How bad can the global economy get?

[memenode]

Fannie and freddie have been nationalized, banks which seemed too big to fail have fallen and the stocks are crashing all over the world. Some libertarian authors write about the great chance that we could be facing a new Great Depression or a collapse of the dollar, if not both. And to top it all, the Georgian crisis could conceivably lead to WW3 as a worst case scenario (listening to would be vice president Palin isn't confidence inspiring on the subject of peace).

Yet I am trying to grow my business, trying to back myself up financially and in general, hoping that the depression and huge collapses don't happen before I manage to prepare myself to survive through it. So I sometimes wonder, how bad could it be? What would happen?

If dollar collapses (and my business currently depends on USD which I convert to local currency so this could hugely affect me) what would happen to euro? Is stashing euro savings a good idea? How about swiss franks? Any other suggestions?

Would it really happen that food prices become so high that only the relatively rich could afford enough for normal living? How do you go about saving food if you're living in a city flat? Buy stashes of canned food that can last long even when not refrigerated or is working your own land the only real option? How exactly does having silver coins help? At which point would people actually demand them enough to give you significant portions of what you need for small amount of ounces?

How bad can it get?

Also, given the situation today, when would you say the serious crisis (like, great depression or economic collapse style of serious) could happen? 2009? 2010? Later? Ever? And if it's starting in US (which apparently it is), how deeply could it really affect europe, including countries which still have their own currency like Croatia?

Feel free to weigh in with your opinions, and if you're doing anything to prepare for weathering the crisis, what are you doing?

Thank you

[doobie]

For mankind?  How bad?  Oh around 6.721 billion humans dead.

[memenode]

Hehe.. sure.

I meant realistically extrapolating from past and current events into the future of say a decade.

[David]

Low end and neccessities markets are the last to be effected during rough times.  Luxuries, and purchases that can be put off for a while, even if neccessities, are hurt during crises. 
In Ohio, there was a regional grocery chain that first opened up during the USA's last great depression.  They were still going strong last I knew. 

[memenode]

Hmm so why are people in kitco forums en masse talking about "prepping", stockpiling large quantities of non perishable food, bullets and of course, gold and silver?

These people are expecting a Great Depression as immenent it seems.

And all I have are 11 ounces of silver and 1 gram of gold (physical) and NO stockpiled food and not quite enough cashflow to increase these quantities fast... (and my only real source for gold and silver is overpriced ebay).

What you say makes sense David though, but I suppose if there are still stores selling food that can actually be afforded the great depression hasn't quite settled in full steam I suppose?

I guess though what the kitco guys are preparing for is hyper inflaction of the USD too, and my country has a different currency and then there's euro so I suppose those can serve as easy fall backs for europeans..

[freeborn]

How bad can it get?  Unfortunately, I think we have only seen the very beginning.  It will make 1929 look like childs play.

And the government is printing more money? Perfect recipe for inflation. It didn't work for Germany in 1923 and it won't work here either.

[Ron Helwig]

Its generally a good idea to have a reasonable stockpile of food on hand. You never know what sort of emergency (snowstorm, hurricane, tornado...) might cause an inability to get to a store for a few days. Also, the food distribution system is more and more a just-in-time system, so a large disruption of that, local or otherwise, could see store shelves in your area being empty. Its just prudent self-sufficiency to be as prepared as you can reasonably be.

Buying in bulk when prices are good is a money-saver, regardless of whether or not you believe the financial house of cards is collapsing.

[McDuck]

Hmm so why are people in kitco forums en masse talking about "prepping", stockpiling large quantities of non perishable food, bullets and of course, gold and silver?

These people are expecting a Great Depression as immenent it seems.

And all I have are 11 ounces of silver and 1 gram of gold (physical) and NO stockpiled food and not quite enough cashflow to increase these quantities fast... (and my only real source for gold and silver is overpriced ebay).

What you say makes sense David though, but I suppose if there are still stores selling food that can actually be afforded the great depression hasn't quite settled in full steam I suppose?

I guess though what the kitco guys are preparing for is hyper inflaction of the USD too, and my country has a different currency and then there's euro so I suppose those can serve as easy fall backs for europeans..

I'm a person of limited means that has been into survivalist scene for the last couple of years.  At the end of the day you can never have "enough", so focus on doing whatever you can to improve your situation over the previous day/week/month/year.   

I've only got a 2ish month stockpile of canned goods and a Berkey water filter at my house, but it's better than nothing.

With regards to prepping financially.  I've got a modest stash of PMs and am going to start keeping a decent supply of physical cash on hand in case something happens to my bank.  Beyond that, I'm looking to add more PMs, foreign currencies, and foreign stocks to my portfolio as well. 

I recommend reading Peter Schiff's book, Crash Proof, for more advice. 
http://www.amazon.com/Crash-Proof-Economic-Collapse-Sonberg/dp/0470043601/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1221803807&sr=8-1

Oh yeah, and if you're looking to buy silver, the best bang for your buck are 90% "junk" silver pre-1965 US dimes, quarters, and halves.  The don't carry the premium that bullion coins do, have a known silver quantity, and can be spent individually in a SHTF scenario.  Expect to pay just above melt value +/- 5%. 

[memenode]

Thanks guys. I agree, although I'm still holding off on food stockpiling. First the surpluses I have aren't very big so it's often an either-or kinda situation. Either I get more silver or I save cash or I actually start saving food.. Luckily I do have a place to go (with land) where we can grow our own food if the worst comes..

Also, I'm not sure how strongly would this affect Europe. I think non-EU member countries should be affected the least.

Btw, speaking of saving cash, don't save in USD. Buy euro's or Japanese Yen or maybe Hong Kong Dollars. The latter two seem most stable according to some graphs I saw (that is, they don't have that long term decline the way USD and even EUR to a lesser extent has.

Also, another idea is to perhaps invest in what I dubbed "self-reliance tech", devices which could help you generate some electricity on your own if electricity from the grid becomes unavailable (or too expensive? ). Scour green tech and energy blogs for some device reviews, like CleanTechnica.com. For example this solar charger could charge your mobile phone so you have some degree of communication capabilities. There are other similar devices which can even charge a laptop! Here's another wind power one.

Another cool thing is AeroGarden which allows you to grow your own food (vegetables and such) inside your home and it's easier to do than using real earth. This is especially useful if you live in a flat somewhere with no land. It takes only 60watt of power so it's possible you could use one of the above solar/wind devices to power it even when there's no power from the grid.

And I think that only scratches the surface of "self-reliance tech".

Cheers

[Raineyrocks]

Thanks guys. I agree, although I'm still holding off on food stockpiling. First the surpluses I have aren't very big so it's often an either-or kinda situation. Either I get more silver or I save cash or I actually start saving food.. Luckily I do have a place to go (with land) where we can grow our own food if the worst comes..

Also, I'm not sure how strongly would this affect Europe. I think non-EU member countries should be affected the least.

Btw, speaking of saving cash, don't save in USD. Buy euro's or Japanese Yen or maybe Hong Kong Dollars. The latter two seem most stable according to some graphs I saw (that is, they don't have that long term decline the way USD and even EUR to a lesser extent has.

Also, another idea is to perhaps invest in what I dubbed "self-reliance tech", devices which could help you generate some electricity on your own if electricity from the grid becomes unavailable (or too expensive? ). Scour green tech and energy blogs for some device reviews, like CleanTechnica.com. For example this solar charger could charge your mobile phone so you have some degree of communication capabilities. There are other similar devices which can even charge a laptop! Here's another wind power one.

Another cool thing is AeroGarden which allows you to grow your own food (vegetables and such) inside your home and it's easier to do than using real earth. This is especially useful if you live in a flat somewhere with no land. It takes only 60watt of power so it's possible you could use one of the above solar/wind devices to power it even when there's no power from the grid.

And I think that only scratches the surface of "self-reliance tech".

Cheers

Awesome links and ideas, thanks!     I love the AeroGarden, it's so cool and this is the first time I've ever heard of one!   How could I switch USD for Euros and different currencies?   Also do I need a certain amount of money to do this?    I looked it up before but the information provided via google was very confusing to me.

[Friday]

gu3st, I'm also very concerned about the current economic situation. Sometimes it's hard to focus on day to day tasks when so many things are crashing around us, let alone make long-term economic decisions such as buying property.  I've also been wondering what I can/should do to take care of myself and my dependents, both short-term and long-term.

Regarding your question about predictions for the next 10 years, here are mine (for the U.S., I mean; I'm not that familiar with the European situation, although my ex-husband lives in France so I probably know more about it than the average American):

-- mass unemployment, which has ripple effects of lower consumer sales, higher crime rates, more alcoholism and other forms of drug abuse, depression, greater willingness to have government "take care of people"

-- shortages.  This is something that I and the majority of other people on this forum can barely conceive of, having grown up in the land of milk and honey; but our grandparents, if they're still alive, can remember all kinds of shortages and rationing of basic staples of life in this country in this century.  It's foolish to think it can't happen here.  It can, and it will.  Actually, it already is.  Atlanta is the primary city of the southeastern part of the U.S. and has been experiencing gas shortages, along with several other SE cities.

-- increasingly inadequate healthcare. If you're lucky enough to even have health insurance, and/or can afford medical visits, you'll be competing with hordes of elderly baby boomers for access to an increasingly limited number of doctors and nurses.

-- ??  I don't know.  Like you, I'm having trouble visualizing this. I feel like I should be doing *something* right now, but I'm not sure what (other than the obvious things such as having some precious metal and implements of self defense on hand). 

Right this moment, I'll have a cheap, nutritious breakfast at home instead of driving to Starbucks for a mocha and a cinnamon roll; it may be one small step, but it's a start. 

Apocalyptic aside: Both the cities of San Francisco and Oakland are overdue for "the Big One": earthquakes that are known full well ahead of time will take out most of each city.  Americans think Katrina/New Orleans was expensive, and chaotic, and disruptive to the U.S. economy?  Or perhaps the island of Galveston recently?  Please...  you ain't seen nothing yet.  There will be martial law, and hundreds of thousands of people living in tents for months, when either earthquake hits. California will be dragged to its knees.  And with an economy equivalent in size to that of France, the financial drag on the rest of the U.S. will be cataclysmic.

[Lloyd Danforth]

Today while cleaning out my car, noticing the empty 2/$1 peanut wrappers,  $1 cashew packs, and  coffee containers, all I could see was dollars that could have gone to cans of Tuna and other stuff to stock away for shortages or simply, to make 10% on the money verses buying it a year from now.
I either have to stop compulsory snack buying and failing to pass a Starbucks or fine myself an equal amount to go for stored food.

[Pat K]

Well here is the final sign that we are doomed.
I have been waiting for it to show as the final "tell"
that folks have finally figured out how bad things
are.

Over the last few days people have stopped
shopping at QVC, that's right  a crazed nation
of T/V shoppers is not buying. The phones are
not ringing.Operators are not standing buy and
are being given time off.

In the words of the Mogambo Guru
We are freaking doomed!

[memenode]

How could I switch USD for Euros and different currencies?   Also do I need a certain amount of money to do this?    I looked it up before but the information provided via google was very confusing to me.

Are there any "exchange offices" there? Here, to convert money from one currency to another you just go to one of the many exchange offices (which are advertised visibly on the streets or roads), give them cash in one currency and they then give you the equivalent in another currency you specify (if they have it). So you can come in with 100 USD and tell them to exchange it to EUR. They will then calculate according the current rate how much that is in EUR and give you cash in EUR. So 100 USD according to the current USD/EUR rate would be 68 EUR, minus whatever provision they take (I think it's usually around 1%).

I don't think there's a minimal amount, but it probably makes most sense to exchange amounts beyond single and double digits.

Sometimes it's hard to focus on day to day tasks when so many things are crashing around us, let alone make long-term economic decisions such as buying property.

Indeed. I find it hard to focus on my goals. But regarding buying property, if you can actually do it soon I think you wont go wrong if you buy anything with land that you can actually grow food on. I personally really dislike agriculture and farming, but then again if the worst really comes I realize that having land to produce your own food with might end up being a life saver. Stockpiling is good, but having something to actually produce food with on the go is even better. But I really hope it wont have to come to that. 

Over the last few days people have stopped
shopping at QVC, that's right  a crazed nation
of T/V shoppers is not buying.

Well, I think some politicians are doing a nice job with their scare campaign too which might have further contributing to the inflation of fear. Unfortunately the solution they're pushing down everyone's throats could be the thing that will make that fear justified. What a Catch 22. 


Also, speaking of martial law, there are apparently some rumors that the secret congress meeting in may was partly about how to tackle the potential public uprising resulting from the fallout in september and possibly the disaproval of this bailout deal and that the US army which is deploying across the US territory is actually all about "crowd control" when that happens. Going to the extreme end of this theory, this could soon be the time when those empty detention camps they built will finally be used, as they put protesters and dissidents in it. I don't know.. but I wouldn't be too surprised considering the direction.

So it looks like in addition to the great economic crisis people in US (and eventually in europe too) should also prepare for active fascism (actual violent clamp down on dissidence). This is something that's been bothering me quite a bit when I heard these stories, because while I've sort of come to peace with the fact that there are people who would threaten violence against me for not paying taxes for instance, I thought of it in the context of the way the system currently is - still on the surface "democratic" and loose, or better put, it's more about words (threats) than threats being actualized. But as (and if) the chain of events shows some speed by what might be going on in USA I begin to realize that an active fascist state might be coming in Europe too sooner than I expected, and have to prepare for that possibility as well.

Besides, when we talk about preparing for the worst, it really means *worst*. The worst thus is both a depressed economy and active fascism. I guess it helps to imagine ourselves there and then see what we can do to secure ourselves while retaining as much of our freedom as possible - I don't think there's such a thing as a situation in which you don't have ANY choice. So we can always make the best of even the worst scenarios, right? While it's still not too late, we can formulate a strategy of survival AND freedom preservation when the two are threatened the most.

That said, I would NOT advise people to go out on the streets and protest, even if everyone else is doing it. At this point I don't believe it will change anything. It will only put you in a state of war. You might get imprisoned or killed for no good reason. This might be the time when there are really no rules so you can less and less point at their actions and scream "See see! That's illegal! That's immoral!". Who will listen? Who will care?

I believe we should conserve instead. Disobey as much as you can but don't run against their shields. Don't draw attention to yourself. Don't do things which you KNOW will only end up in your permanent imprisonment or death.

Consider this: If 200 million americans chose not to go into the streets and effectively start a civil war, but rather chose to silently just start disobeying - stop filing taxes, stop registering, stop complying - with no shot fired they might start feeling their power slipping away.

We are about non-violent revolution, but what we often mean by that is that we wont fire the gun first, that we wont INITIATE it. However, I think it's worth considering that just going out and protesting might for them be enough to do that. If you KNOW that this is what they're going to do, then the only way to make this a non-violent revolution is to not go out in the first place.

Silent disobedience might be the most powerful way of protesting that there is. Maybe the revolution should be both non-violent and silent. I think silent secession is possible too.

[John Edward Mercier]

Deflationary depression means the value of all asset classes will fall... including the value of labor.

The effects is NH are lower employment... not necessarily in the number of people, but more so in the value of the labor (you'll find a job, but it will pay less). This causes a decline in the value of property, and unfortunately will leave many people 'upside down' (owing more than the underlying asset value).

It creates a credit collapse and a greater effiency of labor... not sure how to put that in laymen's terms.

But it generally would be like growing your own vegetable rather than working a job, then using the paycheck to buy vegetables.