patrick.net

"It's good to be able to do that, I think. And most people can't or don't."

I think that most people CAN in some fasion or another. They just won't. Sometimes, the most noble of actions carries too great a cost. You have to be selfless and willing to stand alone. Very rare in a society of sheeple.

Selfless. Interesting. Have to consider that.

I had perceived the problem as one of being so out of the self, so much a part of the herd, so expecting that someone else would handle the problem, that the self is...not online.

it is arguable that a well-armed citizenry is a boon to troubled times.

When I was in Thedford, England, I had my house ransacked when I was away unexpectedly for just one night. In fact, all my English relatives were victims of burglery, along with so many other English and Americans living in England that I knew. These were not low end areas. Most were above average suburban or country homes.

I have never had a my home burgled in America, nor know anyone in America who has. I own no guns, but I suspect that home invasions are rare because of fellows like DennisN. A crook does not know who has a gun, and will not take a chance on meeting a DennisN. In that way, a law abiding gun owner benefits all households. This does not apply in places like DC, where an armed crook knows any homeowner he meets will be unarmed.

Without going too far down the Doom and Gloom path, lets take a small swipe at why you care:

1. A well diversified portfolio does not mean much, if anything. How many Carlyles do we/ did we have? If a big part of sock buying came from higly leveredged buyers that are being forced to unwnd their positions you are talking, not about a contraction here coupled to a buldge there, you are talking about a total net loss in the market. I seem to recall a Chicago ecnomist getting a nobel prize for showing how we are all wealthier when we find a way to 'expand the pie' - which is why we moved away from the notion of econmics as a zero sum game. However, the converse is cerainly true. We ALL lose money when the pie shirnks. Care? You better. You may be able to recover, but how about the large and growing segment of the population that cannot make up its losses. Its funny to think of social upheaval from the gray-haired crowd. But believe it.

2. When the Fed not only acts as the lender of last resort, but does so now routinely with 75 banks you are not spooked? Even the Fed and the US cannot handle the losses that are quite possible (in excess of 4 trillion)

Remember, we only have to go back to the Nixon years to see our last attempt at imposing federaly mandated price. We 'may' try something like that again, who knows? Wasn;t Rumsfield on that team of figuringout what everything ought to cost?

My more probable scenario isfunding massive Federal jobs programs through massive tax increases across the upper strata of the country.

Social upheaval certainly could be in the cards. And with it, radical legislation. Don't feel like just because you understad todays rules (laws) that those cannot change. I am old enough to have parents whose families were wiped out in the Great Depresson - and they "knew" it would not affect them since they were not speculators. As small business owers the Federal governement did this: 1. Froze their access to their bank accounts. 2. Called all loans due (so those net 30 inventories killed businesses) 3. Liquidated their assets when the loans failed. 4. Effectively put they and thir employees out on the street. The govt did this to 'raise cash' to cover losses not at all incurred by this group. It was just his group that had hard assets (inventory).

Look, I have absolutely no idea how far down this road we can go. But the financials look really, really bad. Like many, I STILL have no idea how extensive the shadow banking system is. But failed margin calls, the TAF, the dollar crises, the magnitude ot the dollars already known, are giving even the sunniest of economists heart-burn. And what we have not seen yet are the massive pay-outs from the mono-line insurers we *know* are coming. Municpal bankruptcies. State lay-offs from lack of funding. Larger Federal deficits from shrinking tax revenue (and expensive rates to fund those deficits).

What can halt all of this? Dunno. All CBs following the Fed for starters. Relaxing the capital reserve requirements at banks for now. Austerity legislation? I am guessing we will see this and more in the months/years ahead. But you are right. Who knows?

In a food scarcity high unemployment environment, a different class of criminal will be stalking the unwary. Not too difficult to defeat any and all home security alarms, dogs, armed owners. Smart scoundrels will be about, with cell phone jammers, target reconnaissance, and common sense. Home security and safety is an illusion.

Go after the money right? Nice neighborhoods is where I’d concentrate, blend in, learn occupants habits, defeat countermeasures, know the entry process and contingencies, multiple exits, prepared to use deadly force. Trickery and smarts. Best would be to wait for FAB or Dennis to leave for the local Walmart. If not, first order of business would be to incapacitate the occupants, preferably with a small trained team to overwhelm. Look like a delivery guy and suprise with a weapon. No chance to arm oneself. Owning firearms might* allow one to sleep better, but are probably useless in a real confrontation. You will either not have one handy, or be relived of it in short order. All fairly straightforward stuff. Drive a cable repair or plumbing truck. Check the back of the freezer and all the usual creative hiding places.

Now this said, the gated compounds with a private full time security team is probably not a fight worth picking, nor the large estate of the uber rich which employ full time armed thugs. Believe it or not, there are several of those around this neck of the woods of which I am aware.

It would probably be an easy living to make, if not risky. Not endorsing same nor would I under any circumstance consider, just to be clear.

I know its hard for you to imagine, but we will see widespread hunger in the US before this is over. I don't see how its avoidable. Its way beyond a real estate deal at this point. Sorry for all the gloom.

NVR,

Too much idle farm land for hunger here. Would the food be expensive? You betcha. You could give me two sections tomorrow and within two weeks I could have it planted.

There are too many of us one generation out from the farm. We just won't have nectarines in January.

@ OO,

Regarding bank heists, we are setting records in Chicago-

"...in 2006. Chicago had 284 heists, up from 2005's previous record of 240. One Chicago bank was robbed twice on the same day. "

I believe 2007 beat the above record too!

http://www.guardian.co.uk/world/2007/feb/11/usa.paulharris

I know of two working low income families that are now today walking the edge. Both consist of duel wage earners, 2 and 3 children. Both families are employed in jobs unrelated to REIC. They are having difficulties putting FOOD on the table due both to cost rise and a doubling of their monthly gas and commute expense. Their kids are complaining about the diet change, they've transitioned to low cost foodstuffs. Standard of living decline there I'd say. What happens to this demographic class next? I'd say job loss leading to further debt default and household contraction.

Our social welfare system is not prepared for the masses of fish soon to be in their broken nets.

For those on this list that are lucky enough not to be in this position and who do not take that hardline capitalistic every man for himself approach, find yourself a few of these families to help. Disdain for welfare? What, let these people go homeless and starve? This is the vulnerable class. This is what is scary. They are everywhere outside of the fortress and BA. Foodbanks are on empty due to food inflation. Wake up folks. The ranks of this group are set to explode.

NVR,

What you say is absolutely true and it will become a very large issue, but there are things that people can do. First and foremost, don't buy crap. Put down the friggin' Cheetos and buy a sack of potatos. You need something to drink? How about water?

I've been poor. Dirt flippin' poor. And those of us that have been there, we have the skills to deal with it. It's all about education and schools just about ready to start.

I'm not looking for a fight. It's just that I have seen worse.

Duke Says:

> Without going too far down the Doom and Gloom
> path, lets take a small swipe at why you care:
> 1. A well diversified portfolio does not mean much,
> if anything.

Can you tell me the last time real estate values, apartment rents, the value of stocks, the value of oil, the value of cash and the value of bonds all went down at the same time?

> We ALL lose money when the pie shrinks. Care?

This is not true, some of the wealthiest people I know got that way in the early 90’s buying California Real Estate when the “pie was shrinking”. The man with half a little pie has more pie than the man with one spoonful of a big pie…

Then northernvirginiarenter Says:

> In a food scarcity high unemployment environment,
> a different class of criminal will be stalking the unwary.
> Not too difficult to defeat any and all home security
> alarms, dogs, armed owners. Smart scoundrels will be
> about, with cell phone jammers, target reconnaissance,
> and common sense. Home security and safety is an illusion.

Smart criminals don’t target the rich who have dogs, alarms and private security with guns. Microsoft Billionaire Paul Allen travels around the world with a team of Navy Seals who have more firepower than the military of many small countries.

> Go after the money right? Nice neighborhoods is
> where I’d concentrate, blend in, learn occupants habits,
> defeat countermeasures, know the entry process and
> contingencies, multiple exits, prepared to use deadly
> force. Trickery and smarts. Best would be to wait for
> FAB or Dennis to leave for the local Walmart.

Other that some Asian families the rich don’t have a lot of money at home. Most things the rich have are not easily converted in to cash (who wants to buy a stolen John Singer Sargent painting and it is not easy to sell a Range Rover without a pink slip). Since liberals hate Wal Mart we don’t have any around here to shop at (not a single Wal Mart in San Mateo, San Francisco or Marin counties)…

> If not, first order of business would be to incapacitate
> the occupants, preferably with a small trained team
> to overwhelm. Look like a delivery guy and surprise
> with a weapon. No chance to arm oneself. Owning
> firearms might* allow one to sleep better, but are
> probably useless in a real confrontation.

Other than the Asian gangs that do home invasions (when they know about a lot of cash) not many others want to risk getting shot robbing an occupied home. Even in his 70’s my Dad can consistently empty clip after clip in to 2” groups (we were both competitive slow fire pistol shooters in the 80’s)...

northernvirginiarenter Says:

> I know of two working low income families
> that are now today walking the edge. Both
> consist of duel wage earners, 2 and 3 children.
> For those on this list that are lucky enough
> not to be in this position and who do not take
> that hardline capitalistic every man for himself
> approach, find yourself a few of these
> families to help.

Just last week I was speaking to a group of low income High School students (I’m very involved with Bay Area charities that help poor kids get an education) and explaining to them that most successful people are not “lucky” they are “smart” and/or “hard working”. A little luck never hurts, but it is not “bad luck” when a person is so stupid that they have 2 or 3 kids “before” they get an education and/or get to a stable place in their life (or at least have enough to pay for food and shelter)…

We ALL lose money when the pie shrinks. Care?

Huh? LOL!

Not if one can get more and more of the pie fast enough.

RE: diversified portfolio

Diversification is important, but I think it is counterproductive to over-do it. Your commissions-dependent broker may think otherwise though. :)

Not investment advice

Microsoft Billionaire Paul Allen travels around the world with a team of Navy Seals who have more firepower than the military of many small countries.

I thought there are always issue yachting with firearms internationally, especially in gun-hating countries like Mexico. How does he get around that? This is a serious question.

http://www.yachtforums.coms/general-yachting-discussion/8396-firearms-onboard-yacht.html

Even hardline capitalists support charities.

High-taxation is a freedom issue, not a bottomline issue.

Welfare is an incentivization issue, not a cost issue.

I think the growth of human population has reached the tipping point of instability. There is no solution to this problem.

Other than those people who put gold bars in their toilet tanks....most people don't leave lying around stuff of any great value. Burglars could steal my stereo stuff but that's only a couple of $K. I have nice cooking gear, fishing rods, a huge set of classical music CDs, and such like. What would a "fence" really pay for this stuff?

One of the nice things about being "the millionaire next door" is that I don't attract attention with my moderate home and Ford/Mazda vehicles. I don't plaster those stupid "protected by Smith & Wesson" stickers on my windows. If I have a security system, I'm not going to draw attention to the fact by putting one of those stupid lawn signs out that says "protected by ADT".

I have a few firearms on the premises, but these are in safe room built into the foundations. And my FFL gives added protection. Normal home burglary is sadly a minor state crime to local law inforcement. But burglary to an "FFL premesis" is a serious Federal felony and WILL BE aggressively investigated by the FBI/BATF. Whatever poor dope fiend breaks a window at my place to steal a stereo will probably be caught and sent up the river to a Federal Prison for most of the rest of his life even if he never realizes what kind of place he broke into. Tough stuff for him.

Peter P Says:

> I thought there are always issue yachting with
> firearms internationally, especially in gun-hating
> countries like Mexico.

Maybe Paul keeps the guns in his yacht's choppers (or in the submarine) when he is in Mexican waters...

http://www.yachtcrew-cv.com/paulallen.htm

Thank you for exposing Jim Cramer for the fraud that he is. He should be fired by CNBC and NBC and absolutely should not have a national forum. He is lies, he is manipulative, he doesn't give a hoot about the average investor (who foolishly give him his ratings and platform) - I think he is a total evil and destructive force.

CNBC should fire Kudlow too - just because he is full of s***.

I don't see starvation being a problem around here in Idaho. We produce huge amounts of food and export most of it. There are lots of places for people down on their luck to get help, notably Second Harvest for which I'm getting more involved as time goes by.

A real problem is that "social planners" over the last 50 years have pushed the mantra "urban-density-urban-density" ad nauseum. When people are crammed together so much they no longer have any ability to help themselves when times get tough.

My grandparents did OK during the Depression. They had an acre on Bayshore Road in San Jose (currently the rent-a-car place at SJC) and they could grow vegitables there. They also raised chickens. They bought the land for $500 and built their own home and workshop with their own hands and with the help of some of their friends. This low-density rural lifestyle meant that most people in Santa Clara county got through the Depression with minimal suffering.

Another advantage we have in ID is the large percentage of Mormons. I don't think much of their theological beliefs, but they do have a strong community support system for those Mormons down on their luck. Places on the East Coast without many Mormons have other sects such as the Amish who may prove very helpful in a new set of hard times. They are a pool of "low tech" knowledge who could train others how to use horses to plow fields if oil really gets scarce.

I know a local breeder of Belgian work horses who has no shortage of demand, there is already a movement afoot to reduce oil consumption in the eco hobby farm set. Its very cool to sit behind a couple of these mammoth beasties while they drag you around.

Apparently, its like $4-6 a day to feed one these guys in these drought induced high hay price times, but often over $150 daily to feed the Deere tractor monster diesel.

Could someone explain to me exactly why BofA is so hot to purchase Countrywide?
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article3511120.ece

DennisN,

Some really good observations on your part, and a lot of the reason "I" have struggled with the outrageous run up in RE prices. A house in and of itself... produces NOTHING. Other than shelter which isn't going to do you much good after you've starved to death.

As for personal security? There's nothing like good neighbors. How do you get good neighbors? Be one yourself!

I can't speak for HARM but "I" will say... I'm a little disappointed by some of the responses. I guess I got the wrong impression when we said "let's suspend disbelief" for a second and imagine a post-crash world where not all get sucked down the same shit tube?

NVR,

If I get a chance to come back in another life, f@ck being a "blonde" (I want to come back as a Clydesdale!) Can you believe how PAMPERED those things are?

Could someone explain to me exactly why BofA is so hot to purchase Countrywide?

The theory is that the regulatory powers-that-be might be more willing to turn a blind eye to BofA's monopolistic goals if they bail out the poster boy for the housing crash. The biggest mortgage lender in the country going bankrupt would have quite a chilling effect on the nations economic psyche.

Anyways, BofA can just play some accounting tricks and write off CW's toxic debt over the next couple years. They won't be paying taxes for a long time.

Here in the middle of changing all of our corn to ethanol, we are seeing an impressive run-up in ag. prices. www.nytimes.com/2008/03/09/business/worldbusiness/09crop.html?hp

It's just what we were talking about: higher grain prices but the farmers are feeling the pinch of fuel and fertilizer prices.

Recession is bad for everyone, not sure if we are looking at a complete meltdown, Mad Max style. But, the whole thing has me thinking that we are going to relive the 70's; stagflation, oil crises, disco (shiver). At least Battlestar Galactica is better this go round.

Beware of spiking ag commodity prices (or not, if you are peak oiler):
Read Smith, a farmer in St. John, Wash., thinks a new era is at hand for all sorts of crops. “Price spikes have usually been short-lived,” he said. “I think this one is different.” Hmmm..., that refrain sounds so familiar. Where have I heard it before?

Back to the zero-sum game

Yes. Vast wealth can be achieved by having dollars at a time when owners are forced into sales. Look at Carlos Slim Helu.

The trick is being near the bottom (and thus being able to call it), having deep enough pockets to hang on until the turn around (thus avoiding your own fire sale) and hoping society is stable enough to not chnage the rules mid-risk.

In the Depression scenario, I would contend:

1. If you think you can pick the thing or things that survivie the meltdown better then market, where only the very strong will survive by deign of their size, go right ahead. Impress me. A lot.

2. I see a depression as pretty Vegas-like. The house always wins because they have deeper pockets than you. If a hedge fund can create its own momentum play to force you into liquidation because it can, it will.

3. After succeeding at 1 and 2, simply look at the tax law changes to socialize the remaining wealth after the Depression.

Of course, if it really gets that bad, we are well on to the Nation versus Nation scenario. All those European nations that are pretty mad right now about being bilked into the world of the sub-prime. Or the Chinese looking at the vastly depreciating pile of US currency in their vaults. Or the oil nations looking at their dollars thining, "Why am I holding dollars and giving up oil?"

Trade is a delicate dance requiring faith and that is in very short supply right now.

“Price spikes have usually been short-lived,” he said. “I think this one is different.”

It is a new paradigm!! :)

I understand that North Dakota is the "fortress" of wheat production.

Federal Authorities open CRIMINAL investigation of Countrywide for Securities Fraud! :-)

The FBI is looking at whether the company misrepresented its financial condition in securities filings.

Interesting turn.

For my money I'd say we've got an historic week for the financial markets in front of us, one to tell the grandkids about. As far as I know, the central banksters have no tools at their disposal to stop margin call momentum panic. Hedge fund implosions, derivative unwinds, bank write downs.

I'll predict this is the beginning of the end for the irritating, overused "subprime crisis" moniker, the "credit crunch" will head to memory.....we are about to enter "full blown financial crisis" stage....look for the new headline on the nightly news by the end of this coming business week. Probably a news conference from the White House with the entire financial team in the background endeavoring to shore up confidence.

Main street America is about to get an education on just how serious this situation is.

Stay tuned for imminent FED emergency operations. Wondering just what those crazy kids are going to try this time.

Stay tuned for imminent FED emergency operations. Wondering just what those crazy kids are going to try this time.

Will gold break $1000 this week? :)

Is that FED or FUD? I'm so confused.

Is that FED or FUD? I’m so confused.

It is F'ED. :)

The tan man sure looks very attractive to inmates. I hope he's gotten enough lubricant stocked up.

I was just thinking this afternoon....we need more prison space for white-collar criminals especially.

We have entire "forests" of abandoned REO houses in Stockton and Modesto.

Why not build up a giant fence around those two towns and turn them into a minimum-security prison colony?

I was just thinking this afternoon….we need more prison space for white-collar criminals especially.

Only if there is a way to pay for that without raising tax.

New Post :
Devaluation of the US Dollar : On the other hand ...

The machine is overwhelming to me. For example, American workers have turned into service industry workers...while jobs have been off-shored, outsourced overseas. High paid professionals coming to the US on work visas (then become greencard holders) and these are engineers and doctors. The thing that frustrates me is that in their respective countries their education was free. I work in a hospital and I see this upclose with the ratio of Drs coming from India, vs. American citizens --for the same position. Then they come to the US and they get the high paying job, (200K-400K annual) while we are paying more and more to try and get a college education. Not to mention that our young men are then sent off to fight in wars either for our own defense or the defense of some other country. It seems the "system" is designed to bring Americans down.
Is this the fault of the American worker? How many more would plan and go to college if it were "free."