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“We are in a degenerating vicious cycle. Economic events of Europe have demoralized our security prices. This has given rise to an unsettlement of public mind. There have been in
some localities foolish alarm over the stability of our credit structure and considerable withdrawals of currency. In consequence bankers in many other parts of the country in fear of the possibility of such
unreasoning demands of depositors have deemed it necessary to place their assets in such liquid form as to enable them to meet drains and runs. To do this they sell securities and restrict credit. The sale of
securities demoralizes their price and jeopardizes other banks. The restriction on credit has grown greatly in the past few weeks. There are a multitude of complaints of business men that they cannot secure the
usual credit to carry their operations on a normal basis and must discharge labor. There are complaints of manufacturers who use agricultural and other raw materials that they cannot secure credits beyond day to day
needs with which to lay in their customary seasonal supplies. The whole cumulative effect is today to decrease prices of commodities and securities and to spread the relations of the debtor and creditor.”
- Herbert Hoover, Oct 5, 1931 on the eve of the Great Depression
Hoover’s words sound eerily familiar, don’t they? It could have been Paulson or Bernanke testifying before congress last
month. But it’s a peculiar human trait to never quite see the full magnitude of reality. We always look at the world through a filter that holds some promise, or as Browning wrote: “Ah, but a man's reach should exceed his grasp, or what's a heaven for?” I suppose we need to do this to have any semblance of hope in life, but having hope should never be an excuse for living in denial, or failing to truly face the real situations before you. This is something one only learns with age and time, by having, holding, and losing something dearly loved. The effort is to see the world clearly for what it is, without denial, anger or regret, and yet still have hope.
The hard times on our doorstep now will present each of us with equally hard choices. The words spoken by Bush, and his maverick shadow McCain, about the economy being fundamentally strong while banks collapse on one another like floors of the World Trade Center, seem strangely out of touch. We are now living through one of the greatest financial collapses in history. US News and World Report wrote: “ ‘This is the big one—the biggest financial crisis since the Great Depression," says financial historian Niall Ferguson. ‘It is, in fact, unlikely that even $700 billion will suffice to contain this great credit crunch we're witnessing.” It was something I foresaw years ago as I stared at an insanely rising graph of housing prices in the US, paralleled by ballooning consumer and national debt curves. It was no act of prognostication to simply say that had to end, and that when it did end it would be cathartic and painful. The scenarios I feared have now cascaded to a critical mass, not only here in the US, but throughout the whole western financial system as well.
Americans are not aware of the grave crisis also threatening Europe. Fortis, a mega bank of the size of Citigroup was rescued, albeit unsuccessfully, then nationalized when the government realized how grave its situation was. The bank had assets exceeding the GNP of the Netherlands and Belgium combined, a venerable institution that financed the Louisiana purchase in our own history. Its failure dwarfed the nationalization of institutions like Northern Rock and Bradford & Bingly in the UK. Meanwhile, Ireland was forced to guarantee all deposits in its banks, followed by Germany on Oct 5 as another large Countrywide scale real estate firm, (Hypo Real Estate) collapsed there. Greece and Spain were desperately trying to rescue their banking systems. The Telegraph in the UK wrote this cheery assessment of the situation on Monday, Oct 6: “We face extreme danger. Unless there is immediate intervention on every front by all the major powers acting in concert, we risk a disintegration of global finance within days. Nobody will be spared, unless they own gold bars.”
Nobody will be spared... Not even remote Iceland, which was all but bankrupt with the fall of its great bank Glitnir. The tiny nation of just over 300,000 residents had a thriving banking
industry that was a haven for may depositors in Europe. The banks there now have assets that exceed the annual GDP of the entire nation! When Glitnir got into trouble, the problem quickly infected other banks.
Landsbanki and Kaupthing had a cool savings plan for thousands of depositors in the UK called an “icesave account.” Now the government has literally frozen the ice in an effort to protect domestic
depositors. British customers woke to this polite little bank robbery the morning of Oct 7 when they tried to log on to their accounts. “We apologize for any inconvenience this may cause our customers. We hope
to provide you with more information shortly.” Nothing like putting your money on ice, eh? How inconvenient. We’ll let you know how we lost your savings later. Kaupthing failed the next day, prompting
British Prime Minister Gordon Brown to threaten legal action to recover lost deposits.
With news like this, European markets were off 7% on Monday, Oct 6th in their worst single day drop ever recorded. The
CAC 40 was down nearly 9% and Russia’s faltering market, shut down three days last month, was closed again after a 19% fall, to be closed another three days. Here at home, US stocks continued their downward
death spiral, with the DOW falling through 400, 500 and then 800 points in the time it has taken me to write this article, slipping well under the 10,000 mark. Then the bottom feeders surged in the last hour of
trading, scooping up devalued stocks and limiting the loss to about 370 points. The game never ends. Wealth keeps getting squeezed out by fear and then soaked up by greed. The very next day the DOW fell another 508
points, a 5% loss in one session, then lost another 189 points the following day, and 678 more on Thursday, Oct 9 in spite of a world wide interest rate cut announced on Oct 8.
The S&P fell below 1000, a dramatic danger signal. The value of the Wilshire 5000 had lost $7.4 trillion--ten times the size of the “bailout bill.” The volatility
continues, but the trend is down. If the DOW were to have just 19 more days like this, it would reach zero before Halloween! The DOW ended the week off 5,747 points from it high just one year ago--a 40%
decline. I’ve been saying the stock market is a great place to lose money for years now, but folks prefer to listen to Cramer. Marketwatch.com heralded the hour with the headline “Global Stock
Free-Fall…Worldwide Wreckage.” The only bright news was the fall of oil below $90 a barrel for the first time this year.
September will be remembered as a black month in US financial history. All five of the big Wall Street investment banks were gone by month’s end, Bear Stearns, Lehman Bros, Merrill Lynch all gobbled by larger US banks of forced into bankruptcy, and JP Morgan/Stanley and Goldman Sachs converting to commercial banks so they can qualify for bailout money, (with no franchises to speak of). The World’s largest insurance company, AIG was rescued by Uncle Sam for $84 billion, then spent $61 billion of that money in just two weeks, including a half million gala event at a posh California resort, and had to ask for another $39 billion. Most of our housing industry was nationalized in the Fannie & Freddie takeover. The nation’s largest S&L (WaMu) collapsed and was bought out by Morgan Chase. Our fourth largest commercial bank (Wachovia) also collapsed, and Wells Fargo and Citigroup have been tussling with the carcass like a pair of ravenous jackals ever since. The failure of any one of these institutions would have been the story of the year on any normal year. But in this tumultuous year of 2008, the news comes tsunami style, one wave after another in an ever rising tide of adversity.
We are now down to four superbanks towering over the smoldering financial ruins, Bank Of America, Morgan Chase, Wells Fargo and CitiGroup. Of these Citi is perhaps in no better shape than some of the other institutions that have already failed. The air of crisis was palpable all month. After congress tossed the hot potato of a $700 billion bailout bill back and forth between the House and Senate, its passing sent the US markets tumbling on the fear that it would make no difference. Add to this the $25 billion bailout of the US auto industry, and the fact that auto dealerships are wilting on the vine. Even the Terminator is in Washington with a $7 billion dollar begging cup for California. Who can get financed? I’m amazed people can even check out library books without a credit check these days, but, as I also predicted, FICO scores are eroding all through the middle class and becoming irrelevant. You’ll have to pass certification for sainthood to get a bank to lend to you in this climate, or offer up your first born child as collateral.
Stunned into action, ministers of the G-7 met in emergency sessions over the weekend of Oct 10-11 and emerged announcing new coordinated government guarantees for interbank lending and
deposits. The problem, however, is that the teetering mountain of derivatives clogging up the system, a sum exceeding $600 trillion, is more money than all currency, gold, precious metals and assets
on planet earth. The only way any government can make good on such a guarantee in the event of a failure is to crank up the printing presses, which will eventually debase their currency. In effect, the vaunted dollar, euro, pound could soon go the way of currency in Zimbawe. To think that the “system” allowed banks to dream up $600 trillion in derivatives is mind boggling--a bunch of wealthy men playing their game and wreaking utter havoc. Isn’t capitalism wonderful?
A Second Great Depression?
 The Washington Post asked that question the day after the carnage on world markets, making comparisons between the crash of 1929 and our present crisis. They pointed out
that each crisis was preceded by a speculative spate of borrowing on credit—an enormous credit bubble that burst and came crashing down, taking stock equities to near
zero. We’re not quite there yet. Stocks lost nearly 90% of their value between 1929 and 1931. At present, we are a third of the way there, with a 40% fall from our market’s high
point. And while unemployment reached 15% in the Depression, (as we calculate it today) we are only half way there on that benchmark, nudging up against a 7% rate now. But bear in mind--it took two years for the markets to
wither away to their final low after the 1929 crash. The news we are being hit with has happened in just one month!
But there were other comparisons between the Great Depression and our present situation that
the Post failed to note. Back then, America was still very rural, with thousands of productive farms, fertile topsoil, and a population gifted with a lot of practical know-how and craftsmanship. Few
people had cars, and we still had a good rail system. Believe it or not, people had savings, and there were no credit cards in circulation. Oil was abundant, and dirt cheap, as little as ten cents a
barrel. We had a well established industrial and manufacturing base that would soon become “the arsenal of Democracy” as WWII approached. We were a generation of people tough enough, and
resilient enough, to weather the storm, then win WWII against two enormously powerful opponents in just four years.
Now we mostly inhabit large sprawling cities and have service sector jobs, or vaporware jobs where people push pixels instead of drill presses. They have one or two cars and must drive to
survive, needing expensive gasoline on a regular basis. We have no rail system worth mentioning. Our savings rate is decidedly negative. Our oil is mostly gone, costs a thousand times more than
it did in 1929, and we must import 65% of our energy needs at tremendous cost. We have no manufacturing base to speak of, as all of that has been shipped overseas to Asia and Latin
America. Our farms have consolidated to a smaller number of mega growers, and the old “family farm” so many people retreated to in the Great Depression, is largely gone. Our armed forces are
enormously expensive to maintain, and have been unable to subdue two third rate countries like Iraq and Afghanistan after five years. We haven’t a tenth of the grit and will that previous generation
showed us between 1929 and 1945. In short, the cards in our present hand are much worse than those held by the generation that survived the Great Depression. Perhaps this is why there is such
a rising climate of fear now—people realize, deep down, that they are really not prepared to face hard times. Here’s a sample of what I mean.
Rumors and Fear
All across the Western world people with money are in a state of near panic. The rich were buying bullion, pulling money from their money market accounts and hedge funds. Nouriel Rabini
described a silent run on the entire banking system, even down to the retail level where nervous people were pulling out cash to ward off any potential emergency. The price of gold surged $35 an
ounce higher on Oct 6.
The Internet has been rife with rumors for months now about a secret meeting that was
supposedly held in March for select members of congress. The blog “Deprogram” summarized the subsequent media leaks about the meeting as follows:
“The imminent collapse of the U.S. Economy to occur sometime in late 2008
The imminent collapse of the U.S. Government finances sometime in mid 2009
The possibility of Civil War inside the United States as a result of the collapse
The advance round-ups of “insurgent U.S. Citizens” likely to move against the government
The detention of those rounded up at The REX 84 Camps constructed throughout the United States
The possibility of public retaliation against members of Congress for the collapses
Safe facilities for members of Congress and their families to reside during massive civil unrest
The unavoidable merger of The U.S. with Canada and Mexico establishing The North American Union
The issuance of a new currency called the AMERO for all three nations as an economic solution.”
Ah yes, the old end of America scenario has been kicked around the blogs for years now. More recent Internet rumors continue to spread like wildfire. One stated that BofA received a large
shipment of signs for its retail branches apologizing for being closed during a government mandated bank holiday that was supposed to be imminent. Others stated that BofA was going to
shut down the credit card accounts of all users with a FICO under 750. (Fat chance. Credit card interest is the most lucrative profit center remaining in banks. A move like that would only lead to
massive defaults as pissed off creditors simply stop paying.) Other fringe site rumors spoke of elite Chinese police secretly arriving on US shores to begin forced eviction of delinquent
homeowners and recoup some of the losses they’ve sustained after being sold over $800 billion in bogus US housing securities. (I got a good laugh out of that one.) Still others whispered the US
had to kow tow to China and has secretly shipped the Chinese $800 billion in this new currency to be called the “Amero,” in partial payment of our enormous debt to Beijing. The climate of fear was
spreading like a contagion.
These rumors aside, banks continued to hoard their good old fashioned dollars, and found
overnight and short term interest rates skyrocketing to unheard of levels. The UK Times on-line reported: “Data from the US central bank shows how much financial institutions are relying on the
Fed in its role as lender of last resort as short-term funding becomes almost impossible to find elsewhere. Banks' discount window borrowings averaged $367.80 billion per day in the week ended
October 1, nearly double the previous record daily average of $187.75 billion last week.” A JP Morgan economist was quoted as saying: “Each time it gets more and more stunning. You're just
seeing huge increases across the board. It tells you that the paralysis is massive.”
While the stock market collapse has not been as severe as in 1929, we are seeing the same
conditions in the world financial system that led to the Great Depression—deflation as the credit markets completely freeze. I have argued that all this is voluntary behavior, but the sad fact is that
there is a median line between greed above and fear below where investment is concerned. We are now well south of that line. What we are seeing is the very “best and brightest” of the upper
class, the bankers, investors, brokers, wheeler dealers and finance tycoons, all beset with the panic of fear. It’s shocking. All their various and nefarious dealings are, after all, nothing more than
gentlemen’s agreements with one another. A thing is worth only what other men agree it is worth. That goes for commodities, real assets like a house or car, a share of stock, a dollar, or even their
precious gold. Now all these civilized, sophisticated wealthy folks no longer trust one another, and in this climate of uncertainty, suspicion and fear, their agreements are all breaking down. Some
have so much money that they couldn’t find a way to spend it in their remaining lifetime. Yet they still scramble like common curs to salvage their portfolios. Thank God I’m too poor to have to
worry about it, but “the rain falleth on the rich and poor alike.” The woes of Wall Street will soon
set off another storm front of rising unemployment, small business failures and all the civil stress that will give rise to. It will take us one more step toward those Depression era numbers quoted earlier.
Whether this will eventually lead to the collapse of the US government, or civil insurgency in the US is unlikely. But one thing is certain, hard times such as Americans have not seen in
generations are now upon us. They arrived in Maine this a while back when the heating oil fuel vendors offered their contracts to customers for winter heating oil--they were twice as high as they
were last year. Shoshana Zuboff of Business Week wrote: “A new quality of dread settled over the place like soot, as people weighed their options. Heat or food? Gas or electricity? Medicine or
mortgage payments? What to give up? What to cut back? The conversations were everywhere. In the supermarket, I heard one man tell another: ‘When I was a kid, you woke up, went into the
bathroom, and broke up the ice in the toilet. Now my kids will have to do the same. America is moving backward.”
The 2nd presidential debate, in a town hall forum, had a moment where the candidates were asked what sacrifices they would ask of the American people. Neither used the question to make a
rallying cry that we now so desperately need. People sense danger. They feel the pressure on their overstrained budgets, but so far the worst has not yet come. There are no soup lines, bread
lines, massive bank runs at this point, but things will get much worse before they get better. Unemployment could quickly double from its present rate, and we could see lines of hungry
people as in the photo leading this article. A few months ago I wrote that our lives were quickly going to become about three things: Food, Fuel and Freedom. Another Maine resident quoted in
that Business Week article said it in a way that many families now understand: “We have to choose between heat, gas, food, and medicine. Most of us have never lived through a time like this
, where we can't afford the basics of a decent life. It's hard to believe that this is America.”
And that will be the great shock that many will have the hardest time dealing with. We have been
insulated from some of the most fundamental challenges that have faced all previous generations, things much of the world’s population still struggle with each day. We have had access to a
seemingly endless stream of credit, in a society that has thrived by producing a vast array of largely trivial products that move quickly from the factory to the Christmas tree to the landfill. That
America is ending, and thank God. The new America will not be able to shield us from the basic challenges of survival with easy money on easy terms. Now we have to work, and sacrifice and
save and make do, just like every generation before us.
When I made my January predictions last year I said that 2008 would be the year that finally
dispelled the illusion that we can continue living as a society of credit drugged consumers. The dream is over. It’s now all but certain that we will experience a severe downturn, perhaps a second
Great Depression. People who have been reading my articles about all this have written to me asking what they should do now for their families. All I can say is be prudent, take reasonable
precautions, but do not panic. I’ll repeat my advice about the change you must first undergo within before you think about changing the way you live without. It can be summed up in a few quick
phrases. 1) Wake up, 2) Pay attention, 3) Scale down, and 4) stand ready to help those you love, and those in need. Here’s the long version:
Solutions For Hard Times
Readers sometimes comment: “I hear your message, see the truth of what’s been happening and
what’s coming, but what can I do? How to I avoid despair and find a way forward?” That’s the dilemma that so many people face, particularly those more keenly aware and informed on the true
nature of the world. Do we just keep reading “life after the oil crash” posts and fall into a funk? No, you don’t have to succumb to despair, but you do have to realize your life is about to change
forever, and to survive it with any sense of happiness, you must change yourself first. This change will involve heads, hearts, hands and feet all across this nation. Let me explain.
The first step, and the purpose of many of my articles, is to shine the light of truth in the dark corners out there, and expose the wrongdoing that has led us to the place we are now. If good
men do not oppose bad men, and with all the eloquence and volume they can muster, then there is truly no hope. This is changing heads. Waking up to what is happening and getting informed is
changing your own head. Sharing what you have learned helps to change other heads, one at a time. We can’t fix something if we don’t know what the problem is. There is simply no excuse for
hiding yourself away in a sitcom as a way of avoiding the emotional work you must do to face what is happening and prepare yourself for the days ahead. Wake up! Get informed. If you are
ready and able to deal with reality, then move on to job two: help others who are struggling with denial and delusion to get some clarity.
Calling something what it is, recognizing wrongdoing and opposing it, is not being “negative.” It the application of good energy in opposition to evil. But take care to balance the ire of your sword with
the olive branch of rapprochement, and find a way toward a solution after the problem is exposed and understood. What we have been seeing on Wall Street is the exposure of years of greed,
corruption and fraud, much of it with government sanction. Time to change that—change the system. Perhaps we can begin in just a few weeks by throwing out the old power brokers in
congress and the White House and starting with all new people.
That said, how do we take action in the world around us now that is valid, productive, and
meaningful in contributing to the changes we must all now make? To do this you must first be ready to change hearts as well as heads, starting with your own. Gather your inner strength.
Prepare yourself, both psychologically and physically for what is to come. And be compassionate when others around you falter and fail. Use the skills you have to help others find their way forward
. Then join hands in a common effort with other like minded souls. How do you find them?
As one informed blogger wrote, you will meet three kinds of people when you talk about this:
“some friends instantly understood.... Others were willing to be supportive, but had no intention of doing anything differently themselves. Still others refused to even discuss the issue with me.”
People are going to be all over the spectrum in their understanding of what is happening now, and reactions will be equally diverse. In the end each of us will face a choice about survival—do we
fight one another for what is left after the collapse, or do we join one another in a great cooperative effort? The choice is ours.
In my article Perfect Storm when I first predicted these events in 2005 I wrote: “The new growth will
begin, on one street after another. Then we will see if we really are Americans after all—people who hold certain truths to be self evident. We will have two choices: the first is to fight one another
for the limited resources that will be available over the next several decades; the second is to join one another and take care of one another to build something up here again that is equitable, fair and free.”
To begin that cooperation, find the people who “get it” and hang with them. As for those who can’t
or won’t hear the message, remain patient. This isn’t evangelism. There are a thousand different pathways to the truth. Each person will confront the changing times in their own way, at their own
pace. There’s a lot of bad news out there now. Some have a cup too full to take that in. Just put your truth out there, and be helpful. They may be too invested in their own situation and life
circumstances to change just now, but at least they understand what they see another do, on some fundamental level. Find those who are supportive, and make an example of your own life by
“walking your talk.” Handsome is as handsome does. The changes will involve a dramatic scaling back of your life style to a more sustainable level, and you must be willing to make sacrifices. The
days of owning two houses stuffed with appliances and three or four cars are over now.
So scale back and simplify your life. This means you have to take a hard look at where and how
you live. So many have bought in to suburbia, owning a ranch style home 20 miles from where they work, in a multi-car family that relies on those autos a great deal. If you have an initiative for
public transport going in your community, support it. If you don’t—start one! Whether we like it or not, and in spite of the auto industry $25 billion loan, we are going to become a society that is
less and less car-centric.
Scaling back begins, however, on a more personal level, by understanding your expenses now,
and distinguishing between necessities and desires. Think “need” and not “want.” Then ruthlessly
analyze your personal spending by looking at everything you have spent money on the last couple of months.
Did you really need the things you bought? How did you pay for them, from earned income,
through a bank loan, with revolving credit cards? Realize that if you have to ask a bank or credit card company to front you money to buy something, you probably can’t really afford it. Besides,
the banks will not be lending to most people in any case. The days of easy finance and credit spending are over for the foreseeable future. Scale back and be prepared to live a more cash
-centric life. Live within your means, using money you earn, not money you borrow on a credit card, and build savings. Cash will be king in the days ahead.
It can be done. I recently lived in Greensboro, NC, a sprawling town of 330,000 people with a climate so humid in the summers and cold in the winters that most folks were housebound with
either the AC or the heater running non stop for 8 months out of the year. The neighborhoods were lovely, but to do anything or go anywhere you needed to have a car. Even the thriving farmer’s
market was a 30 minute drive away. The rank and file would mostly drive to massive grocery stores instead, that are all too characteristic of they way our food is distributed now. The chain
there was called “Harris Teeter,” and one store in particular was so large and lavish it was dubbed
the “Taj McTeeter.” I remember walking down endless aisles looking for catsup, taking an hour or more to ferret out the things I needed under the massively neon lit ceiling.
Living Differently
But there were some there who lived differently. One Saturday, while I was toiling in the heat and
humidity to try and mow the front lawn, it brought a smile to my face to look down the street and see a couple of friends, Sheldon and Michelle, tooling merrily along on three wheeled reclining
bikes. Sheldon was a typical example of someone who had figured all this out a long time ago. He always had a pleasant, happy smile on his face, eyes alight beneath wild hair—a veritable hippy
that refused to become a yuppie. He and his life companion Michelle seemed to have a wonderfully simple life, even to the point of shunning air conditioning in a climate that would see
endless days of 90+ degree temperatures with equal humidity. They slept in an outdoor screened porch on hot nights—No AC. They also abandoned their cars, relying on their bicycles to get most
anywhere they needed. And their greatest strength was each other. When they came to parties or group events, they seemed joined at the hip, one never more than a few feet from the other.
Sheldon would even shun chairs, preferring to plop himself down on any patch of vacant floor space to converse with anyone at hand.
There was a small group of intelligent, caring people there in Greensboro, really remarkable people in fact. An amiable fellow named Jahan was the center of the social wheel in many respects, and
a man who’s head and heart were both well ready for anything the world could throw his way. He recently laid to rest dear old Hank, the 93 year old elder statesman of the group, a man who had a
quiet sophistication and hilarious style about him that everyone loved. The point is, Jahan took care of Hank like he was his father, for years. His open generosity, amazing wit and social grace
were a fountain to everyone around him. This is community that truly cares--loving your neighbor as you would love yourself.
Another “instigator” of sorts was a woman named Sue, a mover and doer when it came to social
organizing, women’s issues, alternative ways of thinking, living and making things happen. Sue
was the organizer of the town’s “Solstice” event, a gala celebration of life that featured, among other things, a raft of alternative healers, jugglers, magicians, musicians, and women dressed up
as fairies giving free neck and shoulder massages—yup, in Greensboro, North Carolina! I lived with one of the fairy godmothers there, a woman with an enormous loving heart, nurse, healer,
channeler of knowledge in all things medical, who would do anything for her friends. Others in this amazing circle were experts in alternative healing, like Lorraine, who had just obtained her PhD in
some arcane art of physical therapy, or the quiet, golden hearted Betsy, a specialist in Trager therapy. I never forgot how she quietly held my hand across the table on the first night I met her
there, welcoming me to this circle of amazing people that I was privileged to meet that year. As I came to know them all a bit, I knew that this was a group that would come together and support
one another come thick or thin. They were all liberal minded, active, and very loving people, a magical group of hippies, healers, rogue spirits and Baba lovers right in the heart of cornbread,
pulled pork, NASCAR and the Harris Teeter South!
This then, becomes the key to surviving, and even thriving, in the hard times ahead—other people.
If you have someone in your life who you know you can count on, someone who you know will stand with you against any wind, under any circumstance, then hold fast to that great life blessing
now, for you will need them dearly in the days ahead—and they will need you. Again, Browning said it best: “Grow old along with me! The best is yet to be, the last of life, for which the first was
made. Our times are in his hand who saith, 'A whole I planned, youth shows but half; Trust God: See all, nor be afraid!” This was something I saw in Sheldon and Michelle. You just knew they
would find a way forward, reclining bikes and all, without the slightest worry over what was happening on Wall Street. But if you don’t have someone close like that, then find a community
like the one I describe above, for it is by joining others that you will survive, not by isolating yourself in a rural fortress with a stockpile of shotgun shells and freeze dried food.
Some towns in America can provide the prospect of this community better than others, being small enough to remain sane while large enough to provide most essential services. To my mind,
a town of no more than 30,000 is a good place to start, and I found such a place, recently relocating to Pacific Grove, CA, a small community barely a tenth the size of Greensboro. My
home is right in the middle of town, but then again, this place is small enough that most residences are within a mile of town center. The main shopping/restaurant district is just blocks
away from where I live, and I also get treated to a wonderful view of Monterey Bay and one of the most beautiful coastlines in the world. The windows remain open here day and night, with no heat
or AC required in a climate that is benign and remarkably temperate. I can walk to anything I need within minutes—no car required. The market I shop in now is a small local grocery store with just
five short aisles, and not having a million things to choose from as in the “Taj McTeeter” back east,
I have found my food bill is much lower here. There is also a farmer’s market in the town center
every week, just a few blocks away. So I guess I can say now that I definitely “walk my talk.” Find
a way of living like this, if you can—a smaller, safer, saner community. The larger big cities will be very hard hit in the months and years ahead. But if you live in a larger town, you can still plug into
a smaller community, a town within a town, as in the Greensboro group I described above.
The quote from Herbert Hoover that I opened this article with has a kind of haunting echo to it, yes
? If things follow now and they played out then, we can expect a decade long period of severe recession or depression. Are you ready? In the article Perfect Storm I tried to describe some of
the changes we must all now face, and I’ll repeat that portion of the article again here.
How will things change for us here when the recession becomes a depression? After the initial
shock of it all, when you find yourself just throwing away your credit card bills and fighting the lines at the market; after the shelves begin to empty, and you lay in a stock of whatever you can
get your hands on, you will suddenly realize that this will not be a weekend event. The “hard times” will go on for years, not weeks. It took Russia a decade to climb out of the hole when that
system collapsed, and today they have a GNP about the size of Denmark. Here in America, people will have to adapt. They will start trading things of value with one another as currency
inflates and becomes meaningless, and here Dimitri Orlov, a man who lived through the Soviet collapse, has a useful tip for us, and for the people who are busy gouging us now for quick cash profits: “When faced with a collapsing economy, one should stop thinking of wealth in terms of
money. Access to actual physical resources and assets, as well as intangibles such as connections and relationships, quickly becomes much more valuable than mere cash.”
 A new underground
bartering economy will develop, and you may be surprised at the sudden shift in what you now perceive as “valuable.” Dollars may lose their value, but services and material things won’t. We
may soon see more companies brokering an exchange of services and things, with no money involved, as in the graphic example here of “The Barter Company.”
The Greensboro group all traded their unique alternative healing arts with one another, to the
benefit of all. Do you have a skill you could trade for needed things? The trinkets and decorative trim that floods our society, the meaningless drivel on TV, the endless plastic baubles, will
become utterly worthless in the years ahead—as it always has been. People like Paris Hilton will no longer be chased by paparazzi photographers and featured on Pop TV. Who will care?
Celebrity, as a cult religion in this country, will vanish, and all the glitter and glamour of Hollywood along with it. Sorry… no more summer blockbusters at $9 a seat, and a DVD sale at $19.95 three
months later. That $30 bucks will be needed elsewhere.
Commodities that you cannot eat or use for an energy source won’t be worth much either—and
that even goes for gold. Like any commodity, gold will only be worth what people say it is worth. It has little intrinsic value in the world the prophets see ahead. When a man thinks a loaf of fresh
baked bread is worth more, what good is gold? And for the rich who think that hoarding gold and diamonds against a better day is the way to go…How old are you? You think you will live forever?
This collapse will take a long, long time to resolve itself, because each year will take it deeper into the energy depletion that catalyzed it. The rich old man may not live to ever spend his money in
“better times.”
What will be valuable in the new world ahead for us? First off, people. Your immediate family and
friends will be central in your life. Friends who love you, and will look out for you and take care of you will mean everything. As Jim Kunstler points out, life will get very local. The routine business
flights from LA to New York will be over. Coal fired trains will be the new long distance transportation system again—if we can keep them on the tracks. Life will get very local, and
therefore the people around you will matter very much. Small groups, families, streets, neighborhoods, may begin to band together to inventory assets and set up cooperatives where
they share much needed things with one another and provide mutual support and protection.
Much needed things? If you own a home, with any exterior yard safe for growing food, you have
a real asset you definitely want to hold on to. (By own I mean exactly that. If you have a mortgage the bank owns your home, and you just pay them a monthly rental until its all paid off.) If you own
it outright, by all means keep that house. You will always have a safe place to live. How about a home garden that grows vegetables instead of flowers? Anything you can eat will be valuable, and
if you can grow it you don’t have to buy or trade for it. If you don’t own a house, renting will likely
get cheaper as the years unfold. It’s already much cheaper to rent than to buy. Forget buying a home for the foreseeable future. Housing values and prices still have a long way to fall. Rent a
place in a small town with a benign climate where you won’t have high heating or cooling costs year round, and a place near a good water source.
As for things...Good tools will be valuable. Good wine will be hoarded, and beer and liquor, as it
was in Russia where vodka became a kind of new currency in the barter economy. Clean water will matter a lot, as disease will follow dirty, unpalatable water in little time at all. Beyond that,
things like a generator that might provide you power would be good to have…if you can find the fuel. Medicine will be valuable, so the pharmaceutical companies need not worry. Likewise, certain
skills will be valuable, and people will start trading a needed skill for a commodity. Medical caretakers, nurses, EMTs, will be the new guardian angels of local neighborhoods. The strength
and vigor of youth will matter a great deal. Shoveling snow, chopping wood, tilling a field, takes physical energy, and the young will have a real advantage there. Recycling, now a politically
correct yuppie fad, will become an essential habit. Conservation will be the order of the day, not consumption.
To illustrate just how out of touch, distracted and oblivious most Americans still are about all this,
here is a list of the top searches conducted via Yahoo on the day the world market headlines announced startling losses:
1. Halle Berry
2. Jessica Biel
3. Jennifer Lopez
4. Paris Bennett
5. Halloween Costumes
6. Lance Bass
7. New Cell Phones
8. Dow Jones
9. Chicken Salad Recipes
10. Cold Medicine
Amazing! Clueless people lost in a world of celebrity fascination, holiday prep, and cell phones..
.though a few managed to take a peek at the Dow in #8 above, then quickly retreated to their Chicken Salad and Cold Medicine. In the world that is coming, real information will be valuable, not
the stupid headline news about celebrities we see on the TV today, but information about where you can find good kindling, charcoal, firewood, food, wine, antibiotics and other services for trade
and barter. A good sleeping bag could come in very handy, and a rain proof tent—just in case. Batteries and a good shortwave radio would be good to have on hand. Better yet is something that
runs by itself, with no need for a power source, like those nifty flashlights that run when you just shake up the little generator inside them. Photovoltaics will be most desirable, or a nifty windmill
that can harness wind power. The alternative solutions to petroleum as a means of power generation will suddenly be very significant, not the under funded, largely neglected fields they are
today. People with SUVs—too bad. The guy with the Toyota Prius will still be able to drive for a while. Buy these energy saving things now. Forget that new plasma TV and a hundred dollar bill
for 200 useless digital channels in HDTV.
The change of life that is coming to America will make us re-think our lives as never before. It will
no longer be a life of getting, watching and doing what we want. It will not be about climbing the corporate ladder, trading stocks, shopping at the malls. It will be about feeding grandma, staying
clean and healthy, finding fresh food and fuel, purifying water, disposing of waste adequately, getting medicine for the sick—in short, this artificial life style we have enjoyed since the last
depression, will scale back dramatically, and we will live like the billions of other people on this planet who have suffered this way, who suffer this way even now, while we have ignored them all
these years. But we’ll survive by empathizing a new way of life based on community, conservation, commodities and connections. Start now.
Heads, Hearts, Hands and Feet
We all have anxieties about what the future holds, the economy, the state of the environment. It is
said that a “recession” is when someone else loses their job, or home, but a “depression” is when
it happens to you! Help others and begin building a network of like minded souls who can support one another in tougher times. Join hands! This is essential.
Seeing the truth in your head is already an initial movement. Helping others get there is compassionate involvement in the troubles of the world, an actualized heart. Joining hands with
others builds momentum and the energy of positive change. Then actually making these changes is a kind of movement with your feet, changing your old way of living into something new.
To help ease anxiety, and take practical action that could help you better manage your own life now, here’s a wonderful link outlining 26 things you can do right now. Another interesting post by
Charles Hugh Smith recently focused on the cult like “doomer” thing of isolating yourself with supplies in some rural hideaway. Smith argued, and a I agree completely with him, that you would
be far better off in community than you would on your own. It won’t be how well you are supplied and sheltered in the days ahead, but how well you are connected to others.
OK...you have some practical advice that seems to make sense. Now what. DO IT! Then each day give thanks for all the good things you have, and do something to focus on that good.
The world is changing, not ending. Get yourself centered each day with a visit to a place like www.gratefulness.org and not just your normal blog reads. Find others: www.weareone.org , a web site I built for a wonderful client who is so very active in the world of doing good.
Or how about this:
http://www.worldchanging.com
I have come to add stops like this to my normal daily Internet reading cycle. They give me balance
and stimulate hope, and I think, in my own crusade, I am well on my way to making the life transition, psychologically, physically and in my living situation.
Oh, I’ll keep reading my blogs, and shouting from my Internet soapbox here every month, but in very real terms I am moving on to face the changes ahead, and doing all the things I put forward
here as friendly “advice.”
Together, groups of enlightened “doers” will be the ones who survive and change this world. Let’s
get moving, with our voices, our votes, our heads, hearts, hands and feet. You come too.
Article by: John Schettler, October, 2008
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