MyRA

It’s no surprise to anyone that governments in trouble will seize pensions when they can because, to quote Dillinger Willie Sutton ‘thats where the money is.’ With buyers for US debt starting to either dry up or demand higher interest rates, whats a cash-strapped .gov to do? American pension funds hold gazillions of dollars…if only there was a way…

I predicted that at some point .gov would compel pension funds to invest in .gov bonds, thereby giving .gov lotsa money and kicking the can further down the road. Apparently, they are taking a slightly different tack:

It’s safe: Contributions to the account are invested in a Treasury security, which means it will be backed by the full faith and credit of the United States. myRA’s feature government-backed principal protection, so the account balance will never decrease in value, and will earn the same interest rate that is available to federal employees for their retirement savings.

Or, put another way, .gov is going to make it easy for you to automatically give them some of your money every pay period and in exchange they’ll give you an IOU saying they’ll pay you back later…with a crappy interest rate that you could beat pretty much anywhere. And you can keep your doctor.

Since we already have Roth IRAs, what does this program offer that we aren’t getting? Well, the answer is: under the guise of ‘retirement savings’ Uncle Sam is getting you to loan him money and you dont even think of it as a loan! Sweet.

If you want a canary in a coal mine about which direction the economy is going, this might be one. To even float this idea and hope no one sees it for what it really is is just nuts.

 

Budgetting, interesting re-post from elsewhere

I know I beat this topic to death sometimes, but absolutely nothing has added to our personal security like being able to have an increased sense of financial security. That security does not necessarily come from an increase in earnings, but rather a heightened awareness and information about the outflow of money. This is accomplished trough the zero-based budget. Here’s a how-to on that subject: How to Make a Zero-Based Budget. Having an increase in income is always welcome but, even without an income increase, having the budget still really does make it feel like you have more money.

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Here’s a repost of an entry from the blog of someone I read. No linkage, but it’s a very interesting real-world example of a problem that is occurring even before we are officially in TEOTWAWKI:

When you are talking about emergency preparedness in a theoretical sort of way you sometimes talk about how you want a place that has a community and good weather and clean water and the ability to grow food.  But then you talk about needing to be far away from zombies, i.e., refugees or Mad Max looters, so perhaps more than a tank of gas from a big city or far from an interstate.  But, uh, you also want to be able to make a living in the meantime.

I live in a Small Town with 18,000 earnest citizens, many of whom are only a generation removed from the Town Meeting style of government.  My town is the county seat and market town for a rural community that is still startlingly agricultural.  We have clean water, community policing, responsive government, faith-based communities, and a vast array of social services to shelter our citizens when they fall.

And, bam, that’s what turns out to have attracted the refugees.  Other state agencies were tasked with finding them housing and they cast their eyes around and found us.  In a world where everyone is strapped, someone who is barely getting by is rich,so we are a healthy community in comparison to most of the failing ones around us.  The State showed up with a bunch of indigent people the State was tasked with housing, and a traveler’s hotel on the edge of the interstate that goes through town that was willing to house them for $82/day/room.  Then the other small motel – mostly used for events and fall foliage and maybe wedding guests – got into the act, too, and suddenly we have 110 school children to place into our classrooms right this minute, today, and they want lunch, too, and, oh, we are also required to bus them to their former schools if they wish to go.  Plus they need meals and jobs and English as a Second Language services and one presumes many of this kids either have or need an IEP, so they’ll get their own aides.  The paper interviewed some of them and they said how lovely it is here, and how they want to stay.  And bring all their friends, one assumes.

So note this down: if there’s a Days Inn or a Comfort Suites or a rebranded Howard Johnson’s in your town you are going to get economic refugees.  They won’t come from rural poverty in a Joad-style pickup truck, they’ll come in a State vehicle.  Count the number of hotel rooms.   The state says that there must be one 18 year old or older in each hotel room, so we have at least one case reported where a single mother with five children are all required to be in the same room because none of the kids are over 18.  (Duh, kids over 18 have their OWN kids.)  So count the hotel rooms and multiply by five.  That’s how many indigent children your community may find landing on your one crisp fall day.

Also, take a look at the laws your earnest and kind citizens passed.  We have no residency duration requirement for what constitutes a family the State will provide 100% support to.  In other words, you can move here in January, get evicted without a place to go in February, and be entitled to state-paid housing and food and medical care and individualized education in March.  The refugees we saw interviewed do not speak English.  They aren’t a local widow or addict or mentally ill person for whom we expected to have a duty of care when we wrote those laws.  These are zombies attacking us from the city, draining our scarce resources.  My real estate tax bill is over $100/week ($5300/year) for my house.  My office building’s real estate taxes are $4800/year.  The retired lady living on $14,000 for whom I volunteer pays $2800/year for real estate taxes on her very basic paid-for house she raised her kids in. The State and City budgets are required to be paid for with current earnings, we aren’t allowed to borrow from the future.  (We actually do in a hidden way, by not funding our pension obligations, but, as they say, we’ll talk about that another day.)  When we’re talking about FEDERAL money it’s all funny money that no one will ever repay – just print up some more dollars and have fun spending it.  But when it’s STATE money, or CITY money, we actually have to fork over those real estate taxes, and for most of us they’re more than our Federal and State income tax liabilities combined.

There’s a new law being debated right now that says we have a duty to provide 60 days of free in-home personal care attendants for any senior citizen in [state] whether they can afford it or not.  How kind.  How loving. This should be… interesting to pay for.

 

The collapse of society may not happen with a bang and bright flash of light, it may just creep into your life as quietly and as normally as some new folks moving in to a fourplex down the street.

Article – Cyprus weighs big bank levy; bailout goes down to wire

Remember all those crazy old people that ‘never trusted banks’ and kept all thei rmoney ‘under the mattress’? Remember how they were a stereotype for foolish, naive, bumpkins? Yeah..well….

Cyprus said on Saturday it was looking at seizing a quarter of the value of big deposits at its largest bank as it races to raise the funds for a bailout from the European Union and avert financial collapse.

Sooooo…..a 25% haircut on ‘big deposits’. Now, it’s my understanding that, to a degree, Cyprus has become a mob bank for the Russians. Even if thats the case, there are bound to be ‘legitimate; depositors who get their accounts smacked as well. No doubt this will trigger the usual ‘make the rich pay their fair share’ nonsense.

Do I think this could happen here? Nah, at least not in this way. I think what’ll happen is that.gov will eye all those lovely pension funds and ‘incentivize’ them to take their money and invest them in special new .gov bonds designed specifically for this sort of thing. Remember that a bond is, essentially, an IOU. .gov will head over to your pension fund and say “Give us all your money and will give you this bond that yields a better rate than what youre getting now”. They’ll, no doubt, throw in some other features to make it more palatable but the end result is they’ll take the pension funds and promise that you’ll get ‘em back later.

Considering the awesomely crappy interest rates at banks and the ‘real’ inflation rate, I cannot fathom why anyone would leave money in the bank anyway. May as well leave it in cash ( or gold ) in the safe at home.

My wife pointed me to podcast about the Euro and it said that when the economic guidelines for entry into the EU were put in place several countries that were so fiscally fubar’ed they wouldnt normally be admitted cooked their books and outright lied to get admitted. Once in the club they didn’t change their ways and now the rest of the EU is obligated to assist them. (I’m looking at you, Greece and Portugal.)

ETA: The link to the podcast is in the comments.

It’s articles like this that make we wanna take what I have in the bank ( I keep a few hundred bucks there to let me use my debit card conveniently) and hand it over to the Metal Pimp for a handful of shiny gold and silver tokens.

Article – Panic in Greek pharmacies as hundreds of medicines run short

Greece is facing a serious shortage of medicines amid claims that pharmaceutical multinationals have halted shipments to the country because of the economic crisis and concerns that the drugs will be exported by middlemen because prices are higher in other European countries.

Hundreds of drugs are in short supply and the situation is getting worse, according to the Greek drug regulator. The government has drawn up a list of more than 50 pharmaceutical companies it accuses of halting or planning to halt supplies because of low prices in the country.

More than 200 medicinal products are affected, including treatments for arthritis, hepatitis C and hypertension, cholesterol-lowering agents, antipsychotics, antibiotics, anaesthetics and immunomodulators used to treat bowel disease.

Why would a drug company ship millions of dollars of product to a customer who apparently has no ability to pay?  Simple math…no one stays in business long when they give away the product instead of selling it.

The lesson here is that when an economy collapses (or comes close to it) those convenient modern miracles may not keep coming. Of course, anyone with hard currency (cough*gold*cough) shouldnt have any trouble getting their drugs since there’s always someone somewhere who can deliver for the right price.

Oh yeah, silver is down…….

I’ve been so wrapped up with the gun stuff going on (and rightly so, I believe) that I completely overlooked the fact that silver has dropped below $30 and is, at this moment, right around $28.75…time to buy!

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I’m fortunate that I have a buddy in the gold/silver biz (and, wow, has he been busy lately or what!) so he only gives me the mildest of dirty looks when I ask him to drop by the shop with just one or two silver rounds or Eagles for me. (Honestly, I prefer the rounds for the better value but the Eagles are probably more ‘recognized’.) It sucks that between the sputtering economy (and how are those job numbers these days, anyway?) and the gun control shenanigans it’s mighty hard to decide which direction to point my disposable dollars at. (Although, after typing the term ‘disposable dollars’, I think I’ve figured out where to point that wallet.)

Really, the ‘investment’ plan is really the same as it’s always been: gun stuff, metals, food. (Not necessarily in that order.)

I realize that there’s a certain demographic (a short-sighted one, in my opinion) that says “If you cant eat it or shoot it whats the point of it? When we’re all living in caves and eating our children no one will want your Eagles!” and thinks buying this sort of thing is a waste of time. That’s cool, I can respect that..I disagree with it, but I respect that you have an opinion. So take your money and buy more mags, ammo, land, guns, food, fuel, clothes, meds, household supplies, tires, and tools…because while we can disagree about the metals thing, I think we can agree that there’s virtually no point in holding onto anything more than a small amount of cash when it’s looking more and more like the only economic courses available to this country involve bank runs and inflation.

Article – Why your toilet paper is shrinking

Everything shrinks in a recession: GDP, investment portfolios, even the products on store shelves. Consumer  goods companies know that customers won’t go for price increases during a downturn. Instead they often use a different tactic to offset things such as new competition or the rising cost of raw materials: cutting quantity while maintaining price. Yet it may not be obvious that your ice cream or OJ containers have shrunk. Manufacturers must note new specs on packaging, but the changes don’t have to be advertised (ever seen a now smaller! label?). Here’s a look at one of the most recent examples:

This still comes as news to some people. Apparently, there are still folks out there that don’t actually read the labels on the containers of food they purchase. I’ve been noticing this for a while now. Most notably my 1/2 gal. of Breyers has been melting faster and faster as the packaging continues to shrink and the price remains the same. Same for the spaghetti sauce I buy. The price stays the same, the quantity shrinks and the net result is you pay more for what youre buy but you don’t really notice.

This is kind of a ‘soft inflation’…it’s happening, but it’s being quietly slipped in under cover of careful labelling and packaging. One of the reasons I notice is because a) I almost always evaluate prices by comparing price/oz. and b) I have items purchased last year that I can compare against. This has been going on for a while and if more folks were aware of it more folks might realize how their purchasing power is slipping away.

This is another reason we stock up on things when we can. That can of vegetables that cost $1 per 15 oz. this year may wind up buying an identical sized can next year that only holds 13 oz. at the same price. When you see those sales, stock up.

We’re planning on hitting the local grocery stores Friday and seeing what kinda discounts we can get on turkeys. ‘Cause, let’s face it, prices ain’t going down.

Car rental, Walking Dead, economic recovery

Buddy of mine in NY is learning a few things about post-disaster mopping-up that I never considered. For instance, think about this: the insurance guy comes to your house, takes one look at your car, and doesn’t even say anything other than “Yeah, that things toast. We’ll cut a check for you in the morning.” Now you have no car, but a nice check coming to go pick out another. What do you drive in the meantime? Well, your insurance also covers rental, right? So you call the rental agencies and thats when you discover that every car within fifty miles has been rented and the waiting list reads like a phone book.

So…next time you might want to rent a car in advance of things. If your car doesnt get washed out to sea, you can always cancel the reservation.

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Latest episode of Walking Dead: not gonna miss her at all.

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Since the nation douled-down on four more years of Carter II, I’m pessimistic about an economic recovery in the near future. (Or, an economic recovery that doesn’t require something drastic to jumpstart it.)

Really, I anticipate no major changes in anything we do around here in regards to the election results. About the only thing different will be a bit of an emphasis on securing more gun-related items and countering further economic malaise. Otherwise, business as usual.

As I expected, calling most of the major magazine and AR manufacturers and vendors was an exercise in futility. Most simply had their phones go straight to voicemail. Most of the answering messages started off with “Due to higher than normal call volume…” and ended with “..delays of six to eight weeks.”

Theres a few dissenting voices I hear from, from time to time, saying I have nothing to worry about…between the administrations lack of movement on gun control (cough*fastnfurious*cough), the Heller decision, and whatnot theres no signs that new regulation is in the works. Well, if that’s true (which I dont thin it is), then wheres the harm in putting two, three or seven more Glocks and AR’s in the safe, hmm?

Snow, Jarbox, Coke increase

Well, it went from 75-80 degree days to snow like *that* [snaps fingers]. Guess it’s time to pull out the cold weather gear and do all the ‘winter is almost here’ stuff.

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The wife brought this product – Jarbox - to my attention. Definitely one of those ‘why didnt I think of it’ kind of products. I figured if you had to transport canning jars you could just get some foam pipe insulation, cut it to length, and make little beer cozies for each bottle. This seems handier, although a good bit more expensive. I’ll have to see if theres some sort of discount program available or something. Be nice if they had it in a size to accommodate pint jars as well.

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I don’t have a lot of self-destructive vices…I dont drink, smoke, do drugs, etc. My biggest bad-for-my-health vice is that I suck down a few cans of Coke every day. Okay, maybe more than a few…probably about…mmmm….five or six a day. So when we go grocery shopping I pay close attention to the price of the little red cans of death. For quite a while now the best price I could find was $0.27/can at either WalMart or CostCo. Since both places had the same price I figured that was about the best price they were going to get from the company. Went up to CostCo the other day and, surprise, it was now $0.31/can. Headed over to WallyWorld and it was also $0.31/can there as well. Obviously the new floor price was $0.31….a 15% increase. Why the increase? Price of corn syrup going up, perhaps? Whatever. The point is that a 15% increase in the price of *any* grocery product is worth standing up and taking notice of. True, this only comes out to about a $0.24/day increase in my drinking habits but that translates into $7.20/month…which is about the cost of a case of Coke. In short, I’m paying for an extra case of Coke per month but not getting it.

I expect these sorts of revelations about groceries to continue as our economic …turbulence…continues. This is why, folks, you gotta make every dollar count.

Why economic issues translate into personal safety ones

Fella comes to the door yesterday, clipboard in hand, to take a survey for a political candidate. Among the questions was “What is the most important issue to you this election?” and he rattled off things like the economy, debt, jobs, immigration, etc, etc.

Among that list was jobs, federal spending, the deficit and the economy. To me, they all pretty much roll together into one big category of “the economy”.

I was talking to the wife later about the questions and she asked me why I said the economy. To me, that encompassed the most amount of things that directly and indirectly affected our lives. Bad economy? Higher prices. Bad economy? Higher unemployment. Bad economy? Business failures. Bad economy? Higher taxes.  Bad economy? More desperate people.

Once in a while, I get asked why I would prepare with fuel, food, ammo and that sort of thing against what I forsee as an economic disaster. After all, if it’s an economic disaster then all you need to guard against it is an economic defense…such as a big ol’ box of cash and gold, right?

Nope. Here’s todays example..a fella laid off from his job comes back with a gun and shoots former coworkers. And although the story is still very fresh, and the details will probably change, what remains true is that in a bad economy more people are getting laid off, putting them under more stress as they try to keep their homes and their families together and some of those folks are just gonna snap under that stress and take some folks with them. And that doesn’t even include the folks who don’t snap but simply start knocking over 7-11’s, daylight burglaries and doing stickups at ATM’s to keep their houses they couldn’t afford.

So, indirectly, thats how a bad economy affects your safety. It creates a larger group of desperate and unstable people who at some point are just going to go off the rails and commit acts of violence. And this is why in a bad economy it isn’t far-fetched to believe that your preparations and plans against that bad economy should take into account some serious personal safety plans…like things that have triggers and magazines.