Stocks

While my attention was somewhere else the stock market took at tumble. I was having a great day. The garage was finally able to get my car in for some tires and a wheel bearing. An old friend connected with me and we shared coffee and conversation. My mechanic is retiring so we discussed his future plans. 

Before going into town I put a big batch of New England Baked beans in the crockpot. It’s nice to come home to a warm house and a traditional dinner. 

Then I checked the stock market and saw that it took a tumble. That did nothing to harsh my mellow. Maybe if I had more skin the game it would make a difference. For some folks the stock market is a real emotional roller coaster. Seems like a waste of energy to get upset about it. 

Frankly, it wouldn’t surprise me if the market had a 1920s type crash. In fact, I’ve been kinda expecting a hard crash for years. It’s amazing how financial tricks have been able to kick the can down the road for as long as it has. I’ve learned not to bet against the financial gnomes. 

When I was younger I was taught the market was a way to invest in companies and for them to get financing to grow. In my old and bitter years I’ve come to the conclusion that the markets aren’t much different from the rigged games in Vegas. 

Just my opinion. Your mileage may vary.

-Sixbears

Dow dive no surprise

Here we are at a “primitive” campsite in the Ocala. Basically, what that means is that there’s no electricity or other hookups at the otherwise very civilized campsites. Today there was finally enough charge from the solar panels to fire up the computer.

After going on-line I discover that the stock market has taken a pretty good tumble while I wasn’t looking. That comes as no surprise. It was just a matter of time. With China’s economy pretty much shut down from the coronovirius, what did you expect to happen?

Eventually all those just-in-time goods, parts and supplies had to run out. The big question is: will the supply lines ever start up again? A number of companies were questioning the wisdom of foreign parts suppliers and manufacture even before the virus scare. Now they have strong incentive to keep more operations local.

In short term it’s going to be a mess. Businesses are going to pull back and hunker down. Eventually things will settle out to a new normal. Logically, it would make sense to manufacture back in the US again, even if it costs more. Things would be more expensive, but on the other hand there would be more US manufacturing jobs.

I’m not sure how agriculture would shake out. People still have to eat.

Of course, there could be enough disruptions in the system to really set everything back. If that happens, expect nations to turn to war. That’s what they do when they can’t solve internal problems. Once again, we are in for some interesting times.

-Sixbears

Wow the DOW!

I'm writing this blog post after the DOW has dropped 1300 points over two days. I waited an extra day to comment. Often the day after a big drop, stocks bounce right back. After two days, I'm beginning to wonder if this is a trend. Of course, by the time you read this, the stock market could have risen to new highs.

That's the problem with looking for trigger events. If every time you headed for the hills when the DOW took a tumble, you'd have taken a lot of unscheduled emergency trips for nothing. After a few days you'd have to come back and see if you still had a job. You might get away with that once or twice, but sooner or later you'd be out of work. While the world's financial market didn't collapse, your personal finances soon would.

Then again, what if the market keeps heading down? In spite of all the governmental manipulation, the economy has downturns. Sometimes they aren't too bad. Other times they are catastrophic. Recessions and depressions are pretty much baked into the cake. Nothing goes up forever.

If you are student of History, you've probably studied the Great Depression of the 30s. Most people think it was one horrible day in the markets then everything collapsed. It was actually a lot more complicated than that. There were ups and downs. At times, it looked like the economy was going to recover soon. Only over a period of months did it really sink in that a full blown depression was going on.

Our next depression may be like that. We could ease into a depression with a series of up and down moments of the economy. Months might go by before we admit to the reality of a depression. During the 30s, newspapers never used the word “depression.” Depressing economic news didn't sell papers.

Of course, this isn't the 30s. We live in a digital age where everything is connected and fast. Negative economic shocks could case a feedback loop that quickly locks up the whole system. We just don't know.

The only sure way to be “up in the hills” when an economic collapse happens is to live in them before bad things happen.

-Sixbears

What comes next?

Britain voted to leave the EU. The Brexit campaign, against initial expectations, was a success. Now what? It's going to be a tangled mess. The politicians have their work cut out for them: everything from replacing EU laws to negotiating trade deals. Britain will really have to get its trade deals in order quickly. It's an island that lacks the resources to feed itself and produce the raw materials it needs.

It was an interesting vote. London was all for staying in. Scotland was heavily in the stay camp, as was Northern Ireland. I bet Scotland feels angry about not leaving Britain when they had the chance. Who knows, this might be what finally unites Ireland.

Stock markets took a tumble around the world. Let's see what happens on Monday. If after a weekend to contemplate the situation the markets continue to fall, then we have a problem. Right now the reaction is mostly emotional.

There is some speculation that other countries will consider leaving. For that reason the EU may try to make the British exit as painful as possible. At least there's been some talk in that direction. On the other hand, punishing a major trading partner might not be a great idea.

The EU was partly formed to prevent the squabbling between nations that had just produced two world wars. For all its many faults, the EU was successful at reducing barriers between peoples. That's no small accomplishment considering the history of Europe and the diversity of its citizens.

Almost nobody is talking about NATO. Will that alliance also be weakened? Time will tell.

I am surprised that Britain would be the first to leave. I was expecting Greece, but the politicians there do exactly the opposite of what the voters want. Italy, Spain, Portugal -those countries also are having issues so leaving might make sense. The Scandinavian countries may now start to wonder if membership is worth it. Their economies are relatively solid so they will be watching Britain closely to see how it goes.

Of course, I might be getting too “thinky” about the whole thing. From the rhetoric of the final campaign days it appears the vote came down to keeping brown colored refugees out. Finer points about membership were lost in all the noise.

-Sixbears

Welp, so much for stocks

Okay, stocks around the world are doing interesting things right now. The real downside is that I haven't seen any bankers leaping from their penthouses . . . yet! Since this is being written on Monday night, I've got no idea what's happening Tuesday when this posts. Historically, the stock market should be making some sort of rebound, even if only a "dead cat bounce." (if it isn't hold onto your seats and get ready for the ride!)

Once upon a time there were two brothers. One spent all his money on drink, fast women and lottery tickets. The other kept his nose to the grindstone and invested all his money in the stock market. Forty years later they were both broke. At least the first brother had more interesting stories.

The moral of this story: small investors have no business messing around with the stock market. It's the playground of large institutional investors. The game rigged and only they have any sort of insight on how.

That's not to say that they don't get wiped out too. When I left for retirement by way of ambulance ride, my pension was funded at 104%. It should have been possible to pay off everyone and still have some money in the system. Last time I checked it was funded at something like 30%. My yearly pension is now smaller than it was 8 years ago, not even factoring in inflation.

I don't worry about it. Some years ago I went to a retirement system meeting where they were discussing the drop in funds after the tech bubble burst. Their plan seemed to be to just hope the stock market would take off like it did in previous years. I asked them what their plan was if there were to be another burst bubble. They treated me like I was some sort of a nut job full of doom and gloom. Of course, then we had the 2008 housing bubble. The current market seems to be deflating on Asian worries. Personally, I don't waste my time going to meetings anymore. Cassandra wasn't listened to either.

Am I concerned that my pension could get completely cleaned out? A bit, but there's not really anything I can do about that. What I can do is make sure my beans and bullets are in order if a bank holiday is called and everyone's funds are locked up. This prep stuff is starting to pretty smart about now, isn't it?

-Sixbears

Front row at the collapse circus

What's really going on with the economy? The stock market is acting out. Gold is doing some interesting things of late. Crypto currencies like Bitcoin are volatile as heck. Commodities, most notably oil, appear to be in a depressive cycle. There's some who speculate that we are in a financial period similar to the Roaring 20s, the time leading up to the Great Depression.

From my perspective all I can say is darn if I know. It's not like I have a degree in economics or anything. Of course, plenty of people with high degrees and fancy titles said in 2008 there would never be a housing collapse. One can't but help wonder if a degree in economics is similar to a degree in alchemy, tarot reading or some other pseudoscience.

That's great fun and all, but at some point the little guy on the ground has to make his way in this crazy world. The simple minded just go: Yee ya! Gas is cheap again and I kin go mudding wit ma four by four. Never mind the last time gas was this price he might have had a decent factory job instead of a minimum wage service gig.

It's funny how at one time simple virtues could do the trick. All a man had to do was regularly show up to work on time and sober and he could make a living. He didn't have to be especially educated or clever. That's not to say he was dumb. No, he learned the ins and outs of his midget widget making machine and got the job done. He had work. Maybe he belonged to church that keep him from going too far astray. The schools were good enough that his kids went to school with the sons of doctors and judges.

Now the sons of the rich and the sons of the poor never meet. Gated communities and private schools keep the haves and have nots apart. Simple virtues don't put enough food on the table these days. The churches that once claimed moral leadership have lost their way. Their leaders revealed to be perverts and thieves.

Even being clever and educated does not guarantee any sort of financial success -or even basic sustenance.

So what's a person to do? Is this the calm before the storm? Capitalism's last gasp? Just a slightly significant statistical ripple on the sea of smooth financial sailing? Dang if I know.

What I do know is that most of us aren't have enough fun. Sure, prepare for hard times, but don't forget to live a little. Looking back on life, how many of us have usually worried about the wrong things? The stuff that gets us sneaks up from behind in the dark. Then all we can do is muddle though. That's not a bad lesson. Of course, it helps to have some muddling tools and skills.

So I fill up the fuel tank of my van with fuel a lot cheaper than it was 6 months ago and feel a bit uneasy wondering what big macro financial movements are in the works. Then I remember that it's not my responsibly, nor is there much I can do to influence the forces of History. What I can do is live within my personal code and yes, even have some fun. Life is to important to not have fun.

-Sixbears

The market is not the real world

The stock market is doing great. The DOW has reached all time highs. (ignoring the effects of inflation) The economy appears to be doing well.

Maybe it is doing well, for those on Wall Street, CEOs, and high level players in Washington DC. Out in the world where the 99% live, it's a different story. Wages are stagnant. Unemployment appears to be down a bit, but the number of people gainfully employed is way down. I've no idea how much that has skewed the numbers, but I suspect it has.

The stock market is fine, but that market is essentially just a bunch of ones and zeros in a computer. What's going on in the physical world? A country that's growing builds buildings, roads, railroads, bridges, museums, concert halls, and industry hums along. Do you see much of that going on? Maybe you see bridges collapsing, decrepit railroads, and so on?

Sure, highways got a modest boost with Obama's “shovel ready” projects. Some sections of road got much needed repair. Here and there, it made a real difference. A sustained effort would have brought everything up to an adequate level, but those funds are pretty much gone.

We have a natural gas and oil shale boomlet due to fracking. However, fracked wells have horrible rates of decline. Production numbers are only kept up due to massive drilling fueled by investors looking for any sort of decent return on investment.

As unsustainable as the new energy boom has been: financially and ecologically, at least it produces something. The world of finance doesn't produce much lately except exotic shell games and pyramid schemes.

Ignore the half built buildings.

A cousin of mine was in the Ukraine not that many years ago. The country is littered with massive construction projects that were never completed. When the USSR fell, work on these projects came to a screeching halt. Most are in various states of decay. That's the sort of thing that happens when an empire falls.

In 2008, the US and much of the industrialized world suffered the bursting of the housing bubble. These countries were also littered with half completed building projects. A lot of those were never completed either. There are parts of the US that still look like post Soviet Ukraine.

Residents of the US Northeastern coastal region are starting to catch on. Things will never be the same after Hurricane Sandy. A full rebuild just won't happen. Any who don't believe can just ask the good people of New Orleans how well things have gone since Katrina. How about all the forgotten towns ravaged by tornadoes? The scars still remain. Had the economy been booming in the physical world, all that real estate would be too valuable to leave idle.

The video game, computer generated economy is doing well. That would be fine, if the players in that game couldn't take their phony baloney money and buy nice things in the real world. Fortunately for them, not everyone in the game is cashing out their chips. Should that day ever come, they'd soon find out there's not nearly enough real world to go around.

-Sixbears

Been expecting this for some time now

The unraveling of the stock market doesn’t surprise me. My only real surprise is that it’s taken this long to tank. Of course the market could just as easily rise to new heights in the next few days or weeks. Since the market has been unhinged from reality for decades, it doesn’t really matter what it does. For some time I’ve viewed it as a mechanism for the big guys to rob the little guys. The only way for an individual to win is to not play the game.

The fundamentals of our economy is what interests me. Our fiat money system only works in an expanding economy. Cheap oil is what allowed the economy to expand so much for so long. Peak oil happened in 2005. The cheap stuff is gone. Supplies will be harder and more expensive to get. The game has been kept going with smoke and mirrors. Unfortunately, since the downgrading of US credit, the world has seen the wizard behind the curtain.

Currencies have a lifespan. Over time the value gets diluted down to the point where it’s essentially worthless. In the past, when a currency failed, there were other currencies to flee to. Now there isn’t. Almost all global trade takes place in dollars. There’s nothing big enough right now to take its place. Maybe in the future China’s currency might do the job, but right now they have problems of their own.

Plenty of people put their faith in precious metals. To be fair, historically, it’s been a safe haven. If that works for you, fine. I’ve a friend who bought physical gold around $300/ounce. Last I heard he was looking for a big cruising catamaran and planned to head to South America. As for me, my only gold investment is the wedding ring on my finger. Since my wife is a pearl beyond price, it’s been a great investment. My head tells me precious metals are the way to go, but my heart just isn’t in it.

What is really valuable to me is my family and friends. We are there for each other in a pinch. My good water well that can be accessed with something as simple as a bucket is hugely valuable. The trees on my land that can burn in my woodstove are valuable. The fish in the lake are valuable. The game running around my swamp is valuable. A bit of stored grain and beans is a pretty good insurance policy against immediate hunger.

For years my wife and I have prepped to have some basic security in real goods and relationships. With that done, I don’t really have to worry about the stock market. Even if we loose all our stuff, it’s just stuff. We still have family, friends, and the knowledge in our heads.

The real immediate danger is what other people will do. When the guy who’s been waiting for the economy to improve so he can go back to work realizes there is no recovery, there will be hell to pay. When all hope is gone, the smashing and looting begins. It could get ugly. My plan is to sit out the unrest as much as possible. I pity those people who live in big cities.

That’s not to say that rural areas don’t have crime. Robberies and violence are up in the country too. There are desperate people everywhere. At least in the country, there are a lot less of them. Still, there may be a time of wandering robber gangs hitting isolated farm houses. That’s where having some level of community solidarity is important.

It’s still possible to go into the grocery store, spend a few hundred dollars, and have basic food security for some months, depending on family size. You’ve got to shop wisely: rice, dried beans, lentils, dried peas, cooking oil, flour, and some spices. That’ll keep you from starving -if you know how to cook and have backup methods of cooking if the grid goes down. If you don’t have these basics, go out and get them -today. It’s stuff you’ll use anyway, right?

My situation isn’t perfect. Nobody’s is. There are no guarantees in life. All we can do is improve our chances. Make sure you’ve got at least the basics. My guess is that your food stocks will be much more important to you than stocks in the market. Make sure you’ve got at least that basic investment in your future.

-Sixbears

For what it's worth

Wednesday, the stock market took a 280 point tumble. No idea what Thursday is going to bring. If I did, I'd most likely have some money in that game. In the long run, it's all going down the drain, but in the long run we are all dead anyway. Timing is everything.

Now the market could fall into the basement. On the other hand, inflating currency could raise up the numbers, but the money won't be worth anything. I'm not in the market, and I'm not qualified to give advice about it . . . as if anyone is.

While the market itself doesn't affect me directly, if it collapses, everyone is affected. There would certainly be a time of chaos and panic. Interesting times. Few of us really want to live in interesting times. Oh, it might be fun to contemplate, but when things don't get back to normal in a few weeks, and chaos becomes normal, it's no place to raise the kids.

I just finished listening to Michael Ruppert's "The Lifeboat Hour" on the Progressive Radio network. He still sticks to statement that the financial situation will definitely unravel during the month of July. His reasoning is that corporate reports will have to show the economic disruptions caused by Japan's problems. Personally, I've first hand reports about the difficulty getting certain parts from Japan. There might be something to Ruppert's warning.

In the very short term, I'm more concerned with my local weather. In the North Country of NH, we've had 3 hailstorms in as many days. We used to go years without a hailstorm. My lovely wife has seedlings ready to go in the garden, but we don't dare put them out. Golf ball sized hail and tender plants don't mix well. We've flooding and bridges have been washed out. Now I know weather isn't climate, but conditions weren't like this when I was a little kid. Bad weather around the world has made agriculture a tricky business.

Agriculture has gone the way of industry. Everything uses the "Just in Time" model. It's terribly efficient when production matches consumption exactly. No money tied up in granaries and warehouses. Unfortunately, an efficient system is a fragile system. When Japan is unable to supply parts and equipment, assembly lines around the world shut down. When the crops don't come in, someone's going to go hungry.

For years there have been warnings about the dangers of our world wide economic system. Of course, those warnings fell on deaf ears. The system has had enough slack to absorb a few shocks. Can it survive the big ones facing it now? There is reason for concern.

Could we be facing the end of the world as know it? Let's just say it's not a 0% chance nor a 100% certainty. What harm in some preparations? A 30 day family supply of food and water would put you ahead of 99% of the people out there. Even if there are only temporary disruptions, do you want to be one of those disrupted?


-Sixbears