Officially “Out Of Control” – Jim Sinclair

Posted: Feb 14 2009     By: Jim Sinclair
Dear Extended Family,

I sent you a certain few emails that I consider to be the most important communications issued in my career that started in 1958.

I am the son of what I know to have been the greatest Lone Wolf trader in Wall Street history ever, Bertram J. Seligman. He was a past master at his business and believed to be a market sensitive. I apprenticed to him, learned from him and inherited some of his ability, not all however.

From this background of experience understanding and sensitivity the following flows.

The emails of note:

1. Said, “This is it.”
2. Said, “It is now.”

This communication is to inform you as of 2/13/09, “It is totally out of control.” There is no longer any means of reversal of the beginning of the final phase of the downward spiral now solidly set in motion.

For your sake, protect yourselves immediately.

Be prepared for disruptions in distribution common to hyperinflation.

1. You should have already distanced yourself from your financial agents. If you haven’t you are headed for significant displeasure and strain.
2. Make sure you stay three months ahead on necessary items that could experience distribution delays such as prescribed medicine and preferred foods.
3. Even though real estate is far from a buy, if you can afford a second home outside of major cities it would serve a good purpose.
4. Own gold.
5. Consider that good gold shares of non-US companies incorporated in a non-US country operating in third country, traded on multiple exchanges are a means of money expatriation legally and in broad daylight if required.
6. For currencies, all you can do is own a spread held by a true custodial ship wherever that might be.

Simply said, as of Friday February 13th, 2009 the situation is in confirmed “Out of Control” mode as this well engineered downward spiral enters into a terminal phase.

The motive was profit and degree of the disintegration caused in the pursuit of this goal was not anticipated.

The key event was when Lehman was flushed – all hell broke loose. The hell cannot be contained in any practical manner.

I seek nothing of you, but the protection of yourselves.

Respectfully yours,
Jim

An Energy Boomtown Goes Bust

Even as the national economy went into a tailspin, resource-rich towns like Parachute, Colo., were doing fine. Then natural gas prices began to plunge, and the pain began to rise.

By Nicholas Riccardi
February 7, 2009

Reporting from Parachute, Colo. — Robert Knight was about to install wireless transmitters on eight new drilling rigs joining the thousands that dot the ravines and mesas here when he got the startling news: All but one of the rigs were coming down.

Falling natural gas prices had led energy firms to abruptly curtail their work here last month, battering the last sector of the U.S. economy that had prospered despite the recession.

“Boy, it was quick,” said Knight, who has a business installing communication equipment and who serves as the town manager. “It was like the difference between night and day.”

The sky-high oil and natural gas prices that burdened consumers during much of the decade were a blessing to residents of this tiny town and other energy-rich communities from Alaska to Arkansas. Even as the national economy went into a tailspin in early 2008, home prices in boomtowns like Parachute kept rising and the streets were packed with shiny new pickups.

But prices suddenly began to drop in September — natural gas is down 50% from its peak and oil has plummeted from a high of $136 per barrel to about $40.

The plunge brought some relief to recession-racked consumers, but has raised anxieties in Parachute, a town of 1,500 that bears the scars of busts that followed previous energy booms.

In better times, “you couldn’t find a hotel room, you couldn’t find a campground, you couldn’t find a place to rent,” said Laura Diaz, the town planning clerk. That’s changing fast.

full article: here

Peak oil? Global warming? No, it’s ‘Boomsday!’

Five reasons ‘population explosion’ is world’s biggest economic problem

By Paul B. Farrell, MarketWatch

Here’s how an exploding population will remain the key variable driving all other major economic issues in the next four short decades:

1. Global wars … over food, water and energy

Five years ago Fortune reported on “The Pentagon’s Weather Nightmare.” Yes, from inside our military comes a warning of “the mother of all national security issues.” As “the planet’s carrying capacity shrinks, an ancient pattern reemerges: the eruption of desperate all-out wars over food, water, and energy supplies.” But ask yourself: What if nations prioritized population control policies to minimize growth and reduce demand?

2. ‘Global warming’ … and nuclear threats

Will it work? In the latest Foreign Policy magazine, environmental economist Bill McKibben, author of “The End of Nature,” warns: “It might already be too late … to save the planet from a climate catastrophe.” The International Energy Agency’s answer is more supply to feed exploding demand: The world must spend “$45 trillion to build 1,400 nuclear power plants and vastly expand wind power” in order to “halve greenhouse gas emissions by 2050.” Their supply-side obsession assumes three billion more people. But what if we focused on cutting demand by stabilizing world population at 6 billion?

3. ‘Peak oil’ … versus ‘peak population’

Experts warn that “The Age of Oil” is over. Soon the marginal cost of extracting a barrel will equal the sale price. We are on the downside of the bell curve. Special interests like Exxon-Mobil and the Saudis disagree.

But check sites like LifeAftertheOilCrash.net: “Civilization as we know it is coming to an end soon. This is not the wacky proclamation of a doomsday cult, apocalypse bible prophecy sect, or conspiracy theory society. Rather, it is the scientific conclusion of the best paid, most widely respected geologists, physicists, bankers and investors in the world. These are rational, professional, conservative individuals who are absolutely terrified by a phenomenon known as global ‘peak oil.’” Warning: We’re near the tipping point: Stabilize population or self-destruct.

4. Alternative energies, ‘political will’ and lobbyists

Wall Street, Washington and Corporate America hustle the myth that we must become “energy independent.” History suggests narrow special-interest lobbyists will dull the “political will to act” till we pass the point of no return. Our population will grow from 300 million to 400 million by 2050, but the rest of the world will add another 3 billion, with all demanding more economic resources to meet burgeoning demands for energy, food and water. If the world’s population isn’t addressed, we’ll be outnumbered and outgunned.

5. The mythological math of ‘economic growth’

Economic equations stumble on bogus data. Last spring political historian Kevin Phillips wrote a brilliant Harper’s article “Numbers Racket” warning us that “the economy is worse than we know.” Politicians use “deceptive statistics” to sell “Americans that the U.S. economy is stronger, fairer, more productive, more dominant, and richer with opportunity than it really is. The corruption has tainted the very measures that most shape public perception of the economy.”

Making matters worse, economists are part of this conspiracy, tacitly endorsing government propaganda about progress.

more…

Experts Estimate 200,000 Stores Will Shut in 2009 as Recession Deepens

Retailers were hoping against hope that door-busting sales could salvage the holiday shopping season. It didn’t happen.

The recession and factors like bad weather over the last two weeks contributed to the slowest retail holiday season in 38 years. With such dismal shopping numbers, Strategic Resource Group estimates that 160,000 stores will have gone out of business in 2008 and 200,000 more will shut down in 2009.

“We’re going to close malls, we’re going to close chains, we’re going to close stores,” said Howard Davidowitz, the chairman of retail consulting firm Davidowitz & Associates. “The American standard of living is changing forever.”

Analysts estimate that 2,000 to 3,000 malls will go bankrupt by June 2009 as big chains like KB Toys, Linens n’ Things and the Sharper Image go out of business entirely, and other big-name stores, like Ann Taylor, Talbots and Foot Locker shut dozens of low-performing locations. Even huge department stores, like Dillards, Saks and Nordstrom are scaling back.

more…

Forecast for 2009

by James Howard Kunstler

Introduction

There are two realities “out there” now competing for verification among those who think about national affairs and make things happen. The dominant one (let’s call it the Status Quo) is that our problems of finance and economy will self-correct and allow the project of a “consumer” economy to resume in “growth” mode. This view includes the idea that technology will rescue us from our fossil fuel predicament — through “innovation,” through the discovery of new techno rescue remedy fuels, and via “drill, baby, drill” policy. This view assumes an orderly transition through the current “rough patch” into a vibrant re-energized era of “green” Happy Motoring and resumed Blue Light Special shopping.

The minority reality (let’s call it The Long Emergency) says that it is necessary to make radically new arrangements for daily life and rather soon. It says that a campaign to sustain the unsustainable will amount to a tragic squandering of our dwindling resources. It says that the “consumer” era of economics is over, that suburbia will lose its value, that the automobile will be a diminishing presence in daily life, that the major systems we’ve come to rely on will founder, and that the transition between where we are now and where we are going is apt to be tumultuous.

My own view is obviously the one called The Long Emergency.
Since the change it proposes is so severe, it naturally generates exactly the kind of cognitive dissonance that paradoxically reinforces the Status Quo view, especially the deep wishes associated with saving all the familiar, comfortable trappings of life as we have known it. The dialectic between the two realities can’t be sorted out between the stupid and the bright, or even the altruistic and the selfish. The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another. But I have long maintained that life is essentially tragic in the sense that history won’t care if we succeed or fail at carrying on the project of civilization.

Full article

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Shopping malls are a thing of the past. It’s time we closed them all down.

After the Mall

By Chadwick Matlin Posted Friday, December 26, 2008

Malls are a testament to the kind of consumer thinking that got us into this recessionary mess. And that’s why we need to close every single one of them.

Already, malls are in a considerable amount of trouble. Shopping centers on the block are selling for 25 percent to 35 percent less than they did just a year ago. Retail vacancies are on the rise; nationally, 6.6 percent of stores were empty in the third quarter of 2008, a 20 percent increase from the same quarter last year and the highest mark since 2002. Much of the pain is interwoven with the retail sector, where analysts estimate 148,000 stores will have been closed in 2008.

And it will only get worse. Mall stalwarts like KB Toys, Steve & Barry’s, and Linens ‘n Things are all closing shop. The recession is expected to rage on through 2009, and retail chains will probably be looking at dismal holiday numbers. A mall’s chief purpose these days is to be there come the holidays. Now that we’re beyond that season, many stores will need to shutter in the new year.

At the risk of getting Gladwellian, every store that closes has an impact on the shops left behind. Walking through a half-empty mall is an unsettling experience; it feels as dreadful as Dawn of the Dead, just without the zombies. Remember, malls are about escaping from the world and reveling in consumer fun. Spending money during the recession already requires a suspension of disbelief. Confronting an empty storefront is like walking right into a slap of harsh reality. Being reminded of that recessionary reality means you’re less likely to spend money at the surviving stores.

Full story

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An Open Letter to all Americans (Dec 27, 2008)

Dear Fellow Americans

The mass media (talking heads on the television) would try to sugar-coat the depressing news they have to deliver night after night.

They would also have us subscribe to the naive notion: “Obama will fix it.”

This is very misleading. The media want to be able to say “The worst is over” / “The housing market is hitting bottom” / “Things will turn around soon”. You will hear these things every day in the newspaper and on television.

However, there is a much bigger picture: the facts are out there, and some very smart analysts, and members of global think tanks are not afraid to tell it like it is.

Basically (and realistically) these think-tanks are able to project very reliable trends (in black & white). They will tell (sometimes for a fee) what can be expected so that people will have a chance to plan ahead and not be caught unaware, or make poor life choices (in employment, major purchases, investments, or choice of community).

The popular myth that the mass media is trying to push now (as is the government) is that more stimulus packages (bailouts) are the solution. They are not. Basic economics clearly states that one cannot borrow forever and claim that to be profit. Anyways, whoever is getting the bailout money (and the U.S. Government is not disclosing this information) – is not using it as intended. The banks who get it are not lending it out to customers.

You can plan for a US default on their loans, and a very likely devaluation of the dollar likely in summer 2009. This would be followed by the issuance of a new monetary system in the USA, to be called the Amero. It’s already being readied: http://english.pravda.ru/world/americas/02-12-2008/106779-amero-0

Read your Wall Street Journal & New York Times. They won’t sugar-coat the bad news. Here is one stand-up example I can pass on to you so that you and your family and friends can be prepared (for the worse). If it never gets as bad as they claim, no harm done – right? Better over-prepared (at least in mindset, knowing mentally what to anticipate) than under-prepared.

Here is the important link:

http://www.nytimes.com/2008/12/08/business/economy/08econ.html?_r=1&ref=business

The bottom line, from my understanding – is not to expect recovery (growth) for between 3 and 10 years. A lot may happen in between as well (social rioting, more joblessness, currency failure, army activity in the homeland, energy shortages, etc.). Just keep your eyes open.

Cheers and not cheers

Kunstler on: What will U.S. suburbs look like in 40 years?

James Kunstler, the author of The Long Emergency: Surviving the Converging Catastrophes of the 21st Century, World Made By Hand, and three books about suburbs and cities: The Geography of Nowhere, Home From Nowhere, and The City in Mind: Notes on the Urban Condition.

“The suburbs have three destinies, none of them exclusive: as materials salvage, as slums, and as ruins.”

There are many ways of describing the fiasco of suburbia, but these days I refer to it as the greatest misallocation of resources in the history of the world.

I say this because American suburbia requires an infinite supply of cheap energy in order to function and we have now entered a permanent global energy crisis that will change the whole equation of daily life. Having poured a half-century of our national wealth into a living arrangement with no future — and linked our very identity with it — we have provoked a powerful psychology of previous investment that will make it difficult for us to let go, change our behavior, and make other arrangements.

Compounding the problem is the fact that we ditched our manufacturing economy for a suburban sprawl building economy (a.k.a. “the housing bubble”), meaning we came to base our economy on building even more stuff with no future.

This is a hell of a problem, since it is at once economic, socio-political, and circumstantial.

Here’s what I think will happen: First, we are in great danger of mounting a futile campaign to sustain the unsustainable, that is, of defending suburbia at all costs.

In fact, it is already underway. One symptom of this is that the only subject under discussion about our energy predicament is how can we keep running all our cars by other means. Even the leading environmentalists talk of little else. We don’t get it. The Happy Motoring era is over. No combination of “alt” fuels — solar, wind, nuclear, tar sands, oil-shale, offshore drilling, used French-fry oil — will allow us to keep running the interstate highway system, Wal-Marts, and Walt Disney World.

The automobile will be a diminishing presence in our lives, whether we like it or not. Further proof of our obdurate cluelessness in these matters is the absence of any public discussion about restoring the passenger railroad system — even as the airline industry is also visibly dying. The campaign to sustain suburbia and all its entitlements will result in a tragic squandering of our dwindling resources and capital.

The suburbs have three destinies, none of them exclusive: as materials salvage, as slums, and as ruins. In any case, the suburbs will lose value dramatically, both in terms of usefulness and financial investment. Most of the fabric of suburbia will not be “fixed” or retrofitted, in particular the residential subdivisions. They were built badly in the wrong places. We will have to return to traditional modes of inhabiting the landscape — villages, towns, and cities, composed of walkable neighborhoods and business districts — and the successful ones will have to exist in relation to a productive agricultural hinterland, because petro-agriculture (as represented by the infamous 3000-mile Caesar salad) is also now coming to an end. Fortunately, we have many under-activated small towns and small cities in favorable locations near waterways. This will be increasingly important as transport of goods by water regains importance.

We face an epochal demographic shift, but not the one that is commonly expected: from suburbs to big cities. Rather, we are in for a reversal of the 200-year-long trend of people moving from the farms and small towns to the big cities. People will be moving to the smaller towns and smaller cities because they are more appropriately scaled to the limited energy diet of the future. I believe our big cities will contract substantially — even if they densify back around their old cores and waterfronts. They are products, largely, of the 20th-century cheap energy fiesta and they will be starved in the decades ahead.

One popular current fantasy I hear often is that apartment towers are the “greenest” mode of human habitation. On the contrary, we will discover that the skyscraper is an obsolete building type, and that cities overburdened with them will suffer a huge liability — Manhattan and Chicago being the primary examples. Cities composed mostly of suburban-type fabric — Houston, Atlanta, Orlando, et al — will also depreciate sharply. The process of urban contraction is likely to be complicated by ethnic tensions and social disorder.

As petro-agriculture implodes, we’ll have to raise our food differently, closer to home, and at a finer and smaller scale. This new agricultural landscape will be inhabited differently, since farming will require more human attention. The places that are not able to grow enough food locally are not likely to make it. Phoenix and Las Vegas will be shadows of what they are now, if they exist at all.

These days, an awful lot of people — the production builders, the realtors — are waiting for the “bottom” in the real-estate industry with hopes that the suburban house-building orgy will resume. They are waiting in vain. The project of suburbia is over. We will build no more of it. Now we’re stuck with what’s there. Sometimes whole societies make unfortunate decisions or go down tragic pathways. Suburbia was ours.

The above excerpt is from:

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What Is the Future of Suburbia? A Freakonomics Quorum

By Stephen J. Dubner

August 12, 2008, 12:26 pm

http://freakonomics.blogs.nytimes.com/2008/08/12/what-is-the-future-of-suburbia-a-freakonomics-quorum/

Hard Times indeed – tent cities, shelters, food lines (11/08)

In hard times, tent cities multiply

RENO, Nev. – A few tents cropped up hard by the railroad tracks, pitched by men left with nowhere to go once the emergency winter shelter closed for the summer.

Then others appeared – people who had lost their jobs to the ailing economy or newcomers who had moved to Reno for work and discovered no one was hiring.

Within weeks, more than 150 people were living in tents big and small, barely a foot apart in a patch of dirt slated to be a parking lot for a campus of shelters Reno is building for its homeless.

Like many other cities, Reno has found itself with a “tent city” – an encampment of people who had nowhere else to go.

Full story:

http://www.baltimoresun.com/news/nation/bal-te.tentcity28sep28,0,7143626.story

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Hard times and long lines for Southern Californians

Thousands turn out for separate offerings of free food and mortgage help. Some leave empty-handed.

By Ruben Vives, Bob Pool and Rong-Gong Lin II
November 23, 2008

Some sought a cart of groceries the week before Thanksgiving, others sought a way to keep from losing their homes in the new year. By the thousands, a diverse group of Southern Californians converged on two events Saturday aimed at helping families in hard economic times.

The problems, and the aid offered, were vastly different. But both reflected the worries and needs of many.

In Montebello, nearly 5,000 turned out for a food giveaway, a number that stunned organizers who had tried to keep it a low-key event, targeting publicity to several churches and schools. But word of mouth proved stronger than a few fliers, and crowds inundated Montebello Park. A diverse mix of people stood in a six-hour-long line — families from middle- and working-class communities, including Pico Rivera, Montebello, Norwalk and Whittier. No one left empty-handed, though.

Full story:

http://www.latimes.com/news/printedition/california/la-me-foodbank23-2008nov23,0,6575632.story

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Forty thousand glean fields in Platteville

By Allison Sherry The Denver Post

Updated: 11/22/2008 07:21:21 PM MST

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// –>That tens of thousands of people came to a Weld County farm on Saturday to collect free potatoes, carrots and leeks could be one of the most palpable signs of a depressed economy.

The Miller family, which owns 600 acres of farmland outside Platteville, decided to hold a free food day because they had tens of thousands of pounds of extra produce at the end of their fall festival. Any day now, a deep freeze would ruin it, so the family let people come to the farm today to collect what they could haul.

They expected between 5,000 and 10,000 — but instead found themselves inundated with cars and people with buckets and wagons and barrels ready to harvest whatever was available. They estimated the crowd at more than 40,000 people.

“Overwhelmed is putting it mildly,” said farm owner Chris Miller. “People obviously need food.”

Cars snaked around the cornfields starting at 8:30 a.m., and at one point, Miller said, she had 30 acres of farmland turned into a parking lot. Traffic was backed up to Interstate 25 and police officials ticketed people who had abandoned their cars along highways 66 and 119 for the food frenzy.

Full story:

http://www.denverpost.com/search/ci_11052248

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Here comes the Era of Conspicuous Thrift

Most people say they are cutting back on restaurants, travel, and luxuries, the paper reports. Instead, they’re staying at home and renting movies for entertainment.

Here in London, we went out to a restaurant last night and found it almost empty. “Where are the customers?” we asked the waiter, thinking we were too early. “Oh… it’s this financial mess… nobody wants to come out to a restaurant any more.”

eBay says the average family has about $3,200 worth of stuff it doesn’t need. People are getting it out… cleaning it up… and shipping it off. In return, they get what they need – cash.

Readers with a weakness for economics will see in both of these examples a dismal herald. They announce a collapse of consumer demand. Not only are people spending less… but even when they do shop, they’re buying more second hand stuff… stuff that comes from closets and attics – not from China.

So what? Well… if they’re not buying new stuff there’s no need to make new stuff… or sell new stuff…

Full story:

http://www.dailyreckoning.com.au/so-many-things-to-correct-so-little-time/2008/11/19/