Few May Imagine What Is Coming ( FOLLETTO )

by Rick Ackerman on August 25, 2010 12:01 am GMT · 66 comments

X

Hello there! If you are new here, you might want to get Rick's daily market commentary via email.

[From self-described, “radical ol’ gloom-and-doomer” and frequent Rick’s Picks forum contributor Steven George Fair, here’s a tormented essay on why most of us are too far removed from the experience of the 1930s Depression to have any idea or imagination about what is coming. And make no mistake, he warns: Bears who think their timing and strategy will be good enough to gloat about are the most delusional of us all. RA]
There seems to be a single constant in the financial world, and those who play.  There are few if any perma-anythings, with most chasing the bull, or chasing the bear as a bear-bull in the moment.  It looks like the last of the Perma for Life people are dying off as the last of the generation that endured the Great Depression find their rest in the soil.
The generation who made roads in the dirt, flew paper airplanes, and dreamed the impossible dream are now gray haired, and either broke or millionaires.  There is little ground in between the extremes that was once a maxim 20-60-20 rich/middle class/poor.  What seems to exist today is a younger generation with no imagination, incapable of taking a block of wood and shoving it around the dirt pile in dreams of logging trucks, and crawler tractors.  Lost are the majority who created art, and music in its natural form.  There are no lifelong collectors of anything, only a headlong rush from contemporary to abstract, and back in hyper-realism.  Value is now replaced with greed, and get it now before the color fades.  Bringing a face to this reality was a conversation with a PhD, retired, from NASA, who spoke to me about the fear in NASA that the upcoming generation’s imagination has been lulled to sleep by fast TV, fast girls, and constant bombardment of stimulation instead of self-generated creativity.

To a more direct point.  Even the supposed perma-bears of today run helterskelter, seeking profit and gain first in that, and then in this, with no long-living devotion to any belief.  Most current Bears do not care about fundamentals and history.  None seem to care whether or not they are playing in a AntLion hole from which they will never escape.  The greed of gaining the last drop of blood from the dying carcass of both bears and bulls is foremost on the heart of the young and younger.  No person not directly from a Great Depression family is prepared for what will come. That means that unless your parents where born no later than 1920, you cannot have any basis to form an understanding for the potential pain of a real collapse.  There are a few foreigners who understand, but I read nothing of what they may have to say.

‘They Won’t Let It Happen’

Save $200 on
The Hidden Pivot Webinar.
Offer expires in 4 days.

It can never happen…Bernanke will not let it happen…the Government is not going to . . .. they will take care of us…I’ll make so much in the crash it will not matter. . .  I’ll be OK.  Please add your own reassurance to the list, as there are many more excuses offered by temp-bearbulls.  The pessimist rarely makes the big killing in the stock market like a tempbull will.  Someone who experienced the Great Depression does not act like today’s tempbull.  There is one great difference between the Great Depression and today where The People are concerned.  Nearly everyone in 1920 knew how to take care of him or herself.  They knew meat came from a cow, and milk did not come from a bottle.  And yet today, the young cannot imagine a milk bottle delivered to the door by the milkman.  Nor have they ever imagined a family coming together to butcher a steer and can the meat because there was no freezer.
I see no imagination in the pages, blogs, and opinions written by financial wizards, or the wizard bulls who are smarter than a non-emotional chartist who knows the pendulum slows, stops, and slowly speeds up to strike down everything past dead center.  There is only one thing that cannot be taken from someone, and that is knowledge.  And even here, I have seen hypothermia take my mind, my strength, and my soul into a black pit of nothingness.  The majority of bulls and bears today have never experienced hypothermia. Nor have the wishy-washy bears seen $1 million on the books that they will never eat, that they cannot turn into warmth or food.

A Rosy Filter

I guess that unless one has seen the valuelessness of gold while you shiver your way into darkness, there just isn’t a perspective to create a reality.  This is why I spoke of imagination and NASA as I wrote.  The generation born into the Sixties has not experienced loss in any form.  That generation is without understanding, or imagination to see through a mental filter created by pain and loss as past generations have.  The 1960s filter of democracy is a rosy filter of much, more, and always more.  Even in the annals of bear-market writers there exists temp-bearbulls looking to ride the next wave for an hour or a day.
Is it time for the Super Depression ? Probably, because the majority who have lived through that kind of pain are all dead and gone.  Will the greedy temp-bearbulls get trampled? Yes ! But not before they see the millions they’ve won by trading correctly fail to provide them with anything of value.  And what of us hard-currency nuts? You tell me!  But Steve, you say: there are so many suffering without jobs today.  True enough. But in 1934, there wasn’t any unemployment in the place where my dad pulled a crosscut saw for $1.00 pre thousand, part-time. (That’s about 50 cents a day, since there was someone on the other end of the saw).  There weren’t any government handouts in Sutherland, where the mill ran one day a week, or one day a month, and where the women rejoiced in their diary: “The men worked today!”  The more bears who think they are going to make a killing on the crash, the nearer we are to that crash.
I think Mr. Market is going to suck the blood out of nearly everyone — but especially from Bears who think Mr. Market is their friend in crushing the Bulls.  Imagine “Value” and imagine what value really is in its most basic sense.  I’d tell you what value is, but you either know, or will not listen to this ol’ radical gloom-and-doomer.

10 Practical Steps That You Can Take To Insulate Yourself (At Least Somewhat) From The Coming Economic Collapse

The Economic Collapse

Most Americans are still operating under the delusion that this "recession" will end and that the "good times" will return soon, but a growing minority of Americans are starting to realize that things are fundamentally changing and that they better start preparing for what is ahead. These "preppers" come from all over the political spectrum and from every age group. More than at any other time in modern history, the American people lack faith in the U.S. economic system. In dozens of previous columns, I have detailed the horrific economic problems that we are now facing in excruciating detail. Many readers have started to complain that all I do is "scare" people and that I don't provide any practical solutions. Well, not everyone can move to Montana and start a llama farm, but hopefully this article will give people some practical steps that they can take to insulate themselves (at least to an extent) from the coming economic collapse.
But before I get into what people need to do, let's take a minute to understand just how bad things are getting out there. The economic numbers in the headlines go up and down and it can all be very confusing to most Americans.
However, there are two long-term trends that are very clear and that anyone can understand....

#1) The United States is getting poorer and is bleeding jobs every single month.
#2) The United States is getting into more debt every single month.

When you mention the trade deficit, most Americans roll their eyes and stop listening. But that is a huge mistake, because the trade deficit is absolutely central to our problems.
Every single month, Americans buy far, far more from the rest of the world than they buy from us. Every single month tens of billions of dollars more goes out of the country than comes into it.
That means that every single month the United States is getting poorer.
The excess goods and services that we buy from the rest of the world get "consumed" and the rest of the world ends up with more money than when they started.
Each year, hundreds of billions of dollars leave the United States and don't return. The transfer of wealth that this represents is astounding.
But not only are we bleeding wealth, we are also bleeding jobs every single month.
The millions of jobs that the U.S. economy is losing to China, India and dozens of third world nations are not going to come back. Middle class Americans have been placed in direct competition for jobs with workers on the other side of the world who are more than happy to work for little more than slave labor wages. Until this changes the U.S. economy is going to continue to hemorrhage jobs.
The U.S. government has helped to mask much of this economic bleeding by unprecedented amounts of government spending and debt, but now the U.S. national debt exceeds 13 trillion dollars and is getting worse every single month. Not only that, but state and local governments all over America are getting into ridiculous amounts of debt.
So, what we have got is a country that gets poorer every single month and loses jobs to other countries every single month and that has accumulated the biggest mountain of debt in the history of the world which also gets worse every single month.
Needless to say, this cannot last indefinitely. Eventually the whole thing is just going to collapse like a house of cards.
So what can we each individually do to somewhat insulate ourselves from the economic problems that are coming?....
1 - Get Out Of Debt:
The old saying, "the borrower is the servant of the lender", is so incredibly true. The key to insulating yourself from an economic meltdown is to become as independent as possible, and as long as you are in debt, you simply are not independent. You don't want a horde of creditors chasing after you when things really start to get bad out there.
2 - Find New Sources Of Income:
In 2010, there simply is not such a thing as job security. If you are dependent on a job ("just over broke") for 100% of your income, you are in a very bad position. There are thousands of different ways to make extra money. What you don't want to do is to have all of your eggs in one basket. One day when the economy melts down and you are out of a job are you going to be destitute or are you going to be okay?
3 - Reduce Your Expenses:
Many Americans have left the rat race and have found ways to live on half or even on a quarter of what they were making previously. It is possible - if you are willing to reduce your expenses. In the future times are going to be tougher, so learn to start living with less today.
4 - Learn To Grow Your Own Food:
Today the vast majority of Americans are completely dependent on being able to run down to the supermarket or to the local Wal-Mart to buy food. But what happens when the U.S. dollar declines dramatically in value and it costs ten bucks to buy a loaf of bread? If you learn to grow your own food (even if is just a small garden) you will be insulating yourself against rising food prices.
5 - Make Sure You Have A Reliable Water Supply:
Water shortages are popping up all over the globe. Water is quickly becoming one of the "hottest" commodities out there. Even in the United States, water shortages have been making headline news recently. As we move into the future, it will be imperative for you and your family to have a reliable source of water. Some Americans have learned to collect rainwater and many others are using advanced technology such as atmospheric water generators to provide water for their families. But whatever you do, make sure that you are not caught without a decent source of water in the years ahead.
6 - Buy Land:
This is a tough one, because prices are still quite high. However, as we have written previously, home prices are going to be declining over the coming months, and eventually there are going to be some really great deals out there. The truth is that you don't want to wait too long either, because once Helicopter Ben Bernanke's inflationary policies totally tank the value of the U.S. dollar, the price of everything (including land) is going to go sky high. If you are able to buy land when prices are low, that is going to insulate you a great deal from the rising housing costs that will occur when the U.S dollar does totally go into the tank.
7 - Get Off The Grid:
An increasing number of Americans are going "off the grid". Essentially what that means is that they are attempting to operate independently of the utility companies. In particular, going "off the grid" will enable you to insulate yourself from the rapidly rising energy prices that we are going to see in the future. If you are able to produce energy for your own home, you won't be freaking out like your neighbors are when electricity prices triple someday.
8 - Store Non-Perishable Supplies:
Non-perishable supplies are one investment that is sure to go up in value. Not that you would resell them. You store up non-perishable supplies because you are going to need them someday. So why not stock up on the things that you are going to need now before they double or triple in price in the future? Your money is not ever going to stretch any farther than it does right now.
9 - Develop Stronger Relationships:
Americans have become very insular creatures. We act like we don't need anyone or anything. But the truth is that as the economy melts down we are going to need each other. It is those that are developing strong relationships with family and friends right now that will be able to depend on them when times get hard.
10 - Get Educated And Stay Flexible:
When times are stable, it is not that important to be informed because things pretty much stay the same. However, when things are rapidly changing it is imperative to get educated and to stay informed so that you will know what to do. The times ahead are going to require us all to be very flexible, and it is those who are willing to adapt that will do the best when things get tough.
Do you have any additional tips that you would like to share with us? If so, please feel free to share them in the comments below....

theeconomiccollapseblog.com

Everything is OK

brasschecktv.com

Wal-Mart and the Plantation Economy

Charles Hugh Smith

The tyranny of "low prices" is a characteristic of a plantation economy which strip-mines local economies and replaces employment-rich economic ecologies with a single integrated exploitative cartel of global predation.
I am probably one of the few Americans who has worked on an honest-to-goodness plantation:
I picked "pine" on the Dole Pineapple plantation on the Hawaiian island of Lanai in 1970. (The plantation was subsequently closed and production moved to the Phillipines to take advantage of lower labor costs.) Thus my understanding of the plantation economy that I describe in Survival+ is not merely academic.
Wal-Mart is the quintessential plantation in the U.S. and global economies
Like a classic agricultural-commodity plantation, Wal-Mart enters a region and market with a diverse, employment-rich ecology of small businesses and networked supply chains of local and regional manufacturers and distributors, and it bulldozes the entire "forest" of businesses, suppliers and distributors with the irresistable blade of global supply chains and "lower prices, always."
The original sugar king, Claus Spreckels, pioneered the integrated global plantation economy of scale: he owned the plantations which grew the sugar cane, the ships used to export the cane and the refineries which processed it for distribution to global markets.
He also imported uncomplaining, cheap (i.e. desperately poor) labor to provide the heavy work required.
Wal-Mart doesn't have to own the suppliers or distributors or the ships-it's great size gives it supreme pricing power and the ability to offer suppliers a simple yet stark choice: either lower your price to our price-point or we pull your contract, and you implode. You may survive as a much smaller business, but probably not.
Like a plantation, Wal-Mart extracts wealth via mono-cultures and an integrated structure and supply chain
Wal-Mart's model calls for selected global suppliers- the monocultures who make millions of specific items- to provide massive quantities of goods at Wal-Mart prices, meaning that small suppliers get squeezed out by their inability to scale up to meet Wal-Mart's demands for product.
Profitable suppliers are squeezed to the break-even point (or below) by Wal-Mart's continuous demands for ever-lower costs. In effect, Wal-Mart expropriates the profits of all its suppliers and distributors in the entire chain.
A Wal-Mart store quickly bulldozes the complex economic ecology of local businesses
Small business is both the engine of job creation and a highly employment-rich ecology. Wal-Mart crushes this ecology and replaces it with a low-job, low-pay, highly efficient plantation economy in which the townpeople's only choice is to work for Wal-Mart or scrape out a living feeding the Wal-Mart workers, doing their laundry, etc.-exactly as on a classic plantation.
On a classic plantation, the wages are low and the "company store" offers easy credit, binding the workers to the corporation not just for wages but for credit and goods.
Those few who manage to save up enough capital to start small service businesses- laundry, cafes, etc.-must do so in the shadow of the Company, which can always drive them out of business should they irritate their corporate overlords.
A once-diverse landscape is reduced to a monoculture wasteland dependent on subsidies, either implicit or explicit
Wal-Mart's low wages leave many of its workers' families on state aid or food stamps to survive, and so it prospers on the backs of taxpayers who subsidize its low wages.
A relative handful of local workers run the plantation, while the economy the plantation bulldozed offered more jobs and a wider range of jobs
Here is an example from real life. We shop for groceries in Chinatown or "Mexican" markets (in quotes because we do not know the national origins of the workers or owners) because we find the produce to be fresher and cheaper than supermarket chain stores.
A typical full-service market in Chinatown (not the tourist Chinatown, the real one) is small by U.S. standards-perhaps 4,000 square feet compared to 40,000 square feet for an old supermarket and 120,000 square feet for a "superstore."
In this small space one finds a full meat, poultry and fish counter with three butchers on hand, a full panoply of vegetables and fruit (usually placed on the sidewalk every morning) and aisles of canned goods, beverages, dried fruits, etc.
Each small store has over a dozen employees.
If you stop to examine the boxes of fruit, vegetables and meat which are being carted in by hand, you will see a wide range of local produce from family farms and local suppliers.
Next door, the bakery has several salespeople at the counter and several bakers in the back. The deli next door to the bakery has four clerks and four or five cooks/staff preparing food in the small kitchen.
Thus this modest bit of square footage supports dozens of jobs, pays rent to several landlords (further distributing the revenues) and multiple owners/managers. In addition, dozens of small suppliers and farms receive a share of the revenues.
This is the ecology of classical capitalism, in which competition yields a rich variety of goods, services, prices
- and wages. Not everyone is capable of learning high-wage skills in a world of global wage arbitrage, and the wages in small-scale markets are modest. But this ecology offers plentiful opportunities for career changes and entrepreneurship-something the global plantation only offers within its corporate mono-culture.
The plantation-economy is one of concentrated financial and political power, global scale, exported jobs, integrated supply chains which exclude small local enterprises and a predatory monopoly which vacuums up all the profits of the entire supply chain for itself.
The alternative is not some fantasy of "old-time America"-this model still exists where citizens refuse to submit to the mono-tyranny of "low prices."
Long-time readers know that my experiences with Wal-Mart are limited to attempting to buy something of utility with a store credit issued for a gift we could not use.
The Wal-Mart Model of Self-Destruction: Lowest Prices, Always (January 24, 2010)
When my wife attempted to return an item of unusably poor quality, the clerk just shrugged and said, "It's Wal-Mart." In other words, poor quality is to be expected along with "low" prices.
Mono-culture plantations like Wal-Mart are ugly and soul-draining
There is nothing charming or life-affirming in the cavernous stores or wide aisles. People are enervated by the deadening atmosphere; they shuffle forward in line like zombies, and the pall of mono-culture "low prices" offers zero opportunity for amusement or fun.
Street markets (indoor and outdoor) offer plentiful, free opportunities for amusement and diversion, and ones like Porte de Clignancourt in Paris and Chatuchak Market in Bangkok are famous precisely because they are fun and hugely diverse-and offer plenty of bargains to shoppers.
The communities which support local economic ecologies do so not because they dislike low prices, but because the mono-culture plantation of Wal-Mart doesn't offer everything they want, nor is it convenient or enjoyable.
The nation does not exist to benefit corporations-the corporations exist to benefit the nation and its citizenry-and not just with cartels and plantations
Isn't it odd how this statement-The nation does not exist to benefit corporations-the corporations exist to benefit the nation and its citizenry-sounds breathtakingly revolutionary in today's plantation politics of experience?
Thus not shopping at big-box plantation stores is as revolutionary an act as preparing your own food, growing your own garden and eating a household meal together.

If you would like to post a comment where others can read it, please go to DailyJava.net, (registering only takes a moment), select Of Two Minds-Charles Smith, and then go to The daily topic. To see other readers recent comments, go to New Posts.

Silver To Make A Major Move On Breakout

Jeb Handwerger

Silver had very powerful break out Wednesday as investors are seeking assets that are safe and will retain value during a debt crisis. Silver is seeing demand at these price levels as it is historically cheap relative to gold. If the ratio came down to the levels it was in 2006 it would be close to $27 an ounce. Silver is soaring because investors are realizing this is a hard asset, it is money and it is historically cheap compared to gold.
Gold has reached overbought conditions from my July 28th buy signal. Right now gold is a bit overbought while silver is at an interesting buy point, having found support for the fourth time at its long term 200 day moving average. Wednesday’s breakout of the symmetrical triangle, a very bullish chart pattern, is a sign that silver has built up a lot of internal strength and could break out into new three year highs. Remember, silver is significantly below all time highs while gold has already broken into new highs.
While I am bullish on gold, I believe investors could see a higher percentage move in silver. I have also alerted my readers to a specific mining company which has recently found a major discovery in Mexico. Pure silver discoveries are very rare. Silver supply is mostly produced as a byproduct which makes supply very inelastic. A new pure silver discovery in a silver bull market could receive a nice premium.

I believe silver will make a major move on this break out. Investors are looking for a safe haven, protection and value in silver. Gold has already made a significant move and is quite overbought, while silver has not participated to the same extent. The gold silver ratio should move to historical norms which could mean a major move for silver.

If you do a study of the point and figure chart of the relative strength of silver versus the S&P500 since 2001, its strong uptrend is apparent. Each time silver falls back into support, it breaks out and makes significant rallies.
The break above the red bearish resistance line and a double top breakout coupled with the daily chart symmetrical wedge pattern demonstrates that silver has reached a critical juncture and could make a nice move.

goldstocktrades.com