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Issue 11: March 2009: Editor Robert Velare: www.rockhoundstation1.com
In this issue:The Global Financial Crisis-Editorial RHS1 :-
A WAILING GLOBAL CYCLONE OF TOXIC TRASH:- "Bankenstein" the ticking apocalypse:-Lessons from Argentina's economic collapse:-160 FREE e-books.
The Global Financial Crisis
*SPECIAL EDITION*
The Shape Of Things To Come

"The worst financial scandal in history. It dwarfs 1929, Ponzi's scheme, Teapot Dome, the South Sea Bubble, tulip bulbs, you name it. Bernie Madoff? He's peanuts."
James Lieber
"We are on a train to Hell."
Bud Burrell
Mr. Bud Burrell has extensive experience working with major
brokerage firms on the trading desk and arbitrage desk with
almost 30 years experience -- Industry authority, expert,
Wall Street veteran..
This interview is 19.5 megabytes...Info for our dial up readers.

"Buddy can you spare a dime,"
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The above graph is not the space shuttle taking off it is in fact the...Total borrowings of US Depository Institutions from the US Federal Reserve; 01/08/1986 to 10/09/2008... Source Federal Reserve Bank of St Louis
Fed Refuses to Release Bank Lending Data, Insists on Secrecy
March 5.09 (Bloomberg) -- The Federal Reserve Board of Governors receives daily reports on loans to banks and securities firms, the institution said in response to a Freedom of Information Act lawsuit filed by Bloomberg News.
The Fed refused yesterday to disclose the names of the borrowers and the loans, alleging that it would cast "a stigma" on recipients of more than $1.9 trillion of emergency credit from U.S. taxpayers and the assets the central bank is accepting as collateral.
Mark Pittman
RHS1
Hello there, how are you doing?
"Global finance" is not our usual field however if what is portrayed, projected, and assumed in this edition of earthwatch is valid then the implications for the planet "are a whole new ball game".
The foremost topic on the planet today is "the financial crisis" and you know some people are"sick" of it as its not very entertaining or really simple to understand. "Financial crisis" blah, blah, blah, its on the radio, TV, in the papers, its all over the Internet so lets take a good long look at this "label"... Whats happening here?
In this edition RHS1 will try to "pick the stitches" out of the current economic slump using our "dead reckoning" investigative technique. First for the record, this disclaimer so everyone knows the score...I am not a journalist, I am not a economist..Yet to quote Hamlet "when the wind is in the north I fancy I know a hawk from a handsaw"...
Ok a few pointers before we set off...The sort of thing coming through the media is this type of utterance...
"The total liabilities of the United States government, including future social security and medicare payments that the U.S. government is already committed to pay out, now exceed 65 TRILLION dollars, which is more than the entire GDP of the whole world."
"The Obama administration economic stimulus package is going to force the Treasury to borrow approximately $2.5 trillion in 2009 and another $4 trillion in 2010, with the result of increasing the current $10 trillion national debt by 65 percent in just two years."
"If the Obama administration increases the national debt by 65 percent every two years, the debt will be $16.5 trillion in 2010 and $27.225 trillion by 2012, the year of the next presidential election."
RHS1
Indeed the word trillion is bandied about as if it were a simple 8 letter word...How much is a trillion? How big is a trillion? * 1,000,000,000,000 (one million million; 10 to the power of 12;
If you had gone into business on the day Jesus was born, and your business lost a million dollars a day, 365 days a year, it would take you until October 2737 to lose $1 trillion.
If you spent $1 million a day, every day since Jesus was born, you would still be only slightly more that three-quarters of the way to spending $1 trillion.
To put this in perspective: A trillion dollar pile of $1000 bills would be 67 miles high. A million dollar pile would be 4.3 inches.
Indiana RHS1...
A WAILING GLOBAL CYCLONE OF TOXIC TRASH.

Credit Derivatives..."Bankenstein"
This Reality/Movie cost over 1 Quadrillion Dollars to make...Thats over 1000 Trillion..Not cheap eh!
"The 'securitised assets' held by the banks cannot lose 'more' value, as they have already lost 100% of their value and it is impossible, therefore, for these non-assets to be devalued any further.
As indicated below, Swiss Re, the second largest reinsurer in the world, has just scrapped its own investment bank and in the process has written down its derivatives 'assets' to their correct value:
*ZERO*."
Christopher E. H. Story FRSA; Editor; International Currency Review.
"Swiss Re tumbled 28 percent after it posted a full-year net loss of about 1 billion Swiss francs and said U.S. investor Warren Buffett's Berkshire Hathaway was investing 3 billion Swiss francs ($2.63 billion) in the company.
Swiss Re wrote down twice that amount in toxic assets and said it would consider further equity raising of up to 2 billion francs."
FRANKFURT, Feb 5 (Reuters).
RHS1
Yep!..That is not a misprint 1 Quadrillion dollars of toxic waste paper...That according to informed sources has "No value" no one trusts, no one wants, and no one is fooled by anymore in the financial world.
OK below is some financialese; logical, definitions of some financial instruments...Which is going straight in the trash can...If anyone wants to take this path click the link below the text in blue and good luck -O)

"Find the Lady"
Collateralized debt obligations or CDOs are a form of credit derivative offering exposure to a large number of companies in a single instrument. This exposure is sold in slices of varying risk or subordination - each slice is known as a tranche.
In a cashflow CDO, the underlying credit risks are bonds or loans held by the issuer. Alternatively in a synthetic CDO, the exposure to each underlying company is a credit default swap. A synthetic CDO is also referred to as CSO.
Other more complicated CDOs have been developed where each underlying credit risk is itself a CDO tranche. These CDOs are commonly known as CDOs-squared.
Lehman Brothers Guide Exotic Credit Derivatives:
and other "exstinct species"...Click Me.
RHS1
So whats happening here?...What is the "Financial Crisis"?...Well lets take a look at the "official" declared cause which is the "subprime mortgage meltdown".
When checking the mortgage default percentage in September 2008 it stood at about 5%...Uuuggghh...Your average supermarket reckons on 7% shrinkage, "theft", surely the mortgage givers know the maths and are covered???
Today (below) its 11% after throwing vast quantities of workers on the scrap heap its not really a surprise.
NEW YORK (CNNMoney.com) -- More than 11% of all mortgages are either delinquent or in foreclosure, according to an industry report released Thursday. The percentage of borrowers at least one month behind in their mortgage payments - but not in foreclosure - rose to nearly 8% during the fourth quarter of 2008, according to the National Delinquency Report from the Mortgage Bankers Association (MBA). This is the highest rate of delinquency ever recorded by the survey, which began in 1972, and reflects a record 13% jump compared to the third quarter.
By Les Christie, CNNMoney.com staff writer Last Updated: March 5, 2009: 2:39 PM ET
RHS1
I cannot for one instance believe that a few people who could not pay their mortgage are the cause of the decline and fall of western civilisation as we know it and responsible for the destruction of the global financial system .
- Have caused titanic financial institutions in exsistance for over an hundred years to crash as Oak trees in a hurricane.
- Put millions of people out of work and caused the motor industry to keel over like a pole axed ox.
- Brought nations to brink of total collapse...
- Evaporated 40% to 50% of the wealth on the planet Earth
NO! "Gimme a break"..."Somethings rotten in the kingdom of Denmark"
This global mess is down to "derivatives" which by dead reckoning are some sort of complex smoke 'n mirror "three card trick". I know they/them "what made 'em" brought in physicists and mathematicians to design them.
These "Alice in Wonderland" financial instruments exotic and complex beyond the "ken of mortal men" became the yuppie, golden boy, jet set's in vogue financial "Emperors new cloths"...The smoke and mirrors were transformed into beads and mirrors and exchanged all over the planet for "Cash".
Today they threaten the planet because if this "Bankenstein" monster gives it "BOOM" its taking everything else with it.
Now below is whole the story of this "FACT" it is written by people far more qualified than I to explain it to you.
"The real story in Ducktown"...
"The global economy is decelerating at the fastest pace on record. 40 percent of global wealth has been wiped out. The banking system is insolvent, unemployment is soaring, tax revenues are falling, the markets are in shock, housing is crashing, deficits are soaring, and consumer confidence is at its lowest point in history." Mike Whitney:
RHS1
To the authors of the articles below...Gentlemen thank you for providing this information its reproduction in some cases may be contra copyright. Now given this situation is current, ongoing, and critical, RHS1 cites "the fair use rule" and in each case we are linked to the original source and attribute the information and opinion to its original author.
It is posted here in the "spirit of the Internet" the 5th estate.
So what is my opinion of this situation...The following image is two fold; It is the end of the play and is reproduced in extreme irony.
mouse over image

Remember the trillion dollars perspective?
A trillion dollar pile of $1000 bills would be 67 miles high. A million dollar pile would be 4.3 inches.
Well now your Quadrillion pile is now 6,700 miles high.
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"Insanity in individuals is something rare - but
in groups, parties, nations and epochs, it is the rule." -
- Friedrich Nietzsche
Quadrillion? In 2008, the Gross Domestic Product of the entire world was $70.5 trillion.
" The Bank of International Settlements recently reported that the amount of outstanding derivatives has now reached the $1.14 quadrillion mark "
Quadrillion? That's a number only astronomers use, right? You know...as in the North Star is "just" a couple of quadrillion miles away?
But, ominously enough, Earth's economists are actually starting to use the number, too. No, not to discuss the amount of dollars out there (though it might feel like the Fed just pumped a quadrillion greenbacks into the economy). The Bank of International Settlements recently reported that the amount of outstanding derivatives has now reached the $1.14 quadrillion mark ($548 Trillion in listed credit derivatives plus $596 trillion in notional [or face value] OTC derivatives).
Whether you're an astronomer or an economist, that's an awfully big number. In case you need a mega-number refresher course, million is followed by billion which is followed by trillion which is followed by quadrillion (and, okay, quintillion and sextillion follow that). Yes, it takes a thousand trillion to make up one quadrillion, and, sadly, that's where we now find ourselves with this whole derivative mess.
Leverage Madness
Derivatives, as you may know, are essentially unregulated, high-risk credit bets. Unlike the earnest farmer who might employ a futures contract to hedge the price of the beans he's worked so hard to grow, many banking institutions now use futures, forwards, options, swaps, swaptions, caps, collars and floors-the whole wacky inventory of leverage devices-to bet the hell out of virtually anything.
What drives derivatives, at their very roots (if you can somehow get back that far), are base assets that get leveraged to a demented degree. Martin Mayer writing for the Brookings Institute, said, "the receiver of the payments on these loans or securities has bought the securities for the duration of the swap on 95% margin, even though the law says nobody can buy securities without putting up half the price."
Extrapolated, $1.14 quadrillion in assets "owned" on something like 95% margin has to be one of the scariest phenomena in economic history.
Mathematicians and academics are supposedly the air traffic controllers of the derivative complex, keeping everything neatly hedged, up-to-date and safe. But a quadrillion-plus of these highly leveraged investments is like multiplying America's fleet of airplanes a million-fold...while not bothering to boost the number of air traffic controllers. The potential for financial disaster here is simply overwhelming.
"Financial Weapons of Mass Destruction"
So warned Warren Buffet of derivatives six years ago.
"We view them as time bombs, both for the parties that deal in them and the economic system," is how the Oracle of Omaha put it.
That time bomb almost went off in March 2008 with the Bear Stearns debacle. The title of an article by noted analyst Ambrose Evans-Prichard-"Fed's rescue halted a derivatives Chernobyl"-says virtually everything you need to know.
According to the article, Bear Stearns held a jaw-dropping $13.4 trillion in derivatives, which is "greater than the U.S. national income." So where did all those derivatives go? Well, this time anyway, JP Morgan was encouraged to step in to add Bear's derivatives to its own $77 trillion portfolio, giving the financial giant a grand total of $90 trillion in these wobbly investments.
Which begs the question, why didn't we just let Bear Stearns-$13 trillion in derivatives and all-go belly up? Wouldn't that have taught the nation a valuable lesson and given Wall Street a long-deserved wake-up call? "Twenty years ago the Fed would have let Bear Stearns go bust," said credit specialist William Sels. "Now it is too interlinked to fail."
Which means that a Bear Stearns collapse today could be the first falling domino in a collapsing domino configuration tomorrow. Derivatives really are all interlinked. So expect the Fed to move with SWAT-like velocity to rescue any bank struggling with its derivative load.
But what happens when even that's not enough?
Surviving the Coming Derivatives Collapse
Eventually, shockingly, something will go wrong. Some bank will slip up, some mathematician will miscalculate or the Fed just won't react fast enough next time, and the whole $1.4 quadrillion derivative complex will simply "go Chernobyl." Only it might not be $1.4 quadrillion by then. It might be a whole lot more.
What would be the aftermath?
Whatever happened, it wouldn't be pretty. Referring to the Bear Stearns emergency, James Melcher, a well-known hedge fund manager, said, "There was a risk of a total meltdown at the beginning of last week. I don't think most people have any idea how bad this chain could have been."
The New York Times was even more pointed: "If the Fed hadn't acted this morning and Bear (Stearns) did default on its obligations, then that could have triggered a widespread panic and potentially a collapse of the financial system."
Yes...the Times said that.
But there's too much leverage, too much money, too much greed and too many shenanigans involved here to believe this story will have a happy ending. So, as soon as you can, you really need to buy some "derivative-collapse insurance."
You need to buy gold.
Think of gold-this beautiful, glittery precious metal-as its own monetary system, an honorable investment divorced from the old-boy paper money network that has bred so many nasty derivative beasts. Should the worst happen, gold would represent the only financial sanity around; investors not mangled by a derivative collapse would flock to the precious metal if only to wait things out.
If you just rolled your eyes, Google Bear Stearns to see just how close we all came. Then go ahead and look into gold...before we start wondering just how much $1 quintillion in derivatives is.
Kevin DeMeritt, president of Lear Capital
You've seen him on Fox News Television and heard him on the Rush Limbaugh Show. Kevin DeMeritt, president of Lear Capital, is a published author, analyst and an expert guest on more than 1000 radio programs discussing today's economy and gold. Now more than ever, his insights are welcome by nervous investors. Visit LearCapital.com for all the help you need.
Article Source:
For more information click here to visit www.EzineArticles.com.
http://www.huffingtonpost.com/howard-schweber/geithners-dragon_b_170790.html
EXPERTS PREDICT MONEY CRISIS
A Little-Known- Derivatives Debt Crisis-
Poses Threat to Entire Financial World
By Christopher Ruddy
Could the U.S. housing recession and recent events in the stock market be early warnings of something even worse to come?
Until recently, the U.S and global economies had been roaring. In the last two years, the Dow went up by a huge 30%, and many commodities are up by 20% to 50%. Also growth in several Asian countries, notably India and China, has been simply amazing, up by 9% to 12% a year. And until recently, real estate was also booming in many parts of this world, including the United States, Europe and Asia.
This broad-based global boom would be great news for everyone if it was the result of natural and sustainable market forces, such as a growth in savings and increasing economic innovation.
But is the mother of all financial disasters on the horizon?
Unfortunately, there is evidence that this global boom is anything but natural and sustainable, but is really the artificial result of a global liquidity bubble. A bubble that could now be on the verge of bursting.
In this global bubble, literally hundreds of trillions of dollars in leveraged debt are at risk. It's no secret that in today's society, everyone from the family next door, to major corporations, to the U.S. government is deeply in debt. But while some debt statistics are widely reported, such as our $8 trillion national debt, other debt figures are never mentioned.
There has much discussion of Uncle Sam's enormous, unfunded liabilities including mandatory Social Security and Medicare payments, government and military pensions, interest on the national debt and other hidden-but-very-real government debt.
Altogether this debt totals an incredible $60 trillion to $65 trillion, or about $500,000 for every U.S. family. It's doubtful these obligations will ever be paid and even the attempt to do so could plunge our economy into hyperinflation.
That's scary enough and raises lots of reason for concern, as more Baby Boomers retire and this debt comes due. However, the above unfunded mandates are dwarfed by little-understood but truly colossal derivatives debt which now totals over $345 trillion-about nine times the Gross Domestic Product (GDP) of the entire world.
COMBINED DEBT
Derivatives are debt based on other debt. For example, banks commonly package groups of home mortgages together and sell this combined debt as Residential Mortgage Backed Securities (RMBS). Banks in Japan and China are major purchasers. Unfortunately, each time debt is repackaged and resold, it grows, in some cases exponentially creating an enormous, global pyramid of debt thousands of times greater than the value of the underlying assets.
Now the $345 trillion question is, "What happens if the underlying assets upon which all of this pyramiding debt is based decline in value?" Moreover, "who gets stuck holding the worthless hot potato of uncollectible debt?"
That's not a trivial or unimportant question. If the assets that all of this debt are based upon ever fall, the entire global derivative debt pyramid would begin to collapse, potentially taking much of the world's financial system along with it.
If you've never heard of derivatives before, join the crowd. Less than one person in 100 has ever heard of them, and even fewer understand them. But what you don't know could destroy your finances, and what's particularly worrisome is that the derivatives debt pyramid may have already begun to collapse.
Christopher Ruddy is the editor-in-chief and CEO of Newsmax magazine.
For more information click here to visit www.newsmax.com.
What's Next?
James Howard Kunstler, CFN Update for March 2nd, 2009
The Peak Oil story was never about running out of oil. It was about the collapse of complex systems in a world economy faced by the prospect of no further oil-fueled growth. It was something of a shock to many that the first complex system to fail would be banking, but the process is obvious: no more growth means no more ability to pay interest on credit... end of story, as Tony Soprano used to say.
There was a popular theory among Peak Oilers the last decade that the world would enter a "bumpy plateau" period when the global economy would get beaten down by peak oil, would then revive as "demand destruction" drove down oil prices, and would be beaten down again as oil prices shot up in response -- with serial repetitions of the cycle, each beat-down taking economies lower -- the only imaginable outcome being some sort of quiet homeostasis. This scenario did not play out as expected. It was predicated on a mistaken assumption that all systems would retain some kind of operational resilience while ratcheting down. Anyway, the banking system was mortally wounded in the first go-round and the behemoth is dying hard.
The last desperate act of the banking system in the face of Peak Oil's no-more-growth equation was to engineer species of tradable securities that could produce wealth out of thin air rather than productive activity. This was the alphabet soup of algorithm-derived frauds with vague and confounding names such as credit default swaps (CDSs), collateralized debt obligations (CDOs), structured investment vehicles (SIVs), and, of course, the basic filler, mortgage backed securities. The banking system is now choking to death on these delicacies.
The trouble is that the EMT squad brought in to rescue the banking system -- that is, governments -- can't remove these obstructions from the patient's craw. They don't want to drown in a mighty upchuck of the alphabet soup.
The collapse of complex systems is actually predicated on the idea that the systems would mutually reinforce each other's failures. This is now plain to see as the collapse of banking (that is, of both lending and debt service), has led to the collapse of commerce and manufacturing. The next systems to go will probably be farming, transportation, and the oil markets themselves (which constitute the system for allocating and distributing world energy resources). As these things seize up, the final system to go will be governance, at least at the highest levels.
If we're really lucky, human affairs will eventually reorganize at a lower scale of activity, governance, civility, and economy. Every week, the failure to recognize the nature of our predicament thrusts us further into the uncharted territory of hardship. The task of government right now is not to prop up doomed systems at their current scales of failure, but to prepare the public to rebuild our systems at smaller scales.
The net effect of the failures in banking is that a lot of people have less money than they expected they would have a year ago. This is bad enough, given our habits and practices of modern life. But what happens when farming collapses? The prospect for that is closer than most of us might realize. The way we produce our food has been organized at a scale that has ruinous consequences, not least its addiction to capital. Now that banking is in collapse, capital will be extremely scarce. Nobody in the cities reads farm news, or listens to farm reports on the radio. Guess what, though: we are entering the planting season. It will be interesting to learn how many farmers "out there" in the Cheez Doodle belt are not able to secure loans for this year's crop.
My guess is that the disorder in agriculture will be pretty severe this year, especially since some of the world's most productive places -- California, northern China, Argentina, the Australian grain belt -- are caught in extremes of drought on top of capital shortages. If the US government is going to try to make remedial policy for anything, it better start with agriculture, to promote local, smaller-scaled farming using methods that are much less dependent on oil byproducts and capital injections.
This will, of course, require a re-allocation of lands suitable for growing food. Our real estate market mechanisms could conceivably enable this to happen, but not without a coherent consensus that it is imperative to do so. If agri-business as currently practiced doesn't founder on capital shortages, it will surely collapse on disruptions in the oil markets. President Obama at least made a start in the right direction by proposing to eliminate further subsidies to farmers above the $250,000 level. But the situation is really more acute. Surely the US Department of Agriculture already knows about it, but the public may not be interested until the shelves in the Piggly-Wiggly are bare -- and then, of course, they'll go apeshit.
The recent huge drop in oil prices has left the public once again convinced that the world is drowning in oil -- if only the scoundrelly oil companies were forced to deliver it at reasonable prices. The public has been consistently deluded about this for decades. What's missing so far is for the president of the US to lay out the reality of the situation in a dedicated TV address. I know a lot of you think that Jimmy Carter already tried this and failed to make an impression (and ruined his presidency in the process). I guarantee you that Mr. Obama will have to do this sometime in the next few years whether he likes or not, and he'd be well-advised to get it done sooner rather than later. And by this I don't mean just vague allusions to "energy independence" or "renewables" in speeches devoted to many other issues. I mean telling the public the plain truth that we'll never offset oil depletion and the intelligent response is to do everything possible to transition to walkable towns and public transit, not to sustain the unsustainable.
The alternatives -- i.e. what we're trying now -- is to further delude ourselves into thinking that we can run WalMart and the suburbs by some other means than oil. Despite all our investments in these things, we won't be able to run them by other means, and the news about this had better get out before enormous disappointment turns into titanic rage. If Americans think they've been grifted by Goldman Sachs and Bernie Madoff, wait until they find out what a swindle the so-called "American Dream" of suburban life turns out to be.
On this blizzardy Monday in the power centers of America, attention is fixed on the never-ending fiasco of AIG -- a company whose main product turned out to be credit default swaps, and is now choking on them. Kibitzers on the sidelines of finance are forecasting a king-hell bear market suckers' rally in the stock markets followed by a belly flop to Dow 4000 or lower. I myself called for Dow 4000 two years ago -- and was obviously a bit off on my timing. All this is surely trouble enough. But while your attention is focused on Rick Santelli in the Chicago trader's pit, or Larry Kudlow desperately seeking "mustard seeds" of new growth in financials, try to let one eye stray to the horizon where these other complex systems are working out their next moves. Farming. The oil markets. These are the coming theaters of alarm and distress.
Click here to visit James Howard Kunstler website
What Cooked the World's Economy?
Tuesday 27 January 2009
by: James Lieber, The Village Voice
It wasn't your overdue mortgage.
It's 2009. You're laid off, furloughed, foreclosed on, or you know someone who is. You wonder where you'll fit into the grim new semi-socialistic post-post-industrial economy colloquially known as "this mess."
You're astonished and possibly ashamed that mutant financial instruments dreamed up in your great country have spawned worldwide misery. You can't comprehend, much less trim, the amount of bailout money parachuting into the laps of incompetents, hoarders, and miscreants. It's been a tough century so far: 9/11, Iraq, and now this. At least we have a bright new president. He'll give you a job painting a bridge. You may need it to keep body and soul together.
The basic story line so far is that we are all to blame, including homeowners who bit off more than they could chew, lenders who wrote absurd adjustable-rate mortgages, and greedy investment bankers.
Credit derivatives also figure heavily in the plot. Apologists say that these became so complicated that even Wall Street couldn't understand them and that they created "an unacceptable level of risk." Then these blowhards tell us that the bailout will pump hundreds of billions of dollars into the credit arteries and save the patient, which is the world's financial system. It will take time - maybe a year or so - but if everyone hangs in there, we'll be all right. No structural damage has been done, and all's well that ends well.
Sorry, but that's drivel. In fact, what we are living through is the worst financial scandal in history. It dwarfs 1929, Ponzi's scheme, Teapot Dome, the South Sea Bubble, tulip bulbs, you name it. Bernie Madoff? He's peanuts.
Credit derivatives - those securities that few have ever seen - are one reason why this crisis is so different from 1929.
Derivatives weren't initially evil. They began as insurance policies on large loans. A bank that wished to lend money to a big, but shaky, venture, like what Ford or GM have become, could hedge its bet by buying a credit derivative to cover losses if the debtor defaulted. Derivatives weren't cheap, but in the era of globalization and declining American competitiveness, they were prudent. Interestingly, the company that put the basic hardware and software together for pricing and clearing derivatives was Bloomberg. It was quite expensive for a financial institution - say, a bank - to get a Bloomberg machine and receive the specialized training required to certify analysts who would figure out the terms of the insurance. These Bloomberg terminals, originally called Market Masters, were first installed at Merrill Lynch in the late 1980s.
Subsequently, thousands of units have been placed in trading and financial institutions; they became the cornerstone of Michael Bloomberg's wealth, marrying his skills as a securities trader and an electrical engineer.
It's an open question when or if he or his company knew how they would be misused over time to devastate the world's economy.
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Fast-forward to the early years of the Clinton administration. After an initial surge of regulatory behavior in favor of fair markets, especially in antitrust, that sort of behavior was abandoned, and free markets triumphed. The result was a morass of white-collar sociopathy at Archer Daniels Midland, Enron, and WorldCom, and in a host of markets ranging from oil to vitamins.
This was the beginning of the heyday of hedge funds. Unregulated investment houses were originally based on the questionable but legal practice of short-selling - selling a financial instrument you don't own in hopes of buying it back later at a lower price. That way, you hedge your bets: You cover your investment in a company in case a company's stock price falls.
But hedge funds later diversified their practices beyond that easy definition. These funds acquired a good deal of popular mystique. They made scads of money. Their notoriously high entry fees - up to 5 percent of the investment, plus as much as 36 percent of profits - served as barriers to all but the richest investors, who gave fortunes to the funds to play with. The funds boasted of having genius analysts and fabulous proprietary algorithms. Few could discern what they really did, but the returns, for those who could buy in, often seemed magical.
But it wasn't magic. It amounted to the return of the age-old scam called "bucket shops." Also sometimes known as "boiler rooms," bucket shops emerged after the Civil War. Usually, they were storefronts where people came to bet on stocks without owning them. Unlike their customers, the shops actually owned blocks of stock. If customers were betting that a stock would go up, the shops would sell it and the price would plunge; if bettors were bearish, the shops would buy. In this way, they cleaned out their customers. Frenetic bucket-shop activity caused the Panic of 1907. By 1909, New York had banned bucket shops, and every other state soon followed.
In the mid-'90s, though, the credit-derivatives industry was hitting its stride and argued vehemently for exclusion from all state and federal anti-bucket-shop regulations. On the side of the industry were Federal Reserve Chairman Alan Greenspan, Treasury Secretary Robert Rubin, and his deputy, Lawrence Summers. Holding the fort for the regulators was Brooksley Born, who headed the Commodity Futures Trading Commission (CFTC). The three financial titans ridiculed the virtually unknown and cloutless, but brilliant and prophetic Born, who warned that unrestricted derivatives trading would "threaten our regulated markets, or indeed, our economy, without any federal agency knowing about it." Warren Buffett also weighed in against deregulation.
But Congress loved Greenspan - a/k/a "the Maestro" and "the Oracle" - and Clinton loved Rubin. The sleepy hearings received almost no public attention. The upshot was that Congress removed oversight of derivatives from the CFTC and preempted all state anti-bucket-shop laws. Born resigned shortly afterward.
Soon, something odd started to happen. Legitimate big investors, often with millions of dollars to place, found that they couldn't get into certain hedge funds, despite the fact that they were willing to pay steep fees. In retrospect, it seems as if these funds did not want fussy outsiders looking into what they were doing with derivatives.
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Imagine that a person is terminally ill. He or she would not be able to buy a life insurance policy with a huge death benefit. Obviously, third parties could not purchase policies on the soon-to-be-dead person's life. Yet something like that occurred in the financial world.
This was not caused by imprudent mortgage lending, though that was a piece of the puzzle. Yes, Fannie Mae and Freddie Mac were put on steroids during the '90s, and some people got into mortgages who shouldn't have. But the vast majority of homeowners paid their mortgages. Only about 5 to 10 percent of these loans failed - not enough to cause systemic financial failure. (The dollar amount of defaulted mortgages in the U.S. is about $1.2 trillion, which seems like a princely sum, but it's not nearly enough to drag down the entire civilized world.)
Much more dangerous was the notorious bundling of mortgages. Investment banks gathered these loans into batches and turned them into securities called collateralized debt obligations (CDOs). Many included high-risk loans. These securities were then rated by Standard & Poor's, Fitch Ratings, or Moody's Investors Services, who were paid at premium rates and gave investment grades. This was like putting lipstick on pigs with the plague. Banks like Wachovia, National City, Washington Mutual, and Lehman Brothers loaded up on this financial trash, which soon proved to be practically worthless. Today, those banks are extinct. But even that was not enough to cause a worldwide financial crisis.
What did cause the crisis was the writing of credit derivatives. In theory, they were insurance policies for investors; in practice, they became a guarantee of global financial collapse.
As insurance, they were poised to pay off fabulously when these weak bundled securities failed. And who was waiting to collect? Well, every gambler is looking for a sure bet. Most never find it. But the hedge funds and their ilk did.
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The mantra of entrepreneurial culture is that high risk goes with high reward. But unregulated and opaque derivatives trading was countercultural in the sense that low or no risk led to quick, astronomically high rewards. By plunking down millions of dollars, a hedge fund could reap billions once these fatally constructed securities plunged. Again, the funds did not need to own the securities; they just needed to pay for the derivatives - the insurance policies for the securities. And they could pay for them again and again. This was known as replicating. It became an addiction.
About $2 trillion in credit derivatives in 1989 jumped to $8 trillion in 1994 and skyrocketed to $100 trillion in 2002. Last year, the Bank for International Settlements, a consortium of the world's central banks based in Basel (the Fed chair, Ben Bernanke, sits on its board), reported the gross value of these commitments at $596 trillion. Some are due, and some will mature soon. Typically, they involve contracts of five years or less.
Credit derivatives are breaking and will continue to break the world's financial system and cause an unending crisis of liquidity and gummed-up credit. Warren Buffett branded derivatives the "financial weapons of mass destruction." Felix Rohatyn, the investment banker who organized the bailout of New York a generation ago, called them "financial hydrogen bombs."
Both are right. At almost $600 trillion, over-the-counter (OTC) derivatives dwarf the value of publicly traded equities on world exchanges, which totaled $62.5 trillion in the fall of 2007 and fell to $36.6 trillion a year later.
The nice thing about public markets is that they act as canaries that give warnings as they did in 1929, 1987 (the program trading debacle), and 2001 (the dot-com bubble), so we can scramble out with our economic lives. But completely private and unregulated, the OTC derivatives trade is justly known as the "dark market."
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The heart of darkness was the AIG Financial Products (AIGFP) office in London, where a large proportion of the derivatives were written. AIG had placed this unit outside American borders, which meant that it would not have to abide by American insurance reserve requirements. In other words, the derivatives clerks in London could sell as many products as they could write - even if it would bankrupt the company.
The president of AIGFP, a tyrannical super-salesman named Joseph Cassano, certainly had the experience. In the 1980s, he was an executive at Drexel Burnham Lambert, the now-defunct brokerage that became the pivot of the junk-bond scandal that led to the jailing of Michael Milken, David Levine, and Ivan Boesky.
During the peak years of derivatives trading, the 400 or so employees of the London unit reportedly averaged earnings in excess of a million dollars a year. They sold "protection" - this Runyonesque term was favored - worth more than three times the value of parent company AIG. How could they have not known that they were putting at risk the largest insurer in the world and all the businesses and individuals that it covered?
This scheme that smacks of securities fraud facilitated the dreams of buyers called "counterparties" willing to ante up. Hedge fund offices sprouted in Kensington and Mayfair like mushrooms after a summer shower. Revenue from premiums for derivatives at AIGFP rose from $737 million in 1999 to $3.26 billion in 2005. Cassano reportedly hectored ever-willing counterparties to "play the power game" - in other words, gobble up all the credit derivatives backing CDOs that they could grab. As the bundled adjustable-rate mortgages ballooned, stretched home buyers defaulted, and the exciting power game became about as risky as blasting sitting ducks with a Glock.
People still seem surprised to read that hedge principals have raked in billions of dollars in a single year. They shouldn't be. These subprime-time players knew how to score. The scam bled AIG white. In mid-September, when it was on the ropes, AIG received an astonishing $85 billion emergency line of credit from the Fed. Soon, that was supplemented by another $67 billion. Much of that money, to use the government's euphemism, has already been "drawn down." Shamefully, neither Washington nor AIG will explain where the billions went. But the answer is increasingly clear: It went to counterparties who bought derivatives from Cassano's shop in London.
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Imagine if a ring of cashiers at a local bank made thousands of bad loans, aware that they could break the bank. They would be prosecuted for fraud and racketeering under the anti-gangster RICO Act. If their counterparties - the debtors - were in on the scam and understood that they didn't have to pay off the loans, they could be charged, too. In fact, this scenario played out at subprime-pushing outlets of a host of banks, including Washington Mutual (acquired last year by JP Morgan Chase, which itself received a $25 billion bailout); IndyMac (which was seized by FDIC regulators); and Lehman Brothers (which went belly-up). About 150 prosecutions of this type of fraud are going forward.
The top of the swamp's food chain, where the muck was derivatives rather than mortgages, must also be scrutinized. Apparently, that is the case. AIGFP's Cassano has hired top white-collar litigator and former prosecutor F. Joseph Warin (profiled in the 2004 Washingtonian piece, "Who to Call When You're Under Investigation!"). Neither Cassano nor his attorney responded to interview requests.
AIG's lavishly compensated counterparties were willing participants and likewise could be considered for prosecution, depending on what they knew. Who were they?
At a 2007 conference, Cassano defined them as a "global swath" that included "banks and investment banks, pension funds, endowments, foundations, insurance companies, hedge funds, money managers, high-net-worth individuals, municipalities, sovereigns, and supranationals." Abetting the scheme, ratings agencies like Standard & Poor's gave high grades to the shaky mortgage-backed securities bundled by investment banks such as Goldman Sachs and Lehman Brothers.
After the relative worthlessness of these CDOs became clear, the raters rushed to downgrade them to junk status. This occurred suddenly with more than 4,000 CDOs in the first quarter of 2008 - the financial community now regards them as "toxic waste." Of course, the sudden massive downgrading raises the question: Why had CDOs been artificially elevated in the first place, leading banks to buy them and giving them protective coloring just because the derivatives writers "insured" them?
After the raters got real (i.e., got scared), the gig was up. Hedge funds fled in droves from their luxe digs in London. The industry remains murky, but some observers feel that more than half of all hedges will fold this year. Not necessarily a good sign, it seems to show that the funds were one-trick ponies living mainly off the derivatives play.
We know that AIG was not the only firm that sold derivatives: Lehman and Bear Stearns both dealt them and died. About 20 years ago, JP Morgan, the now-defunct investment bank, had brought the idea to AIGFP in London, which ran with it. Seeing the Cassano group's success, Morgan jumped in with both feet. Specializing in credit default swaps - a type of derivative triggered to pay off by negative events in the lives of loans, like defaults, foreclosures, and restructurings - Morgan had a distinctive marketing spin. Its "quants" were classy young dealers who could really do the math, which of course gave them credibility with those who couldn't. They abjured street slang like "protection." They pitched their sophisticated swaps as "technologies." The market adored them. They, in turn, oversold the product, made huge commissions, and wounded Morgan, which had to sell itself to Chase, becoming JP Morgan Chase - now the country's biggest bank.
Today, the real question is whether the Morgan quants knew the swaps didn't work and actually were grenades with pulled pins. Like Joseph Cassano, such people should consult attorneys.
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Secrecy shrouds the bailout. The 21 banks that each received more than $1 billion from the Fed won't disclose how, or even if, they're lending it, which hardly quells fears of hoarding. The Treasury says it can't force disclosure because it took only preferred (non-voting) stock in exchange for the money.
If anything, the Fed had been less candid. It stonewalls requests to reveal the winners (mainly banks and corporations) of $1.5 trillion in loans, as well as the securities it received as collateral. A Freedom of Information Act (FOIA) suit to obtain this information by Bloomberg News has been rebuffed by the Fed, which insists that a loophole in FOIA exempts it. Bloomberg will probably lose the case, but at least it's trying to probe the black hole of bailout money. Of course, Barack Obama could tell the Fed to release the information, plus generally open the bailout to public eyes. That would be change that we could believe in.
As for Bloomberg, its business side, Bloomberg L.P., has been less than forthcoming. Requests to interview someone from the company - and Michael Bloomberg, who retains a controlling interest - about the derivatives trade went unanswered.
In his economic address at Cooper Union last spring, Obama argued for new regulations, which he called "the rules of the road," and for a $30 billion stimulus package, that now seems quaint. In the OTC swaps trade, the Bloomberg L.P.'s computer terminals are the road, bridges, and tunnels for "real-time" transactions. The L.P.'s promotional materials declare: "You're either in front of a Bloomberg or behind it." In terms of electronic trading of certain securities, including credit default swaps: "Access to a dealer's inventory is based upon client relationships with Bloomberg as the only conduit." In short, the L.P. looks like a dominant player - possibly, a monopoly. If it has a true competitor, I can't find it. But then, this is a very dark market.
Did Bloomberg L.P. do anything illegal? Absolutely not. We prosecute hit-and-run drivers, not roads. But there are many questions - about the size of the derivatives market, the names of the counterparties, the amount of replication of derivatives, the role of securities ratings in Bloomberg calculations (in other words, could puffing up be detected and potentially stop a swap?), and how the OTC industry should be reported and regulated in order to prevent future catastrophes. Bloomberg is a privately held company - to the chagrin of would-be investors - and quite private about its business, so this information probably won't surface without subpoenas.
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So what do we do now? In 2000, the 106th Congress as its final effort passed the Commodity Futures Modernization Act (CFMA), and, disgracefully, President Clinton signed it. It opened up the bucket-shop loophole that capsized the world's economic system. With the stroke of a presidential pen, a century of valuable protection was lost.
Even with that, the dangerous swaps still almost found themselves subjected to state oversight. In 2000, AIG asked the New York State Insurance Department to decide if it wanted to regulate them, but the department's superintendent, Neil Levin, said no. The question was not posed by AIGFP, but by the company's main office through its general counsel, a reminder that not long ago, AIG was a blue chip with a triple-A rating that touted its integrity.
We can't know why Levin rejected the chance to regulate the tricky trade. He died in the restaurant at the top of the World Trade Center on the morning of 9/11. A Pataki-appointed former Goldman Sachs vice president, Levin may have shared other Wall Streeters' love of derivatives as the last big-money sure thing as the IPO craze wound down. Or maybe he saw swaps as gambling rather than insurance, hence beyond his jurisdiction. Regardless, current Insurance Superintendent Eric Dinallo told me, "I don't agree with his answer." Maybe the economic crisis could have been averted if Levin had answered otherwise. "How close we came ..." Dinallo mused.
Deeply occupied with keeping AIG, the parent company, afloat since the bailout, Dinallo saw the carnage that the swaps caused and, with the support of Governor Paterson, pushed anew for regulatory oversight, a position also adopted by the President's Working Group (PWG), which includes the Treasury, Fed, SEC, and CFTC.
But regulation isn't enough to stop a phenomenon called "de-supervision" that occurs when officials can't, or won't, oversee a market. For instance, the Fed under Greenspan had authority to regulate mortgage bankers and brokers, the industry's cowboys who kicked off this fiasco. Because Greenspan's libertarian sensibilities prevented him from invoking the Fed's control, the mortgage market careened corruptly until the wheels came off. Notoriously lax and understaffed, the SEC did nothing to limit investment banks that bundled, pitched, and puffed non-prime mortgages as the raters cheered. It's doubtful that any agency can be relied on to control lucrative default swaps, which should be made illegal again. The bucket-shop loophole must be closed. The evil genie should go back in the bottle.
Will Obama re-criminalize these financial weapons by pushing for repeal of the CFMA? This should be a no-brainer for Obama, who, before becoming a community organizer in Chicago, worked on Wall Street, studied derivatives, and by now undoubtedly knows their destructive power.
What about the $600 trillion in credit derivatives that are still out there, sucking vital liquidity and credit out of the system? It's the tyrannosaurus in the mall, the one that made Henry Paulson, the former Treasury Secretary who looks like Daddy Warbucks, get down on his knees and beg Nancy Pelosi for a bailout.
Even with the bailout, no one can get their arms around this monster. Obviously, the $600 trillion includes not only many unseemly replicated death bets, but also some benign derivatives that creditors bought to hedge risky loans. Instead of sorting them out, the Bush administration tried to protect them all, while keeping the counterparties happy and anonymous.
Paulson has taken flack for spending little to bring mortgages in line with falling home values. Sheila Bair, the FDIC chief who often scrapped with Paulson, said this would cost a measly $25 billion and that without it, 10 million Americans could lose their homes over the next five years. Paulson thought it would take three times as much and balked. Congress is bristling because the Emergency Economic Stabilization Act (EESA) could provide mortgage relief - and some derivatives won't detonate if homeowners don't default. Obama's nominee for Treasury Secretary, Timothy Geithner, could back such relief at his hearings.
The other key appointment is attorney general. A century ago, when powerful trusts distorted the market system, we had AGs who relentlessly tracked and busted them. Today's crisis is missing, so far, an advocate as dynamic and energetic as the mortgage bankers, brokers, bundlers, raters, and quants who, in a few short years, littered the world with rotten loans, diseased CDOs, and lethal derivatives. During the Bush years, white-collar law enforcement actually dropped as FBI agents were transferred to antiterrorism. Even so, according to William Black, an effective federal litigator and regulator during the 1980s savings-and-loan scandal, by 2004, the FBI perceived an epidemic of fraud. Now a professor of law and finance at the University of Missouri-Kansas City, Black has testified to Congress about the current crisis and paints it as "control fraud" at every level. Such fraud flows from the top tiers of corporations - typically CEOs and CFOs, who control perverse compensation systems that reward cheating and volume rather than quality, and circumvent standard due diligence such as underwriting and accounting. For instance, AIGFP's Cassano reportedly rebuffed AIG's internal auditor.
The environment from the top of the chain - derivatives gang leaders - to the bottom of the chain - subprime, no-doc loan officers - became "criminogenic," Black says. The only real response? Aggressive prosecution of "elites" at all stages in this twisted mess. Black says sentences should not be the light, six-month slaps that white-collar criminals usually get, or the Madoff-style penthouse arrest.
As staggering as the Madoff meltdown was, it had a refreshing side - the funds were frozen. In the bailout, on the other hand, the government often seems to be completing the scam by quietly passing the proceeds to counterparties. The advantage of treating these players like racketeers under federal law is that their ill-gotten gains could be forfeited. The government could recoup these odious gambling debts instead of simply paying them off. In finance, the bottom line is the bottom line. The bottom line in this scandal is that fantastically wealthy entities positioned themselves to make unfathomable fortunes by betting that average Americans - Joe Six-Packs and hockey moms - would fail.
Black suggests that derivatives should be "unwound" and that the payouts cease: "Close out the positions - most of them have no social utility." And where there has been fraud, he adds, "clawback makes perfect sense." That would include taking back the ludicrously large bonuses and other forms of compensation given to CEOs at bailed-out companies.
No one knows how much could be clawed back from the soiled derivatives reap. Clearly, it's not $600 trillion. William Bergman, formerly a market analyst at the Chicago Fed in "netting" - what's left after financial institutions pay each other off for ongoing deals and debts - makes a "guess" that perhaps only 5 percent could be recouped, which he concedes is unfortunately low. Still, that's $30 trillion, a huge number, more than 10 times what the Fed can deploy and over twice the U.S. gross domestic product. Such a sum, if recovered through the criminal justice process, could ease the liquidity crisis and actually get the credit arteries flowing. Not everyone would like it. What's left of Wall Street and hedge funds want their derivatives gains; so do foreign banks.
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A tangle of secrecy, conflicts of interest, and
favoritism plagues the process of recovery.
Lehman drowned, but Goldman Sachs, where Paulson was formerly CEO, was saved. The day before AIG reaped its initial $85 billion bonanza, Paulson met with his successor, Lloyd Blankfein, who reportedly argued that Goldman would lose $20 billion and fail unless AIG was rescued. AIG got the money.
Had Goldman bought from AIG credit derivatives that it needed to redeem? Like most other huge financial traders, Goldman has a secretive hedge fund, Global Alpha, that refuses to reveal its transactions. Regardless, Paulson's meeting with Blankfein was a low point. If Dick Cheney had met with his successor at Halliburton and, the very next day, written a check for billions that guaranteed its survival, the press would have screamed for his head.
The second most shifty bailout went to Citigroup, a money sewer that won last year's layoff super bowl with 73,000. Instead of being parceled to efficient operators, Citi received a $45 billion bailout and $300 billion loan package, at least in part because of Robert Rubin's juice. While Treasury Secretary under Clinton, Rubin led us into the derivatives maelstrom, deported jobs with NAFTA, and championed bank deregulation so that companies like Citi could mimic Wall Street speculators. After he joined Citi's leadership in 1999, the bank went long on mortgages and other risks du jour, enmeshed itself in Enron's web, tanked in value, and suffered haphazard management, while Rubin made more than $100 million.
Rubin remained a director and "senior counselor" at Citi until January 9, 2009, and is an economic adviser to Obama. In truth, he probably shouldn't be a senior counselor anywhere except possibly at Camp Granada. Like Greenspan, he should retire before he breaks something again, and we have to pay for it. (Incidentally, the British bailout, which is more open than ours and mandates mortgage relief, makes corporate welfare contingent on the removal of bad management.)
The third strangest rescue involved the Fed's announcement just before Christmas that hedge funds for the first time could borrow from it. Apparently, the new $200 billion credit line relates to recently revealed securitized debts including bundled credit card bills, student loans, and auto loans. Obviously, it's worrisome that the crisis may be morphing beyond its real estate roots.
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To say the bailout hasn't worked so far is putting it mildly. Since the crisis broke, Washington's reaction has been chaotic, lenient to favorites, secretive, and staggeringly expensive. An estimated $7.36 trillion, more than double the total American outlay for World War II (even correcting for inflation), has been thrown at the problem, according to press reports. Along the way, banking, insurance, and car companies have been nationalized, and no one has been brought to justice.
Combined unemployment and underemployment (those who have stopped looking, and part-timers) runs at nearly 20 percent, the highest since 1945. Housing prices continue to hemorrhage - last fall's 18 percent drop could double. Holiday shopping fizzled: 160,000 stores closed last year, and 200,000 more are expected to shutter in '09. Some forecasts place eventual retail darkness at 25 percent. In 2008, the Dow dropped further - 34 percent - than at any time since 1931. There is no sound sector in the economy; the only members of the 30 Dow Jones Industrials posting gains last year were Wal-Mart and McDonald's.
Does Obama's choice for attorney general, Eric Holder, have the tenacity and will to tackle the widest fraud in American history? Parts of his background don't necessarily augur well: He worked on a pardon for Marc Rich, the fugitive billionaire tax evader once on the FBI's Most Wanted List whom Clinton cleared. After leaving the Clinton era's Justice Department, Holder went to work for Covington & Burling, a D.C. firm that represents corporate heavies including Big Tobacco. He defended Chiquita Brands in a notorious case, in which it paid a $25 million fine for using terrorists in Columbia as security. Holder fits well within the gaggle of elite D.C. lawyers who move back and forth between government and defending corporate criminals. He doesn't exactly have the sort of resume that startles robber barons.
Can Holder design and orchestrate a muscular legal response, including prosecution and stern punishment of top executives, plus aggressive clawbacks of money? There seems little question that he has the skill, so the decision on how aggressive the Justice Department will be is up to Obama.
Holder could ask for and get well-organized FBI white-collar teams. The personnel hole caused by shifts to antiterrorism would have to be more than filled to their pre-9/ll staffing if the incoming administration decides to break this criminogenic cycle rather than merely address it symbolically.
Black contends that aggressive prosecution would be good for the economy because it may help prevent cheating and fraud that inevitably cause bubbles and destroy wealth. The Sarbanes-Oxley law passed in Enron's wake, for instance, is supposed to make corporations now keep the kinds of documents necessary to assess criminality. Whether the CEOs, CFOs, and others who controlled the current frauds will do so is another matter.
"Don't count on them keeping records for long," Black warns. "It's time to get out the subpoenas."
For more information click here to visit The Village Voice.com
-------http://www.villagevoice.com/2009-01-28/news/what-cooked-the-world-s-economy?src=newsletter James Lieber is a lawyer whose books on business and politics include "Friendly Takeover" (Penguin) and "Rats in the Grain" (Basic Books). This is his fifth article for The Voice.

"all right, here's the plan."

Geithner's Dragon
Howard Schweber
Associate Professor of Political Science and Law at the University of Wisconsin-Madison Posted February 28, 2009 | 05:39 PM (EST)
At the end of the brilliant 1969 movie The Italian Job - SPOILER ALERT -- (starring Michael Caine, Noel Coward, and Benny Hill, not to be confused with the charmless 2003 remake), our heroes are gathered at one end of a bus that is teetering on the edge of a cliff. At the other end of the bus, threatening to pull everyone to oblivion, is an enormous chest full of gold. The last line in the movie (as I recall) is Michael Caine saying "all right, here's the plan."
That's about how things looked last week. Since then, however, we have begun to see the plan laid out. On Monday there was a joint announcement by five regulatory agencies that going forward any government money given to banks would be used to purchase preferred stock, which could later be converted to common stock and sold if conditions improved, thus recouping money to the taxpayer and getting the government out of the banking business. On Wednesday, Treasury Secretary Geithner added some more details, including a description of a "stress test" that will be used to evaluate banks' solvency going forward.
The plan is a modified version of the "Swedish model." In the mid-1980s, confronted by a somewhat similar situation, the Swedish government relieved private banks of their ownership of toxic assets and parked them in a newly created national "bad bank." Eventually, when the assets recovered their value, they were sold, netting the Swedish taxpayers 50 ore on the kroner. The Geithner plan is similar in that it represents a partial and temporary nationalization program; the main difference is that the bad assets will not be isolated, and the government will have a direct stake in the banks until such time as that stake can be profitably sold.
The purpose of the stress test is less clear. The working assumption seems to be that it will be used for purposes of triage: banks that are found to be too damaged to save will be allowed to go under, banks that are in some trouble but can be rescued will receive government money, and banks that don't really need help will not be able to siphon bailout funds to be used for M&A's or parked to improve the company's future bottom line. Since receiving money from the government involves giving up ownership shares, that aid is less attractive than it might be; the assumption, therefore, is that banks that don't need the aid won't want it. There is a lot to be said about this program. The application of the stress test will be based on valuing assets at their average mark-to-market valuation for the 20 days ending February 9th. Obviously, if the market value of those assets goes up or down from that valuation, the government's purchase at the earlier price will represent either a subsidy or a penalty.
There is also the idea that this stress test will be applied with an eye toward the future, not just to immediate conditions. Here's Geithner in a PBS interview with Jim Lehrer: "The basic framework is designed again to look at the scale of losses they might face ... if we went through a more challenging environment -- economic environment. And again so that they can reassure the world and we can be confident that they've got that necessary cushion of resources that allow them to lend to support recovery. Because you know right now there's this cloud of uncertainty over the economy and the financial system . . . These banks now have very substantial amounts of capital relative to what you would have seen in the U.S. economy going into previous recessions. But we want to make sure again they have that additional cushion, even if things deteriorate further going forward, that they're going to be able to lend and be in a strong position." The problem with that is the assumption that we know what assets to look at in order to determine how well a bank is equipped to handle the next recession. Models tend to be a lot better at post-diction than prediction; this time the crisis started in housing, so we will look especially at mortgages. But what happens if the next crisis comes up in the service sector, or heavy industry? Which banks will be vulnerable then? Will this "stress test" be able to predict which are the relevant assets to value without knowing in advance where the next crisis will come from? One question that might be worth asking is how much of a bank's assets are in the form of derivatives? More on that in a minute.
Critics like Robert Reich complain that the whole triage approach is unduly and unnecessarily speculative. "It would be far cheaper, quicker, and safer for the government to just take over every questionable bank. This is the only way we can get the truth about which should be shut down. And the way taxpayers who will be bailing out salvagable banks can ever recoup our costs. Why should any upside gains go to private shareholders who made bad bets or to bank executives and directors who got us into this mess in the first place?"
Other critics wonder why we maintain our commitment to private banking at all. After all, we don't care about banks for their own sake. We care about banks because a) people need a safe place to keep their money, and b) the economy needs a reliable source of credit. Why should that be a private, for-profit undertaking rather than a government service? Calls for nationalization have come from some interesting quarters of late, including not only Nouriel Roubini but also Lindsay Graham, Alan Greenspan, and American Enterprise Institute's John Makin.
These experts are all calling for temporary nationalization followed by resale of assets to private markets. But there are plenty of people who are starting to wonder why we are well served by a private banking sector at all. For one thing, no matter how it is structured, one consequence of the bailout is that executives and shareholders will be held harmless for stupid, reckless, or greedy decision-making processes. For another, credit provision has become among the most predatory, exploitative, socially regressive areas of American economic activity. What public good is served by allowing these practices to continue? Regulation might help, to be sure, but regulations can be gamed, enforcement is never perfect, and the incentives are all on the side of cheating unless we do away with the corporate veil that protects individual executives from liability under almost all circumstances.
The counter-argument is that the government is likely to be not very good at running a bank, that private lenders come up with creative and competitive forms of financial instruments, and that modern capitalism is simply too complicated and too varied to be run in any centralized way. Maybe so. But there's a much, much bigger problem to worry about, and it goes to the heart of the idea of encouraging creative banking. The focus for the moment has been on the bailout; that is, on the government spending side of the equation - whereas discussions of derivatives really belong on the regulatory side. But the transformations of the banking sector that are going to be required in that area positively dwarf anything that is taking place on the spending side. In the past 20 years, "creative" people in the financial sector have remade global capitalism in their image; the global banking system today is a Frankenstein's monster version of the system that was in place when the Bretton Woods agreement was signed. In the next few months, governments are going to have to decide whether to kill Frankenstein's monster or try to tame it.
Time to play with numbers. When we talk about the bailout, we are talking in billions, sometimes hundreds of billions. AIG - remember them? -- recently announced that in the fourth quarter of 2007 it lost $60b and is likely to need additional government aid beyond the $150b it has already received.
$150 billion is a lot of money. But when we talk about derivatives and ask what our and other governments will do to get those markets under control, we are using numbers that start with different letters altogether. When this crisis broke, the U.S. mortgage market was around $40 trillion, of which an estimated $1.7 trillion were questionable loans. Derivatives on those mortgages totaled $40 trillion.
Think those are big numbers? We aren't even warmed up, yet. In 2007, the total value of derivatives held by U.S. commercial banks was $170 trillion. At the beginning of 2008, this dropped to only 164 trillion, according to the OCC's Quarterly Report on Bank Trading and Derivative Activities, Fourth Quarter 2007. Compare that to $9 trillion at year-end 2006 . . . or $97 billion way back at year-end 1997. The OCC report for the third quarter of 2008 showed the notional value of derivatives held in U.S. commercial banks at $175.8 trillion - 78% in interest rate products, a bit under 10% in credit products. 99% of these credit products were accounted for by the infamous "credit default swaps" that are dragging AIG under (again) as we speak; 97% of those are held by five banks. (You can find that report here).
But that's just U.S. banks. Think globally. I have been seeing a lot of references to figures produced by the Bank of International Settlements, in Switzerland, which tracks the global markets in derivatives. One figure that kept coming up boggled my mind: at the end of 2007, according to various sources, BIS figures showed a global derivative market of 1.14 quadrillion dollars. Could that be right? What macroscopic phenomenon on earth could possibly require the use of the word "quadrillion" to describe it?
When I was a child, I vividly remember how my imagination was captured by numbers like "quadrillion." These are weird numbers, numbers that have nothing to do with ordinary existence. Unless you are a mathetmetician involved in a very particular area of math or an astronomer who insists on working in kilometers rather than light years, you have never used or even seen the number 1 quadrillion recently. You might want to borrow one of your children's math texts, here. You are certainly going to need a better calculator than the one you got at Target last summer. Here we go.
There are two distinct types of derivatives at issue, here: "over the counter" derivatives that take the form of contracts between two parties, and "credit derivatives" - those based on futures contracts and options - that are traded on exchanges. As of June 2008, BIS reports a total of $684 trillion in notional amounts outstanding of OTC derivatives.
Then there are the exchange-traded credit derivatives, those based on futures contracts and options. The total turnover in credit derivatives in 2007 was more than 2.8 quadrillion dollars. In the first half of 2008 alone there was more than $1.3 quadrillion in turnover of credit derivatives: $600 trillion in the second quarter, down from $629 trillion in the first. (Here.)
The numbers become a little less staggering if one focuses on the value of the amounts outstanding on these credit derivatives: in the second quarter of 2008, that figure was a mere $84.3 trillion. The gross market value of OTC derivatives as of December 2007 was only $14.522 trillion. (These figures are from the BIS quarterly review, Sept. 2008; some are from the Report, others from the Statistical Annex.
Oh, by the way. In 2008, the Gross Domestic Product of the entire world was $70.5 trillion. I am suspicious of that number, since in 2007 it was $55 trillion. In other words, I suspect that an awful lot of that growth exists only on paper. But since that is true of everything else we are talking about, let's stick with $70 trillion for reference purposes.
That's the dragon in the dining room that not enough people are talking about. National banks, regulated private banks, whatever we call it - we have to kill the dragon. At a bare minimum, we have to get it out of the living room before it burns down the house again. What's the plan?
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FRONT LINE

Denninger Declaires TSHTF
The market-ticker.org Posted by Karl Denninger in Editorial at 09:57: 3.5.09
What's Dead (Short Answer: All Of It)
Just so you have a short list of what's at stake if Washington DC doesn't change policy here and now (which means before the collapse in equities comes, which could start as soon as today, if the indicators I watch have any validity at all. For what its worth, those indicators are painting a picture of the Apocalypse that I simply can't believe, and they're showing it as an imminent event - like perhaps today imminent.)
* All pension funds, private and public, are done. If you are receiving one, you won't be. If you think you will in the future, you won't be. PBGC will fail as well. Pension funds will be forced to start eating their "seed corn" within the next 12 months and once that begins there is no way to recover. * All annuities will be defaulted to the state insurance protection (if any) on them. The state insurance funds will be bankrupted and unable to be replenished. Essentially, all annuities are toast. Expect zero, be ecstatic if you do better. All insurance companies with material exposure to these obligations will go bankrupt, without exception. Some of these firms are dangerously close to this happening right here and now; the rest will die within the next 6-12 months. If you have other insured interests with these firms, be prepared to pay a LOT more with a new company that can't earn anything off investments, and if you have a claim in process at the time it happens, it won't get paid. The probability of you getting "boned" on any transaction with an insurance company is extremely high - I rate this risk in excess of 90%.
* The FDIC will be unable to cover bank failure obligations. They will attempt to do more of what they're doing now (raising insurance rates and doing special assessments) but will fail; the current path has no chance of success. Congress will backstop them (because they must lest shotguns come out) with disastrous results. In short, FDIC backstops will take precedence even over Social Security and Medicare. * Government debt costs will ramp. This warning has already been issued and is being ignored by President Obama. When (not if) it happens debt-based Federal Funding will disappear. This leads to.... * Tax receipts are cratering and will continue to. I expect total tax receipts to fall to under $1 trillion within the next 12 months. Combined with the impossibility of continued debt issue (rollover will only remain possible at the short duration Treasury has committed to over the last ten years if they cease new issue) a 66% cut in the Federal Budget will become necessary. This will require a complete repudiation of Social Security, Medicare and Medicaid, a 50% cut in the military budget and a 50% across-the-board cut in all other federal programs. That will likely get close. * Tax-deferred accounts will be seized to fund rollovers of Treasury debt at essentially zero coupon (interest). If you have a 401k, or what's left of it, or an IRA, consider it locked up in Treasuries; it's not yours any more. Count on this happening - it is essentially a certainty.
* Any firm with debt outstanding is currently presumed dead as the street presumption is that they have lied in some way. Expect at least 20% of the S&P 500 to fail within 12 months as a consequence of the complete and total lockup of all credit markets which The Fed will be unable to unlock or backstop. This will in turn lead to.... * The unemployed will have 5-10 million in direct layoffs added within the next 12 months. Collateral damage (suppliers, customers, etc) will add at least another 5-10 million workers to that, perhaps double that many. U-3 (official unemployment rate) will go beyond 15%, U-6 (broad form) will reach 30%. * Civil unrest will break out before the end of the year. The Military and Guard will be called up to try to stop it. They won't be able to. Big cities are at risk of becoming a free-fire death zone. If you live in one, figure out how you can get out and live somewhere else if you detect signs that yours is starting to go "feral"; witness New Orleans after Katrina for how fast, and how bad, it can get.
The good news is that this process will clear The Bezzle out of the system.
The bad news is that you won't have a job, pension, annuity, Social Security, Medicare, Medicaid and, quite possibly, your life.
It really is that bleak folks, and it all goes back to Washington DC being unwilling to lock up the crooks, putting the market in the role it has always played - that of truth-finder, no matter how destructive that process is.
Only immediate action from Washington DC, taking the market's place, can stop this, and as I get ready to hit "send" I see the market rolling over again, now down more than 3% and flashing "crash imminent" warnings. You may be reading this too late for it to matter.
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The Reality of Economic Collapse
RHS1
What will happen to you if the financial systems go nova?
Well know one really knows for sure; The article below is about as accurate as it gets...Remember this is a live show however the information below is "near enough" if you read and understood whats above you need to read whats below...All the best...Indiana
Lessons from Argentina's economic collapse
ferfal
(Editor's note: the article that follows is a very sobering account of the effect that the collapse of the Argentine economy (1999 - 2002) had on its citizens, as seen through the eyes of one of them. The economic collapse wiped out the middle class and raised the level of poverty to 57.5%. Central to the collapse was the implementation of neo-liberal policies which enabled the swindle of billions of dollars by foreign banks and corporations. Many of Argentina's assets and resources were shamefully plundered. Its financial system was even used for money laundering by Citibank, Credit Suisse, and JP Morgan (sound familar?). The net result was massive wealth transfers and the impoverishment of society which culminated in many deaths due to oppression and malnutrition. I am not sure the same thing is about to happen here, but I am sure that there is a distinct possibility that it might. Just food for thought - JSB)
Wednesday, 13 December 2006
For western countries such as the UK, the first major problems of Peak Oil, assuming there are no oil shocks, will not be the shortage of oil but the economic crises that will occur. Argentina is a recent example of a country that suffered a serious economic crisis, and although Argentina and the UK are not identical, anyone interested in how economic crises can affect individual lives will be very interested in the following vivid description of life for an Argentinian following the economic collapse.
My brother visited Argentina a few weeks ago. He's been living in Spain for a few years now.
Within the first week, he go sick, some kind of strong flu, even though climate isn't that cold and he took care of himself.
Without a doubt he got sick because there are lots of new viruses in my country that can't be found in 1st world countries.
The misery and famine lead us to a situation where, even though you have food, shelter and health care, most others don't, and therefore they get sick and spread the diseases all over the region.
What got me started on this post is the fact that I actually saw this coming, and posted on the subject here at Frugal's, months before the new viruses spread over the country and the news started talking about this new, health emergency, which proves that talking, thinking and sharing ideas with like minded people (you guys), does help to see things coming and prepare for them with enough time.
So I started thinking about several issues, what I learned (either the hard way or thanks to this forum) after all these years of living in a collapsed country that is trying to get out an economical disaster and everything that comes along with it.
Though my English is limited, I hope I'm able to transmit the main ideas and concepts, giving you a better image of what you may have to deal with some day, if the economy collapses in your country.
URBAN OR COUNTRY?
Someone once asked me how did those that live in the country fare. If they were better off than city dwellers.
As always there are no simple answers. Wish I could say country good, city bad, but I can't. Because if I have to be completely honest, and I intend to be so, there are some issues that have to be analyzed, specially security.
Of course that those that live in the country and have some land and animals were better prepared food-wise. No need to have several acres full of crops. A few fruit trees, some animals, such as chickens, cows and rabbits, and a small orchard was enough to be light years ahead of those in the cities.
Chickens, eggs and rabbits would provide the proteins, a cow or two for milk and cheese, some vegetables and fruit plants covered the vegetable diet, and some eggs or a rabbit could be traded for flower to make bread and pasta or sugar and salt.
Of course that there are exceptions.
For example, some provinces up north have desert climate, and it almost never rains. It is almost impossible to live of the land, and animals require food and water you have to buy. Those guys had it bad, no wonder the northern provinces suffer the most in my country.
Those that live in cities, well they have to manage as they can. Since food prices went up about 200%-300%. People would cut expenses wherever they could so they could buy food. Some ate whatever they could, they hunted birds or ate street dogs and cats; others starved.
When it comes to food, cities suck in a crisis. It is usually the lack of food or the impossibility to acquire it that starts the rioting and looting when TSHTF. When it comes to security things get even more complicated.
Forget about shooting those that mean you harm from 300 yards away with your MBR. Leave that notion to armchair commandos and 12 year old kids that pretend to be grown ups on the internet.
Some facts:
1) Those that want to harm you/steal from you don't come with a pirate flag waving over their heads.
2) Neither do they start shooting at you 200 yards away.
3) They wont come riding loud bikes or dressed with their orange, convict just escaped from prison jump suits, so that you can identify them the better. Nor do they all wear chains around their necks and leather jackets. If I had a dollar for each time a person that got robbed told me, "They looked like NORMAL people, dressed better than we are", honestly, I would have enough money for a nice gun. There are exceptions, but don't expect them to dress like in the movies.
4) A man with a wife and two or three kids can't set up a watch. I don't care if you are SEAL, SWAT or John Freaking Rambo, no 6th sense is going to tell you that there is a guy pointing a gun at your back when you are trying to fix the water pump that just broke, or carrying a big heavy bag of dried beans you bought that morning.
The best alarm system anyone can have in a farm are dogs. But dogs can get killed and poisoned. A friend of mine had all four dogs poisoned on his farm one night, they all died.
After all these years I learned that even though the person that lives out in the country is safer when it comes to small time robberies, that same person is more exposed to extremely violent home robberies. Criminals know that they are isolated and their feeling of invulnerability is boosted. When they assault a country home or farm, they will usually stay there for hours or days torturing the owners. I heard it all: women and children getting raped, people tied to the beds and tortured with electricity, beatings, burned with acetylene torches.
Big cities aren't much safer for the survivalist that decides to stay in the city. He will have to face express kidnappings, robberies, and pretty much risking getting shot for what's in his pockets or even his clothes.
So, where to go? The concrete jungle is dangerous and so is living away from it all, on your own.
The solution is to stay away from the cities but in groups, either by living in a small town-community or sub division, or if you have friends or family that think as you do, form your own small community.
Some may think that having neighbors within "shouting" distance means loosing your privacy and freedom, but it's a price that you have to pay if you want to have someone to help you if you ever need it. To those that believe that they will never need help from anyone because they will always have their rifle at hand, checking the horizon with their scope every five minutes and a first aid kit on their back packs at all times.... Grow up
SERVICES
Whatever sort of scenario you are dealing with, services are more than likely to either suffer in quality or disappear all together. Think ahead of time, analyze possible SHTF scenarios and which service should be affected by it in your area.
Think about the most likely scenario but also think outside the box. What's more likely? A tornado? But a terrorist attack isn't as crazy as you though it would be a few years ago, isn't it?
Also analyze the consequences of those services going down. If there is no power then you need to do something about all that meat you have in the fridge, you can dry it or can it. Think about the supplies you would need for these tasks before you actually need them.
You have a complete guide on how to prepare the meat on you computer... how will you get it out of there if there is no power? Print everything that you consider important.
WATER
No one can last too long without water. The urban survivalist may find that the water is of poor quality, in which case he can make good use of a water filter, or that there is no water available at all. When this happens, a large city were millions live will run out of bottled water within minutes.
In my case, tap water isn't very good. I can see black little particles and some other stuff that looks like dead algae. Taste isn't that bad. Not good but I know that there are parts of the country where it is much worse. To be honest, a high percentage of the country has no potable water at all.
If you can build a well, do so, set it as your top of the list priority as a survivalist. Water comes before firearms, medicines and even food.
Save as much water as you can. Use plastic bottles, refill soda bottles and place them in a cool place, preferably inside a black garbage bag to protect it from sun light. The water will pick some plastic taste after a few months, but water that tastes a little like plastic is far way better than no water at all.
What ever the kind of SHTF scenario you are dealing with, water will suffer. In my case the economical crash created problems with the water company, that reduces the maintenance and quality in order to reduce costs and keep their income in spite of the high prices they have to pay for supplies and equipment, most of which comes from abroad, and after the 2001 crash, costs 3 times more.
As always, the little guy gets to pay for it.
Same would go for floods or chemical or biological attacks. Water requires delicate care and it will suffer when TSHTF in one way or another. In this case, when you still have tap water, a quality filter is in order, as well as a pump if you can have one. A manual pump would be ideal as well if possible.
Estimate that you need a approximately a gallon per person per day. Try to have at least two-four weeks worth of water. More would be preferable.
POWER
I spent WAY to much time without power for my own taste. Power has always been a problem in my country, even before the 2001 crisis.
The real problem starts when you spend more than just a few hours without light. Just after the SHTF in 2001 half the country went without power for 3 days.
Buenos Aires was one big dark grave. People got caught on elevators, food rot, hospitals that only had a few hours worth of fuel for their generators ran out of power.
Without power, days get to be a lot shorter. Once the sun sets there is not much you can do.
I read under candle light and flashlight light and your head starts to hurt after a while. You can work around the house a little bit but only as long as you don't need power tools.
Crime also increases once the lights go out, so whenever you have to go somewhere in a black out, carry the flashlight on one hand and a handgun on the other.
Summarizing, being in a city without light turn to be depressing after a while. I spent my share of nights, alone, listening to the radio, eating canned food and cleaning my guns under the light of my LED head lamp. Then I got married, had a son, and found out that when you have loved ones around you black outs are not as bad. The point is that family helps morale on these situations.
A note on flashlights. Have two or three head LED lights. They are not expensive and are worth their weight in gold. A powerful flashlight is necessary, something like a big Maglite or better yet a SureFire, specially when you have to check your property for intruders. But for more mundane stuff like preparing food, going to the toilet or doing stuff around the house, the LED headlamp is priceless. Try washing the dishes on the dark while holding a 60 lumen flashlight on one hand and you'll know what I mean. LEDs also have the advantage of lasting for almost an entire week of continuous use and the light bulb lasts forever.
Rechargeable batteries are a must (ed. Get a solar powered battery charger) or else you'll end up broke if lights go out often. Have a healthy amount of spare quality batteries and try to standardize as much as you can.
I have 12 Samsung NM 2500Mh AA and 8 AAA 800mh for the headlamps. I use D cell plastic adaptors in order to use AA batteries on my 3 D cell Maglite. This turned out to work quite well, better than I expected.
I also keep about 2 or 3 packs of regular, Duracell batteries just in case. These are supposed to expire around 2012, so I can forget about them until I need them.
Rechargeable NM batteries have the disadvantage of loosing power after a period of time, so keep regular batteries as well and check the rechargeable ones every once in a while.
After all these years of problems with power, what two items I would love to have?
1) The obvious. A generator. I carried my fridge food to my parents house way to many times on the past. Too bad I can't afford one right now.
2) A battery charger that has both solar panel and a small crank. They are not available here. I saw that they are relatively inexpensive in USA. Do yourself a favor and get one or two of these. Even if they don't charge as well as regular ones, I'm sure it will put out enough power to charge batteries for LED lamps at least.
GAS
Gas has decreased in quality as well, there is little gas. Try to have an electric oven in case you have to do without it.
If both electricity and gas go down, one of those camping stoves can work as well, if you keep a good supply of gas cans.
The ones that work with liquid fuel seem to be better on the long run, since they can use different types of fuel.
You can only store a limited amount of compressed gas and once you ran out of it, you are on your own if stores are closed of they sold them out.
Anyway, a city that goes without gas and light for more than two weeks is a death trap, get out of there before it's too late.
A DIFFERENT MENALITY
I was watching the People & Art channel with my wife the other night. It was a show where they film a couple for a given period of time and some people vote on who is the one with the worst habits, the one they find more annoying.
We were in our bed, and this is when I usually fall asleep but since the guy was a firearms police instructor I was interested and managed to stay awake.
At one point the guy's wife said that she found annoying that her husband spent 500 dollars a month on beauty products for himself. 500 USD on facial cream, special shampoo and conditioner, as well as having his nails polished! If you are that guy and happen to be reading this, or if you know him, I'm sorry, but what an idiot!!
"500 USD, that's a small generator or a gun and a few boxes of ammo" I told my wife.
"That's two months worth of food" she said.
We were each thinking of a practical use for that money, the money this guy was practically throwing away.
Once the SHTF, money is no longer measured in money, but you start seeing it as the necessary goods it can buy. Stuff like food, medicine, gas, or the private medical service bill.
To me, spending 500 dollars on beauty products, and to make it worse, on a guy? That's simply not acceptable.
The way I see it, someone with that mentality can't survive a week without a credit card, no use in even considering a SHTF scenario. And this guy is a firearms instructor?... probably the kind of guy that will say that a handgun is only used to fight his way to his rifle... and his facial night cream...
Once you experience the lack of stuff you took for granted, like food , medicines, your set of priorities change all of a sudden. For example, I had two wisdom tooth removed last year. On both occasions I was prescribed with antibiotics and strong Ibuprofen for the pain. I took the antibiotics( though I did buy two boxes with the same recipe just to keep one box just in case) but I didn't use the Ibuprofen, I added it to my pile of medicines.
Why? because medicines are not always available and I'm not sure if they will be available in the future. Sure, it hurt like hell, but pain alone isn't going to kill you, so I sucked it up. Good for building up character if you ask me . Make sacrifices so as to ensure a better future, that's the mentality you should have if you want to be prepared. There's stuff that is "nice to have" that has to be sacrificed to get the indispensable stuff.
There's stuff that is not "basic need stuff" but it's also important in one way or another.
My wife goes to the hairdresser once every month or two. It's not life or death, but it does make her feel better and it boosts her morale. I buy a game for the Xbox or a movie to watch with my wife every once in awhile, just to relax. 7 or 10 dollars a month are not going to burn a hole in my pocket.
Addictions such as alcohol, drugs or even cigarettes should be avoided by the survivalist. They are bad for your health, cost a lot of money that could be much better spent, and create an addiction to something that may not be available in the future.
Who will have to tolerate your grouchy mood when your brand of smokes is no longer imported after TSHTF?
GRAY/BLACK MARKET
Once the SHTF the black/gray market will take no time to appear all around you.
In my country, gray markets were even accepted in the end. At first it was all about trading skills or craft products for food. Districts and towns would form their own barter markets, and created their own tickets, similar to money, that was used to trade.
This didn't last long. Those tickets were easy to make on your home computer, there was no control and eventually people went back to paper money.
These markets were usually placed on warehouses or empty land, and were managed by some wise guy and a few thugs or hired security.
Anyone can go rent a kiosk inside these markets for about 50-100 pesos (about 20-30 dollars) a day and sell his goods and services.
Piece within these markets is usually respected... lets just say that these managers don't call the police if someone tries anything funny, like stealing, fighting or taking advantage of women. That's not good for their business and anyone that tries to mess with their business finds out how much pain the human body can actually experiment or gets a free ticket to meet the Lord.
Sometimes even uniformed cops manage security on these markets, for a small fee of course. As always, you still have to be careful. They may still try to pick your pockets or even attack you once you leave the market. Once you leave the market, you are on your own, as always.
This market evolves, and now a lot of different products are available. Today I visited my local market, a warehouse that is fairly well set up and cleanly managed. They had problems for selling stolen merchandise and fake Brand name clothes a few days ago.
What can be found at a local markets? Mostly food and clothing. Some have more variety than others but cheese, canned food, spices, honey, eggs, fruits, vegetables, beer, wine and cured meat are generally available, same as bakery products and pasta. These are less expensive than those found at supermarkets. Fresh fish is sometimes available but not always, people don't trust much products that need refrigeration, and they get those at supermarkets instead.
Clothes are also popular and you can find copies of brand name clothes, imitations, or even original stolen new clothes, the same goes for shoes and snickers. Children clothes, underwear, socks, sheets and towels are all very popular. Some sell toys, but they are always China made, mostly poor quality though there are some few exceptions.
Others sell tools, also made in China can be found as well, but they are of poor quality.
Some offer their services and repair stuff or offer work as handyman.
You would be amazed of the junk that these guys manage to fix: TVs, CD players, Power tools, etc. They even manage to solder the small integrated circuits boards sometimes. Give one of these guys a screw driver and a bar of chocolate and he will fix a nuclear submarine.
After food and clothes, the 3rd most popular item has to be CDs and DVDs, movies, music, play station 2 and Xbox games, programs, it all ends up there just one or two days after the official release in USA. Seems that they have a guy hidden under Bill Gate's desk or something.
Anyway, almost everything can be found there, and if you want, you can ask around, talk to the right guy and buy illegal stuff like drugs or black market guns and ammo. The quality of the drugs is questionable, of course, and a lot of addicts die from the mixtures these guys sell. Guns are mostly FM High Powers, Surplus 1911s and Colt .45s, Sistemas, and old Colt Detective revolvers in 38 special that found their way from police and military armories into the black market. Condition isn't very good but if you have money you'll be amazed of what you can end up with. Everything that is used by the military and police, including SMGs a, Browning 50 BMG Machine guns, and even frag grenades, is available in the black market, if the customer has the amount of money and a little patience, of course. The big guns may take a while, but the handguns and grenades are readily available.
Part Two
GOLD:
Someone hit me in the head please because I messed up about the gold issue.
Everyone wants to buy gold! "I buy gold. Pay cash" signs are everywhere, even on TV! I can't believe I'm that silly!
I just didn't relate it to what I read here because they deal with junk gold, like jewelry, either stolen or sold because they needed the money, not the gold coins that you guys talk about. No one pays for the true value of the stuff, so big WARNING! Sign on people that are buying gold coins.
Since it is impossible to determine the true mineral percentage of gold, small shops and dealers will pay for it as regular jewelry gold.
What I would do if I were you: Besides gold coins, buy a lot of small gold rings and other jewelry. They should be less expensive than gold coins, and if the SHTF bad, you'll not be losing money, selling premium quality gold coins for the price of junk gold. If I could travel back in time, I'd buy a small bag worth of gold rings.
Small time thieves will snatch gold chains right out of your neck and sell them at these small dealers found everywhere. This is VERY common at train stations, subways and other crowded areas.
So, my advice, if you are preparing for a small economical crisis, gold coins make sense. You will keep the value of the stuff and be able to sell it for its actual cost to gold dealers or maybe other survivalists that know the true value of the item.
In my case, gold coins would have been an excellent investment, saving me from loosing money when the local economy crashed. Even though things are bad, I can go to a bank down town and get paid for what a gold coin is truly worth, same goes for pure silver. But where I live, in my local are small time dealers will only pay you the value of junk gold, no matter what kind of gold you have. So, I'd have to say that if TSHTF bad, gold jewelry is a better trade item than gold coins.
GUNS, AMMO AND OTHER GEAR
After TSHTF in 2001, only the most narrow minded, brain washed, butterfly IQ level idiots believed that the police would protect them from the crime wave that followed the collapse of our economy.
A lot of people that could have been considered antigun before, ran to the gun shops, seeking advise on how to defend themselves and their families. They would buy a 38 revolver, a box of ammo, and leave it in the closet, probably believing that it would magically protect them from intruders.
Oh, maybe you don't think that firearms are really necessary or your beliefs do not allow you to buy a tool designed to kill people. So you probably ask yourself, is a gun really necessary when TSHTF? Will it truly make a difference?
Having gone through a shtf scenario myself, total economical collapse in the year 2001, and still dealing with the consequences, 5 years later, I feel I can answer that question.
YES, you need a gun, pepper spray, a machete, a battle axe, club with a rusty nail sticking out of it, or whatever weapon you can get hold of.
A LOT has been written on survival weapons. Everyone that is into armed survival has his or her own idea of the ideal gun battery. Some more oriented to a hunting point of view, others only as self defense means and others consider a little of both, and look for general purpose weapons.
Talking about guns, there is one special subject I want to rectify, and it's the point on what's the primary weapon for the survivalist, specially a urban survivalist that has to function in a society, yes, even after the SHTF.
People, if you are interested in real world SHTF situation, and you want to prepared for the real deal, then understand that this isn't black or white.
You wake up one day and listen on the radio that the economy collapsed and that the stock market closed indefinitely.
CRIME AND INSECURITY
Even though crime has always been an issue in South America, my country was quite the exception. It was dangerous, yes but nothing like after the 2001 economical crisis. One used to be able to let kids play on the sidewalk, or walk back home from a party, a few blocks, and be somewhat safe. This all changed now. There are no kids playing on the sidewalks anymore. I should emphasize this a little more. There are absolutely NO kids playing on the sidewalks at all, at any time of the day. Maybe a kid rides his bike a few meters on the sidewalk, but always under the supervision of an adult. A kid riding a bike on his own will get that bike stolen in no time, probably get hurt in the process, therefore no responsible parent leaves a kid alone on the street. Teenagers present a greater problem. You can't keep a 15 or 16 year old inside a house all day long, and even though they are big enough to go out on their own, when the sun goes down things get much worse.
This is when parents organize themselves; either taking them to someone's house or to a club and picking them up at a certain time. Taxis and remises are used sometimes , but there have been lots of cases of girls getting raped, so no parent worth a buck leaves his son or daughter in hands of a stranger. After years of living like this, almost everyone learned to be careful; sometimes they had to learn the hard way. Practically no one leaves a door or window opened or unlocked. Nor do they hang out in front of the house talking to friends. A bad guy might just see you there, like a sitting duck, pull a gun on you and take you inside your house.
There are no "bandit's law" anymore. One used to hear people talk about "You shouldn't resist a robbery, give them what they want and they'll go away". That holds true no more. These guys are under the influence of drugs, epoxy glue, or just hate your guts so much, because you have a better life than they ever dreamed of, because they were abused since the day they were born, that they will hurt and humiliate you as much as they can. Letting a criminal inside you house almost guaranties you that he will rape/beat/ torture and abuse whoever they find inside.
I personally drew a line a few years ago and decided, after one long, serious conversation with my wife; that no one would be allowed inside the house, no matter what. We figured that there are worse things than death. Having decided that, I make sure I always have a weapon on me. They'll have to pay dearly for my life, plus interests.
By far, the most dangerous moment of the day, is when I (or my wife) leave/enter my house. A solid, secure house cannot be broken in easily, so criminals wait until you are standing on front of the door with the keys on your hand to jump on you. This is why we are extra alert when approaching our house, look all around us and if we see anything strange, keep walking around the block or keep on driving. No door is ever opened when there is a strange person around. Whenever someone knocks on our door (and we don't know him/her), they are answered from a second story window. Criminals sometimes disguise as electric company guys or something like that, saying that they have to fix something. NO! If there is something to be fixed they can fix it on the sidewalk. Anything inside your house is your responsibility and the company is not going to fix it for you. Either way, it's always better to play it safe, Better to be rude than dead.
On the car/driving issue, that calls for an entire post dedicated to SHTF driving. For now I'll just say that windows and doors have to be closed at all times, a weapon must be within arms reach, and that stop signs and traffic lights have a hole new meaning once TSHTF. If your country ever falls as mine did, you'll remember me whenever you see a traffic light. You never stop at a red lights or stop sign unless there is traffic, especially at night.
At first, police would write you a ticket for not stopping at a red light if they saw you (another way of saying that they will ask for a bribe if they see you pass a red light), but after a few months they realized that nothing could be done, people would rather risk a ticket than risking their lives, so they decided to turn traffic lights to permanent yellow at night, after 8 or 9 PM. This is, of course, very dangerous. Night car accidents are both frequent and brutal since sometimes both cars hit each other at full speed.
MissinLink asked some good questions that might interest others as well, and since we are on the security issue, here they are:
"Do the invaders of homes in the country just drive up in cars or trucks? Do they hide and sneak up? How do these home invaders attack a home in the country? A similar question could be asked for homes in the city."
Sometimes they just drive up to where you are working, if you are far away from the home, but most of the time they sneak up on you. Criminals are not stupid, and they will spend days checking the place and specially YOUR ROUTINE. For example, if they see that you lock the gate at night, as most do, they will wait for you behind a tree until you are close. This is done a lot. Dogs are the best alarm you can find, and criminals know that. They will poison them with pills when you go to sleep and attack the place in the middle of the night. I know of many that had their dogs killed. If they think that security is tight, they will just hide near the main gate, and wait for you to leave or return. When you stop at the gate and must get out of the truck to open/close the main gate, they attack. I'd say that the most frequent kind of attack is attacking by surprise when you enter/leave your home.
"Most common times of attack? Day night evening morning? I understand occur when coming or going from ones home, etc."
7 am, 9 am, 1pm 7pm, all are common times for attacks. There is no "safe" hour of the day. Night is particularly dangerous. Maybe attacks during the day are faster, they want to get some money or jewelry and leave fast, while at night they might stay inside more time, maybe till the next day. But there are no fixed patterns. If I could give one advice concerning SHTF security, it would be: Eyes and ears wide open when you enter/leave your home. If possible, keep a gun on your hand when doing either one. If something looks, even "feels strange, then go around the block and check again, carefully. If you see them still there, either call the police (if still available) or get help. If you approach the house with a large number of people they will leave. One time, I saw a couple of strange looking guys at my door. I went round the block and saw them still there. I started flashing the car lights and the horn and they left. I had a gun with me, though, so be careful when trying this. Also, remember that a car is one heavy, powerful piece of machinery. I know a guy that had one of those big chrome-tube bumpers installed on his truck, especially for hitting those that were stupid enough to try and make him stop by standing in front of the car.
If I had a truck, I would do so myself. Though I would keep my mouth shut about it, as always. Just say that you think it looks cool or something. Every now and then someone tries to force me to stop my car by standing in front of it (I suppose there are still fools out there that get robbed this way), in the middle of the street. I just aim at them and accelerate at full speed. They always jump out of the way before I hit them. By the way, at first, doing this made me feel nervous, but can you believe that now it's just common driving, as normal as changing gears? I guess it's a little sad.
Part Three
Studying the SHTF at the University: Dark omens:
I forgot it! Darn, same as the gold stuff but worse, much worse. I've never been good at remembering some things, like numbers and names of people I meet, I forget those (instantly), they just flee my mind, uneventfully, but I do remember some other things that don't seem to be as important. I do remember living in USA as a kid. I remember my school, Pierce School, Don't remember exactly were it was, because we lived some in Boston, Massachusetts and some in New Hampshire. I remember my best friend, Freddy, and a girl (why is there always a girl? ) Samantha, Sam. She was red haired and tall, I had a picture of her playing together but I lost it. Some time between the age of 3 and 26 I lost that picture that was so dear to me. I remember the smell of an orange shaped "scratch and smell" sticker my kindergarten teacher stuck in a small book we made once. But I almost forgot this forever. This, this was important, a moment where the life we once knew stopped existing, and a group of students, in a class room that looked like and abandoned building, realized it, all 60 of us at the same time.
It's 1:06 AM over here. I just finished showering and my wife and son are asleep. I was putting shampoo on my hair, thinking about what I wrote today on this post, and remembered the exact moment when I realized along with several other people, not only that TSHTF (that we all knew) but that the world we once new no longer existed, and that this was not a hurricane, this was an ice age period, it wouldn't just go away.
We understood it the same way a kid understands photosynthesis: Because a teacher coldly explained it to us, even used graphics. I slept 5 hours yesterday, 2 hours the day before yesterday. Saturday night I didn't sleep at all. I'm already used to it. Deadlines at the University, staying late at night, drawing in CAD 3D, waiting until Renders are ready. It's a competitive world out there, and no one sympathizes with what you are going through, they just want you to perform as expected, and the standard is always high. It happened 4 years ago, almost a year after the December 2001 crisis. It was a social studies class and this teacher, don't remember if it was a he or a she, was explaining the different kinds of social pyramids. God! Now I remember more! We even had a text book with those darn, cruel pyramids! The first pyramid explained the basic society. A pyramid with two horizontal lines, dividing those on top (high social class) those in the middle (middle class) and the bottom of the pyramid (the poor, proletarian). The teacher explained that the middle of the pyramid, the middle class, acted as a cushion between the rich and the poor, taking care of the social stress. The second pyramid had a big middle section, this was the pyramid that represents 1st world countries. I which the bottom is very thin and arrows show that there is a possibility to go from low to middle class, and from middle to the top of the social pyramid. Our teacher explained that this was the classic, democratic capitalist society, and that on countries such as Europeans one, socialists, the pyramid was very similar but a little more flat, meaning that here is a big middle section, middle class, and small high and low class. There is little difference between the three of them.
The third pyramid showed the communist society. Where arrows from the low and middle class tried to reach the top but they bounced off the line. A small high society and one big low society, cushioned by a minimal middle class section of pyramid. Then we turned the page and saw the darned fourth pyramid. This one had arrows from the middle class dropping to the low, poor class.
"What is this?" Some of us asked.
The teacher looked at us. "This is us"
"It's the collapsed country, a country that turns into 3rd world country like in pyramid five where there is almost no middle class to speak, one huge low, poor class , and a very small, very rich, top class."
"What are those arrows that go from the middle to the bottom of the pyramid?" Someone asked.
You could hear a pin drop. "That is middle class turning into poor".
I won't lie, no one cried, though people rubbed their faces, held their heads and their breath.
No one cried, but we all knew at that very moment that all we thought, all we took for granted, simply was not going to happen.
"You see, the income from the middle class is not enough to function as middle class any more. Some from the top class fall to middle class, but the vast majority of the middle class turns into poor" Said the teacher.
I don't know how many people in that room suddenly understood that he/she was poor.
The teacher continued "You see, we have a middle class that suddenly turns to poor, creating a society of basically poor people, there is no more middle class to cushion tensions any more. Middle class suddenly discovers that they are overqualified for the jobs they can find and have to settle for anything they can obtain, there for unemployment sky rockets, too much to offer, too little demand. You see they prepare, study for a job they are not going to get. You kids, you are studying Architecture because you simply wish to do so. Only 3 or 4 percent of you will actually find a job related to architecture."
We all sat there, letting it all sink in. After a few months, it all proved to be true. Even the amount of students that dropped out of college increased to at least 50%. They either so no point in studying something that would not make much of a difference in their future salaries, had no money to keep themselves in college, or simply had to drop college to work and support their families.
Someone once said, in this forum, that if this had happened in USA, the social unrest would have been much worse, because people from S. America are stronger. At first, I told him that I didn't think so, I said that all humans adapt when they have no other choice. But now that I consider it more, maybe he was right. Not that S. Americans are stronger, but they are more used to adversities. Most of us are children from grandparents that escaped civil war, either in Spain or dictators in Italy, our parents survived the dirty war, even more dictators, and therefore their children are of strong character too. Can USA citizens survive what we survived? Of course they can, though I think that there are too many that are not like you, many that don't prepare, and take everything for granted. Those are the ones that will be responsible for the increase in the social unrest once the SHTF, those that were too lazy to take care of themselves before the SHTF, or that had gone soft through out the years, believing that the government will "take care of them because they pay their taxes". But in the end, they will pull through. People will adapt, they always do. You'd be surprised. And those that don't want to adapt to the new reality they live in, will die young, thus cleaning the gene pool and ensuring the continuity of the specie. It's been this way for thousands of years.
MISCELLANEOUS Q&A
Don't prepare for an idiot shooting a Raven at you 200 yards away, prepare for the sneaky son of a gun that waits until you are distracted, fed the dogs some nice pills, and gets to you when you less expect him. THAT is much more likely than someone attacking you 200 yards away.
I didn't mean it as an insult to anyone, I'm well aware that there are cases of people shooting enemies 1000 yards away. That is war. Killing someone that wants you dead before he gets close to you is perfectly logical.
Please name me one case of self defense where the person shot the bad guy 100 yards away.
I had a guy try to steal my car a while ago while visiting a friend at his farm.
I saw the guy next to my car about 300 meters away. I had my FAL PARA with me, since we where going to spend some time shooting that morning.
I could have shot that guy from a safe distance, right? But you can't do that in real life. People that shoot others 300 meters away for no reason, claiming self defense, are called psychos. I had to fold my rifle, hide it under my coat, walk to where my car and the guy where, and ask him what he wanted. When he said that he was there to take the car I leveled my FAL at him, and as it usually happens in real life, the guy almost pissed his pants, and left, babbling some BS story I no longer remember.
If someone starts shooting at you 300 yards away, and you shoot back in self defense , that's ok, but that rarely, if ever, happens.
Any bad guy that has survived through puberty will be smart enough to get close, very close, maybe when you are distracted with some chore/fieldwork and point a gun at you, asking you to calm down and walk into the house.
No way can you know what a man's intentions are 200 yards away, unless he starts shooting at you like an idiot. And if he wants you dead that bad, he will get close enough and make sure that that one shot is the last thing you hear on this planet.
As I said, dogs are the best alarm on the field, though those too can be eliminated, as it happened to my friend. A shame by the way, they were nice dogs.
But if your idea of a self defense plan is shooting anyone that happens to be within your 200 yard range, do as you wish. You will not have to worry much about survival, State penitentiary will provide all you need.
It is one thing to go to war, and it is another, completely different, to live your life in a SHTF situation. When you deploy in a war zone, you set yourself mentally to do a job, when the job is done, you return home, you turn the mental combat switch off.
You cannot live your entire life as if you where in combat, it's impossible.
I'm as alert as I can be, all day long, and all night. Thanks to that I kept my family and myself safe, while everyone else I know has at least been involved in one or more violent crimes. I'm so winded up that the slightest sound will make jump out of bed at night and have my pistol ready even before I'm conscious of what I'm doing.
My house is the only one in the block that has not been broken into, my wife and son are safe, safer than all the other stupid sheep that blame God for whatever happens to them, and do nothing to prevent it themselves.
But still, you have to live your life, go to work, go to the supermarket... live a life! do everyday stuff.
The
stress of living that way will be the end of you, I'm 26 years old and
already have problems related to high stress like high blood pressure,
migraines, insomnia, etc.
NSA
"You make it sound like carrying a pistol on your person is a fairly common occurance (at least now)."
My mistake, it is not common, at least for descent working people. There are parts were criminals carry their guns openly, sticking out of their joggings and no one does anything about it. No one dares mess with them, these are neighborhoods were police don't dare to enter.
Carrying a handgun, ready for use (loaded and on your person) is illegal, unless you have a permit that is almost impossible to get. You need to own a large company, and justify carrying the gun because you transport large amounts of money (several thousands of USD on daily basis). Carrying a gun for self defense is not a reason for a carry permit, only the protection of money. It's ridiculous, isn't it?
Still, owning handguns is not that complicated, once you get a gun user card, but a ccw permit card is out of the question.
Some gun users still choose to carry guns, even though they don't have a carry permit. This is not allowed and you might loose your gun user card for this.
Carrying a gun, bought in the black market, and without even having a gun user card, will take you straight to jail.
On the issue of cops and guns, some may understand that you are carrying for self defense, because you are in a very dangerous area, and if you have you gun user card that shows that you bought that gun legally, he MAY be sensitive and let you go, or not.
More than likely, he will ask for a small "tip", for his troubles. It's a matter of luck actually. You have to consider all this, and decide if the risk of getting caught is greater than the risk of getting killed for not being able to defend yourself.
We often call unprepared people, the mass, sheep. Sheep describes them pretty well. They do as the rest of them do, don't fight for their rights, accept almost everything and so on. But what happens when "sheep" get desperate? Well, that 's what happened here.
After years of closing factories and the destruction of the national industry, extremely low wages, people got fed up. This destructive economy by Menem, our previous president, one of the most corrupt president in the history, ( he was into the bombing of the jew embassy, managed the drug market in the country, just to mention some) plus the stupidity of the following president, De la Rúa, was a formula for disaster.
One day the Minister of Economy declared that no one would be able to get more than 100 bucks a day from the ATM( correct?) nor close accounts. You could just get 100 bucks out of the bank a day. That was it.
Then came the devaluation. Before this happened 1 U$S= 1 $ Argentine peso. Suddenly this changed into 1 U$S dollar= 2 peso then 2.5 even 4 pesos. Today 1U$S= 3 Pesos.
The banks kept the people's money, including their deposits in US dollars. If you had 1000 U$S dollars in Bank Boston for example, they turned it into 1000 pesos, that equaled 333 U$S dollars. They stole 666 dollars from you!
Prices went up 200%, 300% and sometimes more. Imagine for one moment what your life would be like if today you go to your local 7-11 and everything has gone up 200%. How would you survive with your pay check?
The sheep got desperate. First, because they had been stolen by banks and wouldn't return the money to the people.(the so called "corralito" ) then because the classes with the lowest income found out that their salaries weren't high enough to buy the minimum food stuff to survive. The country marched asking for the presidents resignation. He had to leave the presidential palace in a chopper...
Banks were destroyed by people that wanted their hard earned money back. Supermarkets and other shops were looted, as well as regular houses.
This lasted for about a month, the chaos spread all over the country, concentrated in the largest cities.
I remember being at a supermarket and the mob outside, negotiating with the manager. Sometimes, they would not destroy the place if the supermarket surrendered them the goods peacefully.
Food got scarce. I mean, you could buy just a certain amount of milk or water, 4 bottles for example. And most imported goods disappeared. Electro domestics such as TV, videos, and refrigerators kept their prices in dollars, inaccessible for most people. The same happened with real estates, cars and luxury goods.
Today this all seems far away. Not because it got better, but because us humans have this damn capacity to " get used to".
How did our lives change? I cant even being to explain... everything changed!
The streets are more dangerous than ever, thanks to the general poverty.
Education suffered thanks to this as well. Kids working or stealing to survive instead of going to school.
How could I explain this to you?....
For example, tools are really expensive, since most come from abroad... remember, our national industry was sold out or destroyed.
Stuff like MRE, Emergency food bars are impossible to get. No one imports them anymore. (I paid 10 dollars for 1 MRE a guy had)
Guns and ammo are really expensive and are sold in small quantities.
Forget about buying a "case" of ammo! Forget it! I know it's hard for some of you to imagine this, but you just can't buy a " case" of anything. A large store may have 10 or 15 boxes of 308, 20 rounds each box. Small stores have 10. or less.
Only common ammo is available such as 22, 38, 357. 9mm, some 40 s&w, 12 ga 308 and a little 223, that's pretty much it. Ammo for my 357 sig is hard to get. I buy a box of it every time I find one around... and it's extremely expensive.
IF you just HAVE to buy something strange like 300 magnum or 270 (strange for us J ) there's one place you can get them from but be prepared to pay +100 dollars for 20 rounds. While we are at it, there are also few models of guns, 70 % of it is used. You can find about 4 or 5 12 ga pumps, mossberg 500, Maverick or Rem 870 in each store. Handguns are relatively plentiful, not the newest models but still there's some Beretta, Glock, Colt, S&W, Walther, Taurus, Rossi and Sig. Same goes for Mausers and bolt action rifles as well as side by side shotguns.
Semi auto rifles are hard to get. Some big gun shops have 1 FAL each. M16 are quite rare and expensive. Saw a Galil and a SKS(600 dollars) the other day, but it's not common and the red tape is HUGE. I found a good FMK3, one of the few left around, and bought it for 250 dollars, but this isn't common.
Shoes and clothes are also, expensive, even in U$S. Labor is cheep; you can have a maid and a gardener for 300 dollars. There's no "safe" job. With 20% unemployment they pay you whatever they want and if you don't like it there are 100 persons waiting to get your job. Owning a shop-business is hard. You have to consider armed robbery (some get hit 10 times a month) and still you have to pay the police for protection (from themselves) Hope it helps, at least so you can have an idea how your world would be if this happened in your country, hope you never have to experience it in the flesh...
Well, one thing I learned with all this is that people adapt, people get "used to".
And finally, people accept.
I have a hard time seeing people eat out of trash cans, that's one thing I'll never get used to.
Every night entire families, wife, husband and 2 or 3 kids, little kids
about 3 years old go throw trash cans in search of food.
At almost every light stop there's little bare foot kids begging, all dirty and skinny.
That's the thing that affected me most, the starving children.
One guy in another board told me he didn't care for this "bleeding Heart thing" and that "Life is rough. Get used to it." I told him that I didn't need someone that lives in San Diego, California, explain me how rough life is.
I've seen dead people, man, I once saw a guy "sew" his mouth shut with a piece of rusted wire he got out of a broom, and all that I can handle, but a 3 year old sobbing because he's starving, Im sorry, I can't.
Believe me, it's one thing to see a little kid starving in Africa, you probably saw that terrible image a million times, but now imagine that that kid speaks English, with an American accent, and you see the Hollywood sign in the background.
Both cases are terrible, but the one that looks as if he could be your son and not some kid in Africa or Croatia hits a nerve. Because "those things don't happen here". It happens to others, not in my country, not in my neck of the woods.
Sorry , Im babbling here. Back to your question:
You guys have most stuff covered, but there's some stuff I'd like to share:
1) Don't invest all your money in your country. Don't put all your eggs in the same basket, just in case economy goes to hell. Invest in a country in Europe, in Australia, whatever, I don't know, but not in the same place. I did this, but most people didn't and got screwed.
2) Keep cash. Both dollars and Euros. I know some of you just don't like the European money, but it's the only way you have to cover most bases. Here the national paper money was worth 1/3 from one day to another.
3) If you have land, have some animals. Even a few chickens and rabbits can make a huge difference and will complement your staple food.
4) Buy guns and ammo. Not 20, but a couple of fighting guns, 1 or 2 Mausers and 2 or 3 handguns. You know the kind. Get lots of 22 ammo.
5) Try to get 2 or 3 similar guns, like 2 or 3 AR, Fals, or SKS. This way you can use the same ammo and if 2 guns brake you may be able to fix 1. For example, If I were you, Id buy 3 or 4 SKS and 3000 rounds of ammo. If your SKS brakes, you have a spare gun that you already know how it works and are used to.
6) Spare parts are ok, but make sure you know how to replace them, a gunsmith may not be available. If not, get a similar gun as back up.
7) Don't trust the media. If you watch the news here, reporters say everything is ok, everything is fine. But then you talk to your neighbor and it turns out Mr. X got shot yesterday, the nice girl on the next block got kidnapped and raped, and today the boy next door was also kidnapped. This is the kind of conversations I have in my neighborhood, I'm not kidding.
8) Keep 6 months- a year worth of food stored if you can and have a well or at least a good supply of bottled water stored as well a 2 water purifier and a good supply of filters for them. The water network works but it's not safe. Some time ago an entire town got sick because of the contaminated tap water and lots of people died.
9) B-proof vest. I'd sell my left testicle for one these days. I never believed I would ever need one and now here I am. Get one of those that can go under the regular clothes.
10) Keep your passport and cash ready. If you can afford it, the best thing to do in such a country is getting the hell out of it! Maybe you have family somewhere else, keep in touch just in case. I did with my family in Spain and I going there as soon as I can.
"What about essential services like power and water?"
Power get cut some times but not for long , a couple of flash lights and your ok.
Water is still working but you cant drink. Most of the water supply in
Bs As shouldn't be drank, I used to drink it but this year the water
was just too dirty. Even if we still pay our water bill and the gov.
says it's ok for drinking this water wouldn't be accepted in the US.
Here the water companies can bribe their way out of it.
"Were they always delivered reliably or were there blackouts etc...."
There were blackouts, I remember once most of the country was without light for about a day. Buenos Aires was without light for 4 days.
"What about medical care, how do people get treated for injuries or illneses? "
If you have private health you are ok, but if you don't have the money
for it you might as well put a bullet in your head. Free
hospitalization, forget it, you'll die because of an infection. They
don't have supplies, even sterile needles are hard to get in a public
hospital. No way, if you don't have private health you have a foot in
your grave already.
"Is the crime mostly simple street crime or is it highly organized with gangs and cartels/mafia style?
Both. The police handles most organixed crime. The governors are the
head of the organizations on each Province.The worst part is the
kidnapping. About 2 or 3 persons get kidnapped each day in my
neighborhood.
For example, I keep 10 pesos (about 3 dollars) bills to give to the police if I get stopped when driving. You HAVE to bride the cop that stops you, the last time I got stopped by a couple of cops I played a little hard to get (pretended I didn't understand he wanted money) the cop got really nervous so I just have him the money and he calmed down, he let me go.
The cops are involved in most illegal activities like drugs, prostitution, robbery and kidnaps.
That's why I keep the high power Hirtemberg 9mm stuff and AP 308, because there a big chance the "perp" might be wearing a "Policia Federal" body armor vest.
They ask for donations. That's right, the government asks the people for donations instead of doing things themselves.
And the best part is that once they get all the donations.(mostly food, milk, blankets and such) The damn Governors SELL the donated goods to the poor. No , you cant imagine the kind of corruption we have here.
The problem is that nothing is being done to get us on the right track, because a small group of people wants this country as poor as possible to take advantage of it.
Imagine having to pay your employees 1 dollar a day and selling the soya, meat and other agricultural products you get at international prices.
The people that own small portions of land have it worse than those professionals that are in the city. This is because they are destroyed by the larger land owners such as Benetton and other large international corporations.
But you are right, they can at least live out of their land. The poor people in cities have to collect cardboard or look in the garbage.
You are also right about people now fixing things instead of buying new ones. Seems as handyman will always find a way to survive.
The only things that can be imported are the cheep ones from China, or Brasil. Other products like large plasma TVs and such are rare and only accessible to the extremely wealthy.
For example, I had to buy a electric shaver because the Gillette blade are too expensive. No way am I going to spend 6 dollars for a pack of Gillette Sensor.
And so you adapt to whats available and what you can afford.
people that live in the Patagonia are a little better off than those that live in other Provinces. The rich people do well everywhere (except for the kidnaps and murder) but the poor people that live in the south have better land and can at least grow and raise a few animals. The central part of Argentina, and the North has been severely punished. Tucumán is a disaster, as well as Chaco, Entre Rios, and others, the amount of children that starve to death is astonishing.
The Chileans returned to Chile long ago, Chile is MUCH better off. Argentineans are going to Chile looking for job.
Buenos Aires is also a disaster area. Even the "nice part" of Buenos Aires, the Capital where the nice Hotels are, the part that tourists see, turns into a complete nightmare after 10 pm.
During the day tourist from around the world shop and sight see, ignoring the beggars. But at night the picture is Mad Max 4:
All the "cartoneros", people that pull carts in search of cardboard and paper to sell, flood the city. And I mean flood: 20 to 30 persons per block.
They pull the carts themselves, followed by the wife and a few children. They pick the paper out of the trashcans and eat whatever they scavenge.
The
government considers them "employees" God only knows why, since they
have no salaries, just the paper they get. This is just another "trick"
the government has to reduce the unemployment %, considering these poor
people that eat out of trashcans employed. (Our politicians have no
shame)
As I write this I hear shoots being fired outside and
people screaming.. jjejee, I never would have think that I would be
writing this today, 3 years ago, but now it's almost normal.
Gold & silver kept their true value, as they always do. I didn't have gold, but had dollars and euros. Now that you mention it gold might be a good way to go for the Americans. Dollars, Euros and gold and you'd have most bases covered.
You can't barter gold at a supermarket for example, you would loose too much money. But you can wait until things settle and change for dollars/Euros or other stable paper money and save yourself from devaluation. Or get out of dodge with your gold and deposit it in a safe country.
The point is that gold never looses it's value because, unlike paper money, it holds value itself.
Foreign accounts could not be touched since they are protected by other
countries law, not affected by national executive orders.
Imagine a federal agent calling a Suzie Bank.
"Hi, I'd like to seize Mr. Smiths accounts"
"Why?"
"Well, because I want to steal his money"...
Wouldn't work.
Part Four
A LIST OF THINGS THAT "If you had it to do over again" YOU WOULD GET.
Nomad came up with this one. It's a good idea because it may help some of you from making the same mistakes I did. There are things you don't think about until you need them, and then it's too late.
OK, If I had to do all this from scratch? Say, for example, if I had a 2 year warning, fairy godmother appears one night , all dressed in blue waving a magic wand, saying " Your country will go down the sewer in 2 years, consider yourself warned dear"
There are several things I would have done differently, and things I would have bought:
Food: I'll get to the food issue soon enough, but you can never have
too much canned, or other long shelf life food. This was probably one
of my greatest mistakes, I overlooked the food problem.
I was talking to my wife today while driving, asked her the same question Nomad asked me "what would you do if you could go back in time, before the 2001 crisis".
My wife, though smart, isn't much into preparedness, but she answered "I'd buy food" in a heartbeat.
"Don't you remember that you could only buy one small bottle of oil at a time, same with sugar, flour and milk. Don't you remember all those empty shelves at the supermarket.?"
Definitely, more food, specially food that lasts for a few years.
CAR
I would have bought a 4x4, even though I live in the city. A 4x4 allows you to dive over the sidewalk or through wasteland, away from roadblocks or riots. I've see those that have 4x4s simply go off road, climb over a boulevard and leave while the rest of us poor car owners have to stay.
A 4x4 truck also has more mass and power in case that someone tries to cut you off or rams you with the car. It's less likely to stop running if you hit someone or several people (in a riot situation) since it's prepared for cross country use and the engine is much more protected.
Fuel containers: Not only jerry cans, but those big metal containers, that hook up like small "u-hauls" ? I'm not sure about their capacity, maybe they can hold one or two barrels of gas. I saw them at construction sites, and they were not that expensive if bought used, before the 2001 crisis. Now , I don't know. Haven't seen them for a while.
A generator: These are imported and very expensive for us. I think that they are now making them here, but I'm not sure about the quality.
A nice TV and DVD player: I know what you are thinking "this guy has gone ... "nuts" "
Please, let me explain.
Going out for dinner or to the movies is not only dangerous but also expensive. You WILL find much better use for that money if SHTF.
There are places in Buenos Aires where you can go out for dinner, movies, or theater shows and have a good time, safely. They either have their own security or arrange with the police for added security. These are the kinds of places you are likely to visit if you ever come to Argentina, places were tourists can move around, relatively safe (there are always exceptions, of course). But these places are either for tourists or for the extremely wealthy. I have a good socio-economical level, better than 96% of the population at least, yet I cant afford to spend that amount of money every weekend or even two weekends a month. Going out for a walk is a possibility, and we do go out for a walk every now and then, but lets just say that the view isn't that good, and you can only walk about 6 blocks in the same direction before you get out of the are which is guarded by private security, after that you are on "you are on your own" land. You CAN go for a walk (just like millions that live in Somalia or Afghanistan go for a walk as well) millions of citizens do, but I'd rather not risk it.
Just the day before yesterday, a young woman was waiting at the bus stop in my neighborhood, holding her 6 month old daughter. A cop that was chasing a bad guy opened fire with his High Power, with no regard to bystanders as they always do. The 9mm FMJ (JHP are not allowed for the average police) went right through the baby's buttocks and through the mother. Miraculously, the bullet didn't hit any of the baby's internal organs and the mother also survived after a few days at the hospital. Was that just luck? Maybe, I prefer to think that God does work in mysterious ways.
We have a lot of cases like this, were innocent people get shot by the police, and the stupid "no JHP" rule makes it worse, since 124 gr. FMJ 9mm will penetrate walls, windows, even bad guys and end up injuring or killing innocent people.
So, back to the TV. Good places are too expensive, and just going out for a walk at night with your wife/girlfriend is out of the question. All of a sudden popcorn , pizza and a movie sounds like a good plan.
I'm not saying that you should spend all day in front of the screen like a zombie. Reading is nice, I love reading myself, but once the SHTF, going out with a date at night wont be that easy, nor will it be that cheap. You will end up paying for that added security the shop/bar/theater owner hired, the higher price of gas and food, while a DVD copy can be found everywhere, and costs only a couple of bucks.
After the SHTF there will be a lot of "why don't we watch a movie" nights. Like it or not TV is cheap, safe entertainment. A play station or xbox is also nice to have.
Even if the country collapses, there will always be a guy with a DVD writer making copies. Just something to think about if you like movies.
BOOKS
Oh, almost forgot. If you like reading a lot, buy books now, even if you wont read them for some time. If your economy crashes, paper will become a source of income for many. We have thousands of scavengers collecting cardboard and paper all day long, specially at night when people take out the trash. As a result, books are not cheap, because they have a value of its own in the form of paper.
Also, consider that books are heavy, making transportation expensive and many are printed abroad.
Just as an example: I returned from visiting my parents in Spain with
three suitcases. ONE suit case was entirely full of books. Books cost
about 80%-200% more than what they cost in USA or Spain.
Guns & ammo: I always liked guns, so I always had weapons. But I didn't have an adequate survival battery. If you don't have a good survival selection of weapons, buy them now, or as soon as your budget allows. Make it one of your priorities, just after food, water and shelter.
There are several posts on the ideal choice of weapons. Get at least a service size pistol and a military semi auto rifle and a 22 handgun/rifle. (try to get both if you can, they are not that expensive).
A bolt rifle (preferably in the same caliber as the semi) a pump 12 ga shotgun and a sub rifle, like a SMG or pistol caliber semi auto carbine (same caliber as pistol) would complete the package.
I forgot to buy a 22 pistol until after 2001, and ended up paying for a Norinco 22 pistol the same price I would have paid for a Ruger pistol before the crisis.
My advice is: See what you use regularly and what you expect to need after TSHTF. Of those goods, see where they are made. If they are made outside your country, they will either increase in price of stop importation entirely after TSHTF.
In
my case, one good example (of many, many others) is Gillette disposable
blades. They are made in USA, and right now they cost a fortune. But as
I said before, check what is being imported.
No point in buying cases of Cubans for trade after TSHTF if you live in Cuba, right?
I wouldn't think of these items as trade goods, but as "gifts" to buy favors, build up relationships with police, government officials, doctors, people you might need favors from.
Stuff, like liquor/wine, a nice pen, perfume, makeup and other "free shop" kind of items can go a long way when you need some strings pulled, or a "friend" within certain circles. And it's not only the item, sweet talking also must be applied.
For example, you need renew your drivers license after the XXXX crisis. The problem is that the office is low on personal (they had to let go 25% and 50% are on strike) so you'll have to wait 4 months until you get an appointment.
You approach the information desk were you find Betty. Now, Betty hasn't had a date since the age of 10, and she weights as much a healthy manatee (though she's not THAT pretty) you kindly ask her to please help you fill the paperwork, and though she's as cold as a Popsicle, you keep calling her by her first name and when you leave she smiles and says good bye.
The next day you drop by and give Betty a Revlon lipstick for "helping" you fill the form, which had difficult questions like "name?"" Age?". It cost you about 4 bucks before the crisis but, since it's made in France, it went up to 20 dollars and then, 2 months ago, they no longer imported it. Revlon saw that they no longer had a market for their 4 Euro lipstick, which now costs Americans 20 dollars and the segment that used to buy it is spending that money in other items like food, so their marketing experts told them that the 4 Euro lipstick is no longer profitable in USA.
Betty used to love that particular lipstick, she thought it made her look like Cindy Crawford (poor Betty) but 20 dollars was more than she could spare in her good looks, and when she finally decided to drop the 40 pounds of M&M's she ate a month in favor for the lipstick, the girl at the drugstore told her that the item is no longer imported into the USA.
Her face lights up when she sees your present, and tells you that you shouldn't have bothered, and she asks how did it go with your license. You tell here that you actually have a problem, it seems that it takes 4 months to renew, and you ask her if , well, maybe she can do something about it... you get the picture.
In other occasions people will let you know that they want a plain and simple "bribe", and there 50 bucks or 100 bucks according to the situation will get the job done. I've used "gifts" ( a perfume) to get my passport faster, saved a few months, and I've used bribes every single time the police stopped me for "inspection". I know this does not apply to 1st world countries were most officers are honest self sacrificed people, I mean no insult to the law enforcement community on this forum, but please understand that it does apply to 3rd world countries, and I'm not getting shot by an angry cop over 10 or 20 pesos, let them have their bribe. I tried it once and I will never try it again. A cop stopped me and started BS me. I told him "ok officer, guess you'll have to write me a ticket, I understand". He didn't want to write a ticket , he wanted money and things got ugly. I'm never doing anything that stupid again.
FOOD
A delicate issue. Even though not in the same way, it does affect us all. Keep in mind that if TSHTF, prepared or not, food will always be in your thoughts. If you don't have it you'll do ANYTHING to get it, and if you are prepared you'll worry about being able to get more for the future. Once you see food prices go up between 200% and 300%, or simply see it missing, you'll realize what a valuable commodity food really is.
To those that think that food will never be a problem in USA:
Come visit my country, even though there are desert areas up north, most of the country is fertile "Pampa".
Just after WWII Argentina practically fed Europe. Argentina was know in Europe as " the world's granary". Cattle and wheat was enough to feed our own country and another continent.
So, what happened? Why are there so many that have little or no food and end up eating out of dumpsters?
I mean, the land is still there, isn't it?
Well, the country is the same country that used to be called the "world's granary" but some things changed. Several big, multinational corporations, such as Benetton, bought hundreds of thousands of acres of natural resources. I don't know the exact number, but I do remember that the media started talking about the integrity of the sovereignty of the country being at risk because of these massive purchases of land, so you can imagine how many acres were bought. Mysteriously, the media suddenly dropped the subject.
Another important factor is that now, with our new economy, it's not good business to sell Argentine food to Argentina. Why sell a kg of meat to the local market for 17 pesos when they can now sell it to Spain for 17 Euros when 1 Euro = 3,5 pesos?
All this combined with high unemployment, salaries that are not enough to buy the minimal amount of calories for a typical family, and the high prices resulted in a country that slowly started to suffer hunger.
Again, I can pin point the exact moment when the entire country realized what was happening. After the 2001 crisis things had been bad, but people in Buenos Aires, the capital city and the richest province, didn't realize how bad things actually where in the other provinces.
This was until teachers noted that kids had problems with education. You see, they noticed that they had problems to concentrate, that they fell asleep, and that they found it difficult to resolve mathematical equations.
They later found out that this was due to mal nutrition, kids where not receiving the minimum amount of nutrients for a healthy working body.
The braking point was when a reporter interviewed a little girl about 8 or 9 years old. The reporter lady asked her what she wanted to be when she grew up, the usual kiddy questions.
The girl, crying, said that she didn't want to be anything, that she didn't care.
The lady asked her why was she crying.
She said that she cried because she was hungry, that she had nothing to eat for days, and it was then that I noticed how skinny the little girl actually was.
Seeing children starve is terrible, I guess we all saw those images f the starving kids in Africa. But when you see them speak your same language, with your same accent, in your own country, it hits a nerve.
People talked about it for weeks, and they interviewed pediatricians that confirmed that the number of children dieing because of hunger had increased drastically in the last few months.
So whatever happens, let it be a hurricane, economical collapse, earthquake or meteor hitting earth, food and water always come first.
Ideally
you already have a food plan and have a year worth of food in your
basement... You don't? hmm... neither did I when the SHTF and lets just
say that I had my manhood up my throat all the time, fearing that
supermarkets would definitely close and me and my family would be left
without food.
If you don't have your food needs sorted out
already, just do what I did, start buying a little extra every time you
go to the supermarket. The points you want to look for your storage
food are, in order of importance:
1) No need of fridge.
2) High nutritious value/volume
3) Long shelf live, between 1-5 years.
4) That they don't need water
5) That they don't need cooking
This will usually take you to canned meats, canned tuna, canned vegetables, dried pasta, dehydrated soups, chocolate, milk powder, marmalades, soups, rice and dried beans.
Canned food is excellent when it comes to long shelf life. Most of the time they are already hydrated, so they don't need water, and you can eat them out of the can. Just watch out not to dent the can, if this happens air may get inside and ruin it. If you have a dent or bump in a can, consume it fast. Also remember that once the can is opened, you have to remove the food from the can.
My favorite canned food is tuna. It lasts forever, it's full of proteins, and no matter how often I eat it, it always tastes good. Besides you can combine it with frizzed vegetables or rice.
Canned fruits and vegetables are also good, but they have much less vitamins than the fresh ones, and you loose most of it unless you drink the liquid they come in.
Dried pasta may need a lot of water to cook, but its one of the best ways to store carbs in convenient to use form. Flower or wheat can also be stored in large quantities and are nutritious, but they require more preparation to consume.
We've become quite independent from the fridge, and only use it to keep frozen our fresh pasta (ñoqui) pizza and frizzed vegetables.
We practically freeze everything, because it lasts longer, practically indefinitely, and because if the lights go out a large mass of frizzed food will last for hours, even a day or two. The more mass of food you have frizzed to longer it will hold.
The survivalist, especially the urban one, should try to rely as little as possible on the fridge. That's why canned food and freeze dried food is your best friend.
Yet, anyone who has been for a while with no fresh fruit knows that after some time the skin starts to suffer. Sores will appear after a while, especially on delicate skin like the lips and mouth. Once you start eating fresh fruits and vegetables again they go away.
This happened to me once, spent to much time without fresh vegetables and my mouth was a mess, full of sores. After a week of eating fresh vegetables regularly the symptoms disappeared. That's why you should try to have some fresh food to supplement you storage food. Not much, just 2 or 3 fruit trees on your garden and a small orchard would be fine. You don't have to feed out of this, you just need a little fresh veggies or fruit every once in a while.
On the news right now while I write this: We had elections last Sunday, we voted senators. It seems that in one of the north provinces people where surrendering their ID documents for bags of groceries, some for water, or for 10 pesos ( 3 USD) they were later taken to warehouses were they spent the night to ensure that they voted. The next day the candidate's men took them to vote, howled inside cattle trucks, like animals. When they arrived they were given their ID documents back with the number of list they had to vote. Thugs guide them and ensure they vote who they want.
HEALTH & FITNESS
Visit you doctor NOW. Get yourself fixed. Visit the dentist and make sure your mouth is in perfect conditions. Nothing is worse than having toothache and no one available to take care of it. Remember that doctors may not be as available as they are now, in the future.
For example I got eye surgery to take care of my sight problem. Now I see perfectly without glasses.
The advantage of laser eye surgery isn't limited to not needing
glasses. (which can brake and would be nearly impossible to replace
after TSHTF)
Even people react to you in a different way. Humans are after all instinctive animals.
Bad guys will look at you as a weaker person if you wear glasses. Maybe they don't know that at a conscious level, maybe they do, but they do react differently.
This is not me imagining stuff, it's the way things are. Old people and women are specially vulnerable. After old people and women and children, come small framed people, the smaller you are, the weaker you look, the more likely you are to be chosen as a victim by a bad guy. It sounds, cruel, and it sure is, but that's the way it works.
A young man with a well formed body, broad shoulders, muscled arms and a "don't f*** with me" face, is less likely to be a victims of small time thieves. If a professional group choses you as a target that's a completely different story, of course.
Talk to your doctor a lot. Just like "The little Prince", never stop yourself from asking a question. Adopt that as a general philosophy and you'll end up learning a little about everything. Mechanics, doctors, policemen, you can always learn something new from people with skills.
As a survivalist, and as a smart person, you should try to know a little about everything, Always be curious.
That's how I learned that I had to diversify my stock of antibiotics. A doctor told me, that the body will adapt if you always use the same, making that particular antibiotic not that effective, specially in small children, so now I keep two different kinds of antibiotics.
Working out 3 times a week, for a couple of hours will keep you in shape. I work out at home, I have a bench and some weights. Try to compliment some aerobics and weight lifting.
Working the boxing bag is good exercise, works most muscles if done right, and you'll have a much more powerful punch. Keep in mind that a bag is no replacement for a sparring partner and that the bag does not faint nor does it punch back. Still, it good exercise and your punch will be more powerful if you connect.
Running belts and bicycles are also good.
Research on the subject and make your own routine, join a gym and talk to a professional if possible.
Whatever you do, the idea is to have a fit, healthy body. No use in
shooting ½ MOA at 100 yards if you have a gut that hangs half way to
the floor and you cant run that same distance without needing an oxygen
mask.
I
know, shooting is fun, and working out isn't. At least for most, but
after some time you'll start to enjoy it, your stamina and morale will
definitely increase, and you'll start looking forward to working out.
The survivalist that spends 3 hours a week on his gun skills and no
time at all on his own body is not doing things right.
Imagine
if you have to run away from a riot/gunfight/attack while carrying your
BOB, or fighting bare handed against someone that got you by surprise.
This applies for life in general , before or after TSHTF a man has to
now how to fight bare handed. You don't have to be Bruce Lee or Mike
Tyson, just know how to through a decent punch, cover your face, or
some kind or martial art classes.
I once had a fight that got a
little ugly. It happened in my mother in law's house, which proves that
thing can go bad everywhere at any time. A guy my wife's sister was
dating argued with me and things got physical. He had problems with the
police for beating up an ex girlfriend (which he was proud of, go
figure) and had spend 2 years in jail for stealing cars. My wife's
sister was showing up with mysterious bruises on her body, from
"falling while working out". So you could say this guy wasn't my
favorite person. Anyway, he grabbed my neck by surprise, I grabbed his
arm with both hands, one in his hand and the other in his elbow, and
twisted it around. The leverage made him let go of my neck and a kept
on twisting it forcing him around. He punched me with his other hand
but the positing wasn't on his favor so it was just a glancing blow. He
pushed with his back against me, so I placed my left arm around hid
neck, my elbow flexed over his Adam's apple. The guy went berserk so I
decided that I had to hold on until he passed out, or I would get
seriously hurt. I had practiced this choking move with my friend, the
one that has the farm I talked about before. He told me that after 30
seconds of choking the person passes out, and after 60 seconds, if you
keep choking him, he dies.
So I placed my left arm firmly around his neck while holding my left hand firmly with my right arm, pressing as hard as I could.
The guy went nuts. He slammed me against the walls, trying to get me away from his back.
He started clawing with his fingers on my biceps, desperate. Me? I just hold my lock around his neck, mentally counting. As if by magic, after 20-25 seconds. He lost all strength and fell to his knees like a rag doll, and I let him go.
Meanwhile my wife, her sister and my mother in law were all screaming at me to stop.
Once he caught his breath he said that I was psycho, and that he was just fooling around. Not believing a word he said, I said I was sorry and we both got into the elevator, since we were leaving.
As soon as I close the elevator door, the s*** bag attacks me again. I guess he felt humiliated in front of the woman he beat up. He tried to grab me the same way I did. I knew that this was getting out of hand and I completely lost patience with this clown.
I brought my serrated Cold Steel El hombre from my pocket and placed the dull side against his arm. He got the message instantly a let go of me. Once he did this I shoved him against the elevator, my forearm pressing against his neck and the knife under the neck as well. He calmed down instantly, saying he was sorry, bla ,bla, bla.
When we got out of the elevator I told him that if he ever got close to me or my family again I would put a bullet in his head.
I never saw him again.
This guy was a thief and women beater and I had no use him. Besides these are the kind of rats that would brake into your house when you leave, or worse.
I'm ranting all over the place again. What I mean is that practicing defensive moves is useful, specially if you spar with someone that knows his thing. My friend practices Judo. He won the state championship and was left in 3rd place in the nationals final.
Practice as you would fight in real life. Getting chocked isn't nice, but you get to know what you are working with and know how effective it actually is.
Being in shape will also make you less prone to diseases, such as high pressure, heart problems, and will boost your immune system in general.
Knowing first aid procedures is always helpful. I'll take the red cross course this summer.
Keep a first aid kit and any other special medicine you may need. If
you take drugs regularly try to have at least a year's worth of the
stuff.
Medicines are hard to get and expensive, many are made in other countries and if SHTF they might not be available. My father in law has Parkinson and needs a special medicine that is no longer imported. He asks friends that travel to get it for him.
I stock pile as much medicines as I can. Apart from the regular 1st aid kit stuff you usually have at home, I concentrate on Ibuprofen and antibiotics, both for children and adults.
Antibiotics are precious here, with all the viruses that are floating around. Lung infections are particularly dangerous.
Also remember that keeping a clean, ventilated house goes a long way when it comes to preventing diseases. This is hard when the city is full of filth and there are cockroaches and rats everywhere but it can be done.
My neighborhood isn't that bad, there are places that are much, much worse, where people literally sleep and eat with rats. Cockroaches are a problem, but I keep them somewhat controlled with that poison that comes in syringes and you place around the house.
That reminds me, stock up on rat and cockroach poison. Services are bad in general, and the garbage collectors are no exception.
Once, they went on strike for about a week (though there are worst places where they go months without collecting) and you could see rats running around eh piles of garbage that people threw on the street's boulevard.
This is not healthy, of course. And helps spread diseases all over the city, so keep that in mind as well.
Click here to visit Ferfal's website
While working on a new edition of "RHS1 Earthwatch" this last week... Dealing with the present global financial meltdown...Came across this list of 160 books while researching thought I would pass it on and say "Thank you" to whoever compiled it; all books are FREE & downloadable...Help yourselves folks...Regards...Indy
Gardening, Wild Foraging and Self Sufficiency
The City People's Book Of Raising Food
[link to www.scribd.com]
Encyclopedia of country living Carla Emery
[link to www.scribd.com]
The complete book of self sufficiency by John Seymour
[link to www.scribd.com]
Vegetable Gardening Encyclopedia With Special Herb Section
[link to www.scribd.com]
Gardening Without Irrigation - Dry Farming
[link to www.scribd.com]
Intensive Gardening For Profit And Self Sufficiency
[link to www.scribd.com]
Joy of Gardening
[link to www.scribd.com]
Indoor Gardening Secrets
[link to www.scribd.com]
Wild Edibles - Nutrition & Medicine
[link to www.scribd.com]
Herbal Manual - Herbal Medicine 1936
[link to www.scribd.com]
Culpeper's The Complete Herbal
[link to www.scribd.com]
Edible And Medicinal Plants
[link to www.scribd.com]
survival - how to make herbal preparations
[link to www.scribd.com]
Edible Rooftop Gardening
[link to www.scribd.com]
Handbook of Herbs and Spices, Vol. 1 - K. Peter
[link to www.scribd.com]
Handbook of Herbs and Spices, Vol. 2 - K. Peter
[link to www.scribd.com]
Culinary Herbs: Their Cultivation Harvesting Curing and Uses by Kains, M. G.
[link to www.scribd.com]
How-To Hydroponics - A HowTo Guide to Soilfree Gardening
[link to www.scribd.com]
bill mollison - permaculture design course
[link to www.scribd.com]
Saving Your Own Vegetable Seeds
[link to www.scribd.com]
Organic Gardener's Composting by Steve Solomon
[link to www.scribd.com]
Growing & Curing Tobacco
[link to www.scribd.com]
Organic Tobacco Production
[link to www.scribd.com]
grow organic potatoes
[link to www.scribd.com]
Home Composting Bins
[link to www.scribd.com]
Organic Insecticides For The Garden; Home & Garden
[link to www.scribd.com]
Barrel-ponics
[link to www.fastonline.org]
An Integrated Fish Culture Hydroponic Vegetable Production System
[link to www.fastonline.org]
The One Straw Revolution _excellent (no tilling or plowing) permaculture
[link to ebooks.du.ac.in]
Food Preservation _Cooking, Canning, Curing, etc.
Preserving Food: Drying Fruits And Vegetables - Nutrition
[link to www.scribd.com]
Complete Guide To Home Canning
[link to www.scribd.com]
Canning Meat, Wild Game, Poultry, & Fish Safely
[link to www.scribd.com]
Preparing And Canning Fermented Food And Pickled Vegetables
[link to www.scribd.com]
Every Step in Canning
[link to www.scribd.com]
Small-Scale Food Drying Technologies
[link to www.scribd.com]
Field Care Of Harvested Big Game
[link to www.scribd.com]
How To Build A Wood-Fired Oven & Start A Home Bakery
[link to www.scribd.com]
Solar Cookers - Natural Living
[link to www.scribd.com]
Earth-Friendly Cooking Technologies
[link to www.scribd.com]
Solar Distillation & Water Purification
[link to www.scribd.com]
Rain Water Harvesting
[link to www.scribd.com]
How To Make An Upesi Stove
[link to www.scribd.com]
Wood Conserving Cook Stoves - A Design Guide
[link to www.scribd.com]
How To Make Liquor With Fruit And Berries
[link to www.scribd.com]
Cheese Making Made Easy
[link to www.scribd.com]
Cheese Making
[link to www.scribd.com]
Canning Meat, Wild Game, Poultry, & Fish Safely
[link to www.scribd.com]
Water
Handpumps for Domestic Rainwater Tanks
[link to www.cd3wd.com]
Using Treadle Pumps
[link to www.cd3wd.com]
Treadle Pumps _Non-motorized Irrigation
[link to www.cd3wd.com]
Recommendations for Designing Rainwater Harvesting System Tanks
[link to www.cd3wd.com]
Water Well Manual
[link to www.scribd.com]
Windmill Construction Manual
[link to www.scribd.com]
Heating, Energy and Fuel
Solar Water Heaters
[link to www.scribd.com]
Water as Fuel
[link to www.scribd.com]
Run Car on Water - stanley meyer resonant electrolysis cell system collection
[link to www.scribd.com]
Homemade Batteries [2003, 14 Pages]
[link to www.scribd.com]
Wind Energy Systems
[link to www.scribd.com]
Wood Burning Handbook
[link to www.scribd.com]
Oil Drum Stove For Cooking And Water Heating
[link to www.scribd.com]
Water Power For The Farm
[link to www.scribd.com]
Pumping Water For Irrigation Using Solar Energy
[link to www.scribd.com]
Generator Power For The Homestead
[link to www.scribd.com]
How To Make Biodiesel Fuel
[link to www.scribd.com]
Build Your Own Biogas Generator
[link to www.scribd.com]
Using A Biogas Digester
[link to www.scribd.com]
Livestock
Small-Scale Chicken Production
[link to www.scribd.com]
The Homesteader's Handbook To Raising Small Livestock
[link to www.scribd.com]
A Poultry Mini-Manual
[link to www.scribd.com]
Small-Scale Freshwater Fish Farming
[link to www.scribd.com]
Poultry a Practical Guide _Very old, Very excellent comprehensive guide
[link to www.scribd.com]
Hog trapping
8 documents and trap plans
[link to www.fastonline.org]
Poultry raising gold mine!
nearly 100 documents!
[link to www.fastonline.org]
Raising Rabbits start to finish
[link to www.fastonline.org]
Small Scale Dairy Production
[link to www.cd3wd.com]
Why and How to Keep Dairy Goats
[link to www.cd3wd.com]
Constructing a Simple Wooden Cart
[link to www.cd3wd.com]
Making a Straight Hame Collar
[link to www.cd3wd.com]
Single Donkey Harness for Cart Pulling
[link to www.cd3wd.com]
Medicine
Holistic & Alternative Medicine 101
[link to www.scribd.com]
Herbal/Medical Contraindications_ Using herbal remedies and pharma products: interactions
[link to www.swsbm.com]
Herbal Formulas for Clinic and Home
[link to www.swsbm.com]
First Aid Full Manual FM21-11
[link to www.scribd.com]
Where There is No Dentist - Murray Dickson
[link to www.scribd.com]
Where There Is No Doctor - A Village Health Care Handbook - David Werner
[link to www.scribd.com]
Wilderness Medicine Course
[link to www.scribd.com]
Healing Pets With Alternative Medicine
[link to www.scribd.com]
Physicians Desk Reference: Herbal Medicines
[link to www.scribd.com]
How To Treat and Heal Your Pet at Home?
[link to www.scribd.com]
ONE MINERAL CAN HELP _Potassium Iodide
[link to www.nogw.com]
Ditch Medicine - Advanced Field Procedures For Emergencies (1993)
[link to www.scribd.com]
Survival Manuals and Info
Compact Survival Kits
[link to www.scribd.com]
SAS Survival Guide
[link to www.scribd.com]
Wilderness Survival (FM 21-76)
[link to www.scribd.com]
Nuclear War Survival Skills
[link to www.scribd.com]
USMC Winter Survival Course
[link to www.scribd.com]
US Marine Corps Summer Survival Course
[link to www.scribd.com]
Survival Attitude
[link to www.scribd.com]
NUCLEAR CONTAMINATION AVOIDANCE
[link to www.scribd.com]
Kearny Homemade Fallout Meter
[link to www.scribd.com]
survival - personal wilderness medical kit
[link to www.scribd.com]
Building Related _Survival Shelters and More
Seven Survival Shelters That Could Save your life!
[link to www.scribd.com]
Building With Stone And Earth - Part 1
[link to www.scribd.com]
Building With Stone And Earth - Part 2
[link to www.scribd.com]
Barn Plans And Out-Buildings (1886)
[link to www.scribd.com]
How to build your own underground home
[link to www.scribd.com]
The Complete Book of Underground Houses _How To
[link to www.scribd.com]
the manual of free energy devices and systems
[link to www.scribd.com]
Communication
The Complete Manual Of Pirate Radio
[link to www.scribd.com]
Crystal Radio Project
[link to www.scribd.com]
Field Antenna Handbook
[link to www.scribd.com]
Shortwave Radio _Build Your Own
[link to www.scribd.com]
A Handbook On Shortwave Radio And LEO Sattelite Communication
[link to www.scribd.com]
Shortwave 101 - How To Listen To World Radio
[link to www.scribd.com]
Shortwave Radio Networking When Phones Fail
[link to www.scribd.com]
Other Skills and Useful Info
The Foxfire Books are simply some of the best old time skills books around!
Foxfire One
[link to www.scribd.com]
Foxfire Two
[link to www.scribd.com]
Foxfire Three
[link to www.scribd.com]
Foxfire Four
[link to www.scribd.com]
The Foxfire Five
[link to www.scribd.com]
Sharpening Small Tools
[link to www.scribd.com]
Farm Shop And Equipment
This publication offers suggested assortment of tools, special tools, and how to keep and care for them.
[link to www.scribd.com]
Tools For Agriculture - A Guide To Appropriate Equipment
Appropriate Equipment For Small Farms
[link to www.scribd.com]
Soapmaking - How To Make Soap
[link to www.scribd.com]
Village Technology Handbook
[link to www.scribd.com]
W.F. Vickery, Advanced Gunsmithing, 1940
[link to www.scribd.com]
Manual Of Bicycle Repair
[link to www.scribd.com]
The Formula Manual
Make your own recipes for almost everything other than food.
[link to www.scribd.com]
Land Clearing
[link to www.scribd.com]
Axe Manual of Peter McLaren
[link to www.scribd.com]
Crosscut Saw Manual
[link to www.scribd.com]
Basic Plumbing Skills
[link to www.scribd.com]
Basic Plumbing Course
[link to www.scribd.com]
Hoppe's Guide To Gun Care
[link to www.scribd.com]
Pistol Preventative Maintenance Guide
[link to www.scribd.com]
Emergency Sanitation At Home
Interesting DoD publication from 1958
[link to www.scribd.com]
Spinning With Simple Tools
[link to www.scribd.com]
Introduction To Spinning
[link to www.scribd.com]
Natural Dyeing Of Textiles
[link to www.scribd.com]
Handloom Construction
[link to www.scribd.com]
Blacksmithing Basics
[link to www.scribd.com]
Practical Blacksmithing 1891
[link to www.scribd.com]
Farm Blacksmithing 1921
[link to www.scribd.com]
Alternatives To Portland Cement
[link to www.scribd.com]
How To Make Candles
[link to www.scribd.com]
Candle Making
[link to www.scribd.com]
Hide tanning
4 documents
[link to www.fastonline.org]
Pond Construction and Management
about 50 documents
[link to www.fastonline.org]
Fighting fires
[link to www.cd3wd.com]
This is a great resource site for homesteaders, people interested in sustainability and survival techniques. There is so much here that the site deserves its own listing.
Downloading directly from the site is free, but does require sign up and some information (including info on what you plan on doing with the materials provided). It's worth it!
[link to www.itdg.org]
This is yet another almost incredible information resource for all things homestead. It will take time, but is well worth the dig and everything is available for free download.
[link to www.fastonline.org]
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