Click the image for a larger version. This cartoon got me to thinking. Are you ready? And how would you respond to the lady in the Dilbert comic strip when she and her family come knocking?
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.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.
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See my new signature line.Click the image for a larger version. This cartoon got me to thinking. Are you ready? And how would you respond to the lady in the Dilbert comic strip when she and her family come knocking?
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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.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.
Here is another article regarding this issue:Banks do not value assets based on what they will be worth in the future, e.g. when the recession ends.
And another: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.
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"
Second, I read the second article a couple of times, and never ever found the quote you provide. Did I sleep past that?The proposed FASB rule, according to a release from the agency, "provides a framework for measuring fair value and a definition of fair value that contemplates an orderly transaction between market participants, not a forced or distressed sale."
It goes on: "In the current economic crisis, many constituents have requested additional authoritative guidance to assist them in determining whether a market is active or inactive, and whether a transaction is distressed. Proposed FSP FAS 157-e would provide this application guidance."
In other words, if a bank asserts that the market for a certain asset is "inactive," then it need not write the value of it down to market prices. Critics such as Grayson insist this change would allow banks to continue a fiction of viability when in fact they may be insolvent.
Trying to learn and not to cause a discussion or argument-- I thought that one of our present problems was that banks were loath to loan but that there was demand, which they were not meeting in part due to stringent loan practices so they don't get burned on bad loans. You seem to be saying there is no demand. Are you talking about the mortgage market, or the commercial/small business market or both? And I would appreciate an explanation of what you mean by their margins being too low. The banks are now practically borrowing at 0% . Are you saying the demand for loans is so low that they can not charge a high enough interest rate to have a decent margin/mark up?Really, of more concern to me, is the lousy loan demand banks have, which keeps their margins too low, which weakens them.
Just my .02
As far as group #1: I have lots of ammo and philosophically have NO problem shooting somebody trying to rustle any of my cows, horses or poultry.
As far as group #2: I have lots of chores to do on my place, they can work for a meal or two.......
In Fer Fal's country (Argentina), there is hyperinflation but there is still food. He is talking about criminals with the intent to rob. In a scenario where food is scarce, people will be hungry, angry, and desperate. They will not be looking for a fair fight.Sometimes criminals just drive up to where you are working, if you are far away from the home, but most of the time they sneak up on you. Criminals are not stupid, and they will spend days checking the place and specially YOUR ROUTINE. For example, if they see that you lock the gate at night, as most do, they will wait for you behind a tree until you are close.
It all depends on how they come knocking.Click the image for a larger version. This cartoon got me to thinking. Are you ready? And how would you respond to the lady in the Dilbert comic strip when she and her family come knocking?
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Depending on how desperate a scenario we are talking about here I was thinking the dog has to eat too.Well Dilbert should probably go ahead and bury her in the back yard
I thought that one of our present problems was that banks were loath to loan but that there was demand, which they were not meeting in part due to stringent loan practices so they don't get burned on bad loans. You seem to be saying there is no demand. Are you talking about the mortgage market, or the commercial/small business market or both? And I would appreciate an explanation of what you mean by their margins being too low. The banks are now practically borrowing at 0% . Are you saying the demand for loans is so low that they can not charge a high enough interest rate to have a decent margin/mark up?
I'm asking because I keep hearing about all the poor business people being unable to get loans. You'd think if they want a loan they'd pay a higher interest rate and the bank margin would be adequate, no?
I could use some help understanding this stuff.