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.

Peter Schiff Was Right

The title of this post says it all. If you’ve paid any attention to the media coverage at all, you’re familiar with Euro Pacific Capital President Peter Schiff. He was the main punching bag for those who liked to scoff at analysts and money experts calling for recession or worse the past couple years. Schiff took punch after punch from fools like Ben Stein, Art Laffer and Mike Norman when put up against him on arguing-head shows on cable.

Here’s a compilation of some of those appearances. Note the amount of scorn heaped on Schiff as he accurately called what was coming. The laughing at Schiff’s on-target message is a sad commentary on the skills of the pundits that populate the mediasphere.

If you go to blogs written by some of these nay-sayers, you’ll be entertained by their responses to readers calling them out on being completely wrong. They get very technical and petty (“keep drinking Schiff’s Koolaid” as Norman tells one reader).

I think I will. It may not be the tastiest, but it’s sure a lot more nutritious than whatever you’re pouring, Mike. My suggestion is make sure you’ve read everything Peter Schiff has written, and lose the bookmarks for the sites written by those who laughed at him.

Schiff was right.

The Wheels are Starting to Come Off

In truth, if you’ve been reading this blog, and the websites and books recommended here, you know this whole thing started years ago, lug-nuts beginning to loosen and slowly rotate without any change being noted by the vast majority of Americans. But, it’s hard to ignore the problem now.

The credit crisis has flared and is now building again in intensity. The stock market, when it opens today (in about an hour from this writing) will almost certainly crash, possibly big.

The European and Japanese stock markets have “been mauled,” on what could very well be known in the years that come as “Black Friday,” or maybe “Bloody Friday.” Whatever the case, it won’t be pretty.

This week has seen a LOT of building bad news. Unemployment projections are looking bad. The snowball of advertising cancellations for November and December, where advertisers cancel already placed advertising orders with radio and television stations and newspapers. Massive layoff talk has been out in the open this week. Despite the fact that oil prices are tumbling, and with them, the price of gas at the pump, economic activity is quickly winding down.

Also out in the open in the news this week, has been talk of state and local tax shortfalls. When there’s lower economic activity, tax revenues fall, and so the amount of money states and cities have to spend on services falls pretty fast. This causes more layoffs, and since in many areas, states and cities are high headcount employers, the problem spirals and can crash pretty quickly.

Which it is most certainly doing.

What Americans Don’t Know WILL Hurt Them

I must admit, I’ve been mystified by the reaction, or more accurately the lack of reaction by Americans with regard to our imploding economy. But I get it now, thanks to Dmitri Orlov’s excellent Reinventing Collapse: The Soviet Example and American Prospects. Orlov, an American with Russian roots, was able to watch the collapse of the Soviet Union while visiting a number of times during that collapse.

At the height of the intensity of the bailout drama a couple weeks ago, I visited a nice, mid to upscale mall where I occasionally shop (I needed the Apple Store, my only consumerist passion). I was amazed that even though our economy was on the verge of meltdown with anyone who knew anything about what was going on tense and wondering how the next couple days were going to play out, the everyday consumers flowing around me in the mall seemed completely unaware that anything unusual was going on. I realize now that they weren’t completely unaware of dramatic things going on, they were simply convinced that it wouldn’t affect them. That’s a distinction that was lost on me that day, as the well-practiced credit-card presentation moves were displayed even as the Secretary of the Treasury Henry Paulson got down on one knee to beg Nancy Pelosi to pass the $750 Billion bailout bill.

I was comfortable spending a little money that day, because I have protected myself from short-term disruptions in the everyday workings of our economy. Having cash on-hand, safely stored along with enough food, water and household goods to easily weather a couple months disruption is something I recommend to anyone who asks my advice about what could possibly happen. But looking around, I realized that few, if any, of my fellow shoppers had protected themselves in that way.

Reading Orlov’s new book yesterday, I realized that we Americans are asleep about what could happen to us because we don’t believe anything catastrophic could happen to us. And that’s not a completely unreasonable assumption, since nothing bad has happened to us in almost 80 years. Plus, it’s been almost 150 years since war has been seen on our shores, as wars are something that Americans have to travel a long way to participate in. It’s been that way since the Civil War ended in 1865. Europe lives with that collective memory still relatively fresh. Even if Europeans haven’t lived through it first-hand, it’s a part of their history that’s closer to the surface.

We in America are living in one of the best-insulated pockets of comfort the world has ever seen, and that will make the troubles that are almost certainly coming much harder to deal with. The shock Americans will feel when the ATMs don’t work will be devastating. When the grocery shelves are cleared by those with a little cash on-hand, the panic will set in. Most people don’t plan for disruption because they don’t believe it is possible. Waking up to the realization that their assumptions in that regard aren’t true will be a difficult experience.

The alarm has most certainly gone off. The government is frantically doing what it can to keep hitting the snooze button, but when it’s morning, you can only do that for so long before waking can no longer be delayed.