Eeyore's News and View

Survivalist business booms as economy flails By NICHOLAS K. GERANIOS , 12.01.08, 12:13 PM "Too many things are occurring at the same time. It's upsetting people," said the Survivalist, whose real name is Kurt Wilson.
So this Martha Stewart for the camo-and-compound crowd provides valuable information on nonperishable foods, portable water purifiers and defensive weapons. His catalog business, Survival Enterprises, sells what you need for the coming hard times.
Northern Idaho has long been a magnet for anti-government types and Wilson moved his business here from California in 1998.
He operates out of a modest strip mall that is, ironically, on Government Way in Coeur d'Alene. Much of the work is packing and shipping orders for survival supplies such as canned bacon with a camouflage label and cases of military MREs.
Wilson started "The Armchair Survivalist" radio show about a year ago because so many people were asking him for advice on what he considered simple problems. The Saturday show can be heard over his Web site, on shortwave radio, or a few broadcast stations.

The survivalist movement was considered somewhat on the decline since it peaked around 1996, according to the Southern Poverty Law Center, which studies fringe movements around the country. But the SPLC warned last week of a rise in "hyper-survivalist paramilitary groups" as a result of the Obama election.
"Some conspiracy theorists and fringe "Patriot" radio hosts are seeking to reverse that course by calling on their friends and countrymen to arm themselves, organize and head for the hills in preparation for a fast-approaching second Civil War," the SPLC said on its web site.
Jim Rawles, editor of survivalblog.com said unique visits to his site are climbing. They've doubled to about 107,000 a week, he said. But he doesn't think Obama's election is the main reason.
"The main driver right now is the economic situation," he said. "A lot of people are deeply concerned we are on the cusp of another economic depression."
While the term "survivalist" often carries negative connotations of reactionary politics, advocates of the lifestyle say it has a long, proud place in history - see Lewis and Clark - and in fiction such as "The Swiss Family Robinson."
Barton Biggs, former chief global strategist for Morgan Stanley (nyse: MS - news - people ), recently wrote a book in which he warned that people should anticipate the breakdown of civilized society. He suggested creating a "safe haven" and stocking it with canned food, liquids, medicine, seed, fertilizer and other tools for survival.
In the same vein, Wilson devotes most of his program to topics like vacuum packing of food, generator silencing, and fire starting
But his politics are also clear. During a recent program he referred to "low-life interesting creatures that crawl over the border to get on Social Security." He said Barack Obama was a communist whose election was largely due to his race.
Yet business is booming at levels Wilson has not seen since the Y2K scare.
He attributes that to Americans' sense of vulnerability because of economic woes and a series of high profile disasters, most notably Hurricane Katrina. People feel they have to fend for themselves, he said.
Wilson spent part of his childhood living in a log cabin in the woods, where he picked up many of the skills once common among rural Americans but now largely forgotten.
During the Depression, for example, many Americans survived by planting gardens, he said.
Wilson said his show is intended for a mainstream audience, but it's not exactly "Paul Harvey."
On a recent program, he ripped the Wall Street bailout package, Democrats, rising taxes, disappearing pensions and the possible expansion of welfare. He warned that the worldwide credit crunch may leave cargo ships stranded in ports, making food imports to the U.S. impossible.
During breaks, there were advertisements for a product that can obscure license plates from red light cameras ("when cameras flash, you'll save some cash"), a cure for intestinal parasites, and a device for converting humidity into drinking water.
He doesn't worry so much about people who live in the country, figuring they can fend for themselves.
"The guy in an apartment has no chance in hell," he said. "I help people to become more self-sufficient."
One customer lives in a small Manhattan apartment, where he keeps stacks of canned food covered by tablecloths in his living room so they look like end tables, Wilson said.
Wilson recommends spending whatever it takes to have a year's worth of food on hand because grocery stores will be immediately stripped bare when disaster strikes.
Survival food and equipment can be expensive, but there are tricks to cutting the costs, such as buying cases of canned food on sale.
"I like yard sales," he said. "All true survivalists like yard sales."
http://www.forbes.com/feeds/ap/2008/12/01/ap5760797.html

Expect the Worst Recession Since WWII
This week we look at a short but excellent summary of the state of the current economic crisis. I always enjoy reading David Rosenberg, the North American economist of Merrill Lynch. He has a no-nonsense style that is refreshing from most mainstream economists. The reality is that things continue to deteriorate. Today's stock market action shows that we are not of the bear market woods just yet. Rosenberg gives us a few reasons why
The Six Lessons from Last Week's ActionBy David Rosenberg, North American Economist, Merrill Lynch
1) Expect the worst recession in the post-WWII eraFirst, this is going to be the worst recession in the post-World War II era, in our view. The ECRI leading indicator hit a record low for the fifth week in a row – down to - 29.2 as of the November 21st week versus -28.2 the week before. This index, which leads real GDP by two quarters with a 70% historical correlation, is getting further and further away from the prior all-time low of -19.8 that defined the worst recession of the post-WWII era and saw a six-quarter consumer recession coincide with a 45% peak-to-trough decline in the stock market. Perhaps the fact that this bear market is proving to be even more severe is symptomatic of an economic downturn that will also prove to be deeper and more prolonged. After the flurry of data released just before Thanksgiving, we are now tracking close to a 4.5% QoQ annualized fall in real GDP in 4Q. This would be the largest pullback since the 1982 recession, and we see a similar contraction in the first quarter of 2009.
2) Capex is in a steep declineSecond, capex is in a very steep decline right now. Durable goods orders dropped 6.2% in October, the third decline in a row. Over that time frame, orders have plunged at a 39% annual rate, which is unprecedented. The retrenchment has spread to the tech sector, where order books were expanding at a 7% annualized rate over the three months to June. Currently, that same three-month trend has swung to a negative 13% annualized rate.
3) Consumer spending down sharply; savings rate is soaringThird, consumer spending fell 1% in October, which was a near-record decline. This, in fact, was the fourth straight monthly decline, which is unprecedented. The savings rate is soaring; it leapt to 2.4% from 1.0% in September, in a sign of heightened risk aversion and cash preservation, and is a shift that we believe should be seen as secular, not merely cyclical.
This was a conclusion that came through loud and clear in the Conference Board's Consumer Confidence Index, principally in the spending intention components of the survey. Auto buying plans dropped for the third month in a row to a record low in October while home-buying plans fell to their lowest level since the 1982 recession. Consumer plans to buy a major appliance fell to a 14-year low as well – down for three months in a row. During this four-month period of unprecedented consumer retrenchment from July to October, spending on discretionary items collapsed at an average annual rate of 18%. Even spending on groceries has declined 6%, toiletries are off by 6% and utilities are down 3%. So, even some of the classic staples are being curtailed.
The only areas that have posted increases in spending over this unprecedented four-month decline in spending have been pharmaceuticals (+7%), telecom services (+3%), medical care services (+5%) and mass transit (+26%) – all other forms of transportation, from rail to bus to air fell at a 19% annual rate.
4) Obama planning a $700 billion fiscal packageFourth, we learned this week that President-elect Obama's economics team is planning a fiscal package as big as $700 billion over the next two years. We are going to wait for the details to see how this is going to impact our base case macro forecast. Suffice it to say that the cornerstone of the stimulus this time around will likely be infrastructure, not tax rebates. The key for investors is where these outlays will be concentrated, which, in turn, means identifying the areas of the capital stock that have been the most underinvested in recent years. After sifting through the data, we believe that the prime candidates will be hospitals, waste management services and passenger transit.
5) Housing market is not close to bottoming outFifth, we learned that the housing market is nowhere close to bottoming out. New home sales dropped 5.3% in November to a 433k annualized rate – the worst since the 1982 recession. Even though sales are now down 69% from the July 2005 bubble peak of 1.39 million units, we believe builders have not been aggressive enough in curbing production because the most critical variable of all, the unsold inventory backlog, rose to 11.1 months' supply from 10.9 in September.
Need to see inventory backlog drop to 8 months' supply
The reality is that even though single-family starts have dropped to 26-year lows of 531,000, they are still running 23% above the prevailing level of new home sales. The worst the inventory-sales ratio ever got in the early 1990s real estate meltdown was 9.4 months' supply. We are currently 18% above that level and almost 40% higher than the 8 months' supply we would need to see before calling an end to the housing deflation phase.
Another 15-20% decline in home prices likely from here
As we saw last week, the Case-Shiller index fell 1.85% MoM or at a 20% annual rate. All 20 cities were down both sequentially and YoY. Home prices are now down a remarkable 22% from the 2007 peaks. With the unsold inventory sitting at the third highest level of the past three decades and mortgage approvals for new home purchases falling to their lowest level in nine years, we believe the laws of supply and demand point to a further 15-20% decline from here. So, of all the things that happened last week in the market, retailing stocks up 17%, the bank stocks up 26%, tech up 9%, the one development that probably has the greatest chance of being reversed is the 60% surge we saw in the homebuilding group.
6) Fed has switched December meeting to a two-day affairSixth, we learned that the Fed is going to make the December FOMC meeting a two-day affair instead of one (December 15-16). The market is already sniffing out a 50 basis point rate cut. However, now that the Fed has de facto embarked on the process of quantitative easing, perhaps the need for a two day meeting is to iron out a more aggressive plan to revive the credit markets and the economy. The only areas that have posted increases in spending over this unprecedented four-month decline in spending have been pharmaceuticals (+7%), telecom services (+3%), medical care services (+5%) and mass transit (+26%) – all other forms of transportation, from rail to bus to air fell at a 19% annual rate.
As Chairman Bernanke suggested in several speeches he gave back in 2002 and 2003, one of the deflation-fighting strategies would likely involve Fed action to nurture lower rates at the longer end of the yield curve. Perhaps this prospect is behind the rally in the 10-year note yield and long bond to cycle lows. This would fit in very well with our ongoing strategy of focusing on equity sectors that have income-generating characteristics like utilities, health care and telecom services; these sectors also screen very well in a negative nominal GDP growth environment.
http://www.marketoracle.co.uk/Article7573.html

Jobless claims fall last week; benefits at 26-year high
WASHINGTON (AP) — The number of new claims for unemployment benefits fell unexpectedly last week, but the number of people continuing to claim benefits reached a 26-year high.
The Labor Department says initial claims for unemployment insurance dropped to a seasonally adjusted 509,000, from an upwardly revised 530,000 the previous week.
That's significantly below analysts' estimates of 537,000, according to a survey by Thomson Reuters.
But the number of people continuing to claim unemployment benefits reached 4.09 million, the most since December 1982, when the economy was in a steep recession.
http://www.usatoday.com/money/economy/2008-12-04-jobless-claims_N.htm?loc=interstitialskip

AT&T, DuPont, United will cut thousands of jobs
AT&T, United Airlines and DuPont joined the layoff parade Thursday, as the number of people drawing unemployment benefits hit a 26-year high.
AT&T (T) announced plans to cut 12,000 jobs, about 4% of its work force.
DuPont (DD)says it will cut 2,500 jobs, mostly in its businesses that serve the U.S. and European auto and construction markets, plus 4,000 contractors.
United Airlines plans to furlough 1,088 workers at bases around the country, according to layoff notices and the unions that represent the workers.
Those announcements came as the Labor Department said the number of new claims for unemployment benefits fell unexpectedly last week to a seasonally adjusted 509,000, from an upwardly revised 530,000 the previous week.
But the number of people continuing to claim benefits reached a 26-year high 4.09 million, the most since December 1982, when the economy was in a steep recession.
The U.S. workforce is roughly 50% larger than it was in the early 1980s. As a result, the Labor Department said the proportion of workers continuing to receive jobless benefits matches a level reached 16 years ago, in September 1992, when the economy was recovering from recession.
Weekly claims last month reached a 16-year high 543,000. A year ago, initial claims stood at 340,000.
WHAT AT&T SAYS: Read the press release
WHAT DUPONT SAYS: Read the press release
AT&T, the nation's largest telecommunications company, said its job cuts will take place in December and throughout 2009.
It was not immediately clear what departments and cities would see cuts. But, like most telecom companies, AT&T has been seeing customers defect from landline phones to wireless services, and the company noted that it would still be hiring in 2009 in parts of the business that offer cellphone service and broadband Internet access.
The company also said it plans to reduce capital spending next year.
AT&T said it will take a charge of about $600 million in the fourth quarter to pay severance costs.
The company noted that many non-management employees have guaranteed jobs because of union contracts. All affected workers will receive severance "in accordance with management policies or union agreements," the company said.
Chemicals maker DuPont says it will cut the 4,000 contractors by the end of this year, with additional contractor reductions expected in 2009.
DuPont is forecasting a 2008 fourth-quarter loss of 20 cents to 30 cents a share, excluding restructuring charges of about 40 cents per share. The company expects 2009 earnings between $2.25 and $2.75 per share, anticipating the current global recession will continue well into 2009.
Analysts surveyed by Thomson Reuters were predicting quarterly profit of 23 cents per share and fiscal 2009 earnings of $2.80, on average.
United, the nation's third-largest airline also plans to close maintenance facilities at the Newark, New York-LaGuardia and Philadelphia airports on Jan. 11.
Chicago-based United has been working for several months toward reducing its headcount by 7,000 positions as it trims the amount of flying it does. It's been using a combination of leaves, buyouts, and furloughs to eliminate those jobs. The latest furlough plans are part of that 7,000 total, which also includes plans to lay off roughly 1,500 office and management workers.
United told workers in October that it plans to close maintenance facilities at Newark, LaGuardia, and Philadelphia, and said much of that work would shift to John F. Kennedy International Airport in New York.
United also told workers it would close hangars in Boston and JFK, although some maintenance would still be done in those locations. It said growing international departures would mean some growth in activity at Washington Dulles airport.
The 1,088 job cuts would include some 490 ramp and customer service workers represented by the International Association of Machinists and Aerospace Workers, spokesman Joseph Tiberi said on Wednesday. That includes 253 at Chicago O'Hare and 153 in San Francisco around Jan. 25, and 84 at Los Angeles International Airport on Feb. 3.
United also notified the state of California that it plans to furlough 598 San Francisco mechanics around Jan. 11. That was a revision from a previously-disclosed plan to furlough 414 this month.
"These previously-announced layoffs are difficult but necessary actions that we must take company-wide that will enable United to compete in the challenging economic environment," spokeswoman Megan McCarthy said.
United mechanics are represented by the Teamsters. The head of the union's airline division, David Bourne, is scheduled to meet with United executives on Dec. 11 and 12 to see if the number of job cuts can be reduced.
United's flight attendants avoided involuntary furloughs because enough of them took leaves, early retirement, or other voluntary measures.
United and other airlines have been reducing the flying they do. On Wednesday United reported that it cut November capacity by 14.2%, but its traffic fell faster, by 17%.
Shares of United parent UAL Corp. rose 28 cents, or 2.9%, to close at $9.92 on Wednesday.
http://www.usatoday.com/money/economy/2008-12-04-job-cuts_N.htm

Majority of CEOs say they plan job cuts in next six months
WASHINGTON — Businesses often cut workers at year's end to get salaries off their books. But this year is looking far bleaker than normal.
More than 4 million people were collecting unemployment benefits in the week that ended Nov. 22, the highest in 26 years, when the economy was climbing out of one of the worst recessions in postwar history, the Labor Department said Thursday.
And a survey showed the majority of CEOs plan to cut workers in the next six months, while a number of major companies, including AT&T and DuPont, announced layoffs of thousands of workers in coming weeks.
"This is so quick and so sharp," says Richard Yamarone, director of research at Argus Research. "We had some job loss the first seven or eight months of the year, but it was nothing like this." He says declining stock values are leading firms to cut more than usual in December.
The jobs news helped lead to another sell-off on Wall Street. The Dow Jones industrial average fell 215 points to 8376. A government report out today is expected to show another plunge in jobs in November and a further increase in the unemployment rate. The jobless rate in October was 6.5%, the highest since 1994.
The Business Roundtable survey found that 60% of CEOs planned to cut workers in the next six months. That was up from 32% in the third quarter.
The survey of 101 CEOs showed a rapid deterioration in the outlook from the nation's top executives as expectations for sales and investment dimmed. The group said its CEO economic outlook index plunged to 16.5 in the fourth quarter, down from 78.8 in the prior quarter and the lowest since the private group began doing the survey six years ago.
An index below 50 points to a contraction in the economy.
The survey was conducted Nov. 3-17. CEOs in the round table represent many of the nation's largest companies, with a combined workforce of 10 million employees.
Job cuts announced Thursday:
•AT&T said it's cutting 12,000 jobs, or about 4% of the company's workforce.
•DuPont is cutting 6,500 workers. The cuts include 4,000 contractors and 2,500 employees, or more than 4% of its permanent workforce. Those cuts are mainly in the motor vehicle and construction markets in the U.S. and Western Europe.
•United Airlines said that in January it will lay off nearly 1,100 workers.
http://www.usatoday.com/money/economy/2008-12-04-job-cuts_N.htm

Blackwater joins fight against sea piracy
Pirates beware -- Blackwater Worldwide may be looking for you, and soon. That prospect certainly would shiver Bartholomew Roberts, better known as "Black Bart," down to his timbers if the infamous pirate hadn't been dead for the past 285 years.
The North Carolina-based security firm, which came under fire from Congress over a shooting incident in Baghdad last year that left 17 Iraqi civilians dead, announced in October that its 183-foot ship, the McArthur, stands ready to assist the shipping industry as it struggles with the increasing problem of piracy in the Gulf of Aden and elsewhere.
"Billions of dollars of goods move through the Gulf of Aden each year," said Bill Mathews, Blackwater's executive vice president. "We have been contacted by ship owners who say they need our help in making sure those goods get to their destination safely. The McArthur can help us accomplish that."
The International Maritime Bureau estimated that more than 100 ships have been attacked off Somalia alone since January. A total of 14 ships and 250 crew members are still being held for ransom.
Among them, the Saudi oil tanker Sirius Star and its cargo worth more than $100 million are still being held. The ship and its 25-member crew were seized on Nov. 14.
Just this week, pirates fired on a U.S. cruise ship carrying hundreds of passengers as it steamed across the Gulf of Aden on a 32-day cruise from Rome to Singapore.
Blackwater spokeswoman Anne Tyrrell said more than 70 companies, including shipping and insurance firms, have contacted the security specialists for information on the McArthur, although she did not elaborate. She said meetings are taking place this week in London to explain to those interested what the company can provide.
"More than 70 different companies have reached out to find out our capabilities," she said.
As a company with a 50,000-person database of former military and law enforcement professionals, Blackwater says it is uniquely positioned to assist the shipping industry in the Gulf of Aden and elsewhere.
Formerly known as Blackwater USA and founded in 1997 by former U.S. Navy SEAL members Erik Prince and Al Clark, the company recently focused on expanding operations and services, and acquired the McArthur for use in combating terrorists and for special missions.
The refurbished ship has what the company has described as state-of-the-art navigation systems, full Global Maritime Distress and Safety System communications, SEATEL broadband satellite communications, dedicated command and control battlefield air support, helicopter decks, a hospital, multiple support vessel capabilities, and a crew of 45 highly trained personnel.
Formerly a National Oceanic and Atmospheric Administration research vessel, the McArthur was put in service in 1966 and decommissioned in 2003. Reconfigured and modified in 2006, the ship is now considered a Blackwater Worldwide maritime security support craft. Blackwater´s aviation affiliate can provide the helicopters, pilots and maintenance required to support escort missions in the Gulf of Aden.
Company spokesmen said the dramatic increase of pirate attacks on merchant vessels in the Gulf of Aden had led to parallel cost increases for the shipping industry, resulting in 10-fold insurance increases this year alone. They said that with the added danger pay offered to crews willing to make the journey, pirate ransom demands that reach into the millions, and lengthy negotiations for hijacked ships, if left unaddressed the cost of the piracy boom to the shipping industry -- and consumers buying their goods -- will only increase.
"Some shippers have taken the step of arming their crews, or hiring private security to ride on board cargo ships," the company said. "Rather than having armed guards on a cargo vessel, the McArthur´s ability to accompany a ship and deploy helicopters to patrol the area provides a safer option for the shipping industry.
The McArthur is a multipurpose maritime vessel designed to support military and law enforcement training, peacekeeping, and stability operations worldwide.

Motor Vessel McArthur
Blackwater Worldwide is the largest of the State Department's three private security contractors. Of the 987 contractors Blackwater provides, 744 are U.S. citizens. At least 90 percent of its revenue comes from government contracts, two-thirds of which are no-bid contracts. The company is currently contracted by the U.S. government to provide security services in the Iraq war.
Twenty-seven Blackwater employees have been killed during various security missions in Iraq. In March 2004, four Blackwater employees were ambushed and killed in Fallujah, and their bodies were hanged on bridges.
In September 2007, Blackwater employees in Baghdad fatally shot 17 Iraqis, at least 14 of whom were killed "without cause" according to the FBI. Witnesses told investigators the attack was unprovoked, although Blackwater maintained that its guards were under attack and responded accordingly.
The Iraqi government initially said it expected to refer criminal charges to its courts in connection with the incident, but in October 2007 immunity from prosecution was granted by the State Department. While the Justice Department said any immunity deals offered to Blackwater employees were invalid, legal experts have said the U.S. government is unlikely to allow a trial in the Iraqi courts, because there is little confidence that trials would be fair.
http://www.washingtontimes.com/news/2008/dec/04/blackwater-joins-fight-against-sea-piracy/

Record number of Americans using food stamps: report
By Roberta Rampton
WASHINGTON (Reuters) - Food stamps, the main U.S. antihunger program which helps the needy buy food, set a record in September as more than 31.5 million Americans used the program -- up 17 percent from a year ago, according to government data.
The number of people using food stamps in September surpassed the previous peak of 29.85 million seen in November 2005 when victims of hurricanes Katrina, Rita and Wilma received emergency benefits, said Jean Daniel of the USDA's Food and Nutrition Service.
September's tally -- the latest month available -- was also boosted by hurricane and flood aid, Daniel said on Wednesday.
But anti-hunger groups said the economic downturn is the main reason behind the higher figures.
"It's a disturbing trend," said Ellen Vollinger, legal director with the Food Research and Action Center. She said she expects more people will turn to food stamps as unemployment figures rise and the economy remains weak.
One in 10 Americans were participating in the food stamp program as of September, said Dottie Rosenbaum, analyst with Center on Budget and Policy Priorities, a think tank.
That's approaching the all-time high of 10.5 percent of the population that used the program in 1994, and is similar to levels seen in the early 1980s, she said.
States that have seen a drop in job numbers and increase in home foreclosures such as Florida and Nevada also have seen a marked increase in food stamp use, Rosenbaum said.
Food banks are struggling to meet increased requests for food, said Maura Daly of Feeding America, a network of food banks.
"The tough economic time that our nation is facing is having a tremendous impact on the level of food assistance needed across the country," Daly said.
On average, people who used food stamps received $100 per month in benefits in September. That increased slightly in October to account for higher food prices, but hunger groups said the benefits still don't go far enough at a time of high food prices and home heating costs.
Last month, the USDA said 36.2 million Americans or 11 percent of households struggle to get enough food to eat, and one-third of them had to sometimes skip or cut back on meals.
Hunger groups want Congress and the new administration to increase food stamp benefits as part of an economic stimulus package they hope will come in early 2009.
The benefits go directly to people who spend it at local grocery stores, supporting businesses and jobs, said Vollinger of the Food Research and Action Center.
"They (the benefits) don't sit in a pocket," she said, pointing to USDA estimates that $5 in food stamp spending generates $9 in economic activity.
http://www.reuters.com/article/domesticNews/idUSTRE4B28CB20081203