Katrina Spears, a self-described internet medium, was running errands Sept. 30, the day the Dow plummeted 770 points.
"When I got home that day, I had messages from 30 clients," Spears says.
While it doesn’t take a psychic to see that tough times lay ahead for the economy, online practitioners of the divination arts say they’re seeing a marked sift in the questions posed by their clientele, with anxious consumers increasingly asking what’s in store for them financially in the months ahead. Believers who normally seek psychics for advice on a cheating spouse are now asking whether a pink slip is in their future, and internet psychics across the board saw a spike in traffic in the days following the initial market crash.
In reference to Davos #41, how does the Fed do it? Karl Denninger explains:
The Fed is essentially kiting and praying
that the clock doesn't run out on them - or worse, that someone doesn't
hold up the funds "somewhere" long enough to disrupt the chain. In a
"kiting" scheme the crook deposits a check into Bank #1 from Bank #2
(which is in fact no good!), then draws the funds on Bank #1 and
deposits them in Bank #2 to make the check good that they wrote. This
is illegal, by the way, if you're an "ordinary Joe", as you are
effectively counterfeiting the money (it doesn't exist in both places
at once!) during the time of the float.
But wait! Isn't counterfeiting of credit the entire nexus of the last five years of "financial innovation"?
Yep.
And now we have The Fed
continuing the game but on a global grand scale, taking the excess
leverage that everyone else had and consolidating it on its own balance
sheet. Where we had a few investment banks running at 30:1 leverage,
we now have our Fed running at fifty to one!
The
Fed is running what amounts to a gigantic kiting scheme where it
borrows $500 billion (the "supplemental Treasury program") from various
foreign and domestic sources then loans that money out to the same domestic and foreign sources who settle those trades!
As further evidence of this game we have an enormous number of "fails to deliver" in Treasuries. Why would there be a fail to deliver unless the person who sold it doesn't have it?
That's the essence of a kiting scheme - you're effectively
counterfeiting, because you're writing a draft that you can't settle.
This is showing up in the Treasury market, where "fails" reached an
aggregate five trillion dollars in October.
If
you or I pulled this game we'd be under indictment. Yet this is the
essence of the various programs that Treasury and The Fed has put into
place - primary dealers take down Treasury supply yet they
are, in no small part, recipients of these various alphabet soup
financing programs.
That is the definition of kiting folks. Go look it up.
I probably don’t know more than you but what I have been thinking is that cottage industry like you see on Etsy will help people like us make it through. In fact I think the whole DIY craze could well turn overpriced hobbies into useful skills.
Since a lot of companies whose existence people take for granted will probably fold, there will be surprise shortages. With fuel affecting the cost and frequency of transporting goods supply may be disrupted or even stop altogether. It will certainly increase costs.
Learning how to make useful things by hand (or at least fix them) means you don’t have to buy replacements and you won’t be left high and dry. It also means that you can use this to barter with neighours and friends who have been left high and dry. I recently bought a sewing machine and am learning to use it. My geek friends are having children now so I imagine I could sew children’s clothes in exchange for getting my computer fixed. I already make Xmas gifts instead of buying them.
I would like to stock up on fabrics but I don’t even have the money for that at the moment so I’m heavily into researching how to reconstruct second hand clothes and repurpose and recycle other objects that would normally be thrown away. There is an enormous amount of tutorials and information on the internet in this field. I have hundreds of links that I’ve saved here just over the last few months.
I imagine what you could do is buy equipment now (preferably with a no-interest loan from family) while such things are at a relatively reasonable price, build up your stock, and then sell goods through Etsy and/or Ebay when the USD. The lower doller means your prices are more attractive to overseas buyers.
It’s scary, isn’t it? My husband and I have been working through a lot of this stuff, him for years, myself for about one year now. It takes time to find your way and figure out what to do to respond, but it is important to take some time and work through things at your own pace and find your way. The Crash Course is obviously an incredible resource for everyone, and I’m glad it’s helped you understand our situation, even if that is scary. On the topic of "what should I do?" I think there’s quite a bit available in the forum section here on "Chapter 20"–check the menu bar at the top.
The other site that I frequent is http://www.sharonastyk.com. Her blog does deal with macro-level issues like the national economy, debt, global crisis, etc… However, her focus is much more on how to get through the crisis in your own situation–e.g., how to apply real, deep conservation measures to save money and be more sustainable; how to grow and preserve foods; and so on. But more than anything else, she writes wonderful thinkpieces that help us reassess what it means to live a lower-money, lower-energy lifestyle, and understand that these changes, while difficult, can be very beneficial to us for our health, our sanity, and our overall society. I heartily recommend you check out her writings, and see if those help you situate yourself at all. The commenters are very friendly, and will also help you on your way.
I hope it’s okay to plug this other blog on here–it’s been such a great resource for me, as well as the Crash Course.