Stating the Obvious
 

Like, holy shit. I'm starting to see the signs of this financial storm brewing in the US.

Friends are having trouble getting loans, I've got deals that have stalled out and died, and a buddy who owns a Porsche dealership has told me his business is very, very slow.

On top of that, Bloomberg should change their name to "Doomberg" because everytime I read their front page I want to cry.

I realize there are some people who are still not affected (and those who felt it long ago), but I just today have that feeling you get in a big rain storm when all of a sudden you look down and notice the water is up and over the curb and suddenly your grass is flooded and you realize, 'hey, that's not normal'

Re: Stating the Obvious
 

You might be in a Recession 'if'..........

IF Bloomberg changes it's name to Doomberg.

IF you go see a movie on Saturday night and there's a sea of seats like it were Monday afternoon.

IF your neighbors houses are vacant due to foreclosures.

IF a friend offers to mow your lawn for money because he's out of work.

IF your boss puts up his Porsche for sale.

IF you see less people showing up for work everyday (parking lot thinning).

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My friend owns a fitness/weight lifting gym. Business is slow and customers are leaving.

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Yep; consumer discretionary appears to be taking a hit. Expect the essentials to likewise suffer as Joe 6 Pack chooses between deodorant and ho-hos. May Odin guide his hand so I don't have to smell him. :bear_tongue:

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Storm is not brewing it hit last month

Home sales have been in the tank for months and foreclosures have climbed every month for the past few years

I talked to a dealer at a major local GM dealer and she said they sold three new cars in one month, where they usually do that in a day.

TSHTF already happened, just a question of how worser it is going to get and what happens when the idiot public finally figures it out. Remember the big numbers run 30-120 days lagging.

My advice: dont spend ANY money unless you are buying food, retiring debt, or investing wisely in metals that you hold in your hand; and if you got "crops in the field" work em hard as you can before they rot. I mean crops if youre a farmer or leads if youre a salesman or overtime if youre in a factory. RIGHT NOW UNDERSTAND WE ARE IN A RECESSION AND WHO KNOWS HOW BAD IT WILL GET

We have had inflation for the past year and it has showed up strong at the drugstores. Today I went into a drugstore and there were markdowns everywhere. I ended up paying prices they had three years ago. THAT is called deflation and it accompanies recessions but it is odd that I would see a hallmark so fast. Keep in mind deflation already hit in real estate bubbles over a year ago.

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1 house flipper I know hasn't made a payment in 3 months.

(2) large custom homes I was working on were pulled from the boards.

A huge rush to get offshore operations underway by Florida developers.

Yes, and small personal loans by the dozens.

Employee groups eating at McDonalds with coupons, rather than the higher end quality food places.

It's here, I give it three months before massive layoffs by small to medium sized sub-contractors.

It's the constant wearing of the gas price that is deflating the tires.

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It looks as if early 2009 could be the severe crunch time for mortgage lenders in the USA.

Apparently this is when rates could move from 6-8%, to some wilder numbers that will hammer anyone out of their home that is over-leveraged in debt, and there are plenty of peeps out there eating Ramen noodles so they can live in the McMansion.

If rates move, those people are finished. They will sell up, or walk away, and property prices will fold, compounding the recessionary atmosphere that already exists.

This is certainly not like the days that our parents lived in...

Young families etc. having to sell up their homes because they are in a debt trap.

Re: Stating the Obvious
 

AE,
I concur with everything you said EXCEPT the retiring debt. Our financial advisor many years ago told us our house was the WORST place to keep your savings (the bank is the second worst place).

If you've got credit cards, CHARGE THEM BABIES UP. Hell, ask for a LARGER LIMIT.

Then ONLY USE THAT MONEY FOR YOUR SHTF PREPS. PMs, LEAD, firearms, bov, etc.

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I hear this mentality repeated over and over, even by myself.

What happens when the bill comes due wallew?

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I'd go for a 0% promotional offer (if they are still floating around) and liquidate only to the extent one must pay off the debt, as the dollar is going only one direction.

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What to do when the bill comes due?

Change addresses. :wink:

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I can agree with this sentiment...

Do you think G.I.M. membership could be tied to our credit ratings?:rolleyes_m:

Re: Stating the Obvious
 

Excellent advice.

I also agree with getting rid of as much debt as you can.

If you think banks are gonna sit there and lose money as inflation kicks in rather than raise rates through the roof, you might be in for a nasty surprise.

Owe nothing.

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A friend called the other day. His brother had been kicked out of the house by his wife and Dickie wanted to know if we had any work we needed done that his carpenter brother could do. I think it is beginning to get hard out there.

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Good point Ulysses

In Vancouver they are advertising CAR equity loans on the tv guide channel. anything to get you into debt. what's next ? I've got $300 equity in my bicycle, maybe soon I can borrow against it

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The obvious statement that few will make is this: If you aren't prepared to have some degree of self-sufficiency, you are going to really suffer.

I would not pay down debt UNLESS I was already prepared to the gills and had lots of spare cash. Who has "spare" cash these days? Much better opportunity to pay off debts in the future if your cash is now committed to items that will enjoy a run up with the inflation we are seeing already.

Been to the grocery store lately?

You'll be better off to stock up on groceries now, than paying off debt. Groceries are going to cost a lot more. Saw decent quaity bread yesterday, IE Orowheat approaching $4/loaf. Yikes! Know how to bake bread? How many loaves of bread can you get from 50lbs of whole Wheat Flour? Takes about 4 cups to make a 2lb loaf. Want to eat better? Start doing your own cooking, use quality ingredients and forget about fast food and eating out all the time.

You'll be better off buying some additional PM coins and marking those for your debt retirement sinking fund.

Yes, there are going to be numerous going out of business sales. Businesses will also want to trim back their inventories, not keep as many items and turn them faster. Those lower prices you will chance to encounter are not deflationary, they are a business decision.

Think of all the hungry lawyers that are out there.
Going out of business now is a pretty smart idea.
Get your money, protect it from inflationary and other losses, and be ready to respond when you see conditions that might be favorable. Yet, even then, be very cautious.

This will not be a normal downturn business cycle. The Nation has been setup and the plan is for total failure. Your being out of debt does not matter on bit. When you are caught up in a tornado of chaos, your credit score won't matter. Likely, it won't matter again in your lifetime or your children's lifetime. There will be no more "easy credit".

Nothing will be easy, ever again, except the dying.
Almost 4 years ago I wrote if you were not prepared, but were retiring your debt you would be "out of the running". That will be painfully obvious very soon.

Good luck to all.

Re: Stating the Obvious
 

Thanks zeedub.

You mean you've paid off the bike already? :D



You're right, groceries are going to cost a lot more. But so is debt.

It's not going to do anyone any good to prep up to the gills and then, just when TS starts HTF, have some old debt inflate to the point where your property is repossessed and they bring out the metal detectors to go over your property. Oops, sorry, that's their property.

That would also put you "out of the running".

Banks don't play. If you haven't paid what you owe, they'll come and take what you have. If you prep really well but don't pay your debt, they'll just recover more of their money than usual.

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Uh.....I have to disagree with a resounding 'NO'....:D

Debt is usually value in US Dollars.......have you seen the Dollar lately ?
It's cancerous and loosing value daily.....it hit 78.15 today.

So, if debt, value in dollars is actually getting 'cheaper' then what you typed is not true............groceries go up.......debt goes down (in purchasing power).
Take milk for example or even bread........Milk for $5 then $6 then $7.........or Bread for $2 then $3 then $4 dollars per loaf.
Now, if you have a $100 debt it's based on items you bought for $100 but in the past as in yesterday.....that $100 won't buy the same groceries - duh.
The devaluation of debt is contrary to our current thinking because this has not happened in over 30 years. Guess what ~ credit cards and helocs haven't been around that long ! .......now......keep in mind that I am not taking into account new laws which could be passed to help 'neutralize' or pay down that debt at a much quicker rate.

I know this is a difficult concept that many, many, many GIM'ers have discussed in terms of Deflation and Hyperinflation......

TET has recited it best........but the fact is........Debt is being devalued because the US Dollar is being devalued.

Period.

Re: Stating the Obvious
 

It really depends on the interest rate, whether they can ratchet up the rates to keep up with (hyper)inflation, thus why I was trying to get dad out of his adjustable-rate...the thing's 3/4 paid off but if something happens, he won't get the thing re-appraised fast enough to keep up with the bankers.

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assuming you have a fixed interest rate. even then they have the ability to call in the loan. the house always wins

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Debt sucks. I wouldn't be slave to anyone even if it seemed like an advantageous way to play the system. I just read Peter Schiff's "Crash Proof" this morning, and one thing I strongly disagreed with was his recommendation to borrow every penny possible against your house (with a fixed rate only), then invest in foreign equities and gold. There is something to be said about the peace of mind of owning your own house free and clear - even if it isn't "financially advantageous.

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A house is merely another asset that can be purchased and sold. If nothing else, in the event the other shoe drops, one can always sell the equities and pay back the debt early. In an inflationary scenario, the equity of the home will appreciate much faster than the loan, so all should remain well.

Even so, the peace of mind that comes with the house is quickly eroded given that it is taxed just for being there (property tax), and the taxes, due in FRNs, have to come from somewhere, be it the sale of hard assets or labor. Owning it free and clear is not what it used to be...

Re: Stating the Obvious
 

I was at a Frys supermarket tonight doing some light shopping, and was shocked at the price of beef; top sirloin was priced at $9/lb.

1.5 years ago I suggested a co-worker wait a couple of years to buy a house. She is trying to sell that same house for 25k less than purchase price.

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Right now renting is cheap compared to exploding ARMs and grossly high housing prices, but once people are run out of their homes I do not expect it will be.

We carry a little credit card debt, but not more than we can easily clear. We add preps by living frugally now.

Re: Stating the Obvious
 

You're right about one thing: since the last inflationary period was about 30 years ago, many people don't really understand what happens in one. Thinking that somehow debt is good when there is high inflation is a clear symptom of this.

To use your example, that $100 you borrow won't buy the same amount of groceries tomorrow, but unless you can borrow money at a guaranteed 0% interest no matter what, that $100 won't be $100 tomorrow, either. Duh.

Read 'em and weep: interest rates, interest rates, interest rates.

Banks won't lose money during inflation, they will fleece debters through high interest rates.

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This borrowing thing depends on three things:

1 that you can service the loan
2 that your wages rise with inflation
3 that they don't change the rules

0% you can service the loan, but you may have noticed banks change the terms at will. If they're in trouble, have no doubt they will share that trouble with you. Hello 30%APR.

Wages have not risen with inflation. They continue to fall, even with the dollar falling. So unless you live in the US and are paid in Euros, this is not helping. Eventually wages may rise or money may be so cheap that the black market says you can paint a house for $500,000.00, but you'd have to make it to that point for the debt to be paid off in pesos. Can you make it there? Are you sure? Because you may be betting your life and preps on it.

Change the rules? How about being able to pay your 3% property taxes when your house is suddenly worth $500M? How about the bank sponsoring your CC goes under and the debt is due immediately? Of course that's illegal, so why don't you go ahead and prove it in 30 days or less? In hyperinflations, money is scarce believe it or not, that's why idiot governments print MORE. You may suddenly have $10,000 for giving that haircut, but money is still tight when cheese costs $40,000/lb. Yes, the debts vanish in that situation, but we're talking about how you'd be able to defend yourself agains ta change in rules. Hire a lawyer? Since everyone is broke (money still too tight) what would they get?

You're better off independent, on a level keel. Debt is still slavery. You may have inside information that there will be a prison break in 1 year instead of the 7 you signed for, but what if something goes wrong? Isn't it better to never be on the chain gang, if possible?

4 what if we have a Depression and not inflation? That is decided by the relative level of debt to available cash in society, and if you hadn't noticed, under a fiat system ALL cash is debt. There is ALWAYS more debt than free cash, guaranteed. That's why fiat systems cannot have zero (sustainable) growth. There is a very good chance, in fact, 100% that we will have a Depression instead. The only question is how much can they inflate before it hits? Inflation is dependent on free people BORROWING, which depends on confidence. Confidence is breaking right before our eyes. They may INTEND to hyperinflate, but 'tis many a slip between cup and lip.

Just a thought here. Of course debt can be used for good or bad. Any way you play it's a gamble.

TS

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It's business - that's why you NEVER opt for a 'variable rate' allowing them to fleece you at will.

:wink:......BTW ~ my bank is a Credit Union.

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#3 is the most important. A year ago, I spoke with Bunker Hunt personally.......he said be careful of 'shorts' and be aware that they'll change the rules.

I'm sure this applies to many market sectors.

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you're making a good and subtle point but one that my own ethical standards prevent me from suggesting. but since you brought it up, lets talk

the fact is that credit cards are unsecured debt. in the old days they would get nullified in a BK. Even under the new tougher BK laws they take a haircut is what I hear. Fact is if TSHTF they are just chasing you with a scrap of paper called a judgment-- if that-- and you got birds in the hand.

But I would not suggest people do that esp because if the recessionary dip is slight, then running up those cards might seem in retrospect to have been a pretty bad idea, and that scrap of paper may come back to haunt you.

In general I believe in people honoring debts even to the disgusting global parasite megabank usurious credit card issuers. Under certain limited situations though I can imagine moral reasons to hand them the shaft. LOL

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Another fact is......when TSHTF and if it's to the point of 'looting' - riots and police trying to 'sweep' the streets.......at that juncture who in the hell is going to give a damn about paying bills ? .......heck it may get bad enough to lose mail service in some areas.

Whatever birds you have in hand IS yours.......if you don't hold it ~ you don't own it........applies to all tangible goods.

PAPER is worthless

:smokin:

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House is a homestead, they can come get the vehicles, but they ain't haulin off a house.

Where they gonna sell all those vehicles?

This will be done in increments, for max. return, milking the repo. market.

The banks have little or no secured debt from the general public, perhaps why they are hurting so bad presently.