This is no time to stick your head in the sand.

Many of the people I deal with on a personal level are in denial that the economy if falling off a cliff. I hear many people who say "I disagree with you," but give absolutely no backing for their belief. The truth is, they just don't want to believe that we're headed into the abyss. I don't blame them. It isn't pleasant to think about.

Contrary to what they think, I get no pleasure at all in making my forecasts or in being a "doom and gloomer." I'm just passing on what I see in hopes that they might make preparations. We will fair far better as a society the better prepared we are. Those who are prepared can help those who aren't, and can keep their heads better in time of crisis. The more people we can keep out of food lines, the better.

It still looks like a hyperinflationary depression to me. Stephen Lindeman gives a long, long list of reasons why we're headed toward "an unstoppable economic breakdown." If you read it, you'll see why unprecedented tough times are ahead.

Please take a daily look at Jim Sinclair's website. Today he showed why hyperinflation is on the way. Saturday he gave practical steps to avoid personal financial destruction. He first published "This is it" last spring. He could see what was happening. Do nothing and watch your investments dwindle.

Many people are confused about the disconnect between the price of "paper" gold based on futures contracts and the price of physical gold, which is extremely hard to get, especially in coin form. The resulting confusion has caused paralysis and procrastination and kept some people from protecting their assets with gold. This article helps explain the reason and gives links to help monitor the actual price gold is selling for on eBay. If you plan to buy, do it now. You will NOT be able to time the market. By the time you think the market has turned, the price will be exploding up.

New World Order as Global Financial Matrix Self Destructs is an extremely interesting read. Follow it with Catherine Austin Fitts' analysis of the G-20 meeting a few weeks ago. "The net result will be to continue to exercise growing control over the real economy by a handful of private families and institutions designed to protect and grow intergenerational wealth. G-20 are silent on the military and covert action that will be required to make this stick. They are also silent on how they are going to manage this much inflation."

Ron Paul warns of a "great shift to global government" under Obama. (Paul still has the best grasp of the economic policies needed to keep a free and prosperous country. George Bush laid the groundwork. Many, like British PM Gordon Brown, are now openly calling for and discussing the "New World Order."

The oil price collapse in creating great geopolitical stability. Pay attention. Enjoy the low gas prices while they last.

A big part of the enormous problem we have with grappling with our problems is, frankly, the ignorance of many people. I don't say this in any kind of condescending or holier than thou way. I just find that few people are able to carry on an intelligent discussion about political or economic principles, whether from a conservative or liberal viewpoint. The previously discussed hypnosis techniques used by Barack Obama underline this situation. Far too many people are swayed by the images and emotions engendered by sophisticated propaganda. Bush, of course, used them effectively, too. Contrary to this article, I'd say that even many "educated" people fall into this category. Make a vow not to be one of them.

Since I'm going to be away from home for the holidays, I may be posting without sending out emails. Rather than do longer articles on single topics, I may just start picking out some of the sign posts I see daily. If I do that, I'll be able to stay on top of things more currently. So check back every so often. I hope you find my efforts helpful.

Financial Tsunami - Category 3 and Growing

The financial tsunami is hitting more quickly than I imagined. I've been warning about it since I started this blog a few months ago. Today I'd say the tsumani is at least a category 3, with category 5 staring us in the face. Nobel prize-winning economist Joseph Stiglitz today said things won't get better for at least two years, and I think he's optimistic. (He's the one whose recent book estimates the total cost of the Iraq war at $3 trillion or more!) I'm more inclined to agree with the estimate of a decade-long depression.

A friend just sent me a brief summary of current events: "In the space of roughly seven days you have just witnessed the near-simultaneous failure:
1. Fannie Mae
2. Freddie Mac
3. The FHLBs (Federal Home load Banks)
4. Lehman Bros
5. Merrill Lynch
...which, all totaled equals companies representing:
APPROXIMATELY SEVEN AND ONE HALF TRILLION DOLLARS
And we're not done yet.
Not even close.
On deck is AIG. "

Even in the turmoil, you can still make preparations to lessen the impact on you and your loved ones. Yes, choices are much more limited than they were even three months ago, but you don't have to be swept along like so much flotsam.

It is time to focus on your own liquidity. Cut your discretionary spending, pay off your credit cards, hang on to your job -- if you can. The ripple effects through the economy will leave many finances looking like the aftermath of hurricane Ike. Dave Ramsey has some excellent tools.

If you have savings, IRA's, etc., you need to protect them. Despite the large correction in the precious metals, it is very difficult to buy physical gold and silver. Worldwide investor demand for physical is up, while prices have fallen. It makes no sense. We are most likely headed for the worst of all financial worlds, a hyperinflationary depression, or hyperstagflation. The currency will be inflated to cover all the new obligations the Treasury takes on bailing out banks, investment firms, automakers, airlines, etc. Meanwhile, spiraling unemployment will bring economic activity to a crawl.

And please, invest in at least a 3-month supply of food for your family. Walton Feed has a 12-week backlog. But eFoodsDirect offers shipping in one week. Don't delay.

Make Jim Sinclair's excellent website regular reading. He will help you understand why there is no easy recovery from our predicament. If you have accounts with brokerage houses, you need to take delivery of any shares you want to keep. Here Sinclair tells you what you need to do to protect yourself. Better yet, get out of the stock market altogether. While the Plunge Protection Team is making the most massive cash infusions into the market to prop up the stock market, take advantage of this situation and get out now from anything vulnerable to the financial collapse. That's most everything. Forget about interest and dividends. Try to preserve what you have.

Watch this great video from MSNBC which explains what happened to Lehman Brothers. Now realize that Lehman was just a small part of this worldwide, interconnecting web. When the derivatives exposure of Long Term Capital Management almost toppled the financial markets in 1998, total derivative exposure to the world financial system was a small fraction of what it is today. Think of it as the puffed up egg whites topping a lemon meringue pie. Now squish all the air out of those egg whites. What is left of the egg whites? That's where our economy is headed.

This week I've seen two references (one being the bubble enabler, Alan Greenspan) to our current economic crisis as being a "once in a century event." Remember, the Great Depression of the 1930's started with the stock market crash in 1929. That's 79 years ago. So this may be Great Depression II.

Some of the major differences that today could make our current unfolding depression worse are:

1. We still had a gold-backed currency. Today we have a fiate currency in its death-throes, with a dollar today worth about what 2 cents was when the Federal Reserve was founded in 1913.


2. Many more people were self-sufficient, living on farms, being self-employed, having gardens, etc.


3. Today we've sent offshore much of our manufacturing base and many of our better service jobs. Paul Craig Roberts says the "New Economy" (remember that?) is now based off shore, and as a result, there is not nearly enough money to finance day to day government operations. He expects the government will raid private pensions in an attempt to make ends meet.


4. America was a more unified nation, with a proud culture, undergirded by sound values. Today we have a massive welfare culture, great social fissures due to the culture wars, a flood of illegal immigrants will too little assimilation, etc.


5. We're overextended militarily with two ongoing wars, a worn out military, more than 800 military bases in more than 150 countries. The maniacs in Washington seem intent on starting a war with Iran, and have been pushing the Russian Bear into a corner by encircling them with missles and missile defenses based in their border countries. Russia has warned of a new world war if either the US or Israel attacks Iran. (Did you see today's revelation that former Rep. Dick Armey accuses Dick Cheney of puposely lying to him about Saddam Hussein and alQaeda to get his vote for the war?)


6. The US Constitution seems to be dead and buried. The President claims the powers of a "unitary executive" (doublespeak for "dictator" and seems to think he has the right to kill anybody he pleases. The Patriot Act and its companions has set up the mechanism for martial law and a police state. If the Muslims really hate us for our freedom, then maybe they will leave us alone now, since freedom is now an illusion. I read and hear reports daily about new encroachments on our privacy and Constitutional rights. The American police state lies like a trap waiting to be sprung with the right provocation. (I still plan to report on the police state preview I experienced two weeks ago as a delegate to the Republican National Convention in St. Paul.)


7. Our elected officials, especially Congress, are the worst that money can buy. With the few exceptions of statesmen like Ron Paul, most of our elected Federal officials are bought and paid for shills for the interest groups that brought them to Washington. They're masters at the spin game, and they won't take a principled stand for what is best for America.


8. There are no significant differences between the candidates for President. Both have given their allegiance to AIPAC, the Israeli lobby. Both staffs are riddled with advisors that assure the established powers that nothing substantial will change, regardless of the rhetoric. Both seem ready to maintain the total surveilance police state and to continue with our wars in the Middle East and Eurasia.


9. There are many more differences to be sure, but these come to mind most easily. The bottom line is that we are ill-prepared for what is coming.
   

All of this makes me more pessimistic about the prospects for withdrawing from our wars of aggression. The historical response to massive domestic economic problems by dictatorial regimes is war. War is a great distraction and excuse for economic hardtimes. It justifies the command economy and suppression of political opposition. A draft for national service or the military is a convenient way to sop up unemployed civilians and give them a paycheck. See Orwell's 1984.

We've just opened a new front in the current wars with attacks in Pakistan. Bush has just taken another step toward war with Iran by imposing new sanctions on Iran's shipping industry. Lord Stirling interprets recent events as Bush agreeing to war with Israel. (See here also.) Take the likely WMD escalation along with Putin's threat to see this as the start of World War III, and we're really in trouble. God help us!

A while back I predicted the death of the dollar by 2013, the hundreth anniversary of the Federal Reserve. The way the Treasury is nationalizing and funding financial firms, with more to come, and the Fed creating money to fund the process, we may not make it that long.

Ever since I read Harry Browne's classic "How You Can Profit from the Coming Devaluation" back in 1970, I've been expecting the financial collapse. I covered some of this ground previously, as well as in many of my other previous posts. The financial "Masters of the Universe" have finally reached the limits of their ability to manage the economy. At best, American imperialism of the last decade of the 20th century will end as reaches its financial limits. At worst, it will end in a world war.

Maybe it just seems that way when it finally happens. The news has been so fast and furious that there is hardly time to assimilate it. One thing is sure: America is becoming more overtly fascist. We're are moving into one of the most difficult periods in American history. Pray that we come through it with our freedom intact.

Grace and Courage and Peace Be with You!
Porter

Hyperstagflation on the Way

Bob Chapman continues to provide comprehensive analysis of our financial decline. His latest The International Forecaster lays out the formula for "hyperstagflation." Read it carefully for the macro-analysis. Then take steps to prepare.

Get out of stocks (except quality metals and commodities), bonds and into precious metals and their stocks. Take delivery of actual metals and shares. Stay away from ETFs (see Chapman's article for a summary of our they're used to suppress the metals prices). Keep cash in small bills at home. Buy at least a 2-3 month supply of food. Even more is better. Don't put it off. Procrastination literally kills.

As Chapman warns, "Detach yourself from the Matrix, or get reamed."
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True story. Last weekend I bumped into a banker friend. Here's a short version of our quick conversation:

PD: "The worldwide financial system seems to be broken. Everyone but Americans seem to know it."

Banker: "Yep. It's de ja vu all over again."

PD: "But we've never seen this before, have we?"

Banker: "That's right."

PD: "Calling our financial crisis a 'sub-prime crisis' just names the tip of the iceberg."

Banker: "No one knows how deep it goes."
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Meanwhile, the stock market plunged over 200 points today until the Plunge Protection Team (PPT) went to work. Gold jumped $15 before the PPT went to work. It is still up $6.00.

Doug Casey provides an interesting graph showing how hyperinflation wiped out the Yugoslavian currency in the early 1990's. At its height in 1993, retail prices were inflating at a rate of 2% per hour. Today, inflation is surging through the global economy as never before.
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Does anyone besides Big Agriculture and their lobbyists think ethanol is still a good idea? A confidential secret report by the World Bank indicates that 75% of the recent rise in global food prices is due to the mandates use of biofuels to combat global warming. Many think a 10% ethanol blend reduces gas mileage by 8-10%. It is subsidized and additional energy is needed to process it. 2-stroke engines are having lots of problems with it. Why is there no outcry to stop this little bit of madness?
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Patrick Buchanan points out that all our saber-rattling against Iran drove oil prices up another $11 a barrel, translating "into $143 million more sucked out of the U.S. economy every day – into the coffers of Canada, Mexico, Venezuela, Saudi Arabia, and OPEC." Peter Casey says that the IAEA reports do NOT point to Iran being close to developing a rudimentary nuke, nor that they are even trying.

After watching what happend to North Korea (with nukes) and Iraq (without them), who could blame them if they wanted them, too? And yet Congress continues the march to war being led by the nose by AIPAC. Are we insane? If we don't like the results of the Iraq war, we'll hate the one with Iran.