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Re: Infrastructure - the joy and end of us all.

Posted: Sat Jan 08, 2005 10:36 pm
by 3l
Hi Jack:

I used to do high tech for the government.
Nuclear high tech.
I have seen the depraved specticle of the government in all it's glory.
I have glad handed senator's stumbling fool relatives.
The main reason folks can be outside the reach of government is the government has wriiten us all off.
In wartime the people become just numbers to the government.
A boat load of folks, KNOW deep down in their soul that the government will do the wrong thing 90% of the time.
Out of total stupidity for sure.
Not out of malice of fore thought
But bad judgement.
But by the time they develope a concious IE people get mad ,you could die an unintended death in their mercy drenched hands. People no longer trust the fickle finger of fate planning of past years Those folks are laying in food reserves and erecting windmills and solar panels in order to cheat death. I have friends in FEMA and other agencies. Don't count on them if you are wise. An NBC attack could paralyse the section you live in. They maybe so swamped it might take months to get to you. Can you eat ,have drinking water and warmth for a month or more while officials sort it out? I contemplated this while the power failure on Friday was playing out. We lost power for 8 hours. My house was the only one with heat and lights that worked. as far as I could see. I plan to make it.
I intend to have a hot cup in my hand no matter what.
Now that I've added emergency rations to my larder I can live totally off the grid for 3 monthes with no power,water or driving
for resupply. A sure indication of the underground is the Homepower movement. Check them out at
Another good site is

Happy Fusoring!
Larry Leins
Fusor Tech

Re: Infrastructure - the joy and end of us all.

Posted: Sun Jan 09, 2005 6:51 am
by Richard Hull
Jack is right. This particular forum is the one where we can vent a bit and that is often a plus. I was not venting, but just noting the fragility of the infrastuctures that support our society.

I don't think I'll join any militias or anything that extreme, but part of our duty as citizens is to stay informed and keep our eyes open. This often involves discussion with fellow citizens.

As far as government is concerned, that is something that we can only alter at the ballot box, though the offerings there can be pretty meager.

Richard Hull

Re: Infrastructure - the joy and end of us all.

Posted: Sun Jan 09, 2005 5:00 pm
by 3l
Hi Richard and Jack:

I am not mad at the government per se.
Knowing the facts is not being mad at the government thank you.
Join a Militia?
Not likely...the government for all it's warts is still the best one going.
That ten percent is a huge lot of good you know.
I don't need to play army thank you.
BTDT at age six....militias can cross into "Lord of the Flies" with untrained ,undisciplined folks too easily.
The best defense is hearts and minds ,befriend your neighbors, be a good might need them someday.

I'm only doing what I think is prudent for my situation.
An individual is responsible for his plight.
I am relating what I'm doing...not to vent or hypothesize but to
maybe to galvanize folks into some kind of action.
Preparing for emergencies has fallen out of fashion in this country. A simple kit could be all it takes to save your life.
Most folks don't even have a med kit in the house or flashlights.
You have some time,I think to gather stuff.
I spend 15 minutes a year,adding stuff to my emergency list.
I started with a 36 hour candle and a box or two of energy bars.
The next year I added 40 gallons of water.
Four plastic water cans from Walmart.
The year after that a medical kit and pocket heaters and their fluid.
See by just adding as little as 30 dollars a year you can build a reasonable emergency store.
Richard is correct in pointing out the weaknesses in the support system.
Most folks are ignorent of this issue.
As an ex DOE & SAC guy ,I can confirm what Richard is saying.
I am a firm believer in the Aesop Tale of the Grasshopper and the Ant. We ants feel a cold winter is due. Grasshoppers on the other hand are basking at the pool with a drink wondering what the fuss is all about.

Happy Fusoring!
Larry Leins
Fusor Tech

Re: Infrastructure - the joy and end of us all.

Posted: Thu Jan 13, 2005 5:52 pm
by ChrisSmolinski
I'm not quite as pessimistic as others about the future. I do think way too
many people are spending way beyond their means. All encouraged by the
government, since it leads to increased economic growth. I don't see a
bubble bursting, I just see a flattening of the growth curve.

My real concern is with the effects of the dramatic increases in real estate
prices (I hesitate to use the term value), all IMHO driven purely by low
interest rates, and simple supply-demand. People with existing homes can
"move up" due to the increased price of their home to sell, but many first time
buyers are somewhat locked out of the market. We're now seeing the first
side effect of this, dramatic increases in assessed values on homes. Expect
to see local governments slightly reduce the tax rates to lower the hike, but
still result in large increases in real estate tax revenues. This is their chance
to grab a lot more cash, and I've never seen a government official miss that

The real crunch will come when people are forced to sell their homes due to
job relocations, etc. No more turning a 100% profit for sitting on a house for
five years. They'll be lucky to get what they paid for it, if that.

The other major problem is with folks who took out massive loans on the
"equity" in their house, suddenly created by the increased "value". There are
IMHO good and bad uses for such loans. Putting an addition onto your house
is a good use. Taking a trip to Hawaii is a bad use. I suspect a lot more of the
latter than the former. At peak I was getting one or more equity loan offers a
week. Many were pushing interest-only payments, which of course offered
very low monthly payments. Hence the principal remains in full, ready to be
repaid after the set number of years. I wonder how many people understood
that? "Balloon Payment" isn't in the vocabulary much anymore.

As I think Richard has said, keeping your debts as low as possible is the way
to go. A house mortgage is usually unavoidable, but no reason to do what
most people do, find out the max you can borrow, and then find a house
which is that expensive. What a crazy way to go shopping.

With a third child on a way, a mini-van is in our future, but with the one car
loan (0.9% so worth it vs paying cash outright) paid off in a few months,
it'saffordable, especially with having paid down my mortgage at an
accelerated rate for several years and then refinancing for a monthly
payment down around what many people have for a car loan. It's allowed me
to quit the day job a year ago, and hang my own shingle. And while I am
saving for "retirement" I have no plans to retire, I enjoy doing what I do too
much to quit! Being given a finite amount of time to live, it does not make
sense to do something you dislike for 45+ years.

Re: Infrastructure - the joy and end of us all.

Posted: Thu Jan 13, 2005 8:30 pm
by 3l
Hi Chris:

I not a total pessimist but it is better to prepare like one tho.
Retirement is a big bad bear to plan for.
I put 100k away and it is not enough with the costs rising out of control.
I live in a modest 1960's three bedroom that I took a 46,000 dollar morgauge on in 1996. The house has changed little but the outside speculators have driven the valuation into the stratosphere. Since I'm within a ten minute drive from Ole Miss,the valuation of my house with 3 acres is now 120,000 bucks! Thank God I'm handicapped my taxes only went up 120 dollars verses the 500 per year tax hike my neighbors pay.
I'm now planning an under ground dug out...but the land is wacko. How to buy it? I can build my new home myself without the contractor's markup. I only have six years left on this mortguage but if the city of Oxford finally annexes the land I sit on....I'll have to sellout.
Ah Retirement the easy life!

Happy Fusoring!
Larry Leins
Fusor Tech

Re: Infrastructure - the joy and end of us all.

Posted: Thu Jan 20, 2005 3:06 pm
by Beryl
Mainly because of this thread and the Price of Indium thread, I've been thinking quite a lot about investing some money into metals rather than "virtual cash" so I have a few questions that I believe some of you may be able to answer:

If someone was to invest in an amount of silver or other precious/rare metals, how (or "to whom") would they sell it?

Do any of you have any recommendations for "buyers" (people, businesses, or exchanges that would exchange your metal for money) or suppliers of metals (and what to expect from them, such as certificates of purity)?

Re: Infrastructure - the joy and end of us all.

Posted: Thu Jan 20, 2005 4:30 pm
by Richard Hull
Investment metals have a special methodology.

Never buy metal market shares, metal futures, etc. Always "take delivery".

In general, the "spot prices" are for bullion amounts of metal 10,000 ounces or more. Needless to say a healthy premium is often commanded at time of purchase for coining or ingoting and small transaction overhead.

For spot prices check:

Silver on the ounce in bar stock commands about a 10% or more surcharge over spot. Gold is similar. Never buy fancy forms of metals. Common ingots with weight and purity stamped on them is usually sufficient.

If you sell your metal, expect to recieve no more than spot, but never sell it for less either.

Every large city has a bunch of stores that sell and buy gold and silver for private individuals. Check your phone book in the yellow pages. Often these are specialty stores, but can be coin shops, or pawn shops. Know what spot is before buying and make your choices accordingly when purchasing.

example. US silver eagles command a stupid and rediculous premium over the far more pure Canadian maple leaf. Both are 1 troy ounce coins. (make sure the verbage is TROY ounce) the US coin can be $8.00 when spot is $6.50 while the maple leaf might be $7.70 and be an order of magnitude purer. All common bullion is rated as FINE metal or .999 pure as is the US coin. The Canadians claim .9999 . Another great option is to purchase old 1964 and earlier US coins. (.90 purity) This is probably the cheapest way to accumulate silver.

Richard Hull

Re: Infrastructure - the joy and end of us all.

Posted: Sun Jan 23, 2005 12:23 am
by AnGuy
>In 1900, gold and silver were just leaving the scene as pocket ripping $1.00 silver cartwheels and heavy $20.00 gold pieces were left in the banks. All your paper money was either a gold or silver certificate redemable at any bank for the metals, if you had your truss on to haul'em away.

>Finally, How many of you think there is a pile of money in your personal savings bank with your name on it and all the other depositers names on it that represent your actual savings account balance that you can get to if a great fall comes?

Hold on a sec. Throughout history when the US dollar or any currency that was backed by precious metals faired no better. There were boom and busts all the time. In fact, when the dollar was under the gold, or silver standard, the economy have a severe depression every 10 to 15 years. There were also periods when the US dollar was faced high inflation on many occuations (usually during war or economic booms). During the 19th century there were many panics where people ran to the banks to get there money out, only to find it wasn't there. In fact during the 20th century the US faired much better than the 19th and 18th centuries.

Second, I would not be as concerned about the declining US dollar and inflation. For instance if we look at Japan, the economy has faced deflation for over a decade, depisite every effort by the Japanese goverment to induce inflation. And Japan is in far worse economic shape then the US! They import just about everything, have higher budget deficits and a mountain of national debt.

Personally I think the danger is deflation. If inflation was a real concern in the US, the long term interest rates would be substantial higher as investors would demand higher rates to offset the risks associated with inflation. Despite the Federal reserves action of raising short term rates, the long term rates have barely moved at all. In some instances the rates of long term rates have fallen. This is an indicator of lack of confidence in the economy.

Rising Commodity prices do not necessarily mean that inflation will happen. Inflation almost always occurs when the labor market is tight, where employment is easy to find and the average work week exceeds 40 hours per week. As it stands few business are hiring. Most of the employment growth is through temp agencies as business are unwilling to hire full time employees. The number of working hours per week is well off the late 1999s high. These all signal weakness in the labor market. Rising Commodity prices with weak labor markets leads to a period of stagflation. When this occurs, salaries remain flat but living costs rises (energy, food, housing). Unless the labor market improves, the economy falls into a recession, as consumers cut spending to preserve cash flow. Recessions can create periods of deflation, because consumers stop spending and this forces business to lower prices to attract consumers to buy thier products. At some point consumers hold back spending even more to hold out for better pricing. This creates an economic death spirl which un-employment soars and prices endlessly fall.

Despite past bank runs (where consumers run to the banks and withdrawl all their money to put under the mattress), there have been none since the Federal reserve had created the FDIC. This is an insurance program that protects personal bank accts up to $100K against a bank failure. In the 1980's the US had the collapse of the S&L's no one lost their money because the US gov't stepped up and made sure everyone got their money. Even bank accounts that were not FDIC insured, where covered by Uncle Sam. The gov't was not going to take the risk that consumers would lose confidence in the banking system. However, holding your money in a Money market account is not FDIC insured. If you are concerned about the risk to your money you can move it to an FDIC insured account. You can also do this with your 401K or IRA. You can also invest your money in treasury bills, which is virtually the same as FDIC accounts.

[Disclaimer: The following text isn't investment advice. These are my views and should not be accepted blindly for your own personal investments. I am not a financial planner nor am would I consider myself a professional in financial services]

Personally I have reservations about putting money into precious metals. PMs are probably not substantial safer than paper currencies. The price of PMs is dictated by supply and demand. Many gov't have substantial PM reserves and would dump them on the open market to protect the value of their currencies. In fact, Germany has announced several times that it may sell PM reserves if the price is right. Therefore, its probably unlikely that you can preserve wealth with PMs. Investment in the energy industry may be a safer bet since few countries can dump oil or natural gas on the market. However, like PM, the price of energy is limited to supply and demand. If the global economy enters a severe recession or a depression, demand for energy will fall causing prices to fall as well.

For now, all of my money is in either cash or short term AA or better bonds. I fear deflation more than I fear inflation. I am not particularly concerned about the falling dollar, because I believe its limited. The rest of the world is dependant on exports to America. Both European and Asian economies are based upon exports. Europe uses exports to finance their domestic entitlement (retirement, and health benefits) programs. Asian countries have weak domestic demand for goods and services and use exports for growth. If the dollar depreciates, americans will no longer be able to afford imported goods. Overseas economies will slide into deflation because their factories will have excess capacity and too few consumers to buy goods. This will likely make the US dollar more apealing to investors and the dollar is still the world's reserve currency.

Although, I have not invested in any energy companies yet, because I believe the price of Oil will fall sometime this year. This is because there are 18 new oil production projects coming online this year. This is likely to improve supply. Over the longer term, I see oil higher because of oil depletion. Fields in North sea, indonesia are drying up. Russian production peaked in 1987, Many of the current Middle east fields in production are nearing peak or are already in decline (google the Ghawar oil field), Mexico's PMEX has announced production will peak by 2006.

However, the recent rise of oil may have to do more with refining capacity than depletion. From my research, I discovered that we have a lack of refining capacity of heavy crude. Most of the refineries in Asia can only process light crude. The US and Europe refineries can process heavy crude, however they cannot process enough to meet internal demand. If additional heavy crude refineries came on line Oil prices would fall. However, There isn't much available real estate in the US for building refineries, and many Americans and Europeans don't want them built in their backyards anyway.

The US economy has replaced one bubble with another, in the late 90's it was the Tech and Equity bubble. Today it is an asset and real estate bubble. Consumers have over extended themselves by purchasing new homes. Last year 37% of all new mortgages were ARM's or Adjustable Rate Mortgages. These loans float provide borrowers with very low rates at a fixed interest rate for about 2 to 5 years. After that period the rate flow with the market rate. If these borrowers were unable to afford a 15 or 30 year mortgage, its unlikely they well be able to afford their existing mortgage, once the loan floats with the market interest rates. Those that believe the rise of housing prices will continue indefinately are foolish.

Because of the risk involved with consumers using these types of loans, banks have acted to protect themselves. Rather than assume the loan risk themselves they have push off the risks to investors and other institutions. They make money by charging loan processing fees and other fees for servicing the debt. Then they sell bonds on the open market or other businesses. This method is a win win situation from them. If the borrower defaults on the loan, The back can forclose on the loan, sell the property, pay off the loan to the bond holders. If the property has gone up in value the bank pockets the difference. If the property declines in value, its the bond holder that assumes the loss. Oh, and the bank can also charge fees for the forclosure to the bond holders, even if it sells at a loss!

The next question in your mind probably is, who are all these bond holders that are assuming this risk! Well some of it bought by REIT (or Real estate investment trusts), The remainer is financed through GSE (or Government sponsered Entities). The US currency sponsers two companies for home mortgages. They are Fanny Mae and Freddie Mac. They were established in the 1970s to make houses loans more affordable for low income families. Howerver over time, lending practices and the type of loans offer have evolved. Back in the 1970's the GSEs required substantial downpayments. Today, borrows need not put a dime for a downpayment. A homebuyer wantabe can walk in a buy a home with no saves or a downpayment. The size of loans offered by the GSE has also grown substantially. Consumers can now take out loans as large as $400K!. Borrowers can also now skip a payment or two a year. The GSE's aren't worried about these loans because housing prices are rising. If the borrower is unable to afford the loan, the GSE can just forclose on the loan. So what happens when housing prices fall?!?! That's something that GSE's simply don't think about these days!

In addition, the majority of loans issued by the GSEs are long term fixed rates (15,20,30 year loans, and now ever 40 years!). This means that over the entire life of the loan, the borrow pays a fixed payment, no matter how high or low the market interest rates move. Consumers lend to borrow money using fixed rates, so that don't get trapped with a rising mortgage payment. However, the GSE's cannot find enough bond holders willing to purchase 20 or 30 year bonds. Most bonds are sold with 10 year or less maturies. So the GSE have to do some finance engineering to make up the difference. The sell shorter term bonds (2,5, 10 years) to bond holders and give the cash to the borrower. When the bond reaches maturity they have to issue more short term bonds, to pay off the previous bonds. They continue to do this until the borrowers loan is paid off. What if the interest rates rise? Well they estimate the expected interest rates over the life of the loan and add that cost into the loan the borrower gets. This is why short term rates are always lower than long term rates. What if the interest rates rise above thier estimates? Well they assume a loss. In instances they can purchase insurance to cover potential loses. However, when you assume Trillions in loans there are limits. If we see a sigificant change in the housing market and loan defaults, the GSEs will be in serious trouble.

Currently Freddie Mac is already under scrutiny for lack of proper reserve capital reserves. Personally I believe the GSE will make the S&L crisis of the 1980s look like a mosquito bite.

I hope you found this information enlighting.

Re: Infrastructure - the joy and end of us all.

Posted: Mon Jan 24, 2005 6:32 pm
by Richard Hull
The bottom line is that in the complicated world of today all economics is the business of economic engineering and not economic foundation.

I have never found a knowledgable source in economics that could tell me a simple ratio. I don't think all of the kings horses or all the kings men have a way of knowing. If all the world's physical assets were put in a pile (this doesn't include one dime of the world accounts receivables)............... and all of the wolrd's physically demanded debt placed in another pile..........What is the ratio of real physical goods products and owned items of value to all debt both national, public and private ........1:10?...1:50?....1:100? What? How bankrupt is the planetary economy? As it is merrily sailing along at present, what is genuine wealth in the mind of modern man in the current economy? What would it be in the more realistic pay as you go economy of a world in a deep, depression should all debt be called tomorrow morning?

401 k's are no more valuable that the stability of the entire economy at any given moment as the money they pay out is not real savings, but portions of that being paid in daily, OR cash coming from various investments being sold at market perceived value.

Greenbacks are no more valuable than the public confidence that most of their fellows do not have a million of them in there immediate personal posession at any one time. (if everyone is a millionaire bread is $3,200 per loaf.)

Precious metals are no more valuable that their rarity coupled with their value in science and industry.

Given a 20 kilo ingot of gold or a loaf of bread the starving man might just choose the bread.

Real wealth is in services, land or goods only . All other tokens of defered wealth are images of tokenized wealth and are no more valuable than there perceived value compared to a loaf of bread of a warm shelter in time of need.

The real world is the one we live in. The condition of that world determines the value of all tokens of defered wealth. Usable, valued goods, services, skills, and property will forever be wealth. All else are tokens of defered wealth NOT IN HAND.

Re: Infrastructure - the joy and end of us all.

Posted: Sun Feb 06, 2005 7:39 pm
by AnGuy
>If all the world's physical assets were put in a pile (this doesn't include one dime of the world accounts receivables)............... and all of the wolrd's physically demanded debt placed in another pile..........What is the ratio of real physical goods products and owned items of value to all debt both national, public and private ........1:10?...1:50?....1:100? What? How bankrupt is the planetary economy?

What you asking is very complicated. Especially when you consider variables such as volitile prices and the value of intelletectual knowledge. For instance If a business spends two billions to develop technology, there is a intrinsic value for that technology. If you took all of the investment in todays infrastructure for the entire world, it would be measured in petadollars (thousands of trillions).

However if for instance, when oil depetion hits the market, trillions in assets will become worthless, since they all are dependant on oil to operating (road vehicles, trains, plains, power plants, gas stations, auto dealerships, factories, petrochemical plants, farms dependant upon oil based fertilizer, ships, etc). Most of it needs to be replaced with newer equipment, and some of it can't never be replaced. The lives of billions are also soly dependant on oil. If oil suddenly becomes scarce, billions will starve and probably perish. And as we can see, the world is increasing becoming dependant on oil even as production nears its peak. Our biggest fear may not be a drastic change in lifestyle, but life itself if World war 3 breaks out over oil.

I have no crystal ball to tell me what our future has in store, but with so many big issues looming its difficult for me to see a bright future ahead. I think some our best days of our lives are already behind us, and a new era of poverty and dispair is less than a decade away. This is one conclusion I hope to be proven wrong!

>Given a 20 kilo ingot of gold or a loaf of bread the starving man might just choose the bread.

Exactly, this is why investing in PM's may not be very wise investment. For a something to have future value, is very dependant on if others believe it has value and are willing to exchange it for other goods or services.