Eeyore's News and View

Water is one of things that you have to have to live, and it is a percious commodity, and people will do what ever they have to do to get it. That could happen here. You need to think about alternate ways to secure drinking, bathing, cleaning and cooking water if the electricity went out for a few days or longer. You might want to review the Water Prep Talk i did several weeks ago.
Mob runs riot as Zimbabwe runs out of water
Water supplies to residents in Harare were cut by the authorities yesterday as Zimbabwe’s cholera epidemic tightened its grip and the city witnessed its worst unrest for a decade.
The Zimbabwe National Water Authority turned off the pumps in the capital after it ran out of purifying chemicals. With cholera cases soaring above 11,000 across the country, and an anthrax outbreak ravaging the the countryside, David Parirenyatwa, the Health Minister, urged Zimbabweans to stop shaking hands to avoid spreading disease.
Companies and government offices, especially those in high-rise buildings, were sending workers home by midday as lavatories became blocked. “My office stinks and the toilet is a disgusting site,” said Mary Sakupwene, a secretary. “I won’t go back until the water’s on again.”
The four-star Jameson Hotel stopped taking guests and other less exclusive ones closed. Restaurants provided buckets of water for hand-washing and flushing. There was a sharp increase in people turning up at the Harare Sports Club – served by boreholes – for their ablutions after their home taps ran dry. It notified members that from today they would be charged $US2 (£1.34) for a shower.

In Harare’s townships, some of which have been without water for two years, 20 litres of water from one of the thousands of backyard hand-dug wells can cost $1. All wells hold the danger of cholera. “What I am afraid of is now that the rainy season has come, the faeces lying in the bushes will be washed into shallow wells and contaminate the water,” said Mr Parirenyatwa.
The opposition Movement for Democratic Change (MDC) urged President Mugabe to accept international humanitarian help. “The country is reaching a catastrophic level, in terms of food, health delivery, education,” said Morgan Tsvangirai, the MDC leader. “Everything seems to be collapsing around us.”
The seething anger felt by ordinary Zimbabweans exploded yesterday as hundreds of off-duty soldiers went on the rampage in the centre of Harare. Witnesses said that the violence erupted at a bus depot on the edge of the city centre where soldiers, frustrated at not being able to draw cash from banks, confronted illegal moneychang-ers. The dealers scattered and the soldiers turned on the city, followed by civilians spurring them on.
The mobs stoned cars and looted shops. In the panic, home-bound workers fled and traffic jammed as motorists tried to turn back from the scene.
It was the first serious public unrest since the riots over food price increases ten years ago. The disturbance brought a swift and brutal response from the authorities who swamped the area with heavily armed para-military police and troops. At least one man was shot.
http://www.timesonline.co.uk/tol/news/world/africa/article5269909.ece

Delinquent Mortgages Set to Nearly Double in 2009
The number of consumers with delinquent mortgages is poised to almost double by the end of next year, hitting its highest level in at least 16 years, according to a leading credit bureau.
TransUnion LLC, which analyzed about 27 million consumer records in its database, predicted that the proportion of consumers with mortgages that are 60 days or more past-due will hit 7.17% in the fourth quarter of 2009.
That would be the highest level reached since the Chicago credit bureau -- which is releasing the data on Tuesday -- first started tracking ... (Get the rest here)
http://online.wsj.com/article/SB122818894948271631.html

Starting Now: America’s Second Great Depression
by Martin D. Weiss, Ph.D. 12-01-08
On this first weekday after Thanksgiving, it’s time to take a moment, look at the changes swirling all around us and think about the tasks we must achieve together in the weeks ahead.
After more than six decades of growth, America is sinking into its Second Great Depression of modern times. The place is every home, business, and community.
The time is now.
America’s Second Great Depression is not a typical 20th century recession that happens to strike a bit harder or linger somewhat longer. Nor is it merely a fictional scenario conjured up by economists with a murky crystal ball.
America’s Second Great Depression is the probable consequence of a great housing bust, a massive mortgage meltdown and the biggest financial crisis in history.
It promises to bring the worst wave of bankruptcies, job losses and wealth destruction any citizen under 90 has ever experienced.
It challenges the smartest minds in Washington, defies the deepest pockets on Wall Street and threatens to rip through our life with the force of a Cat-5 hurricane. And yet, among all those making the decisions that could forever change our future, no one has personal experience with a similar episode.
I don’t either. I was born in 1946, just as we were leaving the final vestiges of America’s First Great Depression behind. I’ve studied that historic period with books, charts and numbers, but that’s not the same thing. I’ve lived in Brazil and Japan during tough times, but that, too, was different.
What brings me closer to a visceral understanding of this crisis is the half century I shared with my father, J. Irving Weiss, one of the few economists who not only advised investors during the First Great Depression, but actually predicted it.
Dad was so proud of that unusual feat, he began telling me stories about it when I was just five years old. Vicariously, I lived through the Roaring Twenties, the Crash of ‘29, the massive bank failures of the 1930s, and the many years of human suffering that ensued. Through Dad’s teachings, I felt as though I was there with him when investors lost fortunes, when we hit rock bottom in 1933, when we eventually recovered and brand new fortunes were made. Dad was not only a loving father, but also my mentor, partner and best friend.
I wish he could be here today to write to you directly and help you get through these tough times personally. But as soon as I was old enough, I helped him write his investment reports; and in 1971, soon after I founded Weiss Research, he helped me write mine. Although he’s gone, I can feel his vibrant energy and calming spirit beside me; and from time to time, I will let him speak to you posthumously here in Money and Markets.
Think of this message you get from me each Monday as co-authored by the two of us. He will tell you about his experiences and analysis during America’s First Great Depression; I will tell you what it means for America’s Second Great Depression and what you can do about it. A lot has changed since then. What hasn’t changed is my family’s passionate desire to help you through it.
This entire effort is the culmination of eighty-four years of research, beginning when Dad first went to Wall Street in 1924 to learn everything he could about money.
Five years later, when the great crash struck, he did not own any stocks. His parents were recent immigrants from Eastern Europe with barely enough to keep food on the table. He had to save everything he earned, bring it home and give it to his mother. He knew how real estate had collapsed in Florida, and he saw how America’s farms were in disarray. He didn’t want to gamble his hard-earned savings on another bubble.
After the crash, the stock market rallied for almost six months, and nearly everyone on Wall Street thought the crisis was over. But Dad persuaded his clients and friends to sell everything, get the heck out of the market, and pile up as much cash as they could. He was so convinced the market would fall again, he even borrowed $500 from his mother to sell short — to take a crack at profiting from the market’s decline.
Sure enough, the Crash of ‘29 was just the opening act of the great bear market. All told, from its peak in 1929, the Dow Jones Industrials Average fell 89%. Compared to the Dow’s peak in 2007, that would be tantamount to a plunge of more than 12,600 points — to a low of approximately 1500. Dad explains it this way:
“In the 1930s, at each step down the slippery slope of the market’s decline, Washington would periodically announce some new initiative to turn things around. President Hoover would give a new pep talk promising ‘prosperity around the corner.’ And often, the Dow staged dramatic rallies — up 30% on the first round, 48% on the second, 23% on the third, and more. Each time, I sought to use the rallies as selling opportunities. I persuaded more of my clients to get rid of their stocks and pile up cash. I even told them to take their money out of shaky banks.
“On the surface, it might have appeared that just sitting out the crisis got you nowhere. Actually, though, it was a great strategy for building wealth. Prices were falling — on homes, on automobiles, on almost everything. So the more prices fell, the more your money was worth. Just by saving money, stashing the cash, keeping your job and going about your daily life, you were building wealth. You didn’t have to know about investing. All you needed to figure out was how to protect yourself from the bad times. Then, when we hit rock bottom — that was the time to start buying real estate, stocks or bonds.
“The end of the entire decline came with two events: The inauguration of our new president, Franklin D. Roosevelt, and the national banking holiday he declared on his third day in office. But after three years of panics and crashes, most people greeted those events with dread. They thought it would be the beginning of another, even steeper slide. Some people even said it was the final chapter of capitalism itself. As it turned out, that was precisely the right time to pick up some of the greatest bargains of the century and make a lot of money.”
Helping people make money was Dad’s profession, but his passion in life went far beyond money; he was a man of deep empathy and feeling for his fellow man. When others suffered, he suffered along side them. He gave them jobs, bought them meals and offered an abundance of free advice
Most of all, he did not want to see America go through another depression ever again. His vision for accomplishing that goal, however, was different from that of most economists in the post-Depression era. Their strategy was to yank the economy out of nearly every slump and slumber, forever seeking to keep the economy growing, always bailing out major institutions that failed. His philosophy was moderation in both directions. “The only way to avoid the pain of a great bust,” he wrote, “is to refrain from the excesses of a great boom.”
I agree, and in the coming weeks, I’ll explain why. Plus, I’ll show you how you can use a similarly moderate approach to secure your own future.
A better future was also something Dad sought to secure for the country as a whole, in his own personal way. In 1955, for example, a Florida junk dealer sought to take over one of America’s largest cash-rich companies to force it to borrow money and grow more quickly. In response, Dad mobilized like-minded executives from all over the country and, in one of the greatest corporate battles of that era, successfully blocked the takeover. Similarly, in 1959, when the U.S. federal deficit seemed to be growing out of control, he formed the Sound Dollar Committee, organized a grassroots movement of an estimated 11 million citizens, and helped President Eisenhower give America its last truly balanced budget.
Today, I am Chairman of the Sound Dollar Committee; and separately, I am the cofounder of the Financial Publishers Association, representing over 14 million investors. My primary goal, like Dad’s, is to do my small part to help head off the avoidable consequences of another depression.
Right now, our country’s finances have deteriorated too far to balance the federal budget anytime soon. But it’s not too late to avoid some major financial blunders that could seriously weaken our country for the rest of the century. Even in the worst-case scenario, it is certainly not too late for you to protect your savings, boost your income and grow your wealth.
How long could the depression last? How much further can home prices fall? How far down will the stock market go? Will it be as bad as the 1930s? At this juncture, you can count on your fingers the number of serious analysts who believe that’s even a remote possibility. And yet, stranger things have already happened, including the largest bank and insurance company collapses of all time. Before he passed away, Dad expressed it this way:
“Most Americans — especially the youngsters who manage billions of dollars on Wall Street — have no concept of the power and speed of a great stock market crash. They’ve never lived through one. So it’s hard for them to visualize it. In 1929, people were jumping out of windows and one-time wealthy people were selling apples on street corners. The shock waves reached into almost every office and every home in the country and in the world. Next time, it could be just as bad, or even worse.”
Trouble is, there are no historical precedents for what’s happening in this era. Any forecasts I make today, no matter how well researched, are not nearly as valuable as the awareness you will have of current events as they unfold in real time. So rather than pick a number for the bottom in the Dow or guess the low price of an average home, my primary purpose is to help give you the understanding you need to make some major decisions right now and then adjust them as the crisis unfolds.
Your immediate task, which may seem hard, is actually very simple — get your money to safety.
Your second task, which may seem easy, could actually be more difficult — wait patiently.
But it’s the last step that will be the most rewarding — when real estate, stocks and bonds are near a true bottom, reinvest in America and greatly improve your life for years to come.
Over the next few weeks, I will show you how. I will give you the warning signs to watch out for while things are still falling; I will describe the kinds of conditions that are likely to prevail when we’re near a bottom; and I will provide step-by-step instructions on precisely what to do.
Surviving the crisis on Wall Street and Main Street is not rocket science. You don’t have to forecast the future. You don’t even need investing experience. All you need is the courage to get out of its way and the patience to stay out of its way for the duration.
The simple secret is to throw out your prejudices, start with a clean slate and then follow your own common sense. Right now, that means taking a cold, hard look at the events swirling around you and recognizing that your money could be in grave danger.
It means accepting the reality that the value of your home, your 401k, and even some of your supposedly “safe” investments CAN fall a lot further. And most important, it requires the realization that you have the power to stop the bloodletting.
There’s no law, rule or ethic that requires you to sit quietly and accept financial punishment passively. You have every right — and every mechanism — to get your money to safety without remorse.
I have warned about this crisis repeatedly. I have nagged, cajoled and shouted this message from the rooftops. But it gives me no pleasure to see my dire warnings come true. I have dreaded this day as often as I have predicted it. I prayed it would not come to pass. But now that it’s here, I have a new prayer:
That you are, or soon will be, out of danger and ready for the worst …
That the worst will strike swiftly and end swiftly …
That, once we hit bottom, no matter how ugly the future may appear, you, me and many others will have the fortitude to reinvest, help get our country back on its feet, and move on to better times.
Just promise me one thing: No matter how dark this tunnel may seem, never forget it is not the end of the world. Our country has been through worse before, and we survived. We will survive this crisis too.
You hold your future in your hands. At this landmark turning point in our history, it’s the choices you make today that will determine your fate — and the destiny of everyone that depends on you — for decades to come. Your decisions now could make the difference between a successful career or a lifetime of struggle … retiring in dignity or becoming a ward of the state … enjoying wealth and health or risking poverty-stricken illness.
Whatever your choices may be, do not procrastinate. And whenever you take action, don’t do so in haste. Your response to the current crisis — or any new crisis that may ensue — should be both prompt and planned; both bold and prudent. I write to you each week to help you make that possible.
Here are your tasks in a nutshell:
Your first and most urgent priority is to survive the depression, while building the biggest pile of CASH you can. Whether it’s a molehill of pennies that you pinch from daily sacrifices or a mountain of dollars you squeeze out of asset sales, the more cash you can accumulate now, the better.
Your second priority is to make sure your cash is in the safest place possible. That may not be the nearest bank or the biggest insurance company. Short-term Treasury securities, despite their low yield, must be the primary vehicle.
Third, for the duration of this crisis, plus any new ones that may strike, your best friend and companion will be patience.
Don’t yield to the temptation of so-called “bargains” and “big discounts” from peak prices. Many of those peak prices were a fiction from a bygone era that may never be seen again in my lifetime or yours.
Don’t jump in too soon. You can afford to wait. Indeed, just by waiting patiently, you can build wealth tremendously.
Fourth, I recognize that not everyone is able to follow all my instructions to the letter.
You may have real estate you cannot sell or a pension fund beyond you cannot control.
You may have bonds that have no market or a business that continues to provide income.
All could be assets that you must keep; and yet, at the same time, all are assets that could be vulnerable to big losses in a continuing decline.
To untie that knotty dilemma, you may need a hedge — a protective shield that can help offset your losses. Alternatively, if you are a risk-taker, those same hedges can be turned into pure profit opportunities during a market decline. I hope you have already read and acted on the guide to hedging I sent you a while ago. If not, the latest rally in the market gives you a great time to start. (Click here to download the pdf file.)
Last, the big pay-off will come when we hit rock bottom and it’s time to buy the greatest bargains of the century. So recognizing the bottom can unlock the opportunity to boost your income, allowing you to buy some of the best assets in the world for a pittance and stake out the high ground for yourself, your children and generations to come. I will do my utmost to alert you when the time comes.
Just remember that nothing is predetermined. Right now, the tsunami of crisis seems unstoppable. But in the foreseeable future, there will also come a singular moment in time when the worst of the storm has passed and the tides of history have ebbed, opening a window for you, me and our leaders to choose our own destiny. Before then, let’s have a serious discussion about what the best — and worst — choices may be.
Good luck and God bless!
Martin
http://www.moneyandmarkets.com/starting-now-americas-second-great-depression-3-28428

Fractional Reserve Banking a.k.a. Counterfeiting
Wednesday, November 26, 2008 - Vol. 10, No. 282
Today's comment comes from A-Letter Editor Matthew Collins and is the latest in a series of ‘Lies' reports, supplements to Sovereign Society Chairman John Pugsley's special "Lies" report.
Your bank is a counterfeiter, as facilitated by the Federal Reserve System and permitted by the government that allegedly represents you.
The lie of fractional reserve banking is at the heart of our ‘banking' system. And its acceptance as fact or necessity by the world's populace is the basis on which most other economic lies and myths gain so much credibility.
To understand why we're in so much trouble right now, and why the privately owned Federal Reserve Banks are to blame, one must understand fractional reserve banking, and why it amounts to little more than counterfeiting.
King Edward II, Goldsmiths and "Legal" Counterfeiting
For all of history through the 1800s, goldsmiths were the world's primary bankers. It made sense in those hard money days to keep your gold with the fellow who molded it into coins and acted as the community's central cash register.
So here we have the goldsmiths...guardians of bullion and protectors of everyone's wealth. I've personally always seen this as the primary function of a bank.
But just guarding money and issuing certificates for it...I suppose it just didn't pay as well as it could. That and you always end up with a huge pile of cash (gold) that's just sitting around and not really doing anything other than backing promissory notes. So the goldsmiths got crafty, and at this point they became the bankers we know today.
They started issuing more certificates than they could back in gold, allowing them to collect interest on the physical gold collecting dust in their shop...gold that already belonged to someone else. But weren't there already certificates attached to that gold? Of course. But the bankers believed those certificates wouldn't all be cashed in at the exact same time, so they could get by and no one would ever be the wiser.
This is the critical point in our story, and at few points in history has the difference between right and wrong been so very clear.
The value of goldsmith's notes was in the gold behind them. So when they issue a new note backed by...well backed by nothing other than the supposition that they'd have enough inventory to pay it off if it fell through...they were engaging in wishful thinking, at best. Ladies and gentlemen, I give you irrational exuberance. At the very core of our banking system.
But how could the goldsmiths get away with such blatant counterfeiting? Didn't anyone realize that they were pulling wealth from thin air, that they were trading worthless notes for valuable goods? Well, the governments knew. Why didn't they do anything to stop the goldsmiths?
Put clearly; it wasn't in the interest of the world's ruling monarchs to stop them. King Charles II of England had his own con game going with the bankers...one where they traded him physical gold for sticks of wood (I'm not kidding at all...we'll be covering government debt next week.)
So by complying with the government's con games and ponzi schemes, the goldsmiths earned themselves a back-scratching from the world's monarchs, received in the form of Fractional Reserve Banking.
The Whole World Falling for the Same Tricks...500 years later
And so we arrive at the modern-day. The Dollar is the world's reserve currency, making us in some sense the world's goldsmith. And we have a Federal Reserve System - composed of privately owned member banks - that represents how cloudy and convoluted the relationship between governments and banks has become in the last half-millennium.
But somehow, the world economy keeps falling for the same scam.
You see, the Federal Reserve controls not only the interest rate at which banks are allowed to lend, but the fractional reserve ratios they're required to keep (as a percentage of their reserves).
Let's backpedal for a second here...make it even simpler. An institution composed of banks and their representatives is in control of not only our money supply, but the amount of new money (in the form of loans issued) that banks are allowed to ‘counterfeit' and the interest they're required to charge on those conjured-from-nowhere dollars.
Interest rates - when the decision is left to the borrower and the lender - represent the time preferences and assumed risk of borrower and lender. Like the price of any other good, the interest rate of a loan ideally represents a compromise for both parties in terms of time and risk.
But when the government intervenes with a mandated interest rate (like Greenspan's sub-zero "liquidity experiment") those decisions to lend and borrow are often made with little or no consideration to time and risk. Since the money is cheap, free, or the government might even be paying you to take it, incentives are changed across the board.
And then fractional reserve banking comes in. Since the banks only have to keep a percentage of their reserves - a ratio set by an institution they own...making them essentially self-governing - these ridiculously low interest rates spur the banks into a lending frenzy.
Lending to and from each other, commercial interests and private parties, the banks go hog-wild. Without the restraint of reasonable lending costs, they lend as much credit against your money as humanly possible, flooding the economy with fresh dollars that never existed before.
Euphoria takes over. Of course housing prices will continue to go up when the pool of dollars chasing those houses is growing so rapidly...that's just common sense. But many of us bought into it, in some way or another. And that's what makes the coming correction so painful.
The M3 Chart: Ever wonder why the government dropped it a few years ago?
Because of the one-two punch of mandated interest rates and fractional reserve banking, an epic amount of bad business decisions are inevitably made. That's a simple truth of economics...no matter who tries to ignore it.
But what can I do?
Well, it's pretty easy actually. Just don't believe all the hype, take everything with a grain of salt, and make your own decisions. I'm not telling you to protest at your local federal reserve bank, I'm just saying you should use reason and that you shouldn't take most things at face value.
Like when the keepers of our national pocketbook - and thereby our national sovereignty - are run by the very banks they're supposed to govern, and those banks (whose original purpose was to guard the money of the people) have a balance sheet that looks like this:

You should be asking questions.
When our government gives a US$25 Billion bailout to Citigroup, and then the company's market capitalization is listed at around US$20 Billion shortly before the company is taken over...you should certainly be asking questions.
When Detroit's CEOs fly to Washington in separate luxury jets, and they beg for US$75 Billion in bailout money for companies with a combined market capitalization of less than US$10 Billion...you should be asking questions.
There's a heist going on out there...and plans are afoot. Through the careful control of information sources, those in power can control the actions of the masses. But you don't have to be a part of the masses.
To make the difference and speak out on the part of personal sovereignty, The Sovereign Society's Chairman John Pugsley has assembled this comprehensive report to tell you about a few of their most dangerous and pervasive of lies. I urge you to have a look.
Regardless of whether you voted for the current President. Regardless of whether or not you like or even trust our country's political and economic systems. You need to give this special information enough of your time to understand the grim situation you could be facing. Not just for your sake, but for the sake of the Sons & Daughters of America, now being laden with years and years of debt.
MATT COLLINS, A-Letter Editor

UN economists warn that dollar is in for a hard landing next year
By Harvey Morris at the United Nations
Published: December 1 2008 02:00 Last updated: December 1 2008 02:00
The current strength of the dollar is temporary and the US currency risks a hard landing in 2009, according to a team of United Nations economists who foresaw a year ago that a US downturn would bring the global economy to a near standstill.
In their annual report on the world economy published today, the economists say the dollar's sharp rebound this autumn has been driven mainly by a flight to the safety of the international reserve currency as the financial crisis spread beyond the US.
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