Economics and Investing:

New climate strategy: track the world’s wealthiest. This is the sort of fallacious logic that foments envy, and inevitably class warfare. Yes, Americans do use a disproportionately large portion of the world’s natural resources. But we also create correspondingly more with those resources. The gross domestic product (GDP) of the US is tremendous. Here is an illustration. (California, just by itself is the sixth largest economy in the world.) Consider this: Why does Kenya Airlines have Boeing 747s in their fleet? Because someone in America builds them. Could those planes be made in Kenya? No, because they have neither the expertise nor the manufacturing infrastructure. Is this situation somehow “exploitive”? No! As my old friend “Jeff Trasel” says: “Please don’t tell me that I somehow magically ‘owe the world’ more because my ‘carbon footprint’ is larger. Well, so is my productivity!” I agree with Jeff. Carbon footprint calculations and swaps of carbon credits are nothing but voodoo economics and socialist scheming.

Credit delinquencies hit record high. (Thanks to GG for the link.)

Items from The Economatrix:

G8 Still Sees Economy in Peril

True Unemployment Rate Already at 20%

The MOAB continues to grow: Dem Senator: Second Stimulus Probably Needed

California’s Nightmare Will Kill “Obamanomics”

FDIC Insurance Fund: It Doesn’t Actually Exist

US Consumers Fall Behind On Loans at Record Pace

How Wrong Can You Get? (The Mogambo Guru)

Bartering catches the attention of the mainstream media: Make Purchases Without Cash

Abandon Ship (The Mogambo Guru)

US Stocks Drop, Sending S&P 500 to Lowest Level Since April; Exxon Falls

Morgan Stanley Plans to Turn Downgraded Loan CDO into AAA Rated Securities [JWR Adds: I think that they should dub this new unit their Silk Purse Transformation Division]

G-8 Spars Over Stimulus, Leave “Exit Strategies” Open

Yuan Deposes Dollar on China’s Border in Sign of Future for Global Trade

Dems Split on Stimulus as Job Losses Mount, Deficit Soars

Odds ‘n Sods:

H.H. and Hawaiian K. both mentioned this piece over at the Backwoods Home site, by Claire Wolfe: Preparing for Civil Unrest

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Randy K. sent us this history lesson: How the potato got hot; The foodstuff was once viewed as unnatural and dangerous. Its rise to a global staple may tell us something about today’s genetically modified crops.

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Richard S sent us a link to an amazing story: Do or die; A fellow soldier was impaled by a live RPG. For medics and a helicopter crew, there was only one choice

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From Cheryl: North Korea Believed Behind US And South Korea Cyber Attacks

Jim’s Quote of the Day:

“Keep your revolver near you night and day, and never relax your precautions.” – Advice of Sherlock Holmes to his close friend Dr. Watson, circa 1889, Sir Arthur Conan Doyle, in The Hound of the Baskervilles

Note from JWR:

Several readers have asked why I chose the Battle of Bennington Flag as the low key “OPSEC” identifier for SurvivalBlog readers. This was merely because that flag pattern is uncommon enough to stand out, yet it is nothing too controversial. (Versus, for example, a “Don’t Tread On Me” rattlesnake flag!) The Bennington flag does not have any particular historic significance vis-a-vis preparedness. But the flag looks cool, and after all, at Bennington, part of Burgoyne’s army got trounced.

By popular demand, I’ve just added Bennington Flag window/bumper stickers to my CafePress Stores. (They are also available by the 10 pack or 50 pack, at near my cost.)

Net Producer-Net Consumer Equations for Self-Sufficiency: Getting Out of the Pit

In a recent phone conversation with one of my consulting clients, I was asked why I placed such a large emphasis on living in the country, at a relatively self-sufficient retreat. I’ve already discussed at length the security advantages of isolation from major population centers in the blog, but I realized that I’ve never fully articulated the importance of self-sufficiency, at a fundamental level.

In a societal collapse, where you are in “You’re on Your Own” (YOYO) mode, it will be very important to be a net producer of water, food, and energy. This will mean the difference between being someone that is comfortable and well fed, and someone that is shivering, hungry, and thirsty, in the dark.

If you were to create computer models of a typical suburban home as compared to a small farm, they would probably present two very different pictures:

A typical suburban home is an energy pit. It generates hardly energy other than a bit of garden waste that could be used as compost, or fuel. A farm house on acreage, in contrast, can often be a net producer, especially if the farm includes a wood lot. (Standing timber that is suitable for use as firewood.) Properties with near-surface geothermal heat, coal seams, or natural gas wells are scarce, but not unheard of. I’ve helped several of my clients find such properties. For some further food for thought, see this article by Lester Brown over at The Oil Drum web site: The Oil Intensity of Food

A typical suburban home is a food pit. Just picture how many bags of groceries you tote home each week, month, and year. Compare than with the net volume of food produced by a small farm, or the meat produced by ranch. (For the latter, a ranch that is large enough to produce its own hay and grain is ideal.)

A typical suburban home is also a water pit, dependent on utility-piped water. But with a spring, or with well water and a photovoltaic or wind-powered pump, you can be a water exporter–charitably providing surplus water to your neighbors.

There are are of course some work-arounds for these limitations, such as installing photovoltaic power systems and rainwater catchments cisterns. But it is nearly impossible for a family to be a net producer of water, food, and energy, when living on just a small city lot.

Consider the inherent limitations of life on a “postage stamp” lot:

Limited acreage means that your house will always be a net importer of home heating fuel. Unless you live on acreage where you have a wood lot for firewood, you’ll end up on the wrong side of the production-consumption equation. Photovoltaics are practical for lighting and running some appliances, but the big energy loads like space heating, hot water, and kitchen range cooking exceed what PV panels can produce, unless you are a millionaire. Yes, there are substitute energy sources, but most of those–such as propane-but those-are also “imported.” Hmm… Perhaps it is worth the extra time and effort to find a retreat property that has a natural gas well, a coal seam or that is in a geothermal zone. At least buy a property with a wood lot, so you can heat your home and water with firewood.

Limited acreage and a location inside limits usually means restrictions on raising livestock. You might find a property that has been exempted or “grandfathered”, but without the room required to grow animal feed crops, you will still be a net importer. (You will be forced to buy hay and grain, rather than grow it yourself.)

In many jurisdictions, it is illegal to have a private water well in a neighborhood that is served by a public water utility. This usually has more to do with maintaining a monopoly, rather than any genuine worries about a public health issue. There are of course exceptions, such as older houses with wells, that pre-dated the advent of a water utility. In many jurisdictions, the owners of these wells benefit from grandfather clauses. If buying such a property, make sure that the grandfather clause exemption is transferable. (Otherwise, you will have to cap the water well.)

One of the great ironies of urbanized life in modern-day America is that there has been a great inversion. In 1909, it was dirt poor farmers that lived on acreage, while wealthy people lived on city lots. But now, in 2009, owning acreage is something that most people only dream of, for retirement. In the more populous coastal states, the price per acre of land that is within commuting distance of high-paying jobs has been driven up to astronomical prices.

Have you ever stopped to think why there are large Victorian-style houses falling into disrepair in some Inner City ghettos? This is because at one time, those neighborhoods are where rich people lived. They were nice, safe neighborhoods, and were conveniently close to work, shopping, and schools. But times (and neighborhoods) change. These days, most of the wealthy have long-since moved to suburbs or to the country.

If you decide that you must stay in the suburbs, then I recommend that you at least relocate to a stout masonry house that is on the largest lot that you can afford. When you search through real estate listings, some key phrases to watch for are “creek”, “grandfathered”, “mature fruit trees” (or “orchard”), “secluded”, and “well water.” Another key word to watch for is “adjoins”. It is advantageous to own a property that adjoins park land.

As I’ve often written, I recommend moving to a house on acreage in the country–that is if you can afford it, and your work and family situations allow it. But I’ll close with one admonition: Don’t bite off more than you can chew. There is no point on living on acreage if you have a large mortgage, and no working capital remaining to build up the infrastructure for genuine self-sufficiency. In fact, that would be “the worst of both worlds”, since you would have higher commuting costs, a bigger mortgage, and perhaps even a bigger annual tax bill. Owning non-productive land may be worse than owning no land at all.

Letter Re: How Do I Transfer Propane Between Tanks?

Sir,
You mentioned the liquid propane dual-fuel vehicle, and said “…if you have a large home LP tank”. So, how do I get the gas from the large tank, to the vehicle.” Is there a pump or some sort of device? Thanks, – Brad S.

JWR Replies: There is no need for a pump. Draining liquid propane from a tank, is a self-siphoning process. Talk to your propane delivery man. Tell him that you want to be able to refill your barbeque’s 20-pound tank from you main tank’s liquid withdrawal valve. The adapter fittings are made of brass, and fairly hard to find–but propane company employees know where they can mail order them. For a detailed description of what you’ll need, see this thread, at an RV Owners’ discussion page.

Influenza Pandemic Update:

Four Britons Die From Swine Flu; Tips to Help You Fight the Flu “Optimize your vitamin D levels. As I’ve previously reported, optimizing your vitamin D levels is one of the absolute best strategies for avoiding infections of all kinds, and vitamin D deficiency is likely the true culprit behind the seasonality of the flu — not the flu virus itself.”

Argentines question government as flu spreads

Swine Flu Worries Spark Cambridge Jail Riots

Northern Hemisphere Bracing for Fall Flu Carnage

Explosion of Swine Flu Deaths in Argentina

Homeless People Die After Trial Bird Vaccination In Poland

Economics and Investing:

Reader Paul W. forwarded this piece over at Real Clear Markets: Get Ready for 14 Percent Unemployment

GG sent this Wall Street Journal article: Big Banks Don’t Want California’s IOUs

DD sent us four articles on unemployment:

Unemployed fighting for their benefits

A map of weekly unemployment benefits by state and current unemployment rate by state

Low income families turning to outside sources to help with necessities

Retailers to lay off more workers

Karen H. also sent us another raft of articles:

Migrants are going to Britain, come hell or high water. “Gazing across the Channel in the direction of the white cliffs of Dover, Amir Gul stood on Calais beach and imagined himself on the other side – and living the dream that has brought him 3,500 miles from Afghanistan.”

G8 days numbered? “The Group of Eight industrialised powers, ineffectual in the face of the worldwide finance crisis, is slowly losing its grip on the global economy and now faces calls for its abolition.”

Debt Burden Quickens Power Shift as G-8 Loses Clout. “Different countries are pulling in different directions and that is, I think, quite troubling,” said Niall Ferguson, a history professor at Harvard University in Cambridge, Massachusetts. The uncoordinated response is “one of the classic symptoms of a global crisis.”

U.S. Home-Equity Loan Delinquencies Set Record in First Quarter

U.K. Factory Output Unexpectedly Dropped in May. “The recovery is not yet “guaranteed,” the British Chambers of Commerce said today, as rising unemployment in the U.K. and around the world threatens to prolong the worst global slump since World War II. Today’s U.K. manufacturing report comes two days before the Bank of England decides whether to continue its program of buying assets with newly printed money. “

An interesting link for keeping up with Chapter 11 Bankruptcy filings

Items from The Economatrix:

401(k)s as Dangerous as the Dollar Get your money out of 401(k)s now!

Calls Grow to Supplant the Dollar as Global Currency

Peter Schiff: An Obama Speech, Debt and China

South Korea to Buy Gold, Expecting it to Replace Dollar

Gold Could Shoot Through $1,000 if China Shifts Away from US Treasuries

Jobs Data Bodes Ill for the Future

How Bad Are Auto Sales? 10 Questions and Answers

A Goldman Trading Scandal?

Celente: Some Major Trends Forecast

Odds ‘n Sods:

Ed L. suggested this Wall Street Journal article: Guns N’ Grosses: Arms Makers Fall Back From Obama Surge. Methinks the next year represents a window of opportunity to stock up on guns, full capacity magazines, and ammunition at a discount prices–before MOAB-induced currency inflation kicks in, or worse yet, new civilian disarmament legislation is enacted. I recommend that you systematically round out your firearms battery , preferably with cash purchases from private parties at gun shows.

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Be sure to visit Bill Buppert’s new blog, titled Hezekiah Wyman

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Steve from Philly spotted this interesting piece in a Maine newspaper: Pay attention when chitchat turns to ammo shortages

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Tamara, from the always entertaining and decidedly hoplophilic View from the Porch blog, pointed me to this fascinating piece on old-time technology: Retro Tech Days.

Note from JWR:

I was a disgusted to see the large number of U.S. flags being waved at Fourth of July celebrations that were marked “Made in China.” The bitter irony of this is almost indescribable, especially when you consider that a good portion of Chinese merchandise for the American consumer market comes from laogai (“Reform Through Labor”) prison factories. Do America a favor, and buy yourself an American-made flag. OBTW, I’ve chosen the “76” Battle of Bennington flag as the official “OPSEC-conscious” flag for SurvivalBlog readers, to identify themselves to fellow readers. And, also BTW, I just had one of my kids create Battle of Bennington Flag logo T-shirts, hats, mugs, and tote bags to add to my CafePress store, for the same purpose. (For those readers that consider it too “high profile” to wear a “SurvivalBlog” hat or T-shirt.) By wearing either a SurvivalBlog logo, or the Bennington Flag, you may providentially meet folks in your town that are fellow SurvivalBlog readers.

Letter Re: Some Thought on Dual-Fuel LPG Vehicles

Dear Jim,
I don’t know if this applies to folks in the US, but it may be something for UK readers to consider. My main vehicle is equipped with both petrol and Liquefied Petroleum Gas (LPG) tanks, and I will also be installing an LPG system on my secondary vehicle. There are two main advantages to this:

1. LPG is less than half the price of petrol, and although you get a third less mileage than you do using petrol, it still works out cheaper – in fact, in the UK, you can get the installation costs back in around 18 months. Also, burning LPG as fuel is cleaner and greener. I buy mine from the farm supplies company around the corner, which is even cheaper still.

2. With both petrol and LPG tanks full, I can drive around 550 miles (on English roads, which have far more bends and stop-starts than US roads) without refuelling, even though my main petrol tank is only 15 gallons. That’s a big advantage. Two things to note: always deplete the LPG first, as the vehicle needs petrol to start; and the amount of LPG you can get in the tank depends on the temperature; the warmer it is, the more the gas expands in the tank and the less liquid you can get into it, which will affect your mileage.

There is a minor disadvantage in that places that carry LPG are not as common as regular fuel stations, and sometimes they’re tucked away on industrial estates – sometimes they are a tank in a farmyard! We keep a log of where known ones are, and we have a [GPS] sat-nav with LPG stations listed on it for traveling further afield. Most of the places we use are unmanned, and require a special key to operate, so if power is still working, the pump will still give you LPG. Perhaps that disadvantage could be an advantage in a SHTF situation.

I’m looking to devise a method of filling the vehicle tank/running directly with bottled LPG as a further fall-back. Blessings, – Luddite Jean, in England

JWR Replies: There are road tax issues, but propane conversion kits are readily available in the US for older “pre-smog” aspirated gasoline-engine cars and trucks, as well as more expensive conversions for newer fuel-injected engine vehicles. Used conversion kits for pickup trucks, usually complete with fuel tanks often come up for sale on eBay. And a few complete and running propane vehicles are also sold on eBay Motors. Used utility company trucks that are propane-powered or even dual-fuel occasionally get sold at auction yards. Watch the auction listings closely. Once in a blue moon, you will find a dual-fuel vehicle that is also a four wheel drive. If you find one like that, that is in good shape at a reasonable price, then jump on it!

I highly recommend getting at least one propane-fuel vehicle, especially for any readers that already have a large propane tank at home.

Letter Re: Home Heating Oil Price Fluctuations–Time to Buy Low

Hi Jim,
Some older neighborhood houses [in the Pacific Northwest] have large oil tanks for heating under driveways, in basements, and buried under yards. Last winter, we saw our neighbors run dry during a rare 2-week snow/ice event that even chained fuel trucks couldn’t get around in. Portland and Seattle are notoriously under-prepared for ice/snow on roads, and actually have a “intentional neglect policy” of letting it melt without salt/de-icer rather than clearing the roads. Prepare to walk on uncleared pavement and stay around home!

If the predictions of temporary global oil over-supply are correct and fuel oil drops to around $1.50/gal, filling or topping-off a 600 or 1,000 gallon tank at that price would be a prudent thing to do with any extra money in the budget or even savings beyond the 6-month emergency reserve. Over-supply and clearance-pricing will be temporary as OPEC and others throttle back expensive drilling and pumping operations while the supply chain clears and prices return to “normal”.

Even if a person is a renter, having a full heating fuel tank is a good thing. Some rental contracts make heating the building and a maintaining a minimum heating fuel level a requirement. The fuel in the tank remains the property of the renter, minus the amount that was there when they moved in (or language in the rental contract), and can be sold to the landlord, next tenant, or sucked up and moved by an oil company truck for a fee.

Filling before heating season allows plenty of time for sediment to settle in the tank before drawing it into the in-line filter ahead of the burner. Anecdotal commentary by furnace service men indicates that furnaces that run on mostly-full tanks have fewer burner problems than those that use “bottom of the tank” fuel. Farm and trucking supply houses have “fuel polishing” additives/fungicides and pump/filter systems that keep tanks and fuel clean that might be safely added to a home storage tank system. Being able to fill a five-gallon can of stored/filtered Home Heating Oil from a valved-spout in the basement might be useful at some point in the future [, since Home Heating Oil can be substituted for diesel fuel, in extremis]. Cheers, – Karl in Portland, Oregon

Letter Re: Escape From (Fill in Your City Here), 2009

Dear James
Regarding Matt R.’s letter, I have been a survivalist and self-sufficient minded person most of my adult life. I live at my retreat in a prime western state. I have been reading your site for the last 18 months. I have learned some new useful information (never too late to teach old dog new tricks) from your site. I have also purchased quite a few supplies from your advertisers.

For most scenarios my home/retreat is a perfect place to be if the SHTF and I can just stay home. However I do not like to have all my eggs in one basket. I have three very different SHTF plans. One of my contingency plans is to get out of Dodge using aircraft. I keep a Cessna 206 in my back yard. My back up location is remote and has a place to land the plane. I was surprised by the pilot [in the subsequenty-posted letter] who so negatively responded of the use of aircraft as a get out of Dodge mode of transportation and strongly disagree with a lot of what he said.

I made my living for the last 30 years as a bush pilot, flying everything from Piper Super Cubs to DC-6s. I have flown over 12,500 hours as Pilot in command operating in the USA, Canada and Africa.

Cessna 172 Aircraft as a G.O.O.D. Vehicle
 A 172 would not be my first choice in a plane to get out of dodge but the C-172 could carry the pilot along with one passenger and 300 pounds of gear nonstop for 400 miles. For some scenarios a C-172 or similar aircraft could be a life saver. [JWR Adds: I agree. It would be great if every pilot that reads SurvivalBlog owned a Pilatus Porter, but alas, we live in the real world, where budgets demand compromises. OBTW, one fairly inexpensive upgrade is having a spare set of extra large “Tundra” tires. These will greatly expand the improvised airfield possibilities of many high-wingers..]

I would not rely on any one plan to work if SHTF but for 1 of 3 contingency plans a small aircraft could be just the ticket. During a local disaster or to get to your well stocked retreat a C-172 or similar plane could save the day and be the best transportation option.

A 172 will land very short, a lot shorter than it can take off. In a worst case scenario for one trip to get to your retreat the pilot may not care if the plane ever takes off again. I have landed and taken off on thousands of beaches, roads, gravel bars, ridge tops and every other unimproved surface that you can think of. There are a few books, videos and specialized classes for bush flying that a pilot can learn from but it takes years to become proficient in off field bush flying. But even the average pilot has many options to land off airport. Just be honest with yourself and fly within your ability. The biggest hint I can give any pilot for off airport landings is check out the landing sites from the ground before attempting a landing. Fly over your retreat and look for possible landing sites, then land at the closest airport drive/walk to the prospective landing site, check the approach, escape routes etc. before you ever attempt to make a landing. If you are not 100% positive you can safely land do not attempt it and go find another spot. It would be better to walk an extra 10 miles to your retreat than be ½ mile from your retreat with a broken leg!

Auto Fuel in Aircraft
Auto fuel will work fine in any piston aircraft and most turbine powered aircraft for a limited time. Many Piston aircraft including 172s can legally use Auto fuel for private use. There are three issues with using auto fuel in piston aircraft.

First you need to make sure the auto fuel is clean and free from all water and particles. This is easy to do, just buy a MR Funnel (around $50) that has the micro screen filter in it and run the fuel throw it. If you have any concern let the fuel settle for ½ hour then run it through the filter a second time.

The second issue in using auto fuel is the engine life over the long term. Auto fuel will/may reduce the engine life of piston aircraft engines. How much will the life of the engine be reduced is hotly debated among experts. 0% -50% reduction in the life of the engine is the range the different experts claim. Piston aircraft engines are designed to go 1,400 to 2,000 hours between overhauls so even losing 50% of the engines remaining life should not affect a plane in a SHTF situation where you have to get out of Dodge.

The third issue is auto gas with ethanol is hard on aircraft hoses and gaskets and seals and will reduce the life of a bladder type fuel tanks. Again this is a long term affect and for a few flights and should not affect the safety of a flight. But if you let auto fuel with ethanol stay in the aircraft system it could cause big problems in certain aircraft.

To be legal the use of Auto Fuel in any aircraft the specific plane must have been approved for auto fuel and you must follow the STC. In a true emergency a few fights using clean auto fuel in a aircraft will have no affect. In many Third World countries that I have worked Avgas was not always available so we would occasionally be forced to run a tank or two of auto gas in our piston aircraft.. If you are using auto fuel in a plane that has 8.5-1 compression pistons keep the mixture a little rich and run the max power setting 5% below normal and you will be fine.

I operated DHC-2 Beavers and Piper PA-18 Super Cubs a on a steady diet of auto gas for years. The Piper Super Cub uses the same engine as most 172s. On one occasion I have even used auto fuel in a Twin Otter with PT-6 turbine engines.

Navigation
If the plan is to use a plane to get out of dodge the biggest problem pilots may face is navigation. These days most pilots rely on nav aids and never practice using only a chart (map), compass and stop watch. In the last 15 years I have not checked out one single commercial pilot or flight instructor that could use a map and compass well enough to pass my company’s standards.

If you plan to use a plane in a SHTF situation be prepared for all navigation aids including GPS to be off line. I suggest using a Map and compass and practice that a lot. In a SHTF situation if you count on nav aids you are very foolish. Most pilots that have learned to fly in the last 20 years are not able to navigate worth a hoot using only a Map and compass and are way too dependant on nav aids. I suggest anyone planning to use a plane in a SHTF situation pre fly the route as often as possible while times are good. Take a chart and highlight the whole route. Make notes as to what the actual compass heading is that you need to stay on course. Have a check point every 5 miles and learn to recognize them. Have the average time it takes between check points written on the chart. Fly this route at both altitude and low level as the check points will look totally different. Practice your route without nav aids so you get use to using the compass and stopwatch.

Avoiding Small Arms Fire
As for getting shot out of the air by small arms fire that is unlikely. The part of the world I now work our planes get shot at a lot by small arms fire. It is rare that a plane ever gets hit. If you are 5000’ above the ground small arms fire will not hit you. The danger is the climb out and the descent. A very steep spiral or figure 8 descent will drastically reduce your chances of getting hit. A power off setting during a descent is very quiet and will not attract attention from very far. It can be hard on the cylinders because of shock cooling but in a SHTF situation do you really care.

The most vulnerable time to get hit by small arms fire is takeoff and climb out. The trick here is to wait for a clear night and perfect VFR conditions. Take off early morning just before first light so you will be at altitude just as it is getting light. People with small arms cannot hit what they cannot see so if it is a SHTF situation remember to leave all the aircraft lights off.

Another technique that can be used is to stay as close to the ground as possible ([as little as] 25 feet AGL) [in flat country] for the flight. This limits exposure and does not give people on the ground much time to react, locate and fire at you. Using the low flying method you must never fly near the same route twice as the second time you fly that route people on the ground will recognize the sound know a plane is coming and will be ready. A second low level run is far more likely to get you shot. I do not recommend this for most pilots and do not attempt the low level flying unless you have been trained for low level operations.

James, Please Keep Up The Good Work! You are providing a fantastic service and giving a tremendous amount of good sound advice. – Old Dog