Economics & Investing For Preppers

Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR. Today, we look at the export side of the Swiss watch market. (See the Tangibles Investing section.)

Precious Metals:

Mike Gleason: Fed’s Own Forecasts Again Dead Wrong as QE4 Accelerates

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Why are Gold and Bonds rising together?

Economy & Finance:

The Hill reports: US debt surpasses $23 trillion for first time. JWR’s Comment:  That is a $1.3 trillion jump in past 12 months.  For some perspective: It took the first 205 years for our Federal government to pile up the first Trillion Dollars of debt.  We are now witnessing an almost upright spike. A Dollar crash is now inevitable.

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At Zero Hedge: JPMorgan Prepares For Next Recession By Shifting Jobs From NYC To Texas

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Rents Fall Southern California, Seattle, Miami, San Francisco, San Jose, Chicago, Honolulu & Others. JWRs’ Comment:  Chalk this up as an omen. If you own any rental properties, then this is a good time to cash out!

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Another from Wolf Street: Global Slowdown? Mexico’s GDP Declines Year-Over-Year for First Time Since 2009

Commodities:

H.L. sent us this: Pig Plague Starts Rippling Through American Meat Markets

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OilPrice News reports: Oil & Gas Earnings Set To Surpass Expectations

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Uranium turnaround coming into focus, says Cameco

Stocks:

At Wolf Street: What Will Stocks Do When “Consensual Hallucination” Ends?

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Tesla Discloses US Revenues Collapsed 39%. Americans Sour on its Cars, Pent-Up Demand Exhausted

Forex & Cryptos:

Sterling holds steady below $1.30 ahead of Brexit Party announcement

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It is interesting to note that while the U.S. Dollar is remaining quite strong against most other currencies, it is still bouncing around parity with the Swiss Franc (CHF). Click on the historical charts. Although I sold some CHF in December of 2018, I’m still hedged a bit into Swiss Francs, but I’m presently more interested in the  prospects for the British Pound.

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The U.S. Dollar still has special significance: Lebanon Bans Removal Of Large Dollar Sums From Country Amid Bank Run “Panic”

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At Seeking Alpha, there is this from Avi Gilburt: Sentiment Speaks: The Bitcoin Correction Is Almost Complete

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BitMEX Twitter ‘Hack’ Incites Ominous Warning: ‘Take Your Bitcoin & Run’

Tangibles Investing:

What Swiss Watch Exports Tell Us About The State Of The Global Economy. (Thanks to H.L. for the link.)

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Some stats, straight from their own industry web site: Swiss watch exports.

Provisos:

SurvivalBlog and its Editors are not paid investment counselors or advisers. Please see our Provisos page for our detailed disclaimers.

News Tips:

Please send your economics and investing news tips to JWR. (Either via e-mail of via our Contact form.) These are often especially relevant, because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News from local news outlets that is missed by the news wire services is especially appreciated. And it need not be only about commodities and precious metals. Thanks!




13 Comments

  1. re:
    home rental collapse

    Could the home rental collapse in Frisco and other cities be attributed to banning plastic straws and plastic shopping-bags?

    Could it have something to do with bums defecating on sidewalks in front of businesses?
    And injecting drugs in library restrooms?

    We have a nice 3/2 rental in a nice Sacramento suburb in California.
    Our 2019 property taxes exceed us$8,000 annually.
    Maybe this is a contribution to rental collapse.

    Could it be a result of everybody with any sense leaving?
    Could it have something to do with populations exceeding the carrying capacity of the utilities?
    Rolling Black-outs and rolling Brown-outs?
    Could it be the traffic?
    Could it be the constant threat of violence, the constant threat of property seizure, the constant noise pollution?

    1. You forgot HOAs which now require an armed conflict in order to keep private property.

      Horace Mann with is socialism of free public education set up private property siege with the property tax invention.

      The leveling harassment on private property is the HOA with fines levied and penalties which of not paid is a lien on your personal private property you and your wife work 8 hours a day for 30 years to pay off.

    2. I’m surprised that the property taxes on a 3/2 in Sacramento would be 8k/yr. Given CA’s prop 13 protections, that would mean the property cost $800,000 to purchase. I think maybe something isn’t straight here. While California is a godless hellhole with plenty of problems, property taxes (currently) one of the causes of RE collapse.

  2. I don’t understand why you suggest cashing out a rental. Why would you sell an asset that is still brining in revenue, even if it is a reduced rate? As long as your cost of doing business doesn’t exceed your revenue (and if it does on a rental you should burn it down and start over) how do you lose?

    1. Why? Because we are just seeing the beginning of the cycle of simultaneous declining rents and increasing property tax rates. Unless they own the property free and clear, many rental owners will soon be operating at a negative cash flow. The cash generated–that is, by cashing out–can be reinvested into something that will generate either better return (income) or sustenance (productive farm land), or a place of refuge, for a worst case.

      1. I wasn’t thinking about increasing taxes. That would be a consideration. I wouldn’t own a rental that wasn’t free and clear, which is why I don’t own one, but I probably wouldn’t sell it just because rents might come down. We are looking at picking up a couple of rental properties down the road, but that would not be until all of our own planning is satisfied. And they would have to be cash purchases. I know too many people who have lost their entire investment because they couldn’t make the payments when the renters stopped paying. Thank you for the explanation, I appreciate it.

    2. Excellent question. For many decades, owning a rental has made some economic sense.

      However, in some states like WA, the progressive socialism and decriminalization of destructive behavior have strongly reversed the economic situation.

      Local and state laws here now prohibit an owner from evicting people unless you go to court and prove that your tenant has been damaging the property and failing to pay for rent, and utilities.

      In some areas, no one can be evicted until court proceedings are concluded and then a 90 day wait period begins. In real life practice now, if tenants still refuse to vacate then, owners have to try and get county sheriff staff to come and guard you as you have your hired personnel carefully carry the tenant property out.

      Sheriff’s only allocate a few hours for you to do this, since in our county they only do it on Fridays, and they only have one deputy allocated for the county of 271,000 people.

      State law requires landlords to safeguard all tenant property from theft and harm for 30 days, meaning landlord must pay to transport it, unload it, store it, and notify tenant where it is, etc.

      State law requires that unpaid water and sewer bills and penalties are allocated to the property owner, not the tenant, in perpetuity.

      So in addition to court costs, eviction costs, and paying all unpaid utility costs and penalties, the landlord also pays all repair and replacement costs for items tenant, tenants family, friends, and dogs or cats have damaged, destroyed, and stolen.

      Applicants don’t want to move into a unit with carpets seeking of dog crap and cat urine, surprisingly. Usually carpet replacement runs from $1,000 to $3,000 per rental unit. As I maintained units, I would pay to haul away old carpets and install vinyl flooring from a surplus warehouse.

      Rent control is being implemented which prohibits owners from establishing rents at levels to pay mortgages and regularly increasing taxes, as well as all the above costs.

      I invested in rentals in 2008. This year I sold my last one. My smart friends in the business are carefully doing the same.

      I personally had some wonderful renters, but I screened through a dozen licensed management companies to find a company I could count on, and did my managerial tasks in conjunction with the professional, to manage for a profit, limit losses, and monitor the bad tenants.

      I did all my own maintenance with few exceptions that I personally observed while they were conducted, thus was frequently checking my properties.

      Of the latter, I had several, and consider a combined loss of $25,000 over 11 years on 8 duplexes and houses to be a better result than most realize.

      I went to court twice, and the last time was victimized myself by the socialist lawyer who was the substitute judge that day, to the cost of $1,700.

      The tenant let mice into my modern two story 2004 house, leaving the doors open all the time, and mice then ruined the new propane kitchen range. When I asked him to pay for the damage, he insisted it was my fault. I served proper notice under law for the tenant to move.

      He moved out and filed against me. The socialist judge ruled I had to pay all moving and storage costs, and give a months rent reimbursement. To appeal I would have to hire a lawyer, etc.

      I am not whining, just warning. Rentals can be great, but active and effective management is critical. But when socialists take your property rights from you, count your shekels.

  3. Keiser Report: What is the Fed hiding? (E1457)
    https://www.youtube.com/watch?v=vYS59HP46eM

    Great overview and depiction of what is going on with the Fed and Repo Market. David Morgan shows up at the end show. Of the many competing projections, Farber anticipated a “crack up- boom”. Peter Schiff , hyper inflation. At the moment, deflation (“crack up”) is the apparent threat and talk of this video, yet eventually hyper inflation could set in (“boom”).

    The Repo Market problem does indeed represent the bigger black hole of debt that is the root of the problem, and Fed continues to be forced to pump in more and more, for a longer and longer time, that looks to be infinite. ‘Black hole’ was a comparison used to describe the situation.

  4. Thank you, Mr Fisher. Many states have similar laws. In fact, one of the friends who lost their property was near Spokane, that is a hard rental market! We no longer live in WA for a variety of reasons, the politics is one of them. Not that Michigan is much better. It’s also one of the reasons I won’t buy rental property until I can pay for it outright. I don’t want to have to pay a mortgage when I have a delinquent tenant or worse. I was hoping to be ready to buy in about 6 years, but who knows what the laws will be by then? Right now prices are much to high to buy, and obviously the election will have consequences, good or bad, so we will see if it is worth it or not when the time comes.

  5. We have sold most of our rental properties over the last two years, even though they were owned outright the return on investment was no longer worth it. The losses due to dead beat tenants made them financial disasters. With the laws favoring the tenants and the state providing oversight and free lawyers the deck was just stacked against a landlord. Not sure what tenants are going to do for housing in the future, but there may become more former rentals on the market reducing the value of this housing. With many states and locales proposing rent control, investing in rental property may become a thing of the past. I still cannot understand how rent control can exist as it constitutes a taking buy a government entity . What liberals do not consider is that if you have money for investment you will put it in other places than rental property, again “Let the Peasants Eat Cake”

  6. I plan to continue to rent because I refuse to buy a home in a market that probably peaked last summer. You’ve heard the term “don’t catch a falling knife”. I’m a patient man. I won’t be the one buying your rental unless it’s at the bottom of the market. This approach has served me well over my lifetime. Anyway, if I were an owner of rental properties today I’d be selling the riskiest assets and moving that money into other investments focused on preservation. I’m with Rawles on tangibles, but not opposed to buying recession resistant stocks that pay dividends after a major drop.

  7. THe skyrocketing US debt astounds me & is part of why I stared prepping. Part of my amazement is how many people just accept it as part of the political & economic scene & don’t see the danger or risk -even among my conservative friends. I cannot understand why more ppl are concerned or alarmed at it. This cannot go on indefinitely, & it will end at some point.

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