Note from JWR:

We blew past 600 gigabytes in web traffic in December. Since we are only contracted for 450 gigabytes, we just had to negotiate a special flat rate with our ISP for one terabyte of monthly traffic on our web site. There is now so much SurvivalBlog traffic–around 124,000 unique visits per week–that late in 2008 our ISP had to set up a dedicated server for us. Thanks, everyone, for making SurvivalBlog such a huge success!

Letter Re: Observations on Preparedness from a Gulf Coast Hurricane Veteran

Mr. Rawles,
I just wanted to let you know how much I have enjoyed your site. I had no idea that there were whole survivalist communities out there until I stumbled on a link by accident. In fact, I didn’t really know that I fit into that category myself. My wife and I live on the Gulf Coast and we discovered the hard way during Hurricane Rita that a bag of trail mix and a bottle of water, was not preparing to evacuate. Eighteen hours in traffic in a hundred and fifty mile traffic jam taught us to find the roads that are not on a US map. After that we planned, made maps of blacktop roads for evacuation, and stocked a retreat a couple of hundred miles from the coast and cities.

Two years later here came Hurricane Ike. Since we had our gear pretty much laid out it only took us about an hour to load and we were gone. It was a vacation compared to the first time. After the storm blew threw we used some of the gas we had stashed and wanted to look at the house and see if there was anything left to come back to. The trip was eye opening. There were people sitting in gas lines that stretched for more than a mile for five gallons of fuel. Some people where sitting at stations that didn’t even have gas because they just couldn’t go any farther. There was no food or water to be found. I thought to myself what if the trucks didn’t come back or the electricity didn’t come back on for an extended time frame.

People can speculate if there is going to be nuclear war, Peak Oil or the economy is going to complete collapse. People have been saying “The End is Near” for a few thousand years, but this was real, we saw it, and we were in it. We made our trip. The house was damaged but still there. We checked to make sure everything was secure and left back for our retreat. We stayed for about two weeks in semi-comfortable conditions. We are not where we want to be as far as being stocked up for an extended time frame but we are getting there. By the time next storm season comes we should have supplies for about two months and we are installing solar power to augment our generator and propane systems. That is a pretty short time for some of your readers but considering the rest of the people I have seen, this is living like a king. After that it’s a squirrel on a stick. – Randall

Letter Re: Field Test with a MURS Band Dakota Alert Intrusion Detection System

James;
I just recently purchased a MURS band Dakota Alert and Radio setup from [MURS Radio] that advertises on your site. Needless to say I got a screaming deal! I live in the Pacific Northwest, literally in the middle of dense woods. My radios and sensors arrived during one of the best snowfalls we have had in a while. All of the trees were loaded [with snow]. The temperature was in the very low 20s. Our terrain is mountainous.

Here are my results (which may be helpful to your readers who may be thinking about purchasing them):

[Dakota Alert MAT] Sensors: Solid transmission to Base station (located in a metal building) at 3/4 mile. Longer range not tested (It was cold, and I did not require longer range.)
Hand held transceivers [handi-talkies (HTs), [also made by Dakota Alert] to and from base station, solid to 1/2 mile, sketchy at 3/4 mile.
Sensors to HT solid transmission to 1/2 mile sketchy at 3/4 mile.
HT to HT solid at 1/2 mile sketchy at 3/4 mile.

Problems:
The sensor does not have enough transmission time to finish the third [repetition of the] “Alert Zone 2” message due to [an error in] the speed of the person recording the message. I contacted the manufacturer about it, and they said that all their current units are all this way. No one wants to be #2. (All other alert messages are fine) This is not a problem, but one does have to chuckle.
A cold vehicle (just started) dose not always activate the sensors. This is not a tactical problem but is an annoyance.

Suggestions:
BNC connectors and pull up antennas are leaky. In addition to the manufactures suggestion to add a packet of desiccant inside the sensors, I highly suggest wrapping the BNC connection and each segment joint of the antenna with COAX-SEAL.(A hand moldable plastic.) This will insure total water proofing of the unit. I plan on disguising my [chromed, collapsible] antennas by covering them with gray heat shrink [tubing] and a little magic marker action, then sealing the BNC with coax seal.

Since I live off the grid It makes no sense to run the base station (which is 12 Volt DC) off my inverter. I wired it up to my 12V distribution network that I use for all my comm devices Ham, CB, etc. Just to play it safe I contacted the manufacturer about the maximum voltage the unit could handle as I charge my batteries at 14.4V. They recommended some sort of voltage regulation device. You could “fab“one up or as they suggested, use a [voltage] regulating cigarette lighter plug. They said the unit would function at the higher voltage but it would be hard on it, and reduce it’s life expectancy.

The only drawback is that there are only four alert messages, limiting the number of sensors you can use at one time. If you need more than four sensors you will need a second receiver. I plan on calling the manufacturer and suggesting a “record your own message” modification. I am totally pleased with these units. Thanks for listing them. – John

JWR Replies: Thanks for the review. Here at the Rawles Ranch, we also use MURS band Dakota Alert transmitters in conjunction with some gently-used Kenwood transceivers. We bought all of these components from MURS Radio. Programming the transmitters to match our MURS frequency was quick and easy. We have been very pleased with their sensitivity and reliability. These are great products that provide a low-cost solution for detecting anyone entering our property.

Letter Re: Precipitation and Growing Season as Retreat Locale Criteria

Sir,
Regarding your Retreat Areas recommendations: I grew up on a small multi-crop and livestock farm in north western Iowa, with 24 inches of precipitation and 180 frost free days.
I have been living in California Eastern Sierra since 1982 , but soon will be leaving.

I respectfully submit that your assessment of the agricultural capability of many of the low precipitation/low humidity areas of the western US is vastly overestimated. Western states such as Nevada, Utah, Arizona, and New Mexico are not farmable by amateurs using conventional means available during any TEOTWAWKI scenario. Obtaining water rights and controlling large scale irrigation is not some thing you can learn after a crash. Northeastern Oregon, Southeastern Washington, and the Snake River plain of Idaho are exceptions.

Your frost free growing season data [at state level over-generalizes] for many states. For example, eastern Oklahoma has 200 – 220 [frost-free] days.

For the vast majority of readers, Interstate 90 should be their northern limit if they wish to grow any more than a small garden and areas south of Interstate 80 would be preferred.
If you plan to grow enough row crops to feed yourself, or if you want to trade with the local farmers, you will need an absolute minimum of 18 inches [of] precipitation (preferably during mid spring and summer) and 140 frost free days.

JWR Replies: I have always recommended that readers do detailed study of micro-climates before relocation. Start with the Gale Publishing Company book “The Climates of the States” (in the reference section of many libraries), and then do detailed climate and soil studies using data from the NWS, NRCS, and various online resources.

My general guidance is to avoid areas that require irrigation, with the exception of the very few locales that have an end-to-end gravity fed irrigation infrastructure in place. As I’ve mentioned many times, if and when the power grids go down, many parts of the western US will quickly revert to desert. Hence, my preference is for “reliable rain” or “dryland farming” regions–that is, areas where crops can be reliably grown with regular spring and summer rains. But here is the rub: Many of those regions are heavily populated and might might not be safe in the event of a major societal disruption. So your choices will be narrowed to “”a subset of a subset”, if you are looking for an ideal retreat local. There are just a handful of places that I consider ideal lightly-populated locales for retreat self sufficiency. Two notable ones are the Palouse Hills region (straddling the border of eastern Washington and north-central Idaho), and the Montpelier, Idaho region. So, taken together with other important criteria like crime, taxes, gun laws, and so forth, it is no wonder that Idaho is at the very top of my list for retreat locales.

With the exception of the immediate riparian tracts, I do not recommend Idaho’s Snake River Plain, because the majority of the region depends on electrically-pumped irrigation water, much of it from deep wells. When the grid goes down, that area will revert to sagebrush. That, by the way is a clue to remember: When you are traveling in search of potential retreat properties, observe the native vegetation on the non-irrigated hillsides. What you see is what you’ll get, when the grid goes down. Again, in much of the West, the only exceptions will the few and far-between places with end-to-end gravity fed irrigation. And BTW, if you plan to live “in town” the same logic applies to municipal water supplies. Very few of these are gravity fed from end-to-end. (Ironically, the City and County of San Francisco is one such locale. (Its water comes from the Hetch Hetchy reservoir, high in the Sierra Nevada mountains. But given its population density, San Francisco can hardly be recommended!)

Odds ‘n Sods:

Susan Z. sent us this bad omen: [Former Bank of England official] Willem Buiter Warns of Massive Dollar Collapse

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Reader Debby S. flagged this: Terrorists could use ‘insect-based’ biological weapon

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“Shades of Minority Report…“, writes “Mike Papa”, an ex-pat living in Jordan, regarding this article: Police set to step up hacking of home PCs. Mike’s comment: “So now the United Kingdom is authorizing warrantless preemptive invasion of home computers by police if “a senior officer says he “believes” that it is “proportionate” and necessary to prevent or detect serious crime.” Scary stuff, likely coming soon to a country near you (Here in Jordan, I’m not sure it doesn’t happen already. I’ve been told by several to assume that all e-mail, phone calls, Internet usage, etc. is routinely monitored.)”

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How did I miss finding this great blog for so long? Check out Tamara’s View From the Porch blog. I just added it to my Blogroll.

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Luddite Jean in England sent these two news links:: 200 shops a Day to close this year in high street bloodbath, and Cold war! 12 freezing European countries without gas as Russia switches off supply (Jean added this explanatory comment: “Russia has long accused the Ukraine of stealing [natural] gas from the pipeline, and are using this as an excuse. The real reason is purely economic – the price of Urals Crude oil has fallen to $32, and Russia no longer has enough money to run the economy. They are holding Europe to ransom, and demanding higher prices for the gas.”) And here is the latest from Cheryl: US Stocks Drop Erasing Most of ’09 Gains — Alcoa to Slash 13,500 Jobs, Reduce Aluminum Output — India: Trucks Go Off Roads Over Fuel Prices, Food Shortages Feared — Don’t Get Used to Cheap Oil, Analysts Say — Fed: Economic Woes Will Last Despite Radical Moves — Chrysler Sales Plummet 53% — Subaru Posts 2008 Increase in US — Private Sector Cut 693,000 Jobs in December

Jim’s Quote of the Day:

"With the exception only of the period during which the gold standard was in effect, virtually all governments throughout history have used their exclusive power to issue money, as a method to defraud and plunder the people." – Friedrich von Hayek

Note from JWR:

The sale goes on! More than 700 SurvivalBlog readers have bought Foodsaver vacuum packing/sealing systems at the special $59.99 sale price. I had thought that the sale would end on December 31st but the manufacturer is still honoring the sale price while supplies last. (The promotion program manager mentioned that it would be less than two weeks.) We get a little “piece of the action” for each order. So this a is a great way to save money and to support SurvivalBlog in the new year. Don’t miss out on this sale! You can buy a FoodSaver v2830 for $59.99 (originally $169.99) with free Standard Shipping for orders over $100, directly FoodSaver.com.Use code L8FAV28 at checkout. Note that the special price will not show up until the last step of the checkout process.

By buying foods in bulk and re-packaging them in more handy (single meal size) vacuum bags, you can save a lot of money on your grocery bill. You can also vacuum pack Mason jars! (These come with a wide mouth Mason jar adapter as an included accessory.) But be sure to get an additional regular mouth Mason jar adapter, for an extra $8.99.) Buy a FoodSaver. You’ll be glad that you did!

Letter Re: Advice on Grungy Military Surplus Magazines

I took your advice and ordered some FN-FAL magazines from What-A-Country, and they were promptly delivered. However, I was surprised to find that the military surplus magazines were quite dirty with what appeared to be black sand, and slightly oily. Is that common for used magazines? As a first time battle rifle owner making my first military surplus purchase. I don’t know if this is common practice or not. If it is, what is the best way to properly clean the magazines so they can be used? Any advice or a link to a web site with additional information would be appreciated. – SteelerFan

JWR Replies: That isn’t very unusual. When buying military surplus, I’d much rather get oily or greasy mags, because that indicates that an effort was made to protect from rust in all those years of storage.What-A-Country imports most of their magazines from Israel. And the Israel Defense Forces (IDF) has almost always done a good job with storing weapons and accessories. (For example, I’ve seen Lee-Enfield rifles that had been in storage in an Israeli warehouse for 50 years that still looked arsenal-new, once the grease was removed.)

I once bought a large batch of Thompson SMG magazines that were practically pumped full of grease. Yeech! It took a lot of time to degrease those.

OBTW, if the magazines that you bought are grungy inside, it doesn’t take long to disassemble them. If there is a lot of grease, you’ll need to use a solvent (such as Birchwood Casey Gun Scrubber), otherwise just wiping them down with paper towels will usually suffice. But again, be sure to examine their interiors. (Needless to say, the usual safety provisos on avoiding skin contact and inhaling vapors of Tri-Chlor-based solvents apply!) One you’ve cleaned the magazines inside and out, wipe them down with a light coat of oil, or perhaps a heavy coat if you live in a region with high humidity. and for long-term storage in a damp climate, RIG is ideal. (But then, of course someday you’ll be back to square one–removing grease, before use.)

Letter Re: Bulk Diesel Fuel Antibacterial and Stabilizer

Hi
As to diesel fuel treatment, it is a investment that will involve the operation and reliability of your backup power engines and vehicles. The fuel is expensive so don’t cheap out on the fuel treatment. You need to have a diesel fuel maintenance program in place,
1. Treat the fuel with the proper required [stabilizing and antibacterial] chemicals.
2. Clean and polish the fuel once a year, pump the water & sludge out of the bottom of the tank. A clogged fuel filter is a serious problem.
A cheap cleaning rig can be home made, [consisting of] two filters a 20 micron and a 4 micron bought off eBay and a pump and some gauges. This can be offered to another family for a rental fee.
3. Send out a fuel sample to a lab for testing every year or two. Order a test kit online.

I worked for a telephone company doing backup power systems nationwide for years. Caterpillar provide me with a company that provides good products. I would not go dumping anything into my generators I was not sure of or was not approved by the manufacturer- TEN-32 is the product I used. Check out their web site and e-mail them questions.

You have a great blog, I try to support the advertisers, too. Thanks, Ed S.

Letter Re: Learning Old-Fashioned Trades and Skills

Jim
Concerning the article that Lisa sent: “Blacksmith-collector of forgotten trades”: Many survival minded folks consider learning a basic trade to help them through TEOTWAWKI. Most commonly they think farmer, gardener, blacksmith, bullet reloading. But there are many other basic skills and trades that will be highly prized and needed if the electricity goes off.

Tinsmithing, broom and basket making, wheel and barrel making, pewter casting, weaving and spinning, candle and soap making, harness, horse collar, boot and shoe making, hide tanning, etc., will all be needed. Many of those trades need specialized tools, equipment and knowledge. Most 19th Century and non-electric shops have long since been broken up and auctioned. But, the tools still exist. You can find them in antique shops, sometimes put away in the corner of a barn or someone’s basement, or even on the wall of a restaurant. You can also find many tools on CraigsList.org and eBay. It is much the same for books. They are out there on any subject you can think of, but it’s the locating them that’s the trick.

Right now we have the luxury of going online. By doing a used book search on Barnes & Noble web site, you can purchase a used book from any listed book store in the country. Other book retailers often offer the same service,–check and see. Right now we also have the luxury of going to flea markets, online, and to antique shops to find the needed specialized equipment. Right now we also have the time to acquire examples of the “art” of various trades. In the future it will be much easier to make a tin funnel, buggy wheel, or wood barrel if we have on hand an old one that we can copy.

But we may not have much more time to find the tools and knowledge we need to be really self-sufficient and/or provide us with a needed trade good if times get really interesting. It takes quite a bit of searching to find all the specialized items we may need. My suggestion is to get to it. Even if you don’t have the desire or interest to become a horse collar maker, someone in your future community will. It will be good to have what is needed, to make it possible. – Jim Fry, Museum of Western Reserve Farms & Equipment

Letter Re: Home Invasion Robbery Countermeasures–Your Mindset and Architecture

Jim,
After reading the recent letters about home invasion robberies, I’ve gotten a little paranoid about the idea of someone kicking in my front door in the middle of the night. It would be incredibly easy to do and it’s unlikely I could retrieve a firearm quickly enough to defend (I have a toddler so all guns are locked up except a pistol, which my wife doesn’t know is in Condition 3 in a drawer too tall for my daughter to reach).

The Strikemaster II is out of budget (I need three of them) so I looked into having similar strikeplates fabricated. As it turns out, I can have them made for about $30 each by a local guy who has a plasma cutter. This is an option for those in a similar situation.

On a related note, on a whim I purchased a lock pick kit at a recent gun show. With just several minutes of practice I am now able to pick the deadbolts on my house in less than 10 seconds each. So my locks have got to go. Any standard lock that you purchase at Home Depot or Lowe’s can be picked or bumped in seconds. Neither of those stores carry locks that provide high security, all on-package claims aside. The only locks that even approach being secure (enough for residential use) are those that meet or exceed ANSI 156.x standards, and even this level only provides that the lock can’t be picked in less than 15 minutes. A good article on the subject can be found here and here.

I have glass adjacent to two of my doors. Rather than putting a double-cylinder deadbolt in, which would be unsafe during a house fire, I’m replacing my deadbolts with a high-security cylinder on the outside and a keypad-equipped cylinder on the inside. The keypads cost about $100 and are backlit. As an extra safety measure, I’m hanging keys inside each door – but not close enough to see or reach through a broken window.

With all the glass on modern houses, it would be impossible to stop a determined burglar unless someone is home. My objective is to buy the extra time I’d need to respond to someone breaking in. For burglary protection for valuables, I’m relying on a security system and a large gun safe bolted to the floor with four 4-1/2″ anchors. Best, – Matt R.

Odds ‘n Sods:

Reader J.L. sent this piece describing the impact of a new Federal regulation: “New safety rules for children’s clothes have stores in a fit”. J.L’s comment: The thing that galls me, is that the thrift/resale arena is one of the few bright spots in the economy, and they are some of the few places people can go and get low priced clothes to help them get through this recession.”

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Frequent content contributor Bill N. found a web site with a useful comparison of civilian MRE equivalents.

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Reader Paul B in Texas found this 60 Minutes television segment linked over at iTulip: The Next Wave of Mortgage Defaults. Paul’s comment: “This indicates the real estate market still has four to five years to continue its downward fall. Things are getting worse, not bottoming out!” JWR’s comment: The scary thing is that the Alt-A and Option ARM defaults that they mentioned are just a small fraction of the threat posed by the huge overhang of Credit Default Swap (CDS) derivatives. Beware!

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My old college friend Mike (now back in Iraq for the third time) sent me this article: U.S. Facing Debt Time Bomb. One oddity: This January 3rd piece appears to have been partially spiked. It can no longer be found with a search at The Washington Post web site, nor at the MSNBC site. Where (Mike found it, on January 4th.) I suppose that some editors would prefer to see such sans culottes articles go away quickly. So it took me some searching to find the full text. Luckily, it had been re-posted by several discussion forums.

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And here is the latest batch of news and commentary from The Economatrix: Obama Plunges Into Pre-Inaugural Talks — US Millionaires Lose 30% of their Wealth — McMansion Trend in Real Estate Slows as Economy Slumps — Billionaire Kills Himself Over Financial Crisis — Obama Says US Economy is “Very Sick” — Crunch Puts Car Buyers in Negative Equity Loans — Beware, Commodity Index Rebalancing Ahead — Looming Collapse of Russia and China (Marty Weiss) — Empty Offices are on the Rise — Barron’s: Get Out Now

Jim’s Quote of the Day:

“The typical individual is addicted to low quality leisure. He watches prime time television. He reads very little. He does not subscribe to economic newsletters or spend much time on financial web sites. He does not think about the distant future, which he defines as anything beyond this month’s paycheck.” – Dr. Gary North

Notes from JWR:

The high bid in the SurvivalBlog Benefit Auction is now at $1,000. The auction is for a large mixed lot that includes:

1.) A large “be ready to barter” box of full-capacity gun magazines, from the JASBORR. This box includes: 12 – Used original Bundeswehr contract HK91 (G3) steel 20 round magazines, 6 – Used original FN of Belgium-made FN-FAL alloy 20 round magazines, 6 – Used AR-15/M16 USGI (a mix of Simmonds & Colt made) alloy 20 round magazines, and 2 – New and very scarce original FN (Belgian-made) US M1/M2 Carbine blued steel 30 round magazines (marked “AYP”) . All of these magazines are of pre-1994 manufacture (and hence legal to possess in New York.) These magazines have a combined value of approximately $450. 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.

2. ) A brand new in box Big Berky Water Filter, with your choice of either four white ceramic filter elements or four black filter elements. This is a $329 retail value, courtesy of Ready Made Resources.

3.) A huge lot of DVDs, CD-ROMs and hard copy nuclear survival/self-sufficiency references (a $300+ value) donated by Richard Fleetwood of www.SurvivalCD.com

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

5.) A desert tan SOG Trident folding knife, courtesy of Safecastle. (a $92.99 retail value.)

6.) A case of 12 recent production full mil-spec MRE rations (identical to the current military contract MREs, but without the civilian sale restriction markings). This is a $90 retail value, courtesy of CampingSurvival.com.

Thus, the combined retail value of this combined lot is at least $1,275. This auction ends on January 15th. Please e-mail us your bid for the entire mixed lot.

—

Today we present a guest editorial from Roger Wiegand. He is the Editor and Publisher of Trader Tracks Newsletter. Roger is co-editor of WeBeatTheStreet.com and he writes a weekly column, “Rog’s Corner,” For J Taylor’s Gold and Technology Stocks Newsletter. He has had an interest in precious metals and futures since the commodity rallies of the late 1970s and early 1980s. Roger is a voracious reader, reviewing several domestic and foreign newspapers and wire services daily for economic, political, and monetary news. His commentary is frequently featured at KITCO.com.

Our 2009 Predictions, by Roger Wiegand

We think we now have enough data from both the fundamentals and technicals to make some serious forecasts and predictions for 2009. While 2008 was a nasty year when lots of things imploded, they are far from being repaired. Treasury Secretary Paulson told us this week there are no more surprises, which tells me we haven’t even discovered but a small portion of this monster derivative mess. His ripping-off of the taxpayers to the tune of $700 billion is only a warm-up. However, the larger question for traders and investors is what could happen next and when.
In the following report we take the key global economic points and suggest the outcome for 2009.

The most important news for 2008 was the destruction of the big global banks’ net worth and their badly wounded ability to conduct normal business and make market-moving loans. Ben & Hank’s bailout only helped the bad-boy banks reliquify themselves to remain somewhat solvent and stay in business. They are doing nothing to extend credit to any business enhancing western or global economies. The 2009 result will be no significant banker lending, taking more bailout money and sweeping additional bad loans of all stripes under the banker’s rug and hiding the rest in back rooms.

The largest surprise in our view was the massive disaster at insurance giant AIG. Despite numerous injections of bailout billions, AIG remains in very serious trouble hanging on by their proverbial fingernails. The 2009 result will be a surprise crash and failure of AIG frightening the world at large causing ripples of failures throughout western and Asian nations unable to conduct business without mandatory insurance policies. Most folks have no comprehension as to the monster fallout this will create. It is in our view literally immeasurable, and this is why Paulson handed them so much money.
Our new president is determined to hand out $860 Billion to One Trillion dollars in a Herculean effort to literally buy a new economic recovery. While some of his ideas are noble indeed the overall plan
will have little effect and Great Depression II shall take hold in 2009 with crashing stock markets in May and September-October 2009. We think the worst of the worst hits in later September 2009.

During the spring of next year we see:
(1) A second larger wave of residential housing mortgage failures; (2) The first big wave of auto loan failures and repossessions; (3) Over $40 billion in credit card defaults, smashing the bank lenders; (4) The first wave of commercial mortgage failures and foreclosures on shopping malls, office buildings and other commercials; (5) And finally, the grand smashing finale of Credit Default Swaps (CDS) originated with no margin money or down payments! We heard today the total is $500 trillion! I cannot even fathom that number. These five converging train wrecks could take the Dow from a dead cat bounce of 10400-10800 back to 7250, or even 6600, or 5600.

Shares traders and investors have one more solid quarter, in our view to regain some stock market losses on the forthcoming Obama Trillion Dollar handouts. We think the rising share markets will help most all sectors gain some recovery and provide the illusion the bottoms are in and new bases found. The stark reality hits home after shares peak in April or early May taking an unprecedented selling high dive scaring the wits out of Americans and the watching world.

Even with these events and rising unemployment and social problems, economic observers and analysts could continue to plead the worst is over, the bottoms are in and a fine, new, shiny world of trading and investing in our bright economy lies just ahead for the fall of 2009. Then, in later September and early October, the New York, London, Tokyo and Asian markets take a monster crash. How low is low and how bad can it get? We think the Dow could end-up on November 1st, 2009 anywhere from 5,600 to a low of 3,000 or even 1,500. One guideline will be a falling overshoot of PE’s on our largest, so-called international corporations posting lows of 4 to7. Today, many of them are near 18. What does this tell us about the severity of our projections?
Unemployment nationally in the USA is now touching 16%. The officially posted number is somewhere near half of that. By the fall of 2009, American REAL UNEMPLOYMENT WILL BE NEAR THE ALLTIME 1930’S DEPRESSION HIGH OF 25% UNEMPLOYED. SADLY, THAT IS NOT THE WORST AS IT GETS MORE DIRE. WE PREDICT REAL, USA UNEMPLOYMENT REACHES 30-40%. IN THE RUST BELT STATES OF MICHIGAN AND OHIO, WHILE 40% IS NOT UNREALISTIC.

Several European nations have larger, more established social safety nets for the unemployed. In the USA, local, regional and national authorities are not nearly as prepared. The American federal government departments for food stamps and the job of providing welfare provisions will be overwhelmed. This will be a Katrina event for the hungry citizens of the United States. Urban areas will see skyrocketing crime and in parts of some cities, life could become totally uninhabitable.

The last report we’ve seen on those receiving food handouts and related welfare amounted to 11 million USA citizens with 700,000 children going hungry each day. We suspect the true amount of those needing food help will rise to 35,000,000 with an untold tragic number of them being little, defenseless children. Governments remain in denial and are not prepared for this national emergency whatsoever. As things worsen, food riots and others with violence aimed at the “haves’ are common.

The number of bank failures over the next three years will be in the thousands. In addition, the US Dollar’s valuation could break recent lows near 70.00 on the index, dropping to 46.00 by 2011 or 2012.
Inflation or potentially hyperinflation is quite real as the Federal Reserve and US Treasury strain to print and circulate cash to prod our stalled economy. It is simply not working even with the dramatically lower interest rates of late. Benny Bernanke is out of rate cut running room.

Consumers are broke and going broker. Households of interrelated families are doubling and tripling up even with several employed members being under one roof. Basic costs of rent, mortgage payments, health care, food, utilities and taxes are too much to bear on stagnant and in some cases falling wages. In some areas of America, there are entire subdivisions of homes totally abandoned or existing with only a hand full of occupants. The millions thrown at lenders for new mortgages are not getting through to buyers, as there are fewer of them. We are witnessing system breakdown.

Municipalities and states are sinking into a spending, debt-ridden morass. It was reported today that 22 of 50 USA states are in serious budgetary trouble. California is one of those in terrible condition and Michigan is already technically broke as are many of her cities. Detroit will file bankruptcy in 2009 and there will many other surprises as well. There will be a cascade of bond defaults and the outcome will cap the ability of these cities, states and counties to borrow ever more.

The shining light through all of this is the faster we find the bottom the faster we can recover. Sadly, the recovery process will take years. Futures and commodities traders should continue to earn steady profits as the stock markets slide into oblivion for years. We see no recovery until 2015.

Roger Wiegand
Editor, Trader Tracks Newsletter & The Rog Blog at WeBeatTheStreet.com