he facilitate that transition. He will not cross them and live.
From a Capitalist point of view, Obama is the ideal candidate, if you are hoping for a bait-and-switch: The masses get their “New Deal”–only in the fine print it turns out to be the same as peonage and slavery. Will it work? Nobody knows.
You can see, though, that most Capitalists are not only panicked, but faint-hearted: They still support the transparent and ham-fisted policies of McCain. Obama is too subtle for most of them.
Our financial troubles are exacerbated by such surrounds as climate change. That the climate will change is already guaranteed by the collapse of Arctic ice; how MUCH it will change is still unknown. Survival may not be possible, but I am still gambling on the chance that it is. I then ask myself what does surviving imply–that is, demand? Local, physical issued like food (this means organic gardening) and shelter come to the fore.
Love thy neighbor will be practical politics.
The collapse of arctic ice is not a cause or guarantee of climate change. Rather, the retreat of glaciers is a symptom of climate change. The cause is, and continues to be, the amount of carbon we dump into the atmosphere being greater than the amount that is removed by assorted sequestration processes. The temperature will rise, but we can still control how much and even, with good policy, bring things back to a sensible equilibrium.
As for Obama being corporate, what evidence do you have to back up that assertion other than airy claims about the corruption of all politicians? One reason he’s faced such intense opposition from the media so far is that he hasn’t been corporate – unlike Clinton or McCain, most of his donations have been from small, individual donors rather than large corporations.
Finally, you’d be amazed at how quickly infrastructure can be rebuilt in the hands of a suitably motivated, populist government with a progressive agenda. It’s taken the corporate farms over fifty years to destroy American agriculture. We could probably completely rebuild it in less than five. Distributed peer-to-peer is always easier than and superior to highly centralized by its very nature, particularly when there’s support of a strong governing agency regulating and supervising the peer-to-peer exchange.
As for Obama being corporate, what evidence do you have to back up that assertion other than airy claims about the corruption of all politicians?
I’m am not at all sure how to interpret this info from OpenSecrets.org which shows the amounts donated to the various campaigns by various economic sectors. I thought I had read that Obama wasn’t accepting corporate donations., hence my confusion.
In other words, they’re categorized based on who employed the person who donated. It’s a deceptive measure. The individual candidate pages have a bit more information, but not much more. The upshot, as I understand it, is this: Obama’s campaign has been almost entirely financed by small donators, with little from large donators and nothing from PACs. Clinton’s campaign has been almost entirely financed by large donators and PACs, with little from small donors.
This page gives a more accurate break-down, particularly the “percent from donors”.
As an example, I conceivably count as a big pharma donor.
The collapse of arctic ice is not a cause or guarantee of climate change. Rather, the retreat of glaciers is a symptom of climate change.
The retreat of glaciers is merely a symptom.
The collapse of summer Arctic Ocean ice is a positive feedback loop. Regardless of what Greenland does (and what it WILL do is melt) the Arctic Ocean is going to collect more sunlight than in the past, adding to the Earth’s overall temperature. We have set in motion a planet-warming feedback.
The cause is, and continues to be, the amount of carbon we dump into the atmosphere
This is indeed the main driver. And sadly, though we are willing to talk and talk, there is no evidence at all that we are willing to abandon the many industrial and economic activities that produce this excess carbon dioxide. It seems to me that we will continue producing excess carbon dioxide with little or no abatement until our civilization collapses. Fortunately, that will happen. Unfortunately, we are not getting ourselves ready for it. Time is very, very short.
As for Obama being corporate, what evidence do you have to back up that assertion other than airy claims about the corruption of all politicians?
He was allowed to run, and he was given media coverage–unlike a number of (potential) candidates who were actually saying substantive (not just “inspiring”) things who weren’t.
I rest my case.
No, I do not claim that Obama is particularly corrupt. That is not even the point at issue. Also, in his favor, he is obviously intelligent and speaks very well. I would certainly count him the best candidate in the race.
Finally, you’d be amazed at how quickly infrastructure can be rebuilt in the hands of a suitably motivated, populist
Well, I certainly hope so. But we’ll be doing it with picks and shovels, not tractors. This is not as bad as it sounds since organic methods desire less mechanization (all that plowing and harrowing) and more direct human attention.
I suppose the heart of our disagreement is that I do not believe our national government can or will be salvaged. Nor do I believe that Obama, despite his plain virtues, can do it. If I am wrong, so much the better, but I am totally unwilling to count on it.
Where did you get to be so wise? Your comments here are golden. Thanks for the clear thinking and right-on insights.
Er… My memory may be faulty, but I don’t remember him getting much serious media attention at all until he won Iowa. He was generally treated similarly to Kucinich – a joke candidate. Though in Obama’s case it was because he was too young, the point remains – the narrative I remember was that the only “serious” contenders were Clinton and Edwards, and that Clinton was “obviously” going to win easily.
Obama’s media coverage since then has been overwhelmingly negative.
Yes I’ve noticed it and not just this week, it’s been mentioned for several weeks back now.
I think Gainne puts it well about how to handle the coming mess, big or small there’s gonna be a change and I’m thinking it will be a lot like the 70’s with the gas situation and costs went sky hi, people actually sold their gas guzzlers and much talk was made of alternate energy for one thing.
We older folks observe that 30 years later we didn’t do much at all in any of the directions that we could see back then were going to lead to huge problems in the future.. Now we are here and as far as I’m concerned many of past and present leaders of this country are going to have to come to account for the mess they’ve made in both foreign and domestic areas, combined to make one giant tsunami of a breakdown.
Of course too if the US goes into any kind of depression the rest of the world will follow us down.
Is it the time of the great downfall and upheavel that will lead to perhaps peace and prosperity on this planet. Does all need to fall in order to change?
.
In 1971 on our honeymoon to Germany, we were happy to have travelers’ cheques in US dollars. Thanks to tricky Dick, we lost 15% in the first weekend. No recession is identical, many features differ. In the seventies you had high inflation and interest rate above 11%. The housing market collapsed in the early eighties, as did the job market. The interest rate came down and the dollar recovered under Reagan’s optimistic mood. The Repug economics has gone from bad to worse and will hit rock bottom in the coming years. I’m very lucky to have all my assets in the Euro.
The OECD, a multilateral government research body, said its downgraded estimates reflected a sharp downturn in US economic conditions since December, with financial markets in turmoil, evidence of weakness in the jobs market, plunging confidence and further declines in the housing market.
The forecasts, with virtually no growth or maybe contraction in the United States in the first six months, appeared to support the idea of “decoupling” in which the rest of the world breaks its dependence on the US motor for growth.
The Japanese and European economies were forecast to continue expanding at a healthy, albeit reduced, pace.
In short, given the size of the current account deficit it is held that the US dollar has to plunge in a big way against most currencies, and it is not possible to avoid a painful adjustment as a result of this. It would appear that the trade deficit is a major economic problem that must be urgently addressed in order to avoid serious economic disaster.
UAE – Sovereign Wealth Funds Draw Attention
≈ Cross-posted from Zander1’s diary — Global No-Confidence Vote: Is It Over? ≈
"But I will not let myself be reduced to silence."thank you for those links.
as you note, no two events in history are exactly similiar. However, in this round, the debt is some $500 trillion.
the 1930s: ‘Brother, an you spare a dime’
2010: ‘can we spare a quadrillion?
The central bankers are working hard to stop the bleed.
Mr. Nouriel Roubini, professor of economics at Stern School of Business, NYU, nailed it in 2004. He was dismissed as being too much of a gloomer. His most recent missive:
The Worst Financial Crisis Since the Great Depression is Getting Worse…and the Need for Radical Policy Solutions to the Crisis
can the powers avoid the financial meltdown without hyper-inflation? Unlikely. There’s no practical solution.
as
US ponders: How deep is economic abyss?
imho, it’s the tip of the iceberg that the USS Titanic hit last July.
Can they avoid a meltdown and still embrace their neo-liberal/neo-conservative philosophy? No. That philosophy is what’s causing this meltdown, because it’s fundamentally wrong and destructive.
Can they avoid a meltdown by returning to, or perhaps even exceeding, the principles of FDR? By nationalizing and heavily regulating banks, by tightly controlling monetary policy, by implementing an aggressively progressive tax, and basically socializing the economy, European-style? Yes, almost certainly.
Again: there are solutions. But the solutions are progressive and socialist in nature. IE, adopting an economic system that actually almost works.
smart money posits the regulators and governors will adapt the Weimar tool, hyper-inflation – (weimar repudiated war reparations). This round, it’ll be repudiation of OTC derivatives – over $581 trillion – a number greater than the total world economies.
Central bankers met on the weekend to devise a plan…mass purchases of mortgage backed securities with tax payers money..a bailout of the brethrens.
such a solution will be the destruction of national currencies. The dollar is already burnt heading to .52.
when the litigation(s) against the issuers of these OTC derivatives end, millions will have free houses…the Attorneys will track the mortgages to the SIVs. So far courts have held only the financial entity that actually lent the money can foreclose.
Ask Duetsche Bank AG.
Here’s the legal catch: the entity that actually lent the money has sold the mortgage and been paid…but that same mortgage contract has been re-sold over and over and over and over and over.. Those who bought down line have no locus (legal standing) to foreclose b/c what they bought was less than 1/84 of a contract.
A mountain of fraudulent debt rated AAA.
Exactly. Which is why we need a progressive government willing to hit them on the nose with a rolled-up newspaper and say “Bad banker! No cookie!” Pardon the facetious attitude and simplistic analysis, but the only way to win is to not play the game. They want to trade imaginary money? Fine. Cut them out of the economy and ignore them.
Yes, I do believe there’s no cushioning of this, that we have to learn the “hard way”, that there will have to be a massive collapse of this greedy gambling system called capitalism, else it will never be destroyed.
The pick-me-up that comes out of this debacle thought, is what adults teach little children — sharing. We will learn to share resources, share property, share wealth, share burdens and problems and disasters. It is the next step in human conscious development.
the one involving disruptions to shipping of food stuffs may be of concern, particularly if you live in the larger cities, and thus have limited access to the food commodities stored by the farmers in more rural areas.
IMO an investment in a few pounds of your favorite beans, etc, and essential “paper products” would be a wise move.
Remember, your supermarket has maybe 2-3 days worth of supplies. The resupply is on a tractor-trailer rig, somewhere.
I’ve already noticed emptier shelves at some grocery stores. Maybe they were just under staffed for restocking, but the empty spots here and there were plain to see and not just on sale items. Another point is that more date sensitive items like bagged salads, cheese, & meat are being marked down and I often have to wait behind others to get to those sections of the coolers. Even marked down, meat is getting too pricey for my budget – some of the beef is still $12 a pound! I’m stocking up on basics like rice, beans, & flour plus storing them in glass or heavy food grade plastic containers to prevent bugs from getting into them.
how long can food supplies like that last it you store them in air tight containers?
Not really certain, but I suspect longer than they will just placed in the cupboard in the original packaging. We’re in the process of moving and I was upset to discover that packages of split peas, rice and other items that had gotten shoved into the back of a cupboard were infested with little bugs that had eaten holes in the plastic bags and had to be discarded. My daughter has Mormon friends who use canning equipment provided by the church to can things like rice & flour for storage.
I have had to do THAT more than once.
(or leave the bugs in for extra protein. Cook well.)
I have learned to move storable food out of those worthless plastic pouches and into glass jars with good sealing lids. Rinsed and dried juice jars work well.
Keeps much better this way, and without the bugs.
that’s one to make sure you stock up on — dry beans aren’t a great food, unless you have some water (and a heating source, firewood?) for cooking.
We have a well instead of city water and are looking into getting a hand pump. If (and I know that it’s a big IF)natural gas supplies continue, we have a generator that will basically run the whole house. Otherwise, my grandparents’ oil lamps are stored in the basement and we have a fireplace. I think I’m going to dig out my collection of Mother Earth News from the 70s as there were good articles in them.
I remember. My father was out of work from 1930 to 1938, when he got a job as an apprentice electrician in a US Navy Yard. In between, he helped out in his stepfather’s delicatessan for room and board. He met my mother in 1934, but they couldn’t get married until he got work. After the war we lived in economic anxiety for about ten years, and didn’t buy a car until just before I went to college in 1958. Thkey worshiped FDR.
You don’t forget those experiences. My primary goal upon obtaining a job was to save up a year’s income in the event I lost my job. I didn’t want to have to beg like my father. To be sure, that saving was irrational, but it bought a house when houses were still a good buy.
(I am ONLY 66!) But this I can tell you:
Check out James Howard Kunstler’s blog on the coming changes, in his new novel, and very interesting commentary.
http://jameshowardkunstler.typepad.com/clusterfuck_nation/