Michael Panzner is a well regarded financial adviser who seems to have better insights than most financial commentators. I’ve recently finished reading his book, Financial Armageddon, which, written in early 2008, predicted the financial crisis that marked the beginning of the global financial meltdown and our ongoing economic depression. Panzner has written another book, When Giants Fall, which I’ve yet to read. He maintains two websites, Financial Armageddon, and An Economic Roadmap for the End of the American Era. Both are highly recommended.
In a recent post, Panzner cited a book by Fernando Ferfal Aguirre, titled, The Modern Survival Manual: Surviving the Economic Collapse, which is based on the actual experience of Argentina over the past 10 years. It’s not a Mad Max scenario, but it isn’t pretty. You can find a summary at Aguirre’s website.
Shorebank in Chicago was closed by regulators last Friday. This bank, which has been prominent for its commitment to the needs of local business and low-income clients, was closed “after Wall Street backers failed to rescue the institution.” Over the past 2 years the federal government has lavished hundreds of billions of dollars on major Wall Street institutions while allowing small, local banks to fail. One must wonder why. According to a Reuters report:
“… the [Shorebank] bank, which was put on the ropes when the recession hit its lower-income borrowers especially hard, was unable to secure the funds it was seeking from the government’s Troubled Asset Relief Program, or TARP, it needed to match private-sector pledges.”
Read the full report here.
SAN FRANCISCO (AFP) – – Virtual currency manager Jambool announced Monday that it has been purchased by Google for an undisclosed sum.
“When the opportunity arose to join forces with Google… we couldn’t pass it up,” Vikas Gupta and Reza Hussein, co-founders of the startup, said in a blog post.
Jambool is the company that launched Social Gold virtual transactions technology that processes virtual currencies — make-believe money for online transactions such as games and social networks, including Facebook and MySpace.
The technology allows makers of online games and social networks to mine “real money from virtual goods” — allowing genuine cash to be converted into virtual currency and vice versa.
The company has reported strong growth due to the popularity of online games.
“Our vision is to build world-class products that help developers manage and monetize their virtual economies across the globe,” the company said in the online post.
Gupta and Hussein said they started Jambool in 2006 as an online collaboration platform, but shifted focus a year later to building applications for social networks.
“Along with success, we found fun and lucrative ways to monetize our apps — specifically virtual currency and goods,” the former Amazon.com employees said.
“That led us to create a platform to help developers create, host, manage and monetize their virtual economies,” they wrote.
An Associated Press story reported in Forbes magazine indicates that China has for the past two months been reducing its holdings of U.S. Treasury debt. ” The $24 billion decline in China’s holdings in June followed a $32.5 billion drop in May. China’s holdings had hit a high for this year of $900.2 billion in April.” And this was down from their record high holdings of $939.9 billion reached in July 2009.
This seem to confirm my expectation that China would be diversifying its foreign reserve holdings away from dollar denominated securities.
The slack is being taken up by Japan and Britain so the immediate impact on the dollar in foreign exchange markets may continue to be minimal– for a while.
Central banks collude to advance their common objectives, but given the astronomical budget deficits and continued monetization of U.S. government debt by the banking system, it is unlikely that they will continue to support the dollar in the future as they have in the past. At some point, they will allow the dollar to slide into the void as they roll out their new plan for a global reserve currency. –t.h.g.
I’ve just posted my summer newsletter to my other blog, Tom’s News and Views. This edition contains a lot of information about my recent activities, much of which is pertinent to the topics of Beyond Money. You’ll also find there some recent posts that relate to security and survival. Please take a few minutes to read these posts. — t.h.g.
A few weeks ago, after I commented on something she said in her monthly newsletter, author and alternative financial consultant, Susan Boskey (Susan@AlternativeFinancialNow.com), asked me to write something about investing for a subsequent issue. (You can find additional information on her website). Here is the article I wrote, which she has published. It expresses my idea about our current situation, and my advice about how to better use our resources in this time of transition. – t.h.g.
Investing in Uncertain Times
Thomas H. Greco, Jr.
Many people today are in a quandary about their personal savings and investments. The conventional advice has it that every family should have three to six months’ living expenses squirreled away. But that begs another question which is, in what form should that ‘nest egg’ be held?
Is it safe and prudent to leave it in a bank? Should I buy bonds, or stocks, or real estate, or commodity futures? How can I balance risk with income and capital appreciation? These are questions that are difficult to answer even in “normal” times, but the present situation seems especially uncertain. The near financial meltdown of a couple of years ago coupled with the ongoing stream of bad economic news leads one to wonder, along with billionaire George Soros, is this the end of an era?
I think it is. My view on the matter is that the era of economic growth is over, kaput, finished. If you stop for a minute to think about it, you must admit that we live on a finite planet, that we are rapidly using up the available resources, that we are adding ever more pollution to our air, water and land, and that the distance (in time) between the end of the production line and regional dump is growing ever shorter. This cannot continue. Nature shows us that nothing grows forever. What would it be like if children never stopped growing? What happens as insect or animal populations grow? They either level off or experience a catastrophic collapse.
So, if we cannot expect the economy to return to what has been “normal” in our past, what can we expect? I believe that we must, and in fact are right now transitioning toward a steady-state economy, one in which overall quantitative growth is supplanted by qualitative development, i.e., an improvement in the conditions of life that really matter,
This is a transition that I compare to the metamorphosis of the caterpillar into the butterfly. The caterpillar’s role is to eat and to grow, i.e., to accumulate the resources that will be used during the chrysalis stage by the emergent butterfly as it assembles itself into a new and different creature. The butterfly behavior contrasts sharply with that of the caterpillar. While the caterpillar can be very destructive as it devours plants, the butterfly helps to pollinate them as it sips nectar from their blossoms.
So, if this is an apt description of what is going on, we ought to withdraw our resources from Wall Street investments that perpetuate “the Caterpillar economy” of endless consumption and despoliation, and start investing in “the Butterfly economy,” which is more equitable, sustainable and restorative of the environment upon which our lives ultimately depend.
This can be achieved through
As our communities become more self-reliant, we become more secure, providing for ourselves more of our food, energy, housing and other necessities of life.
Right now, the economy is in a depression because in the wake of the last bubble-bust cycle the private productive sector is being starved for credit while the wasteful government-military-industrial-financial sector is appropriating ever more resources to keep itself alive. There is not much we can do about that since the political power is mainly in the hands of those interests. But we can use our own resources in our own communities to secure a better future for ourselves and our descendants.
In a depression “cash is king” because many people don’t have enough of it to cover ordinary living expenses. At the same time, the money powers are inflating the currency at unheard of rates, so ultimately fixed-dollar securities, including bank deposits, will be eaten up by rising prices.
If savers and small investors can buy into local enterprises that provide returns as a share of their actual product, they can achieve some measure of security (in food and energy, for example) while transforming depreciating dollars into something (like food, or alcohol for fuel to replace gasoline) that will become increasingly valuable as time goes on. Use value is becoming more important than market value, and personal responsibility and local cooperation are becoming more important than reliance upon declining institutions and structures.
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Here are a few links to pertinent information: