Back From A Break

It’s been quite a long gap in posting, but for good reason, I think. My family, for the first time in many years, took a long holiday break from work and school. Though I had every intention of “working” on WCN.net while away (it’s more a labor of love and concern than true “work”) I decided a couple days into the vacation to consider it work and stay away from it. That, in my opinion, was a good decision, as it allowed me to soak in some life, recharge, and watch the world more as a participant than as an observer. I believe the insight I gained from this helped me better understand what’s going on, and it gave me some ideas to share with you in the coming weeks.

Once I got back to the “business” of WCN, I saw some things that need to change with the site. You’ll start to see some of those changes gradually over the next month. The big change is of perspective. It occured to me that this site has been mostly about the possible branches on the path that our economy and resulting society could travel. WCN.net is going to start being more about the path we’re on and what you can do to survive, thrive and be successful in our new world. Make no mistake, we are in a world that’s much different than the one we were living in 2 years ago.

We are living through a societal paradigm shift that is changing almost everything about the way we live in the U.S. Part of that paradigm shift is that sites like WCN.net, Kunstler.com, Financial Armageddon, When Giants Fall, WorldNetDaily, Urban Survival and others are “suddenly” seem less directed at the “paranoid fringe” and more for everyone. Those sites mentioned haven’t changed their direction, many people are simply seeing the light. Events have played out in ways the writers and editors of those sites (and many more, by the way) predicted. Those who previously scoffed are now getting it, and in many cases, preaching the gospel of dramatic change.

The tenor of WCN.net won’t change. The changes I’ve been writing about for a couple years now are happening, and instead of engaging in the tempting “I told you so” that would be easy to write, I’m going to transition to writing more about what preparations and activities could help ensure survival and success in these difficult times.

Get Ready for MUCH More of This

Republic Windows and Doors, like a lot of companies around the world, ran out of money, and had to close up shop. Naturally, the (union) workers there are angry, probably even more angry than if they’d been asked to take pay cuts. So, rather than leave, they’re occupying the plant, demanding the severance and benefits they say they’ve earned.

President-elect Obama says they are “absolutely right” to do this. Interesting choice of words for a President-to-be, who is the chief enforcer of laws in the U.S. They are absolutely right to do this? Does he realize just how many more of these situations he’s going to face in his single term, especially since he is throwing his support to the movement?

Here’s the story.

The most interesting and telling part though, is this:

One of the factory’s workers, Silvia Mazon, said in Spanish that she needs the money owed to her for an $1,800 monthly house payment. The 40-year-old from Cicero said she has enough money saved to survive for one month.

“We’re making history,” she said.

An apparently Spanish-only speaker, working in a factory in Chicago with only a single month’s savings and her house payment is $1,800?

This, is why the work of James Kunstler, George Ure, Michael Panzer and others, is so important. This situation is going to get worse. Much worse, and there will be a huge number of people like the unfortunate Ms. Mazon, who were participating in an economic model they thought was never-ending. One where real estate always rose in value, there were always blue collar jobs available, and new cars and plasma tvs grew on trees. Unfortunately, these assumptions were wrong, and those who didn’t understand that will be hungry, moneyless and angry.

Have you thought about what you will do then?

The TARP Has Failed

Predictably, the bailout has failed.

The Cutting Edge lays out the promises made, none of which have been kept. Treasury Secretary Henry Paulson, who should be held accountable for the fiasco he has needlessly piled onto the fiasco that this government’s economic policy has helped create, is apparently, as the site says “winging it.”

By any reasonable assessment, the Troubled Asset Relief Program has been a miserable failure and a complete waste of taxpayer money. The basis used to ram the bill through Congress was the purchase of the toxic assets off of bank’s books. Not one dollar has been used for this purpose. The main purpose for passing the $700 billion bailout was to restore confidence in the markets.

On October 3 when the TARP was signed into law, the S&P 500 was at 1,114. Today, it is 887. The 20 percent decline in the markets in six weeks doesn’t show much confidence in Paulson’s acts. Paulson changing course every few days has shown the world that he is “winging it.” He has floundered from buying toxic assets to jamming capital down the throats of banks to his current plan to support consumer debt. Did Paulson lie to Congress about buying toxic assets?

Paulson has handed out a grand total of $310 billion of the initial $350 billion tranche. He would have to go back to Congress for the 2nd $350 billion tranche. Congress was supposed to create a five-member congressional oversight panel, but hasn’t. The White House was supposed to nominate, and the Senate was supposed to confirm a special inspector general to audit and investigate where the funds are going. After six weeks, President Bush hasn’t proffered a nomination.

Poorly run automakers (GM, Ford, Chrysler), poorly run cities (Atlanta, Philadelphia, Detroit, and Phoenix), and poorly run states (California) are begging for a piece of the pie. The banks that received the first $179 billion have not made any loans with the special money. Indeed, some are using the money to buy other banks. It appears their goal is to become “too big to fail.” Others, like Citigroup, are using the money to buy back bad assets from off the balance sheet SIVs they created. SIVs are the “structured investment vehicle” instruments that Citibank invented in 1988 to become part of its so-called “shadow banking” system. The solvency of the SIV world is now in question.

Hence, TARP has failed.

But then again, maybe not. The TARP has obviously failed to do what we were told it would do, but were we told the truth about its purpose?

I don’t think so.

I believe the TARP may have been intended to provide a huge pile of cash to do two things:

1. Rescue the Wall Street gamblers who created this mess and who are in bed with the regulators. Remember, Paulson worked on Wall Street, so his buddies are his “skin in the game.” Also, remember the corruption that runs rampant through Washington, DC, like Christopher Dodd’s sweetheart loans from Countryside – he’s the head regulator of that industry in Congress now.

2. Keep the stock market bouncing around, and up occasionally, while the Bush Administration is still in the White House. Many think a group funded by Paulson’s TARP money is the entity creating these end of day rallies that in the last half hour of trading, prop up the DOW. Once the money (and the Bush Administration) is gone, these “economic commandos” will disburse, and a massive crash could occur.

At least that’s the theory.

It Doesn’t LOOK Like We’re In a Depression

One of the best posts ever, at Michael Panzer’s Financial Armageddon, “Gone, Over, Toast.”

I’ve noticed recently the same phenomenon, that though all indicators say we’re in a severe economic meltdown, and entering a “greater depression,” life still goes on as before. The lights still work, the trucks still roll and in some cases, Black Friday was a success.

But, as we noticed last night, restaurants are empty, the airports aren’t madhouses, and there’s the palpable sense from those in the know that winter is coming.

Disturbing On a Number of Levels

This headline bothers me a lot:

Wal-Mart worker dies after shoppers knock him down.

First of all, it disgusts me that our culture (yes, even the early morning “Black Friday shopping at Wal-Mart” culture is our culture) has fallen into consumerism so deeply that we become animals for a sale on plastic imported-from-China crap. It’s disgusting. There was a crush of people who were so out of individual control that they killed another person to gain first access to what they wanted. If they were hungry people, it would be a tragedy, but somewhat understandable. But they weren’t hungry. In fact based on my limited experience shopping at Wal-Mart, I would assume they were very well, and probably over-fed. This was a riot. Not a food riot, but a plastic, disposable, consumer-good riot.

Even though the first point is sufficient for this post, the more sinister second point is that because we’re (mostly) raional-acting beings, and because Wal-Mart is known for the lowest price-point on plastic crap from China, these people were rioting because they saw getting to that store’s supply of plastic crap from China as the only way to sustain their expectation of Christmas in a crashing economy. In other words, rather than attack the root of the problem by being disciplined this year and not spending money on crap, they’re doing whatever they can to maintain the very behaviors that got us in this mess – excessive consumerism.

This is exactly the same as burning food and ruining topsoil to maintain what Kunstler calls our “happy motoring society.” We grow corn (food) to make ethanol, in an effort to extend the life of the unsustainable auto-centric society, instead of banking the food and taking better care of the topsoil.

This is going to sound strange, but apart from any security responsibilities they may have dropped the ball on, I don’t blame Wal-Mart. They’re simply participating in the market and doing what they should do. I blame the culture we’ve created, the culture that will be our undoing. If we are to survive as a nation, we have to stop making shopping our national pastime, and start making things worth repairing, saving and working harder. We’re past the point of preserving our way of life, that’s a societal evolutionary dead-end.