Note from JWR:

A special note of thanks to the anonymous pharmacist on the East Coast that has set up a very generous 10 Cent Challenge subscription via an automated weekly payment. These voluntary subscriptions are greatly appreciated, especially now that our hosting and bandwidth expenses exceed $450 per month. (Daily downloads from our site now regularly exceed 20 Gigabytes per day. Last month alone, we burned through a whopping 660GB!)

Letter Re: Is the US Residential Real Estate Market Nearing the Bottom?

Hello Mr. Rawles:
Seeing that houses are pretty much dirt cheap right now, would it be a good decision to buy one? what would happen to our debts (including the mortgage) when/if the Amero comes? would they disappear like they claim the American debt will? I hear radio advertisements about the IRS giving you up to [a] $7,500 [interest-free loan] on your 2008 taxes if you buy a house in 2008. So, again, would it be a good idea? would the Dollar amount be converted into Ameros?

Thanks in advance for your response. As always, congratulations on and thank you for your blog, simply the best. – Luis S.

JWR Replies: The $7,500 incentive offered by the IRS must be paid back over the next 15 years. It is an interest-free loan, not a tax credit. People who claim this “credit” must pay it back at $500 per year for the next 15 years.

In my estimation, suburban houses have another 25% to fall nationwide, and another 40% to fall in the over-bought markets. I recommend that you wait for at least two years, until the market is closer to the bottom. And FWIW, according to The Chartist Gnome, the absolute bottom may not be until around 2016. There will be plenty of pain and angst ahead!

The widely-rumored advent of the Amero is far from a sure thing. I recommend diversifying out of dollar-denominated assets and into practical tangibles. At present, my favorites are alloy, steel, and polymer, and hold lots of cartridges. With well-chosen tangibles, you will shelter yourself from the worst effects of any currency swap or formalized devaluation. Yes, land is a tangible too, but the only real estate that I would consider buying these days is productive farm or ranch land. This should be land that could double as a survival retreat, and that is located in a region that was not part of the Big Bubble.

Letter Re: Comments on Two of the Three Bs: Bullets and Band-Aids

Greetings Jim,
With [the] November 4th [US presidential and congressional election] behind us, many of us are wondering how to proceed with our preps. With regard to the bullets in the “Three B’s” consider this; your firearm will function with one magazine, most with even no magazine, but they all require ammunition. As a prep (as opposed to investment), I put forth that a good supply of ammunition is a higher priority than spare magazines, after purchasing the firearm, of course! In selecting a firearms battery, ammunition availability is a common selection criteria. You should own firearms that ammunition can be purchased readily at any country store in the middle of nowhere. Good choices are .308,.223, .30-06, 12 gauge, 9mm, .45 ACP, .40 S&W, .22 LR, and possibly 7.62×39. A post-November 4th trip to our local Wal-Mart found them cleaned out of the Federal brand 100 round white boxes of both .223 and 9mm.

Esoteric calibers should play only a limited role in the defensive battery and be supported by more common calibers. A couple of notable exceptions are .50 BMG, and .338 Lapua Magnum. These calibers are in limited use by various military units for very-long range engagement of medium and hard targets. If you own weapons chambered in these cartridges then be sure to obtain a large supply ASAP. These weapons can be very useful for special purposes, and typically represent large financial investments, but are useless without ammunition. If ammunition is hard to find now, it will only be more difficult and expensive later. From that point consider purchasing a quantity of ammunition, in each caliber, that you maintain a commitment to not to use any of it. It’s reasonable to start with calibers that you or your group have the most firearms for, and work down from there. After reserves in each caliber are built up, purchase ammunition for training, target practice, or barter, using the same (most guns to least guns) philosophy. Some people may choose to start with rifle ammunition and work towards pistol ammo. As my favorite Front Sight instructor says, “Your pistol is only to fight your way to a rifle!” A thousand rounds in backstock, of each caliber, is a good place to start (case lots are psychologically harder for me to break open). One needs only to hear of the purported attempt to ban imports of 7.62×39, or the ammunition “registration” bill being pushed in Arizona to realize that there are many magazines, etc. available on the market, but ammunition is a one-time use product. Bans, taxes, or “registration” of loaded ammunition, or components would eventually make gun control a moot point! So stock up now.

With regard to the band-aids in the “Three B’s”, on another blog I happened onto a discussion of first aid kit components. The pre-hospital care giver was advocating obtaining all sorts of advanced tools like IV fluid and sutures. As Josh (hat-tip to my fellow Montanan) pointed in an earlier SurvivalBlog letter ,there are many training, and medical-legal issues with having/using this type of equipment. And as many sources like Ragnar Benson, and Where There is No Doctor point out, these interventions have only a limited role in all but a full of TEOTWAWKI situation. One excellent product that everyone should have in their medical bag that requires no prescription or specific training is a hemostatic agent like Quickclot. Here is a YouTube link to the military report on Quickclot (one specific brand, there are other good ones also) should demonstrate it’s effectiveness. The 6th edition of the NAEMT’s Pre-Hospital Trauma Life Support (PHTLS) textbook identifies hemostatic agents as most useful in a “delayed transport” scenario, that is, typically greater than one hour to definitive medical care, like what you would find in a wilderness or”grid down” type emergency.

Having the equipment without the proficient skill in its use is exactly like having a firearm in the nightstand and thinking you are good to go. Here are some ideas on medical training in addition to the WRSA, and Medical Corps suggestions that you’ve made. Start out with an American Heart Association (AHA) CPR Healthcare Provider class (Healthcare Provider is the prerequisite for most other training, and much more detailed than the AHA‘s Friends and Family CPR class.) The AHA offers other basic medical training as well. Many community colleges offer excellent Emergency Medical Technician (EMT) classes, they last about one semester, and may equal up to four college credits). If you are currently enrolled in college this is a great class that offers immediate job opportunities with varied schedules, and may expose you to a career track that you hadn’t considered. Many volunteer fire and ambulance services provide this same training for free with a time commitment to the service after course completion.

Wilderness Medical Associates, and NOLS offer a variety of non-urban setting EMS classes. One of the best educational opportunities that is often overlooked is the National Ski Patrol’s Outdoor Emergency Care Technician program. It closely mirrors the EMT curriculum but emphasizes care in the outdoor setting, and improvisation. Think about this; take the class, learn important skills, and then ski for free! Lastly, as Ragnar Benson points out in some of his books, even doctors use reference materials. In addition to the well known titles like Emergency War Surgery, and Where There is No Doctor, some people may consider purchasing EMT, Paramedic, or the OEC textbook. Gray’s Anatomy or other texts on anatomy/physiology, and pathophysiology are also important references . The key is not just to have the texts, but to learn them as well. Some people may try a self-study program of these resources. This last route is the least desirable, because so many skills like assessment, splinting, etc. require significant practice and experience. As a side note, the first aid kit in your latest auction from Cajun Safety and Survival certainly seems to be well equipped to deal with a variety of emergencies.

Thanks for all you do. Keep up the great work. – J. in Montana (A 10 Cent Challenge subscriber)

Letter Re: Michigan’s Upper Peninsula as a Retreat Locale

Jim,
I’ve been following the letters about living in Michigan;’s Upper Peninsula (UP) with interest. For those that aren’t familiar with Michigan geography, there are two peninsulas. For the most part, most consider Michigan the ‘mitten’ [landmass], and that’s all. The rest forget that there is still more to the state, and that’s okay with me! The UP is 1/3 the land mass of the state, with only 1% of the total population. There are more people in Detroit, than there are in all of the UP. another very nice statistic!

Personally, I was born and raised in Detroit (please don’t hold that against me), moved to the outer ‘burbs for several years, and moved to the UP 14 years ago. I will never go back. Never. Here, the water is clean (I get my drinking water from a free-flowing artesian well, with no filtering whatsoever), the air is clean and the crime is minimal. There is so little air pollution that on a moonless night (preferably in August) you can sit on any number of beaches along Lake Superior, and see the curvature of the distinct edge of the Milky Way galaxy. The stars are uncountable. Many find upon moving here that their respiratory allergies disappear–discovering that they were allergic to the smog of the cities.

Sounds like heaven? it is. Are there drawbacks? of course, but there are downsides to every location. I feel the benefits far outweigh the drawbacks. I might have to drive 30 miles to get to a sizeable town to shop, but along the way, I might see deer, coyote, and an occasional other vehicle 🙂 When I do go to town, I will shop extensively for my preps, and then not drive that direction again, sometimes for weeks.

Five years ago I purchased my current retreat. Ten acres that backs up to hundreds of acres of logging land, large parcels on either side of me. I have a small house, barn, two wells and a creek. I paid $45,000 for it. Cash. My taxes every year are just $750, in total. I’m off the main road (those prices are higher), but my road still gets plowed if there’s over 6″ of snowfall. It’s incredibly private, the neighbors know each other, but don’t interfere with anything. I even set up my own shooting range, no one cares. Some of the best fishing is within a ten minute drive, and the hunting is great.

One other letter mentioned the bugs. Yep, they sure are annoying. Ticks, blackflies, mosquitoes, beach flies, they all bite. Fox, raccoon, pine marten, fishers, even coyotes will get into the chickens. So I take precautions, what’s the big deal? Some of these nuisances are what keeps the riffraff away! They don’t want to deal with them. they’re soft, pampered, and want everything either handed to them or ready for them to take. The UP is not for the soft or pampered–at least not the woods of the UP, where I live.

It’s said that there really are four seasons here:” June, July, August and Winter.” Spring is typically two weeks of meltdown followed by two weeks of mud, then it’s summer. And those summers can be glorious! With the exception of this past year, we have consistently hit over 100 degrees in late July. Great for the gardens, because, yes, the growing season is short, so I adjust what I grow to fit that. Fall is breathtaking!

The worst winter I’ve experienced, was in 2002, where in the woods, I got thirty feet of snow. It was the only time that I had 6 feet of snow on the ground at one time. It was a tough winter, but, I never had to worry about those ‘roving hordes’ trying to take my supplies! They couldn’t get there! and I think that’s one of the biggest draws of the UP: It’s lack of accessibility, it’s anonymity, and it’s isolation. – Deborah in the UP

Letter Re: Perfect Practice Makes Perfect

Hi.
The Chinese say that if proficiency is desired a skill must be repeated “10,000 times.” Well, if you don your concealment rig and practice weapon presentation and dry firing 30 times, every day, you will have done it over 10,000 times in just one year. Repetition builds muscle memory and with muscle memory comes speed. Speed is not a matter of quick reflexes. It comes from eliminating extraneous motion. It doesn’t matter how “fast” you practice. If done right, every time, even in slow motion, when needed in reality you will be amazed at the effortless speed that results. My twenty bucks (two cents —adjusted for inflation) worth. – Doug R.

Odds ‘n Sods:

Michael G. sent this great link: The The King of Scrounge and His Castle

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Erik mentioned that US military personnel with proper identification can shop at Sam’s Club without a membership for two days in December. The company will also waive its 10 percent non-member service fee. The military open houses will be held Monday, Dec. 1 and Monday, Dec. 15 at 598 Sam’s Club locations in the U.S., during regular club hours. This is a good opportunity to stock up! BTW, if you need to know exactly what food products, hygiene items and sundries to buy at a “Big Box” store and details on their shelf lives, then study my “Rawles Gets You Ready” preparedness course.

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Eric also this: 30 reasons for Great Depression II by 2011

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Doc Gary sent us a tip that Alamo Tactical still has a few MagPul brand “MagLevel” (cartridge counter window) polymer magazines (“PMAGs”) for AR-15s still in stock (in just one remaining color–“Foliage Green”) for under $18 each. Well, that is until today, when the readers of SurvivalBlog will undoubtedly clean them out.

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The latest news and commentary from The Economatrix: Dow Falls 430 on Economic Bad News — Senate Cancels Vote on Doomed Auto Bailout — Dow Slips Below 8,000 on Growing Fear of Deflation — Asian Shares Fall as Recession Sets In — Heading for Recession and the Crime Wave that Goes Along with It —A Sea of Unwanted Auto Imports

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.)