Scenario: Financial system meltdown

This is a discussion on Scenario: Financial system meltdown within the Carry & Defensive Scenarios forums, part of the Defensive Carry Discussions category; Were he alive, I wonder if Franklin would have made that comment during the 1860s....

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Thread: Scenario: Financial system meltdown

  1. #16
    VIP Member Array Brass63's Avatar
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    Were he alive, I wonder if Franklin would have made that comment during the 1860s.
    The United States Constitution 1791. All Rights Reserved.

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  3. #17
    VIP Member Array mlr1m's Avatar
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    Quote Originally Posted by shockwave View Post
    Snip
    For example: Yesterday when I went to get the paper, I saw a dying raccoon in my neighbor's driveway. Sent him a text, and when I didn't hear back after an hour I called animal control. They took care of it. When I've got too many tomatoes coming in, I bring him the extras. When he has too many shrimp on the boil, he brings me the overage.

    Snip
    During a true financial meltdown this is what would happen. People would relearn the art of bartering. Either with goods and produce or with labor. A dentist would pull a tooth and in return you might give him something out of your garden or even repair his roof for him.
    The down side of this is that the government could not let this stand for long as it "cheats" them out of what is rightfully theirs. Taxes.

    Michael

  4. #18
    VIP Member Array mprp's Avatar
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    Maybe this would be a good time to wear that shirt, "Drop 200 lbs. fast..." when she comes a knockin'.
    Vietnam Vets, WELCOME HOME

    Crossman 760 BB/Pellet, Daisy Red Ryder, Crossman Wrist Rocket, 14 Steak Knives, 3 Fillet Knives, Rolling Pin-14", Various Hunting Knives, 2 Baseball Bats, 3 Big Dogs and a big American Flag flying in the yard. I have no firearms; Try the next house.

  5. #19
    VIP Member Array Tom G's Avatar
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    .That's the trouble with our nation. People sit back and do nothing until it's too late.A prime example is the way our government is conducting business while bypassing the Constitution and gets away with it. It's time we stood up to whats going on.
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  6. #20
    Senior Member Array Cold Shot's Avatar
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    The comic is kind of true. If it really hits the fan, and you have bullets, then you can take what you want. It's not a noble thing, but it's realistic.

  7. #21
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    Quote Originally Posted by mlr1m View Post
    During a true financial meltdown this is what would happen. People would relearn the art of bartering. Either with goods and produce or with labor. A dentist would pull a tooth and in return you might give him something out of your garden or even repair his roof for him.
    The down side of this is that the government could not let this stand for long as it "cheats" them out of what is rightfully theirs. Taxes.

    Michael
    And out of necessity, since barter is a fairly inefficient means for conducting trade, e.g., how do you give change, someone will create a paper currency, if only to make stuff work on an interim basis.

    I'm uncertain, but I think the premise of one of the posts here (not one of your posts Mike) about how banks presently are valuing their paper assets is incorrect. Immediately following the calamity in 2007 the banks went through "stress tests" in which assets were valued on market value.

    Again all, see my signature line. People are people and nothing much changes in this world.
    If the Union is once severed, the line of separation will grow wider and wider, and the controversies which are now debated and settled in the halls of legislation will then be tried in fields of battle and determined by the sword.
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  8. #22
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    Quote Originally Posted by Cold Shot View Post
    The comic is kind of true. If it really hits the fan, and you have bullets, then you can take what you want. It's not a noble thing, but it's realistic.
    I don't think it is realistic at all. It sounds like what would happen, but with all the gun ownership in our country we'd end up killing each other in a mass suicide if folks followed a "take what you want" mentality. A more successful approach would be groups of folks cooperating; it might start with family and kinship or with neighborhood, but without cooperation we would do ourselves in.
    If the Union is once severed, the line of separation will grow wider and wider, and the controversies which are now debated and settled in the halls of legislation will then be tried in fields of battle and determined by the sword.
    Andrew Jackson

  9. #23
    Senior Member Array Cold Shot's Avatar
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    Quote Originally Posted by Hopyard View Post
    I don't think it is realistic at all. It sounds like what would happen, but with all the gun ownership in our country we'd end up killing each other in a mass suicide if folks followed a "take what you want" mentality. A more successful approach would be groups of folks cooperating; it might start with family and kinship or with neighborhood, but without cooperation we would do ourselves in.
    Yeah, but if it really hits the fan, then who knows. $2500 for a loaf of bread type of thing would change everything. Survival of the fittest.

    You may be right, but you might not be. The comic makes sense to me.
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  10. #24
    Member Array Magnum's Avatar
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    Quote Originally Posted by HotGuns View Post
    Yep...its not a matter of IF, its a matter of WHEN.
    Before the next election would be a good bet.

  11. #25
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    Quote Originally Posted by Hopyard View Post
    I'm uncertain, but I think the premise of one of the posts here (not one of your posts Mike) about how banks presently are valuing their paper assets is incorrect. Immediately following the calamity in 2007 the banks went through "stress tests" in which assets were valued on market value.

    That was my post. I know it sounds unreal, but it's true. You can find lots of info on google about it. Of course, the banks think it's the best thing since sliced bread. We can trust the banks, right? Here's one article I found in a quick search: US suspends mark-to-market rules on bank assets - Business News, Business - The Independent

    Friday, 3 April 2009
    Banks in the US are being given more discretion on how to value the toxic mortgage assets that have poisoned their balance sheets in a reversal of parts of the controversial "mark-to-market" accounting rules that many blame for exacerbating the credit crisis.

    The Financial Accounting Standards Board (FASB) voted yesterday to let banks ignore market prices for assets if they judge the market is illiquid and that the most recent sales are being done at firesale prices by distressed sellers. There will also be changes to allow banks to book smaller losses on impaired assets that are available for sale, which could take extra pressure off many of the biggest banks in the US.

    Here's a video that helps explain:
    New Mark-To-Market Rules - Bloomberg - YouTube


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  12. #26
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    Quote Originally Posted by dtox View Post
    There is a decline scenario that I've researched that will not be so gradual. Apparently, our banks are being allowed to value their assets (the things that keep them solvent) based what the assets WILL be worth when the recession ends, NOT what they are currently worth (mark to market). This is the same type of accounting that Enron did and you know how well that turned out. It seems stupid, but it was necessary to make these changes back in 2009 (or 08- I can't recall) because without them, the banks wouldn't have passed the government's stress tests. What this has done is to create "zombie banks" (google that and you can read better explanations from smarter people than me). These banks are so-named because they appear to be alive & well, but they are not.

    Now, with that in mind, the scenario I picture is that a European country defaults (likely Greece), causing bond rates in the other over-indebted European countries to skyrocket, thus making it impossible for them to borrow money and causing those countries to default as well (i.e. Portugal, Italy, Ireland, Spain) (google "PIIGS".) The banks that purchased those bonds will become insolvent and the Euro will collapse. Many American banks also own Greek and other European bonds, or are otherwise tied to European banks through loans and such, so that causes our Zombie banks to become insolvent (google "economic contagion" for a better explanation).

    Now then, this starts a panic over here and the US government has to step in and nationalize the banks, and must spend trillions of dollars to secure the depositors. To give you an idea how much just 1 trillion is, if you were born in 100 BC (100 years before the birth of Jesus) and you spent 1 million dollars every single DAY from then until now, you still would not have spent 1 trillion dollars. (2111 years x 365 days x 1,000,000 = 770 billion) That's how much we're talking about here. Not just 1 trillion either. Many trillion. Anyway, the government doesn't have trillions of dollars to bail out the banks. So, two choices are left: Does the government let the US financial system collapse into a barter-town scenario, or do they print the money out of thin air (google "quantitative easing") in order to bail out the banks? Well printing money is what got Weimar Germany in trouble. That's the 1920's German government that printed gobs of money and caused such massive hyperinflation that it took a wheelbarrow full of money to purchase just one loaf of bread.

    So, with no other choice, the government will print the money and everyone will have bank full bank accounts full of near-worthless dollars that they can use to purchase $50 a gallon gas which will double in price the next week.

    Anyway, that's the scenario I've come up based on lots and lots of research. The only thing about it that is unknown is the timing. My guess is it could be as early as this fall. We'd have "Arab Spring" and "European Fall" both in the same year. If you want more information about what this will look like, you should google "fer fal". He lives in Argentina and their economy collapsed into a hyperinflationary spiral back in 2001. He lived through it and has a great blog. His entry called "Thoughts on urban survival" is awesome. If you want to see what a collapsed economy looks like here in modern America, google "Detroit". If you want to watch a real documentary on a town whose economy collapsed, rent Iron City Blues on Netflix.

    All of this info may be new to you and a bit overwhelming, but just take your time and do some research and you'll see there are ways you can prepare. The good news is that everyone on this board is already ahead of the average Joe out there in that we have protection.
    I would say if "O" gets reelected, that is exactly what is going to happen. Whether you like republicans or not, there are a large group of them trying to stop this from happening. But with 48% of Americans on food stamps and more people getting entitlements at a disproportionate rate, there are a lot of voters who are now stuck on the govt. tit and will not vote to stop it. This was "O's" plan from the start. The quicker he could get more people relying on the government, the less likely they will vote for a Republican.

    We are at a critical time in this nations history. There have been people like "O" in the government for a long time trying to move us towards this eventuality, but never before have they been this close.

    Am I prepared for such an eventuality? As best I can be. But for how long can anyone hold off the waves of looters and thieves coming to take what you have? Hopefully I can hold on for long enough but who knows how long it's going to take to put the brakes on this freight train.
    Censored and RETSUPT99 like this.
    -Bark'n
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  13. #27
    Distinguished Member Array noway2's Avatar
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    I am not anywhere near prepared for a SHTF scenario. Until recently, I could easily be classified as blissfully unaware and in the dark. It wasn't until earlier this year that I even began to consider such a thing as preparedness. My plan, though it would occur over several years is to eventually move, more into the country where I would have a chance at maintaining a self sufficient lifestyle. In the short(er) run, I plan to actually take seriously the concept getting a stock pile of food and water to at least last several weeks and putting together a BOB should it be needed.

  14. #28
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    Quote Originally Posted by noway2 View Post
    I am not anywhere near prepared for a SHTF scenario. Until recently, I could easily be classified as blissfully unaware and in the dark. It wasn't until earlier this year that I even began to consider such a thing as preparedness. My plan, though it would occur over several years is to eventually move, more into the country where I would have a chance at maintaining a self sufficient lifestyle. In the short(er) run, I plan to actually take seriously the concept getting a stock pile of food and water to at least last several weeks and putting together a BOB should it be needed.
    Do you have the money it will take to move? What happens if you can't sell your present home? Can you afford to sell it for cents on the dollar? And if you do take a big loss on your present house, will that be enough to buy one elsewhere? And if the Zombie Banks are all collapsing, who's going to finance your mortgage? Mortgage houses like Fannie Mae and Freddie Mac will vaporize this time around. They should have been shut down two years ago, but the government bailed them out. And they held over 10 trillion dollars in toxic mortgages. They won't survive this time.

    Read Reckless Endangerment: How Outsized Ambition, Greed, and Corruption Led to Economic Armageddon by Gretchen Morganson. It's also available on Kindle.
    -Bark'n
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    "The gun is the great equalizer... For it is the gun, that allows the meek to repel the monsters; Whom are bigger, stronger and without conscience, prey on those who without one, would surely perish."

  15. #29
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    Just a couple of quick comments:

    Banks do not value assets based on what they will be worth in the future, e.g. when the recession ends.

    Second, the 47% while accurate currently, and alarming, is not too far off the mark historically for many years. Look here: The Tax Foundation - Summary of Latest Federal Individual Income Tax Data

    Otherwise, it is still of a concern, and we should be prepared, but I don'y spend too many nights worried about it. I worry more about what I can control.

    This is a good exercise though!
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  16. #30
    Member Array dtox's Avatar
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    Quote Originally Posted by Rock and Glock View Post

    Banks do not value assets based on what they will be worth in the future, e.g. when the recession ends.
    Here is another article regarding this issue:

    New Rule Would Allow Banks To Choose Values Of Their Assets
    The Financial Accounting Standards Board quietly buckled to banking-industry pressure last week and proposed new accounting practices that would allow banks to value assets at a higher price than they could currently be sold for.

    Banks have long demanded the "mark-to-market" accounting rule change, arguing that it's unfair to require them to mark toxic assets down to current market prices because the very market for those assets is frozen.
    And another:
    Failed Bank Disaster Largely Ignored By Mainstream Media | Greg Hunter

    Quite simply, the rules have been changed by FASB so banks can value their assets to whatever they think they will be worth in the future even if they are worthless or worth alot less then they can get in the market today"
    Those who do not learn from history are doomed to repeat it.

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