Surviving the Crash-In Spite of the Government
The War on the Middle Class
©2009 Bruce David
In the old days a man who saved money was a miser; nowadays he's a wonder. - Author Unknown
Regardless of government efforts to cushion the blow, the impact of the auto industry bankruptcies on the economy is already devastating. It's largely because of auto industry layoffs that unemployment is surging again. There is a large ripple effect of businesses and families that will suffer. Consider the fallout being predicted.
Gut the nation's auto dealer network, employing over 1 million Americans ...
Cause a chain reaction of failures among auto makers and parts suppliers, employing another 1.7 million ...
Wipe out any positive effects from the economic stimulus package
Sink the U.S. economy into a new, hair-raising decline.
The real lesson to be learned is that the government cannot and will not be the economy's ultimate savior. So the first thing you must do BEFORE GM fails is to learn this lesson.
Why will the government ultimately fail to come to our rescue?
Because the crisis is too big — enveloping 195 sovereign nations ... 6.7 billion people ... over 100 trillion in debts ... more than a half quadrillion in global derivatives. For more than 30 years the government has acted in collusion with Wall Street to dilute the earnings of the middle class.
The government's resources are not infinite, they’re limited — by politics, by internal conflicts, by bureaucracy, and by the extreme difficulty of financing its follies.
And because no one — not even the most powerful government on Earth — can control the accelerating chain reaction of events.
The government will also fail to avoid another Great Depression.
Beginning with the Clinton administration, our national basket of goods, or how the cost of living was reported to the world, had been tweaked to under report inflation and the cost of goods by an average of two percent. It never reflected our actual declining standard of living or the downward mobility we’ve faced. Consider how energy costs were removed from the equation. (one of the ways the government kept the cost of living increases to Social Security recipients at a lower rate – see http://www.shadowstats.com/
for the correct data). This also fooled international investors into supporting our national debt. The American press only mentioned this sleight-of-hand in passing but the foreign press took notice.
The economic insecurity among the middle class became commonplace. Median family incomes stagnated for more than five years; millions were deprived of health insurance, and more household income went for necessities such as food and fuel. Income instability has now grown faster than income inequality and folks were borrowing themselves to the hilt on their real estate holdings.
The chance that a household would at some point experience a 50% drop in income (the typical family represents a two-income household) rose from minimal in 1970 to one in five by 2002 (even worse for a single mother). From her book, The Two-Income Trap, Elizabeth Warren, a professor at Harvard Law School, wrote:
Middle class families have been threatened on every front. Even with two paychecks, family finances are stretched so that a very small misstep can leave them in a crisis…they were faced with higher costs, increased risks, the old financial rules of credit were re-written by corporate interests that see middle-class families as the spoils of political influence.
Her last statement is a reference to the credit card firms and their rewriting card contracts to include horrendous fees and raising interest rates for late payments, lowering credit lines, etc. In the 1970s a credit card agreement ran about a page long; today it’s about 35-pages and written in tiny legalese.
Essentially, Wall Street and our government declared war on the middle class without any thought to the future – only short term profits. Who cares if burger flippers can’t afford $40,000 cars, we’ll just our profits from fees.
What will save us?
The answer to that is two-fold. First, always remember Americans are resourceful and have a can-do attitude. We will get through this, but not without dramatic changes in behavior. We will revert back to a better sense of community and family where members help each other. We will also change our consumption habits – we do not need the latest toy or designer label clothing to be happy.
We will redevelop our habits of self reliance; growing a garden, repairing our own clothes, becoming more energy efficient and so on. The priority everyone needs to keep in mind – do not panic.
Stopping the greed of Wall Street traders, the ones who crucified the American public, will be a larger challenge. I’d beware of recent upticks in the stock market as they’re probably minor blips when viewed in the larger picture of unemployment and failing governments.
Second, once it has become crystal clear that it is our government who has over stepped its bounds and has grown too much, taxed too much, ignored or chipped away at many rights and has minimized what the founding fathers set forth in the Constitution about their legal parameters of authority – then, and only then…the government must retreat from its excesses and greed. If this does not take place, the worst of actions might happen such as rioting and martial law or another revolution.
Useful resource site which offers their seminar program handout
See our Affluenza page to learn more!
Living Better on Less, which includes an online video of The Cure for Affluenza
http://www.minimalistgroup.org
http://www.poormansurvival.com
Cocooning & Current Trends
People are spending money differently. First, it is obvious that they are forsaking the higher priced stores.
They're also buying different things. Everyone knows that sales of guns and ammunition are going through the roof. There are actual shortages of some items. But people are also stocking up on gardening supplies. They're planting gardens in order to grow some of their own food. And they're buying home entertainment systems - videos...sound systems and so forth. Instead of going out to the restaurants or the movies...they're staying home. So, they're making their homes more comfortable...and safer.
Speaking of safer...sales of home safes are also taking off. They want to protect what they've got.
The lower priced, fast food places, such as MacDonald's, are doing fine. But just look at the 'casual' dining places - the places where middle class people go to eat...places like Appleby's and Friday's. They're losing a lot of business.
Cocooning
Cocooning is the name given to the trend that sees individuals socializing less and retreating into their home more. Individuals tend to stay away from society and lack in social confidence leading to 'cocooning'. The term was coined in the 1990s by Faith Popcorn a trend forecaster and marketing consultant. Popcorn identified cocooning as a commercially significant trend that would lead to, among other things, stay-at-home electronic shopping.
Since Popcorn coined the term, the trend has continued. The creation of the World Wide Web (WWW), home entertainment technology, advances in communication technology (cellphones, PDAs, and Blackberries) which allow "work-at-home" options, and demographic changes have made cocooning an increasingly attractive option.
What I think is happening is this: people are reorganizing themselves for a different, less expensive lifestyle. They're spending less already...but they're preparing to spend even less in the future. Instead of going out to the mall or to a restaurant...they're going to stay home.
Americans were saving almost nothing a couple years ago. But in the first quarter of this year, they saved 4.2% of disposable income - or $453 billion (annualized). That's up from just $20 billion a year before.
On a positive note…The voices of reason (like our parents) have long proclaimed that a college education is the best means to future success – that may no longer be true, suggests landscaper Joe Lamacchia, author of BLUE COLLAR AND PROUD OF IT.
Academia does not suit every temperament, and many industries require
different skills than those that one can obtain in a lecture hall,
library, or lab. The good news for more hands-on learners and workers
is that more jobs are opening for those without a bachelor's degree.
In the United States, more investment in repairing crumbling
infrastructures will create growing demand for skilled trade workers,
argues Lamacchia. Especially compelling will be the so-called "green-
collar" work in environmentally conscious industries such as hybrid car
manufacturing, green construction, organic farming, sustainable
fishing, and eco-friendly landscaping.
SOURCE: BLUE COLLAR AND PROUD OF IT by Joe Lamacchia (HCI, 2009)
www.amazon.com/exec/obidos/ASIN/0757307787/thefuturist books
Surviving today is harder…but
©2009 Bruce David
Most will agree economic survival today is a challenge. The middle class has seen an income transfer unlike anything since the Great Depression. The average income level had been about $40,000 per household; something which hasn’t risen much in nearly 10 years.
Add to that rising cost of everything from government taxes, to food and fuel and the losses to retirement portfolios, 50% in some cases, income has generally declined. The last figure I read said we’re seeing an average 250,000 foreclosures per month and that could easily get worse when commercial properties begin to tank.
Everyone is feeling the pressure and trying to figure out what to do.
Unless you plan on becoming an urban hermit, it might be time to alter your lifestyle gameplan.
For example, our household purchases items in three categories:
- Long term survival goods including food and tools
- Items we can make money from
- Necessities
That’s about it. Our entertainment budget is barebones; less than $50 a month. We own a small 4-cylinder vehicle, we cut out cable TV altogether.
We focus on developing small circles of income, acquiring new DIY skills (we have a solid library of how-to books) and we’ve gotten rid of all credit card debt.
If you haven’t already, develop a circle of like-minded friends and pool your resources, both knowledge and other physical items. For instance, share DVDs and videos to watch.
Get your debt under control. If you’re facing foreclosure, use the following resources (avoid those firms who ask for money)…
If you’re able, make a donation to Gold Cross of America which helps families facing foreclosure with materials, financial assistance and referrals. 877-251-1734 or at: www.goldcrossofamerica.com
Stash Some Cash
- Adjust your withholding especially if you get a refund each year. This will put money into your pocket now.
- Become coupon conscious and not just for groceries. You can find coupons for movies, dining out, retailers and more. (see our site for links to coupon sites).
- Use public transportation or carpool
- Drop your long distance phone service. Sam’s Club and Costco sell prepaid long distance cards and many folks have eliminated their land line to take advantage of their cell phone minutes.
- Buy groceries in bulk at health food stores and places like Costco.
- You can also save money on pet foods by shopping at the membership outlets and online you can save at firms such as: Petcarex.com, 1800petmeds and others.
Finally, and this may prove the toughest for many of us…begin a savings program. No matter how little you earn, pay yourself first or take advantage of Bank of America which offers an automatic savings by having the change made on debit card purchases go directly into your savings account.
I’m happy to hear and share your suggestions and resources. Please send them to me and let me know if you’ll allow me to share them.
Forgive Us Our Debts-Simplify Your Life
Forgive Us Our Debts! Living a Simple Life
© 2009 Bruce David
I don’t envy today’s college grads; the job outlook is pretty bleak in nearly every profession. College students are faced with huge tuition bills and often, large credit card debt upon graduation. Even worse, US corporations are still expected to move another 1.6 million jobs overseas within the next year.
As the weak economy continues to take its toll, many find their mounting personal debt is crushing them.
What one church group in VA is doing could be a lesson for us all. Their mantra is you can’t serve both Mastercard and your Master. Once a month the pastor selects a family and the congregation contribute money to pay their arrears. So far, they’ve donated more than $600,000 to help 70 families get out of debt. Once out of debt, each family is required to give $300 to help somebody else…a sort of debt liquidation revival.
When I was a speaker at the annual COSE business start up conference in Cleveland we learned about an old Asian financing ‘secret’ that many adapted to their own use. A circle of at least a dozen business associates was formed and each chipped in (I’ll use a round number) $500. Once each year the group held their own lottery and one person received all the cash to help start or expand their business. Once the business got established, that person replaced the original $500 and wasn’t eligible to win the pool of money again.
Needless to say, this works well only with trusted associates.
Avoid Gifting Clubs…every time the economy sours, so-called ‘gifting clubs’ crop up with promises of a large cash return with little effort. For some reason, this was a popular scam among women. Give $5000 to another woman in need and your gift would be returned eight-fold.
The money would multiply by more women being inducted into the group. The groups usually number 15, known as circles or pyramids. Eight women at the bottom of the pyramid and four above that.
As with all pyramid schemes, the people who originate the scam, usually come out as the winner. Many women feel a unique sense of belonging and sharing within these groups and therefore, keep quiet about the group when they discover it is sham. Often, to keep the con going, more women need to be brought into the ‘circle.’ Don’t waste your time or money!
Whether by choice or necessity, most of us find living a more simple or frugal life is the route to better security. It’s not about deprivation but discovering what is enough for you and your family which is pretty much what my website is all about. Check out this site for more information on simple living:
http://www.simplelivingamerica.org/simplicity/
Pooling Our Resources © 2009 Bruce David
There’s a fellow in Humboldt, KS who owns a small manufacturing concern making trailer hitches. He’s lost half his business this year but keeps his staff working by having them perform tasks around town such as fixing up the local ball field, playground and church. It’s his way of giving back. You probably won’t see many executives from AIG doing this for their community or fellow citizen; heck, they’re too busy spending their bonus bucks derived from taxpayer bailouts!
Many of us have two plans. Plan A involves President Barack Obama performing some economic magic. Plan B involves a revolver, a vegetable patch and a subscription to Survivalist Monthly.” “If most people think of a survivalist as an armed loner with extreme views – there are folks like that out there, but there are many more in America who are simply involved in preparing for down times, lean times or disaster,” Rantala, a former U.S. intelligence analyst, he says. “It’s logical. It’s common sense.” I think we’re headed back to the days of the victory gardens,” Rantala said. “We have to figure out how to help ourselves. We can’t be isolated. We can’t sit around and wait for the government.”
Unless you were raised in a small town or the Midwest, the sense of community, those who help each other by pooling resources, could be a faded memory on the American scene. Too many of us, over the years, have let greed rule. You may have heard of the expression T E A M or ‘together everyone achieves more.” That’s what we ALL need to be doing now in order to survive. We’re probably headed for a new paradigm which dictates we all do more with less. After all, did we ever really need six cell phones (do your kids truly need a cell phone), three cars, four TV sets, etc.? For most folks, searching for a job which pays a decent wage and offers benefits has become a sick joke in this country.
As Marx once observed, ‘capitalism never promised stability.’ The corporate culture that once was, has vanished. It’s easier to fire people or send their job overseas to raise profits rather than have the CEO take a pay cut. Organizations no longer see employees as long term assets but rather serfs, which can be discarded on a whim.
The amount of money our government spends every second of every day seems to vanish into a black hole. The economy would be more quickly stimulated had the feds simply sent every citizen a check for $100,000 as that cash would be spent, thereby creating demand and jobs…no joke. Instead, they give it to greed mongers like AIG?!
The only key(s) to survival that I can see is a move toward community action; the development of cooperative food raising/buying, the exchange of skills and trade and the like. Having first hand experience with the Amish community in Ohio and Pennsylvania has taught me the value of their ways…no reliance on government; more self reliance. I know it goes against our natural inclination, but my feeling is we need to stop supporting the corporations and governments, which have treated us so poorly. It’s time to pool our personal and community resources.
Beat the Bailout Blues
http://www.1shoppingcart.com/app/?af=936624
Pooling Resources-Part II $100 Homes
© 2009
A perfect example of pooling resources and becoming more self reliant with little or no government assistance was aired on this week’s 20/20 hosted by John Stossel. A young couple purchased an abandoned home for $500 (now several) in Hamtramck, MI, what used to be a very clean Polish neighborhood near Detroit.
The second home they purchased, cost $100! Now, a neighborhood of mixed ethnicities, the area has become very run down and these homes were more than simple fixer-uppers; they needed a lot of work, which they are doing themselves. Artists by trade, they plan to fix the home up and turn them into art studios and they’ve attracted other young couples to do the same.
The banks had given up on these properties as unemployment in Detroit now stands at 22% and decay had set in. Vandals have routinely destroyed homes in the area (what else do idiots do). The lot alone is worth that price and as a group, they’re helping each other to restore the properties to viability. One of the planks in my own ‘bailout’ plan calls for urban homesteading; allowing families to reclaim properties and bring neighborhoods back to life.
Hamtramck, in my youth, was filled with Polish-speaking Catholic masses, little old ladies in babushkas sweeping down their front walks each morning while chatting with neighbors. Kowalski’s butcher markets were within walking distance and most residents did walk to their corner stores. See the story here – more resources below:
http://abcnews.go.com/2020
Life on the edge – the $100 home
There are many blighted areas in Michigan. Flint, for instance, is another city, which has encountered severe financial challenges over the years due to the auto industry pull-outs. Homes can be acquired cheaply there as well. Most folks don’t even know how to go about acquiring these cheap properties as government websites are often confusing. As with most of the problems our nation faces, government is the problem, not the solution. Nearly every cure is either complex, expensive, or obscured to the point where even local officials haven’t a clue.
Your local government, county and city, can often lead you to houses which are no longer on the tax roll, HUD, the VA, the FHMA and other federal government agencies maintain websites which can prove helpful in locating such properties. Here are two more you might investigate:
www.cheaphouses.info
www.foreclosure.com
Of course, our government can spend a billion dollars each day for the war in Iraq, but moans about providing its own citizens decent, affordable healthcare. We can force families to become homeless, but we can’t assist our own citizens. We can subsidize bit oil firms with tax breaks, but we can’t put our own country back to work.
The links (mostly video) below are eye openers; take a minute to review them. As always, your comments are welcome. Your suggestions for resources are welcome too. If you missed last week’s blog, go to my site above and review it.
Great interview with John Stossel of 20/20; America’s best consumer reporter.
www.reason.tv/stossel
http://www.reason.com/news/show/131974.html
http://www.youtube.com/watch?v=46MEqEgdLTg
Fox Business: Gerald Celente Predicts Revolution
http://www.trendsresearch.com/
Watch the America: Freedom to Fascism video here…
http://video.google.com/videoplay?docid=-1656880303867390173
Beat the Bailout Blues
http://www.1shoppingcart.com/app/?af=936624