Guest Post: How To Find Shelter From The Coming Storms? (Zerohedge.com)

 

Submitted by Tyler Durden on 07/01/2014 09:52 -0400

Submitted by Charles Hugh Smith from Of Two Minds

A Reader Asks: How to Find Shelter from the Coming Storms?

Some basic suggestions for those who are seeking shelter from the coming storms of global financial crisis and recession.

Reader Andy recently wrote: "I look forward to your blog each day but am still waiting for your ideas for surviving the coming crisis." Andy reports that he and his wife have small government and private pensions, are debt-free and have simplified their lifestyle to survive the eventual depreciation of their pensions. They currently split their time between a low-cost site in North America and Mexico. They are considering moving with the goal of establishing roots in a small community of life-minded people.

Though I have covered my own ideas in detail in my various books (Survival+: Structuring Prosperity for Yourself and the Nation, An Unconventional Guide to Investing in Troubled Times, Why Things Are Falling Apart and What We Can Do About It and Get a Job, Build a Real Career and Defy a Bewildering Economy, I am happy to toss a few basic strategies into the ring for your consideration.

Let's start by applauding Andy for getting so much right.

1. Don't count on pensions maintaining their current purchasing power as the promises issued in previous eras are not sustainable going forward. I've addressed the reasons for this ad nauseam, but we can summarize the whole mess in four basic points:

A. Demographics. Two workers cannot support one retiree's pensions and healthcare costs (skyrocketing everywhere as costly treatments expand along with the cohort of Baby Boomer retirees). The U.S. is already at a ratio of two full-time workers to one retiree, and this is during a "recovery." the ratio in some European nations is heading toward 1.5-to-1 and the next global financial meltdown hasn't even begun.

B. The exhaustion of the debt-based consumption model. The only way you can sustain a debt-based model of ever-expanding consumption is to drop interest rates to zero. But alas, lenders go broke at 0%, so either the system implodes as debtors default or lenders go bankrupt. Take your pick, the end-game of financial crisis and collapse is the same in either case.

C. Printing money out of thin air does not increase wealth, it only increases claims on existing wealth. An honest government will eventually default on its unsustainable promises; a dishonest government (the default setting everywhere) will print money to fund the promises until its currency loses purchasing power as a result of either inflation or some other flavor of currency crisis.

In other words, the dishonest government will still issue pension checks for $2,000 a month but a cup of coffee will cost $500--if anyone will take the currency at all.

D. Pensions funds are assuming absurdly unrealistic returns on their investments. Many large public pension plans are assuming long-term yields of 7.5% even as the yield on "safe" government bonds has declined to 3% or 4%. As a result, the pension fund managers have taken on staggering amounts of systemic risk as they reach for higher yields.

When the whole rotten house of cards (shadow banking, subprime everything, etc.) collapses in a stinking heap, the yields will be negative. As John Hussman has noted, asset bubbles simply bring forward all the returns from future years. Once the bubble pops, yields are substandard/negative for years or even decades.

Pension funds that earn negative yields for a few years will soon burn through their remaining capital paying out unrealistic pensions.

2. Lowering the cost of one's lifestyle. It's much easier to cut expenses than it is to earn more money or squeeze more yield out of capital.

3. Establishing roots in a community of like-minded people. Though it's rarely mentioned in a culture obsessed with financial security, day-to-day security is based more on community than on central-state-issued cash--though this is often lost on those who have surrendered all sense of community in their dependency on the state.

The core of community is reciprocity: before you take, you first have to give or share. Free-riders are soon identified and shunned.

My suggestions are derived from this week's entries on the inevitable popping of credit bubbles, the unenviable role of tax donkeys in funding corrupt state Castes and the Great Game of Elites acquiring essential resources with unlimited credit issued by central banks, leaving the 99% debt-serfs and/or tax donkeys with neither the income nor the credit to compete with Elites for real resources.

4. Lessen your dependence on anything that requires debt and assets bubbles for its survival. Whatever depends on expanding debt and asset bubbles for its survival will go away when credit/asset bubbles pop, which they always do, despite adamant claims that "this time it's different." It never is.

5. Control as many real resources as you can. These include water rights, energy-producing or conserving assets (solar arrays, geothermal heating/cooling systems, etc.), farmland, orchards and gardens, rental housing, and tools that you know how to use to make/repair essential assets such as transport, housing, equipment, etc.

6. It's easier to conserve/not use something than it is to acquire it or pay for it. As resources rise in price, those who consume little will be far less impacted than those whose lifestyles requires massive consumption of gasoline, heating oil, electricity, water, etc. It's as simple as this: don't waste food, or anything else.

7. The easiest way to conserve energy and time is to live close to your work and to essential services/transport hubs. Those who reside in liveable city neighborhoods and towns with public transport and multiple modes of transport who can walk/bike to work, farmers markets, cafes, etc. will need far less fossil fuel than those commuting to everything via vehicle.

8. If you can't find work/establish a livelihood, move to a locale with a better infrastructure of opportunity. I explain this in Get a Job, Build a Real Career and Defy a Bewildering Economy, but John Kenneth Galbraith made much the same point in his 1979 book The Nature of Mass Poverty.

9. If you buy property, do so in a state with Prop 13-type limits on property tax increases. We have no choice about being tax donkeys, but choose a state where income and consumption (i.e. sales tax) are taxed rather than property tax. You can choose to earn less and buy less, but you can't choose not to pay rising property taxes.

10. Be useful to others. That way, they'll want you around and will welcome your presence. There are unlimited ways to be helpful/useful.

11. Trust the network, not the state or corporation. Centralized systems such as the government and global corporations are either bankrupt and don't yet know it or are bankrupt and are well aware of it but loathe to let the rest of the world catch on.

12. Be trustworthy. Don't be morally corrupt or work for corrupt/self-serving institutions. Many initially idealistic people think they can retain their integrity while working for morally bankrupt, self-serving bureaucracies, agencies and corporations; they are all eventually brought down to the level of the institution.

Lagniappe suggestion: lead by example. "Setting an example is not the main means of influencing others; it is the only means." Albert Einstein

Average:

4.688525

You feel poorer because you are poorer. (Zerohedge.com)

 

In the last fourteen years, has your income increased over 50%? If you think it has, has it done so after taxes? Even if it has, you likely have not kept up in terms of inflation.

If you are a retiree, living on fixed income, a pension or bonds, you certainly have become poorer. If you had bought the Dow-Jones on 12/31/1999 you would have entered at about 11,500. It closed last week at less than 17,100. That would have been an appreciation of 6,600, better than 50%. But, of course, that was before taxes.

As a retiree, you have seen your purchasing power stolen by Fed policies. Whether you invested in fixed income or equities, you lost ground. Anyone in that position has seen their lives become poorer despite a lifetime of successful work and careful financial planning.

For those still working, most are losing purchasing power each year. Wages are not keeping up with inflation, even the understated numbers reported by government. In short, the decline of a once-great economic power is well underway. The country is no longer growing enough to raise everyone’s standard of living.

Government has killed the golden goose and in an attempt to hide the obvious is debauching the dollars. Government tries to hide their own failure with phony statistics and a welfare state designed to placate the masses. Bread and circuses are deceptions not progress.

This charade will not work! It is merely a futile attempt to prolong the Ponzi scheme for a little longer. While the process continues, the parasites who plunder the productive ready expand in numbers. The productive either give up or remove their capital from the country. Those who stay build compounds with the walls around them to protect against the   soon-to-become enraged masses. Bread and circuses precede poverty. They don’t continue through it.

To understand the loss of purchasing power, look at this series of items:

H/T Zerohedge

The last two items are what government claims is price inflation over this period. Wikipedia defines them as follows:

The personal consumption expenditure (PCE) measure is the component statistic for consumption in GDP collected by the BEA. It consists of the actual and imputed expenditures of households and includes data pertaining to durable and non-durable goods andservices. It is essentially a measure of goods and services targeted towards individuals and consumed by individuals.^[1]

The PCE price index (PCEPI), also referred to as the PCE deflator, PCE price deflator, or the Implicit Price Deflator for Personal Consumption Expenditures (IPD for PCE) by the BEA, and as the Chain-type Price Index for Personal Consumption Expenditures (CTPIPCE) by the FOMC, is a United States-wide indicator of the average increase in prices for all domestic personal consumption. It is currently benchmarked to a base of 2009 = 100. Using a variety of data including U.S. Consumer Price Index and Producer Price Index prices, it is derived from the largest component of the Gross Domestic Product in the BEA’s National Income and Product Accounts, personal consumption expenditures.

The less volatile measure of the PCE price index is the core PCE (CPCE) price index which excludes the more volatile and seasonal food and energy prices.

In comparison to the headline United States Consumer Price Index, which uses one set of expenditure weights for several years, this index uses a Fisher Price Index, which uses expenditure data from both the current period and the preceding period. Also, the PCEPI uses a chained index which compares one quarter’s price to the last quarter’s instead of choosing a fixed base. This price index method assumes that the consumer has made allowances for changes in relative prices. That is to say, they have substituted from goods whose prices are rising to goods whose prices are stable or falling.

The last one, the PCE Deflator is used in government’s calculation of real GDP growth. To the extent that this number is understated, reported real GDP is overstated by an approximate amount. That is not an accident.

Average:

4.77778

Arithmetic: How Badly You Have Been Screwed ( http://market-ticker.org/ )

 

Folks, I know people have this desire to moan about how bad this part of our country is or that, whether it be on guns, poverty, religion or whatever else pushes your buttons.

I challenge you to read and let this post sink in for a good hour today.  Do nothing else.  Find the hour, print this out or send it by email to your cellphone, read it and contemplate it.

Then choose, today and forward, whether you're going to sit for what has been done to you.

I present a simple arithmetic chart:

The data was pulled from here: http://www.bls.gov/data/#productivity

It is not my data.  It is official government data.  I did nothing other than pull it into Excel and chart it as a compound function.

Now let me explain what it shows you.

This chart shows the output per hour worked for Americans across the labor force.

It shows that today one hour of work at the end of 2013 produces 169.8% of the output that one hour of work produced in 1980.

Now stop and read that last sentence again -- very, very slowly.

Read it as many times as you have to until you understand it.

You should have 170% of the standard of living you obtained in 1980 from one hour of labor.

Let me ask: Do you?

If you did, what would you be complaining about?  The average middle-class person that could afford a house in 1980 could afford a house 70% better (not more expensive, better -- larger, with more appliances, that uses less energy, etc.)  You could buy 70% more food with an hour of labor today than you could in 1980.

Equally to the point -- note that there was no decrease in productivity at any time from 2007 to today.  In other words, what "great recession"?  You ought to be ~10% ahead of where you were in 2007.  What would there be to complain about, were this the case?

I could flip pizzas and pay for college in 1980.  I should be able to flip those same pizzas, pay for college in cash and have another 70% of the tuition, fees, books, room and board left over to buy other things. Can you?  NO, YOU CANNOT.

Look at the world in 1980 and a typical skilled and unskilled job.  Is the typical worker able to buy, with cash, 70% more than they were in 1980?  Did the typical lower-income worker need food stamps, EITC, Medicaid, etc?  Did that typical worker need a five, six, seven or ten year car loan, or was a car loan (if there was a loan at all!) for two, three or four years?

Or did they just write the check -- for a new or used car?

How come I could buy "no fault" insurance for a couple hundred dollars a year back then -- as a young driver?  Can you do that today or will the gecko bend your ass over the table for five or ten times as much?

How did that massive amount of improvement in your standard of living -- that was yours, not someone else's -- get stolen from you?

I've spent seven years explaining how it happened and why it continues. 

It does not matter how many dollars you have or are paid.  What matters is how much time you must spend working to earn a gallon of gasoline, rent, electricity or water for a month, food to feed your family and so on.  That is, what matters is how much what you have and earn buys in material goods and services.

Your purchasing power isn't stolen through "inflation" per-se.  If you are paid $20 tomorrow for an hour of work instead of $10 but the price of everything doubles you can say "inflation" was 100% (as expressed in prices) but it doesn't matter because you get paid twice as many dollars.  (Of course it matters a great deal if you saved those dollars from previous work, which is why inflation is bad and deflation is good -- but we're talking about the "Average Joe" that saves nothing.)

In short only purchasing power matters as measured by a monetary invariant -- such as an hour of work or a BTU of energy.

How much longer can this crap continue?  Are you a servant to the government today, dependent on those handouts?  Will you be tomorrow?  Do you think you can outrun this with your wits when a theft of nearly half of what should be yours in improved standard of living has already happened over the last 35 years?

Note that this improvement should happen for everyone.  A person who is dirt poor and has their standard of living improve by 70% is now probably lower middle class and self-sufficient!  Yes, the rich have even more.  So what -- so do you!

The schemes and scams concocted through monopoly games (such as in the health care and education fields) along with the continual deficit spending that destroys purchasing power is why you have not seen that 70% improvement.  It was stolen from you via the deliberate acts of our Government, including both political parties via deficit spending and permitting private banks to create ever more "dollars" via unbacked credit -- acts that are factual frauds.

Period.

The "wedge issues" that are often raised, whether they be "gay marriage", "pot smoking", "gun rights" or whatever else are a damned sideshow.  Do you really care about "gay marriage" if you are so damned poor you're living under a freeway overpass in a refrigerator box, gay or straight?  Do you really care about gun rights if you can't afford a gun no matter how little they cost because your income is insufficient to pay for food, water and a place to take a crap?

Go back and read that big, bold sentence up above again.

Read it however many times you need to until you get it.

Then decide.

Either you fix that and demand that the government enforce the law, returning to you what has been stolen, or sit down and shut up, because so long as you do not do that all of the other complaints you have are utterly immaterial to the outcome of your life and that of your children and grandchildren.

Apollo Astronaut: Climate Alarmism Is the ‘Biggest Fraud in the Field of Science’

CNS ^ | July 2, 2014 | Craig Bannister

Posted on ‎7‎/‎4‎/‎2014‎ ‎2‎:‎44‎:‎09‎ ‎PM by xzins

97% Climate Consensus ‘Most Nonsensical, Stupid Number in the World’

Climate alarmism is "the biggest fraud in the field of science" and the 97% consensus claim is nonsensical, Apollo 7 astronaut Walter Cunningham tells MRCTV in a preview of his presentation at the upcoming Heartland Institute climate conference, July 7-9.

"Since about 2000, I looked farther and farther into it," Col. Cunningham (USMC, Ret.) tells MRCTV in an exclusive interview. "I found that not one of the claims that the alarmists were making out there had any bearings, whatsoever. And, so, it was kind of a no-brainer to come to the conclusion."

Cunningham rejects the notion of man-made climate, not only as fact - but also as even qualifying as an actual "theory":

"In the media, it was being called a theory. Obviously, they didn't know what it means to be a theory."

"If we go back to the warmist hypothesis - not a theory, but, a hypothesis - they've been saying from the very beginning that carbon dioxide levels are abnormally high, that higher levels of carbon dioxide are bad for humans, and they thought warmer temperatures are bad for our world, and they thought we were able to override natural forces to control the earth's temperature. So, as I've looked into those, that's the problem that I've found, because I didn't find any of those to be correct - and, they certainly were not a theory, it was just their guess at what they wanted to see in the data they were looking at."

Cunningham urges Americans to look at the data and decide for themselves, instead of taking anyone else's word for it:

"You go out and take a look at it and you find out that a lot of it is pure nonsense and wishful thinking on the part of the alarmists who are looking for more and more money to fall into their hands."

"Don't believe it just because your professor said it. You gotta go take a look at it. Go back and look at the history of temperature and carbon dioxide, and you look at the value of carbon dioxide, and how it's a benefit today."

Cunningham notes that, while climate alarmists are concerned that the atmosphere currently contains 400 parts per million of CO2, that's only a tenth of the level his spacecraft had to reach before causing concern. In his Apollo craft, an alarm would go off when CO2 reached 4,000 parts per million and, in today's space shuttle, the trigger is 5,000. And, in submarines where crewmen may be on three-month missions, CO2 has to reach 8,000 parts per million before the alarm is activated.

"In one area after another, we find these people overly concerned about, one, the danger they're trying to push on us and, secondly, the claim that we can somehow or other control the earth's temperature by affecting it," Cunningham says.

"I can't say we don't have any impact, at all, but it'd be so miniscule and so tiny, that it wouldn't be worth any effort."

So, what does dictate the Earth's temperature? Cunningham says it's well-established that "principle controllers" are natural forces like sun, ocean temperature, and even volcanic activity.

Thus, he calls climate alarmism "the biggest fraud in the field of science":

"The case is, to me, really, it's laughable to find somebody who claims to be a serious scientist - that he would buy into this. So, I would really question anybody who claims to be a scientist doing this - so, what they do is try to control the nomenclature."

"To me, it's almost laughable, it's the biggest fraud in the field of science, certainly in my lifetime, maybe the biggest one in centuries."

"If you go back and you look at the data that has been well-documented over the years, you can look and see, for example, that right now both carbon dioxide and temperature are simultaneously at one of the lowest levels in at least the last 600-800 million years. The last time they were both together at this low a level, more or less, was 300 million years ago, and if you go back go back about 500-600 million years ago, carbon dioxide was 15 times higher than what it is now. So, what I'm getting at is this, the history shows you that most of this is just plain nonsensical today."

"And, the amazing thing to people like me... is that there are people that believe the nonsense they're being fed."

The media are largely to blame for public misconceptions - not because they're intentionally misleading the public, but because they "just don't want to go into the time and trouble to find out." "If they do go into it and look at it for themselves, they become a lot more neutral in their presentation," he says.

Worst of all, Cunningham says, media are promoting the "nonsensical" claim that there's scientific consensus accepting the hypothesis of man-made climate:

"When they're out propagating this so-called 97% of scientists believe we're controlling the temperature - I mean, that's the most nonsensical, stupid number in the world - and all they have to do is do a little research on Google - I'm not going to do it for them - go in there and take a look and you find out that's a ridiculous statement that people are making - and even the president makes a statement like that."

"If you have a totally anonymous survey of real scientists involved in this field, I would almost guarantee you that you going to have a majority that are not going to agree with the alarmists."

"I can only tell you that, even back in the days of Apollo, we didn't have to face this kind of nonsense," Cunningham concludes.

Editor's Note: Watch the Heartland Institute's 9th International Conference of Climate Change streaming live July 7-9, 2014 from Las Vegas, Nevada on CNSNews.com.