Tag Archives: Wall Street

The $100 Trillion Reason the Fed is Terrified of Deflation

by Phoenix Capital Research

Falling Prices Ahead

Over the last few months, Janet Yellen, head of the Federal Reserve Bank repeatedly stated that lower oil prices were “positive” for the US economy. This is simply astounding because the Fed has repeatedly told us time and again that it was IN-flation NOT DE-flation that was great for the economy.

And yet, repeatedly, the head of the Fed admitted, in public, that deflation can in fact be positive.

How can deflation be both positive for the economy at the same time that the economy needs MORE inflation?

The answer is easy… Yellen doesn’t care about the economy. She cares about the US’s massive debt load AKA the BOND BUBBLE.

Yellen knows deflation is actually very good for consumers. Who doesn’t want cheaper housing or cheaper goods and services? In fact, deflation is actually the general order of things for the world: human innovation and creativity naturally works to increase productivity, which makes goods and services cheaper.

However, DEBT DEFLATION is a nightmare for the Fed because it would almost immediately bankrupt both the US and the Too Big To Fail Wall Street Banks. With the US sporting a Debt to GDP ratio of over 100%… and the Wall Street banks sitting on over $191 TRILLION worth of derivatives trades based on interest rates (bonds), the very last thing the Fed wants is even a WHIFF of debt deflation to hit the bond markets.

This is why the Fed is so obsessed with creating inflation: because it renders these gargantuan debt loads more serviceable. In simplest terms, the Fed must “inflate or die.” It will willingly sacrifice the economy, and Americans’ quality of life in order to stop the bond bubble from popping.

https://i0.wp.com/www.silverbearcafe.com/private/images/inflation2.jpg

This is also why the Fed happily talks about stocks all the time; it’s a great distraction from the real story: the fact that the bond bubble is the single largest bubble in history and that when it bursts entire countries will go bust.

This is why the Fed NEEDS interest rates to be as low as possible… any slight jump in rates means that the US will rapidly spiral towards bankruptcy. Indeed, every 1% increase in interest rates means between $150-$175 billion more in interest payments on US debt per year.

If you’ve ever wondered how the Fed can claim inflation is a good thing… now you know. Inflation is bad for all of us… but it allows the US Government to spend money it doesn’t have without going bankrupt… YET.

However, this won’t last. All bubbles end. And when the global bond bubble bursts (currently standing at $100 trillion and counting) the entire system will implode.

Something Rotten Is Piling Up In This Economy

Total US business inventories balloon to Lehman-Moment levels

https://farm4.staticflickr.com/3912/15252459662_c459d49944_h.jpgby Wolf Richter

“We do have more work to do in the US,” admitted John Bryant, CEO of Kellogg’s which makes Pringles, Pop Tarts, Kashi Cereal, and a million other things that consumers are increasingly reluctant or unable to buy. He was trying to explain the crummy quarterly results and the big-fat operating loss of $422 million, along with a lousy outlook that sent its stock careening down 4.5% during the rest of the day.

Then in the evening, ConAgra, with brands like Healthy Choice for consumers and something yummy they call “commercial food” for restaurants, cut its fiscal 2015 earnings guidance, citing a laundry list of problems, including the “strengthening dollar” and “a higher-than-planned mark-to-market loss from certain commodity index hedges.” But it blamed two operating issues “for the majority of the EPS cut: “a highly competitive bidding environment” and “execution shortfalls.”

After which confession time still wasn’t over: it would be “evaluating the need” for additional write-offs. What had gone well? Cost cutting – “strong SG&A efficiencies,” the statement called it. But the pandemic cost-cutting by corporate America represents wages and other companies’ sales.

It’s tough out there for companies that have to deal with the over-indebted, under-employed, strung-out American consumers with fickle loyalties and finicky tastes, who have been subjected to this corporate cost-cutting for years.

And so retail sales, according to the Commerce Department, dropped a seasonally adjusted 0.8% in January. That’s on top of a 0.9% decline in December. The hitherto inconceivable is happening: folks are saving money on gas, but not everyone is immediately spending all that money! It’s so inconceivable that I warned about it and other effects of the oil price crash two months ago: “Wall Street promises a big boost to US GDP,” I wrote. “What have these folks been smoking?”

But even excluding gasoline sales, retail sales were flat last month after edging down 0.2% in December. And sure, some of the savings from gasoline will be spent eventually, but there are plenty of Americans with enough money left over every month to where their spending patterns aren’t influenced by the price of gas.

But this report, an advance estimate that is subject to potentially large revisions, covers only spending at retailers and restaurants, a portion of total consumer spending, which includes healthcare and anything else that consumers pay out of their noses for. And year-over-year, retail sales actually rose 3.3%, with food services sales up 11.3%, auto sales up 10.7% thanks to prodigious subprime financing, while sales at gas stations sagged 23.5%.

So from just the retail sales report, the consumer situation remains murky.

But there is another gauge that is moving deeper and deeper into the red. It has been deteriorating consistently since last summer. A couple of days ago, I reported that wholesale inventories were ballooning in relationship to sales, a red flag in our era when just-in-time delivery and lean inventories have been honed into an art to minimize how much working capital and physical space gets tied up. The crucial inventories-to-sales ratio for wholesalers had reached the highest level since the financial crisis.

Now the Commerce Department released total business sales and inventories for December, which include sales and inventories at retailers, wholesalers, and manufactures – the entire channel. And it’s even worse.

Combined sales by retailers, wholesalers, and manufacturers, adjusted seasonally but not for price changes, dropped 0.9% from November, and was up only 0.9% from December 2013 – not even beating inflation.

Retailers were able to keep their inventories stable in relationship to sales, which inched up 2.6% year-over-year. So the inventories-to-sales ratio remained at 1.43.

Further up the channel, wholesalers saw sales rise only 1.43%, but their inventories stacked up, and the inventories-to-sales ratio hit 1.22, up from 1.16 a year earlier.

And manufactures? That great “manufacturing renaissance” in the US? Year over year, sales declined 0.9%, but inventories rose 2.7%, and their inventories-to-sales ratio jumped to 1.34 from 1.29 a year earlier.

For all three combined, the inventories-to-sales ratio rose to 1.33 in December, after climbing methodically since summer. The last time it was rising to this level was in September 2008 – the Lehman Moment – when sales up the entire channel were beginning to grind to a near halt, a terrible condition that morphed into the Great Recession. That propitious September, the inventories-to-sales reached 1.32, still a smidgen below where it is today:

US-Business-inventories-sales-ratio-2005_2014-Dec

Optimistic merchants and manufacturers expect sales to rise. They plan for it and order accordingly. If sales boom and draw down inventories, the inventories-to-sales ratio remains lean. That’s the rosy scenario. But that hasn’t been happening recently.

In our less rosy reality, sales are not keeping up with expectations, and inventories are piling up. The increase in inventories adds to GDP, and so from that point of view, they beautify the numbers. But from the business point of view, growing inventories caused by lagging sales can turn into a nightmare. And unless sales can somehow be cranked up for all businesses across the entire country to bring down these inventories, orders to suppliers will be trimmed – and that ricochets nastily around the economy with all kinds of unpleasant secondary fireworks.

World War III Has Started

by Greg Hunter

Analyst and trader Gregory Mannarino says, “We are deeply engaged in an economic war against Russia. This is a collective collusion that is very scary.

“We are watching epic events occur. People have been saying for years, where is the collapse, where is it? It’s now.

“The strength of the U.S. dollar is a fear trade. When you see the dollar going parabolic with a flattening yield curve, this is a huge tell.”

“People need to understand here that economic warfare is war. World War III, beyond any shadow of a doubt, is already here.”

The Baltic Dry Index is another tell that says the economy is not good because the shipping of goods has come to a crawl.

Money Dries Up for Oil & Gas, Layoffs Spread, Write-Offs Start

https://i0.wp.com/www.petrorigs.com/files/cache/45a05a294860772d6ff23262800daa1f_f171.JPG
by
Wolf Richter

When money was growing on trees even for junk-rated companies, and when Wall Street still performed miracles for a fee, thanks to the greatest credit bubble in US history, oil and gas drillers grabbed this money channeled to them from investors and refilled the ever deeper holes fracking was drilling into their balance sheets.

But the prices for crude oil, US natural gas, and natural gas liquids have all plunged. Revenues from unhedged production are down 40% or 50%, or more from just seven months ago. And when the hedges expire, the problem will get worse. The industry has been through this before. It knows what to do.

Layoffs are cascading through the oil and gas sector. On Tuesday, the Dallas Fed projected that in Texas alone, 140,000 jobs could be eliminated. Halliburton said that it was axing an undisclosed number of people in Houston. Suncor Energy, Canada’s largest oil producer, will dump 1,000 workers in its tar-sands projects. Helmerich & Payne is idling rigs and cutting jobs. Smaller companies are slashing projects and jobs at an even faster pace. And now Slumberger, the world’s biggest oilfield-services company, will cut 9,000 jobs.

It had had an earnings debacle. It announced that Q4 EPS grew by 11% year-over-year to $1.50, “excluding charges and credits.” In reality, its net income plunged 81% to $302 million, after $1.8 billion in write-offs that included its production assets in Texas.

To prop up its shares, it announced that it would increase its dividend by 25%. And yes, it blew $1.1 billion in the quarter and $4.7 billion in the year, on share buybacks, a program that would continue, it said. Financial engineering works. On Thursday, its shares were down 35% since June. But on Friday, after the announcement, they jumped 6%.

All these companies had gone on hiring binges over the last few years. Those binges are now being unwound. “We want to live within our means,” is how Suncor CFO Alister Cowan explained the phenomenon.

Because now, they have to.

Larger drillers outspent their cash flows from production by 112% and smaller to midsize drillers by a breathtaking 157%, Barclays estimated. But no problem. Wall Street was eager to supply the remaining juice, and the piles of debt on these companies’ balance sheets ballooned. Oil-field services companies, suppliers, steel companies, accommodation providers… they all benefited.

Now the music has stopped. Suddenly, many of these companies are essentially locked out of the capital markets. They have to live within their means or go under.

California Resources, for example. This oil-and-gas production company operating exclusively in oil-state California, was spun off from Occidental Petroleum November 2014 to inflate Oxy’s share price. As part of the financial engineering that went into the spinoff, California Resources was loaded up with debt to pay Oxy $6 billion. Shares started trading on December 1. Bank of America explained at the time that the company was undervalued and rated it a buy with a $14-a-share outlook. Those hapless souls who believed the Wall Street hype and bought these misbegotten shares have watched them drop to $4.33 by today, losing 57% of their investment in seven weeks.

Its junk bonds – 6% notes due 2024 – were trading at 79 cents on the dollar today, down another 3 points from last week, according to S&P Capital IQ LCD.

Others weren’t so lucky.

Samson Resources is barely hanging on. It was acquired for $7.2 billion in 2011 by a group of private-equity firms led by KKR. They loaded it up with $3.6 billion in new debt and saddled it with “management fees.” Since its acquisition, it lost over $3 billion, the Wall Street Journal reported. This is the inevitable result of fracking for natural gas whose price has been below the cost of production for years – though the industry has vigorously denied this at every twist and turn to attract the new money it needed to fill the holes fracking for gas was leaving behind.

Having burned through most of its available credit, Samson is getting rid of workers and selling off a big part of its oil-and-gas fields. According to S&P Capital IQ LCD, its junk bonds – 9.75% notes due 2020 – traded at 26.5 cents on the dollar today, down about 10 points this week alone.

Halcón Resources, which cut its 2015 budget by 55% to 60% just to survive somehow, saw its shares plunge 10% today to $1.20, down 85% since June, and down 25% since January 12 when I wrote about it last. Its junk bonds slid six points this week to 72 cents on the dollar.

Hercules Offshore, when I last wrote about it on October 15, was trading for $1.47 a share, down 81% since July. This rock-bottom price might have induced some folks to jump in and follow the Wall-Street hype-advice to “buy the most hated stocks.” Today, it’s trading for $0.82 a share, down another 44%. In mid-October, its 8.75% notes due 2022 traded at 66 cent on the dollar. Yesterday they traded at 45.

Despite what Wall-Street hype mongers want us to believe: bottom-fishing in the early stages of an oil bust can be one of the most expensive things to do.

Paragon Offshore is another perfect example of Wall Street engineering in the oil and gas sector. The offshore driller was spun off from Noble in early August 2014 with the goal of goosing Noble’s stock price. They loaded up the new company with debt. As part of the spinoff, it sold $580 million in junk bonds at 100 cents on the dollar. When its shares started trading, they immediately plunged. By the time I wrote about the company on October 15, they’d dropped 68% to $5.60. And the 6.75% notes due 2022 were trading at 77 cents on the dollar. Then in November, Paragon had the temerity to take on more debt to acquire Prospector Drilling Offshore.

Two days ago, Moody’s downgraded the outfit to Ba3, with negative outlook, citing the “rapid and significant deterioration in offshore rig-market fundamentals,” “the high likelihood” its older rigs might “not find new contracts,” and the “mostly debt-funded acquisition” of Prospector Drilling. The downgrade affects about $1.64 billion in debt.

Today, Paragon’s shares trade for $2.18, down another 61% since October 15. Its junk bonds are down to 58 cents on the dollar.

Swift Energy – whose stock, now at $2.37, has been declining for years and is down 84% from a year ago – saw its junk bonds shrivel another eight points over the week to 36 cents on the dollar.

“Such movement demonstrates the challenging market conditions for oil-spill credits, with spotty trades and often large price gaps lower,” S&P Capital IQ LCD reported.

It boils down to this: these companies are locked out of the capital markets for all practical purposes: at these share prices, they can’t raise equity capital without wiping out existing stockholders; and they can’t issue new debt at affordable rates. For them, the junk-bond music has stopped. And their banks are getting nervous too.

Their hope rests on cutting operating costs and capital expenditures, and coddling every dollar they get, while pushing production to maximize cash flow, which ironically will contribute to the oil glut and pressure prices further. They’re hoping to hang on until the next miracle arrives.


These Two Charts Show the True Fiasco of US Oil & Gas

https://i1.wp.com/static.panoramio.com/photos/large/78033170.jpgby Wolf Richter

Rig count for oil and for gas: two separate fiascoes

Oil-and-gas exploration and production companies in the US have announced cutbacks of 30%, 40%, or 50% and beyond in operating budgets and capital expenditures. They want to survive in an environment of plunging oil and gas prices, and hence plunging revenues. They loaded up on debt, and that debt is now exacting its pound of flesh.

These companies lease drilling rigs from oil-field services companies, such as Halliburton. When the going gets tough and they run out of borrowed money, they stop leasing rigs, and they try to get out from under the rigs that they have already contracted for. It’s a slow process. But it has begun.

The number of rigs drilling for oil in the US dropped another 55 in the latest week to 1,366, the lowest since October 2013, down 15.1% from the peak in the second week of October last year, when 1,609 rigs were drilling for oil.

The rig count had already dropped by 61 in the prior week, the largest week-to-week drop in Baker Hughes’ data series going back to 1987. In percentage terms (-4.12%), it had been the largest drop since the Financial Crisis.

In both weeks combined, the rig count plunged by 116, or 7.8%. The last time it started plunging like this for two weeks was in December 2007 (also down 7.8%, ironically), at the cusp of the stock market crash.

The standouts:

California lost 4 active oil and gas rigs in the latest week, bringing the rig count to 18 (including 1 offshore), from 45 rigs (including 2 offshore) reported on November 21. In those eight weeks, the rig count plunged 60%! Drilling is coming to a halt in California.

North Dakota, second largest oil-producing state, lost another 6 rigs in the latest week, to 156 active rigs. Down 13.3% in five weeks.

Texas, the largest oil-producing state, got hit the hardest, not in percentage terms – that honor belongs to California – but in number of rigs that have been evaporating: 44 in the latest week. The oil and gas rig count is now at 766, the lowest since March 2011. That’s down 15.4% from the peak of 905 rigs reported on November 21.

This is what drilling activity looks like across the US:

US-rig-count_1988_2015-01-16=oil

As I wrote a few days ago in This Is Just the Beginning of the Great American Oil Bust:

Estimates vary widely as to how far the rig cutting will go. Barclays’ analyst Anderson estimated that at least 500 rigs could be idled in the American oil patch by the end of the year. Raymond James analyst Praveen Narra said that his firm estimated that up to 850 rigs could be idled this year. If 60% are idled, as was the case during the Financial Crisis, it would mean that 965 rigs would be taken out of service.

Over the last 10 years, the oil and gas business in the US has become huge, and the unwind will be huge as well.

Rigs drilling for natural gas follow a different pattern. The rig count collapsed years ago as the price of natural gas fell below the cost of production, after a phenomenal no-holds-barred fracking boom in the years before the financial crisis, which culminated in August 2008 when over 1,600 gas rigs were active. This resulted in a “gas glut” that killed prices, pushing them below the cost of production.

The rig count collapsed in two phases, first during the financial crisis, and then after a sucker rally, during the “gas glut.” It has turned into a true fiasco for the industry and increasingly for its investors:

US-rig-count_1988_2015-01-16=gas

But why is production still rising after this kind of plunge in drilling activity?

There are a number of reasons, but one stands out: Numerous of these newly drilled and completed or partially completed wells couldn’t be hooked up to pipelines because the growth of the pipeline infrastructure hadn’t kept up with the drilling boom. These wells – by some estimates, 1,300 in the Marcellus alone – just sat there, waiting for the pipeline. Over the last two years, pipeline infrastructure has reached these wells, and despite the plunge in drilling activity, “production” – which is counted when natural gas reaches a trading hub, not when the well is drilled – has soared in 2014.

So the rig count for natural gas dropped 19 in the latest reporting week, to 310, matching the low of June 2014, levels not seen since May 1993! Yet, in the overall fiasco that natural gas drillers are facing, this is just another minor downtick, and barely visible on the chart.

This Chart Makes It Look Like It’s All Over In Venezuela

Supporter of Venezuela’s late President Hugo Chavez holds a doll of him as she stands outside a military academy where the funeral ceremony for Chavez is held, in Caracas March 8, 2013.  Article source: Business Insider

Collapsing oil prices have a turned a difficult economic situation into a dire one. Oil exports brought in 60% of the country’s revenue.

And now, according the UBS, Venezuela has an 82% chance of collapsing within a year. The country will no longer be able to make payments to foreign investors without oil revenue as it was.

Economist Rafael del Fuente wrote in a recent note:

By the government’s own recognition, the economy contracted by 4% in the first three quarters of 2014;
inflation is running at close to 65%; the fiscal deficit has shot up above 15% of GDP by most estimates; and the black market exchange rate is trading at VEF180 to the dollar, almost 30 times higher than the official Cencoex rate.

Wall Street is watching and waiting, which is why the spread on Venezuela’s 5 year credit default swap — basically debt insurance — has spiked. You just don’t see charts like this everyday people.

Meanwhile, as foreign investors wait for the day Venezuela calls them and says, ‘sorry, we don’t have the cash’, ordinary Venezuelans suffer. The government cut them loose a while ago, doing nothing to curb rampant inflation (at 60%) and shortages of goods and food. People wait in line for days to enter grocery stores with empty shelves.

venezuelan cds skitch

On hearing this, the Venezuelan Minister of Food said — “I’ve been in tons of lines. I went to my favorite sports team’s game this weekend, and…I went to go buy an arepa [Venezuelan sandwich] … and I had to wait in line there, too.”

The Spike Series By Cold Steel

Spike Series

Cold Steel Bowie Spike Neck Knife, 53NBS. Entirely re-engineered in 2013, this Spike series continue to raise the bar for neck knives! Thin, light and super-tough, their razor sharp, zero ground blades, are complemented by heavily scalloped, textured handle scales that offer a comfortable, secure grip.
Integral quillons provide a safe stop for index finger and thumb, while the textured Faux G-10 provides excellent positive traction even when your hands are cold, wet and slippery.

Available in four distinctive blade shapes (Bowie, Drop Point, Tokyo and Tanto point) they offer all the strength of a solid steel one-piece construction (much stronger than any tactical folder and even rivaling the strength of some boot knives) while still being light enough to carry all day without fatigue.

The brand new Spike series come complete with all-new Secure-Ex sheaths that provide even greater retention and safety. Super lightweight (weighing in at 3oz. in the sheath!) the Spikes can be comfortably worn around the neck 24/7 by using the black bead lanyard provided, or carried on a waistband or belt by taking advantage of their new Tek-Lok™ compatible design.

Easily concealed, razor sharp and light as a feather — the Spike series by Cold Steel!

Good Alternative

Furious 7 – Trailer

Take five with Marty Robbins y’all

Know Your Enemy

qt_zps0dd2290f

A Veteran Policeman’s Observations on The Free Shit Army

Source: SurvivalBlog

A lot has been written warning us of what will happen when the City Dwellers find their homes are untenable and vacate [en masse as The Golden Horde] for “the country”, but I haven’t seen anything on what the make-up of these hordes will be. The generic term “city dwellers” encompasses a lot of territory. Who will they be,what kind of shape will they be in, how will they be armed…all of these need to be examined.

One category needs to be examined, I feel, more closely than others. Since I have seen posts on your site lately dealing with the nitty-gritty, unpleasant aspects of prepping, I think this is a needed look into what’s out there. I’ve been a cop over 20 years, my last uniform assignment before moving to Investigator being a two year stretch of Anti-Crime patrols in the Section 8 Housing projects of my city. This put me into contact with some of the “Worst of the Worst” that will be fleeing the cities in time of trouble. Gang-bangers, common street thugs, dope dealers and users, all have a place in the hierarchy of the streets. And they will certainly be part of what preppers will be facing in times of troubles. Here’s some of what I have learned:

The bottom rung is occupied by the drug addicts and users. They exist, not live as we understand the word. They have no assets, no goals, no drive. But they do have an almost animal instinct to continue living. They will be armed with anything they can steal or lay hands on. Most will have a knife of razor box cutter, and some sort of cheap pistol, or they will not live to get out of the city. Since they have no resources or assets, they will be on the edge of starvation and desperation almost within a day of an event. With no fixed residence or place to defend, they will be hitting the road and coming towards us. They will become violent without any provocation and there will be no negotiating or bargaining with them. They don’t want to hear your story or excuses. All they want is what you have. And have no doubts: They will do anything to get what they want. And this does include catering to their most base instincts of rape, murder and mutilation. Letting someone like this even close to you and what you have is flirting with death.  

The next and most numerous will be the drones who make up the majority of the project dwellers. They live on Government Entitlement checks, have no assets and, on any given day will have no more than 3 or 4 days supply of food in their apartments,most of this being refrigerated. There will be a high percentage of females without male companions,will have a large number of children and will be absolutely vicious and violently inclined. Their day to day existence within the defined society they live in demands they be aggressive and violent.They fight more, and are arrested more,than the males they live around. The males will have more serious charges, but the females will have more of them. They too cannot be trusted. If they are drug users, they will, and have, traded their children for drugs, and, based on this proven behavior, will most certainly abandon them or trade them if the situation calls for it. Seeing that you are supplied, they will leave their children in your yard and walk away, counting on your liberal Good Samaritan instinct that has always bailed them out in the past to care for their offspring and justify that to themselves as “doing what they have to do”. Knowing that they will do something as low as this,be assured they will do much worse. They habitually carry razor knives and small pistols such as .25 ACPs and .380 ACPs. They are very dangerous and unstable folks to be around. These females may or may not be accompanied by men. The males may be linked biologically to one or more of the children but will abandon them as easily as the females. These males come from the lower order of males (see next classification) and will be armed as described next.  

The next order of classification will be unattached or drone males. These males tend to be convicted of felonies before they are 21 and who hang around the other, more productive males who deal drugs and have money. They will also be the so-called “foot soldiers” of the drug and street gangs. They exhibit sociopath behavior and have no allegiance to anyone except maybe a family member, usually referred to as a “cousin” or a gang. They live off the female drones by paying cash rent, gained by low level drug dealing and petty crimes, to a female who has Section 8 housing, for a room that they sleep in and usually have no other attachment such as taking meals there.They live off fast food,carry guns of dubious origin and consume massive amounts of drugs and alcohol, mostly beer and cheap brandy and marijuana. They will not have any assets to defend, may accompany the female who rents them a room and will hang around the cities and projects only as long as their cohorts do. They will leave in junky vehicles,steal what they need along the way and kill,rob,rape and pillage their way across the countryside. Their weapons tend to be of the pistol variety although they may have access to shortened, easily concealable shotguns or rifles. Their lifestyle doesn’t give them a secure place to hide or keep long guns,but they will steal and use them if given a chance. They will also have some type of blade weapon and be proficient with the use of them. They are very dangerous to anyone who comes into contact with them. The last and highest order will be the moneyed drug dealer.He will have a flashy vehicle such as an Escalade or Lexus variety. He will have quality firearms, preferring Glock handguns and SKS or AK type rifles and will have ammunition for them in quantity. He will be arrogant and a definite killer. He will have assets to defend and may not leave his comfort zone until forced by authorities or circumstances. He will have “foot soldiers” and a woman traveling with him, but probably not children. He will travel well and be charming when trying to gain confidence or talk himself out of a jam. He will also be vicious and hateful, full of spite at those he sees as having taken away his lifestyle and means of making a living. He most probably will not have a lot in the way of supplies such as food and medical equipment, tending to live in the moment and not for the future. He will be one of the opportunistic “I’ll just take what I need” types. He will be very cunning, having risen to the top of the street hierarchy,and all the more dangerous because of this.  

When dealing with all of the above types, caution is the word. Never let them get even a glimpse of what you have. Never let them get past your outer barrier, be that a fence, abatis or boundary line. Its best to keep verbal contact to the barest minimum. A terse: “We have nothing, go away or we will shoot” is a good example. I have seen them be charming and seemingly harmless while edging into a fence gate or otherwise getting closer until they are in range to strike. You must always remember the 20 foot rule (Never let anyone get closer than 20 feet from you at any time). It is important to remember also that the longer they have been roaming and stealing,the better armed they may be, having stolen others firearms and equipment. Seeing an obvious street thug carrying an expensive scoped rifle or an engraved shotgun should be a tip off as to what they are. These type people would never spend money on a gun that may be taken by the law at anytime in their day to day existence. They do worship Glocks and the glamor they see in them. A dealer told me once, when confessing to an assault “I just outs with my Glock .40 and let it holla” as if he had done something great.  

I know that most people who read your blogs are aware enough to keep strangers away from their refuge.But if someone has never lived around these types of people,they may not be aware of just how dangerous they really are. As I mentioned,they can be charming,cunning and deceitful. They have lived their entire lives off the goodwill of others and The Government and are past masters at pretending to be needy,harmless and “safe”. Guile is engrained in them.   I leave you with one short story. In the days after Hurricane Katrina, we were reinforced with officers from other agencies, many states away, who had volunteered to help. (I was not in New Orleans, but on the edge of the hurricane strike) I was partnered with a state SWAT officer from up North. This man was experienced and a “steady hand”. As we walked through some of the power blacked-out , sweltering-in-the-heat projects, he turned to me and said: “This is worse than Mogadishu”. He was scared and had good reason to be. And this was after only three days of no electricity and relief was just starting to arrive. Think about those same areas after a real failure of services and food deliveries.   Good Luck.

50 Years Later: Reagan’s ’A Time for Choosing’ Speech

Fifty years ago Monday, Ronald Reagan gave the speech that launched his career in politics and made him a star.  The speech, called “A Time for Choosing,” aired to a prime time NBC audience and made him a household name.

 

 

Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required


Carole Hinders at her modest, cash-only Mexican restaurant in Arnolds Park, Iowa. Last year tax agents seized her funds. Credit Angela Jimenez for The New York Times

by Shaila Dewain

ARNOLDS PARK, Iowa — For almost 40 years, Carole Hinders has dished out Mexican specialties at her modest cash-only restaurant. For just as long, she deposited the earnings at a small bank branch a block away — until last year, when two tax agents knocked on her door and informed her that they had seized her checking account, almost $33,000.

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Using a law designed to catch drug traffickers, racketeers and terrorists by tracking their cash, the government has gone after run-of-the-mill business owners and wage earners without so much as an allegation that they have committed serious crimes. The government can take the money without ever filing a criminal complaint, and the owners are left to prove they are innocent. Many give up.


The I.R.S. seized almost $33,000 from Ms. Hinders. Credit Angela Jimenez for The New York Times

“They’re going after people who are really not criminals,” said David Smith, a former federal prosecutor who is now a forfeiture expert and lawyer in Virginia. “They’re middle-class citizens who have never had any trouble with the law.”

On Thursday, in response to questions from The New York Times, the I.R.S. announced that it would curtail the practice, focusing instead on cases where the money is believed to have been acquired illegally or seizure is deemed justified by “exceptional circumstances.”

Richard Weber, the chief of Criminal Investigation at the I.R.S., said in a written statement, “This policy update will ensure that C.I. continues to focus our limited investigative resources on identifying and investigating violations within our jurisdiction that closely align with C.I.’s mission and key priorities.” He added that making deposits under $10,000 to evade reporting requirements, called structuring, is still a crime whether the money is from legal or illegal sources. The new policy will not apply to past seizures.

The I.R.S. is one of several federal agencies that pursue such cases and then refer them to the Justice Department. The Justice Department does not track the total number of cases pursued, the amount of money seized or how many of the cases were related to other crimes, said Peter Carr, a spokesman.

But the Institute for Justice, a Washington-based public interest law firm that is seeking to reform civil forfeiture practices, analyzed structuring data from the I.R.S., which made 639 seizures in 2012, up from 114 in 2005. Only one in five was prosecuted as a criminal structuring case.

The practice has swept up dairy farmers in Maryland, an Army sergeant in Virginia saving for his children’s college education and Ms. Hinders, 67, who has borrowed money, strained her credit cards and taken out a second mortgage to keep her restaurant going.

Their money was seized under an increasingly controversial area of law known as civil asset forfeiture, which allows law enforcement agents to take property they suspect of being tied to crime even if no criminal charges are filed. Law enforcement agencies get to keep a share of whatever is forfeited.

Critics say this incentive has led to the creation of a law enforcement dragnet, with more than 100 multi-agency task forces combing through bank reports, looking for accounts to seize. Under the Bank Secrecy Act, banks and other financial institutions must report cash deposits greater than $10,000. But since many criminals are aware of that requirement, banks also are supposed to report any suspicious transactions, including deposit patterns below $10,000. Last year, banks filed more than 700,000 suspicious activity reports. Owners who are caught up in structuring cases often cannot afford to fight. The median amount seized by the I.R.S. was $34,000, according to the Institute for Justice analysis, while legal costs can easily mount to $20,000 or more.

There is nothing illegal about depositing less than $10,000cash unless it is done specifically to evade the reporting requirement. But often a mere bank statement is enough for investigators to obtain a seizure warrant. In one Long Island case, the police submitted almost a year’s worth of daily deposits by a business, ranging from $5,550 to $9,910. The officer wrote in his warrant affidavit that based on his training and experience, the pattern “is consistent with structuring.” The government seized $447,000 from the business, a cash-intensive candy and cigarette distributor that has been run by one family for 27 years.

There are often legitimate business reasons for keeping deposits below $10,000, said Larry Salzman, a lawyer with the Institute for Justice who is representing Ms. Hinders and the Long Island family pro bono. For example, he said, a grocery store owner in Fraser, Mich., had an insurance policy that covered only up to $10,000 cash. When he neared the limit, he would make a deposit.

Ms. Hinders said that she did not know about the reporting requirement and that for decades, she thought she had been doing everyone a favor.


Jeff Hirsch, an owner of Bi-County Distributors on Long Island. The government seized $447,000 from the business, a candy and cigarette distributor run by one family for 27 years. Credit Bryan Thomas for The New York Times

“My mom had told me if you keep your deposits under $10,000, the bank avoids paperwork,” she said. “I didn’t actually think it had anything to do with the I.R.S.”

In May 2012, the bank branch Ms. Hinders used was acquired by Northwest Banker. JoLynn Van Steenwyk, the fraud and security manager for Northwest, said she could not discuss individual clients, but explained that the bank did not have access to past account histories after it acquired Ms. Hinders’s branch.

Banks are not permitted to advise customers that their deposit habits may be illegal or educate them about structuring unless they ask, in which case they are given a federal pamphlet, Ms. Van Steenwyk said. “We’re not allowed to tell them anything,” she said.

Still lawyers say it is not unusual for depositors to be advised by financial professionals, or even bank tellers, to keep their deposits below the reporting threshold. In the Long Island case, the company, Bi-County Distributors, had three bank accounts closed because of the paperwork burden of its frequent cash deposits, said Jeff Hirsch, the eldest of three brothers who own the company. Their accountant then recommended staying below the limit, so for more than a decade the company had been using its excess cash to pay vendors.

More than two years ago, the government seized $447,000, and the brothers have been unable to retrieve it. Mr. Salzman, who has taken over legal representation of the brothers, has argued that prosecutors violated a strict timeline laid out in the Civil Asset Forfeiture Reform Act, passed in 2000 to curb abuses. The office of the federal attorney for the Eastern District of New York said the law’s timeline did not apply in this case. Still, prosecutors asked the Hirsch’s first lawyer, Joseph Potashnik, to waive the CARFA timeline. The waiver he signed expired almost two years ago.

The federal attorney’s office said that parties often voluntarily negotiated to avoid going to court, and that Mr. Potashnik had been engaged in talks until just a few months ago. But Mr. Potashnik said he had spent that time trying, to no avail, to show that the brothers were innocent. They even paid a forensic accounting firm $25,000 to check the books.

“I don’t think they’re really interested in anything,” Mr. Potashnik said of the prosecutors. “They just want the money.”

Bi-County has survived only because longtime vendors have extended credit — one is owed almost $300,000, Mr. Hirsch said. Twice, the government has made settlement offers that would require the brothers to give up an “excessive” portion of the money, according to a new court filing.

“We’re just hanging on as a family here,” Mr. Hirsch said. “We weren’t going to take a settlement, because I was not guilty.”

Army Sgt. Jeff Cortazzo of Arlington, Va., began saving for his daughters’ college costs during the financial crisis, when many banks were failing. He stored cash first in his basement and then in a safe-deposit box. All of the money came from paychecks, he said, but he worried that when he deposited it in a bank, he would be forced to pay taxes on the money again. So he asked the bank teller what to do.

“She said: ‘Oh, that’s easy. You just have to deposit less than $10,000.’”

The government seized $66,000; settling cost Sergeant Cortazzo $21,000. As a result, the eldest of his three daughters had to delay college by a year.

“Why didn’t the teller tell me that was illegal?” he said. “I would have just plopped the whole thing in the account and been done with it.”

 

The New Great Depression

new poverty

by Mrs. Cogs

A few years back Peter Schiff opined the Great Depression of the 1930s would look like a Sunday school picnic compared to what is headed our way. Without a doubt the cat is out of the bag. Everyone knows things are not going well. Unfortunately, it seems most people think that fixing the system, changing the politicians, tweaking the rules and the return to honorable ways of yesteryear hold the solution to restoring our idea of a stable and prosperous society.

The disconnect is easy to perceive when we compare black and white faded photos from the 1930’s of dusty farms, soup lines and children who don’t smile to the modern edgy world images from our cell phones, televisions and computers of how things supposedly are now. We live in a bright and vivid world where descriptions have been meticulously spoon fed to us so we will largely act according to how others might see us and we can feel better about ourselves. This only works until financial or emotional changes crash into our lives such as the Big One roaring towards us all now.

The New Depression already began and the news blackout is deafening. Aside from malcontents who insist upon harping on unpleasant subjects and who have no desire to participate in society’s uniform “solutions”, one only has to watch a Sunday football game and it’s commercials to be refreshed in the programming that the American dream indeed lives on. It’s right there in front of us to see with our own eyes and if you are not living that life you are obviously doing something wrong. (And obviously this is sarcasm.)

americandream

As the government has altered the methods to compute inflation, unemployment and debt, the headlines are meaningless since we can no longer use these measures to compare with numbers from the past. Most people are so busy and programmed in their complicated lives that even if it is noticed, what could we possibly do about it? So we suck it up and proceed, feeling better after we catch that prescribed Sunday game. If we’re lucky we have a few like minded friends or family members to gripe to about the state of things before we carry on in the same manner. Until we can’t.

The modern day New Depression has indeed arrived, it just hasn’t been announced yet. Draw your own conclusions. The population of America: 319 million or 4.4% of the people in the world. Americans who are of working age and are “out of the work force”: 92 million. The average household worth compared to ten years ago: 36% less. Number of homeless people in America: 1.75 million (and those are the ones they can find to count). The percent of American college grads supported by parents two years after attaining their degree: 50%. The number of Americans who lead hungry lives: 31 million.

It is here and it’s about to get much uglier. How our personal future develops is largely dependent upon the mindset we each adopt now. As many of us have recently concluded, this postponement of announcing the reality and truth of the dire situation has bought us time. This is our wiggle room. It may last for a few more years or it may end next month.

What is required is something we can choose voluntarily or wait until it is forced upon us by circumstances. It is a critical examination and re-prioritizing of what we value. More than just taking for granted a roof over our heads and a meal when we are hungry a new mindset, or rather a return to what many consider old school views, is called for.

In a world of instant gratification and narcissistic attitudes, where many collect affirmation from unlimited sources via social media, all those “likes” aren’t going to mean so much when one is suddenly living in their car. Who won on the reality TV show of the week will quickly become meaningless when the kids are hungry. These rude awakenings happen every day for people and continue at an accelerated rate.

For years now I have followed the progress of well meaning people trying to change this downhill progression of behavior and the resulting events by means of protest, political change or through the alternative media. While more people are becoming aware of the true reality swirling around the pretty images of life still broadcasted to us, the system careens towards the tar pits and our efforts must first and foremost be focused upon ourselves. As I have stated many times before, if we are to help anyone else we must first put on our own oxygen mask and breathe deeply.

There are some tough truths to think about if you are going to save yourself. The one that knocked me off my feet was learning that if I don’t know how to take care of myself, then I am dependent upon others. And that is about to be a very bad thing. I realized I depended upon an employer to pay me so I could pay for food, water, heat, housing, basic sanitation; in essence every product I use. And I depend upon other people to do their job so I can access these goods and services. Many now depend upon the government to provide what they cannot. The opportunity to alter the way we depend upon others to fill our needs may or may to not be available or affordable in the future. And this deficiency exposes each of us to assured failure at some point along the line.

poverty in the USAWikiHow now supplies us with instructions on How To Live On The Street.

I was not really providing any of this for myself, but rather depending upon everyone else’s specialties to supply goods and services to me and others. The risk that another cannot or will not fulfill their end of this collective bargain is known as counter-party risk. As our systems degrade, this risk will be the weakest link for most people.

Being prepared for events or changing times is a very good idea, one I wholeheartedly endorse. But to only prepare yourself for a rough patch and then to expect life will continue with business as usual, because (after all) it always has, is foolish in the face of a paradigm change such as the magnitude the world is facing.

Never before have global systems of banking, food, natural resources and information been so over-leveraged and extended. When the music stops and everybody reaches for their chair, rather than one person being left without a seat, there will be one heavily protected chair for every 20 or 30 people. That is when the New Depression becomes official and is acknowledged in a public out loud voice.

It won’t matter whether the catalyst is blamed on an epidemic, terrorism or even Krugman’s alien invasion. Finally everyone will see that the music has stopped playing and be forced to recognize we are living in a very different world. May I humbly propose that what that world becomes for each of us ultimately largely depends upon what we do now.

For me, as I expect is also the case for many of you, making decisions that bring about big changes in our lives will be met with great disapproval of those closest to you. We live in a society where change is bad and should be resisted, unless of course it involves upward mobility and better “things”.

Moving to a smaller house? Yanking the kids out of the school system where their friends are? Leaving the urban jungle for parts unknown? This is just crazy talk. After all, in order to have these be positive changes, one would need to acknowledge that happiness does not come from what we have in life or how others perceive us. It requires a huge deliberate mental adjustment. I would suggest that this decision is your proverbial oxygen mask. Breathe deep and become comfortable with the new air. I think you’ll find it much fresher.

Rethinking the big picture involves “crazy talk” such as considering the liquidation of today’s luxuries and believed future security for a different goal. Try telling anyone who understands finance that you are thinking of quitting your job so you can get your hands on your 401k so you can cash it out after paying 45% in penalties and taxes. Then add the part about downsizing your home and lifestyle and for a while you will find you’ve become the new cautionary tale that person tells others about.

But here is the thing you can’t get around. When the music stops playing, whatever you have is all you have. Whether those ‘things’ consist of retirement funds, brokerage accounts or whatever you have at the bank, or public ‘benefits’ such as Social Security, disability, Medicare, Medicaid or EBT, all of them are just pieces of paper with a promise on it and you will NOT be on the short list of people to get what they expect. The late comedian George Carlin informed us many years ago, “It’s a small club and you ain’t in it.”

hungry

For now, those paper promises are still being delivered. The US Dollar has not become so debased it is worthless….yet. Capital controls have not yet been completely implemented to ‘protect’ your retirement funds from yourself. Even if you have no savings and are receiving food stamps and government aid, there are many choices everyone can make to be less dependent upon others, even if each seems like an inconsequential baby step. Every step you can take to provide something for yourself is a victory.

This is not your granny’s depression, this is the New Depression where anybody who really desires to can access the information highway and find alternatives, especially with a bit of help. As the systems we depend upon degrade, we can actually improve our lives with each decision we act upon as we learn that our needs and wants aren’t really what we were taught they are.

As the momentum of change progresses, the fear levels will increase and the herd will be corralled in various directions, often not ultimately in their best interest. The only way to avoid the majority of the chaos is to be able to depend upon yourself. Roll up your sleeves, it’s going to take a lot of time and hard work.

Many definitions are going to need revising such as what is ‘normal’ and what does one ‘deserve’. How we choose to look at life will determine the new normal and will predicate what we create and how we treat others. If the rules are all about to change, what better time to set an example such as showing small kindnesses or taking the generosity of our time to teach someone something useful? Maybe I cannot save the current system, but I certainly can turn to my neighbor and lend a hand.

I would suggest that before the brunt of the storm hits that all of us, even those far ahead of the curve, take some extra time to consider what we need and value. If you think because you are but one person that what you choose and how you act doesn’t make a difference, I am here to say you are wrong. How you write the narrative of your own reality makes all the difference in the world.

Teaching the next ones a better way.
Teaching the next ones a better way.

Mobility: Something To Think About

https://i0.wp.com/www.survivalnewsonline.com/wp-content/uploads/2012/02/BOL-cabin.gif

by Fren2ken

The concept of Bunker-in-Place as the best solution to the SHTF scenario has been the first choice of Preppers for a long time. To that end, we build up our supplies, choose our locations carefully, reinforce our dwellings, keep a low profile, and also stock ammo. This preparation ideally includes training oneself and establishing a small community of trusted fellow Preppers in fairly remote locations who have varied skill sets to make the community (SOC = Self Organizing Collective) self-sufficient. This is great. There remain, however, many folks that are unable to become fully integrated into a SOC for any number of valid reasons including lacking opportunity for contact, or other communications issues. It is to those Preppers that I address this discussion. The fact that you are reading this article on American Preppers Network is a good start towards communicating with fellow Preppers.

What do you do when, despite your best planning and preparation, you and your dependents are “caught out in the cold” when the SHFT happens? You gather your family together in your site. You have done the best you can to stockpile food and supplies for your family. You relocated your residence to a place that, to the best of your ability and resources, is as far away from the perceived danger zones as you could get. You built out your domicile as far as possible given your money and time constraints. You have trained and gained knowledge to the best of your ability but, you have not been able to get connected with others who are like-minded. You know that your location and support structure may have a limited time before you may be forced to Bug-out. You didn’t have the opportunity, money, or contacts to preposition caches through the countryside. Right? Now what do you do? The “balloon has gone up” and you foresee the end to your “bunker-in-place” strategy’s ability to support you. It is too late to consider new options if you reach that point and haven’t been able to plan for, or hoped the time would come that you would need to, prepare for a Bug-Out ahead of time.

Staying in-place for as long as possible with a low profile is always preferable to moving around due to the inherent dangers of travel in a post SHTF world, especially while the event(s) is/are in progress. Most Prepping sites and blogs have great info concerning everything except how to get you someplace else when things either become too dangerous or unsustainable where you are. The primary concentration of most sites is for critical item preparation and the mobility aspect is given little attention. There WILL come a time when, if you are not already established in a permanent Prepper community (SOC), you will find it necessary to seek out and join those communities. When that time comes, you want to have resources and knowledge to offer them when you get there, so as to not be a drain on their own already (likely) stretched resources.

Some of the solutions from down-to-Earth and knowledgeable Preppers have limitations that may not work for you. They generally advocate backpacking or biking out to a new location. These work but, limit what you are able to carry with you, depend on fair/good weather, and they assume that all your party are able to do the same. What do you do with remaining food, munitions, weapons, hand tools, raw materials, books, extra clothing, etc. that you don’t have carry capacity for but will have to be left behind when you decide to B-O? Make hard choices of what to leave behind, hoping you don’t leave something critical? How far can you travel in a day with your children or elders while loaded down to the max? Is it far enough to get you away from danger zones in a timely manner? What resources will you have left to offer to any SOC communities of fellow Preppers you encounter? Will you have barter goods? Excess food? Fuel? Can you carry enough weaponry and ammo to assure your safety?

As we begin this discussion, you are probably thinking, “I’ll load up the family car and slide down the road.” Sorry. Not a very good answer. The major highways will be littered with abandoned vehicles and patrolled by whatever entities are in charge by that point. That makes for a very high risk adventure. Secondary and tertiary roads are likely to be lower on the priority lists of patrols and to be more open than the major highways. Dirt roads and trails are most likely to be passable, particularly in the more rural areas. Make sure that you have local maps with trail and fire-road level detail. How will your family car deal with them? Answer: Not well and likely not for long. Your 1/2 –Ton pickup? Better but with limitations for passenger capacity. So. Now what? That is what we will attempt to address in this series. There are no perfect answers to these questions in an indeterminate SHTF aftermath. Our intent is to help increase your odds of being able to Bug-Out successfully, when time comes, by stimulating your thinking and invoking your Prep Planning muscles toward mobility.

In this series of articles, we explore the topic of mobility, with the goal of maximizing the load-out capabilities of your preparations and survivability when the bug-out time comes. While I don’t have all the answers, I have spent many years as an engineer and analyst of mobile systems in the DoD world. I am hoping to share concepts with you and cause you to seriously evaluate your mobility options and plans for Bugging-Out, should it become necessary. The Post SHTF world will be a dangerous and alien place…we can be sure of that. The time to plan is now. Part 2 of this series will take a top-level look at mobility plans. Again, the goal here is to start the thought process and give a venue for discussion. Please join in the discussion and share your views. There are no perfect answers. We can get more answers by sharing information and asking questions.

Preparing To Move:

https://i1.wp.com/media-cache-ec0.pinimg.com/736x/a1/6e/0d/a16e0d37a8801a85cc97ab931ae6ce5c.jpg

In most Prepper’s planning, there must be a contingency plan for Bugging Out. Sooner or later, most of us will run into the possibility that our location will no be longer be sustainable or defensible. This is most likely to occur if we are unable to form an association with a larger group of like-minded people (such as a Prepper SOC) or, when that group is too far away to be able to support us (and us them) in real-time. It is that point in time that we are looking at.

In preparation for SHTF or other disaster, we stocked up on all the items that we anticipate we will need for at least 3-months or more. This includes stored food, water (or a good source), tools, fuel, usable scrap materials, and shelter. Take a good look at the weight and bulk of all those items. How much of it are you able to take with you when you need to abandon your shelter? How many people are in your shelter group?

Establish a priority list of items. There are many reference sources in APN and other websites that will help you prioritize. We will not go into those here but, you need to compile that list. Make a list of minimum essentials for a 2-week duration from the priority list. Make that the list of items you plan to Bug-Out with. Now it is time for the list of “It would be nice to have” items that are what is left. Let’s look at what transportation capacity you have. According to priority, make sure that all the items on the 2-week list are accommodated. Evaluate your mobility options. Still have excess capacity? If so, see how many additional items you can add using the Priority list as a guide.

Let us consider for a moment the situation of the Preppers who are in a permanent encampment or SOC (Self Organizing Collective) community. These hardy folks will be guarding their territory and provisions like their life depends on it … because it does. If you are an unknown person or group and show up suddenly on their doorstep looking for entry, you will need to convince them that you and your group will be of value to their community and are no threat. If you arrive with nothing to contribute other than yourselves, you may find your self turned away due to resource constraints and/or perceived threat to the community. These communities will be stretched for food and other resources themselves. Adding to their load without contributing tangibles will be a difficult “sale”.

So, what is your plan? Are you planning to backpack out? The maximum a healthy adult can safely carry in a backpack for a long duration haul is about 75 lbs. Children can carry, at great need, 50% of their body weight. How much of your needed supplies can your party carry out? How much of your 2-week supply list can you accommodate? Hiking will allow you to average about 20 miles in an average day, terrain and weather permitting. Pulling a cart will allow greater capacity but, at the loss of ground covering ability.

Biking out is another option. Your carry capacity will be increased to a minor degree over hiking but, the amount of ground you can cover in an average day increases dramatically. On a good day, 50 to 75 miles will be achievable in a Post-SHTF environment. Children will decrease the achievable mileage due to physical constraints. Also depending on weather factors. Motorcycles may also be a viable option but with similar limitations on how much of a load they can safely carry, also depending on weather factors. In good weather, 200 miles will be possible on a motorcycle if the fuel tank is large enough. Neither of these options are very good in Winter travel due to ice, snow, or cold conditions.

With good advance planning, 4-wheeled motor vehicles will allow you to take the maximum of your provisions, people, supplies, equipment, and arms with you. Weather is less of a problem than biking or motorcycle. Fuel is always a concern but, with prior planning and a full tank, you will be able to cover 300 to 400 miles in a short time with all your supplies and your people. The downside is that they are louder and require better surfaces to travel on. This additional range and cargo capacity should permit you to arrive at your fellow Prepper’s SOC with much needed barter goods, provisions, tools, and materials. Any remaining fuel will be most welcome also. Purpose-bought vehicles are not necessary. If you can easily obtain “upgrades” or replacements of your existing vehicles, by all means do so but do so wisely. For Scouting purposes, it will be a good idea to include bicycles, ATV’s, or motorcycles. For carrying capacity, 4-wheel vehicles are best.

Part 3 of this series discusses the timing of your Bug-Out. Note that these articles not intended to be a Final Answer. They are intended to give you food for thought and the open up a venue for discussion of these topics.

When Should We Bug Out?

https://i0.wp.com/media-cache-ak0.pinimg.com/736x/21/9b/6f/219b6fa6ae27d9863b2c60177181e492.jpg

Okay. You have planned and executed preparations for the SHTF or other disaster event to the best of your ability with available resources. Well, let’s imagine that finally it happened. The SHTF and you are now in survival mode, working your plan. For this exercise, we will assume that your situation is as follows: your dwelling is outside of a medium sized city at minimum; you have not been able to connect with a Prepper SOC within 50 miles of you; you have sufficient food and ammo for 4 months; you have a family of 4: your spouse, and 2 children under the age of 12. The Grid is unreliable and telephone service (cell and landline) is mostly unavailable. Now what? Be discrete and low profile. Be aware of what is going on around you.

Conventional wisdom says that in this situation, it is wisest to fort up (or “bunker”), working with your neighbors to defend your location and wait out the situation to see how it develops. In the first few days of the event, most city dwellers will remain in-place and wait for the government to resolve their problems. As time passes, those same city folk will see that the stores have become empty of food, fuel supplies are dwindling, potable water is in short supply, and ruffians are starting to rove around the city, looking for targets. You, being an aware human being and recognizing the signs of what comes next, know that it is time to hunker down. Now is when your planning begins to be worthwhile as you put it into effect. You are prepared for this.

The city dwellers will migrate away from the city that they know so well using major highways and byways. They will tend to avoid the lesser roadways as panic ensues because they fear running out of fuel and food sources as they travel to perceived “safe harbors”. In the initial phases of SHTF, local residents will be using the lesser-known roadways to get home, get provisions, or bug-out on their own. After all, “everyone knows” that there is always food and fuel on the Interstate. Right? This will hold true for 80 to 90% of the migrating herd. They will then gravitate to the smaller population centers as they run low on fuel, believing that the towns have the resources that they seek. Law enforcement and the military will channel these folks into established evacuation routes for better control of the migrating masses. The small towns are likely to fort up. So you bide your time and stay put for now. Be vigilant and observant of your surroundings.

If your situation stabilizes and order is restored locally, you’re good. If your situation looks like it will stabilize in a manner that won’t allow you to maintain your safety, it may be time to implement a Bug-Out Plan taking all you can carry with you. Do not wait until you have no remaining choices before you make this decision. Be aware of the situation around you. If it looks like it will be “going South” soon (within the next week or so), that is the time to pack it in and Bug-Out while you still have time and resources remaining. By looking ahead, you will have sufficient time to prepare and pack your goods and take advantage of nominal timing for leaving with at least 2-weeks of provisions.

Now is the time to let your Prepper contacts know that you are heading their way, if you were able to make arrangements with them prior to the SHTF. You did maintain communication with them as SHTF progressed … didn’t you? It is wise to forewarn them you are coming and your approximate timing to avoid being viewed as unknowns and a threat to their community. If you have no contacts, you will need to implement Plan B. Plan B is the plan that you made that recognizes that you may have to Bug-Out blindly into the unknown. Plan B will head into a direction that you believe will give the highest probability of reaching a safe location or community to join. Study your maps and terrain carefully in advance of moving. You will need to plan your route carefully. Take maximum advantage of railroad right-of-ways. All rail lines have service roads along the tracks. It is wise to make preliminary plans NOW, don’t wait until the moment is upon you. Hopefully, you will never have to implement Plan B. Be prepared anyhow.

Part 4 of this series of articles will briefly discuss vehicle selections. This series of articles is not intended to be the last word on the subjects covered. They are intended to provoke thought and a venue for further discussion amongst us.

Vehicle Selection Concepts:

https://i1.wp.com/cdn2.armslist.com/sites/armslist/uploads/posts/2012/03/18/340062_01_are_contractors_topper_640.jpg

Buckle your seat belts. This is going to be a long one. There are many websites and blogs that will tell you all about what to prep with, how to prep, and how to survive a SHTF event. The majority of them concentrate on static locations. That is to say, how to prepare your home, bug-out location or how to cache supplies. What is not often discussed is how to get everybody in your party, and all the remaining supplies you stockpiled, out of a non-tenable location to a safer, more secure one.

My intent is not to provide an exhaustive and complete list to you, nor is it to tell you what to do. My intent is to point your thinking to possibilities that you may not have considered before this. It is too easy to get lost in details and concentrate solely on accumulating supplies to stay put. The probability there may come a time when you need to move out is significant. I’m reasonably sure that you would prefer to take all your unused preparations with you for further/future use and protection. After all, ammo and water are heavy, people take space and need food. You might also like to have barter goods available without reducing your own needed supplies.

There are some questions that you should be asking yourself. What kind of vehicle are you starting with? A small station wagon or SUV with AWD? A Jeep? A ½-ton pickup? A van? A Medium Duty truck? A combination of these? The next question is: How reliable is it? Is it in good condition? How new is it? What are its’ load and mobility capabilities? Do you need multiple vehicles?

Let’s talk newness. Shiny new, upscale vehicles scream TARGET. They are also susceptible to electronic component failures, Nature (sunspot activity EMP) or, police/officials (many new vehicles can be stopped remotely). They also draw too much attention from the unsavory types, looking for an easy target. How common is your vehicle? Can you find parts easily? Your better chances are with older, well-maintained, scruffy looking vehicles. They are easier to come by, repair, and cheaper too. Making them reliable is easy and fairly cheap. Choose well and keep it/them fully maintained. Make sure that you can accommodate all the members of your party, plus maximize storage and cargo weight capability. Install external cargo racking wherever possible (roof racks, ladder racks, etc.). Keep the fuel tank full. Keep all you are able loaded at all times.

Pickup trucks have good cargo capacity but are limited in the passenger department. SUV’s have passenger capacity but lack cargo capacity. You may want to think about multiple vehicles if you overrun one of these capabilities with a single vehicle. I know. You think I’m nuts. “What? Two fuel eating hogs?”. No. I am not insane. Multiple vehicles will give you options when you are out on the road. Think of it as built-in redundancy and “shelter in place” wherever you are each day. Even if you end up abandoning one along the way, you still have more supplies than you would otherwise have had and, possibly a new “cache” location when you leave the dead vehicle.

Have you considered a Contractor’s work truck? This is also known as a Work Body truck. These are commonly of the F350, F450, F550 (or GM or Dodge RAM equivalents). Look around next time you are on the road and notice how many of these vehicles are around. Note also how they are loaded. Interesting, isn’t it? These are heavy-duty beasts of burden. Their whole purpose in life is to haul equipment and materials safely, economically, and securely in all weather. They do not have an easy life. They do have huge payload capacities for their size, exceptional towing capacity and are built to take abuse. They do not often have the frills of their non-commercial brothers but have only one purpose in the world … work hard and work long. Picking one of these beasts up used is cheap but, be aware that they will require repairs before their full reliability is restored. The first owners will have worked them very hard and only replace them when reliability declines. Once restored, they will happily provide services to you for an extended time.

So you think I’m nuts for advocating a Work truck. Consider this: work trucks have the same characteristics as their cousins, without the luxury. They get the same, or better fuel mileage, use the same driveline components, and they were made reliable because the commercial world demands it. Many of them also have extended cabs to accommodate a larger crew and are 4X4. Think about your experience loading, unloading, or accessing your tools with a standard pickup truck. Wouldn’t it be nice to access your tools and equipment without climbing into the truck bed, chasing stuff around that has come loose? Wouldn’t it be nice if the goods and equipment stored could be kept out of the weather and secure, while still having the capability to place a full load in the bed AND have access to all of it? Consider also that the large population of such vehicles will guarantee that after SHTF, there will be spare parts available for a LONG time … jus’ sayin’. Food for thought.

In the final article of this series, we will explore camouflage. In it we will explore what is meant by the term. It doesn’t only mean “Multi-colored, earthen patterns to blend in with the woods.” There is much more to it than that. These articles are intended to get you thinking and provide a venue for further discussion and idea sharing.

Camouflage:

https://whiskeytangotexas.files.wordpress.com/2014/10/73121-monster_truck_russia.jpg

In previous articles of this series, we have discussed, at a top level, various means of preparing for a Bug-Out using vehicles. The purpose of getting you mobile is to transport you, the members of your party, and the maximum of your supplies, safely to a new location. For this to happen, you need camouflage to pass through areas without issue.

What is camouflage really? Is it green/brown/black patterns painted on your vehicle(s)? Sometimes. By working definition, camouflage is the disguising of items so that they blend into their surroundings to escape notice. If you are in a urban or suburban area, a vehicle that is painted Desert or Forest Camouflage will stand out like a sore thumb among the surroundings. This defeats your purpose until you are fully in that environment. If you are in a rural or wilderness area, a shiny white vehicle might stand out. So, how do we reconcile the differences? Rattle-can paint.

Before the SHTF event and possible B-O time, the majority of us will be interacting primarily in an environment that requires travel and interaction in populated areas. Preppers generally are trying to stay discrete and off the radar. Attracting attention with vehicles that stand-out is less than desirable. We don’t want undue attention called to our activities. Your greatest camouflage is the ability to blend in with the vehicle population on the roads and in parking lots. To that end, you it is desirable to have ordinary looking transportation that is common to that area. Ordinary SUV’s, pickups, and trucks disappear into the background easily and are not memorable.

I have brought up the Work Truck in previous articles. You may concede that they have good capabilities for our uses but you wonder how noticeable they are. After all, they are usually large and heavy. Consider that these trucks have great camouflage. There are so many of them in use by companies and contractors that they effectively disappear in most populated areas. They “hide in plain sight”. A convoy of these vehicles will be mistaken for “official” or “worker” vehicles during the initial phases of an event, even into much of the settling period after it. This gives you an edge when Bugging-Out and will add some protection to your early travel by being “invisible” (ie: not noticed).

So, where does the rattle-can come in? Once you have escaped the populated areas during your B-O, you will be in areas where your ability to blend into natural surroundings becomes key. Provision your supplies with sufficient colors and quantities of paint to cover all your vehicles. This is the time to pause long enough to repaint your vehicles with the spray cans of paint to blend with your natural surroundings. The goal is to escape detection by undesirable groups to the best of your ability. This is likely to be the transition time of your travel patterns. In the early part of your B-O, you likely traveled during the daytime, hunkering down at night, to reduce attracting notice and to blend with others who are moving around. Once you have gotten away from the crowd and deeper into the wild areas, you may be changing over to night travel and digging in, covering up during the day, and scouting the next night’s travel route. Blending in with the surroundings will be necessary to escape detection by undesirable searches.

This concludes the Mobility articles. I hope that they have given you food for thought and perhaps given you ideas to ponder. My goal has been to cause you to think about, and plan for, your possible Bug-Out in the event that things go really wrong in our world. Keep prepping, keep planning, and be prepared for as many possibilities you can conceive. You will be glad you did, should we need to implement them in times of tribulation. Good luck and plan well.

Police Infuriated About New “Cop Detecting” Device That Warns People When a Cop is Near

by The Free Thought Project

A powerful new device has hit the market that promises to warn drivers of nearby emergency vehicles, including police cars, fire trucks and ambulances. The device is called “Target Blu Eye” and is being sold by the Dutch Company “Target Automotive.

The Blu Eye system works by monitoring frequencies that are used by emergency vehicles and then alerts the driver when those frequencies are nearby. It does not allow the driver to listen in on the encrypted communications, but will simply give a signal when those frequencies are nearby.

This is far more advanced and accurate than a traditional radar detector, because this device works even when the officer has their radar and other equipment turned off.

Police representatives and mainstream media sources are not pleased that this device is on the market, because it will give oppressed drivers an edge on police who depend on the element of surprise to generate their revenue.

The Sunday Times published an attack piece on the invention this week, calling it a “gadget for crooks,” and suggested that it undermines the goals of law enforcement.

https://i2.wp.com/radarfriends.de/wp-content/uploads/2013/12/blu-eye-562x266.png

David Bizley, the Royal Automobile Club’s chief engineer responded to The Sunday Times, saying that his device actually makes the roads safer.

“As it does not distinguish between a police car, ambulance or fire engine responding to an emergency or one that is simply driving under non-blue-light conditions, this particular device is sadly just as likely to be bought by a minority of motorists who wish to evade being caught behaving illegally,” Bizley said.

The Target Blu Eye system sells for about $1,600 in Europe, where the device is currently being sold. The type of frequencies that the system is trained to detect are only used by emergency vehicles in Europe. However, according to Fox News, Target Managing Director Jan Rijks said a version that will be compatible with emergency vehicles in the US is nearly ready for release, and could be released sometime in 2015.

Rijks also responded to the attacks against his invention, saying that: “We promote the safe side. Of course, people may say, ‘I want, now and then, to drive a little faster,’ but in a big city there is no licence to speed because there is always the presence of emergency vehicles, which could be ambulances or fire engines. People driving with Blu Eye are more aware of their speed and driving behaviour because you get alerts, which makes people check that they are doing everything OK.

10 Rye Whiskeys


by Gear Patrol

You’ve heard it before, but here’s another shot: Rye whiskey is on the comeback. We’ve long contented ourselves with corn-based bourbon, and we’re not ready (in the least) to change that habit — but to be sure, rye deserves some serious sipping. Long handcuffed to mixed drinks like the Manhattan, rye’s extra boldness and spice in comparison to corn-heavy whiskey is particularly pertinent after a long day of work. It’s simple, like good things should be, served straight up or over ice, and of course still works beautifully in cocktails.

And something with an extra kick-your-ass? That’s what whiskey’s all about. Rye whiskey sales have tripled in the last five years, so it’s time you jumped on this train. Here’s 10 great rye sippers at price points for the thirsty pauper or the libational prince.

Wild Turkey 101 Rye

This affordable 4-5 year aged rye rendition serves dual threat as a killer Manhattan mixture and a straight sipper with some serious zip. It’s solidly anchored in rye spiciness with a bit of apple and honey. Unfortunately, it’s a bit hard to find right now; the 81 proof iteration is similarly affordable and delicious.

George Dickel Rye Whiskey

Stop giggling at the name. This inexpensive rye whiskey is smoothness incarnate, aged five to six years using 95% rye. Plus, charcoal filtering means lots of tasty flavors, like vanilla, raisin and fruit — all at a poor college kid price.

Knob Creek Rye Whiskey

Knob Creek has long boasted tasty bourbons that won’t break the bank, and their rye blend is no different. Bare spice up front with earthy sweetness make this an interesting sip, and distinctly different at a still-affordable price.

Van Winkle Family Reserve Rye 13 year

With maturity comes layers of depth and intensity that our elderly readers are well aware of. Old Rip Van Winkle’s 13 year aged rye blends “cocoa, vanilla and white pepper” into rye’s standard kick. It’s rare to find this many years of aging at such a low price — you should jump on this discontinued whiskey before all the bottles are gone.

Michter’s US*1 Single Barrel Rye

This single barrel rye whiskey gives both spiciness and fruity flavors like plum and marmalade. Sound interesting? We think so.

Whistlepig Straight Rye Whiskey

Brewed by former Maker’s Mark Master distiller Dave Pickerell, this 100% Canadian rye whiskey is aged for 10 years in oak barrels before it makes its way into your happy stomach. That oak aging mellows the rye bite with vanilla notes, and the utter absence of corn still makes this a distinct, and tasty, drink.

Journeyman Ravenswood Rye

Tasty doesn’t have to mean aged. This young whiskey, made from organic rye and wheat, has bold grain notes and is smooth throughout — sounds perfect for a cocktail drink, doesn’t it?

Buffalo Trace Colonel E.H. Taylor, Jr. Straight Rye Whiskey

This corn-free, to-be-released creation has it all: alcohol burn, caramel, rye spice, cinnamon, and even strawberries. Oh, and it’s named after one of the founding fathers of American whiskey. He’d be proud of this one.

Sazerac 18 year Rye

Balance is key in one of the most sought-after rye whiskeys on the market. 18 years of relaxation mellow the usual oakiness and spice and induce citrus and honey. Only 28 barrels are released per yearly bottling, so if you can sniff this one out, hide it well from moochers.

Masterson’s 10 Year Old Straight Rye Whiskey

For those with a sweet tooth, Masterson’s first foray into whiskey is a treat. The usual spice (have we drilled that point home yet?) in this Canadian import is finished with raisin and orange notes. Not bad, eh?

https://i2.wp.com/media-cache-ak0.pinimg.com/736x/47/9d/e2/479de29fa801ecf00b8ff5b7d995ad3c.jpg

TrackingPoint unveils precision-guided AR line

TRACKINGPOINT PGF with ShotGlass

by Lee Williams

TrackingPoint Unveils the Next Generation of Precision-Guided Semi-Automatic Rifles

Three New Precision-Guided Rifles Support TrackingPoint ShotGlass™

Shooting Glass, Longer-Range Engagements and Higher Target Velocities

Pflugerville, TEXAS (October 14, 2014) — TrackingPoint™, creator of the world’s first and only Precision-Guided Firearm (PGF) systems, introduces new semi-automatic rifles that utilize fighter jet lock-and-launch technology enabling shots once considered beyond human ability.

The new semi-autos enable you to make routine shots on targets moving up to 15mph out to ranges of more than one half mile.  The new precision-guided semi-autos connect via WiFi to TrackingPoint’s newly introduced ShotGlass™ shooting glass technology. The Google Glass™ of hunting and shooting, ShotGlass™ enhances your precision-guided shooting experience via a built-in camera and high definition video display.

“The new semi-auto models were designed for several missions including wild boar eradication, predator control (including coyotes), whitetail hunting, homestead defense, and precision target shooting,” said TrackingPoint CEO John Lupher. “Precision-guided semi-automatic rifles are the game changer. Routinely making extraordinary shots at extreme distances on moving targets is a thrilling experience.”

The new semi-auto Precision-Guided Firearms are based on TrackingPoint’s breakthrough Tag-and-Shoot™ system.  Tag-and-Shoot frees the shooter from common errors caused by jitter and trigger jerk. With Tag-and-Shoot, ballistics are calculated automatically and the need to estimate shot hold-over is eliminated, enabling you to successfully eradicate moving targets at extraordinary distances.  Third party testing validates that Precision-Guided Firearms enable you to shoot better than the best shooter that ever lived.

TrackingPoint is offering three new semi-auto precision-guided rifles: a 5.56 caliber with one-third mile range at up to 10MPH target velocity for $7,495; 7.62 caliber with half-mile range at 15MPH target velocity for $14,995; and a brand new .300 WM with half-mile range at up to 20MPH target velocity for $18,995. To learn more go to http://www.Tracking-Point.com

About TrackingPoint

TrackingPoint based in Austin, Texas created the first Precision-Guided Firearm, a revolutionary new shooting system that puts fighter jet lock-and-launch technology in rifles, enabling anyone to make extraordinary shots on moving targets at extreme distances. www.tracking-point.com.

What It Does

A TrackingPoint Precision-Guided Firearm ensures never-before-seen precision at extreme distances and high target velocities. Here’s how:

  • TriggerLink™ connects the tracking optic with a guided trigger.
  • Tag-and-Shoot™ technology lets you designate an exact target impact point.
  • The tracking system then guides the trigger release.

How You Use It

Prepare for an extraordinary shooting experience beyond belief.

  • Press the tag button to designate an impact point.
  • Align the reticle with the tag.
  • Squeeze and hold the trigger.
  • The Precision-Guided Firearm does the rest

How to Survive: Preparing to Survive Pandemics, Disease Outbreaks and Disasters

by Robert Richardson

While many in this country have become extremely fearful over the current Ebola crisis, I still don’t think there’s a reason to panic. While there are some very real reasons to be concerned – any disease outbreak that has a 70% death rate is troubling, to say the least – the real crisis brought forward by this situation is our country’s level of preparedness when it comes to fighting any disease outbreak or pandemic.

Throughout history millions upon millions of people have died as the result of pandemic outbreaks; in fact, almost every recorded civilization has been affected by one of these outbreaks. From smallpox, which killed an estimated 300-500 million people during the 20th century, to things like tuberculosis, the 1918 Flu Pandemic and the Third Pandemic, caused by the Bubonic Plague, which wasn’t fully contained until 1959, pandemics are a very real cause for concern.

While most people, up until this recent Ebola crisis believed our medical system was equipped to deal with these types of outbreaks, because of modern technology and modern medicine, the fact is, we are no more prepared today than we were a hundred years ago. In fact, I believe we are in worse shape today, and I believe our modern world has somewhat set us up for disaster.

The risk of seeing a major Pandemic Outbreak has never been Greater

We live in an interconnected world; this makes it increasingly likely that we will see a major disease outbreak in the very near future. While it may not be this current Ebola outbreak, we will see some sort of pandemic outbreak at some point.  It’s a process that’s highly predictable.

When you consider the fact that the 1918 flu pandemic killed an estimated 50 million people, it’s actually quite frightening to think about a disease like that breaking out in today’s world. The 1918 Flu Pandemic took around 6 months to spread throughout the world. In today’s environment, where a disease outbreak is only a plane trip away, this same thing could be accomplished in a single day. The chance of a pandemic strain spreading throughout the world is greater than it’s ever been.

The Government is not ready, and will not be able to help.

I’ve been telling people this for over a decade. In fact, it was the basis for why I wrote my book, The Ultimate Situational Survival Guide: Self-Reliance Strategies for a Dangerous World.

After attending a number of high level conferences with the top government preparedness agencies, I was shocked at how little these people actually knew about preparedness. While I always recognized they wouldn’t be able to adequately respond to a large-scale disaster, it was actually shocking to see their complete lack of experience firsthand.

Even worse were the actual conference tracks. Conference after conference was dedicated to things like handling PR after the agency dropped the ball, how to talk to the media without making the agency look bad, or how to respond to an angry public on social media. Instead of figuring out why things went bad during previous disasters, these people instead choose to focus on how they should have responded in a way that made themselves look better ­– Simply Disgusting!

Over the years I’ve received a lot of criticism; mostly from unprepared people who were too lazy to take their own health and safety seriously. These people insisted the government was there to help; insisted that the billions of dollars we spend every year on federal preparedness was enough; insisted I was crazy for saying anything to the contrary. Well, after watching the government’s failed response to a single case of Ebola showing up inside the United States, I think most of that doubt has been put to rest.

A lot of really unprepared people are finally waking up to the realization that they need to be their own first responders, because to count on the government to do it isn’t an option that’s going to keep them breathing when the shit hits the fan. Sorry if that may be a little graphic for you, but what’s happening in our government isn’t pretty, and what happens during any crisis in this country, whether it’s a natural or man-made disaster, isn’t pretty when you’re not prepared. In fact, it quite possibly could be deadly.

Things the average person can do to protect themselves.

Understand what threats are out there: Only you can decide what threats to prepare for, but it should be based on a realistic threat assessment. Before spending a single cent on emergency preparedness gear, supplies, or whatever it is you think you need, you need to understand what the most likely threats are that you’ll face, and then formulate a plan to deal with them.

Prepare now! The time for pretending the government can help you, or all those days spent putting it off until tomorrow are over. It’s only a matter of time before you are affected by some sort of disaster, crisis, economic problem, or threat to your health and safety. Whether it’s Ebola, or some future threat we’ve yet to see, you need to start taking steps to protect yourself and your family now.

You need a stockpile of food, water and emergency supplies. Even during small-scale disasters our country’s infrastructure is quick to be affected. How many times have we seen entire grocery stores wiped out in the lead up to a major storm or hurricane? Now imagine a pandemic outbreak that affected the country for 3 – 6 months. If you don’t have an adequate supply of food and water, you’re going to starve or die of dehydration. I don’t mean to be harsh, but there’s simply no way to sugar coat what’s going to happen.

You need to be able to defend yourself. In the case of a deadly pandemic outbreak we are going to see major social unrest. The moment people realize they can’t feed their families, or they see people in their neighborhood dropping dead, all hell is going to break loose. Listen, people riot in this country over a basketball game; imagine these same people when they’re starving, and people are dying around them.

The Stock Market Has Lost Confidence In Central Banks As Gods

https://i2.wp.com/wallstreetonparade.com/wp-content/uploads/2014/10/The-Feds-Last-Monetary-Bullet-is-Spin.jpg
The Fed’s Last Monetary Bullet is Spin

By Pam Martens and Russ Martens

Yes, there is a wall of worry that the stock market is no longer climbing but is now descending. The greatest worry, that makes all others pale in comparison, is that the U.S. central bank, the Federal Reserve, has nothing left in its monetary arsenal but one bullet – Fed-Speak, otherwise known as spin.

After three bond buying programs known as Quantitative Easing (QE) flooded Wall Street with bountiful amounts of play money while failing to significantly lift wages or economic growth, the U.S. central bank now has a balance sheet that has quadrupled since the 2008 crisis to $4.4 trillion. That it would be allowed to engage in QE4 in the next crisis is highly doubtful since QEs have proven to be financial bubble makers, income inequality makers and of little help to the average citizen.

Equally problematic, the Fed is already at the zero-bound range in interest rates with no bullets left to fire in that arena as the specter of deflation begins to emerge around the globe.

There is a growing reappraisal on Wall Street as to what the Fed was really attempting to do with all this talk of the potential for a rate hike next year. Was it simply attempting to reload monetary bullets into its empty gun? If one talks endlessly about a rate hike and then faces a financial crisis, will simply saying you will delay the hike have the same impact as a rate cut?

If that was the Fed’s reload option, it doesn’t appear to be working. Over the weekend, Fed Vice Chairman Stanley Fischer delivered a speech to the International Monetary Fund, stating that “if foreign growth is weaker than anticipated, the consequences for the U.S. economy could lead the Fed to remove accommodation more slowly than otherwise.” Rather than stemming the panic, the Dow sold off another 223 points on Monday.

Veteran traders on Wall Street understand that markets will trade on perception, and spin, for only so long. At some point, ample doses of reality overtake Pollyanna perceptions. The new reality includes the following:

The Treasury market is reading far different tea leaves than the Fed. What it sees is softening demand and the potential for recession – hardly a situation requiring a rate hike by the Fed next year. As of this morning, there is a spread of just 182 basis points (1.82 percentage points) between the two-year U.S. Treasury note and the 10-year note with the two-year yielding an anemic .38 percent and the 10-year having dropped since last Friday from 2.28 to 2.20 percent.

At the same time that yields on Treasuries are declining, yields on riskier debt are rising. Junk bond prices have been setting lower lows (pushing up yields) since July. (See the chart below.) This is the same scenario that played out during the 2008-2010 financial collapse.

Any significant rise in corporate bond yields would throw cold water on a key artificial impetus in the stock market – corporations borrowing heavily to buy back their own stock.

There is growing evidence of both a global economic slowdown and the potential for deflation. In Germany, industrial output, factory orders and exports have posted their worst results since the heart of the last financial crisis. The Eurozone produced zero growth from the first to second quarter.

Just this morning, business media are reporting that the U.K. inflation for September came in at a tepid 1.2 percent, down from 1.5 percent in August. The Bank of England, the U.K.’s central bank, has the same policy dilemma as the Fed: its benchmark rate is already at the low rate of .5 percent.

Commodity indexes are confirming a global economic slump and the potential for deflation. A glut of crude oil as demand weakens has ignited a price war among OPEC members, bringing crude prices to four year lows. Bloomberg’s Commodity Index, a measurement of 22 commodities from agriculture to metals, slumped 11.8 percent in the last quarter – the largest decline since the crisis of 2008.

And while the Ebola scare may be negatively impacting the share prices of airline stocks, it is a minor player in the overall wall of worry, at present at least, since the seeds that have fed this market rout became rooted in July, two months before the Ebola scare erupted in the U.S.

If there is a silver lining to be found in any of this, it just might be that the legislative branch of our government might be compelled to stop passing the buck to unelected members of the Fed and reassert its policy leadership role on behalf of Main Street rather than just Wall Street.

https://i2.wp.com/wallstreetonparade.com/wp-content/uploads/2014/10/HYG-Chart.png
Junk Bond Prices Have Been Setting Lower Lows Since July