Good or bad, we have a new survivalist type

Started by peternap, May 26, 2008, 07:33:00 PM

Previous topic - Next topic

0 Members and 1 Guest are viewing this topic.

peternap

Energy fears looming, new survivalists prepare
Email this Story

May 24, 2:12 PM (ET)

By SAMANTHA GROSS

(AP) Peter Laskowski stacks firewood at his remote home in Waitsfield, Vt., Friday, April 11, 2008....
Full Image

Google sponsored links
The Bakken Oil Formation - "A Good, Old-Fashioned Oil Boom." Early Profits Revealed: New Report.
EnergyAndCapital.com/Bakken_

Solar Window Film - Keep Your Energy Costs Down with Window Films - Learn More Now
Vista-Films.com


BUSKIRK, N.Y. (AP) - A few years ago, Kathleen Breault was just another suburban grandma, driving countless hours every week, stopping for lunch at McDonald's, buying clothes at the mall, watching TV in the evenings.

That was before Breault heard an author talk about the bleak future of the world's oil supply. Now, she's preparing for the world as we know it to disappear.

Breault cut her driving time in half. She switched to a diet of locally grown foods near her upstate New York home and lost 70 pounds. She sliced up her credit cards, banished her television and swore off plane travel. She began relying on a wood-burning stove.

"I was panic-stricken," the 50-year-old recalled, her voice shaking. "Devastated. Depressed. Afraid. Vulnerable. Weak. Alone. Just terrible."

(AP) Peter Laskowski feeds his chickens and sheep at his remote home in Waitsfield, Vt., Friday, April...
Full Image
Convinced the planet's oil supply is dwindling and the world's economies are heading for a crash, some people around the country are moving onto homesteads, learning to live off their land, conserving fuel and, in some cases, stocking up on guns they expect to use to defend themselves and their supplies from desperate crowds of people who didn't prepare.

These here is God's finest scupturings! And there ain't no laws for the brave ones! And there ain't no asylums for the crazy ones! And there ain't no churches, except for this right here!

peternap

The exact number of people taking such steps is impossible to determine, but anecdotal evidence suggests that the movement has been gaining momentum in the last few years.

These energy survivalists are not leading some sort of green revolution meant to save the planet. Many of them believe it is too late for that, seeing signs in soaring fuel and food prices and a faltering U.S. economy, and are largely focused on saving themselves.

Some are doing it quietly, giving few details of their preparations - afraid that revealing such information as the location of their supplies will endanger themselves and their loved ones. They envision a future in which the nation's cities will be filled with hungry, desperate refugees forced to go looking for food, shelter and water.

"There's going to be things that happen when people can't get things that they need for themselves and their families," said Lynn-Marie, who believes cities could see a rise in violence as early as 2012.

(AP) Peter Laskowski plants vegetables at his remote home in Waitsfield, Vt., Friday, April 11, 2008....
Full Image
Lynn-Marie asked to be identified by her first name to protect her homestead in rural western Idaho. Many of these survivalists declined to speak to The Associated Press for similar reasons.

These survivalists believe in "peak oil," the idea that world oil production is set to hit a high point and then decline. Scientists who support idea say the amount of oil produced in the world each year has already or will soon begin a downward slide, even amid increased demand. But many scientists say such a scenario will be avoided as other sources of energy come in to fill the void.

On the PeakOil.com Web site, where upward of 800 people gathered on recent evenings, believers engage in a debate about what kind of world awaits.

Some members argue there will be no financial crash, but a slow slide into harder times. Some believe the federal government will respond to the loss of energy security with a clampdown on personal freedoms. Others simply don't trust that the government can maintain basic services in the face of an energy crisis.

The powers that be, they've determined, will be largely powerless to stop what is to come.

Determined to guard themselves from potentially harsh times ahead, Lynn-Marie and her husband have already planted an orchard of about 40 trees and built a greenhouse on their 7 1/2 acres. They have built their own irrigation system. They've begun to raise chickens and pigs, and they've learned to slaughter them.

The couple have gotten rid of their TV and instead have been reading dusty old books published in their grandparents' era, books that explain the simpler lifestyle they are trying to revive. Lynn-Marie has been teaching herself how to make soap. Her husband, concerned about one day being unable to get medications, has been training to become an herbalist.

By 2012, they expect to power their property with solar panels, and produce their own meat, milk and vegetables. When things start to fall apart, they expect their children and grandchildren will come back home and help them work the land. She envisions a day when the family may have to decide whether to turn needy people away from their door.

"People will be unprepared," she said. "And we can imagine marauding hordes."

So can Peter Laskowski. Living in a woodsy area outside of Montpelier, Vt., the 57-year-old retiree has become the local constable and a deputy sheriff for his county, as well as an emergency medical technician.

"I decided there was nothing like getting the training myself to deal with insurrections, if that's a possibility," said the former executive recruiter.

Laskowski is taking steps similar to environmentalists: conserving fuel, consuming less, studying global warming, and relying on local produce and craftsmen. Laskowski is powering his home with solar panels and is raising fish, geese, ducks and sheep. He has planted apple and pear trees and is growing lettuce, spinach and corn.

Whenever possible, he uses his bicycle to get into town.

"I remember the oil crisis in '73; I remember waiting in line for gas," Laskowski said. "If there is a disruption in the oil supply it will be very quickly elevated into a disaster."

Breault said she hopes to someday band together with her neighbors to form a self-sufficient community. Women will always be having babies, she notes, and she imagines her skills as a midwife will always be in demand.

For now, she is readying for the more immediate work ahead: There's a root cellar to dig, fruit trees and vegetable plots to plant. She has put a bicycle on layaway, and soon she'll be able to bike to visit her grandkids even if there is no oil at the pump.

Whatever the shape of things yet to come, she said, she's done what she can to prepare.

---

On the Net:

Peak Oil: http://www.peakoil.com

Google sponsored links
   
2nd Oil Sands Boom Begins - Canada: 7 Times More Oil Than Saudi Arabia. Two Free Stock Picks.
www.DailyWealth.com/Oil_Report

Do you run your car 24/7? - So why do it with your computer? Download and start saving now!
www.Faronics.com/PowerSave

3 Stocks to Steal Now - Stock Guru Dennis Slothower Gives You 3 Absolute Steals to Buy Now!
StealthStocksOnline.com

   



oth
These here is God's finest scupturings! And there ain't no laws for the brave ones! And there ain't no asylums for the crazy ones! And there ain't no churches, except for this right here!


glenn kangiser

Given the caliber of our politicians, the greed of the oil companies, the fall of the dollar, corporations sending our jobs overseas, the open border policy, the housing bust, I think they may have it about right. 

Better to be prepared for something that may or may not get here than to be caught with our pants down.
"Always work from the general to the specific." J. Raabe

Glenn's Underground Cabin  http://countryplans.com/smf/index.php?topic=151.0

Please put your area in your sig line so we can assist with location specific answers.

benevolance

I dunno about that...

Here it is more like everyone is trying to make old things new... Which is sort of one of my mantras... I went on craiglist and saw dozens of people advertising for used building materials...Bricks, blocks, railroad ties... roofing tin... etc... the things I used to be able to scrounge easily are suddenly very scarce

Luckily though I did scavenge a hundred railroad ties...Free of charge...I had to help someone else get enough to fix up their yard and in exchange I got a free pass on mine... They were piled up on the side of the road... And the guy who wanted a trailer load happens to be in a form of code enforcement here...He made sure nobody gave me a hard time when I went to get my load...

And as far as bricks go...I dragged 1500 of them home on the week end.. cost me $100 for the bricks and $50 for gas... the bricks are new not used...So it was a good deal...And I made a deal with a guy that has 7000 more new bricks... @ 10 cents each...Left over  from building a subdivision entrance...

I am going to Charleston on Thursday to get a load of Cement Cinder blocks... the old fashioned type from the 40's or 50's...The woman there told me they are from a old greenhouse and there are over 1000 of them  like new and I can have as many as I want for free....So I am going to get a couple of loads...

I am just landscaping my property.... but if I wanted to build a home...I could get a long way into it with 1000 cinder blocks 8500 bricks and 100 railroad ties... You could make it look old timey... use the railroad ties for a post and beam type construction...

I have tried to find used roofing tin here.... it is almost impossible... but other than that it is still doable in terms of scavenging materials to build a wonderful home... But in most of the ads... where the materials were free if you cleaned up someone's yard... now you have to pay... It is getting a little harder as everyone is in scrounge mode with the price of fuel and food

Redoverfarm

I would say with the price of scrap metal that you will have to look long and hard to find any roofing metal. They are dragging old truck and car frames out of the bushes around here.  Actually if the trend persist it will clean alot of places up. I am like you when it comes to scrap building supplies.  Just this week I pickup 25 split chestnut rails.  These will basicly be for decoration but still at $10-15 each in the city it was a decent find.     


benevolance

Well the places that sell mulch and bark and field stones want $16 for railroad ties... and they are not selects... they are good only for planters in my opinion... if you wanted to put up a building they are not good enough...

One of the old tricks we always used was to just round up enough railroad ties to make a perimeter of the building you wanted to put up... gravel up spot... and lay the ties... use the ties as anchoring for the walls and footing...and fill the inside with cement...But you need decent ties to make this work...

As for scrap metal...Yeah you go to the scrap yard and you see loads of roofing tin and washing machines and everything imaginable. I have all kinds of windows out of my house (15 so far)...I will dig up some roofing tin sooner or later... One of the things my dad taught me when scrounging was that you needed to be patient.....that people throw good stuff away every day and that you can build anything you want from what other people throw away.


Craigslist is a gift from heaven when it comes to gathering materials...I have used to buy my Cement mixer, Garden Tiller, Dump Truck, Table Saw...To gather Bricks, Blocks,...I used it to hire help with my renovation projects...

I just list want ads starting in Asheville NC...and go to Charlotte, and Wilmington NC... and then Charleston Columbia and Greenville SC.

My wife thinks I am insane... but I explained to her that we could almost build a small house with what I have gathered for almost nothing

I am addicted to searching for bargains...I know I will not be able to stop gathering materials... I will use them somewhere...

muldoon

I would have responded to this sooner because it hits a little close to home for me, but I have been out of town for a few days for work.  There are alot of people who are believers in this, and a whole slew of forums dedicated to it. The OilDrum has a constant stream of very bad news, PeakOil has an organized view of the politics, preparing, and alternatives, and Latoc (life after the oil crash) is a nonstop stream of doom and doomsayers who view this as near apoclyptic. 

I personally work in the oil industry, specifically I happen to work for commodity traders who sell oil, gas, electricity, and all forms of derivitives and futures on the open markets..  mostly nymex and ice.  I work with some very sharp people who generally lay claim to this as being utter BS and fear mongering.  Based on the facts I tend to agree these days although I was back and forth for awhile.  The only thing that is truly different now than 3 years ago is the weakening of america.  While oil is a finite resource, we are not running out, in fact we know about enough of it to continue existing lifestyle for 30 or more years with no problems.  And that is with current technology that only extracts about 30% of the oil we know about.  It is not impossible to think we will have increases in effiecincy and technology in the coming decades.

Much of the cost of oil the past 12 months has nothing to do with scarcity, although it sure makes a great cover story.  What that story is is dislocation in trading markets.  As many know, the credit markets are in big trouble, and most of the existing structured vehicles are not selling today.  These were mostly mortgage bonds that were the catalyst but now its everywhere.  The fed's continual acceptance of this debt has polluted our treasuries.  (They are now backed by mortgage, student loans, credit card and car loan debt).  As this is the collateral behind the treasury people are fleeing from it.  If the markets are declining (and a forward looking market based on earnings WILL decline as earnings decline) and bonds are riskier than previously thought (go look for Vallejo CA, or Jefferson AL), or any monoline insured muni .. you'll see that the places for smart money to go is declining.  As people pull out of debt markets they are wanting to go somewhere SAFE.  Oil is safe, nothing in the world can inflate or delfate the energy within a barrel of oil, its the same today as it was decades ago.  As the fed loans huge amounts of money into the financial sector to offset losses alot of this money is going right into the same commodities and keeping the price in an uptrend.  While peak oil on CNBC makes a great story to explain whats going on.. it just doesnt hold water in the timeframe with the facts.  What we are seeing is the devaluation of credit, (which is not the exact same thing as expansion of monetary base), but the effects are looking very similiar.  It is not sustainable in any sense of economics -  it will reverse (likely violently when it does), I would expect the bond markets to break sending the longer rates going to the moon.  Go back to your history books people, it wasnt the stock market collapse from 29 that caused the great depression.  It was the incessent meddling by the governement that created a bond market crash in 31 that then cascaded through the country and gave us deflationary depression.  Once the debt markets moonshot it will be too late to reverse this course.  I am not saying we wont be standing in line for gas in coming years, but when we do it will have more to do with financial dislocation and US government monetary policy than with the amount of crude under the dirt. 

Yes, I know everyone sees oil companies as greedy .. but the truth is most oil executives are scared out of their minds right now.   What the hell do we do with 130 barrel?  Do we start a 5 year production platform with a retrieval cost of 60 a barrel only to see opec open the gates and send oil back to 20 like they did to us in the 80s?  If so that means were bankrupt.  Done. 

Sassy

Hmmm, interesting post, Muldoon.  I have a question for you...  during the "depression of late 1920's-early 30's, what led to the extreme contraction of money?  The same thing that is happening today?  Too much easy credit, then tightening?  From what I've read, even businesses had a hard time obtaining credit then...  but as soon as rumors of WWII started rumbling, suddenly, there was lots of money for the "war" machine.  Is that like the oil commodities - because it is solid - weapons are real & planes etc are real - not all the speculation of derivatives upon derivatives...  don't you think the Federal Reserve has a lot to do with the problems we are having, along with Bushco loosening the regulations in the real estate/mortgage lending department until there were really no controls, no way of monitoring?

I've read several articles about there still being lots of oil & you make a valid point that CEO's of the big oil companies have to stick their necks out when new exploration, pipelines, off shore drilling etc is contemplated...  the exact thing we need, OPEC dropping the prices, would be devastation to the oil companies...  but then they have been making ungodly profits over the past 2-3 yrs, rather than passing reasonable prices on to the consumer & that has made them the scapegoats for people to direct their anger over what is happening to the economy.

Printing more money by the Federal Reserve only devalues the dollar & leads to inflation...  so it goes back to the old story - I posted an article on another thread about the economy...  there needs to be something solid backing the dollar - the world is losing trust in the dollar, some nations are going to other currencies to trade in, when traditionally the US dollar was the most trusted & solid... 

Anyway, I don't have near the background as you have, Muldoon, & am only beginning to study economics, the market, the Federal Reserve over the past 3 yrs...  read a book on Enron a couple yrs ago, that was an eye opener  :o, read the book The Creature from Jekyl Island on the Fed. Reserve, also an eye opener...  then lots of articles on international banking, IMF, World Bank, BIS etc...  it's all a gamble - and I think there are some really big players around the world that are pulling a lot of strings...   :-\
http://glennkathystroglodytecabin.blogspot.com/

You will know the truth & the truth will set you free

peternap

First muldoon, I knew you had something to do with the markets...and now that I know, Thanks! As of yesterday, you made me a lot of money. ::)

Second, while we never quite agree, we are at leaast in the same astral plane. I agree that the big difference between now and 3 years ago and for that matter, the gas crisis in the 70's, is that the country is much weaker. I'm not sure we can survive a major economic blow (which I don't think we have had yet). I do think everything is lining up for a single swat that could well cripple the country if it all hits at once.

It's easy to blame everything on the Government (who deserve a good portion) or BIG business (who deserve a big portion) or foreigners (who are not the major problem, just participants ).

There;s a whole lot of blame to go around including the American people.
These here is God's finest scupturings! And there ain't no laws for the brave ones! And there ain't no asylums for the crazy ones! And there ain't no churches, except for this right here!


muldoon

Quote from: Sassy on May 29, 2008, 01:04:36 PM
Hmmm, interesting post, Muldoon.  I have a question for you...  during the "depression of late 1920's-early 30's, what led to the extreme contraction of money?  The same thing that is happening today?  Too much easy credit, then tightening?  From what I've read, even businesses had a hard time obtaining credit then... 

In a nutshell, yes.  Very similar set of events, a huge housing bubble that was led by "interest only" and "balloon" style mortgages.  The prevailing concept was that it was revolving, the banks owned the assets and people continued to borrow to continue consuming.  Also there was a huge increase in equities markets, speculation on margin was rampant and resulted in much the same way the dotcom tech boom went down in flames back in 2001.  The tightening resulted when people defaulted on those loans and the market realized that risk was not being properly priced.  This caused money to constrict and banks to be tight with lending because they were getting burned on past mistakes.  It's very similar to where are today, have you heard any anecdotal stories about people having a difficult time getting approved for loans?   

Quote from: Sassy on May 29, 2008, 01:04:36 PM
but as soon as rumors of WWII started rumbling, suddenly, there was lots of money for the "war" machine.  Is that like the oil commodities - because it is solid - weapons are real & planes etc are real - not all the speculation of derivatives upon derivatives...  don't you think the Federal Reserve has a lot to do with the problems we are having, along with Bushco loosening the regulations in the real estate/mortgage lending department until there were really no controls, no way of monitoring?
I dont think this is exactly accurate.  WW2 and "The new deal" was the mechanism by which we exited the great depression and it has to do with a man named John Maynard Keynes, a British economist.  His theory was that in order to offset deflation the government would need to spend great sums of money to "jumpstart" the economy.  They put hundreds of thousands to work building roads, damns, and then building tanks and planes and bombs.  Before this time the government did not have a deficit.  We did not owe other banks and other countries money, it was the creation of deficit spending (government borrowing instead of taxing to pay its bills) that allowed us to get out of the GD.  Unfortunatly we do not have this luxury today, we cannot deficit spend our way out of this, although we might try. 
The other part of your question, did Bushco loosen the controls and create this; yes to some extent the government did have a hand to play in this.  For what its worth, I do not think Bush/Cheney had much if anything to do with it.  This is just greed of many.  We all own some of the blame for this. 

Quote from: Sassy on May 29, 2008, 01:04:36 PM
I've read several articles about there still being lots of oil & you make a valid point that CEO's of the big oil companies have to stick their necks out when new exploration, pipelines, off shore drilling etc is contemplated...  the exact thing we need, OPEC dropping the prices, would be devastation to the oil companies...  but then they have been making ungodly profits over the past 2-3 yrs, rather than passing reasonable prices on to the consumer & that has made them the scapegoats for people to direct their anger over what is happening to the economy.
continued next

muldoon



Quote from: Sassy on May 29, 2008, 01:04:36 PM
Printing more money by the Federal Reserve only devalues the dollar & leads to inflation...  so it goes back to the old story - I posted an article on another thread about the economy...  there needs to be something solid backing the dollar - the world is losing trust in the dollar, some nations are going to other currencies to trade in, when traditionally the US dollar was the most trusted & solid... 


See, thats just the thing.  We hear the term strong dollar.  Or loosing faith in the dollar, or the dollar is getting weak.  But no one really explains what that means.  Here is what it means; the US treasury (us debt) is backed by the full faith and credit of the US.  Specifically it means that our debts are backed by the US governments ability to tax it's citizens for the debt we owe.  The rest of the planet is looking at this and beginning to wonder exactly how "strong" the US dollar is. 
OK, so last night - yes last night.  http://www.dallasfed.org/news/speeches/fisher/2008/fs080528.cfm
Federal Reserve President and CEO of the Dallas branch - Richard Fisher gave a speech and spoke openly about deficit and entitlements.  He goes on in length about some of the problems and I think everyone should read it but I'll just take a quick quote here:
"Let's say you and I and Bruce Ericson and every U.S. citizen who is alive today decided to fully address this unfunded liability through lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would receive promised benefits in perpetuity. How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304 million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of four—over 25 times the average household's income."
Now, how do you think this is viewed by China, or Dubai, or the other sources of our funding that keeps the bus rolling.  Do you think they have faith in the US's ability to tax its people this kind of amount?  Thats the strength of the dollar in international terms.  This isn't conspiracy theory stuff, its on the Feds website - from a speech given to CommonWealth club last night. 


Quote from: Sassy on May 29, 2008, 01:04:36 PM
Anyway, I don't have near the background as you have, Muldoon, & am only beginning to study economics, the market, the Federal Reserve over the past 3 yrs...  read a book on Enron a couple yrs ago, that was an eye opener  :o, read the book The Creature from Jekyl Island on the Fed. Reserve, also an eye opener...  then lots of articles on international banking, IMF, World Bank, BIS etc...  it's all a gamble - and I think there are some really big players around the world that are pulling a lot of strings...   :-\

I also have read the Jekyll Island book some years ago, and to be honest it may have been the reason why I still chase these things obsessively.  The book is not 100% correct, because it assumes the Fed has a printing press and that it can run them with no ramifications.  This is not true, the rest of the world must cooperate for the fed to pursue this and we are being given the finger so to speak right now. 


peternap - your right there.  We are very vulnerable to what your refer to as the swat. 

glenn kangiser

Good conversation here - getting views and understanding out into the open.  Thanks everyone.
"Always work from the general to the specific." J. Raabe

Glenn's Underground Cabin  http://countryplans.com/smf/index.php?topic=151.0

Please put your area in your sig line so we can assist with location specific answers.

Sassy

You Think NAFTA, CAFTA & the Economy is Bad Now? Wait...  just a little more light on what's happening to the economy - must see video!
http://www.youtube.com/watch?v=TShPYA-OuPs

Thanks for replying to my questions, Muldoon - it is all very complicated, so many factors come into play - like the SPP which the Representative from Ohio so clearly speaks about on the video.

Another article at this site talks about the fall of Russia & how we are headed in the same direction
"Reinventing Collapse"
http://www.dailypaul.com/node/50541
http://glennkathystroglodytecabin.blogspot.com/

You will know the truth & the truth will set you free

benevolance

one of the things that makes me so mad is that oil on the open market is subject to investors future traders and people who speculate the market...And the price of oil is being driven up by the financial sector driving it up...

They have no business really artificially driving up the price of oil this way...If it was wheat or potatoes we would step in and stop it.

I too wonder about the math and the oil flow... There has not been a decline in world oil production...we have to work harder to get it and it  costs more... but production is going on just fine.

There is some truth to peak oil in the sense that the worlds largest and easiest to access oil fields have started to decline in their production....many of them have anyways...But we still have a lot of oil to pump out of the ground


ScottA

The price of oil had to go up sooner or later. Better now then when there is a real shortage. High prices will lower demand over time and encourage conversion to other energy sources. Peak oil is here weather we like it or not. Yes the prices have been driven up by specuators but it wouldn't matter since supply and demand would have driven it up soon anyway. Expect prices to stablize in the near future as the high crude prices get to the pumps and people cut back more and more, not just in the US but worldwide.

glenn kangiser

The fall in production could be being manipulated too.  You only hear what they tell you.  When I was working in the oil field they were drilling and capping - not putting the new wells into production.  I knew others that said the same thing.
"Always work from the general to the specific." J. Raabe

Glenn's Underground Cabin  http://countryplans.com/smf/index.php?topic=151.0

Please put your area in your sig line so we can assist with location specific answers.

muldoon

Quote from: benevolance on May 30, 2008, 01:56:25 AM
one of the things that makes me so mad is that oil on the open market is subject to investors future traders and people who speculate the market...And the price of oil is being driven up by the financial sector driving it up...

They have no business really artificially driving up the price of oil this way...If it was wheat or potatoes we would step in and stop it.

I too wonder about the math and the oil flow... There has not been a decline in world oil production...we have to work harder to get it and it  costs more... but production is going on just fine.

There is some truth to peak oil in the sense that the worlds largest and easiest to access oil fields have started to decline in their production....many of them have anyways...But we still have a lot of oil to pump out of the ground

I am not sure it is as black and white as you described it.  At one point, for decades we had a balance between risky stock market, and a "safe" bond and treasury market.  When the stock market lurched down, people "fled" to the safety of bonds.  When people in droves bought bonds, the returns went down (they needed less incentive to get peoples money) and the price went up (supply and demand).  When the return on bonds dipped too low and people saw equities (stocks) go back up they switched over and a kind of equilibrium was established.  The US TBill, or treausry bill was considered the absolute safest of investments, and nearly all bonds or indeed all non-consumer credit is generall tied to either it (or the LIBOR which is a european equivilent). 

As banks began reporting huge losses last year, and some got really close to belly up, they went to their bank - the federal reserve.  The fed is a bank, they do not give money, they make loans.  Loans have interest and require collateral.  Early on, the fed gave alot of loans and things held together generally well up until last August.  Thats when a set of loans did not roll over due to a lack of good collateral.  Shortly after we see Citibank borrowing 7.5 billion from Abu Dahbi at 11% interest...  then the fed creates some new lending facilities and will accept collateral that was not as pristine.  They then begin accepting mortgage bonds and the like that were the initial problem.  This rolled on, creating new lending programs to help offset the losses.  In April of this year, they added student loans as collateral.  Then in May it added auto loans and credit card debt.  Target sold it's entire credit card arm to JP morgan who then put it up to the fed for more cash.  All of these dodgy loans are now in the treasury - to the tune of about 400 billion today.  About half of the fed balance sheet.  How many will default?  How many are already in default?  How safe is the treasury now?  Can they actually cover a metldown? not even close.   

Well, people who are nervous about stocks, investment banks, soverign wealth funds, hedge funds, pension firms, (all speculators) are looking at this and saying "I cant put good money in there and expect it to be safe" ...  Do you want your 401k tied up in something safe?  Do you want your pension in something safe?  Most people do.  So whats safe?  oil is safe for the most part.  It's a commodity, at the end of the month, you own it, you must take delivery.  That forced delivery is a factor as well, if it were pure speculators we would see huge fluctuations in the futures pricing during the month and at expiration because at expiration you must take physical delivery.  Sure, speculators can theoretically "run" the price up on paper during the month but then they must take it.  Not many people are positioned to take delivery, which would force a downward pressure at expiration as speculators tried to sell on the same day.  It hasnt happened.  I dont think this is speculation as much as it is perceived safety.  It's not artifically being priced up, its finding true value not only as source of energy but also as a store of value.  In some ways you could say it's filling the role that gold once had.  Yeah it's too bad that we all need it -- but then again thats why its perfect for the job. 

Take a look at California, this out yesterday - http://www.plumasnews.com/news_story.edi?sid=6337  (and really this is a good enough article for an entire post by itself), No one wants to put money in their bonds -- and I dont blame them.  You think their going to get repaid once they file BK?  People want something of value.  Debt is not as valuable (or safe) as it once was.  If everyone tries to run for the exit at the same time, this is what leads to the bond crash I warned about yesterday.  Everyone knows that so it sorta holds together, but they also know that the first one out keeps his money.  Thats why they call it a crunch :) 

benevolance

muldoon

it is not black and white at all... but the fact remains that oil is sold through publicly traded companies that can be manipulated...the price of oil is subject to manipulation from investors driving up the price of oil on "supposed" fears

We need to remember that there is always some oil crisis... pick up the paper from a month a go... 6 months ago... every three days there is another crisis... I wonder why? It does not take Sherlock holmes to figure it out.

The higher the price is driven the more money these guys are making on previous investments...The higher the price is driven the more money the federal and state government makes in the form of gasoline and oil taxation...and the more money the oil companies themselves make... which make their shareholders very happy.

We the consumer have to get the shaft of course....But they all make record profits...

Saudi Arabia made a great point...About world oil production. They pointed out that there is not a drop in world oil production right now...That the flow of oil is more than sufficient for the world's needs...And that they should not just double their production to flood the market with oil.

There is no oil shortage...Every industrialized nation buys what they need... India, China, America... nobody does without oil... And yet every few days there is another story about a possible storm somewhere that could delay a tanker... a possible strike in Africa....And this drives the price of crude even higher.

$30 a barrel was unrealistic.... and we had cheaper oil than we deserved for decades... But $130 a barrel is also unrealistic long term for us....The talk of the $200 barrel is scary...It does not need to be that high nor can we afford it to be that high for a long period of time.

I wish what Scott said was true about us truly switching to other means to replace oil.... But we only use oil for a few things in the world... IT is no longer used for electricity production....We use it for Heating oil (less and less all the time) we use if for Plastics, Fertilizers, and fuel in the form of Diesel and Gasoline.

We may well have seen the worlds most productive fields reach peak production...But for years many countries that had massive oil fields simply stopped looking for more oil...

Also since the peak oil theory first came out over 30 years ago we have switched our fossil fuel use....We did not rely at all on natural gas 35 years ago...Where as now it  plays a big part in the home heating game...and it is even used to replace gasoline and diesel on a lesser scale...Many countries around the world have focused on searching for it...many have found it and are starting to pump it out of the ground.

As far as heating goes.. the world can switch to electricity... because the bulk of the worlds electricity is generated from coal and they know we have something like 600 years worth of that... that they know about.

So we can make some adjustments to use oil differently...Though I suspect that once everyone heats their home with natural gas and Electricity that we will see the price jump on those forms of heating... the government and the big companies Oil, electric) do not like to see revenues go down ever...

It is funny that they blame the Emerging economies in India and China for the gasoline and crude oil shortage... when the average car in China gives more than 40 miles per gallon and in America only 3 cars sold from all the automakers give 40 + miles to the gallon.

We need to drive differently...Smaller cars, slower cars... cars that utilize existing technology that improves mileage...If America was driving around in normalish sedans the size of the Prius and everyone was getting 60 miles to the gallon....We would not be paying $4.00 a gallon.

The country here in America and Americans are as much to blame for this as anyone when I think about it more...We are lazy we do nothing to increase our efficiency or to use less oil and gas... We consume without a care in the world.

How many people switch to energy efficient lighting in their homes? or have their insulation checked and upgraded if possible? How many people drive cars that burn propane, natural gas, electricity instead of gasoline?...How many people go to their local dealership and demand more of these cars to lower the price for everyone...How many people write letters to congress or the mayor or even general motors.

We like our quadcab dually trucks that have 500 pounds of torque and we like our SUV's that have 350 horsepower...and our luxury sedans that give 15 miles to the gallon... Nowhere else in the world can people afford to drive gas guzzling monstrosities like this...

I hope that Scott is right that we will switch to other forms of heating and look for ways to cut back on oil... But the idea that technology is going to save us is a fallacy....Technology is never the answer... It cannot save us from ourselves... Technology can help us towards our goals if we are persuing something realistic and sensible.

We expect technology to provide us with solutions that will not require us to change the way we drive, do business or live...We expect to make no sacrifice, no compromise whatsoever... This is the fallacy. Oil is going to run out sooner or later... We need to change the way we live in this world...And technology can help us change... It cannot solve our problems for us.

peternap

That was a darn good writeup Muldoon. You hit a sore spot too. I'm heavily invested in Va tax exempt muni's and some federal exempt Municipal management stocks. Virginia has a AAA credit rating but I'm not so sure how long that will hold. Income has gone down and income tax revenues have gone down as a result. Instead of tightening our belts, our idiot Governor has tried every scam from abusive driver fees to additional automobile taxes, to cover the shortfall.

I wish I hadn't ever bought the management stocks but so far, I've stayed ahead in interest on the bonds.

I'm waiting for timber land to bottom and may pull all of the above and buy more land. It's tough to see the end of this tunnel.
These here is God's finest scupturings! And there ain't no laws for the brave ones! And there ain't no asylums for the crazy ones! And there ain't no churches, except for this right here!

ScottA

It won't change overnight but it will change. People are already driving less. Smaller cars will get more popular. I read yesterday where GM is laying off shifts on lines that make trucks and SUV's and adding shifts to lines that make smaller cars. We also aren't going to run out of oil any time soon. I expect a very gradual decline in production over the next 50 years and for some oil to be available for the next 200 years atleast. Saudi Arabia claims there is a 150 year supply of oil left in existing fields. We'll soon see electric cars become more common and better designed. Technology we have now can't free us from oil but I belive we have the time to learn new ways to do things. I'm sure more efficent methods will be developed for moving people and goods. Anyone ever heard of trains? Ships can be powered by nukes our navy already is. Along with this peak oil I see a peak in population comming as well and a possible decline in the future. The US had already reached a stable population 20 years ago when they opened the gates and let in millions of imigrants to keep the governments magic money machine from siezing up. I'm sure the changes won't all be pretty or easy but they will come, the world has no choice.


benevolance

actually the USA has a severly declining population without immigration... Immigration is what keeps the population where it is now...It is not really booming with growth...it sort of has stabilized...But a big part of that is due to immigration...without which america would struggle to find enough workers to run this country as the baby boomers get old and stop working.

John Raabe

#21
I want to say that I really appreciate the fine thinking that has gone into this thread. Muldoon's writing has a clarity most economic pundits could only wish for. :o :D

I have just finished an article in the June 9th Fortune magazine which includes an interview with the hottest mutual fund manager since Peter Lynch, Ken Heebner. Heebner is a contrarian investor who has a great track record of being able to look around upcoming corners. He invested early in homebuilders when interest rates were low and credit was loose after the tech meltdown in early 2000. He rode these up until 2005 when he sensed the bubble could not expand indefinitely. He invested early in "stuff", energy, steel and fertilizer and all are up substantially.

Heebner thinks steel prices could double again and oil could blow past $200/barrel. He also thinks inflation will hit double digits within the next five years.

As Muldoon has pointed out, the US in recent years has squandered the "full faith" of the world. A faith that the dollar, and dollar denominated investments are the paragon of safety and the solid foundation of security.

It is good to remember that the economy works as a "faith-based initiative" and functions as a market square where people trade BELIEFS; beliefs translated into some concrete or contractual form. For the last eight years at least, complex debt derivatives have fascinated the market's customers and they have bought boatloads on faith alone. Now that that faith has proved to be misplaced, the shocked, and now poorer customers are uninterested in a new religion. They want to put their faith in real stuff - things they can touch, understand and know that they have - gold, steel, oil, a bag of rice and other commodities.

This hard-headed financial reality will be repricing most of the things we own, need and use over the next few years. It is probably a long-needed clearing of the system but it will result in a world of shared pain and unwelcome adjustments.
None of us are as smart as all of us.

glenn kangiser

We have only the best here on Countryplans, John.

That is why we are the number one rated commentary and political forum on the Internet. ::)

BTW I invented the internet -- Al helped. [crz]

In all seriousness, I really do appreciate the great group of people and off duty professionals we have here.  You people make this place great.
"Always work from the general to the specific." J. Raabe

Glenn's Underground Cabin  http://countryplans.com/smf/index.php?topic=151.0

Please put your area in your sig line so we can assist with location specific answers.

John Raabe

I totally agree Glenn! (not about the Internet part :-\)

Have you noticed what a great TEACHER PEG has become? As President Bush would say, "he's awesome!"
None of us are as smart as all of us.

considerations

Quote from: John Raabe on June 02, 2008, 11:46:16 AM
I totally agree Glenn! (not about the Internet part :-\)

Have you noticed what a great TEACHER PEG has become? As President Bush would say, "he's awesome!"

I've noticed...he has me to practice on.