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Life After the Oil Crash
Deal With Reality or Reality Will Deal With You
Editor's Note: about 15% of LATOCers live in California, I'm guessing many of them make use of the state parks on a regular basis. (I make use of Annadel here in Santa Rosa almost weekly). As stunning as this sounds, our esteemed governator really is proposing to close nearlly all (220/279) of our state parks.
My guess is if it was to happen, the state would just put up "no tresspassing" signs that would not be enforced as they probably wouldn't even have the money to enforce them. This would mean homeless encampments and pot farmers will move in and trash everything unless some sort of citizen policing is organized. If anybody out there has heard anything or is privy to info by all means feel free to send it my way. Whatever you send will be kept confidential.
With drastic cuts on the horizon, residents uneasily await the state of things to come. Since Tuesday, when Californians shrugged off Gov. ArnoldSchwarzenegger's warning of "fiscal Armageddon" and voted down apackage of budget-balancing ballot measures, everybody has wonderedwhat the worst part of Armageddon will be. Fire station closures? Prisonerreleases? Education funding cuts? Health care cuts? Messy public parks? The Golden State is almost bust, but its inhabitants, even if they believe it,do not want to know and they certainly do not want to pay for it. Thestate has been running huge budget deficits for years; the till in the statecapital, is now empty and the last-ditcc attempt by Gov. Schwarzenggerto balance the books with a series of tax increases and budgetary shuffleswas roundly rejected by voters in referendums a week ago. With a $21billion deficit and the lowest credit rating of any state, the choices are fewand grim. California cannot hope to borrow such large sums, except atextortionate rates, which leaves the option of massive cuts in publicspending. California could run out of cash in a few months. Schwarzeneggerhas warned that 5,000 state employees face being fired. The educationbudget is in line for a $5 billion cut, alongside the end of funding for parks.Chicago's skyline may be glorious, but the city’s big shoulders are slumped.In November the city passed a budget to close a $469m shortfall. But inthe first four months of 2009 a gap opened again, of $96m. By the end ofthe year, the city expects it to be about $300m. A recent report by thePhiladelphia Research Initiative, an arm of the Pew Charitable Trust, looksat how 13 cities are dealing with budget problems. All but one have deficits,thanks to the fall in property taxes, a dramatic drop in consumer spending,high unemployment and the subsequent decrease in income tax revenues. Even as the nation's economy is showing some tentative signs of bottomingout, another calamity looms: the public pension bomb. For years, stateshave shortchanged the retirement programs that cover teachers, police,and other public employees; now the stock market plunge has wiped outbillions of dollars from already underfunded plans. California, New York andIlinois are among the states scrambling to plug multibillion-dollar holes intheir pension systems. The growing obligations raise the specter of highertaxes, diminished services, or another round of costly federal bailouts. Rising unemployment levels helped push record numbers of homeownersinto delinquency or foreclosure during the first quarter, according toindustry data released yesterday. About 12.07 percent of mortgage loanswere delinquent or in the foreclosure process during the first quarter . . .Fitch Ratings looked at mortgages bundled into securities between 2005and 2007 and managed by some 30 mortgage companies. Fitch found thata conservative projection was that between 65% and 75% of modifiedsubprime loans will fall delinquent by 60 days or more within 12 months ofhaving been modified to keep the borrowers in their homes. This is an evenworse result than previous reports released by federal regulators . . .To get the mortgage debt-to-GDP ratio down to a more normal level suchas the 46% average of the 1990s, Americans would have to cut theirmortgage debt to $6.6 trillion from $10.5 trillion at the end of 2008. The last time the national mortgage debt count was below $7 trillion was 2003.We might call this mortgage overhang the $4 trillion elephant in the roomfor policymakers, who have spent the last year injecting liquidity into theeconomy - which will do little to solve the problem of too much debt. There was a time, not very long ago, when getting a job on the productionline at a big automaker meant an instant ticket to the American dream,even for someone with little formal education. Not anymore. "The minuteyou signed the paper, you were instantly vaulted into the middle class,"said Mike Smith, director of Wayne State University's Walter P. ReutherLibrary in Detroit, named for the founder of the United Auto Workers . . .If the company files a Chapter 11 petition by Monday, as many believe,dozens of small businesses that supply GM with parts and raw materials arefacing likely bankruptcy as well, with no prospect of government bailouts.Independent suppliers manufacture 70 percent of the 15,000 parts --including seats, engine blocks, electronics, and bumpers -- that go into asingle automobile. Collectively, they make up a $388 billion industry thataccounts for more than 600,000 of the 2 million American jobs tied to theauto industry. Of those, the overwhelming majority are small businesseswith an average of 80 to 100 employees, according to industry experts. General Motors parts suppliers, battered by losses from slumping vehicleproduction, face new threats to their survival as the automaker preparesto idle factories in bankruptcy. American Axle & Manufacturing Holdings Inc.and Shiloh Industries Inc. are among the companies whose sales will shrinkwhen their biggest customer shuts plants for as long as nine weeks . . .Not all bankruptcies are efficient, short, and sweet. When the proceedingsare contentious, or if there's a lot of financial and industrial spaghetti to beuntangled, the proceedings can go on for many months, even years, inwhich case the system grows somewhat less efficient. The creditors anddebtors are joined by a third set of wily players — the suits, lawyers,accountants, and financing wizards required to fix, defend, wind down, andrestructure a failed company. Most of these people bill by the hour. Thebankruptcy of Enron, for instance, generated fees of about $750 million.. . . then there is the $30 billion that the government apparently is planningto pour into GM so that it won't just limp along but will become a vibrant,revitalized producer. We are becoming accustomed to thinking of anythingless than a trillion dollars as small change. But as the government's loans,investments, and guaranties mount into the stratosphere, the danger ofthe "depression aftershock" deserves critical scrutiny. We should beconcerned lest GM become an economic Vietnam, where the governmentthrows good money after bad, year after year, in a vain quest for victory.Everything from the housing market to credit card defaults to retail saleshinges on the ability of Americans to find jobs. As much as we hear aboutgreen shoots, the jobs market just keeps getting worse. As today's chartfrom Whitney Tilson's Mortgage Meltdown shows, the severity of the jobscollapse blows away what we've seen in recessions of the past 40 years.The U.S. economy shrank at an annual pace of 5.7% in the first quarter, aless severe drop than initially reported but still the second-biggest declinein 27 years, the government said Friday. Economists expect a drop in grossdomestic product this quarter also, although not as sharp as last quarter.Surface transportation trade among the United States, Canada and Mexicofell 27.9% in March from a year earlier, the third consecutive month ofdecline over 27%, the Department of Transportation said Thursday. Truckimports to the United States dropped 21.5%, while exports fell 18.9%. Railimports plummeted 42.8% while exports fell 35.9% DOT said. Pipelineimports fell 56.3% while exports declined 57%. U.S.-Canada trade fell 34%.Imports have plunged 27% since last March, and the continuing declinessuggest that businesses are still trying to reduce their inventories to matchlower levels of consumer spending. Consumer spending has fluctuated thisyear, and economists are uncertain about how American consumers willbehave as unemployment rises and the country struggles to start growingagain. Although consumer spending is no longer falling as quickly as it did ast year, Americans are saving more and may act more conservatively asthey worry about losing their jobs or a return to $4-a-gallon gasoline.In 1998 the firm developed a new notoriety for being the first hedge fundto nearly blow the entire financial system sky motherfucking high. Scholeswas not a day-to-day trader for LTCM, but he brought acadenuc cred tothe table. Scholes believed that if equations can predict to perfection themovements of photons or traffic, then equations should also be able topredict the actions of markets and the people who move money in and outof them. But his equations failed when panic hit. The combination of theAsian economic crisis and the Russian debt default produced a hurricane ofpanic and fear, and the model took no account those emotions . . .___________________________________________________________________
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Preparation and Relocalization:
. . . this is not an academic question. We are seeing a truly frighteningfinancial collapse — partly resulting from high oil prices — unfolding beforeus. The world has changed very significantly in the past few months, somuch so that the shift is difficult to overstate, even though its directionand implications are still revealing themselves. Obviously, what Transition and PCI have been advocating (community gardens, local currencies, etc.)are in fact at least partial solutions to these very problems, but so far wehave discussed them in terms of proactive efforts to keep the problemsfrom happening, or to build a better world in the future. Should the growingpresence of these problems affect how our solutions are described (to thepublic, to policymakers, among ourselves) and how they are implemented? Now that Spain’s real estate bust is fueling rampant unemployment, thisCommunist enclave, surrounded by sloping olive groves, is thumbing itsnose at its countrymen’s capitalist folly. Attracted by its municipal housingprogram and bustling farming cooperative, people from neighboring villagesand beyond have come here seeking jobs or homes, villagers and officialssay. While the rest of Spain gorged on cheap credit to buy overpricedhouses, the people of Marinaleda were building their own, mortgage-free,under a municipal program. If a resident loses a job, the coop hires him, sonobody wants for work — a bold claim in a region with 21% unemployment.Emergency supply retailers and military surplus stores nationwide haveseen business boom in the past few months as more Americans spooked bythe economy rush to stock up on gear that was once the domain of hard-core survivalists. These people snapping up everything from purificationtablets to thermal blankets shatter the survivalist stereotype: They aremostly urban professionals with mortgages, SUVs, and solid jobs . . .Ben Franklin said, "A penny saved is a penny earned." Quite obviously, Bendidn't have to deal with income taxes. Today, a penny saved, assuming youfall in the 28 percent tax bracket, is more like 1.3 pennies earned. Whyspend more than you need to? With a recession here, here's how to chopyour expenses on home, auto, entertainment, travel and healthcare costs.___________________________________________________________________
Best of the LATOC Archives:
This society still has plenty to offer to a young person, provided that theyoung person is clever enough to know how to take advantage of it. All ofthis advice falls into the category of "If everyone did this, society would fallapart." Clearly, this advice is for people like Steve, and does not apply tosocieties, empires, or civilizations. It has been thoroughly tested right herein the U.S., and has a track record of successfully dodging society's bestefforts at enslavement. First of all, it is probably a bad idea to go straightto college. It is best to avoid getting sucked into that pipeline, which startsaround the middle of senior year and ends with post-graduate indenturedservitude of one sort or another. Apply to a couple of schools, strictly proforma, to avoid suspicion. Having a high school diploma is important; thegrades and test scores are somewhat important. Demonstrated excellenceat one or two things is more valuable than a good average. Most importantis learning the differences between talents, interests, and expectations.At Black Mountain, North Carolina, there is a developing ecovillage known asEarthaven that exemplifies Catherine Austin Fitts’ Solari economic model toa tee, though the community has never consciously worked directly from it. It is usually assumed that an intentional community such as this is acommune, but that is not so in the case of Earthaven. Instead, what I willcall a "natural-capitalist" model has been embraced where investment inthe community is encouraged through equity. One community member hascalled this "capitalism with a heart." Within this community, two individualshave taken the initiative to fast-forward Earthaven’s planning for the PostPeak world by implementing an amazingly ambitious business plan with abioregional focus. Chris Farmer and Brian Love have raised $93,000 in loansfrom Earthaven members for their business. After spending over five hourswith these men, I can tell you this is where the smart money is . . .Lawmakers have agreed that the financial future of our children and ourgrandchildren is a bottomless pit into which our generation's mistakes canbe shoveled. There were no investments that could have rebooted oureconomy and reversed unemployment. No investments in our neglected roads, bridges and schools. No investments in green technology. No moreinvestments in research and innovation in sectors where America can takea leadership position . . . No retooling for industrial America. No retrainingof workers. And — astonishingly! — no new supervision of Wall Street.Take for example one Robert Morris, chief financier of the RevolutionaryWar and signer of the Declaration of Independence. Morris was our nation'sfirst Superintendent of Finance, but none of this meant squat when, in hislatter years, his investments turned sour. Morris was sentenced and thensubjected to four brutal years in an American debtor's prison, prisons whichweren't closed until well into the 1830s. I don't claim membership to thisearlier vanguard movement but do feel part of a recent groundswell . . .
Essential Bug Out Bag Gear and Supplies:
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Gear for blackouts and emergencies:
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