The Dependent

64
Wed, Jul 2, 2014 - 1:24am

Based on this title, you may suspect the story is about a member of the free shit army who depends on the largess of taxpayers and our government stewards who feel they must continue to hand out free shit to people who are not working. But there is another kind of dependence that many people may not recognize.

On September 14th, 2008, as Lehmann was frantically trying to avoid bankruptcy, Hurricane Ike had moved inland across the US, bringing heavy rain and 70 mph winds to our home in Ohio. How ironic that the hurricane ripped across the nation as Lehmann was imploding? The power went out for a week. That night we lit candles, got out the Coleman stove and heated up canned food for dinner. The kids loved it, scurrying all around the house setting up candles, feeling like we were living primitively.

For the first time in my life, I got just a taste of a natural disaster. Our water came from a well, so our house was dry. Life got more and more primitive. The kids loved it for a while. Then some friends from another town that had their power back on invited us over for dinner and showers. We were lucky that the nearby town was across the state line was up and running within two days. Soon life was back to normal, but I realized how dependent I was on our system. And when our system was broken, our lives were radically affected.

What if, instead of that hurricane, the Lehmann collapse and a lack of TARP would have “cut the liquidity power” to the world financial system? A fictional, “what if” retelling of that week provides me with a bit of perspective.

********************

I awoke on Sunday September 14th 2008 to stormy skies, expecting just another routine fall rainstorm. But, it was a rough one. On Monday morning, after it blew over, strange things began to happen. The banks did not open, all having “Holiday” signs in their windows. The ATM machines were out of order also. Hmmm… that is odd. Is this a holiday? Guess it can wait until tomorrow. That day at work seemed normal enough. The news had no stories about the banks being closed. So as I stopped by Walmart that afternoon after work, I saw “cash only” signs on their door. Good thing $40 was hiding in my wallet. So I picked up some cheese, milk, a box of Fruit Loops, and some special things for dinner. When I went to checkout, a lady unloading a huge cart filled with pizzas, ding-dongs, and two cases of Pepsi, yelled at the apologetic cashier, “Waachoo mean ya’ll isn’t takin no SNAP cards?”

“Ma’am, this is just a computer problem, I’m sure things will be back to normal tomorrow.” said the cashier.

The lady continued, “No! this is bullshit! My card always works!

The manager hurried over, followed by store security, and spoke to her in a low voice, the guard with his hand on his pistol, blocking her exit from the aisle with the cart. She mumbled more profanities and walked out, leaving the half empty cart.

I checked out and left, thinking I’d never seen and armed guard at Wal-Mart. A group of a dozen or so angry people congregated just outside the door, ranting at one another, including Pepsi Lady.

As I drove back home, out of town, I noticed fewer cars on the street than normal and lots of the town’s many restaurants closed. NPR radio mentioned that the stock markets had closed for the day…something about circuit breakers. At home, my wife and I turned on CNN to see what was going on. No news except the weather, baseball playoffs, and the latest Justin Bieber concert stampede. Gosh he’s a cute kid, but all those 5 year old girls singing along just doesn’t seem right.

After dinner, my wife said, “Honey, let’s go back into town and do our grocery shopping for the week. I mentioned that I was nearly out of cash and they were not taking cards. She went to the bedroom, opened her top dresser drawer and pulled a crisp Benjamin from beneath her underwear.

“What else you got in there?” I asked.

“You stay out of my drawers!” she replied.

“What? after I cooked you a nice dinner?” I replied incredulously. She rolled her eyes and said “Let’s go to Wal-Mart, Romeo.”

Back at the store, there was an even bigger crowd at the front door. We drove back to the tire center and entered there, snagged a loose cart and made our way over to the food aisle. The store was unusually vacant of customers. But our big shock came in the food aisles. Half the shelves were empty. Other shelves were a mess. All the beer was gone. Several people were headed up front with carts full of only frozen foods.

What’s going on?” I asked my wife. “There weren’t any snow warnings were there?

“No... this is September,” she reminded me. “Weird! Something’s going on.”

We picked through the leftovers and found most of what we wanted and bee-lined back to the tire center to check out there. On the way home my wife said, “Let’s get some gas.” Our favorite discount station had signs everywhere that said “Cash only” and the price had jumped up to .79 per gallon for regular. We put our last twenty in the tank. The attendant, Rob, moseyed out.

“Hey Rob, what the hell is going on?” I asked.

“Beats me?” he mumbled in his Kentucky drawl. “We got a fax from upstairs first thing this morning to jack up the price and to only accept cash. The cards just aren’t working. … And what’s more,” he continued, “they cancelled the morning delivery. At this rate, I’ll be sold out by noon tomorrow.” I just shook my head, paid him, and we drove home.

We turned on the news channel again to try to learn more. “Computer glitches all across the country.” led on two channels. Officials were assuring the reporters that all would be fixed within a day or so. We just looked at one another, shrugged, then watched an episode of Jericho.

The next few days were more of the same, except gas stations and food stores were actually closed. Restaurants continued closing one by one. The Interstate north of town was strangely vacant, only local traffic drove between the exits, nothing was coming our way from Dayton to the east or Indianapolis to the west. No trucks, only a few private cars.

The big local news on Wednesday came from Walmart. Someone smashed a truck through the doors and a crowd invaded the store, stripping it bare in minutes. Police arrived and chased all they could catch, arresting a dozen or so, but hundreds more fled in all directions pushing carts loaded with goods. By evening, empty carts littered neighborhoods within a mile of the store. We read the news online because the afternoon paper did not arrive.

On Wednesday evening, the president scheduled a national speech. We sat down to watch.

In recent weeks monetary speculators have been waging an all out war on the American dollar. The strength of a nation’s currency is based on the strength of that nation’s economy, and the American economy is by far the strongest economy in the world. Accordingly, I have directed the secretary of the treasury to take the action necessary to defend the dollar against the speculators.

Seems like I had heard these same words somewhere before. The president continued…

"The dedicated leaders of the department of the Treasury, at the FED and on Wall Street are working furiously on your behalf to counter the actions of rogue governments and speculations against our currency. We will weather this storm and have our banking system back to normal shortly. Until that time, I have temporarily asked the director of Homeland Security to deploy peace officers as needed to maintain order in our cities. The American people will not tolerate flash mobs, rioters, looters, or violence of any sort. Please stay in your homes, stay calm, and rest assured that the American people will emerge from this crisis stronger than ever. Thank you and goodnight."

My wife and I looked at each other. “How much more cash do you have stashed in that drawer?” I asked.

“That was it!” she said, looking me dead in the eye. “We have food for the week.”

“They’ve gotta have this fixed by then, I said, optimistically.

No school bus on Thursday morning, instead an email saying school was suspended temporarily and the kids’ assignments and tests would be available at the “Online Learning Environment.” I got a email from my University employer stating that our classes were suspended also, and to come in for a meeting on Monday morning.

On Friday just after midnight, I got online and was able to access records to our bank account. It showed a balance of $236.78, but had a banner across the top that said online and card services were suspended temporarily, and the bank remained closed by order of the Department of the Treasury. I also noticed that my regular bi-weekly paycheck had NOT been deposited at midnight, as was customary. Now I am getting worried. Maybe Monday's big meeting has something to do with that? Two car payments were due before the 24th and several other bills needed to be paid before the month was over, including our utility bill. And on the first of October, the whole budget cycle starts over. Suddenly an old Credence Clearwater Revival song popped into my head.

But our immediate need was greater. The kids were complaining that the fruit loops were gone and they didn’t like the stale instant oatmeal they found in the back of the pantry. My wife came in and notified me that she had been getting creative with meals, but that her creativity required “basic ingredients.” We were running out of food! Wal-Mart was closed. The Farmers market down the road was closed. The discount store was closed. Our good friends five miles north offered some tomatoes. I drove right up.

Saturday night we ate sliced tomatoes on saltine crackers for dinner. The kids were not complaining.

Sunday morning they finished off the oatmeal before we got up.

We skipped lunch.

Sunday night we ate sliced tomatoes for dinner. The kids were not complaining.

Somebody needs to do something! Just open the banks and let us get our money out! Give me my paycheck! I already earned it and it’s wrong to hold it back. What the hell is the problem? What happens now? Stores are closed, stations are out of gas, my car is down to a quarter-tank, nothing is moving on the highways, nobody has any money. Nobody will sell me what I need anyway. Word from friends in town is that you gotta lock your doors and keep protection handy—lots of burglaries—stealing food. We locked our door that night for the first time in 7 years.

We don’t have any food. Somebody needs to do something!

Epilogue

Well, I suppose that TARP was something. QE is still that something. But we’ve seen diminishing returns on QE and the economy contracted severely in the first quarter of 2014 due to weather.

Weather, my Aristotelian arse!

I have an uncle whose life was saved by emergency heart surgery. I had a friend who passed away at age 40 from colon cancer after chemo failed to stop its advance. Tarp was the surgery. QE is the Chemo. My friend lost vitality first, lost his hair, and finally started saying goodbye to everyone. He left behind a wife and four boys, one with Down’s syndrome.

I am concerned for the future of the patient, and justifiably so. I am angry at those who propagate the lie of recovery, frustrated at those who believe them. I am exasperated at those who continue claiming that markets are trading on fundamentals, those who are expert enough to know better. And I am livid about leadership that continues to do nothing to begin the process of economic repair. Perhaps that leadership has other plans?

I hope the system does not collapse, that whoever is in charge, exercising their divine wisdom, will manage a reasonably smooth transition to a new money system without a banking collapse.

But, in spite of their wisdom, they did not do very well at avoiding 2008, they are rattling their sabers even now, and prudent nations are hoarding gold while they decouple their economies from the dollar. Where will that leave the United States and its satellites, all run by corrupt idiots?

Tick, tock.

And today, my wife and I are doing something for ourselves, doing our best to NOT be that helpless dependent, with no options, if our leaders fail or betray us.

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infometron
Jul 3, 2014 - 12:26pm

Numerology: Much ado about nothing?

I watched the Legarde speech, and have a few observations to make:

1) The "I do what I'm told" comment appears to me to have had something to do with coordinating the order of the speakers, who stands up when and who sits down, when to approach the podium or whatever... nothing to do with the speech per se.

2) Anyone who has the least experience with public speaking knows that it is an icebreaker to tell a joke or some such trivia to set the tone and mood of the talk. I'm not saying there is nothing to this, just that there is a good possibility that there is nothing to this... much ado about nothing? Time will tell...

3) The fact that Legarde's speech deviated somewhat from what was released could just be that she was winging it to some extent rather than reading verbatim.

I reread and caught up on J.C. Collin's essays on the IMF and SDR. Recommend others do so as well <https://philosophyofmetrics.com>. Seems much more reasonable and level headed stuff for turdites to be chewing on to me.

Not to take away at all from Dr. Jerome's wonderful essay. Remember this?

The Scout Motto is: BE PREPARED which means you are always in a state of readiness in mind and body to do your DUTY.

  • Be Prepared in Mind by having disciplined yourself to be obedient to every order, and also by having thought out beforehand any accident or situation that might occur, so that you know the right thing to do at the right moment, and are willing to do it.
  • Be Prepared in Body by making yourself strong and active and able to do the right thing at the right moment, and do it.[1]

[1] Baden-Powell, Robert. Scouting for Boys - Campfire Yarn No. 3 - Becoming a Scout.

SteveW
Jul 3, 2014 - 12:46am
Occasnltrvlr
Jul 3, 2014 - 12:24am

@ Fred Hayek

We'd been eating a lot of Thai street food .

Lamenting Laverne
Jul 3, 2014 - 12:06am

@ Silver66 and Bugzy

@ Silver66: I believe it is the US that is missing from the "entire" support remark. The 2010 reforms that will increase the funds IMF can play with and give more power to China/Russia and Co. on the board of directors has been blocked in Congress, I think, which led the Australian Prime Minister, I think, to make a public statement in connection with the G20 meetings and/or OECD meetings (I forgot) in Australia, that if the US had not complied with the agreements by the end of this year - the rest of the countries would proceed without the US on board.

@ Bugzy: The "I do as I am told" remark makes more sense, if you watch the video. The panel was asked to stand up, as the chairwoman presented them one by one - except for Mme Lagarde, who would be introduced last. Mme Lagarde did not appear to know this, so she stood up after the panelist next to her sat down, but she was ushered to sit down again as her introduction was planned to be last. So she quickly sat down again. Hence the remark - once she was given the word to speak - that she did what she was told - namely sitting down again. The hype on internet media about this particular remark is way over the top and completely misleading, if you ask me. The numerology remark was intriguing, though.

Fred Hayek
Jul 2, 2014 - 10:22pm

@Occasionltravler -- you know what they say?

They say that married couples start to look more alike the longer they're married. You and the missus have the same facial look.

Bollocks
Jul 2, 2014 - 5:32pm

False-flag coming? Or just more fear-mongering for more control?

'Enhanced security' at overseas airports with US flights

The US homeland security department has said it will put into place "enhanced security measures" in certain overseas airports with direct flights to the US.

The UK transport department said the country would be among those to step-up security procedures.

The move comes amid US media reports that al-Qaeda affiliates in Syria and Yemen are developing bombs to smuggle on planes.

The US security agency said the changes would be made in the "upcoming days".

It did not specify which countries would be affected nor did it say what triggered the move. It is unclear if the move would be permanent or for a limited period, or would affect airports in the US.

"We will work to ensure these necessary steps pose as few disruptions to travellers as possible," Secretary Jeh Johnson said in a statement.

"We are sharing recent and relevant information with our foreign allies and are consulting the aviation industry."

In a statement, the UK Department for Transport said the country had "taken the decision to step up some of our aviation security measures".

He added: "For obvious reasons we will not be commenting in detail on those changes. The majority of passengers should not experience significant disruption."

An anonymous US official told Reuters news agency European airports would be taking the extra precautions.

Law enforcement and security officials sources told the news agency that Western authorities were discussing security measures that included extra scrutiny of US-bound passengers' electronics and footwear, among other measures.

Al-Nusra Front, al-Qaeda's affiliate in Syria, and Yemen-based al-Qaeda in the Arabian Peninsula are believed to be working together to try to develop explosives that could avoid detection by current airport scanners, US media report.

https://www.bbc.co.uk/news/world-us-canada-28138526

(my bold)

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tailspinargentus maximus
Jul 2, 2014 - 5:03pm

a very interesting point argentus

I have been employed at various times as a writer/editor of the types of policy reports you refer to, produced on behalf of a "prestigious" international organization, and your assessment of their real value to their producers rings true to me. I also agree with you that listening to too much "news" can cause one to take his eye off the ball...

metalsbyamile
Jul 2, 2014 - 4:52pm

Oops

What is that? The Euro ,USD, Yuan. These 3 will survive and compete like nobodies business. If you suspect or believe a crash will delete the Usd you are sadly mistaken. I'd own the Euro and Yuan as long term(until 3rd phase bullion bull)

Yuan

BOT stresses growing role of yuan

Erich Parpart
The Nation July 2, 2014 1:00 am

The Chinese yuan is becoming more and more important in world trade, so investors are well advised to use the currency in future trade and investment to lower the risk of fluctuations, the Bank of Thailand said yesterday.

Chantavarn Sucharitakul, assistant governor for the Financial Markets Operations Group, said the use of the yuan as a trade and investment currency was noticeably increasing because of the size and growth potential of the Chinese economy and Beijing's policy to encourage the use of the yuan in world trade.

"Investors have more interest in using the yuan to trade and invest, as seen by the move of the United Kingdom, which has offered itself as the centre for trade that uses the yuan, or the Russians, who have agreed to use domestic currencies for their bilateral trade," she said.

The use of a domestic currency for transactions between countries will provide more options in trading for other regions.

There are many factors that are needed for a currency to become a proper international currency, such as its flexibility, robust cash flow within the capital market and debt in the financial market in order to keep the cost of transactions as low as possible.

Britain's decision to become the centre for trade using the yuan as a settlement currency - the yuan will be directly quoted within the China Foreign Exchange Trade System - is similar to what Australia, Malaysia, Russia and Thailand have done before.

It is also part of the Bank of Thailand's plan, since it realised the important of the yuan in the future.

"The yuan has the potential to play a bigger part in the future and the central bank has encouraged Thai operators to start using more yuan as means for trade and investment and as a tool to manage exchange risk and to reduce the effect of fluctuations from the main currency," Chantavarn said.

https://www.nationmultimedia.com/business/BOT-stresses-growing-role-of-yuan-30237536.html

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Forum Discussion

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by sierra skier, Aug 9, 2020 - 8:24am
by argentus maximus, Aug 8, 2020 - 2:03pm
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by jack3617, Aug 7, 2020 - 5:51pm
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