Why the Collapse is Certain

While the following is a little bit of a long and some what technical read, it is the most concise article that I have read on why a Economic Collapse is a certainty.

December 15 2012: Some pretty ugly markets for 2013, our debts are too large to ever be paid, Europe's economy is terminal, Spain and Greece are basically in default, the complete breakdown of moral justice flys into high gear in the US, outright looting of the US Treasury going on, the new year will only bring us closer to the fiscal cliff and closer to going over it......this is the lead in from an article, called 2013 The Final Act, by Bob Rinear for the International Forecaster Weekly. 

Mr. Rinear's view: 

If you have been with us for any length of time you know that I've been claiming that 2013 will probably usher in some pretty ugly world markets. I've called it everything from a massive roll over to an outright crash. Naturally I have to have some "reason" to believe this, and I figure that today is as good as any to discuss the "why's" of it all.

Frankly I have no idea if the big crash will occur in 2013, 2014 ,2015 or what have you. No one truly knows the future. But, I do know that enough things are already in process that the big crash is a mathematical inevitability. We have gone over the edge, we can't walk it back. Now it's simply a matter of waiting on the Grand Finale.

So what is it that is so egregious, that we're going to be facing this economic implosion? The simple fact that you're reading our letter means you already understand the unsustainable debt loads we're under. You're smarter than the average person because frankly most people hear the word debt and shrug it off as some form of abstract concept. Well it is neither abstract nor ignorable. It is real, it has grown to outlandish proportions, and it cannot be repaid. Ever. The single greatest transfer of wealth the planet has ever seen is in full swing, it cannot be reversed and it will play out.

Some are simply too stupid to "get it". Yeah, I know that I'm not supposed to call someone stupid, but let’s just cut the air of PC for a while shall we? There are three subsets of folks when you are talking about the economic situation we all find ourselves in. The first class is either ignorant of the situation, or if they are aware of it, are just not smart enough to understand the ramifications. The next set knows full well what is really going on and have tried to secure themselves from the ravages of it. The final set, are those that "benefit immediately" from this situation, and don't give a rats ass about the consequences in the future. Most of our politicians fall into that category.

Let us consider Europe for a moment. The situation concerning Spain, Greece, Italy, Portugal and the other Club Med Countries is already terminal. There's no way to fix it. The relatively "good" economies such as Germany are being taxed to support the bad economies. As we speak there are more than 6 regions that want to "break away" from this nightmare. The Scots are holding a referendum to vote on the concept of breaking away from the UK and going their separate way. The cries to "stop the madness" will continue to rise and there's a very good possibility that Spain, Greece and possibly others will NOT be part of the Euro by the end of 2013. The great Socialist test tube experiment of joining 17 different "tribes" each with its own unique customs and languages, has indeed failed. Unfortunately, when it does dissolve, that will not be the end of the nightmare. See...the debts will still be there.

Spain has basically defaulted. Greece has defaulted. Yet to keep Goldman Sachs and JP Morgan from having to pay up on Credit default swaps, the ISDA has changed the language. They're calling it "collective and selective default" thus not requiring GS to have to pay up. Likewise they looked at Greece and said that because their bonds would have Salvage asset value, it’s not a default. Excuse me? When you create a Credit default swap, the deal goes like this... You want to buy Greek Bonds paying 7%, but you're afraid they might default and not pay you. So, you go to GS and buy a credit default swap. GS is basically selling you an insurance Policy. For a 1% "fee" they basically say that if Greece defaults, we'll make you whole. But you also have to agree to give GS the physical bonds. That's the "swap" part of the deal. GS gets the bonds because in any default there is some "salvage" value. Well, Spain and Greece have both defaulted and all the ISDA did was "fix it" so no one had to pay CDS payouts. How criminal does it get? Very.

So, part one of my theory of a pretty big market shake up is that the possibility of "Some - all" of the Euro zone to fly apart in 2013 is very real. Now, the ISDA (International Swaps and Derivatives Association, Inc.) has been able to keep their buddies at GS and JPM happy by not activating Credit default pay outs. But can they pull that off when the Euro dissolves? How many hundreds of billions are written against these bonds? If just "half" of them are forced to pay out, can GS and JPM find that much money? Does that spur another round of US bail outs because they're "too big to fail?" What I'm basically saying is that just because Europe is "way over there" and according to Jim Cramer "you don't shop at Europe".... their problems are rooted right here in the good ole US. Pension plans, Insurance companies and many other every day businesses have ties to Euro zone debt. Remember this in particular...if global activity causes the US interest rates to rise by just 3%, economic Armageddon would ensue. Yes you read that right. A 3% rise in interest rates implodes our entire system. Could the failure of Europe have that effect? It is possible.

Here in the US, we see something that can only be likened to as "get all you can while we're still solvent". The instance of outright fraud, the complete breakdown of moral justice is now in high gear. John Corzine took a billion dollars from Customers, money that was NEVER intended to be comingled with the firms’ money and lost it/stole it. He walks a free man, heck... he might even open another fund. Solindra was NEVER going to produce a single green product. Never. It was a shell company backed/owned by political "friends" that were given half a billion dollars and in less than a year, padlocked down. It was a scam, a complete "inside job". No charges, no one goes to jail. All in all, 26 supposedly "green" companies took taxpayer money, and folded like a cheap camera. Why did they need taxpayer money in the first place? Because they were scams. They could never attract private money because no one would lend to them. But hey, if you have a brother in law in Congress... then you get millions to play with and eventually steal.

PFG went belly up after regulators there found that just like MF GLobal (Corzine's outfit) they had mingled about 200 million worth of customer funds and lost it/blew it/stole it. Well it wasn't lost. It wasn't badly traded away. It was stolen in a Bernie Madoff like ponzi fashion.

Sentinel comes to mind next. After their customers sued in high court because Sentinel took customer money that by CONTRACT and by CHARTER had to be segregated. Kept separate...not mingled with the companies money for investment...Sentinel did just that. They comingled customer funds with their own, stole some, lost some, etc... But here's where the Concept of morality, justice and any believe in a rule of law goes right down the crapper... the Court sided with Sentinel. That's right and I wrote a lot about it when it happened. Our justice system is now made up of on the take criminals, not upholders of law and justice. They said that even though Sentinel promised not to co mingle customer funds with their own, doing it because they thought it would make the customers even more money was just a good intention gone wrong, nothing more. Are you kidding me?

So we have outright looting of the Treasury going on, and no one goes to jail. We have financial companies stealing customer funds and its swept under the rug. We have a judicial system that is now a farce, a bought and paid for circus. Shall I go on? You bet. Because our problems are no longer just "there's too much debt". Now our problems are considerably more wide spread.

Day after day we've had to endure all this talk about the fiscal cliff, and the bickering between the White House and the Congress. Please understand this... Cliff or no cliff, deal or no deal... the system will fail and fail horribly. Do NOT think that just because they reach some late hour deal that all is well and we can go on partying like it's 1999... it would be a colossal mistake. Yes we'd get a short term market boost on the news, but it doesn't fix or change anything. I repeat, our problems can NOT be fixed. ( Okay I take that back, yes our problems could be fixed if our Government did absolutely everything right...from opening all our lands to drilling and exploration, to getting rid of the insane laws of the EPA, to getting rid of the miles of red tape that stands in the way of opening something as insignificant as a lemonade stand, to opening 12 new refineries so we could have 2 dollar gas, to blah blah blah....as you see, it isn't going to happen).

This week, on Dec 11 and 12 the FOMC met concerning monetary policy. Remember folks, operation twist ends at the end of the year. If they had just let that expire, we would go from 80 billion a month being used to buy up treasuries and manipulate the interest rates... to "just" 40 billion. Well, just like a junkie needs ever more junk, credit markets need ever more bogus dollars. So, they announced they'd buy up 45 billion a month of Government paper, with money printed out of thin air. Just ponder that for a second. The 45 billion a month in QE4, which will go on top of the 40 billion a month in QE3.. we're talking about 85 billion a month which is $1.02 trillion a year. This is about a 14-15 trillion dollar economy and the FED is injecting one trillion straight into it...out of thin "AIR". 7% of our 14 trillion dollar economy is Bernanke's printing press. Can you say inflation? Can you say hyper inflation? Start practicing, its coming.

Consider something for a moment. Since Bernanke launched his ZIRP plan (Zero interest rate policy) We have seen an explosion in the amount of businesses that are using repo's and reverse repo's to create cash flow. In years gone by, a brokerage firm for instance, would deposit its customers account money in 90 day T bills. For instance in January of 2007, those notes were paying 5.1%. Most folks don't know this, but the bulk of most brokerage income was NOT generated by trading commissions. Nope, it was by buying reasonably safe 90 day Government paper. When Bernanke took rates to virtually zero, all these places had to scramble to come up with some way to replace that missing cash.

Well, as you all know, you don't get big returns without big risk. So, what most of these outfits have turned to is the repo/reverse repo market. Don't just think it was Corzine, or PFG or Sentinel. It's just about every bank, every brokerage, every insurance company, every union pension plan, etc. There are now so many derivatives and CDS's, that the exposure rates are mind boggling. You've seen me post the charts. JPM has "assets" of say 1.5 trillion. (customer deposits) but their exposure to derivatives is 48 Trillion. The leverage factor is insane. This goes for Citi and Goldman and Banc of America, etc etc etc. Consider for a moment Goldman Sachs. If you look at “assets on deposit” versus derivative exposure, they’re at a leverage rate of over 400 times. Am I to believe the world just continues along on its merry path and none of these over the counter derivatives go bump in the night?? Sorry, no can do.

What I'm saying is this... all of this junk is coming to a head. They can't hide it any more, they can't disguise it any more. One really big black swan event, one really crazy event and the cascade goes exponential. The problem however is that you cannot react to it. Consider this.. 77% of all trades now are "Algo's" meaning computers buying and selling to each other via high frequency trading. Virtually every one of those programs is written to go "no bid" in the event of a Black swan event. What do you do if one day something wicked has happened (lets just say an atomic bomb goes off)... in seconds the entire market would go no bid. You want to sell your shares/options/futures etc... but there's no bid. No one to buy them. What happens to all the CDS's, the Reverse repo's that are sitting on "off balance sheet" ledgers when something outside "normal" hits? The entire system will lock up, and fail.

We are there. We are 3 interest rate percent from a lockup. We are one black swan event from a lockup. We are one Eurozone disaster from a lock up. We are already AT the period where firms are sweeping customer accounts, to make up for bad bets, and many more will happen. Will all this happen in 2013? I don't know. But I do know that each and every day we march another inch closer to that swan, to that interest rate spike, to that "outside the bell curve" disaster. To the day YOUR money is no longer at your brokerage, it was stolen/lost. But unlike years gone by where you could call a human and find answers and solutions, now it's all computers. Algo's. Programs. My guess is that the market will start to sniff out these very real possibilities this coming year and begin fading off in advance of it.

So, what do you do? First off there's nothing perfect. I can't sit here and tell you that gold will make everything fine. I can't tell you silver will make everything fine. I can't say land, or cattle or trees or anything else will get you through this unscathed. But I feel fairly confident that you will be MUCH better off having your money in something physical, than in slips of paper with dead Presidents on them. I personally believe that having your "wealth" in gold, silver, property, weapons, ammo, trees, livestock, etc..is considerably better than having a computer entry at your bank. Think about it folks. Your supposed wealth is nothing more than computer digits. The MONEY is not there. Your bank does NOT have your money. Your mutual fund doesn't have your money. They've taken that money and bought swaps, repo's, sovereign debt, you name it. All you have in your possession is a statement that "says" you have "X" amount of money. But you really don't and neither do they. To me that's a very scary thing. One I don't like being part of in this bizarro economic atmosphere.

2013 has the ability to be very unsettled for all the reasons I just outlined. It might not all unfold in 2013, it could be 2014...but the point is this...it's coming. It cannot be stopped. As ugly as those words are, they are a mathematical certainty. Just like I learned after living through Sandy, being prepared is key. Get yourself prepared.

Collapse - The Movie

A new movie on DVD is coming out for our collapse preparation pleasure,...simply called "Collapse", this movie defines what they mean when they say "Collapse - happens to every civilization". The following release and movie trailer will give you an idea on the direction of the movie, or you can go to the web site and see the same as well as some movie reviews - if they mean anything. And even though I hope they are wrong when they same Collapse is now inevitable, I'll be buying and watching the movie myself.

Americans generally like to hear good news. They like to believe that a new president will right old wrongs, that clean energy will replace dirty oil and that fresh thinking will set the economy straight. American pundits tend to restrain their pessimism and hope for the best. But is anyone prepared for the worst?

Meet Michael Ruppert, a different kind of American. A former Los Angeles police officer turned independent reporter, he predicted the current financial crisis in his self-published newsletter, From the Wilderness, at a time when most Wall Street and Washington analysts were still in denial. Director Chris Smith has shown an affinity for outsiders in films like American Movie and The Yes Men. In Collapse, he departs stylistically from his past documentaries by interviewing Ruppert in a format that recalls the work of Errol Morris and Spalding Gray.

Sitting in a room that looks like a bunker, Ruppert recounts his career as a radical thinker and spells out the crises he sees ahead. He draws upon the same news reports and data available to any Internet user, but he applies a unique interpretation. He is especially passionate about the issue of peak oil, the concern raised by scientists since the seventies that the world will eventually run out of fossil fuel. While other experts debate this issue in measured tones, Ruppert doesn't hold back at sounding an alarm, portraying an apocalyptic future. Listening to his rapid flow of opinions, the viewer is likely to question some of the rhetoric as paranoid or deluded, and to sway back and forth on what to make of the extremism. Smith lets viewers form their own judgments.

Collapse also serves as a portrait of a loner. Over the years, Ruppert has stood up for what he believes in despite fierce opposition. He candidly describes the sacrifices and motivators in his life. While other observers analyze details of the economic crisis, Ruppert views it as symptomatic of nothing less than the collapse of industrial civilization itself.

West Point Tracks "Right Wing" Threats

I received this article from a friend working for the government who believes there is a trend for the federal government to look at Americans in the conservative, small government, pro guns rights groups as potential threat groups. If this is true, then it is disturbing. Even more alarming is the report about the U.S. Military, in this case the U.S. Military Academy stepping clearly into the law enforcment realm by studying what they term "threat groups" inside this country.

The below is the article from The Blaze:

The Combating Terrorism Center (CTC) at the U.S. Military Academy at West Point released a study Tuesday warning against American “far right” groups including the “anti-federalist” movement and strong limited government activists.

The report, titled “Challengers from the Sidelines: Understanding America’s Violent Far-Right,” posits that in recent years, and especially since 2007, “there has been a dramatic rise in the number of attacks and violent plots originating from individuals and groups who self-identify with the far-right of American politics.”

The analysis, conducted by West Point professor and CTC director of terrorism studies Arie Perliger, noted that his study “concentrates on those individuals and groups who have actually perpetuated violence and is not a comprehensive analysis of the political causes with which some far-right extremists identify.” He added that an in-depth look at the data provided addresses three crucial questions:

(1) What are the main current characteristics of the violence produced by the far right?

(2) What type of far-right groups are more prone than others to engage in violence? How are characteristics of particular far-right groups correlated with their tendency to engage in violence?

(3) What are the social and political factors associated with the level of far-right violence? Are there political or social conditions that foster or discourage violence?

The West Point professor said anti-federalists “espouse strong convictions regarding the federal government, believing it to be corrupt and tyrannical, with a natural tendency to intrude on individuals’ civil and constitutional rights. Finally, they support civil activism, individual freedoms, and self government. Extremists in the anti-federalist movement direct most their violence against the federal government and its proxies in law enforcement.”

Perliger also identified limited government activists as belonging to one of three categories: “a racist/white supremacy movement, an anti-federalist movement and a fundamentalist movement.”

According to the Washington Times, the report also draws correlation between mainstream conservatism and what it dubs the violent “far right.” The study then goes on to laud liberals as forward-thinking while maintaining that conservatives harbor a more archaic mindset.

“While liberal worldviews are future- or progressive -oriented, conservative perspectives are more past-oriented, and in general, are interested in preserving the status quo,” the report states.

“The far right represents a more extreme version of conservatism, as its political vision is usually justified by the aspiration to restore or preserve values and practices that are part of the idealized historical heritage of the nation or ethnic community.”

Citing a reported 350 “attacks initiated by far-right groups/individuals” in 2011, the analysis characterizes the liberal-democratic system as inclusive and “designed to emphasize civil rights” while far-right ideology inherently “excludes” minorities.

UrbanMan's comment: 350 attacks? Are you kidding me? I'd like to see what they list as far-right attacks. Also disturbing is the comments about a liberal (politically system) emphasizing civil rights when there is a huge call to take away substantial 2nd amendment rights while the right (conservatives) are characterized as basically racists.

Perlinger’s study, however, has not gone without meeting a degree of criticism. Speaking to the Times, a Republican congressional staffer slammed: “If [the Defense Department] is looking for places to cut spending, this junk study is ground zero.”

He added that the Combating Terrorism Center should be focused on radical Islam and, at the least, publish a companion report underlying the dangers of left-wing terror groups like “the Animal Liberation Front, Earth Liberation Front, and the Weather Underground.”

The CTC describes itself as “one of the leading academic institutions devoted to the study of terrorism” whose research is informed by three core components including” studying emerging threats, challenging conventional logic and offering counter intuitive insights.”

UrbanMan's comment: I have the greatest respect for the military and all those who serve in the government who are risking their lives to protect this country. The military in particular enjoys much respect and credibility with the American people. Recent comments from retired General McCrystal about Americans should not be allowed to own AR's, this West Point study, and the previous posted article about the military puting down a "tea party" rebellion as alarming to say the least.

More on Survival Caches

I have been getting quite a few comments and e-mails with opinions and recommendations on caches. Survivalists would, of course, use caches for many diverse reasons.

 

• To support Bug Out especially from an Urban area into a rural area for transit to your final Bug Out location or tentative rally point or assembly area.
• To hide some material or equipment to safeguard it from people who want to take it away from you.
• Cache emplaced to support an operation so travel to that operations in an area does not have to include bringing in so much material.

 

You have to have some way to record caches so over time they will not be forgotten, or you may be sending caches reports to other people for recovery.  The best way to record the cache information and location is a written record maybe backed up by a electronic file on your PDA, tablet or I phone.

 

Everyone is now thinking I am recommendating breaking OPSEC or otherwise having a record with anyone seeing it, being able to get the goods. Not so. You could use a password encypted file for your cache records and you can use a default numerical subtraction or addition code to the information vital for the actual cache location and recovery. See more of this below.

 

Here is what I think it a suitable elements of a Cache report are:

 

Cache name or designation - so you can keep track of recovery, especially if you have multiple caches in.

 

Cache contents. Be specific.

 

Other Information. How cache is emplaced. How items are weather proofed or not. Container(s) description(s) and dimension(s). How deep cache is buried if this is a burial cache (most common). What tools will be neded to recovery the cache.

 

General Area. This would be a general description of the area the cache is located. This should be a general direction, such as EAST and a distance in a common measurement,...meaning do not use leagues for a measurement unless you are a pirate.

 

Specific Area. This would be direction on how to get to the Immediate Reference Point (IRP) which is where you will usually need to measure a direction and distance from to locate the Final Reference Point (FRP) and from there the cache. The immediate reference point should be something that is not likely to move or disappear.

 

Final Reference Point (IRP). This will be a fairly easy marker like a large rock, distinct tree, bridge abutment or something along these lines where you will again measure a distance (tape measure is handy).

 

An Example Cache Report may look like this: 

 

Cache Report.
Cache B#14.
Cache Contents:
2 each Military style Green Ponchos
60 feet of tan colored 3/32 inch diameter string
2 each one gallon water containers, full, not disinfected nor treated
1 four ounce bottle of water purification drops
6 each Meals Ready to Eat,
complete 1 AR-7 surival rifle
2 each 50 round boxes of .22 LR CCI Stinger ammunition
1 each folding Buck knife with belt sheath
1 each 16 inch crosscut saw
1 each butane lighter

 

Other Information: All items wrapped in water proof plastic. All items in one wooden box, 30 inches long by 14 inches wide by 14 inches deep. Top of box buried approximately 18 inches from ground surface. Using metal prob to locate wooden box is recommended. Ground is dirt with grass, weeds and small scrubs. Cache site is visible from IRP so security upon recovery is a concern. Shovel will be necessary to recover emplaced cache.

 

 

General Area. West of Springerville, AZ. Travel 13.5 miles WEST on US Hwy 60.

 

 

Specific Area. From US 60, South on County Road 3123 for 8.2 miles to IRP.

 

Immediate Reference Point (IRP).  On WEST side of County Road 3123 there is a dirt road heading generally WEST. There is a Forest Service gate here.

 

Final Reference Point (FRP).  The FRP is located from the IRP (NORTH end of the gate) on a magentic azimith 032 degrees and at a distance of 62 feet is a large, oval granite rock approx 18 inches long and 12 inches wide. This is the FRP.

 

Cache Location. The cache is buried 18 inches below the ground from the FRP on a magnetic azimuth of 045 degrees and at a distance of 36 feet.

 

Notes on Caching.

 

When emplacing caches consider natural weather conditions such as run off or snow cover that would uncover or expose the cache or make recover difficult.  Or make location and recovery of the cache too difficult.

 

Using ponchos or tarps to separate the different layers of earth when emplacing the cache, then reversing the layers of dirt when covering the caching will greatly aid in the concealment of the cache.

 

Depicting a concealed route to the cache IRP and/or a good position from which to observe the IRP and FRP may help in the safe recovery.  

 

For additional security against the wrong person or people recovering your cache, you may have an internal procedure where you add a certain number, let's say 65 to your azimuth and distance measurements.  Therefore  the example azimuths and distances from the IRP to the FRP would be  097 degrees and 127 feet.  The cache location from the FRP would be 110 degrees and 101 feet.  Then when recovering  the cache the right recovering party would know to subtract 65 from each direction in magnetic degrees and distance in feet.