Saturday, November 1, 2008

Eeyore's News and Views

Here is the third part of the series, i hope you liked it. I hope you understand i don't agree with 100% of what this person purposes, but i hope it makes you think a little. If you have read this blog, then you understand where i'm at on this. We are in some troubled times, bordering on Badtimes. A regular person had nothing to do with it, but that does not mean that we should put our head in the sand and hope it goes away. There are steps to take to help you continue on. It is up to you if you want to do them. The economy is tight and going to get tighter, so be wise and prudent in what ever you do. I would encourage you to do something.

  RELATIONS WITH NEIGHBORS
  I've already mentioned the importance of getting along with your
neighbors. It really is crucial to your city-based survival plan. The best
situation to be in, as mentioned before, is to have neighbors & other church
members who are aware of the issue and who are getting ready for it by
stocking their own food, water, and other supplies. Every neighbor & member
that becomes self-reliant is one less neighbor or member you'll have to
support.
  The range of neighbor situations, from best to worst, is as follows:
  * Best case: your neighbor is current Recommend holder, is aware of and
both temporally & Spiritually prepared for an emergency with their own
supplies and training.
  * Good case: your neighbor is aware of a potential crisis, and even though
they don't have their own supplies, they're willing to help defend yours as
long as you share
  * Bad case: your neighbor is a non-member that didn't prepare for it,
figuring they would just steal from you if things got bad. They are aware of
YOUR supplies but don't have their own.
  * Worst case: your neighbor isn't aware of anything, he is anti-mormon and
he's a violent, angry neighbor just released from prison. He is going to be
caught off guard by the ensuing events and will likely attempt to use
violence to get what he needs or wants.
  Your decision on whether to stay in the city may depend greatly on the
quality and quantity of your neighbors. If you do live in a bad
neighborhood, do what you can to relocate. If you live in a good
neighborhood, do the best you can to educate and inform your neighbors. This
might well be the most important missionary work you ever do for your own
temporal salvation!
  GUN CONTROL IN THE CITIES
  No matter how you felt or thought about gun control in the past, it's time
to face disaster-induced reality. The gun-control politicians (and the
people who supported them) have placed Americans in a situation where not
only can the police not protect us in a timely manner, but we cannot
lawfully defend ourselves. Criminals unlawfully have firearms; citizens
lawfully don't. Intentionally or otherwise, gun-control supporters have
created a situation where an unfortunate number of innocent men, women and
children are going to be in danger during a crisis simply because they could
not obtain the tools of self-defense.
  It also happens that the cities where the rioting will likely be the worst
are precisely the cities where firearms are most likely to be banned from
lawful ownership (and where criminals may wield near-absolute power for a
while.). Perhaps when society recovers from it, we can review the fallacy in
the cause / effect logic that keeps people voting for gun-control laws, but
in the mean time, millions of people are going to have to resort to breaking
the law in order to protect their families. And yes, you too will have to
resort to breaking the law if you are to acquire a firearm in an area where
guns are entirely banned from private citizens (like New York, Los Angeles,
etc.).
  After the disaster hits, if the rioting gets really bad, we're going to
see local police begging law-abiding citizens for help. Your firearm will be
a welcome addition to the force of law and order, believe me. No local cop
is going to mind you having a handgun if you're manning a roadblock
protecting a neighborhood of families with children. Act responsibly, tell
them what you're doing, and they'll probably give you a big thanks. But if
you're carrying a gun while you smash a window of the Wal-Mart and walk off
with a stereo; well that's a different story. Be prepare to get shot.
  See, cops don't mind private ownership nearly as much as we've all been
led to believe. I know, I work with law enforcement officers in a small
town, and I ask them about topics like this. When the crisis hits, they'll
be more than happy to have your cooperation. We're all going to need as many
law-abiding gun-toting citizens as possible in order to fend off the
criminals and establish some degree of order.
  ONE MORE REASON TO MOVE OUT
  If you really feel you need a firearm to protect yourself and your family,
your best bet may be to move to a city or state where people are a lot more
accepting of firearms. You'd be surprised what a difference the locale
makes. Check the gun laws in any state you're considering moving to.
Obviously, "cowboy" states like Arizona, Texas and Wyoming will have fewer
restrictions on firearms (and, interestingly, they have less of a problem
with gun violence). States where the population is more dense (like
California & New York) tend to have much greater restrictions on private
ownership of firearms.
  BUGGING OUT
  Suppose it's July 14, 2006, and you've changed your mind about this city
thing. You happened to be right smack in the middle of one of the worst-hit
cities in the country. The looting is getting worse, the power has been out
for two weeks, and your water supplies are running low. You still have
enough gas in your truck to make it out of town if you can get past the
gangs, that is. You've decided to BUG OUT!
  SOME BASIC POINTERS:
  * Don't try to bug out in a Chevy Geo. You will likely need a big heavy
4x4 truck in order to go off-road and around stalled vehicles
  * Get something that can carry at least 1000 pounds of supplies. A big 4x4
pickup will do nicely! Yes, it requires more fuel, but you can carry the
fuel as cargo.
  * Don't bug out unless you can have someone ride shotgun, literally. You
will need an armed passenger in case you run into not-so-nice people
  WHAT TO TAKE
  Ahh, the bug-out supply list. All this will fit in your truck. Here's what
you should take if you're preparing to bug out with two people:
  * Your 96 hour kits for each person in the vehicle
  * 20 gallons of water
  * 40 gallons of extra fuel or more (and a full gas tank)
  WHERE TO GO
  As mentioned earlier, if you have a designated place of refuge (Grandma's
house, a cabin in the woods, etc.), head straight for it. If not, you're
basically driving anywhere you can go, so try to head for an area that
forested and near a creek or river where you can get some water.
  CONCLUSION
  Choosing to remain in the city is a rational choice for many people in
many situations. However, as you have seen from the dangers described here,
the further away you can get from the population centers in general, the
better your chances of surviving.
  Most people, perhaps yourself included, have a difficult time actually
accepting that a major disaster is going to be as bad as described in this
report. And after all, if you leave the city, sell out, quit your job, move
to the country, and then nothing bad happens? You will have disrupted your
life, and you may find yourself broke, jobless, and homeless. You COULD
assume it will be a mild event, which I suppose is also a credible
possibility. In that case, surviving in the city will be quite feasible,
especially if you have neighbors that can support your efforts and you don't
live in a dangerous city with high racial tensions. However, the very nature
of a major disaster means that if only one or two major infrastructure
components goes down, the ripple effect will quickly create a much worse
scenario. It seems there is very little room for "mild" effects unless they
are miniscule. The most likely scenario at this point clearly points to
massive disruptions, severe shortages in food and water, loss of power in
some areas, and a breakdown of social order in certain areas where the
population density is high.
  But you can survive anything with good planning, an open mind, and plenty
of practice. Why not start now?
  http://www.pilleriin.ee/h5n1/2006/03/radikaalsed_mormoonid.html
  Additional Insight
The article Surviving in the City is basically a good plan. I do have some
comments that I wish to send along, particularly about the bug out phase of
potential relief from chaos.
  The assumption that people in the rural areas are going to be friendly and
accept hoards of people from the cities is false. I live 15 miles as the
crow flies from the closed metropolitan area of about 20,000 people. Only
the disillusioned and stupid in this area will be across-the-board friendly.
The assumption that the people in the rural areas are not as dangerous as
people in the cities is also untrue.
  Many rural areas have a large population of people who are at the poverty
level. They control no land; do not have access to water wells; do not hunt
and drive cheap run down automobiles. Most rural areas are saturated with
meth heads and other drug users as well as a thick frosting of alcoholics. A
certain group is on welfare and are dependents to a wealth redistribution
system.
  If you live in a rural area and want to stay isolated you can take
positive actions.
  Round up 10 to 15 vehicles that can be towed or run to a narrow spot on
the state hi-way.
  Place them across the road and burn them.... Or get a bulldozer and
operator and push up a dirt bank across the road...
  I once talked to a local crew of people in Montana while on vacation. They
had a plan to block the roads at each end of the valley and stay isolated.
This was 14 years ago.....so I am not alone in these thoughts......
  In a just in time mercantile starvation with overtones of diminished food
supplies these people will be equally as dangerous or more so than the
criminal city dweller.
  You miss an important point in not telling people to bug out to state
parks, public hunting areas and lakes. Soon the local ranger will not even
attempt to enter these area to tell people to leave. He will be home taking
care of his family.
  You also miss out on the point of having people get proper maps. The
DeLorme maps sold at Wal-Mart are very detailed.
  You tell people to get a 4X4 pickup to drive around abandoned vehicles and
make it across country. With a 1000+ lbs of gear in the rear your truck will
be a wallowing hog off the road.
  Cross-countrying is BS if you do not have a planned track...which you
cannot get without a good map. You must also have more than a smattering of
knowledge of microtopograpy to be able to drive across country. You will
soon have that 4x4 bogged down in soft soil, wet areas or in a 2 foot deep
cow path covered by grass.
  I worked for 20 years as a District Conservationist with the Soil
Conservation Service. I drove all over God's green earth in a 1/2 ton 2
wheel drive pickup in all kinds of weather and seldom if ever needed 4 wheel
drive. Very seldom got stuck or high centered. I learned to read the
topography and where to drive. You do not get this information and awareness
by driving down a paved road to the local big box store. I recommend that
you have a state wide DeLorme Map for every state that surrounds the state
you live in.
  You must understand the road system in the area that you live. They are
not all the same. The Plains states have a section and township layout of
roads. In most areas there are roads nearly every mile. It is possible to
drive from 30 miles east of Denver clear to Salina, Kansas on dirt roads.
Crossing or traveling down paved roads only a few miles in crossovers. I
have done this twice in my life time. The Plains states have a network of
roads that makes living in that area particularly favorable for some kind of
bugout.
  If you live in the hogback areas of steep hills snaking ridges your roads
will follow the tops of the ridges. Crossovers are only at bridging points
of the streams and rivers to the far ridge line. Your access potential is
very limited to a few roads. Same thing applies to the mountains....highly
restricted roads....death traps....
  You do not talk about how to read maps which is critical. The DeLorme maps
do not have contour lines on them, but I can look at them and visualize the
topography in a very general fashion that most people cannot do. A GPS unit
is going to do you less good than map skills if you cannot get from point A
to point B just 1/2 mile away without getting stuck.
  All land is cut through with rivers, creeks and streams. The stem river
system in America is the Mississippi. From the eastern foot hills of the
Rockies all the rivers flow east and south. The farther you go east and
south from the mountains the bigger the stream valleys become. And the more
difficult to cross. They become great barriers that compress traffic to
certain roads between river systems. They are crossed north to south only on
the bridges. Many counties have only 1 to 3 bridges crossing these rivers in
a 30 to 40 mile area. You must have maps to show where the choke points are.
All bridges are death traps that will be controlled by the local brigands
with a BA in Beer and Meth.
  An alternative: the railroad bridges...what say? Yes you can drive on the
rails and you do not have to let out air from your tires. All you need is
the guts to do it...drive across 1/4 to 1/2 mile of track high up... But you
need to send someone to reconnoiter the other side with a radio to watch and
listen for approaching trains. You cannot drive fast on the rails, 10 mph is
about tops...but with a 1000+ lbs in the back you might have to go even
slower. I have driven miles and miles of tracks even crossing the mighty
Arkansas river bed on a bridge at Larned, Kansas...but my buddy's father was
the railroad agent for that section of track and we knew exactly what the
train schedules were all the time.
  You need tools to travel across country. A chain saw to take down a tree.
Or a manual bow saw. Leave the axes at home they are just weight. A good
machete is better. Also critical to a tool kit is a set of bolt cutters. One
24" and one 36" to cut fence, chains on gates and padlocks. Fencing pliers,
standard pliers and smaller set of wire cutters are essential.
  Additional land surface information is available in the Natural Resource
Service's soil surveys. They are free if you can get them to give you one as
a non landowner in the county. They are a complete set of aerial photos of a
county delineated with the soil types and their distribution on them. The
are invaluable because the show nearly all of the local windmills and ponds.
Water sources. And they show many of the agricultural access roads that
snake through the private range and pasture lands.
  You also need a good set of binoculars to see... reconnoiter by eye.....
  A good 22 rifle and 10,000 rounds of ammo. So you find some of the local
fellas with a BA in beer blocking your way... Get your rig in defilade and
then pepper them from 1/4 to 1/3 mile away with 20 to 50 rounds of 22 ammo.
Having never been shot at they will certainly try to get at least out of
range when even a few bullets impact in their area. You will have registered
your intent to not be messed with....
  You must establish some rules for your defensive actions and stick to
them. Mine are that if people are within 1/4 mile and are menacing with
rifles, blocking a road and show intent to issue a power summons to you and
your party, you shoot one of them center of mass with no warning whatsoever.
Pick out the leader if you can. If you happen to have someone trip up on you
unexpectedly and are under 20 to 30 yards you bring a weapon to bear on the
person and give only one verbal warning [of your choice] and you then shoot
in five seconds if they do not respond to your warning. No counting off
seconds; you warn then shoot. If someone confronts you really close [under
10 yards], no warning you bring a weapon to bear and shoot. Execute the
Mozambique drill, two in the chest and one in the head..
  Think I am a bloodthirsty kind....no, but I am an ex-commissioned police
officer and have dealt with the vermin of the planet. I have seen some of
the third world up close and know just how animalistic humans can get when
unfettered with a conscious and no moral restrictions....
  Ugly is ugly but survival has no second place winners...... If you cannot
win at the mind game you just as well stay home, wait for your fate to show
up and pray....
  JW, Oklahoma
  USAF, retired
  USDA, Soil Conservation Service, retired
  US Dept of State, Peace Corps, Niger West Africa
  Educator, USA public, private and reservation schools
  Educator, Egyptian and Ecuadorian private American schools
  NM Mounted Patrol, commissioned police officer
  Minute Man Civil Defense Corps, April/October 2006 expeditionary unit to
Columbus, NM
  NRA member
  Rifleman
  Free American.. .. .. so far
 Booze, lipstick big sellers in hard times
Americans are not buying new cars or homes in this nose-diving economy, but how about low-price-point instant-gratification items such as booze and makeup?
Yes, indeedy.
According to a recent report by the U.S. Census Bureau, liquor and personal care products are faring well in this credit-strangled environment.
Marcia Mogelonsky, senior research analyst with the market-research group Mintel International in Chicago, is not surprised.
"Yes, we still keep buying these products even in a recession," Ms. Mogelonsky says. "What we see are changes within these product categories."
Meaning we might opt for a store-brand cosmetic instead of the high-end versions, and we might buy that bottle of Glenfiddich at a liquor store to serve at home rather than
ordering a couple of drinks on the rocks at a bar or restaurant, where the markup can be astronomical.
"The on-premise sales will flatten out, but people will entertain more at home instead," says David Ozgo, chief economist for the Distilled Spirits Council of the United States.
Mr. Ozgo says he doesn't regard liquor as a "recession proof" category, but it's certainly not in the same league as the car or housing market.
Not recession proof? Even though sales of liquor are predicted to increase this year?
"Yes, but the growth is slowing," he says.
That sounds like the car industry during good times.
In the alcoholic beverage segment, beer is the most recession proof, says
Jie Zhang, assistant professor of marketing at the University of Maryland at College Park.
"Products that make people feel good without costing a lot of money will do well in this economy," Ms. Zhang says, adding that cosmetics fit into this category as well.
Also, Ms. Mogelonsky says, there is so much variety in each product category that consumers most likely will find something that fits the particular constraints of their pocketbook.
"There are so many inexpensive varieties of lipstick nowadays," Ms. Mogelonsky says. "Many women are just moving from a high-end brand to something cheaper."
A quick search on Amazon.com showed lipsticks varying in price from $2.25 to $52. In the beer category, a 12-pack of something a la Miller Lite could be $9.99 or less.
So, there it is: instant gratification for $12.25.
Throw in a Netflix movie (as little as $5.95 a month) and some microwave popcorn (usually less than $1 a pack) and you're up to $19.20.
However, will this make us as happy as buying an expensive pair of shoes or sipping cocktails at a swanky bar?
"Shopping is pleasurable. There's no doubt about that," says Kit Yarrow, professor of psychology and business at Golden Gate University in San Francisco. "And that's not American.
It's cross-cultural and across time. Shopping gives us a boost." Now that we don't get the boost?
"We'll get used to it, and I think something good will come out of it in the end," says Ms. Yarrow, the chairwoman of her department. "It's hard to talk about the bright spots when so many people are hurting, but maybe this will allow us to become more appreciative of what we do get."
It also may help us lower our ever-escalating standards on beauty and fashion.
"And that can only be healthy," Ms. Yarrow says. "Maybe get some department-store nail polish instead of a pedicure; and there's nothing wrong with getting your fashion at H&M."
While times are tough, though, we're not facing the Great Depression, Ms. Mogelonsky says. There are no food shortages or gas rationing.
"It's all about putting things in perspective," Ms. Mogelonsky says. "You have to figure out what is your personal recession. What are you willing to bear?"
Some might be willing to give up the Godiva chocolate, but not the L'Oreal lipstick. Others might give up the brand-name and organic groceries but not a favored facial product.
Most of us, though, are making adjustments somewhere, somehow, Ms. Mogelonsky says.
In the end, we won't have the full story on 2008 until after the all-important holiday season - in the liquor industry, for example, about a third of the year's sales happen in
November and December.
Ms. Zhang predicts that discount retailers such as TJ Maxx and Marshalls will do very well.
Other segments?
"The holidays are going to be very challenging," Ms. Zhang says, adding that this recession is affecting even the upper crust's willingness to spend.
"Frankly, I think all groups are affected because of the psychological effect of this economic downturn," she says. "No one feels like spending a lot of money.
"It's not going to be pretty," she says of holiday sales.
In other words, let's party like it's 2008 on $2.25 lipstick and a $9.99 12-pack of brewskis.
 http://www.washingtontimes.com/news/2008/oct/29/less-costly-luxuries-big-in-hard-times/

Friday, October 31, 2008

Eeyore's News and View

These first two article i have today are about the retirement plans. I have said for years, to anyone that would listen that the Congress would go after individual retirement accounts and put them in a lock box the way that they did with the Social Security accounts bleed it for all it is worth. Well that is what they have in mind. The first one explains it the second is a little history about what President Bush wanted to do, interesting enough now i read somewhere that Argentina has done it also.
House Democrats Contemplate Abolishing 401(k) Tax Breaks

October 16, 2008 Powerful House Democrats are eyeing proposals to overhaul the nation’s $3 trillion including the elimination of most of the $80 billion in annual tax breaks that 401(k) investors receive. House Education and Labor Committee Chairman George Miller D-California, and Rep. Jim McDermott, D-Washington, chairman of the House Ways and Means Committee’s Subcommittee on Income Security and Family Support, are looking at redirecting those tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute. Teresa Ghilarducci, professor of economic-policy analysis at the New School for Social Research in New York, contains elements that are being considered. She testified last week before Miller’s Education and Labor Committee on her proposal. At that hearing, the director of the Congressional Budget Office, Peter Orszag, testified that some $2 trillion in retirement savings has been lost over the past 15 months. Under Ghilarducci’s plan, all workers would receive a $600 annual inflation-adjusted subsidy from the U.S. government but would be required to invest 5 percent of their pay into a guaranteed retirement account administered by the Social Security Administration. The money in turn would be invested in special government bonds that would pay 3 percent a year, adjusted for inflation. The current system of providing tax breaks on 401(k) contributions and earnings would be eliminated. “I want to stop the federal subsidy of 401(k)s,” Ghilarducci said in an interview. “401(k)s can continue to exist, but they won’t have the benefit of the subsidy of the tax break.” Under the current 401(k) system, investors are charged relatively high retail fees, Ghilarducci said. “I want to spend our nation’s dollar for retirement security better. Everybody would now be covered” if the plan were adopted, Ghilarducci said. She has been in contact with Miller and McDermott about her plan, and they are interested in pursuing it, she said. “This [plan] certainly is intriguing,” said Mike DeCesare, press secretary for McDermott. “That is part of the discussion,” he said. While Miller stopped short of calling for Ghilarducci’s plan at the hearing last week, he was clearly against continuing tax breaks as they currently exist.
“The savings rate isn’t going up for the investment of $80 billion,” he said. “We have to start to think about ... whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.” “From where I sit that’s just crazy,” said John Belluardo, president of Stewardship Financial Services Inc. in Tarrytown, New York. “A lot of people contribute to their 401(k)s because of the match of the employer,” he said. Belluardo’s firm does not manage assets directly. Higher-income employers provide matching funds to employee plans so that they can qualify for tax benefits for their own defined-contribution plans, he said. “If the tax deferral goes away, the employers have no reason to do the matches, which primarily help people in the lower income brackets,” Belluardo said. “This is a battle between liberalism and conservatism,” said Christopher Van Slyke, a partner in the La Jolla, California, advisory firm Trovena, which manages $400 million. “People are afraid because their accounts are seeing some volatility, so Democrats will seize on the opportunity to attack a program where investors control their own destiny,” he said. Automatic Enrollment Boosting 401(k) Participation" The Profit Sharing/401(k) Council of America in Chicago, which represents employers that sponsor defined-contribution plans, is “staunchly committed to keeping the employee benefit system in America voluntary,” said Ed Ferrigno, vice president in the Washington office. “Some of the tenor [of the hearing last week] that the entire system should be based on the activities of the markets in the last 90 days is not the way to judge the system,” he said. No legislative proposals have been introduced and Congress is out of session until next year. However, most political observers believe that Democrats are poised to gain seats in both the House and the Senate, so comments made by the mostly Democratic members who attended the hearing could be a harbinger of things to come.
In addition to tax breaks for 401(k)s, the issue of allowing investment advisors to provide advice for 401(k) plans was also addressed at the hearing. Rep. Robert Andrews, D-New Jersey, was critical of Department of Labor proposals made in August that would allow advisors to give individual advice if the advice was generated using a computer model. Andrews characterized the proposals as “loopholes” and said that investment advice should not be given by advisors who have a direct interest in the sale of financial products. "Pension Protection Act Boosting 401(k) Participation, Survey Concludes" The Pension Protection Act of 2006 contains provisions making it easier for investment advisors to give Market Mess Exposes Gaps in 401(k) Savers’ Knowledge" http://www.workforce.com/section/00/article/25/82/49.php“In retrospect that doesn’t seem like such a good idea to me,” Andrews said. “This is an issue I think we have to revisit. I frankly think that the compromise we struck in 2006 is not terribly workable or wise,” he said. On Thursday, October 9, the Department of Labor hastily scheduled a public hearing on the issue in Washington for Tuesday, October 21. The agency does not frequently hold public hearings on its proposals.

http://www.workforce.com/section/00/article/25/83/58.php

WSJ: South America Offers a Lesson in Pension Reform August 13, 2002

The Wall Street Journal's Pamela Druckerman reports on the Chilean and Argentinean pension systems and their potential models for United States' reform. The lessons are that well-regulated funds in a healthy economy can function well. In an unhealthy economy like Argentina's, both pay-as-you-go and funded systems would suffer. Excerpts follow:

"In 1984, just a few years after Chile privatized its lumbering state-pension system, Cristian Jara eagerly opened an account and began making monthly contributions. Now 41-years old and head of sales at a medical supplies company, Mr. Jara is convinced his account's sometimes rocky growth, alongside that of Chile's economy, will provide a comfortable nest egg when he retires."

"Across the Andes in Argentina, Perla Crivolitti, an executive secretary who is also 41, is convinced she will never see any of the money she has been socking away in a private retirement account since Argentina began allowing the funds in 1994. Her last financial statement showed her account was valued at about $2,200, down from $15,000 before Argentina spun into government debt default and currency devaluation in December.

"South American countries that have taken the private pension plunge offer both encouraging and cautionary tales for the U.S., where the Bush administration's plans to partly privatize the Social Security system have been postponed, but not canceled, by the stock market's deep decline and by Democrat's opposition. In Argentina, many retirement accounts have been devastated, and the pension system has grown increasingly frail amid the broader economic meltdown. In Chile, however, turbulence in financial markets has ruffled pensions but hasn't caused deep damage.

"The Bush team is seeking far less radical change than that undertaken by Chile and Argentina, where private plans are the sole source of income for most retirees, rather than a supplement to the public system. In recent remarks, a spokesman said Mr. Bush wants to allow younger workers to divert just a portion of their earnings to private pension plans instead of to Social Security.

"Still, experts say the U.S. government would face dilemmas similar to those encountered farther south: how to cushion against big declines in financial markets and how to keep paying retirees who are owed state pensions, even after the government loses revenue from younger workers who switched to private plans.

"Both Chile and Argentina sought to protect workers, most of whom had never owned stocks or bonds, by initially limiting the funds to government bonds and then gradually permitting workers to buy corporate debt and a limited amount of stock. This proved effective in Chile: Though returns still varied sharply from year to year, from gains of almost 30% in 1991 to just 3% in 1992, the funds posted average annual returns of 10.5% through June. One of the main classes of Chilean pension funds, which has a blend of stocks and bonds, rose 2.6% through June, even though stocks were mostly flat and economic growth has been weak."

For more information on the Chilean pension system see Jos Piera's "Empowering Workers: The Privatization of Social Security in Chile", and Jacobo Rodrguez's "Chile's Private Pension System at 18: Its Current State and Future Challenges."

For more information on world pension reform see Jos Piera's "Liberating workers: The World Pension Revolution."

http://www.socialsecurity.org/daily/08-13-02.html

China cuts interest rates again as growth cools

The People's Bank of China cut its main interest rate again today without any warning or explanation. By Malcolm Moore in Shanghai Last Updated: 5:36PM GMT 29 Oct 2008

It was the third time that the Chinese central bank has cut rates in the past two months. It informed banks that the key one-year lending rate will fall to 6.66pc from 6.93pc, effective from Thursday.
The country's policy makers were the first to act after the collapse of Lehman Brothers helped deepen the worst financial crisis since the 1930s. China slashed its interest rate for the first time in five years, after spending much of the past year battling record levels of inflation.
However, the prospect of a global recession has worried Beijing and China's economic model that is so reliant on the ability of Americans and Europeans to keep buying cheap Chinese imports. Industry analysts believe as many as 3m factory workers in Southern China could lose their jobs by the beginning of next year.
Mark Williams, an economist at Capital Economics, said that with inflation falling, the government would "now focus on ensuring that growth does not fall too much further".
Although many indicators show that China is still growing at around 9pc a year, and that retail sales have hit record peaks, there are growing fears over the slump of the property market and of the Shanghai stock exchange.
The government, which choked off credit to the property market at the end of last year in order to cool it down, have now reversed their position, cutting transaction taxes, mortgage rates and the amount of money required as a down payment.
Zhou Xiaochuan, the governor of the central bank, warned last weekend that China would have to act quickly and preemptively to stave off an economic downturn. "We must not underestimate the impact on our economy," he told the standing committee of the National People's Congress in a special hearing.
"In order to confront the main destabilising and uncertain factors that exist, it is necessary to strengthen our awareness of the dangers, pro-actively cope with the challenges and do a solid job of preparing to face potential difficulties," he added.
Hu Jintao, China's president, has also promised to start a lavish public works investment project in order to maintain employment levels and keep the economy afloat. China has also agreed a reported $25bn (£15.6bn) loan to Russia in exchange for an oil pipeline to be fed to the South. Several other emerging countries, such as the Congo, have turned to China for money because of the tightness of the credit markets.
The central bank moved after the Shanghai Composite stock index fell by almost 3pc to 1719 points. The picture was rosier in Hong Kong, where the Hang Seng closed up 1pc at 12702 points and in Japan, were investors flooded into the Nikkei 225, driving it up 7.74pc to 8211 points on the hope of an interest rate cut from the Bank of Japan on
Thursday.
http://www.telegraph.co.uk/finance/economics/3278587/China-cuts-interest-rates-again-as-growth-cools.html


MOSCOW, October 28 (RIA Novosti) - Russian Prime Minister Vladimir Putin proposed on Tuesday that Russia and China gradually switch over to national currency payments in bilateral trade, expected to total $50 billion in 2008.
"We should consider improving the payment system for bilateral trade, including by gradually adopting a broader use of national currencies," Putin told a bilateral economic forum.
He admitted the task would be tough, but said it was necessary amid the current problems with the dollar-based global economy.
Chinese Prime Minister Wen Jiabao described strengthening bilateral relations as "strategic."
"Mutual investment by Russia and China has already exceeded $2 billion, this is a very good index," Jiabao said.
He praised the success of numerous projects, including additional construction of China's Tianwan nuclear power plant and the opening of a joint pharmaceuticals center in Moscow.
A number of large Russian companies, including state-run oil producer Rosneft and aluminum champion RusAl, are seeking to develop investment projects in China, Jiabao said.
The Chinese premier said bilateral cooperation in the helicopter industry, mechanical engineering, the energy sector, timber production and innovation sector was also showing signs of progress.
"China is a staunch supporter of Russia's accession to the WTO, but is categorically against politicizing the issue," Jiabao said.
The Russian premier invited Chinese investors to join Russian timber projects.
"We welcome both domestic and foreign investment in Russia's timber sector," Putin said. "As one of the largest consumers of our products, China could be a source of such investment."
He also offered Beijing Russia's assistance in developing a large passenger plane on the basis of Russia's experience with its wide-bodied Il-96 aircraft.
http://en.rian.ru/russia/20081028/117991229.html

Japan Banking misery engulfs

The Japanese banking sector, once considered a safe port in the global deleveraging typhoon, has begun to crumble in the face of stock market crashes and the destructive unwinding of the yen carry trade.
The extent of the crisis emerged this week when the Nikkei 225 Index of Tokyo shares plunged to its lowest level since 1982, briefly breaking the 7,000-point level in a dip that analysts believe with have dire consequences.
The dip triggered a political panic in Tokyo, prompting the authorities to introduce a series of emergency measures aimed at shoring-up the stock market before the carnage unleashes a domino collapse of the nation’s weaker banks.
The plunge in Tokyo shares has been wildly amplified by the worldwide demise of the yen-carry trade – the gambit of borrowing yen cheaply to finance asset buying across the globe. The trade was a favourite of precisely the kind of hedge funds and speculators now hastily stampeding out of risk for the supposed safety of cash.

Nomura Holdings, the Japanese securities house which snapped-up the Asian and European operations of Lehman Brothers in its bid to become a global investment banking giant, unveiled huge quarterly losses of Y72.9 billion (£480 million). Several of the country’s largest banks, including Mitsubishi Tokyo UFJ (MUFG) and Norinchukin are now scrambling to raise billions of dollars of capital and red flags have been raised over the survivability of Japan’s regional banks.
The flood of red ink on Nomura’s results, which does not even include the $2 billion it forked-out for Lehman Brothers, highlights the catastrophic damage caused to the Japanese financial industry by the steep decline of stock values. Despite a rally in the index, along with a substantial dip in the yen, the landslide autumn sell-off has brutalised the share portfolios of the Japanese banks and now threatens their capital adequacy ratios.
MUFG unveiled what brokers described as “desperate looking” plans to raise Y1 trillion of capital through stock offerings and private placements. Other major names, including Mizuho and Sumitomo Mitsui are expected to follow suit by the end of this week. Norinchukin, the giant agricultural bank with exposure to a variety of “bubbly” investments, will attempt to raise around Y300 billion in a similar scramble to hold capital ratios above water.
Investors in the Tokyo market have been braced for trouble because of the surging yen, weakening exports and Japan’s early descent into recession. What they were not prepared for, however, was significant problems for the banks, which appeared largely recovered from their own financial crisis in 2003, and far better capitalised. Analysts initially believed that the drop in the Nikkei would find a floor at around 8,000 points – a level where the unrealised stock losses only affected the Tier 2 capital of Japan’s megabanks. The sharp fall below that could now impact the more critical Tier 1 capital reserves.
http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article5032381.ece

Global financial crisis may hit hardest outside U.S.

It's a measure of the global economy's current frailty that the prospect of a financial meltdown in nuclear-armed Pakistan is almost getting lost amid an ever-lengthening list of countries in trouble.
In Europe, Hungary and Ukraine require multibillion-dollar International Monetary Fund rescues while Standard & Poor's lowers neighbor Romania's credit rating to junk status. Argentina's government is trying to close a financial gap by putting private pension funds under government control. And Asian nations with unsustainable finances such as Vietnam and the Philippines are braced for harder times.
Like tremors before an earthquake, these financial ills hint at the tangible economic toll to come in lost jobs, income and factory orders. "What has not even started is the effect on the real economy. … The situation is going to get very, very dire," says Marino Valensise, chief investment officer for Baring Asset Management in London.
If the first wave of the financial crisis hit the United States hardest, the second blow seems set to punish foreign lands. Global pain now is spreading from the United Kingdom, where the economy already is shrinking, through Middle Eastern oil producers pinched by crude's price plunge, to Japan where the government said Tuesday that September's retail sales were lower than a year ago.
Suddenly, after six consecutive years of expansion, the world economy appears to rest on quicksand. Signs of economic wobbling are evident in Germany, where automaker Daimler said Monday it is shuttering 14 plants for a month because of evaporating demand. Even China's growth is slowing sharply, from nearly 12% in mid-2007 to 7.9% or less next year, according to Standard Chartered Bank.

The potential consequences of economic turmoil are especially worrisome in Pakistan, where the economy is in a "state of crisis," according to the Economist Intelligence Unit. Soaring food and oil prices coupled with runaway spending have made a mess of the government budget. Inflation is expected to top 15% next year, and the IMF is in talks with Pakistani officials about emergency financing.
"Every day that passes, things get worse. … The economy is in a downspin," said Zubair Iqbal, a retired IMF economist now at the Middle East Institute in Washington, D.C.
Pakistan in recent years attracted ample foreign investment and registered strong economic growth. But its economic heft remains modest. The South Asian nation's global significance is geopolitical: Pakistan is a sometimes-uncertain U.S. ally against Islamic extremists based in the country's tribal regions along the Afghanistan border.
Selig Harrison, an expert on the region at the Center for International Policy, says further economic deterioration would exacerbate ethnic tensions and undermine already fragile support for the country's new civilian government. "From a U.S. point of view, the political fallout from an economic collapse would be very, very dangerous," he said.
Despite Pakistan's daunting economic and security challenges, Iqbal is optimistic that a poverty-driven surge in extremism and instability can be avoided. So far in this crisis, however, it's the pessimists who have been proved right time and again.
IMF has a gloomy outlook
In April, for example, the IMF was criticized as unduly negative for an economic forecast that said the global economy would grow about 3.7% next year. This month, the organization issued a revised forecast that was even gloomier. Now, the IMF says the world economy will expand just 3% next year, its slowest pace since 2002 and right on the edge of what the world body considers a global recession. Other forecasters, such as Morgan Stanley's economists, say that recession already has begun.
A true global recession would be certain to hit commodity producers in the developing world especially hard. In the 1980-82 downdraft, non-fuel commodity prices fell almost 57%, says Vincent Truglia, managing director for research at NewOak Capital in New York. That's bad news for countries from Kenya to Argentina.
Oil producers with large populations — such as Iran, Venezuela and Russia — also face difficulties. In Russia, authorities are burning through financial reserves in a desperate bid to prop up the ruble. S&P last week lowered its outlook on Russian government credit to "negative," reflecting the danger of a downgrade prompted by the rising cost of Moscow's financial bailout. Russia has committed 15% of gross domestic product to recapitalize its financial sector, S&P said. But the ratings agency said it expects corporate defaults to increase as economic growth slows to less than 3% next year. And it expressed concern that the state's increasing hold on the economy might not be temporary.
Some investors remain sanguine. John Connor, portfolio manager for the Third Millennium Russia fund, says Russian consumers are relatively unencumbered by debt, so robust retail spending should keep the economy afloat. "I don't see any long-term problem. … It's a panic."
Countries worldwide share the pain
After the Sept. 15 Lehman Bros. bankruptcy intensified the credit crunch, some foreign officials seemed to delight in the USA's plight. Awash in debt and laid low by a Wall Street culture of heedless risk-taking, the U.S. had gotten what it deserved: "The U.S. will lose its status as the superpower of the global financial system. …Wall Street will never be what it was," German Finance Minister Peer Steinbrueck crowed in September.
Amid today's deepening gloom, that sense of schadenfreude— taking pleasure in others' misfortune — is long gone. Now everyone realizes they are in this global mess together. Reflecting that shared fate, Asian and European leaders gathered Saturday in Beijing to brainstorm ahead of a Nov. 15 international financial summit in Washington, D.C.
Likewise, G-7 finance ministers met in Tokyo as currency markets issued the latest signals of something gone terribly awry in the globe's financial mechanism. As hedge funds and other institutions cash out profitable stakes in developing countries, they are shifting to the relative safety of the U.S. dollar. It closed Wednesday at $1.28 against the euro, up 18% since the end of July. Morgan Stanley now likens the troubled U.S. economy to "the best house in a bad neighborhood."
Still, the soaring yen is the immediate focus of international concern. The Japanese currency is appreciating as investors hasten to unwind so-called carry trades — borrowing one currency at low interest rates to lend in a second country at much higher rates. It's a profitable trade, so long as the first currency doesn't unexpectedly appreciate, which is what is happening to the yen.
The yen Monday reached 93.93 to the dollar, its strongest in 13 years, before settling Wednesday at 97.38. The stronger yen is a critical blow to Japan, hammering its exporters by making their goods more expensive for Americans and Europeans; the past two years, net exports contributed more than half the economy's growth. "We are concerned about the recent excessive volatility in the exchange rate of the yen and its possible adverse implications for economic and financial stability," the G-7 finance ministers said Monday, hinting at intervention to stem the yen's increasing strength.
Other financial weaknesses being exposed
The financial crisis may have begun with subprime mortgage loans in the United States. But it's now exposing financial vulnerabilities that have little to do with mortgages or the United States.
Chief among them: Eastern Europe's financial problems. Hungary, for example, has seen its currency, the forint, sag almost 50% against the dollar since July. Even a sudden 3-percentage-point increase in interest rates this week failed to arrest the decline. To stave off a potential default on Hungary's foreign debt, the IMF on Wednesday announced an extraordinary $25 billion loan package for the country. The rescue also includes funds from the European Union and World Bank.
That follows word of a $16.5 billion IMF credit line for Ukraine and $2 billion for Iceland, the first developed nation to seek such assistance since 1976. IMF funding is aimed at getting those economies back on a sustainable path. But even though the loans likely won't include the onerous requirements IMF aid carried in earlier crises, they will certainly lead to painful belt-tightening in the short term. Example: Iceland on Tuesday boosted its interest rates by 6 percentage points to 18%.
The IMF's resurgent role in backstopping troubled economies may be set to expand. Stephen Jen, Morgan Stanley currency strategist, predicted in a client note on Sunday that "the list of (emerging market) economies receiving assistance from the IMF will eventually grow to more than a dozen."
Hungary's financial malady — a dependence on foreign lenders that no longer are interested in making loans — is mirrored by other countries in the region, including Bulgaria, Romania, Turkey, Latvia, Estonia and Lithuania. Those economies, by themselves, aren't enormous. Every nine days, the U.S. produces goods and services equal to the total annual output of Hungary, Bulgaria and Romania. But the danger is that if these countries defaulted on their debts, major European banks would be caught in the downdraft, further imperiling already shaky credit channels.
Of Eastern Europe's $1.6 trillion in foreign bank debt, $1.5 trillion was borrowed from European banks, according to Morgan Stanley Research. Overall, European and U.K. banks have five times as much exposure to emerging markets as U.S. banks. Loans to these fast-developing countries equal 21% of European gross domestic product vs. just 4% of U.S. output.
Globalization undergoes transformation
The remarkable recent volatility in currency markets is a function of two broad transformations remaking both the global economy and global finance. First, institutions are undergoing a painful "deleveraging," or debt-repayment. That's causing mutual funds, hedge funds and banks to sell assets where they can to make up for losses elsewhere. The net result is to drive down the prices of most assets in most markets.
At the same time, a model of globalization that depended upon the U.S. as the consumer of last resort has broken down. American households have lost an estimated $5 trillion in wealth from the housing market collapse, which will cut annual consumption by more than $400 billion, according to the Center for Economic and Policy Research.
That means foreign factories can expect to sell significantly fewer toys, clothes and electronics to U.S. consumers.
Over time, countries such as China or South Korea could reorient their economies to rely more upon domestic consumption. But that transformation, once expected to occur over several years, now needs to happen immediately to replace vanishing export orders.
"The export model that's so dominant in the emerging markets is at risk. That's the vulnerability in the international system. …We're seeing an end to that model of globalization," says David Smick, a global financial strategist based in Washington,
http://www.usatoday.com/money/economy/2008-10-29-global-financial-crisis_N.htm

Glimspe of metals, they have seem to found the bottom and are raiseing again

In Canada,Mints struggle to meet metals demand.

Safe-haven investors are on a shopping spree for precious metals, snapping up gold and silver as an antidote to topsy-turvy markets -- if they can find any, that is.
Demand for physical gold and silver is gobbling up product at nearly every mint around the globe and in Canada has the Royal Canadian Mint allocating its supply among its distributors, who in turn are limiting the number of coins they sell to dealers, who sell to consumers.
"Virtually every mint in the world is sold out of product and as fast as we can produce it, all of us, there is more demand," said David Madge, director of bullion services at the Royal Canadian Mint.
The situation is causing major headaches for bullion dealers like Donald Carlson.
"It's a nightmare trying to keep enough stock in," said Carlson, general manager of Calgary's Albern Coins & Foreign Exchange Ltd.
In the United States, sales of the one ounce gold bullion American Eagle coins are being allocated to authorized dealers, while sales of American Buffalo gold coins were suspended in late September. In the latter case, demand depleted inventories, said Carla Coolman, spokeswoman for the U.S. Mint.
"We are working very hard to resume sales as soon as we can," Coolman said from Washington, D.C.
It's a little different in Canada, where the voracious appetite for physical metal in both coins and bars has seen the Royal Canadian Mint double its output for gold twice in the last eight weeks, and they're still having trouble keeping up, Madge said. "We have never produced more than what we are producing right now. We just can't keep up with all the demand," he said.
It's the same story for silver. Madge said it's going to be a record year at the mint for making silver Maple Leaf coins.
In 2007, the Royal Canadian Mint produced a record 3.5 million one ounce silver Maple Leaf coins. Officials estimated production could easily double that this year, given the abnormal demand.
"That gives you a sense of magnitude as to how much we're pumping out right now," Madge said.
But back in Calgary, Carlson said silver, especially, is almost impossible to find.
Earlier this week, Albern Coins was pre-booking silver about 12 weeks out, while gold was running about two to three weeks behind.
"We get it in, we go through it, and start pre-booking for the next shipment," he said.
Back in March, when gold blew through the roof at $1,033.90 per ounce -- its highest ever price -- business was 70 per cent buyers and 30 per cent sellers, Carlson said.
Now it's 99 per cent buyers and one per cent sellers, and people are buying whatever's available.
The reason for the global run on demand is two-fold, with buyers snapping up gold lured either by free-falling prices that make it a bargain, or by the security it offers.
Physical gold is a very liquid asset and historically is sought out during tumultuous economic times, noted John Ing, president of Maison Placement Canada Inc. "Gold itself, to me, will be the antidote to these financial problems," Ing said.
Price volatility is being driven by a strengthening U.S. dollar, which pushes gold prices down. Also, depending on the day, volatility is coming from the selling side as investors liquidate their holdings -- be it physical gold or gold held in an exchange traded fund -- to raise cash.
gteel@theherald.canwest.com
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Go online for daily updates on global markets

http://www.canada.com/calgaryherald/news/story.html?id=5fc11134-5617-40d4-8a9a-d10f1e92ca5f

Moscow will pose early test of NATO ambitions


Tuesday, October 28, 2008

The aftermath of the Russia-Georgia war presents the next U.S. president with an early test of American resolve to continue NATO's eastward expansion, a bipartisan policy that dates back to the Clinton administration.

Both Republican candidate John McCain and Democratic candidate Barack Obama back NATO membership for Georgia, as well as for Ukraine - support that strengthened with the Russian invasion of Georgia in August. Georgia's bid to join NATO is expected to be addressed during meetings of NATO foreign and defense ministers later this year.

On the other big issue between Moscow and Washington - nuclear proliferation - both candidates call for continued negotiations to trim each nation's arsenal and for cooperation on efforts to prevent terrorists and rogue states, such as Iran, from obtaining nuclear weapons.

When asked about Russia during the first presidential debate, Mr. Obama said he and Mr. McCain "agree for the most part on these issues."

Russian analysts say they are not able to discern how the two men diverge on what promises to be one of the biggest foreign-policy conundrums of the next four years.

"It is impossible to glean enough information from the candidates' speeches to determine what their respective policies toward Russia would be as president," Fyodor Lukyanov, editor of the journal Russia in Global Affairs, wrote in the Moscow Times earlier this month.

Mr. Lukyanov called the two senators' positions "practically identical and lacking in substance."

However, supporters of Mr. Obama and Mr. McCain point out differences between them.

Obama supporter Madeleine K. Albright, secretary of state in the Clinton administration, said that Mr. Obama's approach is "much more nuanced," while Mr. McCain's is "isolating" and contains "much more Cold War language."

Randy Scheunemann, Mr. McCain's top foreign-policy adviser, said the Republican candidate "has warned about the dangers posed by Russia's domestic and foreign policies for many years."

Unlike Mr. Obama, Mr. McCain "has traveled to Ukraine, Latvia, Estonia, Georgia and many other countries that border Russia many times and he understands the security concerns of their leaders," Mr. Scheunemann said.

Russia has taken advantage of surging oil prices to rebuild its economy and its military from a state of collapse after the breakup of the Soviet Union in the early 1990s.

The effort, led by Vladimir Putin, first as president and now as prime minister, has been accompanied by a rollback of democratic reforms and an increasing willingness to publicly challenge the U.S. position as the world's only superpower, analysts say.

With the world focused on the Olympics in Beijing this summer, Georgia launched a drive to regain control of the Russian-backed rebel province of South Ossetia, using weapons it acquired in anticipation of eventual NATO membership.

Russia responded with a full-scale counterattack, followed by a drive deep into Georgian territory. Though Russian troops eventually withdrew from Georgia proper, the five-day war left Russian troops in control of both South Ossetia and another breakaway region, Abkhazia.

When the conflict erupted, Mr. Obama initially urged both sides to show restraint. Mr. McCain criticized Mr. Obama's statement and emphasized his own personal relationship with Georgian President Mikhail Saakashvili. Mr. Obama soon toughened his rhetoric on Russia.

"Obama changed his tone because of the facts on the ground inside Georgia," said Michael McFaul, Mr. Obama's top Russia adviser. "It was not clear to us, when that first statement came out, that Russia was going to carry out a full-scale invasion."

Unlike Mr. McCain, Mr. Obama recognized "at the time that Georgia had also used violence," which showed a better understanding of the situation, Mr. McFaul said.

The Democratic nominee has a "sophisticated strategy for dealing with Russia," with "granularity and strategic thinking" that Mr. McCain's position lacks, Mr. McFaul said.

In his nomination acceptance speech at the Republican National Convention, Mr. McCain said: "We can't turn a blind eye to aggression and international lawlessness that threatens the peace and stability of the world and the security of the American people."

Ariel Cohen, senior research fellow at the Heritage Foundation and a McCain supporter, said Mr. Obama is trying to "appease the Kremlin" by opposing a missile-defense shield in Central Europe.

The Bush administration says the system, with missiles in Poland and radar in the Czech Republic, is intended to counter a nuclear strike from Iran. Russia vehemently opposes the defense and says it is designing new missiles to overwhelm the system.

Mr. Obama is skeptical of the program. His campaign has said he does not want to rely on an "unproven system."

Both candidates have criticized Moscow's authoritarian government, but Mr. McCain has advocated Russia's expulsion from the Group of Eight economic leaders. In July, Mr. Obama said that would be a "mistake," but he has not made a clear pronouncement on the issue recently.

"Russia has now become a nation fueled by petrodollars that is basically a KGB apparatchik-run government," Mr. McCain said at the candidates' first debate. However, he wants to "work with Russia to build confidence in our missile-defense program."

A recent report by the Center for Strategic and International Studies (CSIS), a leading Washington think tank, described both candidates' positions as "evolving."

"Neither presidential candidate has articulated a comprehensive strategic vision for dealing with Russia," the CSIS report said.

While observing the "convergence in the two candidates' position on Russia in the wake of the Russian-Georgian war," the CSIS report said that "subtle, but important differences" remain.

"Given the nature of presidential electoral campaigns, it may be too much to expect either candidate to articulate a clear, comprehensive strategic vision for the Russia policy they will adopt if elected," the report said.

The Washington Times focuses on a single voter issue on each of the 23 days preceding the presidential election on Nov. 4.
http://www.washingtontimes.com/news/2008/oct/28/moscow-will-pose-early-test-of-ambitions-to-widen-/

Easthampton Burning?In the typhoon of commentary that’s blown around the world a step behind the financial tsunami that’s wrecking everything, two little words have been curiously absent: “fraud” and “swindle.” But aren’t they really at the core of what has happened? Wall Street took the whole world “for a ride” and now a handful of Wall Street’s erstwhile princelings have shifted ceremoniously into U.S. Government service to “fix” the problem with a “toolbox” containing a notional two trillion dollars. This strange exercise in financial kabuki theater will shut down sometime between the election and inauguration day, when the inaugurate finds himself president of the Economic Smoking Wreckage of the United States. What will happen?I have thought for some time that things could get dangerously out of hand in America, despite our exceptionalist notion that we are immune to the common plot-lines of history. For starters, inauguration night will seem more like Halloween, as those two little words fly in to haunt the new president. So, a large and looming question is: Who will be appointed the next attorney general of the U.S. (to replace the human sash-weight currently occupying the office), and how soon will the federal marshals be scouring the wainscoted hallways of Goldman Sachs, JP Morgan Chase, not to mention a thousand Greenwich, Connecticut, hedge fund boiler rooms, with man-sized nets?A storyline is already emerging to the effect that these birds really didn’t quite know what they were doing in grinding out that multi-trillion dollar basket of alphabet securities sausage (a theme on Sunday’s 60 Minutes broadcast). Nobody will buy that line of BS, though — and certainly not in the courtroom where, for instance, Mr. Hank Paulson will have to answer why his own firm of Goldman Sachs set up a special unit to short its own issues. It will be edifying to see how they answer.In the meantime, however, millions of Joe-the-Plumber types will have gotten their pink slips, slipped helplessly into foreclosure, watched the repo men hot-wire their Ford pickups, and eaten down the kitchen cupboard to a single box of Kellogg’s All-Bran (which had been sitting there for eleven years infested with weevils). They will be watching the official proceedings in the federal courtrooms with jaundiced eyes as they hunch in their tent cities, in the rain, sipping amateur-brand raisin wine bartered for a few snared rock doves. How long before the hardier ones among them venture out to Easthampton with long knives and matches?It will bring little satisfaction though, and the disappointment could lead to a more inchoate outbreak of civil disorder that would be more like a free-for-all of vengeance and grievance. There will be a great outcry for the new government to “do something!” Perhaps that will finally bring the troops home from Iraq — only for them to find that the Homeland has become Iraq....If the financial system completes its self-destruction — and that’s looking more and more like a real possibility — there will be several pretty awful consequences. One is that the United States will be forced to declare bankruptcy by repudiating its own debt. All those who took refuge in U.S. Treasury bonds and bills will be like folks who sought shelter from a tornado in their out-house. That would go hand-in-hand with a massive currency inflation that is likely to follow the current phase of compressive liquidating deflation — in which every possible asset is being sold off for less than its face value. That process is self-limiting due to the finite supply of real salable assets. The trillions of dollars injected into the system while this is happening must eventually snap-back as people shed the last fungible article and compete for necessary commodities like food and fuel with dollars that are suddenly plentiful but worthless. At some point, the government may have to summon up a new currency. I don’t think it will be anything like the “Amero” which the paranoid fringe incessantly mutters about as part of their fantasy in which the U.S., Mexico, and Canada all join up to become one country. But any “new dollar” would probably have to be backed by gold.As we discover ourselves to be a much poorer nation, one of my correspondents put it: “the bogus risk-swapping economy must be replaced by a net value-added economy.” That means actually making things, growing things, and rebuilding things, and that can only begin to happen if we do not stupidly sucker ourselves into a war with other nations who are liable to be extremely ticked off at us for destroying the global economy, but also competing with us for a dwindling supply of resources that are not equitably distributed around the world.This means especially oil. I hope you’re enjoying the temporarily cheap prices at the gas pumps, because this is purely a function of the compressive deleveraging that is going on right now, as contracts and positions held in energy markets are being dumped by everybody and his uncle to raise cash to meet margin calls. My guess is that oil and its byproducts will become much more difficult to get in the months ahead — not just more expensive, but literally not available. The current falling price of oil has little to do with the real supply and demand fundamentals. It’s simply a function of the markets being in near-total disarray. We’re running on current inventory, and running it down. In the background, all kinds of peculiar and terrible things are happening. The entire apparatus of allocation and distribution is being thrown out of whack. The smaller tanker operations are going bankrupt. The “less-developed” nations are heading back to the 17th-century level of daily life without electricity. The oil exploration and development projects that were planned for hard-to-get oil netting $100-a-barrel minimum — in places like the deepwater Gulf of Mexico, Siberia, and Central Asia — are being shelved, which means the world has less of a chance to offset coming depletions in old fields.The bottom line of all this is that we in the U.S. could find ourselves in a situation of shortages, hoarding, and rationing. This would pretty much kill off whatever remains of the previous shuck-and-jive economy — hamburger sales, theme park visits, NASCAR weekends — while it makes obvious the failures of our suburban living arrangements (and drives the value of housing there closer to zero). My pet project of restoring the American passenger railroad system might seem pretty minor in the face of all this, but it’s at least a place to start that will accomplish several things: allow people and things to get places without cars and trucks; put many thousands of people to work at many levels doing something of direct, practical value; and be a small step in rebuilding confidence that we are a society capable of accomplishing something.Regards,Jim KunstlerGreg’s Endnote: For an imaginative take on the resulting American life a few years hence, read Jim’s latest novel, World Made By Hand. Jim promises the sequel will be out very soon. You can find out more at www.kunstler.com.
State crew takes political signs
Wednesday, Oct. 29, 2008
By JAY FRIESS
Staff writerThe Maryland State Highway Administration apologized this week for crews who snatched campaign signs off of private property during a Monday morning sweep of Route 6 in Charles County.
SHA spokesman David Buck said that crews from SHA's La Plata outpost inadvertently removed signs from lawns while doing a routine Monday sweep of the road.
"Our guys did inadvertently go off the state right of way," Buck said. In rural areas of the road, Buck said that the right of way varies between 10 and 15 feet from the road bed. The crews swept up signs located within 15 feet of the road bed. "They didn't realize they weren't on the state right of way."
One of the places the right of way shrinks to 10 feet is in front of the Nanjemoy home of Justin and Laurie Wade. Justin, who was home Monday nursing an injured back, caught an SHA crew removing his three political signs, which he said were at least 15 feet from the road.
"I assumed they were moving the signs to work on the culvert," said Justin Wade Monday, referring to an ongoing project in the area. Wade said he approached the crewman removing the signs and noticed that the crew had "a truck full of signs."
"I said, ‘I want [the signs] back,'" Wade said. He said he was directed to talk to the foreman who agreed to return the signs. "They left and then took down my neighbor's signs."
Wade, a supporter of Republican presidential candidate Sen. John McCain, sees a disturbing connection between his political leanings and the actions of a road crew controlled by a Democratic government.
"It is freedom of speech," Wade said, referring to his political signs.
"When we had our Bush signs out four years ago, nobody bothered them," said Laurie Wade, referring to the last presidential election, when former Gov. Robert L. Ehrlich Jr. (R) was in control of state government.
Buck dismissed any ulterior motives by the SHA crews.
"There was no malicious intent," he said.
Buck said the crews often patrol state roads during the election season to ensure that political signs aren't blocking drivers' views or posing a danger to SHA maintenance equipment.
"Clearly, around this time of year, [enforcement] is heightened. This is just standard practice."
Buck said that anyone who has had a sign removed from their yard by SHA can pick up the sign at the local shop on Washington Avenue in La Plata.

jfriess@somdnews.com