It’s All Gone

No irreverence intended, good people of ZK & CFN, but the money really is all gone, and all they’re doing in Washingtoon is little but hastily rearranging the stage pieces so things look sufficiently different from just a little while ago. It is not working. Err, it’s not so much money as it is “real value” that cannot be endlessly generated and spent. As we have seen, the government can print (and sometimes does print) as much money as it wants. It gives out whole pallets of the stuff to anyone who shows up at the Treasury loading dock purporting to be a bank. (Maybe someone will try this with a Ryder truck and a few hundred dollars worth of printed large-format signs pasted onto the truck. How about “Berkshire Hathaway First Savings Bank of Boise, ID”?)

Don’t get me wrong: the government is free to print as much devalued paper money as it wants and distribute the stuff as it sees fit. It will most certainly continue along in this “spending” pattern as long as it can. Even now Obama is calling for a “larger economic stimulus” than the one Bush did last year. At the time Bush did it, it was called a giant payday loan, since the money would have to come from next year’s taxes, plus interest of course. If the plan amounts to the $700Bn Obama is talking about, and it goes to the people and not companies, it will work out to be something like $3,000 per household on average. I feel it will end up being in the $1,200~$1,800 range, due to the inevitable compromises that will be worked out in Congress, but that’s just a guess. It will be just as ineffective as the last one.

Anyone with two or three brain cells to rub together knows that you cannot simply /manufacture/ money and expect it to be worth the same as money that was earned. In fact, it is widely known that the only way to make money for real is to earn it by selling goods or services that others will pay for, then save some of it and plow it back into operational investments. By denominating that honestly-earned money in the same units as freshly-printed phoney money (US dollars, for the time being) the powers-that-be are effectively pulling the same kind of stunt done by all those bond-rating agencies that took in bags of subprime dog-crap loans, sprayed Febreeze all over them (thanks DanaJ), and resold them as AAA-rated investment securities. They are calling it the same kind of money even though it is not really the same kind of money.

We are in a phase of the game which may be later called “values reverting to norm”, that is, if anyone can still look at that time in history without revulsion or feelings of awful shock. There are whole classes of items that are getting more expensive and harder-to-get now (or steadily holding their values) and it’s not too hard to connect the dots and group these things together. For instance, anyone manufacturing stuff like woodstoves, weapons, ammunition, basic tools, etc is probably sitting on a gold mine ~ and probably knows it as well.

Woodstoves used to be plentiful at the local flea markets, but in by midsummer 2006 they had all disappeared after getting pricier very quickly.

There are other things that hold their value well: cigarettes by the carton; heirloom seeds; quality gardening implements; new and used weapons; land close to town that’s good for gardening; well-built houses situated in convenient locations for them who don’t want to own motor vehicles; alt-e implements like water- and wind-turbines, solar panels, charge controllers & regulators, etc; quality bicycles and other transport not requiring fossil fuel; and so on.

These things may hold their values well even if (or especially if?) things get to the point where local currencies, hard-money currencies (silver & gold coin), or barter systems replace the soon-to-be-worthless green pieces of paper we now use for value markers.

The big point that the Washingtoon idiots are attempting to disguise (thus far almost successfully) is that they are attempting to fill a quadrillion-dollar-sized hole (adequately represented in size by any of the world’s oceans) with a few small bucketfuls of hastily-ginned-up printed money ~ these few hundred billion dollar bailout plans here and there.

The Japanese have begun to wake up to the scam, as was evidenced by the way they suggested last week that the US government issue bonds denominated in some stabler currency, like the yen.

In the category of companies that compromise the customer base at the place where I work, it is very interesting to note that some of our customers are operating flat out, at full capacity, while others are closing their satellite sales office and running their plants at half shifts or even shutting down a few days per week. It is not too hard to figure out what the successful companies seem to have in common. The key ingredients seem to be flexibility-of-operation, business smarts, and nimble organization. That last ingredient is possibly the most important of them. It has only a little to do with the sheer size of the organization in question, but everything to do with /how/ the organization is structured. Is it smart enough to see something coming, perceive it for what it is, and react accordingly in time?

The customers hurting the most (and this is echoed in the larger business world as well) are the dinosaurs organized as badly as the old Soviet Union was. GM and Ford are fine examples of this type of company. When they perceived gasoline getting expensive, they simply made more SUVs and kept telling themselves, delusionally, at golf courses and in business meetings and over cocktails, that Duhmericans really did want all those overpriced gas-guzzling ugly Big Fooking Trucks for use as passenger vehicles. Toyota, on the other hand, saw gasoline getting more expensive and put more resources into production of its hybrid sedan, and later switched some of its manufacturing lines from Tundra pickups to Prius hybrids. Incidentally, the CEO at Ford gets $22Mn per year, while his counterpart at Toyota gets $1Mn per year. Ford needs billions in free money handouts just to keep the lights on and stay in business; Toyota & Honda do not. Could the hint be any more obvious?

The coming organizational shakeout is apt to be impressive. Could not think of a better way to take down the zombified vampire that is globalism. When there is no advantage to be gained by being especially large, the competitive field between businesses will be radically different as smaller and smarter and better-organized businesses make themselves felt. Provided that we maintain the communicability of the internet as it now is (or something even better) we will continue to see more self-organizing business activity perhaps modeled on the same distributed development model used in the Linux world.

As Jim hinted in this week’s post, enterprising people should be looking ahead and imagining what they could make/provide/distribute/sell/trade if they did not have to deal with the Scylla & Charybdis of the modern post-industrial small-business world: bizarre, extensive government regulations on the one hand, and on the other hand competition from businesses so large that they can warp the playing field in their favor ~ like GM or Blue*Box*Mart.

Just imagine what the business opportunities would be like if nearly everything needed locally had to come from within a 5- or 10-town radius of where you are located. What can you and your neighbors make? Where is your market? How can you get your goods to market, and who will sell them? What will you accept as payment, and what do people have to pay with?

In that vein, I am trying to stock up on skills and other things I feel may be of use in a world where the scale of business is smaller and more local. I already know how to custom-make clothing to fit, and have a machine that can do everything from mid-weight fabrics up through heavy leather/canvas. Perhaps there will be some local need for good work clothing made of leather. For sure there will be a lot of rough work that’ll need doing. Even if you can make rails locally (melting down SUVs sounds perfectly poetic) setting up a railbed and laying track are hard work. Double ditto for digging canals and their feeder lakes/streams.

Got future? :)

 

This entry was posted by nudged.

35 thoughts on “It’s All Gone

  1. I feel like westexas on TOD, always making the first comment. Well Nudge, you have it about right. I keep thinking of Orlov’s FSU collapse comparisons. They also had a formitable military, and did not use it to threaten anyone to get what they needed. My understanding is they could no longer get credit from foreign banks. Their oil was next to worhtless at the time, thanks to Saudi dumping (some say this was CIA instigated). They also finally had a human running things there in Gorby. Recall he had a coup to deal with.

    I wonder if that’s a big difference. For what you and Jim envision to come to past, the dollar must fail. I would think that might happen before it hyperinflates, and our creditors lose their loans to inflation, but the other side of that coin, so to speak, is the real threat of real military action.

    This is where the USA may be different than the FSU. The latter, always protrayed by the US as the aggressor, was actually playing defense to our offence. Those that understand our true nature as aggressors of global reach (aka global defenders of freedom), will pause before refusing our “requests”. I would hate to see it happen, but with the stakes so high, a country or two could find themselves invaded, or worse.

    Imagine you’re broke, hungry and looking for food for your family. You approach a farmer’s house, and he politely but firmly refuses your request. You’re heavily armed and have a history of violence. What happens?

  2. Nudge,
    Do you ‘overlock’ a leather stitch, or is it different to, say denim?

    P.S. Is Berkshire hathaway the bank that the Beverly Hillbillies used?

  3. Thanks for the comments, guys :)

    UY: Berkshire Hathaway is the name of Warren Buffet’s investment company. If you want sticker shock, go look up the price of even a single share of it. I thought the allusion was appropriate given the way Mr Buffet recently told investors to jump in, and the ones who jumped when he said to jump all got burned within days. Mr Buffet took a $13Bn loss on that play, but unlike those Bud Fox wannabes who followed his lead, he can at least afford a loss every now and then.

    About the leather: no, you don’t need any kind of overlock .. I assume by that you mean the kind of stitch performed by a serger, which is a 3/4/5 thread thing that wraps inside edges in thread so they don’t unfray. Leather is a nonwoven that’s very hard (no, extremely hard) to rip. Nothing protects your own skin better than someone else’s skin.

    What you do with leather is either flip the allowances to one side and then do a topstitch right through them (like on jeans) or, on fancy garments, pound them flat with a mallet then use rubber cement to hold them down on the inside of the garment. Takes a long time to do a garment that way.

    Sometimes the guys at work bag a deer and have the skin processed .. so I have a little deer leather to work with and it’s great stuff. It has the durability of cowhide but almost the same suppleness of sheepskin.

  4. Doom, I think you’re just getting online at the right time. All the mainlanders are so jaded that hours go by before they post, yet you post soon after reading. Thanks BTW :)

    The critical element in this scenario (as well as Jim’s, I think ~ not sure about all of it) is a change in conditions that renders large ungainly organizations as dead as dinosaurs, and makes it essentially impossible to run a no-sparrow-shall-fall-unnoticed type enforcement of current regulations stacked in favor of the largest companies. Not sure whether dollar collapse, internet collapse, governmental collapse, etc, need to happen for these conditions to unravel in that particular way.

    I’m guessing/hoping that when people desperately need shelter for the coming winter, and all they’ve got on hand is the means to make strawbale homes, the local authorities may have the sense to stand aside and let the people do what they need, rather than attempt to enforce zoning regs from the Apollo age of suburban home building.

    As federal, state, and local governments all flirt with bankruptcy, conditions may emerge here & there that make it necessary for local operators to organize things locally. We are already seeing various forms of government edge closer to bankruptcy, and we are already seeing the smaller and more nimble and less-GM-like companies do better than their ungainly dinosaur-like competitors. It seems to be a move in the right direction, but I have no idea what else might need to happen for the move to complete.

    Jim wrote in WMBH about how the need to halt all container imports to the UPL caused the economy to stall out. No such nuking of Port Los Angeles has happened, yet already the ports are getting all backed up from the sudden business slowdown. It is depressingly ironic that his book came out, what, less than a year before the economy entered an actual shutdown.

    Doom, if you’re broke & hungry & openly armed, and if you approach a farmer’s house and get politely turned away, you should be asking yourself why the farmer is being so civil. The answer, of course, is that there are almost certainly a number of guns pointed your way by concealed shooters, and a pre-arranged signal (or the absence of an obvious one, for the more clever folks) that means “waste this drifter”.

  5. OTOH Doom,
    Do you want the farmer to invite you in for one of Nudge’s mushroom omelletes?

  6. “…a number of guns pointed your way by concealed shooters…”, and “…waste the drifter”.

    Maybe so. OGH has relayed his own experience (on CFN) in this regard, when some unruly bikers rolled into his little town. Little did they know when they knocked on the door how many eyes and rifles were pointed in their direction. And they subsequently left town never knowing how close they were to meeting their maker.

    Anyway, Nudge, maybe someday you could write a detailed piece on archery, leatherwork or sewing. And I would even so boldly suggest this area could be the subject of a Bunn Bunn interview. I know it would be great. Please consider.

  7. Shades of one of my favorite movies, Carry Grant in “Arsenic and Old Lace”.

    Nudge, I usually respond quickly because if I wait, I’ll have to reread it and I’m no speed reader. It was a bit early for me, so that may explain the number of typos.

  8. Bif, Nudge should watch for loaded questions from Bunn, like “How far away would you say your most accurate shooting occurs? What types of carrots do you prefer planting, when, and how long do they take to mature?”

  9. Just a little apt excerpt from the Deccan Herald:

    http://www.deccanherald.com/Content/Nov132008/editpage20081112100419.asp

    If you are wondering where the bailout package that taxpayers have heavily paid for have gone into, hold your breadth. Goldman Sachs and Deutsche Bank are eyeing a takeover of China’s livestock industry. Morgan Stanley has purchased 40,000 hectares in Ukraine. Landkom, the British investment group has also bought 100,000 hectares of land in Ukraine. The two Swedish investing firms, Black Earth Farming and Alpcot-Agro, have purchased 331,000 hectares and 128,000 hectares of farm land in Russia, respectively. The list is growing.

  10. Hey, I agree that cash will be nearly worthless. But, people will still need to eat, and government function in some sense. So onward we go! I’m pretty sure that Obama understands that he’ll be lucky if a functional nation is still intact. But, please remember the name of that which brought this program to you. Bush. Not Neil, though he tried in his time. Not HW, as he was more interested in Central America. But, W.

    Hopefully, those who voted for the man are first in line. I’ll be way back…

  11. Random Rant to all who will listen.

    Got an email today. They are forcing us to put our retirement funds into 1 of 3 specific types of accounts. New IRS reg. is forcing this. Starts Jan 1, 2009. Got the email today. Today. My tinfoilhat says these accounts makes it so that cagey bitches like me who have avoided 401Ks and other dubious and nefarious financial arrangements all these years will be forced into something that they can seize in 2009 or 2010.

    I have not lost 40%. I have not lost shit. In fact I am up a good little bit this year. That is because of the choices I made.

    I have been so angry today. Trapped. I know the idea that I had the money was an illusion, but still.

    Characteristics of the new accounts:

    *Can’t take out a loan against them.
    *Can’t take out funds in times of hardship.
    *Can’t get the money if you are fired.
    *Can’t get till you retire.
    *Can’t move it around.

    YOU BASTARDS ALREADY COLLECTED FROM ME FOR SOCIAL SECURITY.

    I have no debt, I paid it off. Other people are getting “bailed out.” Fuck following the rules. I need to become a sociopath thief. Fuck caution, fuck honor, fuck integrity. Meaningless. I should be a goddamn leach, that’s where the payoff is. Makes me wonder what the fuck I am teaching my son. I should teach him to steal and go into debt and get everyone else to pay. Ahhhhh!

    Yeah baby nudge, It’s All Gone, including my patience.

  12. Unfortunately MOU,
    We went through a similar thing back in 1999 in Oz, however, it was only for payments made into funds AFTER the changes, so if I get retrenched (not fired) I can still get some money (what they call the ‘unpreserved’ amount) out.
    One of my wife’s ex-workmates got redundancy last year, put all her payment of 100k into super (what we call retirement funds) and has lost most of it, because when she leaves the company, the payout value ceases to become a multiple of her Final Average Salary and just becomes an ‘investment’ with slight lower tax (but only if you take it out after you turn 55).

  13. “I have not lost 40%. I have not lost shit. In fact I am up a good little bit this year. That is because of the choices I made.”

    MOU, that’s no small feat. A lot of wise guys are standing around shirtless right now.

  14. MOU-

    I’ve been self-employed for the last 29 years and received a similar notice from the IRS via Merrill-Lynch about having to make changes on a 401 K plan and an IRA that I established with them many years ago.

    I also have a small IRA with Smith-Barney but have not received any notice from them about changes. I’m going to take a look at this stuff over the holiday weekend with a neighborhood pal who has been investing since he was nine.

    And then I’m going to e-mail Ms. Fitts to see if she has heard about this latest scam and see what she has to say.

    FYI: It is not encouraging to read about the billionaire Pritzker family (Penny Pritzker ran Obama’s fundraising campaign) and how they conduct their business operations: no transparency, off-shore entities, etc.

  15. It seems the guilty nearly always get off scot free. People who have lived simple, modest lives instead of lives of unfettered profligacy are going to get butt shagged and hard. I know life isn’t fair but every time I see a news item about the financial situation, unemployment, people going hungry and all the cover-ups and swindles in the US it just fucks me off.

    Maybe the only thing that can effect real change is a benevolent dictatorship (I know there’s no such thing) to get things back on track. For a start let the big three fail, the rich all seem to want foreign cars anyway and start immediate fuel rationing.

    All the bonused up to the eyeballs Wall Street gamblers should have all their funds frozen and put into a fund for massive public works such as building of electricity generation stations and mass transit systems countrywide with feeder lines to suburbs, which won’t be going away any time soon, with maybe some houses that have been foreclosed being demolished and neighbourhood common gardens implemented.

    If people have lost their homes through foreclosure the government needs to mandate that they can still live in them but pay an affordable rent say 25-30% of their income to avoid social dislocation and crime through empty neighbourhoods – it’s better than people in tent cities.

    Obama could start the thaw in US-Cuba relations by importing some Cuban doctors on salary to care for low/mid-income people as Cuba trains the most doctors per capita in the world as well as some permaculturalists to show people how they can be largely self-sufficient.

    A while ago there was a BBC program about a modern day family that went back in time to the ways things were during WWII in Britain with the clothes, entertainment, available food and resources for several months. The teenagers missed the modern leisure activities but they became accustomed to it and I remember the mother saying that instead of them using five toilet rolls per week they just used one because everything was rationed and you never knew if there might be an interruption to the supply of goods and food.

    It just shows that people can quickly adapt if there is the willingness to endure some sacrifice for the greater good and more people world wide will be doing it soon enough.

    Nudge, good to see you have a plan B re the sewing. As a sewer myself I’ve made maternity gear as there wasn’t a lot around that wasn’t horrendously expensive (very small market here) or simply not available like maternity slips.

    When I get my Christmas pay (five weeks off work including public holidays, yay) I’m going to buy some spare tires for my bike and for the kids as well as they may be unobtainable or really expensive in the future and getting some liquor to trade may not be a bad idea either.

  16. MOU, sorry to hear about these mandated changes to retirement funds that were formerly safe. That truly blows. No one would blame you for going renegade after this.

    I have a friend who cashed out both her 401(k) and her husband’s last year. They paid off their standing debts and rolled the leftovers into IRA accounts. Considering that they bailed from the market before everyone’s account took those 40%+ haircuts, they probably made out better than the rest of us.

    Mary, those Plan B things may someday be a lifesaver. For sure the IT skills will be of questionable use during a Grand Mal type downturn in the economy. At the current time, every single indicator is indicating a stall condition. It seems that a whole lot of people are going to get intimately acquainted, real soon now, with the experience of austerity in their own lives. And not the warm fuzzy kind your grandparents might have lived through during the 1930s either.

    Actually I want to learn how to make paper .. don’t laugh, please. We’re surrounded by the stuff these days, and our economy produces so much of it that we don’t know what to do with it, but once upon a time in ye olden days there were small local paper mills everywhere. This small town where I live once had at least six of them. Some of the millponds and dams are still standing. It should be possible to set up a small one- or two-person operation using local resources.

    Love that story about the modern day family living at WW2 rationing levels. Betcha they all came back from the experience with their sanity intact, if not in better shape than before, right? :)

  17. MOU- I’m no guru with personal finance stuff so feel free to disregard everything I’m saying and call me and idiot for my questions.

    I just rolled over my 401k to an IRA as my former employer significantly curtailed the funds accessible through their 401k plan. Perhaps you could do the same? Is it only your employer contributed funds that are beings funneled into specific accounts? Are these funds an integral part of your retirement fund? I would think that the money you have put into your retirement account would be under your control. There is time to research what to do, it just often seems overwhelming.

  18. Are we all soon to be Argentinians ?

    Argentine Senate approves pension plan takeover
    By JEANNETTE NEUMANN – 5 days ago

    BUENOS AIRES, Argentina (AP) — Argentina’s Senate approved on Thursday a state takeover of $23 billion in private pension funds, a move that analysts say could protect retirees from short-term stock market chaos but also limit their long-term retirement income.

    http://www.google.com/hostednews/ap/article/ALeqM5hvriFrKsWjBthJjz3cUt7Be87hpgD94J2AU00

  19. Damn, and I was just getting the portable underwater field mass spectrometer working at the part per trillion (10^-12 g/ml) detection range when the world (or is it just the USA) economy goes tits up. Surely someone will still care about volatile organics detection at these trace levels in future? Sell them to the Chinese?

  20. Ha ha, well Doom, you can just cast aside that mass spec and strap an underwater DU chaingun to the submarine robot instead. Sell it to the Saudis as a pirate hunting terminator droid. Follow the money. With your academic genius and my business cunning, we could make each other rich. Rich I tell ya!

  21. Wish you were all my neighbors.

    I do need to calm down and look into it more, as EE and Tipper suggest. Yarra, you freaked my stuff, I have yet to spend time thinking through what the endgame would look like, I was so busy with the consequences to me now, if I lose my job. There is a lot going on that I may post about later that has all of us worried. I’d think Doom may be in this boat, as well as his other ship detecting parts per trillion. But yeah, if I don’t lose my job and make it to the finish line, sheesh… and Remus gave me even more to consider regarding the possibility of getting hit with a butt load of tax. AU, I had heard about Argentina and that is why I blew so bad. We should be better than that but we may not be.

    BunnBunn,
    Who’d lie to a rabbit. A lopp at that. I have 126K as of this minute in that account. I can’t get it unless I have a documented hardship or I am fired. But in this mess, I sort of counted on it I could get it if I was fired. To some (like me when I was 20) that sounds like a lot. Many folks managed their stuff and had much much more and have now taken the haircut. I saw peak oil coming and after my stocks bounced back from the last bubble burst, maybe three years ago, I simply pulled out of stocks (because of the ethics, I did not know what the money was supporting) and went into an annuity (I guess we could say the same thing about the annuity, I did not think it through). I would not want to leave you with the impression that I was a wheeler dealer. I have been pretty simple about finance in the past. I just thought the stock market looked greedy.

    Jim Kunstler and the movie The End of Suburbia are the reason I did not lose half my money.

    Nudge, realistically, if I thought me and others giving up our retirement would NOT go down a black hole, or go to line some bankster’s pocket, if I actually thought it would make things better for everyone (or even stood a reasonable chance) I’d do it. No lie, I’d do it and feel pride about it as I saw sustainability initiatives start up, education improve, any of the projects that Mary described happen, I’d give it up, easy. It is the lack of trust and the lack of confidence in their competence that is so, well, enraging.

    Thanks for all your comments. I am processing and integrating them as I write. I also don’t feel alone with my rage which few around here are able to validate.

    Happy Turkey Time, even if you ain’t in the USA, have a nice day tomorrow.

    I give thanks for all of you here.

    Peace!

  22. Saint Bif,

    The Somalis may pay well, let them put in a bid for your services. You are a mercenary (droid) outfit, right?

  23. Yes I am up in GB’s neck of the woods, but follow the Erie Canal west a few locks, then turn and go over a couple hills, along a few lakes, and there you will find my footprints in the snow.

  24. Your deer hunting experiences sounded way too cold for you to still be down south. Growing up, I always loved northern NY winters, especially when I lived in Syracuse where we would get regular blizzards and be snowed in for days… now there was a population that knew how to handle snow and partying!

  25. Yes I have been cold as hell for weeks. Its a good thing I’m a Cossack. We are a hard people.

  26. AU, methane is a bit tricky. The formula peak is (CH4) = 16 amu, same as oxygen as (O or O-), so there is a classic isobaric (same mass number) interference. Fortunately, CH4 will lose an H on ionization, to become CH3+ with a mass of 15 amu. That is a peak we can monitor with only a slight N-15 isobaric interference, since N-15 is a minor isotope of nitrogen.

  27. Bif, I’m always open to business deals, especially with the Saudis. I’ve got product and expertise, both are for sale.

    Have portable mass spec, will travel. Wire Paladin, Honolulu.

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