It's All Related
columnist: Jahfre Fire Eater

Topic: Economics
We All Get What's Coming Whether We Deserve It or Not

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The best we can hope to do is to deserve as much of the good that comes our way and as little of the bad, as possible. My thanks to Bill Bonner for the title of this article.

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by Jahfre Fire Eater
(libertarian)
Tuesday, January 6, 2009

Most of the time when I talk to people about this I run into a problem because they just don't get it. They look around, and instead of seeing anything to worry about they see things are getting cheaper, government economists and banksters are speaking with optimism and confidence. Unless they're already in serious financial hardship, things are looking up in the eyes of many Americans.

A refinance might be in their plans for 2009 since interest rates are falling. Gas seems almost free after the high prices of last summer. People smile as they fill their tanks...but yet they aren't spending as frivolously as they did a year ago...just in case.

I'd guess that upwards of 95% (minus the number already in financial hardship...whatever that is) of working Americans believe this blip in the economy will pass without causing them personal hardship. They look at me as if I were Chicken Little. I'm used to it. I've been perceived by some as Chicken Little since I started buying gold in 2002. I intend to be prepared for the real-world consequences of our current trends to a degree sufficient to allow me to be able to capitalize on the future opportunities resulting from this business cycle. The opinions others may have about the situation and about my preparations are irrelevant. I always figure that personally derisive opinions speak volumes about those who hold them and say nothing about the person such opinions target.

Lately though, some of my hecklers have been asking questions about things I've said over the past few years. It is funny how family and friends will completely ignore you until you start getting things right that the "experts" obviously have gotten wrong. When their portfolios are down 45-65% while mine went up 24% last year, it gets their attention. When my colleagues are nearly all in a funk over their 401K losing 30% or more while I talk about having closed out my 401K 2 years ago to safeguard my gains, it gets their attention.

While they wonder how they will live if they lose their job I wonder if they wish they could get back $15- $30K in mortgage interest over the past year...or the $60K over the past two years...or if they wish they could sell one of the homes they scooped up when things were hot? I wonder if the value they get from driving vehicles with monthly payments larger than my mortgage payment is really that much more than I get from my old, paid for, vehicles? I suppose it comes down to priorities. I make having choices my priority so I steadfastly avoid boxing myself in financially or intellectually. I try to make sure both debt and labels find it impossible to stick to me.

Regarding the stock market, this dead cat too will bounce; a lot of people will rejoice in their belief that the good times are returning...those who are still employed that is. People who are looking for work today will not rejoice if the market bounces 20-30% because no new jobs will be created by that bounce. Profits taken during a dead cat bounce are not typically invested in increased production. Rather, they are usually applied to cover risky positions in other areas or to facilitate belt-tightening efforts. Of course, some fools will return to the market and, if the bounce lasts long enough, some fools will resume risky investing practices. The market serves one major function in both good times and bad: Mr. Market exists to separate fools from their money. Certainly, there is the chance in the short-term that the market could unite some fools with money from other fools. No fool has pockets deep enough to exhaust Mr. Market's patience. Very patient the market is, especially relative to the lack of patience exhibited by most fools with money to lose. In in the long-term, the market will grind all fools into oblivion. That is the market bottom. We are not even close to that today as you can tell by looking around. Far too many fools still have money to lose. You will not know anyone like that when we've reached the bottom.

I'm in the business of selling very high ticket software packages to fortune 1000 companies. In the past 5 months I haven't talked to a single buyer who is certain they have budget for 2009. The end of this downward spiral is no where to be seen. The accelerating downward forces will crush the dead cat rally, wipe out jobs and savings, and increase our vulnerability to violence initiated both from inside and outside our country. I may not have a job tomorrow, or next month, or next year. No problem. I'm prepared because I have no prideful restrictions on how I earn my income and no unsustainable accumulation of debt or depreciating assets. Today I sell software but in the past I have shoveled manure for pay. I can still work a shovel with the best of them.

There was a headline over the holiday that said something like most people feel 2008 was the worst year they can remember. I believe history will show 2008 as one of the best years for a long time to come. Maybe not in the stock markets, those losses are what they are and the worst may be behind us. However, for the general population, living standards will only get worse for the foreseeable future. (I also believe that 2009 will see the market below 6000 but in a government-manipulated market such as ours one cannot depend on market forces to be allowed to function - eliminating the dead wood from our economy - so I wouldn't bet on any predictions here.)

I don't expect to see a bottom in the decline in living standard until after 1 in 4 to 2 in 5 people are unemployed, until dollars are worthless and defunct and until electronic commerce has ceased to be available for individuals completely. I expect to see food riots in our cities, police brutality promoted as patriotism and the US military deployed on domestic ground to carry out deadly operations against US citizens.

Only then will things begin to be bad enough for people to think of revolution and change...initiated by them, personally, not by "someone else". The natural business cycle cannot recover once we are saddled with Obama's Giant New Deal Socialism. It will take a bloody revolt to affect any notable change once that rot is in place.

I have planned not to be part of the decline nor part of the revolution. My plan is to watch and write; living my life as I choose due to provisions I've been putting in place for years. I'll remain too comfortable to fight for the next 10-15 years while the rest of my fellow Americans come to the awful realization that they need to actually do something to change their condition. By the time the masses are ready to stand up and restore liberty, I'll be too old to fight. I plan to just watch and write...with the hope that someday someone will again be able to understand what I have seen and, more importantly, why I bothered to write about it after every warning went unheeded.

So, if what is coming actually resembles what I've described, how much of what you get will you deserve? How much of what your spouse and children get will they deserve? The answers to those questions are the stakes in any gamble that things are going to be just fine.

Now that the stakes are clear, the choices are obvious: sleep well or get busy. I figure only the super rich and the hopelessly ignorant will sleep easy with those stakes on the table. Guess what, if the rest of us get busy, turing more of our resources from consumption to production, it may help stave off some of the worst.! Cool huh? I just love the objectivist optimism underlying acting in one's own best interests.

-Jahfre Fire Eater

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©2009 Jahfre Fire Eater, all rights reserved. You must have written permission from the author in order to republish this work.
Published: Tuesday, January 6, 2009
Last modified: Tuesday, January 6, 2009

The views expressed in this article are those of Jahfre Fire Eater only and do not represent the views of Nolan Chart, LLC or its affiliates. Jahfre Fire Eater is solely responsible for the contents of this article and is not an employee or otherwise affiliated with Nolan Chart, LLC in his/her role as a columnist.

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