Are you prepared? This is a simple question which begs another question. Prepared for What? Well….. Lets say you get up early on a Saturday morning and are greeted with headlines in both the print media and on Television that there is a Bank Holiday. First off do you know what a Bank holiday is? The one I am referring to is not what you think. Infrequently, a bank holiday can also refer to a day where there is an emergency bank closure to avert a bank run. This type of bank holiday occurred as a result of the Emergency Banking Act of 1933 during the Great Depression in the United States. (Read more: http://www.investopedia.com/terms/b/bank-holiday.asp#ixzz1dJO8buNL)

One of the questions I get all the time is, “Hey, you sell gun parts why are you always talking about financial problems?” The reason I talk about them all the time is, we are are in a very precarious situation today and no one….well almost no one, seems to want to speak about this. So let me go back to the question above. What would you do if there was a bank holiday declared. I really like the words Bank Holiday. It makes it seem like we will have the day off and get to spend time with the family. In any case, let me also tell you, this holiday will be announced on the week end. Why the Week End? Most intelligent people know that when you don’t want to call a lot of attention to something, you get the bad news out over the week end because a large percentage of the people are off doing other things and not paying attention to what is going on.

So they announce the bank holiday and initially tell you, this will be for a week while they sort things out. Probably the next question that will arise is, why is there a bank holiday in the first place? Well whether you know it or not most of our big banks today are insolvent!!! Yes,…… that’s right,…….. insolvent, as in broke. They have played all kinds of games to obscure this but at the end of the day, they are flat out busted. Our government treats them as, Too Big To Fail, but fail they will unless the government continues to prop them up.

Now I am sure some of you will probably say, that can’t be right. If they were so bad off the SEC. would have closed them down. If you think that your the one who is in dream land. Last week we had the implosion of an investment bank Called MF. Global. MF Global will end up being the 8th or 9th largest bankruptcy in the history of the USA. (It certainly won’t be the last) What brought MF. Global down? Exposure to sovereign debt (i.e.) Greek and possibly Italian Debt. You have to be living in a cave if you have not been seeing or hearing about this but I digress. The point being,……. there was very little warning before the bank busted out. Even the people who were watching this bank draw down their credit line and called to close out their accounts, were told a check was being mailed to them only to receive the check several days later and have the check bounce.

I mention all of this only because what I am asking above is not beyond the realm of possibility. While the government has been propping up the To Big To Fail Banks, there are those Black Swan events (See Nassim Taleb’s Book Black Swan) which come out of the blue and blow the bank up, such as MF Global. So…. getting back to my question what would you do if you could not access your money in the bank, what would you do? You need to logically think this through and then take some prudent precautions and Oh….by the way….the bank Holiday may not be just a week, it may be three weeks. How would you live? what would you do to buy Food, or Gas?

Now, this is not Mad Max nor do I wish to come off as a doom and gloomer. If the Big Banks Fail, Good. They will be replaced by banks that will survive, after all, this is what used to make America Great. Allowing those who are foolish to fail. Something we have not seen in awhile except, when it comes to you and me. If my company can’t survive, I then must cease business. There would be no one to bail me out. This is as it should be and I would have it no other way.

So….let’s sum this up. As the Boy Scout Motto states, Be Prepared!!! We can see the possible danger on the horizon. What are you going to do?

Rpalick

Gotta tell you, when I usually start talking about a Financial Collapse in the USA, the  Normalcy Bias is usually exhibited by people. For those who do not know what the Normalcy bias is, here you go,

The normalcy bias refers to a mental state people enter when facing a disaster. It causes people to underestimate both the possibility of a disaster occurring and its possible effects. This often results in situations where people fail to adequately prepare for a disaster, and on a larger scale, the failure of the government to include the populace in its disaster preparations. The assumption that is made in the case of the normalcy bias is that since a disaster never has occurred then it never will occur. It also results in the inability of people to cope with a disaster once it occurs. People with a normalcy bias have difficulties reacting to something they have not experienced before. People also tend to interpret warnings in the most optimistic way possible, seizing on any ambiguities to infer a less serious situation.

Okay,….. so having set the stage here’s what usually happens. They look at you like your Tin-Foil hat is a little tight and quickly change the subject, or, try to find a way to get away from you as what you are saying,….. in no uncertain TERMs…. is UN-thinkable. (You instantly gained KOOK Status)… In other words, there is NO Freaking Way on this earth, that what your proposing is a possibility.

The reason I am mentioning this is, before you can prepare for something, you need to know the extent of what you are facing. You have to accept the possibility that this is a real. Let me give you an example. Five or six years ago……. if some one would have told you GM was going to go Bankrupt, what would your response have been? Most people would not even entertain the possibility of this happening yet it happened didn’t it? I remember reading articles in the financial press that gave you every reason why this would never happen……so the key here is accepting the possibility that this can happen.

Next, you need to do your own “Due Diligence”. What this means is, don’t take my advice or anyone else s. Do your own homework, find out  for yourself if,….. what we are espousing is the truth. Look …there are plenty of signs. At the end of April, the S&P rating agency issued a warning to the USA government that if we didn’t get our house in order financially as a country, our debt would be down graded. This week Moody’s followed suit but they differed with the S&P by putting the precondition on that they had to see meaningful action by the middle of this summer. (Good Luck with that one)  Whats really a joke about this is, where the hell has Moody’s and S&P rating agency been? We…as a country have been spending money we didn’t have for years why here? Why Now?

Well the reason Why Here…and Why Now are the simple fact that we,…..as a country,… are coming to the end of our financial rope. By this I mean, we have such an exorbitant amount of debt, that the servicing of the debt, becomes greater and greater. Couple this with the spending on entitlements and the next thing you know, your broke. Now look,…… there are a number of other things we, as a country spend money on besides the ones I have mentioned, Its just these two amount to a lot of money.

Okay…. so lets talk about preparation. Before I get into the nuts and bolts of preparation, let me mention a couple of things. First, never underestimate how long TPTB (the powers that be) can keep the game going. The lies and deceit have been coming fast and furious. Let me give you and example. Since some time in 2009 we have heard the recession is over. Yeah baby….everything is beautiful man…..Yep…and Unemployment was improving and… Wow…things were great right?

No one wanted to talk about the price of Gas (4.00+) a gallon, one one wants to talk bout the cost of Food, no one wants to discuss anything which puts a lie to what the government would have you believe. The Main Street Media is missing in action on this one. Actually , they are not missing in action, they are too busy Shilling for this Joke of a President that they don’t have any time to look or comment on anything else. Besides if they did, Ole Barry may not get elected again and then what would they do? So let me ask you the same question Groucho Marxx asked in one of his movies, “Who you gonna believe me or your Eye’s” I think you know. They say one thing, reality is different. You only have to look at the economic news which has been leaking out this week. The economic situation across the spectrum from Employment to housing is horrible…but hey …..who you going to believe???????

RPalick

Recently,  a headline caught my attention. Government spends 8 times more than it took in, in the month of March. Let me ask you something, what would happen to you if you did the same? Better yet, lets suppose you have done this for the past year, what do you think you’re situation would be like? You know …..spending 8  times more than you’re bringing in? I  think it is safe to say that unless you have a big nest egg, or a rich uncle to bail you out, you would probably be Bankrupt. So logically, taking this to the next conclusion, why do we think the government can do this and not expect the same result?

Too be sure, the government has a number of tools you or I do not have. They have a printing press that they can use at will,  where you and I would be hauled off to Jail for counterfeiting. Furthermore, we have been living like this for a long time racking up huge debt that will never be paid.

This past week end we had some great political theater. We were all threatened by a government shut down because our politicians could not, or can’t, agree on cuts to our bloated government spending. We had trouble coming up with anything meaningful and instead passed this scam of a reduction that was going to really help our debt / spending problem. We were then treated to more media reports of how gallant the politicians were in making these cuts.

Okay so let’s cut the crap. The fact of the matter is, we are hopelessly addicted to debt as a country and do not have the will to make the tough choices which need to be made. Instead, we are going to pretend we are doing something meaningful while we continue riding the oblivion financial express train to disaster. Make no mistake, the laws of finance have not been repealed for us.

Let me just conclude with this, I know how this ends. It ends badly for both you and me. At some point we hit the wall just as you are now seeing with some European Countries. It is important for us to be vocal and in our local politicians face. Be polite but insistent. The current structure will have to change as the path we are on is not sustainable.

In the mean time you might want to make some preparations. The first thing you need to do is Think the Unthinkable..More on this in our next post.