Economics and Investing:

I found this linked over at TotalInvestor.com: Worst of slump yet to come, says economist; Ann Pettifor predicted a painful end to the good times. Now she says that only radical action can prevent further gloom. Her prediction was right, but it is sad to see that she has bought in to the notion that governments can “spend their way out” of the credit collapse.

GG sent this: Students Borrow More Than Ever for College–25% Increase

FG flagged this Wall Street Journal piece: The Coming Reset in State Government – Governor Mitch Daniel. The governor of Indiana explains why the tax well is dry, and why it will remain dry.

Items from The Economatrix:

Jobless Rate Jumps to 9.7%; 216,000 Jobs Lost in August

Stocks Edge Higher [Thursday] on Mixed Job Reports

Energy Prices Slide as US Sheds Jobs

Chinese Sovereign Wealth Fund Dumping Dollars for Strategic Investments Like Gold

Gold: Separation Before Liftoff

China and the Buzz of a Pending Bank Default

China to Buy First IMF Bonds for $50 Billion

Derivative Contracts In China: Our Loss, Your Problem

Six Million Home Foreclosures: Are FDIC-Insured Banks the Next Time Bomb? (Pt 1)

Top 25 Banks by Loan Portfolio

No Pity For Citi

Mad, Mad World (The Mogambo Guru)

States Shut Down to Save Cash

Poverty Rate Among Older Americans May be at 18.6%



Odds ‘n Sods:

Marko liked this Lifehacker article: Build a BBQ Smoker for Under $50.

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JRH Enterprises (one of our most loyal advertisers) is running a Labor Day special on new 3rd Generation PVS-14s for only $2,995. This is a great price, so I’m buying one! The sale ends on September 8th.

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Ticketing tiff ends with courtroom gunfire.

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Two radio towers in Washington state toppled. Possibly the work of eco-terrorists. (Thanks to FG for the link.)



Jim’s Quote of the Day:

"A man does what he must – in spite of personal consequences, in spite of obstacles and dangers and pressures – and that is the basis of all human morality." – Winston Churchill



Letter Re: Some Economic Indicators to Watch

James Wesley,
I just had lunch today with a senior bank executive in Chicago. He confirmed much of what I have been seeing in the economy. After picking his brains, I have put together a few economic indicators to watch:

– Christmas will be a financial disaster – people are reluctant to spend their cash. Weak sales will be a tipping point for many retailers

– Commercial real estate is the next “shoe-to-drop”

– Small businesses continue to struggle – their problems will broaden and deepen as credit is strangled – SBA loans are off-the-street, defaults may be as high as 50% and growing, banks are not lending (see rutledgecapital.com – banks holding record cash reserves from Fred Reserve)

– Consumer Credit Cards – the second next-shoe-to-drop – Piled high and deep – longer unemployment means people can’t keep up payments

-Bankruptcies increase – especially in construction industry and real estate-related industries

– Joblessness – watch the U-6 column (the BLS report on a more “real” unemployment number.) Unemployment, according to Dept of Labor is over 16.5%

The big imminent threat? Inflation – “too much money chasing too few goods” as Milton Friedman warned. The government printing money, and inventories are falling –[ a classic inflation precursor].

Economic recovery? At least 18-24 months from now. Media reports about “recession end in sight” are nonsense.

Federal leadership is a “nightmare” – making all the wrong moves. Look for higher taxes, inflation, increased joblessness (as small businesses fail).

Outlook? Grim.

Best Advice – Avoid bonds (higher yields which are needed encourage buyers of US Treasurys = lower bond prices)

Avoid stocks – look for a “W” market move – stocks to go lower ([Dow] 3,800, H.S. Dent says) Why? Corporate earnings are very weak.

What to buy? Farmland and ammunition

And remember, I am an optimist.

Blessings, – Jeff E.



Two Letters Re: Do it Yourself Low Temperature Casting

James
J.W.G. has a great idea with the zinc pennies. When I need to fabricate a part I usually look under the hood of a junked car for something to melt, many easily-cast metals are under the hood requiring only a blown charcoal forge and covered dry steel pot. The Multimachine web site pointed me to a great source of high very quality casting aluminum: the overhead cam cylinder head from a motor that does not use separate cam bushings. Just ask a mechanic that you trust. Here in Israel there are also easily found junked brass plumbing fittings often found around, or for small jobs the coinage here is mostly hard brass too. A good eye and a few junk piles make great seed stock for easily cast metal projects. Anyone interested in going it alone even if they only needs a sub-scale machine should browse the multimachine archives for many tricks on precision improvised machine shop work, low temperature forging, and tools. – David in Israel, SurvivalBlog’s Israel Correspondent

Jim:
Remind your readers to become informed with the danger of melting Zinc. The fumes given off are very poisonous. – Wayne R.

JWR Replies: Actually, low temperature casting of zinc and zinc-copper alloys does not release zinc-oxide fumes. (Unlike welding zinc-galvanized steel, which uses very high temperatures–above the boiling point of molten zinc.) See this article from The Periodic Table web site, for details. This is not to say that you shouldn’t use all the normal casting safety measures. For example, casting should be done only outdoors or in a well-ventilated open-sided shop. Don’t over-heat zinc alloys unnecessarily, and watch for any telltale white zinc oxide smoke. Always keep in mind that heavy metal poisoning is cumulative, insidious, and essentially irreversible! Avoid repeated exposure to any alloys that include lead. If in doubt, don’t melt it!

FWIW, I have been an ammunition hand loader since I was 15 years old, but I have never castany bullets. This was a conscious decision, after doing some research on lead toxicity and accumulation in the human body. In my estimation the risk of exposure to lead far outweighs the benefits derived from lower projectile costs



Economics and Investing:

Items from KAF:

Gold Increases 2.3% as Greenback Drops

China Pushes Silver and Gold Investment to the Masses

Hong Kong Recalls Gold Reserves, Touts High-Security Vault

Retailers Report Sales Decline for August

More Americans than Anticipated File Jobless Claims

Sugar May Drop 24% as Demand Stalls, Supply Grows

Edinburgh Hedge Fund Feel Madoff Effect as Clients Get Pickier

HSBC Says Switzerland Luring More Rich Foreigners as Taxes Rise

And from HH:

The $531 Trillion Dollar Derivatives Time Bomb

The Nightmare of Contemplating Global Derivatives

Fed Secretive for Good Reason

Investors Rush into Gold Like 1849

Items from The Economatrix:

The Secret That Will Destroy the World’s Financial System

“We Spent $13 Trillion And These Banks Are STILL IN THE CR***ER!”

Racketeering 101: Bailed Out Banks Threaten Systemic Collapse If Fed Discloses Information



Odds ‘n Sods:

America’s Breadbasket Drying Up (What the article doesn’t explain is that half of this drought is political–since California Aqueduct water has been diverted from many farmers. California’s water politics are Machiavellian.)

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When is a nickel not just five cents? By chance, I got a fine condition 1944-P War Nickel in change at the local US post office today. (These are 35% silver, with a current melt value of about 90.1 cents per coin, their numismatic value is a bit higher.)



Jim’s Quote of the Day:

"…if the debt should once more be swelled to a formidable size… we shall be committed to the English career of debt, corruption and rottenness, closing with revolution." – Thomas Jefferson



Note from JWR:

After the large response to SurvivalBlog’s July survey on non-fiction books, I’m starting a new one: What are Your Favorite Survivalist Fiction Books? Please e-mail us a list of your top 5-to-10 favorites, with the e-mail title “Books Survey Input”. If you’d like. you can also include another list of your favorite Survivalist Fiction Books for children and young adults. I’ll post the results in about three weeks. Thanks!



Letter Re: Thoughts on Shedding Bad Habits, and Developing Good Ones

Hi Mr. Rawles,
I was thinking today about a section I read either on the blog or in the book about getting rid of any habits you may have. I instantly thought, “thank God I quit smoking” and left it at that. Until yesterday. I thought of all the things I do that are my habits that would not be there in a melt down. I found some that I just had not even thought about as being a bad habit that needed to be curbed. I am keeping a written diary of my habits to see where I need to improve or eliminate.

Here is what my list consists of so far:
1. Gum chewing. This is what I replaced my smoking habit with. But in a melt down, where will I get gum to chew? Not to mention it’s not something you want in a compost pile!
2. Soda/Pop. I have quit drinking this and have replaced this with water as I am trying to get back into shape. But soda will be gone in the melt down unless you can make root beer.
3. Snacking. I have been known to eat snacks through out the day, hence why I am getting back into shape. My snacks are healthy as I eat fruit but thinking on this, we will need to control the amount of food we eat daily to preserve the stock. So I am eliminating snacking from my diet. My whole family is doing the same thing. We will have a better control on our food supply this way.
4. My glass of wine. I would drink this or cook with it. But in a melt down, it would not be practical. So we are using what we have and not buying anymore.
5. Mints. Just about everyone I know has some brand of mints in their pockets. This is another thing to eliminate. What are in your pockets?
6. Cooking from boxed “dinners”. We took a look at the box and decided we can make our own boxed goods with dehydrated goods just like the box does. This is cheaper and will last us longer as the packaging isn’t the greatest. We have a huge dehydrator and have made individual meals of spaghetti and meat with sauce. You simply put in one serving of noodles, a dehydrated meat patty, and some spaghetti sauce in the dry package that only needs water. Then you seal it with the kitchen saver and you have a meal on the go with protein that will last a while. (You can do this for most dishes you make).
7. Waste. We decided to look at the fridge and find out what we waste the most of. Waste is costly. We now reuse everything, even if it just to the compost pile. This way we have our habits of our retreat already started and will not be in such a shock when looking at the trash pile.
8. Television time. We have cancelled our cable and have not turned on the television in over 6 months. We don’t miss it and it gives us time to learn new skills and to be active and moving while accomplishing things on our list. I did not realize how much television time we used. I like you watch the colony via my computer. Actually you can watch anything via your computer, you just need a program installed. I wont as I just don’t want to replace this habit.
9. Watching my change. I have started my nickel pile and have gotten everyone I know in the habit of saving the nickels. My saying is it’s for my coin collection. I give no more details to that outside of my family at home. When buying anything with cash, I always ask for nickels instead of any other coin. I also keep pennies in my purse handy to ensure I can get a nickel back.
10. Dog walking. We have started our training of our team walking when we take the dog for his nightly walk. We space each other out and we carry sticks (must have them here with the wild animals attacking our dog). But it gives us the opportunity to fix what we didn’t do right while we have the ability to do it under less stress.

My point is we are starting to think about all of our habits. Taking a really hard look at what you do daily will help you determine what habits are they good or bad and do you want to improve them or get rid of them? Will they hurt you or help you? We are creatures of habit. Will yours benefit your or not?

Thank you for all that you do! May God continue to Bless you and your family. Your family is my prayers. – Jane L.



Letter Re: A Nation of Improvisers–More About Everyday Life in Communist Cuba

First our prayers are with your family in these dire times.

The first thing about surviving in Cuba was that we did not see it as “surviving”, it was more like living, we did not know anything else, as the media in Cuba is tightly controlled.

I remember as a child we did not have glue so we made glue out of Styrofoam and gasoline, just mix them up in a glass container that you could close to preserve and that’s it (if you go a little crazy on the gas it would be too liquid and take forever to dry). Canning was done basically with pressure cookers because there was nothing else, so all the knowledge of our grandparents was very handy and since you can’t buy a new house we all live together, so it was very common to live in the same house with your parents and grandparents and sometimes your uncles and your cousins. You learn not
to throw away anything useful, screws, bolts, nuts, washers, you never know when you will need them and there is no hardware store available. Food scraps went either to the pigs or chickens or if you did not have any, you give to someone that has, that becomes a bartering tool you can say you will take care of the food and get some part in the profits when they are killed.

I know that a lot of people are amazed at how we kept old cars running, but trust me, it wasn’t that big of a deal, a little bit of ingenuity goes a long way. I’ll go later into more detail.

We were born with the system, so there was no getting ready like we are doing now, and believe me, no matter how ready you can get, if the S*** really hits the fan and it’s TEOTWAWKI, you will run out of things, and even if it doesn’t and we are stuck in the middle, then you need people because there is no way you can learn everything.

Your best bartering tool is your knowledge, if you have a trade, mechanic, electrician, construction, carpenter,… that is a life saver, the people that had a harder time were teachers, musicians, economists, etc.

They could not trade their work for nothing. For instance if you are good working with metals you will find someone to get the metals and that person will join with you and you can make parts for cars, if you are a welder you can also join in, remember that old cars were very simple, no hydraulic steering, no power nothing. It was basic carburetor, spark plugs, distribution and engine. An alternator is not that hard to fix, it basically a motor, the parts that wear down can be made again, maybe not the same quality as the originals but they will do. You can also adapt an alternator from another car (we had Russian cars coming in, including some WWII jeep-style Russian vehicles), they are mostly 12 VDC (some trucks are 24 VDC).

A good mechanic will make an adapter so you can use the transmission from a Russian built jeep and make it work with an old American car.

My trade was electronics (we use to call electronics to anything below that 24 volt and electrical anything above) so I will get in when they needed the electrical system of the car fixed, again it is very simple; remember no computers or anything like that in those cars. Here is a link of how a car alternator and a bicycle dynamo were used in the mountains to produce electricity, no means to store it so it was to use immediately, but when there is no power even a radio is an amazing thing. (See this YouTube segment: La Cuchufleta – Alternative Power Generating in Cuba.)

I also fixed radios and television, I used to buy old radios and television and use the parts to fix the other ones.

Later on when computer UPS [devices] became available, by available a mean people started to steal them from the government and sell them in the black market, then we can hook up a battery and get electricity when the power went off, which was very common. No deep cycle batteries, just whatever battery you could get.

Other people were real artisans; they would make shoes with leather and old tires, and let me tell you, they were super nice and expensive.

The hardest thing of all was to get food, because you need food to survive, you can live barefoot but not on an empty stomach, at least not for a long time.

When you were able to buy rice (the amount they give in rations, every family had a ration book, was minimal, so again black market) you would buy a good amount as much as you could afford because maybe next month the guy was in jail or it was impossible to get.

The rice you got was not stored properly so you always had to first put it on a table and go slowly through all the rice to search for small stones and foreign objects, then you put the rice in water and keep moving the rice with your hand and look for bugs, worms, they float and would come to the surface. I still remember as a child that grandma would call the children to “escoger el arroz” (that is what the cleaning process was called).

Milk was always boiled first, that way you could use the top which has more fat to make butter (you saved it till you had enough). If for some reason milk was spoiled and not drinkable you would make a dessert with it, I have to get you the recipe if you are interested.

After you ate the inside of oranges and grapefruits, you would use the rind and cook it in water with sugar and it was an excellent dessert.

To have some variety, you will get spaghetti, crush them and leave them in water, next day it was kind of a soft mix in the bottom, get rid of the excess water, add sugar and an egg and you could make pancakes.

Alcohol is consumed in Cuba in enormous quantities, I have no statistics, but it was relatively easy to make with a small homemade distillery (again quality is not a great concern), and I guess it’s a good way to forget the problems, although it brings another problems.

People would fight for the simplest of reasons, and there is no 911, and you better not be the weakest link because your family is in for a rough time because no one will respect you. Criminals would typically give you respect if they know you and you respect them and they knew it was not going to be easy to take on you or your family. If not you would be the target of thieves all the time.

Those are my experiences living in a country in permanent crisis, you would have times when power was on for whole days, and times when power was on for only 8 hours a day, times when it was relatively easy to get meat, or bread and times when it was almost impossible. There is no planning, everyday will bring a new challenge and you have to adapt, and only your knowledge, wits and Faith are going to help you through.

Unless we go down into total collapse – War, in which case all bets are off and nothing will ever prepare us for that because it would be the law of the jungle, whoever is stronger will survive and then you better have a strong group of family/friends or you will have to join a group, because alone you are pretty much gone.

Read the accounts of Somalia and Serbia so you have an idea. I know more of Somalia because my father served for two years (in the 1970s) in the wars between Ethiopia and Somalia, Cuba sent troops there to fight on the Ethiopian side.

I’d also like to respond to a misinformed comment in the article “Developing Our Family’s Survival Strategy, by FBP”. Cubans cannot grow 70% of their own food as a country, let alone in the cities. Cubans eat a lot of rice, beans and potatoes, there is no place in a city to grow enough of that to supply a family, much less a whole city.

The population density in Havana City, Cuba is 7,908.5/sq mi,

By comparison:
Detroit, Michigan – 6378.1/sq mi
Los Angeles, California – 7876.8/sq mi

So can those cities provide more than 70% of their own food? – ILR



Economics and Investing:

SEC’s Schapiro Calls Derivatives Data ‘Critical’ for Probe

Jeff C. spotted this: IndyMac’s mortgage struggle. How does modifying a “liar loan” somehow magically make a semi-employed borrower credit worthy?

From John in Ohio: Is America still depression-proof?

Reader MSB mentioned: The Shell Game – How the Federal Reserve is Monetizing Debt

Oldest Swiss Bank Tells Clients to Sell U.S. Assets or Leave (Thanks to DD for the link.)

Exit strategy? Fed’s Plosser: U.S. rate increases could be rapid. (A tip of the hat to Brenda C. for the link.) JWR’s comment: This is starting to remind me of the policies that created stagflation in the 1970s.

Karen H. sent us these three items:

Bond Market Eyeing 10% Jobless Rate Rejects Recovery

Oil drops nearly 4 percent on China Economy fears

Shanghai Index May Drop 25% on Economy, Xie says



Odds ‘n Sods:

Michael Z. Williamson, SurvivalBlog’s Editor at Large, sent this interesting article from The Atlantic: In Case of Emergency. The new FEMA Director wants American citizens to take charge when disaster strikes. Here is a key quote: “‘We need to change behavior in this country,’ he told about 400 emergency-management instructors at a conference in June, lambasting the ‘government-centric’ approach to disasters.”

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There is a great thread of discussion is in progress, over at TMM Forums: Use of antique or classic tractors for gulching

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A remake of Red Dawn? Reader B.H. sent us this: Cult classic remake set in Spokane, but not shot here.

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For anyone that doubts my assessment of Alaska as a retreat locale, please read this blog piece, suggested by Nancy Z.: Shopping day in Nunam Iqua. Also see this follow-up post: Life without running water in Nunam Iqua. The cost of living is quite high in Alaska, as necessities are often shipped in via air. If that flow of goods is ever interrupted, even if you are well-prepared, you’ll have a lot very hungry, desperate neighbors.



Jim’s Quote of the Day:

“If you’re not shootin’, you should be loadin’. If you’re not loadin’, you should be movin’, if you’re not movin’, someone’s gonna cut your head off and put it on a stick.” – Clint Smith, Director of Thunder Ranch