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I'm ringing the SHTF bell


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I don't post here very often, but here goes and remember this is just my opinion.

 

Many of us preppers have been saying for some time that the most likely SHTF scenario is not an EMP or Carrington Event or Yellowstone super eruption, it is economic collapse and that rather than a single event or point in time, the SHTF will sneak up on us like a thief in the night - or to use another analogy we are like frogs being slowly boiled and not noticing. That there will be no announcement, no balloon going up, no trip wire that is easily recognized to say yesterday we were ok, but now SHTF is on.

So I will go out on a limb (not really) and say SHTF is on now.
I am ringing the bell, LOL

DING DING DING DING.

First off I would like to extend my sincere heartfelt thanks and attaboy to - Hank Paulson, George Bush, Ben Bernake, Barak Obama, Mario Draghi, Janet Yellen and the all the can kickers world wide that stepped up in 2009 to keep the Titanic afloat thus allowing me the time and money to go from barely prepared to "bring it on".

Here's my thinking.

The central banks have been pumping air into a leaking tire for years trying to keep asset prices up because the elites that pull the strings on the Fed and other central banks fear the decline in their assets which are mostly stocks, bonds and real estate. Very few of them even think about investing in things like we are investing in - think Janet Yellen has a grain mill, dehydrator, etc?

But now all the central banks have reached the law of diminishing returns in terms of their ability to keep paper asset prices from deflating. The central banks have lost their ability to have the desired effect and can kicking is no longer working. Japan was first, then Europe, then China and now the US. IMHO the central banks are out of bullets but the deflation zombie keeps coming. Forget a rate hike, that was never going to happen - they were just jawboning.

When (not if) we get an amplified re run of the 2008 collapse these folks are going to have huge paper losses. Like what happened to the house flippers in Fl, Ca, NV in 2008 only far far worse. I submit we are there now and last Friday -530 on the dow is just the beginning of travails.

The problem is that by not allowing the cleansing of weak players in 2008 and rather pumping stimulus into the system they have propped up companies that should have collapsed then but were able to borrow money at historically ludicrously low interest rates to stay afloat. And those companies now must sell at break even prices just to stay alive. That has resulted in excess supply and resulting deflationary pressure.

The shale fracking companies are a great example. They have to sell oil at any price just to stay alive, because they are all leveraged to the hilt. It is a vicious cycle that feeds upon itself. Demand is down at the same time supply is up.

And the general S&P 500 has been artificially inflated by companies taking on relatively free money in the form of historically cheap interest rates and using it to buy back their own stock which causes the stock price to rise and EPS to go up because the divisor (# of shares)is reduced. In other words, stock prices are about as reliable as the Unemployment Rate.

Look at this chart and ask yourself why are basic raw materials across the board plummeting in price world wide? Just look at those commodities that are used at the basic first build industrial items, i.e. these are the first to be needed in and economic boon and the first to not be needed in a bust. Here are a few over the last 12 months:

coal from South Africa  - 19.62 %
crude oil Dubai              - 46.77 %
Indonesian Natural Gas - 51.33 %
Aluminum                       - 15.85 %
Copper                          - 23.29 %
Iron Ore                         - 46.34 %
Lead                              - 19.61 %
Nickel                             - 40.30 %
Tin                                 - 32.79 %

And I only highlighted the industrial feed stocks.

Look carefully at all the red on this chart and ask yourself if this is not in fact a world wide, commodities of all kinds "Canary in the coal mine" situation:
http://www.indexmundi.com/commodities/

And what do these imply about world wide real economic activity - I am talking about mining and farming - not reality TV, iPhones, or Facebook:
 

The world's largest maker of construction and mining equipment, Caterpillar, Inc. reported an 11% fall in its global retail sales for the three months ending Apr 2015, marking the 29th consecutive month of declining sales.

http://www.zacks.com/stock/news/1758...-the-29th-time

And just yesterday, this from John Deere.


John Deere’s latest earnings report showed a decline in sales and earnings...According to the report, net sales of worldwide equipment operations declined 22 percent for the quarter. Net sales in the U.S. and Canada were similar, decreasing 21 percent and 17 percent.As for the upcoming fourth quarter, the company expected to be down about 24 percent, compared with last year.

http://wqad.com/2015/08/21/john-deer...-and-earnings/

So what do I think this means and what am I doing.
Of course I could be wrong and certainly have been in the past.

I have no investments in the stock market except a tiny retirement fund I can't easily liquidate.
We have no debt except the mortgage on our retreat where we relocated to Tn from FL in 2010.
Basically I am slowing down purchases and accumulating cash to be used for purchasing things at fire sale prices, just like happened in 2009 when Craigslist got flooded with items people were selling to raise cash. Just like weak corporate players many individuals are ill prepared to be laid off which is what the companies are probably going to do soon.

Kinda like the scene in Trading Places where Eddy Murphy and Dan Akroid decide the price has dropped enough and start buying. Watch that movie - could be a harbinger of things to come. Don't be Don Amiche, be Eddy Murphy.

The exception and to illustrate my point, we will now fill our propane tank with another 300 gallons of propane and purchase an additional 300 gallons of diesel, but probably not for a few weeks or a month because I expect further price drops.

 

I am also stocking up on fertilizer and the like for my farm.

Well enough pontificating, just my rant and certainly YMMV, but if I am right it is on and we are in for a wild ride.

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How will you pay that?

Honest answer is not entirely sure longer term, but I have a nice income (so far) and about 6 months of cash on hand.

After that, guess I might be in the same boat as others, but only have 9 years left on the mortgage.

 

Would I like to be totally and completely debt free, absolutely.

Do I wish I had paid down the mortgage principal instead of buying "beans, bullets & band aids" - not for a nanosecond.

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What kind of income will be unaffected by an economic collapse?

Honestly, I don't know and not sure anyone would be able to say with certainty, but a logical guess would be basics like food.

So farmers might be one who's income is perhaps more likely to continue.

Perhaps people that repair things since folks will try and keep things vs buy new ones - think car repair as an example.

 

Will my income continue? I am concerned about that and doing all I can think of to preserve it, but I really don't know.

I thought in the 2008 downturn that luxury items would be the first to go and was totally wrong because the rich got richer.

 

So you're telling me the balloon is going up

Yes, that is what I am saying, that it is aready up - just gaining altitude and rapidly

 

and we are going to see another 2008

no, much worse

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So what are you basing all of this on?

all the factors in the original post - i.e. massive deflation in industrial feedstocks across the board.

 

Couldn't this just be a correction and not a crash?

Sure could, but I guess it matters what the definitionof "is" is, sorry could not resist that.

What is the difference between a correction and a crash? Just magnitude.

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I love the sky is falling threads that show up every time the stock market sees a correction.

 

You sell......I'm buying.

 

Where else can a person reliably grow his wealth?

 

 

 

 As screwed up as it is, the U.S. is still the preeminent economic power in the world. The dollar still the world standard currency. Seriously, if it does crash, where else would you want your money?

 

How about a world collapse? What exactly would this mean? The entire world's population just quits producing anything? Sorry, but I cannot wrap my head around that concept.

Edited by gregintenn
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I love the sky is falling threads that show up every time the stock market sees a correction

Yes, I know and hesitated to post but when else would you expect "the sky is falling" threads, LOL.

It is not the NYSE or other stock exchanges that I view as indicative, it is the fact that no one seems to need raw material feedstocks.

In fact, I would say that the stock exchanges are lagging indicators.

 

As screwed up as it is, the U.S. is still the preeminent economic power in the world.

Absolutely, we are the cleanest dirty shirt.

That's why the US dollar is advancing against other currencies and likely will do so for a while.

But that does not mean we are imune from what's happening in the rest of the world.

 

The entire world's population just quits producing anything? I cannot wrap my head around that concept

No, actually the opposite - there is TOO MUCH production compared to the demand which is leading to lower prices for raw material feedstocks world wide across many many industries which is causing financial stress on those compaines.

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Let's compare this to the great AR scare of a couple of years back. "Newtown" we'll call it.

 

Remember the run of the mill $2k ARs, $100 Pmags, and dollar a pop plinking ammo?

 

Today, $500 will get you a serviceable AR. $10-12 for mags. Ammo has dropped by more than half. It is how a free market works. This doesn't mean it's time to go into your bunker.

 

The best run companies will survive, and some lesser companies will be purged.

 

I guess this is all a matter of perspective, and depends on your definition of "SHTF".

 

Being prepared for an emergency is a good plan whether traveling, fishing, investing, or just simply living life. If you are prepared, a great emergency turns out to be a minor inconvenience.

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Things can't continue as they have. And yes...I do feel uneasy about what's going on at the moment and my gut tells me this could be the beginning of an existence I won't be happy with. I don't know what's going to happen...if I did I would have been totally prepared years ago. But I feel pretty confident if something doesn't happen soon at a minimum my kids and grandkids will never know the country and world I grew up in.

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But I feel pretty confident if something doesn't happen soon at a minimum my kids and grandkids will never know the country and world I grew up in.

All of our grandkids will probably be lucky to be able to own a home, let alone all the toys and comforts we have enjoyed over the years. I will however be able to look my grandchildren in the eye and explain to them how this happened and that I tried my very best to not be a part of it when they ask “How could you do this to us?”

I hold out great hope though that the younger generations will see the mistakes of the generations before them that have turned their backs on their family, friends and county, and will bring this country back to where it belongs.
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All of our grandkids will probably be lucky to be able to own a home, let alone all the toys and comforts we have enjoyed over the years. I will however be able to look my grandchildren in the eye and explain to them how this happened and that I tried my very best to not be a part of it when they ask “How could you do this to us?”

I hold out great hope though that the younger generations will see the mistakes of the generations before them that have turned their backs on their family, friends and county, and will bring this country back to where it belongs.

 

That about says it all. I couldn't agree more.

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Harry Truman once said that a recession is when your neighbor loses his job, and a Depression is when you lose yours. I think ol' Harry would wink at the term SHTF. :pleased:

I often heard that statement back in the 80s in TX but I never attributed it to Harrry Truman.

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The sky is falling threads are indeed fun lol :D

 

But i look at "prepping" as its called in a different way..i guess...

 

Most people do not prepare for sh1t, they have nothing to fall back on if anything other than the norm happens..I believe this is a idiot mentality to have no matter how good, or bad things are...

 

I don't have the sky is falling mentality, i just think it's always a good idea to have extra things needed for survival, several different ways of keeping warm, and typical creature comforts stocked up, no matter what the stock market looks like, or what the news is saying, or how hot or cold it's forecast to be...or whatever else may come...Things will always come along thru life that will test your preparedness status, so their really isn't any sense in worrying about which one it will be...just be generally prepared...

 

My advice, quit worrying about whatever they are harping about on the boob tube, enjoy life, and just simply always be prepared..:)

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The big fail in your plan is an economic collapse, and you're stockpiling cash.  Do you actually think your cash will be worth it's current value after a crash?  If things are that bad economically, then your "cash" will not be money.

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The big fail in your plan is an economic collapse, and you're stockpiling cash. Do you actually think your cash will be worth it's current value after a crash? If things are that bad economically, then your "cash" will not be money.

Yep. Currency becomes guns, ammo, food, etc. Luxury items like liquor, coffee, etc.

Some people think things like gold and silver become the currency, but that doesn't come until later when some form of civilization starts to be restored.
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The big fail in your plan is an economic collapse, and you're stockpiling cash.  Do you actually think your cash will be worth it's current value after a crash?  If things are that bad economically, then your "cash" will not be money.

 

Yep. Currency becomes guns, ammo, food, etc. Luxury items like liquor, coffee, etc.

 

Both of you are exactly correct and I see that I was inarticulate in what I was trying to say - so let me restate.

I am doing all I can do in the very short run (3-6 months) to earn extra $ and also not spending on unnecessary things in order that I can have ready cash to be used in the early stages of the downturn to acquire things people are liqidating to raise cash as well as things put on sale by vendors for the same reason or to take advantage of afformentioned falling commodity prices. In a few weeks, I will be adding another 300 gallons of diesel to what i aleady have.

 

Even if this downturn is the same as a normal recession or a bit more like in 2008, there will be bargains to be had. Back then I picked up lots of things people were unloading. Case in point, in 2009 I picked up a 2006 Chevy 2500SD crew cab for $15,000 off an Ebay auction - I was the only bidder. Guy owed the bank 21k, KBB trade in was $17,500. His business was cratering and he needed out from under the payment. I paid cash because I had it.

 

Then I picked up a new truck bed tank with electric pump off Craigslist that TSC sells for $1,299 and I paid $100.

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