Note: The Monday report will be about one hour late due to a long conversation last night with a friend who is on 'between deployments' leave from the military.... please check back.

Where Are the Bank Runs?

Although the mass of media hypnotized consumers will stumble into New Years believing that the danger of bank runs is past, now that Northern Rock and other institutions have been (temporarily bailed out), those darned Danes at Saxo Bank have some rather grim predictions about what's ahead for global financial markets in 2008. 

Their view (which is remarkably close to mine) is that oil will go to $175 per barrel and Western consumers will have to stop living beyond their means.  Maybe it's the half of my ancestry that's Danish coming through, but it seems a reasonable outlook.

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With reports that gasoline prices are unusually high for December, the LA Times headlines that California "State may see $4 gasoline in '08".

Given the Saxo outlook, the LA Times headline writers are likely understating the potential for gas price hikes.  If I take present $3 gas and multiply by 1.8 (to get from where oil is now to where Saxo thinks it's going), I come up with $5.40 gas, and even that may be on the low side, depending on what happens to the dollar which I expect will get a serious beat-down in Q1 - Q2` 08.

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OK, so Congress has sent the White House a defense bill.  Will it be signed?  Doesn't look that way, because it has a provision in it which would allow lawsuits seeking damages going all the way back to the days of Saddam Hussein. 

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One of the interesting, at least interesting to me, points of the story is that Iraq has $20-$30 billion in assets in US financial institutions.  Here's an inconvenient question:  Where did the money come from?  My understanding of this is that a lot of it has come from you and me - the taxpayers indirectly.

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Speaking of which, I was having a conversation with my attorney yesterday (year end tax planning questions, that kind of thing) and he made a very astute observation.  "With the exception of Goldman Sachs, I think almost every financial institution in the country has received some kind of foreign capital bailout..."

A fine point indeed.  We then kibitzed a bit more and informally concluded that without the most recent trillion dollars, or so, worth of paper-hanging, which has amounted to little more than rearranging the deck chairs on the Titanic and telling the orchestra to keep playing, that any large demands on the financial institutions could trigger fresh fears of a global financial meltdown.  Bank runs could easily follow. And, as this pocket veto seems to underscore, anything that could be a call on money could put our country's wars and finances in grave danger.

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Consequently, when I read stories like the one about the pocket veto of the defense bill, I try to put it in the larger context of the present proximity of financial collapse:  "How would this news story relate to the precarious position of financial institutions?" is a great question to ask about everything crossing the wire from here forward.

So,where are the bank runs?  Like the big shark in Jaws, they're lurking out there just under the surface, just waiting.  And I expect within a month or two the question will be answered.

$100 Oil "Close"

One other note about energy prices: The headline in the Financial Times is that "Oil Sinks after $100 Flirtation."  But, again, we have to look for the real culprit.  It wasn't that demand for oil jumped markedly on Friday, it was that the purchasing power of the dollar was falling like a safe.

In fact, the dollar fell from about 0.6845 Euro at the open to about 0.6790 Euro at the close of foreign exchange trading.  The Guardian noted in a headline that the "Dollar drops on housing data; worst week in a year".  So, I give them a gold star for reporting at least part of the picture.

Now let's do the math - realizing that the coffee has not fully kicked in yet:  The dollar drop vs. the Euro all by itself would move $94 oil to nearly $95.  And, it would move $827 gold to  $833.

Now, in reality, oil and gold prices went a bit further than that, because when traders see a swing, everyone rushes into their positions and you get some overshoot.

Likely: It won't be overshoot got long.  The International Monetary Fund says the amount of foreign-exchange reserves in US dollars fell to a record low in Q3 '07.  If the central bankers are fleeing, is there a hint in here about how we should allocate our own holdings?

Kinda Obvious Department

With events in Pakistan this week, "U.S. Fears Greater Turmoil in Region."  Really?

The Desert Southeast

Don't look now, but the drought in the southeast is expected to continue into 2008. Huntsville is almost 28-inches below normal rainfall for the year.

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And then we have the southern California drought, which don't tell anyone, but that could start impacting agriculture there in a noticeable way.

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All this is part and parcel of global change which will impact food availability in 2008 (and beyond), so if you haven't put up some long-term food stores, you just might want to think about that as one of your New Years resolutions.  Or, take up gardening as a high-payoff hobby.

Good News About Democracy

While most folks see that the Bush wars are largely over oil (there are lots of tin-horned dictators who could have been ousted, it's just Saddam had oil...) I'm pleased to report that democracy is still flowering in a new places without throwing depleted uranium around and locking up oil contracts to get there.

Take for example Nepal, which is quietly transitioning from a centuries-old monarchy to a republic. Or Hong Kong, which China says may be allowed to elect its own Chief Executive in 2017.  OK,  10-years may seem like a long time, but remember we've been working on installing democracy in Iraq for five, and we're not anywhere near done.....

The Runs

The decision by Fox News to exclude Ron Paul from an upcoming candidate forum, despite showing higher in the polls than many, is getting a fair amount of protest on the web and letters to Fox. 

And, I won't even dignify by naming  the self-righteous LameStream pundits who don't even include Paul in their so-called polls, which I judge more a measure of corporate brainwashing succes than voter sentiment.  Not that they are exactly traitors to free speech; theirs is protected by the First Amendment, too. 

But, to some of us, it's just further evidence of how the corpmedia/corpgov alliance trying to limit the breadth of discussion and genuine meaningful choice available to voters to only those candidates anointed by sufficient corporate influence not to rock the PTB's financial boat. I expect the outrageous depth of the corporate control/influence/corruption though to come more into focus before the end of Q2 '08.

Worth reading:  "Would Ron Paul be endorsed by the Founding Fathers?  Lawyer says Yes".

Stormin'

Snow, cold, and lots of screwed up travel plans on Friday...And in Georgia and Alabama, there's no real relief in sight yet, either. 

Police Entrapment Department

How far can cops go in their role as provocateurs in order to catching poeople who otherwise might not do anything wrong?  A case in Ohio raises some interesting questions about how far entrapment can go...

Chemical Sleep?

A new chemical is being tested which seems to mask the effects of sleep deprivation.  Mrs. Olson, look out!

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Coping:  Preparing For???

A reader of this site, "Mountain Firkekeeper" sent along this dandy summary about personal preparedness worth clipping and saving:

Preparing for ???

(Survival for 6 months or more if present day supply and services are disrupted for whatever reason---human or natural event)

First, if something bad happened that essential services were disrupted for 6 months, life the way it was, would not ever return. "Normal" would be redefined.

Second, no matter how much supplies you had stockpiled in your castle guarded by a moat and attack dogs, even if you had the weapons and abilities of Rambo, the starving masses are going to get you someway or another if you try to stand alone or with your own immediate family. The first thing I would do (and am doing) is to develop a extended family/clan/neighborhood/village/tribe for mutual support and protection. Even if it means sharing all that you have MOST IMPORTANTLY your knowledge, with your tribe/village, you are creating a life support system far stronger than attempting to stand alone.

Third, the essentials for survival are MAINTAINING BODY TEMPERATURE (too hot or too cold will kill you faster that starvation or dehydration), WATER and FOOD. Everything else is a LUXURY in a survival situation. Of course, human companionship and comfort items will add much to your personal and psychological well being.

Maintaining Body Temperature: Clothing, shelter and heating/cooling fit into this category. So, figure out what is the most extreme weather that you may face and plan accordingly. I've lived in a tipi at minus 40 F. so I can tell you that an army surplus feather sleeping bag and another warm, willing body can keep a person quite warm. Shelter can be anything from a piece of canvas, a debris covered lean to or even a hole in the ground. If you are trying to maintain your suburban house, close off rooms, live and sleep in one room if you have to--depends on your resources and what extremes of weather you face.

Water: It takes 1 gallon per person per day for cooking and drinking--much more if it is extremely hot and/or you are working extremely hard. Figure a minimum of 1 gallon/person/day for washing/dishes/clothes etc. Of course that daily shower is out of the question---you'd have to relearn everything there is to know about water management and reusing from one task to another with the same water. A sweat lodge or homemade sauna is very useful in a limited water use situation. It uses very little water and can keep your skin clean and healthy. If you've ever had a boil on your skin, you know how important it is to keep your pores open and your skin healthy.

It's impractical to think that you can store 6 months or more of potable water so knowing how to catch rainwater, making a solar still, and filtering/boiling water is vital. In a survival situation and you are extremely thirsty, you will use whatever water is available, even scum covered ditch water. Natural contaminants can be filtered out and/or killed with boiling---boiled water tastes terrible so know what wild plants in your area can be used for herbal teas. Artificial toxins pose a far greater threat in an urban situation--in a worst case scenario, filter the toxic water thru successive layers of sand and charcoal (from your campfire). Most toxins will chemically bond with the charcoal and be removed from the water but this is a last resort-survival situation.

Unless you have an abundant water source and you are ambitious enough to carry lots of water, filling your flush toilet every time it is used is impractical. You can use less water by pouring it directly into the bowl. Even better would be to dig a hole and build an outhouse. A chamber pot (5 gal. pail with a toilet seat & tight fitting lid) with a few inches of water to keep things from sticking--if the water is available-- works well during the night or in bad weather.

Food: The basic survival foods that can be stored for long periods of time are grains and beans and dried greens. Everything else is a luxury---very enjoyable of course but not essential to staying alive. Grains and beans each have different types of amino acids which are the building blocks for proteins but together, they compliment each other and provide all the amino acids necessary.

Grains, beans and dried greens can be kept for years with little loss of nutrient value when stored in sealed containers that protect them from moisture and vermin. Storing them in a cool, dark place also extends their useful life.

You can grind your grains & beans with 2 rocks if you have to, but a hand powered grain grinder with metal plates sure makes it easier--the grain grinder needs to be attached to a solid workbench anchored to a wall---takes lots of muscle power and a table will wiggle all over the place. Metal plates can can be clean after grinding gummy beans etc. Stone plates are great for grinding grains into a much finer flour but will gum up with some things. Hand ground flour is still very coarse. Bread baked with hand ground flour will probably feel more like a brick but is very filling--daaaaaaaaaa---packs well in a back pack and keeps well!!

Grains: Wheat, rye, corn, millet, oats, barley etc. (you can grind whole, unhusked oats and barley--very coarse but very filling) if you fry it you have pancakes, boiled for hot cereal, baked for bread (you can bake bread in a tin can over a wood stove if you have to--or wrapped around a stick and toasted over an open fire), sweetened with honey and baked for cake. Different grains, beans, ground rose hips, alfalfa leaf powder, edible weed leaf powder, ground weed seeds etc. can be added to your grain flour to improve its nutrition and/or extend your limited supply.

Foraging and growing greens. Greens are everything from edible herbs & weeds, wild foraged roots, fruits & nuts to your backyard garden, berry patch and orchard. They all provide essential vitamins, minerals etc. and just as important, a variety of tastes to sustain your emotional well being as well. Just think how scurvy cursed early explorers and sailors to get some idea how vital 'greens' are to maintaining your health!

Drying Greens. Almost any foods can be dried and stored but drying greens are by far the easiest! I define greens as herbs, edible weeds, alfalfa, therapeutic and medicinal teas and on and on. Most greens can simply be cut, tied together in small bundles and hung up in a shady, airy place to dry. You know that they are dry enough when you can crunch the leaves up by hand. The dry leaves can be stored in sealed jars----salvaged from your trash, washed and allowed to dry completely! Dry leaves can be stored whole, crunched into pieces or ground into powder depending on your planned uses.

Beans and Greens: These can be cooked individually or mixed together for soups and stews. The basic difference between a soup and a stew is the amount of water in the kettle. If you have lots of hungry mouths and a limited amount of food, make a soup. If you have a limited amount of meat, use it in the soup or stew. Don't forget to boil the bones--crack them into pieces to get to the rich, fatty marrow--- cool, pick the meat off and use the stock for a soup base.

5 gallon pails of honey, 5 gallons or more of cooking oil in small, sealed containers, kept in a cool, dark place, 5 to 50 lb. of sea salt--excellent source of trace minerals, baking soda/baking powder and peanut butter were things that I bought even when I lived a lifestyle that was over 80% food self-sufficient.

Invest in stainless steel and cast iron!!! And hand tools--know how to use them. 2,3,4 & 5 gallon stainless kettles are very useful from boiling water to processing garden produce to picking wild edibles. A dutch oven is valuable for outdoor cooking. If possible, invest in more than you need for trading and bartering.

Guns and ammo. These will be used primarily for hunting and protection against varmints & predators. Self protection maybe??!! but the best defense is a strong, mutually supportive community. These tools can be incredibly dangerous and also have incredibly complex legal limitations so KNOW THE LAWS!!! KNOW YOUR WEAPONS AND THEIR SAFE HANDLING!!!! Something else to consider would be to gain the knowledge and equipment to do your own reloading of your ammunition. Black powder weapons would be something to consider for extremely long (multi-generational) survival considerations.

Traps and snares. This is a category of food producing gear that is often overlooked if not outright disdained. Now I don't go out and trap those cute, furry. little woodland creatures as part of my daily food supply; but I tell you, in a survival situation, trapping and snaring would be one of the most efficient means providing food, especially in the winter!!!!

The 110 conibear trap is probably one of the most useful tools for survival food production. They are best used for trapping squirrels and rabbits so they could be really useful in a suburban survival situation as well as in a rural area. Wire snares can also be extremely useful if you have the knowledge on how to use them. It is YOUR responsibility to know and follow your state's game laws if you plan to practice your 'survival' trapping skills!!!

http://www.buckshotscamp.com  is one of the most useful websites I've found for survival trapping supplies as well as home produced 'how-to' videos.

Fishing, gill netting, spearing. Again, know and follow all state game laws if you choose to practice these survival skills. Obviously, in a serious "life and death" survival situation you may be forced to take actions that keep you alive regardless of present day laws.

A basic fishing kit, frog spears and a small (usually illegal--use only for survival) gill net would be extremely useful in a true survival situation---depending on your location!

Last Word on Generators (Again)

A reader sent along some really great info on the question of the right way to set up a generator and the hot neutral issue.  I took the time to read the IEEE paper (which has to do with stray ground currents and a swimming pool - and it's a great read:

There are 2 big issues that the NEC has failed to address regarding residential wiring.

The 1st is the failure to apply No-Ox to bare copper wires at connection points. This is the standard practice in all Telco central offices on power cables and ground cables.

Most homes burn down from this cause. Oxidation of the bare copper.

My wife had a house trailer that almost burned at the clothes dryer connection.

The 2nd is the neutral wiring that causes stray currents. The neutral wire should be isolated from the ground but this would require a huge costly retrofit that is deemed unacceptable from a cost point of view and lets not talk about liability issues.

Definitely read the IEEE paper.

http://www.bassengineering.com/SV_Utility_.htm 

http://www.mikeholt.com/documents/strayvoltage/pdf/NEC-NESC-Hazardous-to-HealthSwimming-3-3-99.pdf

Cheap Plinking

7.62 x 39?  Cheap but limited quantities:

George you are always complaining about ammo availability how about 1000 rounds for under $200?

http://www.sportsmansguide.com/net/cb/cb.aspx?a=403789&pn=1

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Peoplenomics: 2008: Paradigms in Collision

This coming year promises to reveal some of the largest difference between humans ever.  Not because of things like the onset of the Kondratieff Long Wave Winter in the macro economic world, but because we may get glimpses of how poor the upper middle class of well programmed humans can treat other humans, not as financially endowed. This week we will connect the dots between housing confrontations in New Orleans, the tent cities of Southern California, the years 1421 and 1491, and if that's not enough, we'll throw in the business model of the Catholic church along with moveable type, Martin Luther, UFO's and symbiotic networks.  Sounds like a lot to bite off in a quick 15-minute read?  Not hardly - in fact it's quite simple, really.  It's "paradigms in collision."

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The Gift that keeps on Giving!

Here's a great 'zero-cost' gift exchange:  I will keep getting up every morning at 5 AM to update this site so we can have our laughs and giggles at the absurdities of life, if you will tell everyone you know about this place.  Fair?  If you have Outlook/Express click here to send an email to someone you know telling them what a strange site you've found.

Trite but Right?

What a DFQ (dumb ,freakin' question) huh?  To get your "No Incumbents in 2008" click here.  They're just $5.  And no, that would not keep Ron Paul from running for the White House  he is not an incumbent for that office  having never held that job before, you see.

Guide to Living Cheaply

Order our handy ebook "How to Live on $10,000 a year or less  and learn to live like a Third World person now.  It's coming anyway, with big job layoffs this summer  and by ordering now, you can beat the rush...You may have more time to read this fall if the economy falls apart as I expect...

Last week's report is here.

Friday December 28, 2007

Pakistan, Markets, Pakistan

Talk about a timely interview: Check out the interview with Benazir Bhutto that Parade Magazine was planning to run next week - before the assassination Thursday in Pakistan.

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It wasn't just the rioting that swept Pakistan in the wake of the killing that caused the Dow to nosedive more than 190 points; there were other factors, like the weakness in Durable Goods driving markets, too.

While there is a little bounce at the open today judging by the futures, that could disappear within the first hour of trading as existing and new home sales for November come out.  Any more ugly surprises there, and the markets are set to tank again: Holding longs over the weekend would seem to be risky business, at best.

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Zooming back a bit, there's a much larger problem looming for the USA as a result of the murder of Bhutto.  There's a high probability that the US will be sucked into an ever-larger war with Islamic fundamentalism. UPI quotes a Washington Post story that US Special Forces will be expanding their operations in the country next year.

Officially, the numbers will be small and to "train Pakistani troops" but I seem to recall that this is how at least a couple of recent wars got started; with advisors doing training.

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That said, some observer, like Jim Sinclair, have inferred that al Qaeda has an agenda to secure nuclear technology and ...

"Pakistan is the slippery slope of all time. From today to the first quarter of 2011, this slope pulls in all sides to a meeting point politically, economically, socially and spiritually. The end product is the reason gold is for insurance. Without it you risk everything, believe me. "

The US dollar, continues its near death experience, diving under 0.68 Euro this morning.  But, it's not just the dollar that has our attention.

My commodity broker JB sent me a YM:

"JB Slear: when you review the last three weekly statements from the European Central Bank (ECB) you will find out that Hyperinflation has arrived in Europe. The amount of Banknotes in circulation (M0) has increased by an unbelievable annualized rate of 55%.

The last $500 Bill. mega-tender from the ECB is even not included here.

Here are the reported numbers:

Date Banknotes in circulation Increase

JB Slear: Date Banknotes in circulation Increase --

14.Dec 659.561 Bill.Euro + 4.185 Bill.Euro

7.Dec 655.376 Bill.Euro + 9.679 Bill.Euro

30.Nov 645.697 Bill.Euro + 6.414 Bill.Euro

23.Nov 639.283 Bill.Euro

JB Slear: Reference: http://www.ecb.int/press/pr/wfs/2007/html/index.en.html "

I quickly penciled it out - and it's an annual rate of increase of more than 45% - and as JB notes, that's before the $500 billion credit to the bankers to keep them afloat.

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The overall sense is somewhat akin to watching a gigantic global chess match between extremists on the one hand and Western capitalism on the other. The AQ plan seems to be to simply draw the USA into so many global hot spots, including Iraq, most of the Middle East, Philippines, and now Pakistan that we will fry our economy trying to fund the multiple fronts.

The US/Western response has so far been to meet relatively small forces with overwhelming force, but that is just about a textbook definition of asymmetric warfare.

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March 20, 2008 will mark five years since the start of OIF. That's about half the length of our last war of attrition, the one that spanned 1965 to 1975. It may be tempting for  the West's enemies to believe that a war of attrition is winnable.

At some point, I expect some think tank will recommend a radical change of strategy as America and the West gets fed up with headlines.  Two US policy shifts that seem apparent are either a pogrom or simply putting "the football" in play.

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America's rethinking of overall strategy may come too late, however. 

A sudden and shocking decline in the value of the US Dollar in early 2008 has the potential to devastate the country in 2008, reducing us to Third World status and putting us into a Greater Depression than even the 1930's before the year's out.  The seeds have already been planted.

Kondratieff Winters have a way of ending in world wars.  The end of an emergent depression spanning 2008-2010 could easily fit with Jim Sinclair's Q1 2011 or, even scarier, that 2012 date that's been kicking around.

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The predictive linguistics team posted the first part of the new web bot run early yesterday.  Earlier in the week we had a discussion about whether 2008 could be called the year of "manifestation" of a lot of things that were becoming apparent in 2007, the year of 'emergence'.  I won't spill the beans on what's in the report except to say that 2008 will be a lot like being thrust into a blender and then the power turned on.

Oh yeah, one more thing: Down the road a ways, look back on this advice: Vote early.

Oil Up

Oh, oil is pushing toward $100 now...

Stealing Internet Freedom

A reader email sums it up:

"Hi George,

The news from Pakistan is overwhelming, and so is Part 1 of the bots. Nevertheless, this slipped through the cracks this month:

http://gyaku.jp/en/index.php?cmd=contentview&pid=000320 

Good site, by the way. It seems Japan is moving to censor the net in a multipronged approach, very low key, and just before New Year (January 1st) - their big celebration. Can we be far behind?

I'm still digesting the bot report - pies don't help! I worry about those I love that are beyond commuting distance, yet they won't listen to the obvious drumbeat of chaos. I can save myself, but precious few others."

2003: Ran Out of Home Buyers

In yesterday's column I offered a simplistic view that demographic shifts are what's driving the current meltdown of housing, such that we're seeing two forces combining into a perfect storm.  The first is that the credit/debt bubble has been blown up as far as it can be, but the second and less obvious is that demographics are causing a shortage of buyers.

I was pleased as punch to receive an email from my bond trading friend Jim Goulding yesterday validating my view.  Here, reproduced with his kind permission is the email:

Hey George, Happy holidays. Your comment about running out of boomers is exactly correct as my study shows. I wrote a study about this in 2002. I took all boomers birth years (with and without immigration) and projected them forward based on HS Dent’s home buying theories. He states that the first home is bought when we are 26 yrs old and the second home is the trade-up home, completed when we are 43 yrs old. I took his numbers and added on 3 yrs for the 43 yr old category (for purposes I won’t get into here.) http://www.jamesgoulding.com/predictions.htm#Housing 

What the study show is that you are correct. We ran out of the trade-up home buyers in January of 2003. Oops.

 

Well, what about the 26 yr olds? They’re rising, but these folks buy much lower priced homes. MUCH LOWER. They can’t possibly support the McMansions market. Can they.

 

Jim's bottom line (and mine) is that there's not going to be a pretty end of the housing slide any time soon.  It's in the numbers that the Wall Streeters and bondsmen would just as soon you didn't think about.

References:

Population (annual live births): 1933–2001

Population (decennial): 1790–2000

Immigration (decennial):1850–2000

Immigration (annual):1820–2001

Population (percentage distribution of the population in major age groups by country): 2000 and 2050

Buyers pools for starter homes  (1959–2027) and trade up homes (1977–2040) Graphs. Stats are to the left of graph. No Immigration

Housing (total housing units): 1965–2002

Housing (total housing units as % to births): 1976–2002

Housing (estimates of total housing inventories): 1965–2002

Buyers pools for starter homes and more expensive homes w/immigration

 

Thank Congress

Thanks to the late action on the Federal Budget IRS says tax refunds for 3-million people will be delayed.

New Sparklies

Toyota's new hybrid truck.  On next year's list.

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Coping:  More on Generators

OK, here's what may be the final words on generator transfer switches:

Not to beat a dead horse, but as a municipal electrical inspector in NH, it’s always interesting to hear what the “experts” have to say regarding electrical wiring. A interconnection between the generator and electrical service neutrals is not an issue of concern in a properly grounded residential electrical service. No magic here. The danger is simply the ability to close both the main and back fed branch circuit breakers at the same time. Unfortunately, no matter how determined we are to be careful, sooner or later the switches are likely to be thrown in the wrong sequence, energizing the utility transformer, producing thousands of volts on the utility distribution lines or destroying the generator if utility voltage is present. I recommend that your readers never rely on this method as a solution to powering up a building in an emergency.

Thursday December 27, 2007

Efficient Markets Hypothesis

There's a myth taught in business schools around the world that alleges financial markets are both rational and efficient.  Wednesday's action in the market, though, should have put a final end to any such foolishness; but of course, it won't.  Time to reread some of the behavioral finance books, I suppose.

On at least three levels of zoom, there is nothing on my 'rational horizon' that supports the notion of a rally.  OK, it wasn't a big rally, I mean what's a lousy 2 1/2 points?  The correct answer in 'Figure Out the Economy 501" this morning is why any increase at all?

Zoom in real close: tax positioning.  Zoom out a little farther, holiday sales sucked.  Out further, Baby Boomers want their retirement dough.  Nope, nothing to drive prices up in that mix.

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The news on housing yesterday was worse than bad.  Down 6.1% since October of 2006, and the anecdotal reports out of the few places where sales were actually holding their own, suggest that even in those bergs, the news was a gazillion miles from encouraging.  Let me show you what I mean:

Hi George, I'm retired (68) but still work part-time as an escrow office for a title company, not because I love to work, but because I can't live on my $830 SS. Anyhow, I know of 3 instances in the last 2 weeks where offers have been made by buyers on bank-owned foreclosures - and all 3 of them have been turned down by the banks. What??? and none were ridiculously low offers. Now, being in the business, I know how many (lots) of bank-owned houses there are on the market right now. And in the past banks have always been thrilled to get any offer on these places. (And by the way, 2 of the three houses were badly trashed.) So what's up?? One thought I had is: Do the banks know that somehow the Feds are going to bail them out by how many houses they have in inventory, so they don't want to sell any at this point? As ridicules as that sounds, I can't come up with another reason other than total madness. What's your read?

My read is that a) bankers are greedy and b) that markets are not efficient, and that given a chance, some larger-than-we-all-hoped fraction of humans will lie, cheat, steal, and swindle when it comes to money.  They won't sell at a loss because it would hit the books and make then look bad. So, what you're seeing - at least for a littler while - is banksters holding onto properties, hoping that the price will come up (and that more easy money will flow) - before the auditors come through - and when you get into the clockworks of it, this is just the kind of behavior that markets markets efficiency but only so long as the participants are dishonest and/or irrational.

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Humans do an especially poor job of being honest when it comes to diets and money.  They understate how many pounds they should optimally lose for health reasons, but at the same time systematically lie about their truth financial condition by leasing the most impressive car they can and buying the most pretentious home possible, justifying it as "necessary" and a "good investment". 

Remember yesterday's diatribe about the Complete Reality School of Finance?  Here is the average American's mental T'ai Chi move: Understate weight, overstate wealth, and believe that on average we're all being honest. 

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I'm too lazy (or the coffee is so weak I lack the strength) to look up the median price of housing.  But, suppose momentarily that it's in the area of $167,000 - or was until this week.  A 6.1% drop in housing prices pencils out to $10,354 of net worth evaporating for an average family. 

Got a spendier house? Congratulations -- book a bigger loss.

Hidden in Plain Sight

There's a simple demographic fact underlying the collapse of housing.  The Baby Boomer Americans who start to retiring right about now have bid up the price of homes so high that the next generation of humans won't be able to buy them. Well, duh.

Between Elaine's kids and mine, only about half can afford to buy or hang onto their homes.  Whether it's divorce, lack of income, inability to save, or low wages, there just aren't enough replacement home buyers coming to the market. 

Key point:  If there aren't enough buyers to hold prices UP with at least replacement demand, prices will inevitably come DOWN to an appropriate level.  We're actually quite early in this process.

But, don't take my word for it.  Grab a high school yearbook from just about any school in the country and compare how many recent graduates have managed to buy homes compared to earlier cohorts.  My suspicion backed up only by personal observations is that the number of people able to buy homes has peaked.

Any minute, I expect my deflationist friend Jas Jain to call and say "Exactly!  When young people can't take on more debt, you get deflation!" 

Yeah, I will grudgingly admit that deflation is coming (in a wild way, although this $10,354 drop in net worth for average homeowners isn't too scary - yet.

However, at at the same time The Ben, Paul, and George Show has managed to push milk to $5.50 a gallon and grain prices this spring are headed skyward says the linguistics team.

The second point is that stock prices will go the same as housing - just little slower. 

I can take the combined annual income of at least three of our kids (and they work in the 'hot' fields of medicine and DNA) and all together they cannot buy one share of Berkshire class A.

Go read some of the headlines:

• US Baby Boom Retirement Wave Starts in January

• Baby Boomers turning into New Radicals

• Baby Boomers read to claim pensions

Is there a design pattern here?  More sellers than buyers, as I read it.  There's no way the next generation of investors can save/invest/climb/or buy into in the bubbles that are current stock and housing prices without dramatic declines.

---

If the Wall Street Sages were a little more honest about how this Big T Account works, they would long ago have advised you to unplug those financial newsletters and magazines and focus instead on demographics.

---

Back in 2004, the old magazine "American Demographics" was picked up (and merged into) Advertising Age.  If you want a seat on the 50-yard line of finance, I'd being reading Advertising Age before stock tout newsletters. When you read a headline like "A Disappointing Holiday Season for Retailers" I'd be eyeing the exits.

---

Elaine and I hit the paper asset exit a couple of years ago because of another macro trend that maybe escaped your notice.  And that is?  The Huge Event of May 23 this year:

"There’s no big countdown billboard or sign in Times Square to denote it, but Wednesday, May 23, 2007, represents a major demographic shift, according to scientists from North Carolina State University and the University of Georgia: For the first time in human history, the earth’s population will be more urban than rural.

Working with United Nations estimates that predict the world will be 51.3 percent urban by 2010, the researchers projected the May 23, 2007, transition day based on the average daily rural and urban population increases from 2005 to 2010. On that day, a predicted global urban population of 3,303,992,253 will exceed that of 3,303,866,404 rural people.

Though the date is highly symbolic, the researchers – Dr. Ron Wimberley, Distinguished Professor of Sociology at NC State; Dr. Libby Morris, director of the Institute of Higher Education at the University of Georgia; and Dr. Gregory Fulkerson, a sociologist at NC State – advise avoiding the urge to interpret this demographic transition to mean that the urban population has greater importance than the rural.

Urban and rural populations, they say, rely heavily on each other."

Think about that last sentence:  If one population is getting bigger, and another is getting smaller, yet they must trade, do you want to be in the 'getting-bigger' group, or or in the 'getting-smaller' group, in terms of increasing your net worth?  We're gambling on rural going up faster than the value of urban.  There's fewer of us proportionately.

besides, at the end of the day, a goat, chicken, tree, or a few vegetables has intrinsic/utility value that a collection of paper assets doesn't.  If you don't own at least some of your own means of production, then you don't own your own future.  I don't mean to sound 'preachy' though; you got your life, we got ours.

---

In a sense, markets are efficient.  But there's more to it:  They are only efficient within the confines of a body of information.  A groupthink of a herd. 

Once you step outside herdthink with other information not widely held, you create financial modelers call 'information asymmetry'.  Market panics happen when a lot of participants recognize the asymmetric information en masse.

Yesterday's tiny rally serves as plain-as-day evidence to me that groupthink doesn't understand the reality of what a million more homeless and another year of dropping real estate will be like.  The biggest crisis in housing since the Great Depression, says one story.

But that's why the banks won't sell.  Yet.

But wait! Good times are ahead for the dollar.  At least that's some of the thinking on the Street. 

How Durable Durables?

Three months down and a lame bounce today:

New Orders New orders for manufactured durable goods in November increased $0.2 billion or 0.1 percent to $214.7 billion, the U.S. Census Bureau announced today. This followed three consecutive monthly decreases including a 0.4 percent October decrease. Excluding transportation, new orders decreased 0.7 percent. Excluding defense, new orders increased 1.2 percent.

Shipments Shipments of manufactured durable goods in November, down three of the last four months, decreased slightly to $213.3 billion. This followed a 0.5 percent October increase.

Unfilled Orders Unfilled orders for manufactured durable goods in November, up thirty of the last thirty-one months, increased $7.9 billion or 1.0 percent to $787.5 billion. This was at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 1.0 percent October increase.

Inventories Inventories of manufactured durable goods in November, up four of the last five months, increased $2.4 billion or 0.8 percent to $317.2 billion. This was also at the highest level since the series was first stated on a NAICS basis in 1992 and followed a 0.4 percent October increase.

Capital Goods Industries Nondefense

Nondefense new orders for capital goods in November increased $2.8 billion or 3.8 percent to $75.9 billion.

Defense

Defense new orders for capital goods in November decreased $2.1 billion or 24.3 percent to $6.5 billion.

Mixed open today for stocks and the big news will be consumer confidence.

Red Ink Department

More talk about big write-downs still to come in places like Merrill and Citi.  Surprised?

Pakistan Powder Keg

A suicide bomber has claimed the life of opposition leader Benazir Bhutto say reports.  I don't know about you, but when a country with nuclear weapons is having this kind of trouble it makes me nervous.

Terra: Mudslides

Kill 120 (and likely more) in Indonesia.

---

On the flip side of this, however, the Southeast is looking at Dust Bowl kinds of records with Atlanta now close to matching a 54 year record drought.

Despite the lack of a single big catastrophe, insurance losses for 2007 could reach $75 billion, up 50% on the year previous.

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Coping: More On Generators

More on safely hooking them up (as opposed to moron hooking them up...):

"The "hillbilly" system for connecting a generator to the panel via a spare 240 volt breaker does not work. It is dangerous. Shutting off the main breaker will disconnect the two hot leads from the grid but does not disconnect the neutral (that's the white wire). When the generator is turned on the neutral becomes half of the AC circuit. I know it is grounded but it will still send current back into the system. That is how you zap the lineman trying to restore your power. And that is why the rules say you need a real disconnect switch."

I too have been 'bit' several times by a neutral wire that was supposedly grounded, so again: When you hook up a genset, make sure your work is either done by, or at least inspected and signed off by a licensed electrician or your local utility company.  HUGE liability is you don't do this right.

Need power?

"Upstate New York, bought an old , 1983 Mercedes diesel 240D for $200. Has a 4 cylinder non-turbo that puts out 72 hp at peak. Bought generator "head", (gauges, output for 2 -110 and 1 240) for $300 for Harbor freight. 1" shaft, needs 3600 rpm, gearing up diesel rpm for the gen head. Maybe sloppy but I'm having fun and married well."

Running low on coping articles - click here to send one in, or email to george@ure.net.

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Wednesday December 26,2007

Dropping, Dropping, Rising, Rising

Don't mean to sound too obscure here, it's just that watching the financial markets is a bit like T'ai Chi', in that the very slow movements in one way are always counter-balanced in another such that the perfect balance is maintained. 

Rather than continue in a more pleasant (and often more worthwhile) discussion of the Complete Reality School of Taoism, however, we'll focus on the lesser mysteries of finance, although I did my traditional Chinese dinner on Christmas day - a form of cooking which is at once simple and complex, depending on the fermented beans and fermented rice ratios...

---

When we last talked - Monday - I was asking for a little truth in financial labeling.  Whether it's because someone at Fox reads this site, or the Universe was being surprising quick to acknowledge my request for financial clarity, a sharp eyed reader sent this:

"Fox news this morning had a segment on the use of credit cards - the box at the bottom of the screen said "Debt cards??" - with the gist being that consumer debt is almost $1trillion, and that consumers are not as able (if at all) to take out a home equity loan to cover them - the SOP in the past - because they have maxed out on home equity, for whatever reason. (Won't get into that discussion, I already read your site daily.)"

Neatly coincident, but I still have to bitch about the Universe not hearing my request for a good used, low mileage 930 slant nose, but there's always my birth in February.

---

Clearly, a lot of folks missed the pre-Christmas story on MarketWatch which listed goodies you could buy to help keep the economy afloat.

Holiday spending was weak, much as retailers expected, reports the NT Times.  Here at the Temple of the Complete Reality of Finance, I'd remind you that a 3.6% gain in holiday sales is, in all likelihood, a negative year when you factor inflation into the mix.  So inflation goes up at least 3.6% so sales going up 3.6% is a wash, got it?

I didn't pull that 3.6% out of my seating apparatus, either:  That's the increase pegged by MasterCard SpendingPulse.  The 3.6% inflation, on the other hand, I have to fess up, was pulled from you-know-where.  Even though CNN-Money says "Food prices soar in America" lately, citing milk up 23%+ for the year, the government figures used to adjust social security and military pensions seems to be much less.  So, who you gonna believe?  Your own lying eyes when you cut checks every month, or the government figures?  Your answer is no longer option.

Still, the Toronto Star, which has been watching such things, notes that bonuses in Big Finance have turned greener this year:  "Payouts pick up." 

Meantime, the Arch Bishop of Canterbury warns that greed could wreck the Earth.  Dude! A little late on that one, don'tcha think? 

Maybe I'm not the only one skeptical: Stock futures have turned lower after being higher at the end of Monday's partial day of trading.

"How much worse will the US economy get?  Experts know not..."  But, stick around, I think we'll find out all too soon.  Dropping futures, dropping sales, rising inflation, rising foreclosures.

Chop wood, carry economy.  The Complete Reality School of Finance.

Further Dangers for Reindeer

Not to put to fine a point on my general skepticism toward the world's commercial holiday, but have you noticed how much more dangerous things are becoming for UFO's?   Japan shoots down a missile in space, and the reborn cold warriors in Russia have announced ICBM launch.

Tempting though it may be for the cause of most roof leaks to visit Iran (clearly marked on any vice presidential map with the big red circle and the caption "OPEC's Second Biggest Producer at 13% of world oil), Russia's delivery of a new S-200 missile system to Iran seems destined to further shorten Mr. Chubb's Holiday Route next year.  Maybe the lighter workload will let him join a gym and tone up a bit, eh?

The Rebellion/Revolution Meme

Had a little too much Orwell injected into your life?  Folks in the UK are getting back at too much government by burning British surveillance cameras.

That's nothing though, compared with a mutiny among US soldiers in Iraq which is getting virtually no play in US LameStreamMedia.  Quick, feign surprise.

Going forward into 2008, don't be surprised to hear words like "rebellion", "revolution" and "munity" used in the oddest of ways involving unexpected players.  Like the World Bank, for instance.

Oiled Up

One reason is Turkish warplanes striking at [rebels] in Northern Iraq.

[I bet you think that 'oiled up' reference would get my twisted sense of humor to mention how Fredericks of Hollywood going back public.  You'd be right...]

No one's noticing, except maybe us, that Iran is now selling electricity to Turkey.  Buying a little love, maybe?  Certainly building their business case for more nuke plants...

On The Road, Again

While the folks at Chrysler are talking about being 'operationally bankrupt', an accounting term I'm still trying to  find in my tattered copy of "Accounting Principles" (not to be confused with "Accounting Principals" who will say damn near anything), there's a big deal brewing in China's auto sector which ought to show up in the US financial press either later this week -- or never.

How Dry They Are

Lake Lanier just keeps dropping...

Vista Humor

Several readers have steered me to a dandy little video which sums up my personal Vista experience to date.

George Sent Home

The reenactment of George Washington crossing the Delaware was canceled this year because of excessively strong currents.  And no wars till things are good and safe?

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Coping: With Generators

I number of readers have been sending in comments on generators.  Before I get into a deep discussion of this let me tell you up front that although there are lots of ways to feed a generator into your home's power system, most states have harsh laws (e.g. criminal penalties) for failure to use an approved set up.  The reason?  If the power goes off, you fire up a genset, which back-feeds down the line to the break, there's the potential to injure or kill an electric utility worker.  Ergo, I strongly advise anyone planning to put in a generator to know the law and follow it because if you get anything wrong, you could end up in a small box-like room with no big screen.

That said...

"Here in Tenn. the "Hillbilly" method of connecting a generator to the dist. panel is accomplished by back feeding the 240 volt output of the generator into a spare 240 breaker in the panel.

When the power goes out, open the main breaker to the grid, fire up the generator, plug in the line from the panel into the generator's 240 v output and then close the 240 v breaker in the panel. Then select what circuits you want to power up.

I have a generator for my greenhouse and this is how it is connected to my distribution panel.

The eclectic company wants an "idiot proof" method for people who are too stupid to reconnect to the grid once the power is back on.

I just bought an inverter "Magnum Energy" MS4448E, (for my solar system) which puts out 240 v, which I plan on connecting to my distribution panel via the "Hillbilly" method."

If you don't have a generator, check this:

"Costco has a 5.5kW diesel (but Chinese and hi-rpm (3600)) generator for about $900. And, it is QUIET! I put a tractor muffler on the exhaust and it is stealthy...The diesel is said to be a common model with available parts, but I haven't tried to find any."

That's darned cheap, but I didn't see them on the Costco web site, so it may be in some stores only.  Heck, good enough price I might pick up another one...

Then a reader asked this:

"You might want to discuss the use of natural gas generators for the 'city slickers', or any urban dwellers with access to it."

That's a short discussion:  Yes, the natural gas/propane types last longer, but the fuel is much less robust.  Any earth movement (like a big quake) or disruption of the NG feed source upstream, and you're in the cold.  So, it's a matter of location and fuel choice.  Me?  Give me diesel which is a much more flexible fuel.  NG is too 'dependent on everything else working" for my tastes.

Oh - this is really cool: A transfer switch that uses your electric meter socket - check it out.  No excuse not to do it legal...some utilities are offering a lease purchase, too...

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Around the Ranch: BBQ'ed Porch, Nature's EMP Attack

Yes, we bought a spiffy new stainless steel BBQ grill for Christmas.  And yes, it's possible to flame a $55 rib roast into perdition and nearly set the house afire doing it.  I somehow missed the 'put a pan under the roast to catch drippings' part of the instruction manual.  (It was highlighted and bolded, too, our investigation later discovered)  Come on, what male would be caught reading such things?

And this morning, Universe is sending me a reminder not to be so cynical - a large lightning show is on right now.  Hopefully the internet links (all three of them) will continue working.  Don't want to have to fire up the genset when it's pouring rain and 42 degrees, although that's generally when they are needed.

Tuesday December 25, 2007

A Super Short Report

There's a very simple, but widely overlooked point on Christmas, but here it is:

There are things more important than money.

Knowing this, I'm taking the rest of the day off - see you tomorrow morning at the usual time...

Thank you to the hospital workers, firemen, police, and Armed Forces that make this all possible.  We are all in your debt.  Yours, and the banks...

Monday December 24, 2007

All I Want for Christmas

"Dear Santa,

I don't mean to whine, and I know you've got a long night ahead tonight, but there's some stuff I've got to table for you to put some deep thinking on while you're out causing roof leaks.  No, I'm not going to smoke you for animal cruelty, but your delivery of "Peace on Earth" and "Goodwill towards Men" just plain sucks.

I was reading over the list of most censored news stories for 2007, and I was wondering, what have you got in the bag tonight to fix some of these?  Corpgov is moving inextricably toward seizing the Internet, perhaps thinking too much Freedom is a dangerous thing.  And what about Halliburton's selling nuclear secrets to Iran while their once leader is beating the war drums?  And Death of the Oceans - showing up all over the place in data collection for the web bot project, who can miss that one?

OK, so you're not responsible for everything that's wrong in the world.  We elect people to be wrong about most of it.  However, I have to call you on the carpet for pushing Americans even deeper into debt and pressing them toward the runway point, beyond which these ludicrous 30% credit card interest charges become inescapable debt monsters.

So all I want for Christmas this year is this:  Honesty in advertising and news reports about money. 

• Require all references to 'credit cards' to be changed to 'debt cards' because they incur what?  Debt.

• Require the not-really Federal Reserve to label G.19 report "Consumer Debt" not "Consumer Credit".  Same reason:  It's all about debt, totally about debt, and can be nothing else. 

The Banksters make it seem like they offer credit.  You do remember where the money came from in the first place, don't you?  The truth is the Banksters takes people's hard-earned money and charge interest to 'loan' it back to them - cutting themselves a fat hog in the process.

As long as I'm asking you to become an Economic Crimestopper, how about outlawing derivatives?  Last time I heard, the notional value of these things was half a dozen years (or better) of planetary GDP.  When this house of cards falls, I'll remind you that between credit cards and tacitly approving the credit/debt spin/flip to muddle people's thinking, you've some some personal responsibility to all of us with skin in the game.  Won't just be bankers with the mobs after them...

I figure that if you actively promote a little clarity in economic language that people might be able to make better decisions - and that would be the finest Christmas present you could give.

Sincerely, or nearly so,

George

PS: Because I'm a good and jolly fellow myself, I'm going to remind you to be sure and file a flight plan for tonight, lest the Japanese, recently overcome with candor about UFO's, might get the wrong idea about you, and start blasting away.  Say, are you going to be in the British UFO files about to be released?

PPS: Let me know how you handle the 'roof top' landing routine when you visit the tent cities that are springing up all over the place and millions face the prospect of homelessness.  You really think consumer electronics is the answer to a roof and food problem?

PPPS:  I recommend a VFR approach to the ranch tonight.  The Wifi networks at the ranch aren't interfering with aircraft operations, but the Angels We Have Heard on High have complained all week about navigations errors caused by one of the static IP wireless surveillance cams.  I caught 'em singing to a tree stump a couple of nights ago...

PPPPS: Go light on the wassailing, too.  Our Anderson County Sheriffs are not to be trifled with; if you blow a 1-oh buddy, you're going down. Also, remind Rudolph what will happen if he gets a little uppity here in Texas -- have him click here.  Cases of mistaken identity at night do happen, you know. Never seen any hoofed animal outrun or out-fly a FMJ, right?

Trading Times

My commodities broker sent me this list which I think is right, but no promises All times are in Texas time (mistakenly called Central time by people outside the Republic).  Add one hour if you're Eastern:

Monday, December 24 CBOT Floor: 12:00 close: Financial and Agricultural contracts 12:15 close: Equity contracts 12:30 close: Mini-sized Ags Regular close: Metals and DOW-AIG contracts

eCBOT: 12:00 close: Agricultural contracts 12:30 close: Mini-sized Ags and Equity contracts 1:00 close: Financial contracts Regular close: Metals and DOW-AIG contracts *Overnight eCBOT closed

CME Floor: 12:00 close: Foreign exchange, Commodity futures, interest rate, GSCI, weather, and real contracts 12:02 close: Commodity options 12:15 close: Equity Indexes *Dairy and Dairy Spot Calls Closed

GLOBEX: 12:00 close: Commodity, GSCI, GSCI Excess Return and weather contracts 12:15 close: Foreign exchange, Equity indexes, ETFs, Housing and Interest rate contracts *Dairy Closed

NYMEX/COMEX Floor: 11:30 close: COMEX 12:30 close: NYMEX

GLOBEX/NYMEX Clearport: 4:15 close - No overnight session

NYBOT/ICE 12:00 close: Financial and Stock Index * Electronic Softs Closed

OneChicago Regular close

NYSE 12:00 close Tuesday, December 25 CBOT Floor: Closed

eCBOT: Closed: Daytime and Overnight eCBOT Closed *Financial Contracts open at 6:00 am on Wed, Dec 26 *Equity and Metals Contracts open at 6:15 am on Wed, Dec 26 * $10 DJIA closed for trade on Wed, Dec 26

CME Floor: Closed

GLOBEX: 5:00 pm Open: NYMEX/COMEX Contracts * Globex contracts open at 5:00 am Wed, Dec 26

NYMEX/COMEX Floor: Closed

GLOBEX/NYMEX Clearport: 5:00 pm Open

NYBOT/ICE Closed

OneChicago Closed

NYSE Closed *All times listed in Texas (Central)  Time

Happy Days

The latest mass layoff report from the Department of Labor sure doesn't look to me like it's reflecting the layoffs in construction, real estate, and so forth.  But here's the claimed numbers - make up your own mind:

Now Hear This

iPods with automatic volume controls to protect your hearing are coming.  Of course, I'm waiting for automatic content control to protect your thinking, but that's some distance off, yet.

Eye Spies

Retinal images and any other biometric information they can get from you is likely to end up in an FBI $1 billion dollar database.  Say, I have a urine sample I'd pour on this idea...

Wistapo?

Police in Wisconsin are planning to get fingerprints of everyone they stop for even a minor traffic violation - like playing your music too loud. 

Two questions for lawyer/readers to ponder (and send comments on):  First, if a person goes to court to fight the ticket - and wins - can they have their fingerprints removed from the system?  Second question:  If I copyright my fingerprints (should be easy enough to do) could I sue a thumb printing copy for copyright infringement?

"Notice is hereby given that I copyright my own retinal characteristics, body fluids, DNA, finger and toe prints, saliva, hair samples and any other naturally occurring byproducts including urine and fecal matter and any use including archival and governmental purposes thereof requires a $100-million dollar royalty payment to the copyright holder."  Wonder how the DMCA would handle this?  $100-million?  Sure - pay up and sample away.

National Treasure II

Shining at the box office, and on my 'must see' list.

Stormy Monday

"They call it stormy Monday, but Tuesday's just as bad..."

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Coping: Lessons from the Ice Storm

Interesting stuff here from a reader:

"With a sizeable portion of the Midwest again experiencing weather related power outages, it seems to be a good time to bring up the discussion of generators and “homemade electricity”. The first point being that home generated electricity is very expensive. Even if you are able to install a complete passive solar array, battery banks and backup generator, the expected break even point, verses the cost of commercial electricity delivered over the grid, is pretty close to the expected life of your system. Electricity generated by small home generators is really expensive, but worth the expense at times. The two main categories of expense are the initial cost of the system and the ongoing expense of generating that electricity.

Plan for reality! The current fantasy seems to be for total grid collapse and the necessity to provide electricity for an indefinite period. In a lifetime of traveling through, and working in the third world I have not seen the grid simply go away (OK I don’t know about Somalia). It is always periods of no electricity and an irregular power supply. Even the residents of Baghdad can expect electricity for a few hours each day. When Sarajevo was under siege, some parts of town would have electricity, while many of the large apartment blocks that were virtually on the front lines were without power most of the time. In this country, the current major cause of loss of electricity is storm damage. This is usually fixed in a few days or a week or two at most. So, in reality, we should be prepared to power our homes for a few days to a couple of weeks at a time.

The next question is how much electricity are you going to require and how are you going to generate it. Most of us are going to be limited to a small gasoline powered generator. I know there are many discussions about diesel being more efficient, or getting a high dollar propane powered unit that will come on automatically and power everything in the house, as if the grid had never gone down. Yes diesel is more efficient, but a trip through the local big box shows no small units available, and even a quick glance through one of the large suppliers catalogue shows few candidates. The large propane powered units are expensive, and thirsty! So, being practical, we seem to be limited to generating enough electricity to turn a disastrous situation into an inconvenient situation using a small gasoline powered generator.

A quick glance at the available gasoline powered portable generators shows a large difference in pricing between units of similar output. In this case, what your dollar buys is fuel consumption and a reduced noise level. The best compromise for output seems to be around 4-5 kw. A good Honda powered generator in this output range will consume from ½ to one gallon of fuel per hour, depending on the load. One of the cheaper units will require over twice the fuel for a similar time period. At three dollars per gallon for fuel that’s some mighty expensive electricity! Living anywhere other than in a rural environment, fuel storage for more than a few hours run time can be a problem. Almost as expensive as the generator is the necessity of tying the generator into your household electrical system while insuring that you are not endangering the people who are trying to restore the damaged or failed parts of the grid. A professionally installed changeover system is a must. These are available from major suppliers like Northern Tool and Equipment (northerntool.com), and have about as large a spread of cost and complexity as the list of available generators. Without the changeover system, you are limited to running extensions cords from the generator directly to the appliance or lights that you use and are probably not going to come near optimum use of your generator.

After a couple of ice storms, and a few other “live fire” tests; my household system has evolved into a hybrid using two 115 amp hour deep cycle marine batteries, a 2,500 watt inverter, and a 4 kw gasoline generator. During the day, my generator can feed up to 20 amps of 220 volt electricity into the household circuits, enabling me to run nearly anything in the house, one or two appliances at a time, as well as powering my well pump or the fan and controller circuits for my propane fueled furnace, while also charging the deep cycle batteries. While the generator is running, we are moving about doing the normal household tasks, and keeping an eye on the generator. In the evening, the generator is shut down, cooled down, serviced for the next use, and moved inside of the garage. Then the secondary system comes into play. The batteries are connected to the inverter, enabling us to power small appliances, like the computer and satellite modem, or possibly a couple of hours of television watching, possibly even a small microwave to pop some corn to munch on while watching a DVD. The fireplace is used to keep the temperatures in the livable range, and small battery powered LED lanterns are spotted around the house to enable us to move about comfortably.

This system works for us in a rural environment where we are able to store a few days fuel in the barn, and away from the house, as well as normally having a ready supply of firewood cut, dried, and stacked in a dry environment. With variations for local conditions a similar system can be developed for nearly any setting. Again, it won’t provide all of the comforts and conveniences of on the grid living, but it will turn a disastrous situation into a situation with quite a few inconveniences, but livable."

One of these days I will get a subdirectory for snip and save contributions so we can keep them handy...  Send contributions of things that can help cope with modern like to george@ure.net with "Coping" as the subject line so my auto routing email puts it in the right bin

That brings up one little computing trick that many non-professional computer users don't use often:  email routing.

Most 'grown up" email programs (Outlook, Eudora, etc) let you set up email file folders into which mail can be automatically routed. 

I've got mine set up so that certain senders of email go to certain folders.  All the notes Cliff and Igor send go to one folder, all consulting client email is sorted, news tips, Coping section notes, and so forth.  Just something to set up if you haven't.  Makes managing 200 emails a day less of a pain.

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