Notes from JWR:

Flash Traffic: S&P downgrades U.S. Treasury paper! Excerpts: “United States of America Long-Term Rating Lowered To ‘AA+’ On Political Risks And Rising Debt Burden; Outlook Negative Overview · We have lowered our long-term sovereign credit rating on the United States of America to ‘AA+’ from ‘AAA’ and affirmed the ‘A-1+’ short-term rating.” and “The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.” Get ready for a roller coaster ride on Wall Street next week, most likely with a concurrent leg down on the US Dollar Index. Remember that the bylaws of many pensions funds mandate that they invest only in AAA bonds!

—

Today we present another entry for Round 36 of the SurvivalBlog non-fiction writing contest. The prizes for this round include:

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost $795, and B.) Two cases of Mountain House freeze dried assorted entrees in #10 cans, courtesy of Ready Made Resources. (A $300 value.) C.) A 9-Tray Excalibur Food Dehydrator from Safecastle.com (a $275 value), D.) A $250 gift certificate from Sunflower Ammo, and E.) An M17 medical kit from JRH Enterprises (a $179.95 value).

Second Prize: A.) A Glock form factor SIRT laser training pistol. It is a $439 value courtesy of Next Level Training. B.) A “grab bag” of preparedness gear and books from Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $300, C.) A $250 gift card from Emergency Essentials, and D.) two cases of Meals, Ready to Eat (MREs), courtesy of CampingSurvival.com (a $180 value).

Third Prize: A.) A Royal Berkey water filter, courtesy of Directive 21. (This filter system is a $275 value.), B.) Expanded sets of both washable feminine pads and liners, donated by Naturally Cozy. This is a $185 retail value, and C.) Two Super Survival Pack seed collections, a $150 value, courtesy of Seed for Security.

Round 36 ends on September 30th, so get busy writing and e-mail us your entry. Remember that articles that relate practical “how to” skills for survival have an advantage in the judging.

A Frightening Experience Leads to a Plan, by V.A.S.

Part One:  Why I Started to Prepare

Speaking from the perspective of someone who has spent the last several years researching, reading about and trying to sort through multitudes of information on the subject, I can say that learning the art of preparedness is not a simple task. Given the huge amount of resources, information and even misinformation available on the internet and within the many books written on the subject, determining the right path towards being more prepared can be a difficult one to say the least. Here is my story, and my tips for finding your own path towards becoming safer and more prepared for the many unknowns which can harm us or those we love in this ever-increasingly crazy world.

My journey towards becoming a person who was even interested in becoming more prepared began one chilly fall evening several years ago. I was in my mid-20s and spent most weekends, and even weekdays, focusing on fun, and like most Saturday nights went out and met up with some friends. It was an after-hours party at the local art hot-spot, and they were serving drinks upstairs. The person who accompanied me to the party, my roommate, was on crutches for a broken leg so I was going back and forth for the both of us. On my second or third trip upstairs I noticed two older men looking at me. They gave me just the slightest hint of a strange feeling – but I ignored it.

Several hours and drinks later, the party was over and it was time to move on. We waited until everyone else left so we could use the side exit because it was the handicap exit, but was locked and rarely used. We said goodbye to our friends and they locked the door, closing the place for the night, and then headed around the corner to the alley where my car was parked. I helped my friend into the passenger side of the car and then headed around the back of the car to unlock my own door. Just as I opened it, I felt and heard someone rushing up behind me in the dark. I turned around and it was one of the very same two men I had seen earlier inside. As he rushed towards me I fumbled with my keys in a desperate attempt to open the tiny Swiss-army style knife on my keychain, but all of a sudden from the dumpster behind me two homeless people kicked a trash can and then popped out. The homeless-looking woman stared at the man and began walking towards him, very close to me at this point, and he suddenly stopped dead in his tracks, only a few feet away from me at that point.  We stared at each other for a minute and I opened my knife. The homeless couple walked up, and then the man said in a strange manner, “Oh, I thought this was my car.” I turned to the only other car around, which was parked right next to me – a newer white van with few windows. His companion, the other man from inside, was sitting inside the car staring at me.

I jumped into my car (a small sedan) and drove away, paralyzed from the experience and too scared or shocked to try to even get their license plate number. Honestly it took me a little while to even realize the serious danger that I was in, and that if nobody had popped out of that dumpster, well this story may have never been written. Was it divine intervention? Luck? Destiny? I will probably never know. But I do know that this was the day that everything in my life changed; or more significantly – the way that I view the world changed in every way.

I have spent countless hours wondering what they wanted with me, or worse, to do to me.  Regardless, the fact of the matter was that I wasn’t prepared, and that I didn’t follow my intuition. Was it divine intervention? Or just coincidence that there happened to be witnesses? I will never know. Following that day, slowly, my wants and needs have shifted towards trying to plan for things before they happen and more importantly – to follow my own intuition no matter what, because it can truly be a very powerful thing. Since then I have shifted my life path completely. Had that not happened to me I might be living in the rat race of Los Angeles by now, but instead I now have acreage in the country and feel safer than I ever have…but of course the move was only one step towards making me feel safer. Since we purchased a house in the country with acreage, my extra spending money is limited now – but I think it was the right decision, and it was something that I (well, we) had wanted for a while. I feel safer away from a large population – and to me, any financial sacrifices that have to be made are well worth it. Will I have several years’ worth of food anytime soon? No. Will I be able to purchase an arsenal or switch over to complete solar energy anytime soon? No. But I am in a much better situation than I ever have been in my life – and that is what makes me feel safer. It is all a give and take – that is life. It is something that must be molded; that is – we all have to work with what we’ve got.

This brings me to my point about being prepared in general. With all of the resources that exist on the subject, it would be easy to simply print out any one of the preparedness lists and check things off as you buy them. But in my opinion – this is not the most pragmatic approach and will not necessarily keep you and your family the safest under any circumstance. If you are like myself and most others I know, who live only within their means and particular resources, then you must take your plan for preparedness one step at a time, while trying to make sure that each step matters. And for me – that meant deciding which steps were most important to me in my life, and why.

The power of human intuition is an incredible thing. I can think of countless times in my life where I thought – if only I would have listened to myself, especially that night after the party. It is my belief that following your own intuition, and combining this with as much safety and preparedness information you can find – is truly the best path to finding safety (if that is even possible) in an unsafe world, and perhaps more importantly – to find your own peace of mind. Not finding yourself in a bad situation to start with is important (like being alone or without protection at night), but also carrying whatever type of personal protection you can afford is important at all times. I now carry pepper spray with me wherever I go, and have one in my car as well (it’s what I can afford – at less than $10 each for police grade spray off amazon.com). Do what you can, and think of everything that can happen – because sometimes it does, and someday it could be you.

Planning to be better prepared must be a personal and individual thing, and as with most things in life, there is no one-size-for-all answer. Think about what concerns you the most and address those issues first. Think about what activities your family does on a daily basis and how you can improve their safety both while you are away and at home. Think about the environment and climate you live in and what natural resources are around. Start writing down a ‘what-if’ list: What if we’re out of town and…? What if there was an earthquake? What if the power fails for a week, a month…or worse? What if our well dries up? What if the grocery stores close? The internet goes down? But of course, these questions could be different for each and every person and family. Everyone’s situation is completely different, and of course, the timing of such a disaster cannot ever be planned for or anticipated. One person might be at home with family and live in a densely populated area while another might be driving a secluded road alone at night…that is why it is important to develop something that helps you feel more at ease and according to your own personal situation. What scares you the most? Why? Is it well-founded? Do some research if you need…this is what it took for me to feel safer again.

So, all that being said…Here is my own personal plan for preparedness, in my step-by-step manner:

Part Two: My Plan of Action for Becoming More Prepared On A Limited Budget

Step 1: Begin by writing down a list of your own what ifs. Think about where you live and the potential dangers that you, in particular face. Do some research – now is the time. Once you start learning about how to prepare, and why, the rest will come into place. Don’t wait until it’s too late. Follow your common sense and your intuitive side – even when writing your list. And always include safety in everything you plan.

Step 2: Then write another list – a list of goals and items that you will need in an emergency situation. Make a list for your home. When you’re away from home. For your car. Make a huge list which contains anything and everything you can imagine. Cover all your bases. Consider your environment. Then make a much shorter list, comb through your first list and begin with your simplified list – of just the essentials (adjusted for what you already have). To me, this means things like extra basic household essentials: led flashlights and lanterns, matches, baking soda (can be used for all sorts of things – toothpaste, bee stings, laundry etc.), bleach (water and general disinfection), aluminum foil (you can use to make a make-shift solar cooker as well as plenty of other things), duct tape, toilet paper, paper plates, batteries and paper towels etc. This also means dried or canned (or powdered, dehydrated or otherwise preserved) food basics: rice, beans, baking supplies (flour, baking powder, cornmeal, yeast etc.), TVP and the like.

Step 3: Start by picking out the items which you personally consider to be the most essential – and purchase them one by one. For me, I started by working out a plan with myself considering the very small amount of money I can commit each week. Food and water seemed like the most essential items for myself, so now, I buy 5 gallons of water per week for my storage closet plus 5 pounds of assorted varieties of lentils, peas and beans, as well as 5 pounds of rice or another starch (barley, brown rice, couscous, quinoa, pasta etc.). Then each week I also try to determine another item or even a few, depending on my budget that will enhance my own collection the most. Last week it was the buy one get one free deal on olive oil along with extra household supplies (aluminum foil, trash bags etc.). This week I will buy cans of soup, first aid supplies and a few books (on country living skills and solar cooking etc.) off Amazon.com. Next week I will do the same as well as a few 5 gallon water jugs ($7 each at Wal-Mart) and stock up on batteries. And so on.

The point is – follow your common sense and work on essential items first, and at least you can say that you are making your greatest effort with the resources that you have available. There is no master list – do what feels right for you.  After you begin building up your water and food staples (dried, bulk and canned goods) then you can begin to narrow down the next important things as you can afford them. There are solutions to the basics for all economic levels. Food and water can be acquired as you can afford them. Just buy a little of each category at a time – that way you aren’t caught without one particular thing and water is extra important. Save milk or juice jugs, clean them and fill them for additional water. They are not necessarily the best first choice for drinking – but you can also use them as a makeshift solar shower if you spray-paint them black (or lay under a black tarp or cloth) and pre-drill at least one screw-on type lid in advance. I would hate to be caught in an emergency with only a huge bucket of pinto beans and nothing else. And pre-packed (MRE type) meals are great – they just don’t make economic sense to me at this point (maybe down the road). There are more important things. I don’t buy stuff I like anymore, I buy stuff because I like it and I think it might be useful or benefit me in some way someday-and especially in an emergency.

Step 4: Now that you have a basic plan of action and are beginning to follow it, now you simply have to continue to follow it and add in additional items as the opportunity allows. The first items I purchased along these lines were a wind up/solar am/fm/weather radio as well as batteries and flashlights. You can expand as you go, just make sure to focus on the basics first. Don’t follow the hype – follow your heart when it comes to getting yourself prepared for all situations. Follow your own plan, and expand as you research, save money, and continue to prepare. Solar items are particularly helpful as they provide a longer duration of self-sustaining energy, but stocking up on regular batteries first might make more sense for most people…just do your research and determine the most important things first. Everyday items can be lifesavers, and so can very inexpensive things, if you just plan ahead a little. Take advantage of the bulk section at your local grocery store. Think of all the things you do and/or enjoy in your everyday life, food, water, showers, clean clothing, using a bathroom, entertainment of some sort and so on. Then try to make sure you’ve got as many of these bases covered as possible in case of emergency. Be creative. And of course, always be safe when you are away from home as well. Protect yourself and be aware – follow your intuition in everything that you do and you will be better off.

On my long term list I have hundreds of items, most importantly additional weapons and power sources. And perhaps most importantly a manual hand-pump type connection for our well. I would also like to have backup solar power installed (for the well especially) if money allows. Ideally a bomb shelter on the property would make me sleep the best at night, but that may only come if disaster takes a long time to get here. However, if I work hard enough at it and nothing happens in the meantime – that day will come, and the same goes for you too. That is why taking one step at a time is important, since thinking of anything and everything that could happen can get a little overwhelming to say the least. Make a list and then make it a reality.

I believe that common sense and a belief in one’s own abilities and intuitions can be a life-saving thing, something that is invaluable to each and every one of us. Developing a personal plan and simply setting aside (if only a very little) time from each day before something terrible happens to begin learning and preparing could be the very thing that saves your life someday. I got a second chance – but I don’t know if I’ll get a third. That is why I prepare the best I can and learn as much as I can. And now – I do feel safer than I did before.

Emergency kits and meal kits are great (if you have the money that is) – but they aren’t everything. Follow your intuition and develop a plan of attack first – and most importantly cover the basics (for your own personal situation, and what you can afford) first. If you do enough research, you can find ways around the obstacles you face. If money is the issue, find less expensive ways to accomplish the same thing. If location is the issue, then do your best to change it. If you keep at something long and hard enough, so much can be accomplished. And always remember, all that we can ever do is our best. As far as I am concerned, this is the path towards freedom from fear as well as getting prepared. Be safe in everything you do, and good luck with your own plan and path towards protection and preparedness. I hope that if nothing else, my own personal story helps those who haven’t experienced something like I have, to follow their feelings and intuition their best, and also to do their best to stay safe in an unsafe world. Good luck out there!

Letter Re: Lessons from the Road

JWR,

I’d like to add just a couple points to the excellent “Lessons from the Road” article by R.W..

One key item that I feel is important is to involve everyone in the planning of your escape route. If you are the primary driver, and end up incapacitated, it is essential one of your other fellow travelers be able to take up the mantle and get the BOV to the BOL. In families, route planning can be a great way to get everyone involved and on-board with the preparations process. It also allows everyone to contribute and point out things a single planner may miss.

Next, I firmly believe for long-distance bugouts, a family or prepper should have a primary route and four secondaries, each ranging out from the primary while taking natural and man-made barriers into account, so as to give enough pre-planned options that the performance of the bug-out does not suffer during the stress of driving the actual event. This is one reason why a good deal of over-the-road trucking and aviation involve a lot of time spent prepping the vehicle and planning the route, so that surprises are minimized and all available resources (such as fuel sources, secure overnight/rest locations, etc) are utilized efficiently.

This is one of the first steps I took at the beginning the preparedness journey, and it was instructive. I was surprised at the difficulty of creating a route that took me away from large and medium-sized cities while not increasing the distance traveled by half. It was easy to create a short and fast route through the cities, or a slow and long one through the country, but finding an intermediate one was more difficult.

Finally, I would second  RW’s opinion that slower is safer and more efficient. My relatively new pickup with a few hundred pounds of cargo in the back will get 24mpg on state highways at 60mph, whereas on the interstate at 70mph that fuel economy decreases to 20 m.p.g. or less. That’s a big hit in economy for a small gain in speed. Towing a trailer at 65 earns a paltry 14 m.p.g. By taking advantage of an early bug-out and not having to race to your retreat, you can reduce the number of fuel stops and also reduce the total fuel required to reach your destination.

I’ll end with a Bible verse: “Pray that your flight will not take place in winter or on the Sabbath.” – Matthew 24:20

Regards, – G.R. in Texas

Economics and Investing:

Glenn Beck puts the Federal debt cap deal in prepper terms.

An American Suicide

US borrowing tops 100% of GDP: Treasury

tom in Buffalo spotted this: Royal Bank of Scotland posts £794m loss after Greece hit

Avoid Disaster, Get Out of U.S. Assets: Peter Schiff (Thanks to G.G. for the link.)

Open letter to the London G20 Summit: Last chance before global geopolitical dislocation

Items from The Economatrix:

Debt Ceiling Agreement To Trigger Hyperinflation

Credit-rating Agencies Still Threaten US Debt Recovery

US Manufacturing Woes May Be Just Beginning

10 Signs The Double-dip Recession Has Begun

Odds ‘n Sods:

A gent developed a handy new app for Android phones that calculates bullion coin value for transactions.

   o o o

Who would have thunk it? Federal officials have been caught facilitating moving drugs one way, and guns the other, across the border. Gee, its good to know that at least we don’t live in one of those corrupt Third World countries with a printing press economy.

   o o o

Gun lobby fights Mexico border rifle sale control. It is funny that the journalist picked up on the ATF’s “iron river” rhetoric, when the ATF itself is the biggest trafficker. (Thanks to Sue C. for the link.)

   o o o

SurvivalBlog readers in Sacramento, California and the adjoining foothills communities will be interested to hear that there is a new military surplus and gun store in Rocklin, called TDS Guns. In addition to a buying and selling guns, they also sell military surplus ammo cans, fresh commercial MREs, and camouflage clothing in a variety patterns including MultiCam.

   o o o

Vox sent me this article about a woman that wanted to created a backyard wildlife habitat: Mentor ordinance requires removal of vegetation (video)

Jim’s Quote of the Day:

And I will rejoice in Jerusalem, and joy in my people: and the voice of weeping shall be no more heard in her, nor the voice of crying.

There shall be no more thence an infant of days, nor an old man that hath not filled his days: for the child shall die an hundred years old; but the sinner [being] an hundred years old shall be accursed.

And they shall build houses, and inhabit [them]; and they shall plant vineyards, and eat the fruit of them.

They shall not build, and another inhabit; they shall not plant, and another eat: for as the days of a tree [are] the days of my people, and mine elect shall long enjoy the work of their hands.

They shall not labour in vain, nor bring forth for trouble; for they [are] the seed of the blessed of the LORD, and their offspring with them.

And it shall come to pass, that before they call, I will answer; and while they are yet speaking, I will hear.

The wolf and the lamb shall feed together, and the lion shall eat straw like the bullock: and dust [shall be] the serpent’s meat. They shall not hurt nor destroy in all my holy mountain, saith the LORD. – Isaiah 65:19-25 (KJV)

Notes from JWR:

Today, August 5th, is the Sixth Anniversary of the launch of SurvivalBlog. I hope that you’ve enjoyed reading it, and that it has helped you to gain useful knowledge and inspired you to get prepared. Thanks for making the blog such a huge success. In the past six years we’ve built huge archives of useful articles and letters, and they are still all available free of charge. We now get more than one million unique visits per month, making SurvivalBlog far and away the Internet’s most popular preparedness blog. Please continue to spread the word. Thank you!

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Today we present another entry for Round 36 of the SurvivalBlog non-fiction writing contest. The prizes for this round include:

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost $795, and B.) Two cases of Mountain House freeze dried assorted entrees in #10 cans, courtesy of Ready Made Resources. (A $300 value.) C.) A 9-Tray Excalibur Food Dehydrator from Safecastle.com (a $275 value), D.) A $250 gift certificate from Sunflower Ammo, and E.) An M17 medical kit from JRH Enterprises (a $179.95 value).

Second Prize: A.) A Glock form factor SIRT laser training pistol. It is a $439 value courtesy of Next Level Training. B.) A “grab bag” of preparedness gear and books from Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $300, C.) A $250 gift card from Emergency Essentials, and D.) two cases of Meals, Ready to Eat (MREs), courtesy of CampingSurvival.com (a $180 value).

Third Prize: A.) A Royal Berkey water filter, courtesy of Directive 21. (This filter system is a $275 value.), B.) Expanded sets of both washable feminine pads and liners, donated by Naturally Cozy. This is a $185 retail value, and C.) Two Super Survival Pack seed collections, a $150 value, courtesy of Seed for Security.

Round 36 ends on September 30th, so get busy writing and e-mail us your entry. Remember that articles that relate practical “how to” skills for survival have an advantage in the judging.

Lessons from the Road, by R.W.

Statistically, driving is one of the most dangerous activities in most of our lives.  Limited supplies, new or dramatically changed surroundings, minimal physical protection and exposure to observation make moving by vehicle the most dangerous phase of many survival plans.    

There has been a great deal of focus on the best ‘Bug out Vehicle’ and proper vehicle gear to use in a survival situation.  Often overlooked are techniques and skills, many of which are completely different than the driving skills we use in our daily driving, necessary for a vehicular bug-out.  Whether you are driving a 5 ton military truck or a Mini-Cooper, the ability to get home after a disaster, or make a successful transition to your Bug out Location will depend on your driving skill, sound decision making and common sense preparation.  

The following are some tips and tactics that I have picked up along the road driving in foreign countries devoid of traffic laws, countries with high terrorist threats, in combat convoys, all manner of weather, and even some dirt track racing.    I have attempted to adapt some of these lessons into workable techniques for common civilian vehicles, and useful in a wide range of survival scenarios from a full ‘Get Out of Dodge’, to a ‘Get Home’,  and in some cases, your daily drive to work.

Pre-Bug Out

Ensuring your vehicle is in proper working order is the first step to a successful vehicular relocation.  Most of us do not normally think of oil changes and tire rotation as ‘prepping’, but tires, belts and hoses that are ‘good enough’ for a daily commute across town could make you a pedestrian on a cross country trip to your retreat.   Knowledge of how to repair common vehicle problems is a critical skill.  For a minimal cost you can purchase a set of belts and hoses. Don’t allow a $6 part to become a single point of failure for your entire survival plan.  Have at least one real spare tire, two is better, and a working jack.

It is not difficult to make regular vehicle maintenance part of your routine.  For instance, I enjoy shooting much more than checking my oil.  Like eating my vegetables before dessert, any time I go to the range I take ten minutes to do some basic checks under the hood first. 

During a Bug Out going back for an item you forgot will not be an option, neither will picking up something at the store on your way out of town.  That is why most packing should be done well in advance.  Similar to a BOB, the use of dedicated storage containers make loading a job that can be completed in a matter of minutes.   (Another advantage of dedicated BOV containers is that a sudden flash of inspiration can be acted on immediately…just put it in the box.)   Quality lockable opaque plastic storage boxes with attached lid are ideal.  I use Gorilla boxes because they are inexpensive and have side handle and can be carried with one hand, but there are plenty of quality products on the market.  Good old lockable military duffle bags are fine for items that are not fragile, such as clothing.   Do not leave anything visible that would attract unwanted attention, such as gas cans, food or weapons.  

Every vehicle in the US Army has a load plan with a sketch of where the key equipment will be stowed.   As you develop your load plan, consider what you will need within reach, items that you won’t need until you get to your destination, and ensure a full 360 degree field of vision.  Try putting all the boxes in your vehicle to make sure they fit and be sure you can get to a spare tire and jack without unloading.   On my first practice load-out I quickly determined that boxes that are too heavy for one person to easily lift save no time.  Based on that experience, I reduced the weight of my boxes, primarily by setting aside some storage bags that will go in the boxes once it is loaded in the vehicle.  My wife can now easily manage the loading in the event I am not available. 

During a briefing before a movement through a particularly high threat area, I received this indispensable piece of advice:  “Your vehicle is your foxhole.  Treat it as such.”  (I was also told, just before departure, that “the route has been pretty quiet.”)  Ensure all loads, internal and external, are secure.  Inexpensive motorcycle tie down straps are more than adequate to secure bins and boxes inside the vehicle.  Police up the trash in the vehicle lest it become projectiles.   Similarly, keeping a clutter free vehicle could save precious time if there is no need to first unload items from the vehicle to make room for critical supplies during your load-out.  

Finally, learn to drive your bug out vehicle, ‘every day’ car, and spouse’s car in all types of weather and road conditions.   When trying to get home from the office after a natural disaster or when you notice a car full of shady characters following you is not the time to begin a voyage of discovery about the capabilities and limitations of your vehicle.    For about $50 you can participate in local Sports Car Club of America (SCCA) events with your own car that will give you a chance to find out what your car can do, and cannot do, in a safe (a route of traffic cones), controlled environment.  It’s educational and a lot of fun.  Next time is snows in your area, take your vehicles out and have some fun in an empty parking lot like you did when you were seventeen.

Fuel

Unless your name is Fred Flintstone, you are going to need fuel to get to your destination.    If you cannot make it to your bug out location (BOL) with a full tank and a few 5 gallon cans of fuel or soft side fuel bladders, it might be time to consider an intermediate BOL, a different vehicle, auxiliary tanks or a fuel cache en route.   Keep in mind, your vehicle will be loaded and possibly have external loads which will decrease your normal mileage. 

A few quick thoughts on the ongoing task of route selection:   Have good maps (more than one) and if possible, test drive your primary and alternate routes in your BOV.   Depending on the internet and cell phone situation, there may be no way to know the specific conditions on your planned route on the day you bug out.  However, if you do not drive major portions of your primary and alternate routes on a regular basis, it is worthwhile to spend a few minutes every couple weeks to check Department of Transportation web sites for states your route crosses on a regular basis to check for major detours or construction.

Driving

During a bug out, get home, or other survival scenario, the goal is to arrive at your destination intact.  Any activity while on the road that does not further the goal of getting to your destination should be avoided.  This is not the time to test the capabilities of the vehicle’s four wheel drive, top speed, or braking.  

I can, without hesitation, say that the most critical factor in safely driving in any environment is maintaining situational awareness.  You would never consider walking through a bad neighborhood listening to your iPod and checking text messages on your phone.   Nor should you drive with your CD player blaring, chatting with passengers and a burrito in your hand.  We all get complacent driving in our day to day driving. It happens.   However,  especially during a survival situation, we should drive like we would walk out of the mall during Christmas season, do not be conspicuous, be courteous, and have a plan for everyone and everything you see. 

It might seem counterintuitive, but slow is the way to go in most survival circumstances.  45-55 miles per hour is the optimum speed for fuel economy and slower speeds allow for more reaction time when encountering unwelcome surprises.  As hard as it might be to drive at a moderate speed while the world is collapsing, the goal is to arrive, not to ‘make good time.’  Obviously, for immediate threats drive as fast as needed to outrun the flood waters, ash cloud, or other fast moving threat.

By way of comparison, during the early years of the Iraq war, coalition convoys would drive at speeds of 50 to 60 MPH.  As Iraqi civilian traffic increased and the IED threat began to take a toll, convoy commanders learned that slowing down to the 35 to 40mph range allowed civilian traffic to clear out ahead of the convoy and vehicle crews were much more successful identifying IEDs, ambushes and other road hazards in time to react.   Several years ago I had the opportunity to drive a support vehicle as part of a Presidential motorcade.  To my surprise, we never went more than 50mph, even on the interstate. 

In addition to giving more time to react to road hazards and better fuel economy, slower is also safer. Since many of us will be driving heavily loaded vehicles, possibly with trailers or cargo on the roof, the handling characteristics of the vehicle may dramatically change.  Those changes become more pronounced at higher speeds.    The ditch cares not if you end up there as the result of a masterfully executed complex ambush or a trailer pulled beyond the recommended speed rating.

We all hope to G.O.O.D. long before the mass exodus, but even that may not prevent us from ending up in heavy traffic, or even normal city traffic.   Just like the school bus driver said, do not stick anything out the window you are not willing to lose.  Same goes for external loads that are not secured.     

In traffic, a good rule of thumb is that you should be able to see the rear tires of the vehicle in front of you to retain the freedom of movement to pull out to the left or right without the need to back up.  To avoid being completely gridlocked, make every effort to stay in the far right lane, or far left if there is a drivable median.  If worse comes to worst, such as an accident ahead or violent confrontation behind, you will have the option to pull around on the shoulder, ditch, yard or median.  If you have been waiting long enough and decide to take a ditch or shoulder, do so with a plan (to the next side street or past the disabled semi), not out of frustration, and always tell your passengers before you make an abrupt movement.

In the event you find yourself traveling cross country or down a trail of unknown quality, go slowly and if possible, have someone walk in front of the vehicle.  Even knee high grass can hide holes, abandoned farm implements, or even old farmhouse foundations capable of destroying the suspension of a HMMWV (oops).    Stay off private land unless you have absolutely no choice.  If you do get into a pasture or field, close every gate you open and stick to the edges of the fields along the fence rows to minimize crop damage.  Be ready with a darn good explanation and sincere apology.

The Crew

Unlike a weekend trip to Grandma’s house, in a survival scenario passengers are not just along for the ride.   Each passenger should have assigned duties and be alert at all times.   Think of everyone in the vehicle in terms of a crew, not only will this take pressure off the driver, it may help passengers focus on a critical tasks rather than what they are leaving behind.

Driver – The primary focus of the driver should be driving.   In our daily lives we often get distracted doing other things instead of keeping our eyes on the road.  In a survival scenario, the driver must be ready to act instantly to debris in the road, overly aggressive and scared drivers, and staying on course.  Because the mental intensity required is so much greater than normal driving, plan to switch drivers or take breaks much more often than you normally would.

Front Passenger- With an unobstructed view and no need to constantly watch the road, the front passenger has the best view of anyone in the vehicle.   This ‘assistant driver’ needs to be alert as the driver and should be scanning off the sides of the road, and as far forward as the eye can see.   This is the person who will identify trouble up ahead and allow the driver time to react.

Rear Passengers-  If rear seat passengers are present, they should be watching the sides of the vehicle and the rear, working the radio, tracking location on the map, taking care of youngsters and anything else they can do to minimize distractions for the driver and assistant driver. 

Just like any other crew, communication is critical.   A simplified form of the communication system used by Army gun truck crews may be useful.  Everyone in the vehicle should receive these simple instructions:  The direction of the vehicle is 12 o’clock.  Say what they see, followed by the direction on the clock and distance.   For example: “Broken down semi truck, 2 o’clock, 400 yards.”   The driver just replies “got it” when he gets a visual. 

As a general rule, I would recommend not having weapons visible, especially weapons sticking out of the window.   In slow moving, congested areas it is possible for someone to simply grab the gun barrel and yank.  People, me included, do not appreciate being ‘flagged’ by someone inadvertently pointing a loaded weapon at my vehicle as they pass by.  A rifle sitting across your lap, just under the edge of the window is sufficient.  To the extent that you can, put right handed shooters on the driver side and lefties on the passenger side.

Halts

Nothing good happens on the side of the road.  Nothing.  Don’t be there. 

Stops will be necessary along the way to rest, eat, refuel, exercise kids, getting physical and mental bearings, and so forth.  If possible, plan stops well in advance, preferably as part of initial route planning and recon.  Because of the mental effort required to drive in a survival situation, stops should be more frequent than normal distance driving.   Avoid the temptation to continue driving to the point of exhaustion, especially if driving alone.  Along with slower motor skills and poor decision making while driving,  when you finally do stop, you will likely go into a much deeper sleep than might be prudent for the threat level.

When making a stop, find a side road and take it to a point where you are out of sight of the main road.  The last thing you want is every passerby to see you pull out fuel cans and fill the tank.  Turn the vehicle around toward the main road before stopping.  If it becomes necessary to leave in a hurry you will be able to quickly get back on the main route rather than pushing further off your route.   Slow down on dirt roads as the dust cloud can be visible for miles.   

Before anyone gets out of the vehicle, take two seconds to do a quick scan immediately around the vehicle, about 5 yards out, followed by a second scan at the 25 yard mark and finally look toward the horizon.   The time to identify threats, downed power lines, stray dogs, large potholes, etc. is before passengers dismount, not after.

If the vehicle can be hidden during a short break all the better, but still keep security out and someone in the driver seat ready to go.   A section of camouflage netting or burlap is helpful to quickly unroll over your vehicle.  If you are using a military camo net, don’t waste time with the poles and spanners for short stops, the time spent would be better used taking care of business and getting back on the move.  If you have to make a hasty departure, you can quickly pull the netting out of the way enough to drive. 

For emergency stops (mechanical, not bladder…those can wait) try to make it to the next turnoff, exit or area where you will be out of danger from passing traffic.  In the unfortunate circumstance of a break down on a major road keep in mind that other drivers are scared, tired and not paying attention.   Immediately post security, but not standing by the side of the road as if trying to flag down help. There is no reason to have your entire group out on the side of the road, especially children.  Have everyone in the vehicle scanning a designated sector and have someone on your team make a note of vehicles that stopped or slowed to observe you.  Since you will be prepped and ready to deal with any mechanical problem, just get it fixed enough to move to an area where you can safely do more extensive repairs.  For example, just put some more water in the radiator and move; replace the hose when you get to a more secure area.

Do not run out of fuel.   Many vehicles are very troublesome to restart if they run dry.  More importantly, why give up all tactical mobility for a very small strategic gain?  Having enough fuel to move your vehicle just a few miles could get you out of a bad situation.   When you realize you will not have enough fuel to make it to your destination start looking for a secure stopping point and then start considering courses of action.  There is a world of difference between not having enough fuel to reach your destination and being stranded with no fuel at a place not of your choosing.

Ambushes

As conditions deteriorate and people become more desperate, any vehicle moving under its own power may become a target for an ambush.  Two types of ambush I want to discuss are ‘route unblocked’ and ‘route blocked’.  There are more complex types, but most would be well beyond the planning and training capabilities of a gang of looters in the initial stages of a societal collapse.

The best case scenario is an ambush that is discovered or strongly indicated (your eagle-eyed assistant driver spots some guys with rifles hanging around the side of the road up ahead), before you are in the kill zone.  Stop immediately and turn around at a high rate of speed.   Start planning an alternate route.  If an alternate route is not an option, get to a secure hide position and try again later keeping in mind that the route is not secure.   

An ambush with the route unblocked is the easiest type of ambush to plan and execute.   The bad guys simply hide and wait for someone to come then start shooting.   If the ambush is not spotted and you suddenly find yourself in the kill zone there is only one option:  press your right foot down as far as it will go and get out of the kill zone as fast you can. 
 
Think of it this way: If there are 10 bad guys, spread out 5 yards apart; they have a road frontage of 50 yards.  Assuming they wait until your vehicle is more or less centered in the group to initiate the ambush and they will continue to semi-accurately engage for another 100 yards after you pass, the kill zone is approximately 150 yards.  Traveling at 55 mph, your vehicle will be in the kill zone for about 5 seconds (granted, those will likely be the longest 5 seconds of your life).   Unless they have a fully automatic weapon and have trained to engage moving targets, you have a decent chance of getting out the other side and a much better chance than stopping in the kill zone.

A blocked route type ambush is generally much easier to identify from a distance.   Thus bends in the road, over a small rise, or in some other location where it is not easily spotted are prime locations for blocked route ambushes.   Be particularly wary of these areas.   If the route is blocked but the vehicles were not being engaged, most military logistics convoy battle drills call for the vehicles to quickly back off and seek an alternate route.  The blockage could be innocent (fallen tree, disabled vehicles), or an abandoned, incomplete or unmanned ambush site.  Take advantage of your good fortune and disappear fast.  We are in the business of getting to our destination, not clearing the roads.
 
The first question for the driver who realizes he is in under fire in a kill zone with the route blocked is whether or not the route is truly blocked.   This is why an understanding of your vehicle capabilities is so critically important.  Branches that are large enough to stop a car might not be an impediment to a large 4×4, a compact car might be able to fit in between obstacles set in the road, or a mid-size SUV might be able to negotiate the ditch around the obstacle.  Next, look at alternate routes to the immediate left or right.  In areas surrounded by pasture or farmland simply heading off the road might be the easiest alternative if your vehicle is off road capable (especially if the ambushers forgot to put an obstacle between themselves and the kill zone). 

If you have no exit routes, the only way out is the way you came in.  Make a U-turn if you have the space, or put it in reverse and floor it (this is why I have chosen not to use a trailer). Your passengers should be generating as much suppressive fire as they can.   If the vehicle is damaged to the extent that it cannot move at all, dismount from the side away from the ambush.   This is truly the worst case scenario.

Keep in mind, unless you are being attacked by a group of bad guys carrying air rifles,  the body panels of a civilian vehicle provide negligible ballistic protection.    If you are expecting a particularly rough trip, Army FM 55-30 Appendix O provides directions for field expedient vehicle hardening for larger trucks.   Smaller vehicles will lose their advantages of acceleration and maneuverability if too much weight is added.  Ballistic blankets are a lightweight, albeit expensive, solution that provides some protection against handgun rounds, shotguns and some smaller rifle rounds. 

Firing from a moving vehicle

Unless you have a fully automatic weapon, preferably on a mount, firing from a moving vehicle traveling more than 20 mph is not particularly accurate or effective for the purpose of hitting a target.   A couple lessons I have learned:  1) It is hard to generate a sufficient volume of fire from a semi-automatic rifle to suppress stationary targets when you are moving at speed.  2) It is next to impossible to aim using iron sights or scope when shooting from a moving vehicle.  3) Hot brass bounces around in vehicles and seems to always find its way down the back of the driver’s shirt.  4) Firing from inside a vehicle is unbelievably loud.  5)  The muzzle blast overpressure can break glass and shatter mirrors if your barrel is not extended well beyond the vehicle. 

Having said all that, my natural reaction is still to shoot back at someone taking shots at me.  So forget about using the sights or scope.  The intent here is not to take precisely aimed shots to hit the bad guys, rather, to send enough bullets close enough to them that they duck their heads for just a few of those seconds that you are going through the kill zone (suppressive fire).   One technique is to old the rifle steady on the door frame with your offhand on top and point shoot, this will keep the weapon from bouncing around and allow you to see the impact of your round. (I HIGHLY recommend mixing in some tracers before a road trip.)   The bullet is traveling laterally at the speed of the vehicle.  Fired from a vehicle traveling 40mph, a 5.56 round at 3000 fps is going to move laterally nearly 12 inches from the point of aim in the 0.016 seconds it takes to get to a target 50 yards away.  (The same holds true for ambushers, they have to lead the target which takes some getting used to.)  If you tilt your rifle slightly so that the ejection port is pointed down it will reduce the amount of hot brass flying around the vehicle interior.  I keep using the term ‘rifle’ for a reason.  Save your pistol ammo.

Final thought; the driver’s job is to drive, with two hands on the wheel.  Hitting the target but rolling the vehicle is still a catastrophic failure.   Drivers drive, shooters shoot.

Convoys

For groups sharing a common BOL or planning to travel in the same direction, a convoy will provide extra protection from threats on the road, additional security at halts, and the comfort of not being alone.  Again, some common Tactics, Techniques and Procedures used in the Iraq and some non-combat areas can be adapted for use during a vehicle convoy during a survival situation.

Before rolling out, ensure that everyone on the convoy knows the route, expected speed, and next two scheduled stops, and a ‘floating rally point’.   A ‘floating rally point’ is simply a designated distance from any point or incident that the convoy will stop and rally.  For instance, if the floating rally point is five miles; after an ambush, breakdown or just gets hopelessly fragmented in traffic, the lead vehicle will continue five miles and stop at the first securable area available; the remaining vehicles are on the lookout for the lead vehicle at the 5 mile mark.  Once all the vehicles are rounded up, the convoy continues on.  This technique gets the convoy to safety, negates the need to establish multiple rally points along the route, and eliminates the guesswork of where the rest of the convoy is going to top.

Depending on the number of vehicles in your convoy, duties can be divided.  Placing your most mechanically inclined person in the rear vehicle allows him or her to assist on any breakdowns without the need to backtrack.  If you have a tow bar or tow strap, place the vehicle with the best towing capability in the rear with your mechanic inside with your first aid person.  Placing the best navigator in front is not a bad idea either.  If you are using radios, the vehicle with the best range should go in the middle.   

If you have three or more vehicles, consider using a scout or ‘rabbit’ vehicle around a mile or one terrain feature ahead of the next vehicle, but within radio range.   This vehicle will be the eyes and ears of the convoy and they should have the best optics with them.  If they see something suspicious, the convoy can take a quick halt while they check it out, or immediately take an alternate route if the route is impassable.   In a combat situation the ‘rabbits’ were the fastest vehicles with the smallest turning radius, but they always had a full complement of radios, weapons and supplies.  In a G.O.O.D. scenario, I imagine that most of the supplies and spare fuel from the ‘rabbit’ would be cross loaded to other vehicles since they would be the first to encounter any ‘official’ check points and could be subject to confiscation of ‘hoarded’ supplies and ‘dangerous’ weapons.

A convoy is only as good as its ability to internally communicate.   Redundant means of communication in each convoy vehicle is the ideal.   Cell phones may be working; then again, they may not.  There are any number of hand-held ‘walk-abouts’ and CB radios on the market, as well as higher end radios available.   Keep radio traffic short and sweet, using the clock method of passing information back and forth. 

Don’t forget to develop a simple code if radio communication goes out, or you have a last minute addition to your convoy that does not have a radio.  Something as simple as single headlight flashes for ‘need to stop soon’ and double flashes for ‘emergency stop’ and briefly using hazard flashers to indicate ‘message received’.  Use what works for you and always keep it simple.  Any vehicle without a radio should be placed between vehicles with radios.

The rules for halts and security are the same, except that there are more people for security, and a larger space requirement at stops.  For a person looking to siphon some gas, the car pulled off on the side of the road with the driver sleeping is a much more inviting target than three vehicles a mile off the road with 360 degree security. 

Plan for the Trip of a Lifetime

The critical link between your current location be it home, work, or wherever, and  your ultimate destination is your transportation plan.  Thoughtful analysis, preparation, and practice, this critical part of many survival plans will go a long way to ensuring you arrive at your destination. The danger of traveling during a survival situation cannot be eliminated, but it can be mitigated.  Happy Motoring!

Letter Re: Inexpensive Building and Gardening Techniques

Sir:  
In many states, it is illegal to transport fish from public waters to private waters [or vice versa].  You might be okay going from private waters to private waters.  The concern is that you might introduce disease from one area to another and thus contaminate another area.  He should probably look into stocking his pond from a legal supplier. – Alan W.

Three Letters Re: America’s Sovereign Debt Credit Rating and Interest Rate Imponderables

Mr. Rawles,
Thanks for the blog and your books.  I have given several copies of “How to Survive the End of the World as We Know It” away as gifts. I consider it a network fishing lure of sorts, to find like-minded people.

To the point: Another set of dominoes to fall, if the US credit rating is reduced from AAA many pensions will not be able to hold US Treasury bonds, as their bylaws or rules state that they must hold AAA paper.  Unless they find a loophole or change their rules it will be a cascade spiral down.

Regards, – Ray I.

 

Mr. Rawles:
Please forgive me, but I believe you overlooked one potential scenario in the recent post about America’s credit rating.   Notably the fact that the IMF wishes to install Special Drawing Rights (SDRs), as the reserve currency of choice over Dollars. (There are other links, just the quickest I could find.)    

Both Russia and China have spoken out after the recent debt ceiling “crisis” and called for another reserve currency. 

The chilling statement on the info wars article: It’s probably frustration more than anything else for China,” said Brian Jackson, a senior strategist at Royal Bank of Canada in Hong Kong. While the nation has concerns, “they realize there’s not a lot of options for them out there and so they need to keep buying Treasuries”  

I believe that the IMF will eventually issue SDRs as the “currency of choice” as both the dollar and Euro continue to falter over the next few years. [SDRs] will become the option of choice, and eventually the only option. Just something to consider.   – Rhonda T.

 

Jim,  
I appreciated your take on the economy.  One thing not mentioned was the role of the Federal Reserve in preventing failed Treasury auctions.  Some estimates are that in recent months the Fed has been the purchaser of up to 70% of Treasury bonds.  This will obviously go on until it can no longer be veiled from the world.  Then comes the hyperinflation via unlimited dollar printing and then total dollar collapse.   I appreciate your site!   – D.W.

Economics and Investing:

Thursday’s headlines were full of deep drama economic news, including a market crash in Italy that looked like La fine del mondo come lo conosciamomeowner. Concurrently, the recent drop in silver has widened the silver-to-gold ratio 42.4-to-1. (Meaning: The cost of one ounce of gold currently equals just over 42 ounces of silver.) So this a great time to go to your local coin shop and perform a ratio trade: Ask them to swap your 1-ounce gold coins into bullion silver coins. (For readers in the U.S., pre-1965 mint date 90% silver Quarters are recommended.) Even though you’ll have to pay a dealer’s commission–so you’ll only get about 40 ounces of silver in trade for a Krugerrand–I believe that you will be making a wise move. In fact, I predict that two years from now, when the silver-to-gold ratio has narrowed to 20-to-1 (or lower), you will thank yourself. (Or perhaps thank me, and buy a subscription.)

Stock markets tumble amid eurozone fears over Italy and Spain.

Reader John T. recommended this by Peter Schiff: Debt Deal is a Blank Check

“The Outlook for Inflation Is Dire”: Peter Tanous

Eric Sprott: The Real Banking Crisis

Italy Under Fire in Widening Euro Debt Crisis

Eurozone Debt Woes Get Messier

Taxed Out New Yorkers Fleeing State (Vote with your feet!)

Threat of Downgrade Still Looms

US Job cuts at 16 Month High

Gold up $50 per oz. Since Monday

Some more articles, courtesy of John R.:

Gross US Debt Surges By $240 Billion Overnight, US Debt to GDP Hits Post World War II High 97.2%, Official Debt Ceiling Increase Only $400 Billion  

License to Debase US Dollar Further Jim Willie   

Bob Chapman: All The World Economies In Trouble One Way Or Another   

Deficit Will Grow While Economy Shrinks (Greg Hunter)

Items from The Economatrix:

Ron Paul Exposes The Deficit “Plan” Lies:  “Cuts Are Illusory, Not From Current Amounts Spent But From Projected Spending Increases”

Wall Street Stocks Drop 2 Percent (over 500 points) On Economic Fears

Dow Plunges 513, Worst Drop Since 2008

Oil Falls To Lowest Level In Six Months

The Next Leg Of The Housing Bear Market Has Begun

$2,000 For An Ounce Of Gold Seems Like The Only Bet Worth Making

The Imminent $2.5 Trillion Debt Ceiling Hike Will Unleash A Gold Price Surge To $1,950 And Higher

Odds ‘n Sods:

F.G. sent this: Cooped Up: Chickens Come Home to Roost for Urbanites With a Yen for Hen

   o o o

Nissan eyes powering your house from your car. (Thanks to Anthony S. for the link.)

   o o o

Camping Survival just got another shipment of Wise Foods, packed in food grade pails.  They created a 10% off coupon on these, just for SurvivalBlog readers:  “wise10“. These pails are in stock and ready to ship within two business days.

   o o o

James C. suggested this video on do it yourself evaporative refrigeration: Zeer Pot Fridge. Cool your food or drinks with no electric needed! (This could be a life saver those who are insulin dependent!)

   o o o

Six Creepy New Weapons the Police and Military Use To Subdue Unarmed People

Jim’s Quote of the Day:

"…A really efficient totalitarian state would be one in which the all-powerful executive of political bosses and their army of managers control a population of slaves who do not have to be coerced, because they love their servitude…" – Aldous Huxley in the Foreword to the 33rd printing of Brave New World in 1966 (originally published in 1939)

Notes from JWR:

Safecastle’s big 25% off sale on Mountain House long term storage foods ends tonight, so get your order in soon!

—

Today we present another entry for Round 36 of the SurvivalBlog non-fiction writing contest. The prizes for this round include:

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost $795, and B.) Two cases of Mountain House freeze dried assorted entrees in #10 cans, courtesy of Ready Made Resources. (A $300 value.) C.) A 9-Tray Excalibur Food Dehydrator from Safecastle.com (a $275 value), D.) A $250 gift certificate from Sunflower Ammo, and E.) An M17 medical kit from JRH Enterprises (a $179.95 value).

Second Prize: A.) A Glock form factor SIRT laser training pistol. It is a $439 value courtesy of Next Level Training. B.) A “grab bag” of preparedness gear and books from Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $300, C.) A $250 gift card from Emergency Essentials, and D.) two cases of Meals, Ready to Eat (MREs), courtesy of CampingSurvival.com (a $180 value).

Third Prize: A.) A Royal Berkey water filter, courtesy of Directive 21. (This filter system is a $275 value.), B.) Expanded sets of both washable feminine pads and liners, donated by Naturally Cozy. This is a $185 retail value, and C.) Two Super Survival Pack seed collections, a $150 value, courtesy of Seed for Security.

Round 36 ends on September 30th, so get busy writing and e-mail us your entry. Remember that articles that relate practical “how to” skills for survival have an advantage in the judging.

America’s Sovereign Debt Credit Rating and Interest Rate Imponderables

I’m frequently asked what is going to happen when the U.S. Treasury’s AAA credit rating is downgraded.

First, consider this news article: Moody’s Affirms U.S. Rating, Warns of Downgrade.

Here are my predictions, in a nutshell:

We can expect continued credit market volatility. The recent debt limit increase did nothing to correct the basic problem. The U. S. government spends more than it takes in, so its residual payments are growing, inexorably. As this insanity continues, at some point U.S. Treasury paper will lose its AAA luster. that will initiate a very ugly chain of events that will play out something like this:

  1. One of the major credit rating agencies will drop the credit rating, most likely to the AA+ level.
  2. All of the other rating agencies will immediately follow suit.
  3. Subsequent Treasury auctions may fail, or more likely rates will have to jump by 100 basis points (1%), or more.
  4. This higher rate will ripple through the global credit market.
  5. As the cost of borrowing money goes up, several things happen:
    • Global credit shrinks to the point where a full-blown liquidity crisis could develop.
    • Marginal enterprises fail.
    • Economies slow.
    • Stocks tumble.
    • Municipalities begin to declare bankruptcy.
    • Commercial and residential real estate both take another leg down and more foreclosures will hit the market. This will lengthen the duration of the housing slump.
    • Notes are called. This can cause a secondary squeeze, as everyone begins calling as many notes of their own as possible, to cover their creditor’s calls.

The next phase is difficult to predict, but there are several possible outcomes:

There could be more failed public debt auctions, followed by further credit rating cuts. If that happens, the interest rates will rise repeatedly, as the cleansing of the debt market continues: “Lather, rinse, repeat.” In the long run, all of the bad debt will be driven out of the system, but it will be a slow, agonizing process. Government meddling will only prolong the agony. Meanwhile, precious metals prices will rise. If there are repeated ratings cuts of U.S. Treasury paper, then I would not be surprised to see $90 per ounce silver and $1,950 per ounce gold.

Credit spreads will eventually adjust, as the yield curve stabilizes. But in the short term, some of the currency carry traders will suffer huge losses. (Since they depend on stable Forex rates, and stable interest rates.) Presently, the U.S. Dollar is drifting downward (at 73.955, the last time I checked the USDI), but it will likely plummet when there is a credit downgrade. You can also expect to hear about huge derivatives losses, and here we’re talking about trillion dollar losses.

There will also be lots of hedge funds going under. As I explained in SurvivalBlog back in 2007, hedge funds make their money by “borrowing short and lending long.” That works magnificently in a stable credit market, and investors make piles of money. But when interest rates spike, hedge funds often suffer huge losses. Mark my words: The big hedge fund collapses will be preceded by announcements of redemption suspensions. Beware.

What about the Euro? The EU nations are having some big problems of their own, and they may come to a head at the same time that the U.S. Dollar goes through its crisis. I have a friend who is a well-placed private capital manager. I respect his opinion. He recently sent me this thumbnail assessment of the Euro and the Dollar:

“I suspect that over the next few years the Euro will come apart – not tomorrow. It will take time. Italy is also a basket case and with the third largest sovereign debt market in the world, [so] it’s difficult for “Europe” to save.

Apart from financial market weakness the economies will roll on with Greece becoming inexpensive to visit again and German export growth will slow as the Deutschemark becomes incredibly strong.

In the US, I just don’t see how the government can stop spending money. While everyone talks about wanting less government, everyone has a mother, father, aunt, uncle, etc who benefits from Medicare and Social Security. Those two items and unemployment account for roughly two-thirds of all government expenditures. They can’t balance a budget without tackling those three items. Yet everyone wants them and I will bet politicians who take those programs apart will get fired by the voters. (i.e., not get re-elected.)

So, I suspect the greatest threat to personal wealth is inflation as deficits and quantitative easing continues.

What’s the alternative? The Fed will ensure that short term rates will stay low for a while especially with the nervousness about the Euro people will look to the dollar. Again, over a decade or so the US dollar will gradually no longer become the world’s reserve currency as countries look to alternatives. Recently the Middle East and China agreed a major oil deal which was not priced in US dollars. The Chinese Yuan would be a good medium term bet. Everyone knows the last year has seen more than the official inflation. Inflation will continue if not accelerate so keep that in mind when thinking through what to do.”

The long term outcomes from what I’ve outlined are all ugly. If the U.S. somehow manages to re-inflate and bail out some sectors, then we may see a few years of illusory “recovery”. But at some point a big bust is inevitable. We could then see a devastating credit and currency collapse. That would result in a global depression that might last for several decades. Stock up and prepare to hunker down. If you don’t already have country cousins that you can rely on, then it is high time to establish your own retreat.