Jim’s Quote of the Day:

"Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap. For he that soweth to his flesh shall of the flesh reap corruption; but he that soweth to the Spirit shall of the Spirit reap life everlasting." – Galatians 6:7-8 (KJV)

Note from JWR:

Today we present a guest article from Mike “Mish” Shedlock, a registered investment advisor representative for SitkaPacific Capital Management. I highly value his investing analyses and his “big picture” view of the global economy.

Two Trillion Dollar Reduction In Credit Card Lines Coming Up, by Mish Shedlock

Credit is drying up everywhere. Banks are now concerned (finally), about rising credit card debt. They have every reason to be. The bankruptcy reform act of 2005, which encouraged such reckless lending is now blowing up in lenders’ faces.

Banks and credit card companies wrote that bill. They got everything they wanted. It goes to show you two things:

1.) Be careful of what you ask, you might get it.
2.) Greed kills.

Furthermore, I expect many of the debt slave provisions of the bill to be undone after Obama is elected. That will increase defaults. Even if an unwinding of that “reform” does not happen, the writing is on the wall for lenders for the simple reason “You cannot get blood out of a turnip”.

Regardless of what the law says, unemployed people are not going to be paying credit card bills. A second point is that someone unemployed, with no income, will meet the strict guidelines for wiping away all their debt.

I talked about this in Bankruptcy Reform Act Finally Blows Sky High.
Banks have finally beginning to get the bleak message that credit card defaults are going to soar. In response, Banks are Trimming Limits for Many on Credit Cards.

The easy money that led Americans to depend on credit cards to pay their bills is starting to dry up. After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

Washington Mutual (WM) cut back the total credit lines available to its cardholders by nearly 10 percent in the first quarter of the year, according to an analysis of bank regulatory data. HSBC Holdings, Target (TGT) and Wells Fargo (WFC) each trimmed their credit card lines by about 3 percent.

Among those four lenders, that amounts to a reduction of about $15 billion in three months. Over all, the amount of available credit for the industry appears to be about flat, with the three biggest issuers – Bank of America (BAC), JPMorgan Chase (JPM) and Citigroup (C) – slightly increasing their overall credit lines. But even they are trying to rein in risky individual accounts.

“This downturn is the perfect storm where the consumer is getting squeezed from all levels,” said Michael Taiano, a credit card industry analyst at Sandler O’Neill. He projects that credit card loss rates for lenders, now around 5.7 percent, could go as high as 10 percent in next 18 months. That would be higher than the peak levels reached after the 2001 technology bust.

Meredith Whitney, an Oppenheimer banking analyst, said the impact of the recent regulatory proposals on lender profits could be so severe that she expected the industry to pull back $2 trillion in outstanding credit lines by 2010. That would be a 45 percent reduction in credit currently available to consumers. Risky borrowers would be squeezed the most.


Direct Bottom Line Hit
Every default is a direct hit to the bottom line. And 10% chargeoffs would not be surprising in the least.

Furthermore, a reduction in credit lines by $2 trillion is not peanuts. Credit is contracting folks. Yes, this is deflation regardless of what energy and food prices are doing.


FDIC Bank Examiner Audits
From a source I consider reliable, I received this email the other day: A good friend of mine has a friend who is a Bank Examiner(BE) for the FDIC. The BE says the message he takes into every exam is “You must raise your loan loss reserves”. This is delivered directly to the Chairman, President and CFO of every bank visit, every time. No Exceptions!

I asked for clarification and was told no exceptions, literally means no exceptions. Note that an increase in loan loss provisions means capital will need to be raised or fewer loans will be issued, or both.

Zombification of Banks Accelerates
As I said in Regional Banks Spiral Towards Zero, I suspected Bank United (BKUNA) was raising money at $1.90 because it was told to. BKUNA was down another 11.58% on Friday, to $1.68. I do not see how it can survive even if it raises the $400 million it is seeking.

Much of the credit on the books of banks is worthless. It will be written off. There is nothing inflationary about this at all. The zombification of banks that I mentioned in Night of the Living Fed is now picking up steam. Consumers are being increasingly zombified as well. – Mike “Mish” Shedlock

Tomorrow’s Headlines? — A Nationwide Banking Panic

Since September of 2007, I’ve been warning SurvivalBlog readers about the potential for bank failures and bank runs in the US, spawned by the unfolding global credit collapse. I am now raising my warning to multiple red flags. There are certainly some ominous signs. These include: New banking scrutiny–especially for investment banks. Plunging bank reserves. A few more bank failures this year than in a typical year. A record increase in “bank owned” (foreclosed) houses. New FDIC rules on assessing risks at major banks.To be ready for bank runs, the FDIC has even re-hired some former employees from its division of resolutions and receiverships.

It is noteworthy that the US Federal Deposit Insurance Corporation (FDIC) will soon announce that it is raising the limit on individual depositor insurance from $100,000 to $250,000. Could it be that the FDIC executives are expecting more bank failures in the near future and they want to give everyone a warm fuzzy feeling–just to head off a potential banking panic?

A key indicator is the level of bank reserves. Many US banks are now technically insolvent. These banks are on life support, courtesy of your tax dollars. Since February of 2008, I’ve been warning you about the “Non-Borrowed Reserves” figure at the Federal Reserve web site. Bank reserves are plummeting deep into negative numbers. When you look at the US banking industry in aggregate numbers, there are effectively no genuine reserves left. If the average bank depositor was aware of this, then there would already be huge bank runs in progress. But the Generally Dumb Public (GDP), is still blissfully ignorant, and continues to be lulled into a sense of complacency by the long-standing universal depositor’s insurance backed by “the “full faith and credit” of the US government. Seeing the alarming negative numbers at the Fed’s web site puts me at a loss for words. I don’t know which metaphor to use: House of Cards? Ponzi Scheme? Collision Course? Whatever you choose to call it, be ready, folks! Again, I predict some widespread and very ugly bank failures and bank runs in the near future that will make last September’s Northern Rock Bank debacle in England seem small, by comparison. It may take six months or more all of the FDIC claims to be paid out. Since ATMs and online banking will likely be shut down and virtually all bank instruments (including debit cards) will be disallowed or at least widely distrusted you will need plenty of greenback cash on hand to see to through a banking crisis. Withdraw some cash now, while you still can.

Odds ‘n Sods:

Hawaiian K. mentioned a glow-in-the-dark paint product. This could have numerous uses at a retreat, such as painting firearms front sights. In my experience, luminescent paint is quite useful for painting light switch plate covers.

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There are now just 10 days left in BulletProofME.com’s special sale on Interceptor Body Armor and Kevlar helmets, just for SurvivalBlog readers.

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Chris Laird predicts economic and political trends by following precious metals market behavior. In Dangers – Danger period 2008 and 2009 posted at the Silver Bear Cafe. Laird writes: “…the US, the world’s biggest grain exporter, is seeing widespread damage to its grain crops. Without the US ability to continue huge grain exports into 2009, the world will face new grain export restrictions by many other grain exporters. This will lead to a real world food crisis into [20]09. There is no bigger factor that will lead to world destabilization than food shortages.” (A hat tip to Kevin A. for the link.)

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Several readers in the US wrote to mention that another bit of our privacy is at risk: Senate Housing Bill Requires eBay, Amazon, Google, and All Credit Card Companies to Report Transactions to the Government. If this bothers you, then please contact your congresscritters.

Jim’s Quote of the Day:

"A nation is the more prosperous today the less it has tried to put obstacles in the way of the spirit of free enterprise and private initiative. The people of the United States are more prosperous than the inhabitants of all other countries because their government embarked later than the governments in other parts of the world upon the policy of obstructing business." – Ludwig von Mises

Letter Re: Advice on Storing Sterno-Type Canned Fuel

Dear Jim,
Does Sterno style fuel have a shelf life? I have come across two cases (48 cans) of Don brand Heat Wick (WX-6) six hour fuel – the type used in catering. The price for the lot is $5. Seems like it’s too good to be true. Is it worth it? Are there special storage issues involved with this type of fuel?

Thanks for all the info you put on your site every day. I am using it to get my family ready! Thanks again, – Beth F.

JWR Replies:
That is a great price! The cans should last almost last indefinitely, if they are well-sealed. If the sealed cans emit no odor when purchased new, then odds are that they have intact seals and hence are not out-gassing any alcohol vapors. But if they do smell like Sterno, then you can bet that they have a limited shelf life. The best way to test for minor leakage is to take a random half-dozen can sample and leave them in a sealed Tupperware-type container for 48 hours. At the end of 48 hours, open the Tupperware and take a sniff. If there is no noticeable alcohol smell, then you’ll know that those cans have tight seals. OBTW, if there is an alcohol smell, all is not lost. You can then try dipping the tops of the cans in melted paraffin, to establish a secondary seal. (This is a method that was developed years ago, to extend the storage life of canned tobacco and some other goods stored in two-piece cans.) Following the paraffin dip procedure, you should repeat the 48 hour sniff test.

Letter Re: Stocking Up on Socks and Underwear

Jim
After stocking up on beans, bullets, and band aids, I recommend putting in a decent supply of socks and underwear for the whole family. One can get used to wearing old, worn out clothes in TEOTWAWKI, but socks and underwear can be like gold–to help one retain a bit of dignity and morale in a grim aftermath world. Ask any vet how important a pair of clean, fresh socks meant to them. – Ron in Upstate New York

JWR Replies: In addition to dignity and morale, they are also crucial hygiene items. Every family member should have a three week supply. You never know when circumstances might force a delay in doing laundry.

Watch diligently for seasonal sales advertised at discount stores. Also, for some reason tube socks are often sold at bargain prices at flea markets.

Letter Re: Salt Intake

JWR:

A friend and I went to a Civilian Marksmanship Program (CMP) match last weekend. It was a good clinic to learn how to hit a long distance static target. (Cough.) Say what you will about how useful that it, I think that learning many different techniques for doing a thing gives you a better understanding of the thing. In this case marksmanship.

On to the point. We both ended up drinking three liters of water over the course of the day. The next day I could barely balance, couldn’t eat, was mostly incoherent (felt stupid). I drank water for the entire morning and didn’t get better. I had a can of V8 (high sodium) [tomato juice cocktail] and was better within 20 minutes. Salt is your friend. – Ben M.

Odds ‘n Sods:

Some guys have all the luck! Commander Zero featured a link to blog by a gent who recently discovered a forgotten 60 foot long Nazi underground tunnel in his back yard. A brief video shows the excitement of the discovery.

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FerFAL (SurvivalBlog’s correspondent in Argentina) has posted some observations on a recent home invasion robbery incident in Martinez, Argentina.

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Frequent contributor Bill N. flagged an interesting article about growing your own fuel for a low speed diesel engine.

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Jack B. spotted this piece in The Financial Times: Security fears over food and fuel crisis. This will no doubt be a recurring theme in the next 10 years.

Jim’s Quote of the Day:

"God made Sun and Moon to distinguish seasons, and day, and night, and we cannot have the fruits of the earth but in their seasons: But God hath made no decree to distinguish the seasons of his mercies; In paradise, the fruits were ripe, the first minute, and in heaven it is alwaies Autumne, his mercies are ever in their maturity. We ask panem quotidianum, our daily bread, and God never sayes you should have come yesterday, he never sayes you must againe to morrow, but to day if you will heare his voice, to day he will heare you. If some King of the earth have so large an extent of Dominion, in North, and South, as that he hath Winter and Summer together in his Dominions, so large an extent East and West, as that he hath day and night together in his Dominions, much more hath God mercy and judgement together: He brought light out of darknesse, not out of a lesser light; he can bring thy Summer out of Winter, though thou have no Spring; though in the wayes of fortune, or understanding, or conscience, thou have been benighted till now, wintred and frozen, clouded and eclypsed, damped and benummed, smothered and stupefied till now, now God comes to thee, not as in the dawning of the day, not as in the bud of the spring, but as the Sun at noon to illustrate all shadowes, as the sheaves in harvest, to fill all penuries, all occasions invite his mercies, and all times are his seasons." – John Donne, circa 1615

Note from JWR:

The following is another article for Round 17 of the SurvivalBlog non-fiction writing contest. The writer of the best non-fiction article will win two valuable four day “gray” transferable Front Sight course certificates. (Worth up to $4,000!) Second prize is a copy of my “Rawles Gets You Ready” preparedness course, generously donated by Jake Stafford of Arbogast Publishing. Round 17 ends on July 31st, so get busy writing and e-mail us your entries. Remember that articles that relate practical “how to” skills for survival will have an advantage in the judging.

Ten Tips to Save Money on Ammunition, by Mr. Yankee

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As prices increase, many shooters are looking for ways to take the bite out of their shooting budget. Here are ten tips to help:
Take the bite out of your shooting budget:

If you are like most, you did not buy nearly enough ammo over the past few years. Most of us told ourselves that our budgets just couldn’t be stretched any farther. So our ammunition reserves either dwindled or stayed static despite knowing that prices were rising. Boy are we sorry now! Anyone who was not paying attention had a severe dose of sticker shock when hunting season arrived, and it is just getting worse. This is not an “I told you so” piece despite my advice to stock up on ammo in articles from late 2006 and early 2007. This is a warning about what is coming next and what you can do about it. It is too late to buy cheap ammo. You will never see brass cased, Boxer-primed 308 of good quality for under $200 per thousand again. You will never again see even steel cased 7.62×39 to feed your $99 SKS for $99 per thousand. You will never again see 9mm Luger (Parabellum) for $12 per 100. Not only has the price of factory loaded ammunition soared, the price of reloading components have begun to climb as well. What can you do? Here are 10 steps you can take to offset some of the financial bite in your shooting budget.

#1) Shop wisely – use the Internet and toll free phone numbers to research current prices and comparison shop. Information is power; use it to your advantage. Some sites raise prices more slowly than others. Some include shipping in their prices. Be sure that you are matching apples to apples when comparing prices and factor every penny including shipping and sales taxes when you are making mail order purchases.

#2) Watch for retail bargains at local stores. If your local gun shop or back country general store has an odd box of cartridges or shotgun shells with a five year old price sticker on it. Buy it. The price of ammo has literally doubled in the last five years. Even those last few dusty corners will be cleaned out soon. If you can take advantage of a ‘first in last out’ inventory system, do it before someone else does. Every once in awhile the larger stores like Dick’s and Wal-Mart will run ammunition sales with discounts on case quantities that still seem reasonable. If you see a good sale, stock up! [JWR Adds: Also look for ammo that might still be available pre-inflated prices at on table of private sellers at gun shows. When you do find a bargain, be sure to ask "Do you have any more of this elsewhere?" Look for ammo at garage sales, and estate sales. It might even be worthwhile to place a "want to buy" ad if there are free or low-cost classified ads in your area.]

#3) Roll your own. Reloading has long been a means of saving a few dollars as well as improving the quality of loads tweaked for your rifle. Despite the recent increase in the cost of reloading components, you will still pay less for ammo you load yourself than for off the shelf factory loaded ammunition. The price of reloading components and equipment have begun to climb as the cost for materials and interest in reloading have increased. The prices will climb higher. So now is the time to buy. If you shoot on a regular basis, your savings from reloaded ammo quickly offset the investment in reloading equipment. This is especially true if you pick up a used press. Classified ads and estate sales are the places for buying reloading equipment. A good quality press like the RCBS Rockchucker can frequently be found for less than 50% of the retail price for a new press and will have several decades of hard use left in it. I recommend that you start watching for used reloading gear.

#4) Buy used. Not only can firearms and reloading tools be found at bargain prices, many an old hunter was an avid reloader who left behind a bench full of components when he met the Lord. I’ll happily pay for partial boxes of projectiles, primers, or powder (in the original containers) and make use of those components building my own loads. If you happen to run across full or even partial boxes of factory loaded ammunition at gun shows, garage sales, or auctions you may be able to get it at a fraction of the retail cost as well. But use caution. Never, ever shoot reloaded ammunition of unknown quality. You are literally gambling your life if you shoot someone else’s reloads. There are very few people who I trust my life to. I am just not willing to pull a trigger on a cartridge that might be unsafely loaded.

#5) Stock up! It is too late to get the bargains that were available a few years ago. But it is not too late to stock up before further price increases, taxes, tariffs, and out right import bans. Despite the current market price: buy primers, projectiles, and powder while it is still legal and anonymous to do so. A day is coming when you will need a permit to buy powder. I think it will be within our lifetime. Buy 22 rim-fire cartridges. You can’t reload them, so stock up on them for you and for the next generation. It is prudent to stock up on anything that you use regularly, even without waiting for a sale discount. With inflation at over 10%, “investing” in assets like food and ammo has a better return than the stock market. Plan ahead. Don’t buy just for this weekend or this season. That is the thinking that got you wishing that you had more ammo on hand. Prices are going to continue to climb. Buying in bulk now will generate savings over the long term.

#6) Make your shots count. "Spray and pray" is neither tactically nor economically sound. Make your plinking sessions count. Aim every shot carefully. When testing new reloading recipes, test small batches for signs of pressure and accuracy. Try three or five round test batches instead of ten or twenty round batches. The same is true for sighting in a new scope or a new rifle. Check the target every second shot instead of after each full magazine.

#7) Retool. If your chief reason to plink is for backyard entertainment, consider swapping out of centerfire ammunition to 22 rimfire or even a low cost pellet rifle. Another option is the kits that convert your rifle or pistol to fire 22 cartridges. Shooting a more economical cartridge may pay for the cost of a [.22 LR] conversion kit or a new 22 rifle in as little as a single weekend’s shooting. By way of example, if you shoot 500 cartridges of 22 long rifle (at three cents each) over the course of a weekend instead of 500 cartridges of 308 (at 53 cents each). You save a whopping $250! Just let that sink in for a moment. Plinking with a 22 instead of a 308 saves two hundred fifty dollars every 500 trigger pulls. Wow! That adds up fast and the savings won’t stop with the first $250. It will continue for every similar shooting session you have in the future.

#8) Make use of your skills. Let your investment in shooting sports generate savings in other budgets. Put meat on the table. Moose, elk, mule deer, white tail, pronghorn, turkey, geese, hares, rabbits, pheasant, duck, partridge, squirrel – all are tasty and every bite on your plate saves money out of your grocery budget – especially if you learn to dress and butcher the game yourself. Besides the financial savings, you’ll have a sense of pride like little else when you know that the freezer is full and you have all the jerky you can eat because your hunts have been successful.

#9) Waste not. With scrap metal selling at or near the all time high, don’t waste the byproducts of your range time. Even if you do not reload your cartridge cases or shell hulls, someone else might be willing to pay for the chance to reload them or as salvage. Keep this in mind when you shoot Berdan primed brass. I have been unable to locate a current US retailer of Berdan primers, but that may change in the future. Even steel and aluminum cartridge cases have value as scrap and of course the lead itself can be reclaimed to smelt and mold into new musket balls, bullets, and shot, as well as being sold as scrap metal. It may seem like more work than it is worth, but remember that the prices are climbing and the sand bank behind your favorite target may already hold several hundred pounds of lead.

#10) Fight back. Be vigilant. Be proactive. Vote against new tariffs, taxes, and bans. Vote against candidates who restrict your freedoms, raise license fees, and create access permits or talk about doing so in the future. Encourage and educate not only your friends, co-workers, and neighbors, but also the next generation so that they will do the same. We may not be able to stop the global forces aligned against our shooting sports but if we work together, we might just slow them down long enough to preserve the sport and keep it affordable for one more generation. – Mr. Yankee

Letter Re: Advice on a Mini Photovoltaic Battery Charging System

Hi Mr. Rawles,
I had a question about the article titled Letter Re: For Want of a Battery. In it you said to connect the Northern Tool & Equipment Solar-Powered Trickle Charger — 5 Watt Item # 339973, with this battery pack . How does the panel connect to the battery pack? And does your recommended Accupower AccuManager 20 Battery Charger (a battery charger for AA, AAA, C, D, and 9 volt rechargeable batteries connect to the 12 volt battery pack via the cigarette lighter plug? Also, could you please tell me how many AA batteries you could charge from one 12 volt battery pack. Thanks for your time and your blog. Signed, – LZ

JWR Replies: Unless it already has one installed, you would have to wire a cigarette lighter-type plug on to the lead wires from the photovoltaic panel. Those are available for any electronics supply store such as Radio Shack. Typically with DC wiring the red or white wire is positive, and that would go to the “tip” terminal on the lighter plug. (Note: Be sure double check the polarity with a volt-ohm meter before plugging it in!) One nice thing about jump packs is that they have a built-in charge controller. If you upgrade to larger capacity storage–such as a standard car battery or better yet a pair of golf cart batteries–either add a charge controller to the circuit or be very careful about checking voltage regularly during charging so that you don’t “cook” your battery.

I own an AccuManager 20 Battery Charger. They were designed by a company in Germany, but I was sad to see that they are now made in mainland China. However, they do work well. They are a “smart” charger– so they will not over-charge your batteries. They come with both a 12 VDC cord (with cigarette lighter plug) and a 120 VAC adapter. The charger has six “channels”, so it can simultaneously hold four AAA, AA, C, D cells, and two 9 VDC batteries.

You can recharge at least 20 AA cells from a jump pack that is fully charged. With a five watt photovoltaic panel it might take two or three days to charge your jump pack. A 10 watt panel (or two 5 watt panels wired parallel) works much better, and a 20 watt panel works even better still. Your ability to “make do” with a smaller panel depends on your budget, how many batteries you need to keep charged, and your time available to re-position the panel to keep it in full sunlight throughout the day.