Monday, July 20, 2009

Doomsday scenario

Marc Faber is now using the phrase "total collapse". A commenter on this post says he's joking, because he's smiling, but I don't think the commenter understands European schadenfreude. The Dance of Death illustration on Dr Faber's website should warn you that he is in a very long tradition that sees death and disaster as the spice of our transitory existence.

Faber lives in Chiang Mai, northern Thailand, a country whose King is a proponent of national economic self-sufficiency. It's also worth noting that Chiang Mai is a fairly short air-hop from Burma, Laos and China; and that Dr Faber collects Mao memorabilia and has business interests in Vietnam. I see him as a long-term planner who covers all possible options.

As Dr Doom notes, "...a major crisis like we had should clean the system but nothing has been cleaned," so why should all be well again? But you could choose to side with Faber's co-interviewee Giles Keating of Credit Suisse; very nice accent, nice bearing - just the sort of thing the clients like.

However, witness also Karl Denninger today, commenting on a report that US Federal Government support for the economy could reach almost $24 trillion:

A couple of market technicians have noted certain "patterns" in the market that have potential downside targets of zero. That sort of thing normally results in a loud guffaw from me - even though I'm bearish I'm not that bearish - I couldn't imagine anything short of global thermonuclear war, ala "Joshua", that could lead to such an outcome.

Well I think I just found something purely economic that could lead to that outcome, and it's right here.

Be prepared. As the Greek saying goes, "There is no borrowing a sword in time of war." I'm going to go back to doing what I started to do a few months ago: draw extra cash and stash it in a locker. And some other things (though not weapons - the tiger is the endangered species, not the rabbit).


Anonymous said...

Don't guarantee to pay someone else's debt. Proverbs 22:26 CEV

The country would be wise to heed this advice.

Anonymous said...

Sak: "I'm going to go back to doing what I started to do a few months ago: draw extra cash and stash it in a locker."

In an earlier post, Denninger suggested six months of living expenses.

Assuming you live in the UK and the SHTF, I have been wondering about the fate of all those tax exempt savings, you know, PEPs, ISA, TOSSA's, etc,.

They are all lined up and the government a knows where they are and exactly how much they are worth.

If we are all going south, how much further to Argentina?

Sackerson said...

I think some our senior (and ex) politicians may beat us to South America. I've said for years that Blair wouldn't - couldn't - stay in this country.

Paddington said...

Blair may have moved from the frying pan into the fire.

James Higham said...

I'm going to go back to doing what I started to do a few months ago: draw extra cash and stash it in a locker.

Fiat money, Sackers. Worthless.

Anonymous said...

James Higham: "Fiat money, Sackers. Worthless"

It's interesting you should say that.

I am going to assume you are a bit of a gold bug?

What do you make of the behavior of gold over the last couple of months.

Given that the UK government has entered its printing and borrowing phase, why hasn't the price of gold, sterling wise gone up, rather than what it has done which is drop about £50 per TO?

Sackerson said...

Cash won't become worthless overnight, and a handful of it may get you from A to B at a crucial time.

Sackerson said...

Anon: a disaster has phases. GATA and others have long made the case that the gold market is fishy and you can only fully trust the gold you've got in your own hands. However, when there's a cash crisis (e.g. Argentine-style bank closures) there's not much money free to chase the yellow metal - and in any case, you can't eat it, drink it etc. Pessimists need to build up personal stocks of emergency supplies; real Eeyores may wish to live near a port or airport.

Where I think gold may come into its own is when the government then starts printing oodles of money. Even then, the government may grab your gold, as they did in the US in 1933. Maybe silver, too, for you silver bugs.

Some might say diversify into other currencies. But what if - for the first time in history - ALL major governments begin to hyperinflate in concert? I don't know whether the dollar or the pound will fall faster, and now China appears to be building its own currency bubble.

We live in interesting times. Roll on dullness!

James Higham said...

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hatfield girl said...

I took six months' cash last Autumn and tucked it away mostly because if there had been a cash-obtaining difficulty it would have been really bad not to meet payments for work and services. It was rather nice. Not having to go to the bank, much easier to get a grip on outgoings, and at the end of the period there was cash remaining - sort of savings -so I bought some things like expensive books that usually would be No.

This time round it is even more interesting because the cash has been borrowed at very low rates, and is paying for real things like plasterers and painters and roofers; prices for these kinds of things are rising steeply even though there isn't such a lot of work about. Very interesting, trying to back the right expenditures with the right resources.