Sounds like the same preps discussed back before Y2K. Ah, the memories...

This balance of reducing debt vs accumulating hard assets is a tricky one. I think reducing debt makes great sense for a more normal economic downturn, but a Eurozone meltdown could turn that rule of thumb on its head.

In normal times, what are we afraid of if we can't pay our debts? Repossession of whatever collateral was used for a loan, such as a home or vehicle? A bad credit rating? Being pestered by phone calls and letters from a debt collection agency? (Granted, things might work a bit differently in the UK so maybe my examples don't apply.) But in a truly major meltdown, maybe these fears don't hold quite the same weight.

As we saw in the mortgage and real estate meltdown in the US (and perhaps this also applies to other other hot real estate markets that crashed outside the US) but a lot of people who were unable--or unwilling--to continue paying their mortgages were able to continue living in their homes for a year, two years, perhaps even longer, as so many borrowers were defaulting and swamping the system. The lenders were either unable to process all these defaults due to the volume, slowed down by legal challenges (like the robo-signing scandal), or else were making strategic decisions to not foreclose on homes and kick out the residents. Another major financial system crisis could similarly "change the rules" of the debt system because so much of that system is thrown out of equilibrium.

You don't necessarily need to pay your credit card bill off in full or don't care if that jet ski is repossessed, but you do need to eat. So, if a truly epic meltdown is what is being prepared for, perhaps I would put supplies ahead of debt service IMHO. Just my perspective.

One of my favorite (not quite the right word) guys to listen to on this subject is Kyle Bass (on the greek euro financial crisis). Listened to it again -- near the end he talks about "guns & gold" great quotes:
"Buying gold is just buying a put against the idiocy of the political cycle"

Also, take the time to listen to AC2011 Session 1.2 Come Undone: Kyle Bass redux.

It's going to get worse before it gets better. The tapestry is torn.

Keep in mind we're going through a period of deleveraging and currencies like the dollar and pound may remain high for years. (Bond yields are still at historic lows) So don't forget cash savings in your preps. At least for now.

I am inclined to agree with Arney on the debt paydown. Of course, that may be easier for me to say, since I don't have much debt beyond my home and about six bills. My sister and BIL are in debt to their eyebrows... I wonder how much of it would be actually useful after the power went off? *shrug*

I am really having a hard time visualizing what a 'Greater' Depression would look like -- am I over-estimating or under-estimating? The only real comparison we have is the depression of 1930-44, a time period that was greatly different from how things are now.

I'm thinking that water and food will be the Big Problems. Since 1930, we have lost about four of our six million farms. Then, our farms were located all over America, everywhere, local food production. Now, it seems to be centered in California and the Midwest, hardly local, and requires transport.

Our aquifers have been in steady decline for decades. Rain doesn't fall everywhere like it does here in the PNW (and even we might be dry for 4-5 months), or it seems to come all at once. If you can catch it, where do you store it for the dry times, realistically? If you would have to depend on rivers, many are heavily contaminated, so how to clean up chemicals and heavy metals? Is it even realistically possible?

With the advent of the computer age, we've learned to sneer at production and brag about how service-oriented we are. How many computer specialists can we use when companies can't pay their power bills?

In 2008, there were a grand total of 497,100 workers left in the U.S. textile, textile product, and apparel manufacturing industries, and most are in CA, NC, and GA.

How many companies here make gardening hand tools? Small grain mills? Wood saws and axes? Canning jars, rings, lids? How-to books? Milking buckets? Chicken wire & hardware cloth? Sheet metal?

I have the feeling that these kinds of things will be the new 'gold standard'. How long would it take enterprising people to get factories for things like this up, running and producing? Will any existing banks help them, or will it be a community thing?

There are so many questions! But how many answers? Is it going to be a wait-and-see-OOOPS! kind of thing?

Sue

For excellent insight as to what is happening in Europe, take a listen to MEP Nigel Farage (Minister of European Parliament). Very outspoken, very against what is happening. Definitely a very rare European fiscal conservative.

How do you prepare? Think survival long term and consider how to keep what you have in a total meltdown of the fiat currency system, where governments can manipulate the value of their currency (devalue through printing more paper) thus reducing the value of your bank account.

If Greece had a printing press they'd devalue and pay off their debt with cheaper currency. But to do that they'd need to leave the EU and the Euro behind, return to the Drachma as their national currency, and then pay off their debt with devalued Drachma. By replacing the Greek PM with their former Finance Minister, the EU stopped (or maybe just delayed) that option. There's lots going on and it gets ugly -- interesting times.


"Buying gold is just buying a put against the idiocy of the political cycle" -- Kyle Bass

Nice job everyone on sticking to the non-political aspect of this issue.
-Blast, very pleased with all y'all.

My skepticism makes me suspicious of gold as the answer to the coming economic problems. If currency is so worthless, and gold so great, why are so many people eager to trade their gold for my worthless money? Bartering in food staples, implements/tools, and essential services will supplant most currency, stocks, and bonds as investments for most people.

I agree with Susan and several others that a person needs quality gardening tools, food processing tools, handyman tools and more importantly, the skills to use them properly. You can rarely buy 'quality' in a store anymore. You have to get it in an antique store or yard sale. We're the 'preppers'; how many of us have enough hand tools, nails and wood to build even a doghouse on hand?

I found the book "The Great Depression...American In the 1930's" by T.H. Watkins to be very informative. Many of the events and conditions described in great detail in the book are already here again.

My parents and grandparents sorted and saved everything. Wire, string, nails, wood and so on.

What will we trade for food and shelter if our savings and/or dollars are made worthless overnight?

Let me hazard a guess on this.

First off, money is #1 to many/most Americans. It is more important than anything. ANYTHING. Everything they have is valued by it's cost, including people. Money has become the Great God.

Secondly, I suspect that older people whose parents grew up in the 30s and 40s (and talked about how hard it was) aren't selling much gold or silver. I'll even bet that they have small stashes of things like unfashionable jewelry and some silver coins. Maybe not a lot, but the gold and the silver are more real to them than cash. But they'd best be careful about where they keep it, because as the price of gold has increased, so have thefts of jewelry

Thirdly, younger Americans are very big on NEW, and old stuff has no real value to them. Many of them still have their jobs, and think (unrealistically) they will continue to do so, no matter how bad things get. Most of them haven't really known any hard times. "Hard times" to them is when Mom only gives them enough cash to half-fill the tank of their parent-provided sports car. I know young people who are working, sometimes married with kids, and Mommy is still paying for a lot of their stuff. Shut off the power or cut off the money, and these people are going to have a very hard time dealing with it.



Our folding money is made from cotton and ink, our coins are made from zinc, copper and nickel, and our savings, IRAs and stock market investments are made of faith.

Sue

I'm grateful to say that I've known very few people who act like this.