Category: Economics & Investing

Letter Re: Drastic Changes in the Global Derivatives Market–Be Ready for the Mother of All Bailouts

Jim, Scroll down this article to the link to the Quarterly Derivatives Fact Sheet. It shows Citi[Bank] exposed to $3 trillion and J.P. Morgan at $7.8 trillion [in OTC derivatives.] Continue to the bottom of the piece for “Intelligence Czar Can Waive SEC Rules.” It looks like the Plunge Protection Team is operating in overdrive. Eisenhower warned of “The military-industrial complex”. What about the corporate-government complex? This looks like something Il Duce would have been proud of. Best wishes for our free enterprise system, – William JWR Replies: I’m glad to see that some readers took the time to look …


Letter Re: Advice on a Whole Life Insurance Policy and Firearms

Jim, I’m a newbie to your site and I love it! Read it every morning instead of the newspaper. I’m a single female horse rancher living in Alabama (not originally from Alabama). I attend a home church and have been preparing for our future events for several years before reading your blog. After reading the blog I realize how much farther I have to go. Especially in the home defense area. I own two .22 rimfires and a BB gun. LOL! Thank you so much for all the time and information your providing us. I’ve referred many of like mind …


The Credit Collapse–The World’s Bankers Revert to Saying “No”

A recent news article titled Dresdner Rescues $19 Billion SIV, Follows Citigroup illustrates the severity of the global liquidity collapse. Note that the article mentions that the K2 SIV had no “direct exposure” to securities backed by subprime or midprime debt. But yet the fund failed dramatically. This adds credence to my assertion that the world’s entire credit market is essentially broken, and that despite frantic attempts by the central banks to inject liquidity (BTW, another $25 billion was just injected the Fed on Thursday), most of the major financial institutions are starting to crumble. In the very near future, …


Selecting a Rifle for a Budget-Constrained Prepper

Dear JWR, I have first taken the time to read through your previous posts on Main Battle Rifle (MBR) recommendations before asking this question, but have not found what I am looking for. I am sure you receive an over abundance of firearms questions but any help would be greatly appreciated. Due to financial restraints I am the weak link in my group so far in preparedness. I have chosen to spread what resources I do have at my disposal evenly rather than focus only on firearms as too many seem to do. I feel a need to escalate all …


Letter Re: Mining Claims as Potential Retreat Properties

Sir, I am so happy to have stumbled onto your site today. I have not been on the internet in a very long time (1997 or so). I have been working for a number of mineral exploration/mining companies south of our border on and off since 1998. I will no longer travel outside of the U.S. (unless I’m reactivated by the Army) for work or pleasure. I am going to be 40 this month and I don’t feel like getting shot at any more, at least not for money. I am a former Army Combat Engineer, Electronic Engineer, small business …


Guest Editorial: The Great Bust of ’08, by Mike Whitney

On January 14, 2008 the FDIC web site began posting the rules for reimbursing depositors in the event of a bank failure. The Federal Deposit Insurance Corporation (FDIC) is required to “determine the total insured amount for each depositor…..as of the day of the failure” and return their money as quickly as possible. The agency is “modernizing its current business processes and procedures for determining deposit insurance coverage in the event of a failure of one of the largest insured depository institutions.” The implication is clear. The FDIC has begun the “death watch” on the many banks which are currently …


Finding Your Dream Retreat: It is Time to Watch the Foreclosure Listings

I often get e-mails from readers, complaining that the retreat properties that they see listed are too expensive. Typically is something like: “I found a couple of good places, but they are beyond my reach.” Here is one possible solution: Buy on the other guy’s weakness. There are lots of foreclosures now on the market, and the foreclosure rate is expected to increase as the real estate bubble continues to deflate, and as the US economy slides into recession. (In my estimation, here is the equation for the next four years: Recession equals lay-offs, and layoffs equals missed house payments, …


Letter Re: Comment on the Planned U.S. “Economic Stimulus” Tax Rebate

Jim, Not directly related to survival but more aligned with money management, please note that the Bush administration’s tax rebate is in fact an advance on 2008’s tax refund, and most or all of it will be deducted from taxpayers’ refund within a year. So if one spends it, plan to be short that amount next year. Be sure to thank most of your current crop of presidential candidates for supporting this fraud. – Bruce F.


Peering Over the Precipice: The Future of America’s Credit-Driven Bubble Economy

Here in the States, the newspaper headlines are full of bad economic news: “Credit Collapse”, “Housing Market Tailspin”, “Credit Rating Agency Scandal”, and “Three Trillion Dollar Federal Budget”. Most recently, the Federal Reserve (our central bank, operated by a private banking cartel) made a panic move, cutting interest rates in two jumps in just eight days, a whopping 125 basis points (1.25%). A drop that great, and that fast, was unprecedented. This maneuvering did little to calm the markets. If anything, the Fed’s actions confirmed the suspicion that the credit market is essentially broken and our economy is headed for …


Letter Re: Consumer Price Inflation is Upon Us

Dear JWR, I thought you’d like to pass this on if people want to save some of their hard earnings. Now is the last call to purchase before the commodity price increases. Shipping cost increases are to hit us again on February 19th. Here in North Carolina, we’re seeing an average of 20% increases in prices of staple shelf items like flour, corn milled products, honey, milk, eggs and canned goods within the last two weeks in the grocery stores. One bell pepper now costs a dollar. Other produce is following the same increases. Products made of plastics, paper and …


Letter Re: A Federal Reserve Balance Sheet Disaster

Dear Jim, I just read on a[nother] blog about an imminent Federal Reserve disaster. There’s no [mainstream] news coverage on it yet so this qualifies as a serious heads up. Note the second numeric column. $40 Billion, has been since 1913, by law. Then notice it suddenly drops to $198 million and then two days ago the report lists the banks as minus $8.7 Billion, something which has never happened before. How bad is it? Think Weimar Republic. The Fed can no longer stop inflation because the banks can’t secure new money with debt. People aren’t buying debt anymore. Ergo, …


Letter Re: Countrywide Turns Off the Home Equity Lines of Credit Tap

James, I just received an email from my Countrywide Account Executive that they are suspending further draws against Home Equity lines [of credit]. They have reportedly started mailing suspension letters last week to 122,000 borrowers. Who knows how many more could get those based on the markets and Countrywide’s present situation. If you know someone who has [a home equity line of credit] and is going to need the funds, they might want to draw out the money right away and put it somewhere safe. A lot of people use home equity lines as emergency funds. – MB in Boise …


Letter Re: “Forever” US Postage Stamps as an Inflation Hedge

Sir: Something occurred to me while addressing an envelope today that I thought might be of value to your readers. One small way to beat inflation is to purchase US First Class Liberty Bell “Forever” stamps that guarantees a mailed envelope in the USA forever. They may or may not be available at your post office so ask for them. I bought about $200 worth of stamps before the prices went up and plan to hold on to them for a while. I don’t know if these are still being sold but I think we may have yearly or bi-yearly …


Notes from JWR:

When I last checked, the spot price of silver was $16.75 per ounce, and gold was at $929.30. That’s an all-time high. There will be plenty of volatility and some very scary pull-backs, but the trend for the precious metals is still definitely upward. Meanwhile, the USD Index was at 75.56 and falling. The key number to watch for there is 72. Below that, watch out! BTW, I’m not like those television cheerleader/analysts that have suddenly jumped on the precious metals bandwagon. After a dismal two decade bear cycle, I fairly accurately called the bottom of the silver market seven …


Letter Re: Property Taxes and Hyperinflation

Dear Mr. Rawles, It’s been on my mind off-and-on since I read your novel “Patriots”, when the Grays sent in a property tax payment to avoid losing their retreat to tax delinquency. It’s always annoyed me that a landowner has to pay the government to keep land he has bought and paid for. That said, what would keep a local government, starved for cash in just such a situation as “The Crunch”, to raise the taxes on local properties until no-one could pay them? If a landowner pre-paid his taxes for, say, two years in advance, what would stop the …