Some folks I care about, are still taking losses in the market. Now they look at me with pained looks when I repeat myself and say it's just going to keep getting worse.
It's heartbreaking to see people that I care about cling to their traditional economics education, and their unwavering faith in the market fairy tales.
They worked hard. They played by the rules. They made prudent decisions when things were good, and they profited by it. But they can't yet bring themselves to believe that the game has changed and that they must change with it.
My retired friends are cutting back on trips, renovations, and eating out as their stock devalues and their monthly income shrinks.
I have no good advice, and on occasion I've been asked. There are no good answers. The best I can come up with is, get your debts paid. Sell your stock before it's worth nothing and put it into distressed real estate.
But for those too old to maintain real estate, the options are fewer. Do they buy gold and silver? If they do, will they eventually just get robbed of that, one way or another?
I think it's very likely that by the end of the year, we'll see losses in the stock market that go past 80%. the only way that I feel we won't see this is if we start seeing hyperinflation in prices. Then the market can rise with the price of gasoline. Mike over at Mike's Neighborhood, has written a good piece explaining why price hyperinflation may well be on it's way.
The last time I drove through Plano Texas, I saw a man around retirement age on the side of a busy street. He was wearing a suit and tie, and looked like he'd driven a desk for decades. He was hold a sign that read, "I need a job. Please!"
I fear that for my area, this is just the beginning.
And Plano is one of those places that Kuntsler would deem a misallocation of resources. It used to the be a farming community. When I was a younger man, I'd ride my Trek bicycle up that way on on weekends, taking all day to meander the countryside, visiting a different Dairy Queen in a different tiny town on each trip.
At that time, Plano consisted of a small town downtown, surrounded by farms and ranches. In the spring, the fence rows were abloom with wildflowers. I catch a glimpse of deer, wolves, coyotes, wild turkeys, jack rabbits and other wildlife, as sped along on my quiet metal steed.
Fast forward to today. Plano is a jungle of concrete, wide fast roads, shopping centers and suburbs full of expensive looking homes, with barely a strip of green separating one slab of concrete from another. All of the small towns in the area have undergone a similar transformation.
Now I don't hate suburbs as much as Kuntsler does. I live in one. But mine is old school. The folks that built mine, still believed in yards, in gardening and in having a little patch of green, with the power to restore our sanity after being cooped up in a factory or office cage all day. My neighborhood could actually go semi-agricultural and produce enough food to make a dent in imports from out of town. But in in the newer suburbs like Plano, houses would have to be torn out, and foundations ripped up, to make room for green spaces and gardens. And that will happen. But between now and then, there will be a lot of pain.
Already in many cities, Guerilla Gardening is taking off. In Detroit and Akron, vacant lots are being converted by neighbors into vegetable gardens. With the economy so depressed, when a house burns down, the lot stands vacant for years. I'm sure that many of the arrangements are consensual, but others, may well be on the sly.
Take a look at Google Earth, and look at some of our major cities to see how they are being transformed from industrial sites, back to the their small town roots, as their economies worsen. Look at Detroit and you will be amazed how many lots have greened over.
Change is coming. Some bad, some good. What will your place be in this?