Note from JWR:

We are pleased to welcome two new advertisers: Special Arms and Munitions and and MRECookbooks.com. Be sure to visit their web sites.

The MOAB Keeps Growing, and Growing

Last Winter, when I first started writing about the Mother of All Bailouts (MOAB), I predicted that the cost of the bailout would grow inexorably. Sadly, I was all too right. In fact, the scope of the MOAB is now much larger than I had predicted, early in 2008. The latest tally thusfar is an almost incomprehensible $4.28 trillion US Dollars.

But wait, it gets worse. In addition to bailing out bankers and insurance companies, more and more entities from outside the financial sector are lining up to the Federal trough. The TARP bailout set a dangerous precedent. There is now a big queue forming. It is the “economic victims” queue. It is a growing line of highly-paid whiners with sob stories. Here are some examples:

Lets start with the “Big Three” Detroit automobile manufacturers (Chrysler, Ford, and GM.) Consider these three articles: Detroit automakers are begging for a big chunk and What Will Happen if the US Auto Industry Fails? and GM Bailout Will Be Agony for Taxpayers.

Now, on to the airlines. We’ve already been warned that as many as 30 Airlines will go broke this year. I predict that passenger airlines in the US will be next to get a big bailout. And if the Pentagon gets its way, many of those carriers deemed “too big to fail” will be those that have a large number of planes in the US Air Force CRAF fleet. Nearly everyone, it seems, has a vested interest of some sort in the MOAB.

Insurance giant AIG is getting not one but two bailouts. The latest increment announced will be $40 billion. When will this end? I suspect that lots of other big insurance firms will be lining up for their “fair share” of the dough.

Here is a real stinker: Billions of US taxpayer dollars will probably be used to bail out foreign investors. Uncle Ben Bernanke must have warned: “We mustn’t offend our creditors…”

The States – Some 29 of the 50 states are reporting budget crises. Lo an behold, most of the hardest hit states are those with bloated Nanny State bureaucracies. No surprise there. The states that had the worst fiscal management, of course, will get the biggest share of the taxpayer funds. Those that were fiscally conservative will get nothing.

Municipalities – The Wall Street Journal reports: Cash Strapped U.S. Cities Seek Emergency Bailouts

What will be “the next shoe to drop”? I suspect that it will be some of the the larger public employee pension funds, such as CalPERS. Not only have they made some spectacularly bad stock investments, but many of them have also been playing contrapreneur in real estate investments (such as REITs) and have even dabbled in derivatives, such as CDO paper. Here, perhaps, is an early warning flag: Florida pension fund loses a quarter its value.

Another likely recipient of a reserved spot at the feeding trough will be “critical industries” in defense, bulk fuel, transportation, and telecommunications. If any of these approach a crisis; we’ll surely be warned, “there could be dire consequences…” Can you see how far this slippery slope extends, folks?

The Growing Queue of Beggars

Mark my words: The queue of banking, corporate, and government beggars will continue to grow. Once organizations see how easy it is to get dump truck loads of cash from Uncle Hank, many more sectors will join the queue. The American taxpayers will be thoroughly fleeced.

As I’ve noted before, these trillions of dollars must come from somewhere. Clearly, revenue from taxes, tariffs, and borrowing will not be sufficient. This leaves only monetization–the magical creation dollars out of thin air–as a solution. Experience has shown that monetization is highly inflationary.

The bottom line: Be prepared for a MOAB that will balloon, and then amazingly balloon still larger, in an orgy of bailout beneficence that is unprecedented in human history. Following on its heels will surely come consumer price inflation. The coming decade of economic depression will be marked by inflation will make the stagflation of the 1970s seem mild, by comparison. What I’ve outlined here is just about inevitable. William H. Macy, as “The Shoveler” in the movie Mystery Men said it nicely: “We’ve got a blind date with Destiny — and it looks like she’s ordered the lobster.”

Letter Re: Finding Abandoned Properties, Post-TEOTWAWKI?

Dear Mr. Rawles,

I recently became a fan of your blog and wanted to commend you for your work in educating the masses. While I don’t have a retreat, I’m using a different strategy and hope for your input. I live in western Maryland. Historically we are fairly disaster-proof from natural disasters enjoy all four seasons. My plan is to prepare (as best we can here) and after a disaster, claim a better vacant property.

Two other thoughts: I recently purchased David Blume’s book “Alcohol Can Be a Gas” and intend to fuel my own flex fuel vehicles and have a barter tool. Secondly, I’m trying to rig some way to attach a bicycle to a generator and store energy and provide exercise for my family – Thanks, Mark W.

JWR Replies: I regularly get e-mails like yours, mostly from preppers on tight budgets that have hopes of finding “abandoned” properties. It would take an incredible “worst case” situation with massive de-population before properties would be totally abandoned. A vacant property still has an owner–or at least has heirs of a deceased owner. And unless government totally disappears in some anarchic spasm (which is highly unlikely outside the Horn of Africa), there would still be due process and the normal legalities of properties being seized for property tax delinquency, and then being sold at auction to the highest bidder. Science fiction novelist Robert A. Heinlein said it best: There ain’t no such thing as a free lunch (TANSTAAFL).

I recommend that you plan more realistically. You can prepare on a modest budget by teaming up with like-minded people in your area and buying contiguous parcels in a covenant community to provide a local bartering base and mutual security. Abandoned properties are more the stuff of daydreams than reality. But given the continuing collapse of the United States real estate market, who knows? There may be some very inexpensive foreclosed or even tax delinquent parcels available at auction in rural areas in just a couple of years.

There are several brand of bike generator stands on the market, including the U-Gen.

Letter Re: UCLA’s Eye-Opening Colloquium on the Worldwide Financial and Economic Crisis

Hi Jim,
I’m responding to Tuesday’s article Letter Re: UCLA’s Eye-Opening Colloquium on the Worldwide Financial and Economic Crisis in which the general cause of the crisis was ascribed to too much economic freedom. The following articles make the opposite case, that it was actually caused by government interference in the markets:

The Government Did It

The Myth that Laissez Faire Is Responsible for Our Financial Crisis

Alan Greenspan vs. Ayn Rand and Freedom

Stable Money is the Key to Recovery

As pointed out in the article Stable Money is the Key to Recovery, “…some three-quarters of the massive derivatives market, which has wreaked the most havoc across global financial markets, derives its investment allure from the capricious monetary policies of central banks and the chaotic movements of currencies.”
Best Regards, – Tim L

Odds ‘n Sods:

More than 20 readers sent us links to various articles about Gerald Celente’s recently very gloomy predictions, including this one: Celente Predicts Revolution, Food Riots, Tax Rebellions By 2012

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Eric flagged this one: Root cellars thrive as food prices rise. Oh, and BTW, count this as yet another greenie that doesn’t mind giving an exact location to reporters. How incredibly naive! (“Don’t forget to mention the nearest cross-street!”)

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From Cheryl, our Economic Editor, comes another big batch of news and commentary. It is noteworthy that the most incisive reporting on the US economy now comes from UK newspapers. The US mainstream media is treating Americans like mushrooms (to wit: keeping us in the dark and feeding us manure). Wall Street Finishes Lower on Recession Worries, CitiGroup Layoffs — Aid Prospects Darken for Desperate US Carmakers — Collapse of the Real Economy — Paulson Blunders as Debt Market Remains Frozen — The G20’s Secret Debt Solution — Japan Slides Into Recession as Exports Dive — 50,000 UK Realtors Gone in Nine Months — Crisis is Beyond the Reach of Traditional Solutions — Fears Drive Gun Buyers to Stock Up — S&P: 85 Companies Default on Debt in 2008 — CitiGroup’s Survival in Doubt — Automakers Beg for Aid as Bailout Bill Stalls — EU, Asia Stocks Decline, Led By Banks — October Producer Prices Fall Record 2.8% — Volcker Issues Dire Warning on Slump — The Global Dow — Roubini’s Latest List of “Why Things Are Hopeless” Contains Record 20 Items — Experts Warn of Security Risks in Economic Downturn

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David V. sent us this article that shows that even the mainstream media is catching on to the COMEX gold spot price farce: Why Gold Is Down, But You Can’t Get Your Hands on Any. There is a growing realization that the “gold as a commodity” market is quite different than the “gold as a currency” market. Although industrial demand will continue to wane in the recession, even the talking heads at CNBC recognize that the price of gold is primed to zoom upward, as currencies crumble. Gold is the ultimate safe harbor when the economic seas get stormy.

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David V. also sent us this: Depression 2009: What would it look like?

Note from JWR:

The high bid in the SurvivalBlog Benefit Auction is now at $710. The auction is for a large mixed lot that includes:

A.) 15 brand new 30 round M16/M4/AR-15 magazines from JWR‘s personal collection. These include four scarce and desirable brand new HK steel “Maritime Finish” magazines, and 11 new USGI alloy magazines made by Center Industries. (Note that most of these were made during the 1994-2004 Federal ban, most of them have restriction markings, but those became null and void after the ban sunsetted.) Even if you don’t own an AR-15, these magazines are great to keep on hand for barter. (Note: If you live in a state where full capacity magazines are banned, then you must choose to: refrain from bidding, or designate a recipient in an unrestricted state, or re-donate the magazines for a subsequent auction.) In today’s frenzied market, these magazines have a retail value of at least $460..

B.) A NukAlert radiation detector donated by at KI4U.com (a $160 retail value).

C.) An assortment of loose leaf teas, a box of Bellagio hot chocolate (25 individual packs), and your choice of $50 worth of ground or whole bean roasted coffee. (A combined retail value of more than $150), all courtesy of CMeBrew.com.

D.) A case of 24 cans of canned storage butter, courtesy of Ready Made Resources (a $110 retail value).

E.) A carton of 10 rolls of Hydrion fuel test strips, (with a retail value of $85), donated by UR-2B-Prepared.com.

F.) “Alone in the Wilderness” book and 2 DVD Value Set on the life of Richard Proenneke (a retail value of $51.95) courtesy of Camping Survival.com

G.) An EVAC Easy Roll Stretcher kit, (a retail value of $49.95), donated by FrostCPR.com.

This auction ends on December 15th. Please e-mail us your bid for the entire mixed lot.

Letter Re: UCLA’s Eye-Opening Colloquium on the Worldwide Financial and Economic Crisis

Hi,
Yesterday [Friday. November 14, 2008] I attended the Marschak Colloquium on Mathematics in the Behavioral Sciences at UCLA {University of California, Los Angeles] . This thing is attended by lots of UCLA and USC [University of Southern California] economics professors, including many retired faculty members and other local luminaries. (Two seats to my right was author Alvin Toffler of “Future Shock” fame.) The main speakers presented for an hour, and then the whole group asked questions and discussed the topic. Here is the brief abstract that announced the talk: “The current worldwide financial and economic crisis is the greatest economic challenge we have faced since the Great Depression. The two speakers will treat the crisis in the light of historical experience, will identify some of its causes, and will consider possible policy initiatives at the national and international level to treat it.”

The topic was “The Current Worldwide Financial and Economic Crisis.” I expected it to be an interesting, balanced, reasoned and academic view of the current bumps in the road, with some modest suggestions for improving matters. Wow! It was all very reasoned, and there was even a little bit of mathematical modeling, but these people are very very concerned! The immense set of interlocking derivative bets made by the big banks is now acknowledged as a complete house of cards, and one that is currently collapsing! (The second speaker made suggestions about policy moves that could be taken “if officials somehow miraculously stop the process in mid-collapse.”)

The whole two hours was fascinating, but here are a few of the ideas and comments that I came away with:
• This is the first global crisis of the globalized world. Likely every country will be affected and all at about the same time. (Very different from [the economic crisis of] 1929-1937.)
• The causes were many: lax regulation, lax credit reviews by rating agencies, securitization of mortgages, insane(!) investment leverage, pressure for continuously increasing financial profits, herd behavior, deregulation, ….
• Many financial institutions would be immediately bankrupt if the were forced to value assets at current market prices. (Instead, everyone has agreed to claim that “certain markets are frozen.” The regulators wink.)
• Deleveraging is essential to the survival of these institutions. But most deleveraging actions actually lower all institutions’ capital bases. So it’s a self-reinforcing positive feedback cycle. Serious deflation is a genuinely possible outcome. For the first time in our lives, money could become more valuable over time, rather than less.
• On the other hand, most Latin American currency crises began as fiscal crises. Government frantically created money to prevent deflation, and eventually they got hyperinflation. This, too, could happen here.
• A former vice president of Citicorp was in the audience. He said that the explosion in derivative instruments ran far ahead of infrastructure (markets for trading them, etc.) and far ahead of legal frameworks. He said we haven’t even seen the beginning of the counterparty problem.
• An economist from USC in the audience said that we will soon have huge, massive unemployment in the U.S.
• What will happen next (even what could happen next) is unknown. A Swedish economist in attendance said: “Dispense with the illusion that you understand what is happening.”

It was a very interesting couple of hours. – M.D.I. (by way of SurvivalBlog readers Bill and Charley.)

Letter Re: Where to Find the Funds for Your Preparations

Dear Jim,
So many people are struggling to find ways to make ends meet, much less have any extra money to make purchases for their preparedness plan.
There are a lot of things people can do within their own means.

1. Make a budget. Income minus expenses. Is there anything left over? You are ahead of the game. If not, now is the time to:
2. Trim the budget. Distinguish needs versus wants. Eliminate anything that is not needed.
3. If after trimming the budget, you still cannot find extra money, get a second job, have a yard sale, etc. www.daveramsey.com is a great site for
learning how to eliminate debt.

Some things that have worked for us:
We turned up the thermostat in the summer and used a fan to circulate the air, started hanging clothes out instead of using the dryer, unplugged all electrical cords that were not in use, [each of us] used the same drinking glass instead of getting another, and shortened our allowed shower time. (With three teenagers in the house, we struck gold with that one.) We turned all computers off at night. Our power bill was reduced just over $100 per month by making these changes.

We eliminated the cable television. That saved $70.

We started clipping coupons again. I have saved nearly $200 a month on our grocery bill. CouponMom.com is an awesome site.

I also milk our goats. I will not pay $4.00 a gallon per day at the store.

Instead of spending a lot on pre-packed snacks for the kids, I am baking a lot more.

We cook outside a lot. On Sunday, we grill and smoke chicken, sausage, hamburgers, hot dogs and goat meat. We then use this meat in whatever recipe we want to use for the week. Some of it is then frozen for the latter part of the week.

I make up a few batches of goat cheese to go with my husband’s homemade pita bread.

We have a garden in the summer and we can what isn’t eaten fresh . Even if you live in the city, you can still have a tomato plant or a bell pepper plant etc. You can purchase a grow light at Wal-Mart.

We have consolidated our trips into town, instead of going whenever we want to. This has saved at least $40 a month.
There are so many ways to stop wasting money.

Okay, some women really will think TEOTWAWKI with this one: Buy your clothes second hand. I am not ashamed to accept hand me downs from friends. My children have all worn clothes given to them from other family members. I also shop at Goodwill [thrift stores] or go to Yard Sales.

Start a business. I am a stay at home Mom with five children. We have nearly four acres that we live on and have access to 20 acres next door and that we run our 40 head of Boer goats on. We have chickens and rabbits. I also breed and train German Shepherds and board dogs. With my husband’s income and the extra attention to detail, we do pretty well. The changes that we have made has allowed us to purchase the needed extras.

Thanks for the wealth of knowledge that you share with us every day! – RH in Alabama

Two Letters Re: Procuring Reliable Workhorse Bikes — Take Advantage of the Single Speed Fad

James
I am a daily multi-modal commuter taking an armored bus into Jerusalem and then cycling from the bus station to my kollel. Before my move to Israel, I only drove my 4×4 truck several times a month and did about 50-to-70 miles a week by pedal power. I did once try using Slime in my tubes but this makes for a difficult ride, wasting immense amounts of effort due to the natural imbalance of slimed tires. I also found that it is also impossible to patch slimed tires. My advice is to get a good tire like the Kevlar Schwalbe Marathon tire, although some may not want the reflective paint on this tire for OPSEC, I have also had good use from the Specialized brand CrossRoads mountain/road tire. Unless the cycle rider is planning to go 100% soft road it is better to occasionally walk the bike and gain the efficiency of a smooth roll center strip.

Since most of us are not equestrian experts and since animals can be such a danger especially if regular medical care is unavailable, a bicycle should be part of nearly every persons preparation purchases right after a basic defensive firearm, camping gear, and several months of backup food and a way to cook it. I also suggest every reader find a mechanic that they can trust at a local bicycle shop who can help evaluate any potential purchases so you don’t buy used or new junk which will sit in the garage attracting rust and often teach you to fix the problems, he will also help you collect the tools and parts needed to keep it running even if he is not there. Your bicycle is the most efficient form of powered transport known to man so you will easily feel any inefficiencies when pedaling up a big hill, this is probably your future daily means of transport, don’t sell yourself short. See also Sheldon Brown for how to work on a bicycle and Crazy Guy on a Bike for cycle camping and long tours. – David in Israel (SurvivalBlog’s Correspondent in Israel)

Mr. Rawles –
I noticed your recommendation to use extra-thick inner tubes and Slime for tires on survival bicycles. Excellent advice, but may I suggest an alternative I have used on my bicycles — air free tires. There are alternative suppliers as well but these have worked well for me. The tires use solid, dense polyurethane and are offered with varying densities/elasticities to match various tire PSI ratings. One caveat is that they are a bear to get on the rim, and you’ll likely have to re-true the rim once on.

Since I live in a very cactus-infested part of Arizona, these have been a blessing. I’ve even picked up nails without any problems (other than having to stop and pull them out with a Leatherman tool .)

I love the blog. I’ve been a reader of yours for years, in the far distant past from the misc.survivalism [Usenet] newsgroup [in the late 1980s and early 1990s].
Regards, – “Harmless Fuzzy Bunny”

Odds ‘n Sods:

Reader “Arclight” mentioned that here is a DEA newsletter, formerly restricted to Law Enforcement, called “The Microgram.” Arclight’s comment: While some of it dry and technical, there are some fascinating stories of how drug operations are hidden, items are smuggled through customs, etc. The Microgram and the newsletters also available on the site give a fascinating look into who is running this trade and how. Good intel reading for the good guys.”

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I recently updated my M14 / M1A Magazine FAQ, to include a link to the set of excellent Counterfeit USGI M14 Magazine Detecting Flowcharts that are posted over at Rifle-Company.com. There now so many fake “GI” M14 magazines on the US market that I recommend printing out a set of these charts to carry with you when attending gun shows.

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Craig R. found a free guide to trapping provided in PDF by Michigan Department of Natural Resources.

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Reader Harry L. pointed us to some first-hand some observations on the frenzied battle rifle, magazine, and ammo market in the US, by the owner of Classic Arms, in North Carolina.

Note from JWR:

Two additional items have been generously added to the already large mixed lot in the SurvivalBlog Benefit Auction that started yesterday:

A NukAlert radiation detector donated by at KI4U.com (a $160 retail value). and,

A case of 24 cans of canned storage butter, courtesy of Ready Made Resources (a $110 retail value).

The high bid is now at $350. The auction ends on December 15th . Please e-mail us your bid.

Letter Re: Seeking Advice on Rainwater Catchment and Filtration

Mr. Rawles:
When constructing a rain-catch such as this one, which the good folks at Lowe’s [–a major hardware store chain in the US–] suggest for economically watering your garden, is there any instance where it would be okay to use this as a backup for drinking water?

Obviously, one would be foolish to drink directly from containers that are not food-grade or if the water has been sitting for too long a time. But, my question is does that change if you plan on running the water through a purifying process such as through a Berky or this economically priced alternative.

It looks like these filters might not last as long as the Berky filters, but are quite a bit cheaper and have a higher flow rate (this is what I was told – YMMV). A representative of the manufacturer claims to train the “second largest disaster relief organization in the world” who “use this filter exclusively” and that it is used by missionaries in 38 countries around the globe. I was also told that it was nominated for a World Health Humanitarian Award for 2008. Also, it supposedly outperformed the Berky in a trial run by Johns Hopkins University, but I have been unable to verify that claim. I can verify that Johns Hopkins University did give it a passing grade; as did the National Sanitation Foundation (NSF) under Standards 42 and 53, AEL Laboratories, Analytical Food Laboratories, British 5750 Quality Standard, and England’s Water Research Council standard.

So, my two questions are:

1.) Is it safe to drink rainwater caught in a non food-grade vessel, provided you filter it through a sub-micron apparatus first?

2.) What are your thoughts on the aforementioned filter? Thanks, – J.S.C.

JWR Replies: In answer to your questions: Rainwater catchment for domestic water is very popular in Hawaii. There, most families do little more than use a sediment filter and bulk chlorination. You should of course never re-use something like a fuel tank or a toxic chemical tank for a water barrel. As I explained previously in SurvivalBlog, the issue with “non-food grade” HDPE plastic buckets and barrels is that some of them are manufactured using toxic injection molding release compounds. Whether or not a ceramic water filter would remove any such trace chemicals goes beyond my expertise. Perhaps a chemist or a water quality specialist amongst the SurvivalBlog readership could enlighten us.

We have a Big Berky here at the ranch, and love it. The two-bucket ceramic filter that you mentioned is remarkably similar to the improvised Berky clone that I detailed in a SurvivalBlog post back in May. Both their design and mine have similar cost, similar do-it-yourself labor requirements, and they will process a comparable volume of water. This isn’t like comparing “apples to oranges”. It is more like comparing Bartlett Pears to D’Anjou Pears.