A Depression in Full Technicolor

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Stocks ended Friday trading not much higher than where they began. Gold rose $3. Oil is trading over $80 a barrel this morning. And stocks in Asia are “recovering” from the Fed’s discount rate increase of last week.

If the market wanted to crash, it would have plenty of reasons to do so. China is tightening bank lending rules. Here in the US, there is the aforementioned Fed discount rate increase. In Europe, Greece is going back to the marketplace to raise more money. And in the Mideast, today’s news tells us that many Kuwaiti could be wiped out by the latest downturn in their multi-billion dollar investment industry.

Many things could go wrong; something will.

If no panic comes it is because the market is just not ready to panic. Still, we leave our “Crash Alert” flag flying…and stand clear. There is just more downside to this market than upside. Markets are always discovering what things are worth. We don’t want to be holding a lot of stocks when the market discovers that they’re worth only half what we paid for them. So, the flag stays up…until prices come down.

Gradually, people are coming to two contradictory realizations. On the one hand, there really does seem to be a kind of economic renaissance going on…or, at least that is what you might think if you read the business and investment news. On the other hand, people are also coming to realize that we’re in a depression.

We’ll leave it to the mainstream press to describe the rebound, such as it is. We’ll focus on the depression.

“Millions of Unemployed Face Years Without Jobs,” says The New York Times.

Readers may wonder what kind of economic renaissance fails to produce jobs. Answer: a depression.

As we’ve opined many times in the past, a depression is not just a time when people stand in line to get bowls of soup or sell apples on street corners. It’s a time of adjustment…when mistakes of the previous boom are corrected…and a new economic model is found for going forward. This doesn’t happen overnight, no matter how much federal money is put to work helping it. In fact, the government money just gets in the way…distorting the picture and delaying the necessary changes.

Those black-and-white depression days of the ’30s are gone. Now, we have a depression in full Technicolor…with plenty of shades of gray, too.

More people today get food handouts than ever got them in the ’30s. We call our soup lines the Food Stamp Program. More people are out of work too….

…but here you have to look carefully at the figures to understand it. In the ’30s, there was no public safety net. No unemployment compensation…no severance packages…and no government welfare. People didn’t give up looking for a job; they had no alternative. They kept looking until they found something. Either you were working…or you were jobless. If we reported the numbers the same way they did in the ’30s…the number would already be up near Great Depression levels…at about 15% to 18% joblessness.

But there’s something else. Now, there are more people per household working. Back in the ’30s, the man of the house was the one that had a job. Typically, the family relied upon him, and him alone, as the breadwinner.

And guess what? If you look at the men of the house…men 25-54…what you see is that one out of every 5 of them is out of work.

For men…this is clearly a Depression…no, it’s worse. Not only are they unemployed. They’re going to stay unemployed for a long time. Because it takes times for a depression to do its work. And when it is over – maybe five or ten years…or 20 years ahead – not only won’t they find their old jobs again…they may never work again. And they won’t have wives or families either.

Men’s jobs are disappearing – jobs in manufacturing and building. As the NY Times explains, they probably aren’t coming back any time soon. What’s more, studies show that the longer a person stays unemployed the harder it is to get back into the workforce. Employers don’t like to take a chance on someone who’s been out of the job market for a long time. They’re afraid they’ve lost the habit of work…or that there’s some other reason why they have been out of work for so long.

Women’s jobs…in information and services…are doing relatively well. So, men not only lose their incomes…they lose their places in the family, and in the world. What woman wants to marry a guy without a job and without income? Not many. During the Great Depression, marriage and family were almost automatic. People got married. Then, for better or for worse, they lived in families.

Even before the depression began, marriage had become optional. Women get more college degrees than men. They typically don’t like “marrying down.” They delay marriage while developing their careers…and then, when they are ready to marry, it’s hard to find a suitable man.

Result? Well, we don’t know where this leads. But it doesn’t look good for the beer-swilling, football loving X chromosome half of the population.

Bill Bonner
for The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
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Comments

  1. Those unemployed men could start on online business from home. Or from the free computers at libraries and internet cafes if they don’t have a computer

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  2. Christina–the consumers who will make purchases from those online businesses will come from where?

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  3. Christina has been reading too much Robert Kiyosaki

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  4. Christina is right.

    You might not create a successful business, but you create a successful “resume enhancer” that shows your initative.

    If I was out of work, I would choose a subject, get a free WordPress blog, study the living crap out of the subject, and blog every day about that subject until I found a job in that sector.

    The best way to predict the future is to create it.

    Christina is right.

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  5. People with enough initiative and intelligence to do what you say, Mike, are not going to be unemployed for long any way (no matter what advice we give them), but other people are not as flexible and the shock of unemployment frequently paralyses them from taking real initiative. It’s much better to be getting into such activity well before job-loss hits.

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  6. selfsufficiency.com

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  7. oh sure, if all the dole bludgers just did x, y or z then there would be full employment… and then we can see the “help wanted” posters go up all over the shop windows and employers will be dreaming of the good old days when they had a pool of desperados to pick from .dream on, and keep on blame gaming.

    x = race to the bottom on wages to coolie levels. (no racism intended)
    y = ignore any health warnings, and work yourself into an early grave.
    z = get multiple educational qualifications to outcompete those with only one degree for that chicken plucking job.

    whatever happened to the clever country? wasted on computer wiz kid stockmarket gamblers.

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  8. Y’reckon busking might be a better proposition, peterg?

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  9. bike pete .. maybe, but I am (or was) looking forward to bungy jumping from office towers (with no safety nets?) … we’ll see, but again, maybe.

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  10. It will be interesting to see how and also how much people can use the net in a very depressed enonomy if one arrives.

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  11. This article sums up quite well what’s been written in the following article/blog:

    http://hubpages.com/hub/Gold–Silver-and-the-Specter-of-Economic-Depression

    Seems that this is a bit of a depression judging from the extended unemployment. Yes, the reason you’re not seeing the bread lines and soup lines of the 1930’s is because of Food Stamps, Welfare and Unemployment insurance.

    Having said that, even in the Great Depression some businesses did well. Efficiency becomes the name of the game, and if you can provide a service, good or solve a problem for someone you will find work. It’s not easy, you have to look harder and it’s not fun, but I’d like to think that we still have some viability in this economy, as lousy as it is!

    I can tell you that Phoenix, Arizona (and the surrounding metropolitan area) has been hit extremely hard. Many foreclosures, empty office spaces everywhere, layoffs etc. Anyone with sense here, knew the boom was a fake and would go bust! All the excesses are being rung out of the economy right now, unfortunately this is a very painful adjustment. Hopefully, we will endure and recover in the next 5 to 10 years…..yes, one has to be realistic about the time frame.

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  12. Like Lachlan, I think I’d consider the net, peterg.. ! ;)

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  13. I think I’ll brush up on my street performing skills. I used to be quite the juggler and musician in my younger years.

    A depression is the perfect vehicle to purge the bloat from the system. People will starve and die, demand will reduce to real demand, not credit demand. Real competitiveness, imaginiation and innovation will return, not innovation just for the sake of it like adding a clock to a blender.

    My father lived in Germany in the 40’s and in those days a good, hardworking German worked himself to death by around 35 years old. They had to because they needed to rebuild the entire country form pretty much nothing. Needless to say, my father fled the country!

    Think of the benefits of that though. Minimal pensions, no glut of aging people to look after. Younger families and reduced risk of neurological defects. Reduced health care in general. Increased job turnover and youth employment – “What happened to Bill? Oh he died yesterday shovelling coal, they got some 15 year old to replace him”. Job security. Countless other good.

    Grab a shovel and start digging our future!

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  14. Freddie: “Real competitiveness, imaginiation(sic) and innovation will return, not innovation just for the sake of it like adding a clock to a blender.”

    Why stop there, Frederick? Let’s bring back eugenics! Just think… “…reduced risk of neurological defects. Reduced health care in general..”
    And post-natal birth control. None of that primitive ’40s stuff.
    Think of the benefits though: “Minimal pensions, no glut of aging people to look after.”

    Why wait for a capital D Depression? A new 4th Millennium is coming… and to a beer hall near you, soon… !!~ ;)

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  15. Maybe we can offer a Nobel Peace prize for the first geneticist who manages to cross the common cold virus with ebola?

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  16. “Maybe we can offer a Nobel Peace prize for the first geneticist who manages to cross the common cold virus with ebola? ” .. well there’s certainly enough scientists working on just such a thing, and enough crazy idealists who are half hoping they succeed.

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  17. Bill. Please stop writing or offering any sort of investment advice, cancel all of your pay news letters and do not offer any insight to people other than negatives. That way you will not contradict yourself like all of the other guys at the DR and MM news letters. I once thought you all were for the common man pointing out how the shysters were ripping us all off.Alas you are all shysters as well! what a shame as you have some very pertinent points, Aussie housing etcetera. It has taken me a while to realize this but all you have to do is look at todays DR, read your advertisement at the top of the page and then read the first article. You guys are full of S…! shame real shame, s… eventually alwasy floats to the surface. You need to understand and accept the power of what you write. Such things affect he lives of your readers and ultimatley they make decisions based on what you publish. The wrong decison on your advice could ultimatley lead to some making a very bad mistake and the only way they see as an out is by suicide! Please stop being hypocrites go back to your roots and stop being greedy!

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  18. Edward, I think you are much too unkind. These guys at TDR are always qualifying their commentaries with self doubt and acknowledgment of limitations. my main and only gripe really is the lack of, indeed contempt for, “social” sensibility, sacrificed on the alter of the almighty individual (they hate social securty and government intervention of any sort it would appear) . I’ll even level that charge against the good folk in the above commentaries, so ok, an individual might go on the net and do ok (remember that 90% of small businesses fail – so its a bit of a gamble, huh?). but as was said about redundant steelworkers, they (the unemployed) are hardly all going to train as waitresses in the services sector, and how many waitresses are needed? . but the biggest omission is how machines now do the work of 100 workers in the 1940’s. why shouldnt the fruits of progress be shared amongst the people who (not voluntaryily I admit) came off the farms into the industrial (and now technical) industries. I am not advocating communism here (it doesn’t work with us bad monkeys, at least at this stage of our evolution), but desperate individuals fighting without regulation of any sort? that’s what caused a lot of the GFC, as well as governments mistakes when they have got involved. nothing’s perfect, but the main enemy, I would agree, is all too powerful and unaccountable corporations and governments.
    (the other gripe is the confusion of one’s speculating on gold and shares with anothers hard work and productivity). nonetheless keep up the good work guys, I appreciate it, really.

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  19. I believe Bill Bonner comes here and tells people what he honestly thinks about money and wordly affairs. He admits regularly he may be wrong. I dont agree with every single thing he says of course. Neither Bill nor anyone knows the “absolute truth” about everything and more likely very few things. Whats important for progressive discussion is that people are sharing honest thoughts not absolute truth. The only other road is censorship and then dysfunction. Censorship is administered by whom? Somebody who knows the absolute truth? Where are they? The world will never be perfect, but outside of a miracle honest sharing of thoughts and beliefs coupled with respectful treatment of each other is the only chance we have to increase prosperity. Our other choice is slavery.

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  20. lachlan, I agree, and only add that there is one thing possibly worse than slavery, and that is a slave mentality with no leadership… I am thinking here of the movie “idiocracy”, where everything has been so dumbed down by 2300 that nobody has a clue, or could care less. rings a few bells for my understanding of contemporary politics. as for increasing prosperity, it must be sustainable and, in my view, allow for the natural world to prosper too (as it almost always has). prosperity should also include non-material (eg happiness). live long and… prosper.

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  21. Bill has done what i have never seen any economist do, he spoke about the human element of the GFC.

    Everyone is so focused on when the next rise or fall in the market will be or when China will fall. Do you think the god folks of Pheonix Arizona give 2 hoots about any oif that crap.

    The harsh raelity is if China explodes, their lives will remain as crap today as it will tomorrow. They just need to wade through it unitl someone puts them in a hole.

    It sickens me that as a nation American taxpayers (low middle income earners by in large contribute the most) bailed out the very people that put the gun to their heads and took their lives away………………………………….

    I fear with our mortgage debt binge here in Australia exceeding the US per capita before the sub-prime we are on the next boat right behind you. Sincerley hope i am wrong.

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  22. Yep I agree very strongly your comment Peter. To say that “money can make a person happy” is fair considering the effect a win on lotto has to many people. I wouldn’t demonise their joy of money. Its an honest reaction to the receiving of their new toy. But the way they relate to their money and to those around them in regard to that money exposes how free they are or how enslaved (to their fear of loss) they may be. Which has outcomes in their happiness. You can lose so much and yet still find contentment and then be happier than previously.

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  23. Hello,

    I have to tell you all, that there was quite a bit of snobbery in America during the (fake) boom years. It was a culture of artificially high expectations – “you mean you’re just a mere RENTER?, Why don’t you OWN a house?” as if you were somehow subhuman if you didn’t buy a house. Now many of those same people have walked away from those homes unable to pay. You can’t give the damn houses away here in the Southwest USA (Phoenix, AZ, Riverside, CA, Las Vegas, NV etc.)!!!

    Here is an Australian news story (which many of you Aussies may have seen) on the American Mortgage Meltdown which was broadcast on ABC back in Sept. 2007. It is well worth the time to watch it, if for no other reason, for nostalgia. Toward the end of the piece, a stark yet prescient projection! My how far we have come!

    Too bad more Americans didn’t watch this incredibly well done news piece…..it was available online, but most of us were too busy watching the news on Britney Spears haircut or some other useless rubbish.

    Here’s the news story in case you haven’t seen it:
    http://www.abc.net.au/4corners/content/2007/20070917_subprime/interviews.htm

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  24. I enjoy Bill’s articles as well. You get to see events from someone else’s view point. Yes that could be wrong and he readily admits that could be the case, however the important thing is that although you may not agree with his interpretation, it helps you with your own understanding of the way things work. Seriously, if we don’t like it we should just ask for our money back :) Oh, wait DRA is free :) !

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  25. Old news as you say, Rob: “Mortgage Meltdown” was originally broadcast on 17 September, 2007. Since then much has happened in Australia to demonstrate that a number of factors, including growth in China and government intervention in Australia, have spared us the worst of the GFC.

    Yes, some of our more foolish shire councils bought the ‘sliced and diced repackage’ of US debt… and cost ratepayers millions. That too has passed…

    Not sure you’re right about ‘renters’ (‘tenants’ in Australia). Tenants here are often quite _proud_ of the fact that they’re not tied to really long mortgages… and can invest their funds in other growth assets. Many tenants contend that we’re subsidising their cost-of-living’, in fact. Several of our tenant families have very high incomes. Others appreciate the quality homes we build simply because they could not, _at this stage,_ afford to buy or build such a home.

    It may well have been there, but we never noticed any snobbery towards tenants, while renting for more than two years in North America.

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  26. Excellent link Rob. Highlights the power and damage of speculation and the lack of appreciation for repetition of history. Well worth watching.

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  27. Following what the Yanks are up to can damage an Aussie’s finances. I watched their stuff real diligently and had bailed on stocks by about 2005 and on a nice house by 2006. Reckon following their BS (AND getting it largely right!) cost me $200k. Bugger American financial advisors – For Aussies – For mine.

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  28. I watched your video Rob and it was a very good recap on events. Good to see the human face of things in US too. I cant help but think though how will people look back on this in history. Here we are back in 07 and we’re watching the beginning of the world economy explode. Its obvious from the video people understood the what and why of the situation….and what did we do about it? Pump up the credit man! In true US style if we’re going to have an explosion it better be the biggest and best ever eh.

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  29. Lachlan: “…if we’re going to have an explosion it better be the biggest and best ever eh.”

    Hmmmm…. . Elsewhere, Lachlan: “…the way they relate to their money and to those around them in regard to that money exposes how free they are or how enslaved (to their fear of loss) they may be. Which has outcomes in their happiness. You can lose so much and yet still find contentment and then be happier than previously.”

    Hard to reconcile these two opposing philosophical positions, Lachlan.
    Ever see any conflict in holding two utterly extreme, diametrically-opposed ethical viewpoints? Extraordinary to see the IRA view meshed with the Hari Krishna ethic. What _are_ you growing out there?!~ ;)

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  30. Just mellowing out on pumpkins and cucumbers in my old age Biker.

    In the first quote I was just pretending to talk like Ben Benanke or similar (as per Bens explosion of gov.debt). In the second quote well I could tell you Ive lost a lot of things (much more than assets) over the last few years. And it just never seems to stop even just now. At one stage I lost much of my assetts so I took risky bets because I was fearful of falling behind. Of course I lost more. But Ive recognised my true problem is fear and doubt. So they get the boot. Years ago I used to think how terrible it would be if I lost all my things but now they’re mostly gone and strangely I’m more peaceful (not smoking anything but ;) ). Granted some underlying sadness remains but I think the future will be fine no matter what.
    Anyhow Pete its way past my bed time so I’ll have to say good night.

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  31. Hello folks :-) To answer your questions about who you would sell stuff to if you were unemployed and you started an internet business. Well, in any depression not everyone in the world is affected by it. Only some people are, the rest carry on as normal. Even in the depths of the 1930’s great depression, there were still posh restaurants around doing a roaring trade, they still had big flashy parties, they still went on holidays, they still went shopping and they still had balls and parties. Sure 70%- 80% of people in the world might be broke but you dont target them, you target the affluent who have money and you market to them. The best online busines is to sell information online- an information marketing business. And you don’t have to worry if there is a market for what you are selling because you can check that for free in 10 seconds using the free online google keyword tool. You check before you start so you don’t waste money selling to a market that doesn’t exist. Just type google keyword tool into google and it will come up. In there, you just type in any word and it will tell you how many people have searched for that word in the last month. Anything over a total of 30,000 searches a month and you know there is a market for it. Using that same google keyword tool, you can check out the searches people make in every single country in the world, and you can search in any language too. You can even use the free online google translate to look up words in any language or country in the world if you want to translate a word into another language. That is how you find a market to sell to online my friends. And rembeber the golden rule: find your hot market first and THEN get your product to sell to them. Most businesses do it the other way around and they go broke- first they say “Wow I have this great new product that everyone will want” and then they buy stock and then they check if there is a market for it by trying to sell it in the real world. You seriously have to check FIRST if there is a market for it before you buy any stock, by using the free online google keyword tool. Remember, when the world goes into depression, the wealthy and a lot of the middle class who still have jobs are not affected, they keep spending like normal. If you don’t beleive me then check out ebay and you will see collectors right now paying thousands of dollars for one collectible marble (the kind kids play with), pretty billiard cues, and comic books. A comic book recently sold somewhere for one million dollars to a collector. So find out where the buyers are online and target them. And remeber, information products sell great online. After all, we are now in the information age, and inforamtion is the new currency. Good luck to y’all :-)

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  32. Wow Christina you have real flair. I hope you do well for yourself if things do get rough.

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  33. Christina: “…they still had big flashy parties, they still went on holidays, they still went shopping and they still had balls… ”

    Definitely what’s needed in tough times…

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  34. Parties, I mean…

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  35. Christina….any idea how much my complete collection of ‘The Fabulous Furry Freak Brothers’ comics might fetch me, in case I need to sell them during the depression? They’re a bit dog eared, but very funny.

    I also have several of ‘The Adventures of Fat Freddy’s Cat’ & a couple of Wonder Wart-Hog, including issue #1 ‘Hog of Steel’.

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  36. isn’t the internet a ‘peak civilsation’ thing?… I think i’ll brush up on my hunting and gathering skills.

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  37. IMHO… one of the reasons that we have ‘depressions’, is the specialisation of work. True, when it runs as it should, it allows society to produce goods and services more efficiently; but it has left people conditioned to not do anything for themselves, but to wait for ‘orders from above’. They’ll sit around doing nothing, watching daytime TV and feeling sorry for themselves, just because no-one will pay them money for turning up to a factory/office for 40 hours a week, money that they can then swap for food, beer, cigarettes, etc.
    Surely the obvious and simple solution to ‘unemployment’ is to be your own boss again, and learn to do things for yourself – subsistence living, if you like. Get an allotment and start growing your own food (saves a packet). Brew your own beer, or wine. Plant a few tobacco plants and learn how to cure it. Learn some basic plumbing (don’t wait until you’re knee-deep in water), carpentry, mechanics, sewing. The only thing that should hold people back is lack of access to some physical resource (a spade… or some demi-johns… or some aluminium sheeting… or a pile of 4×2 planks…).
    But of course you can buy those resources with some of the gold & silver you’ve sensibly stockpiled in the days you had a job, whilst your neighbours were busy p***ing it all up against the wall on iPhones, personalised car number plates, latte coffees, Playstation games, designer clothes and so on.

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  38. When I say they still had parties during the great depression, I’m not saying that during a depression all the rich people do is sit around and party while others starve. I am making a point that you don’t listen to the media who try and tell you that the whole world is broke during a depression, they aren’t, just some people are, so instead of laying down and giving up in life, you should start an online business. Would you rather you and your family starve? And in case you think that all the rich do during a depression is party, it’s not true. Of all the money given to charities every year, about 80% is given by rich people, when the governments go broke and fail and everything collapses, it is these very same people who give money to help fund charities and who open soup kitchens. If you don’t beleive me then pick up a copy of any book from the 1930’s depression and you will see photos for yourself of, alongside the wonderful charities like the Salvation Army and the Red Cross, many business people opening up soup kitchens and helping the poor. Wouldn’t you rather be in business and help others when the going gets tough, instead of being the one in the soup bread line?

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  39. As Celente (and numerous other experts) has already said, the USA is on a totally unavoidable one-way downhill slide into prolonged economic depression. Obama, Bernanke et-al have no idea and just live in La-La land. The US people are slowly waking up to reality, but it’s way too late.
    Here in Oz, we have the *potential* to be well off and largely avoid the crash that the rest of the world is about to experience, BUT…we need extremely switched-on political leaders who can direct Oz GDP towards domestic production and consumption over export to protect us against the inevitable overseas export market collapse. We don’t have such leaders – just the typical self-serving, ignorant, squabbling, PR rhetoric dispensing turkeys we’ve all come to despise – so now so we’re seriously exposed to the global depression when it hits.

    Everyone’s best bet is to develop multiple income streams BUT go for high demand products and services, like food, health, affordable alternative energy etc. Even in tough times, people need the essentials, regardless of their income bracket !
    As for yourself, forget gold & silver – “old faithful” ideas but realistically who’s going to buy them ? Certainly not Joe Average with massive debts who’s just lost his job…
    He needs food and power, not gold & silver !

    As for ideas, that’s up to you. I’ve got mine already..

    Demolition Man
    August 10, 2010
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  40. “Everyone’s best bet is to develop multiple income streams BUT go for high demand products and services, like food, health, affordable alternative energy etc. Even in tough times, people need the essentials, regardless of their income bracket !”

    That’s our call, too.

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  41. BP yours was the basis of my thought that lower geared low income housing where the govt would likely pick up the chit was a better bet going into a deflationary episode than medium-high geared high income housing (no I haven’t invested).

    For the post GFC years as you may have gathered my equity investments have been circa 50+% consumer staples(agriculture), 5% health, 15% energy-resources(now only refining), 20+% energy/resource/engineering services. You can graph the indexes on the ASX website (XSJ,XHJ,XEJ).

    The residual assets after taking profits earlier this year are only bouncing around break even and the risk is they will got knocked around some more until paper money and bubble assets get levelled and when real earning assets like those that you talk about become harder to find. My returns would not have beaten rental housing but I am equally comfortable with my position despite acknowledging the risks. Ag is also as risky as it ever was, especially for those that have to finance inventory or rely on rural land values.

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  42. Appreciate your position, Ross. Despite media claims to the contrary, our view is that our capital appreciation in the last two years has been flat. Rental returns have been great, primarily due to low interest costs.

    Your portfolio sounds pretty healthy to me! You’re sufficiently diversified and your breadth of knowledge gives you an edge most of us don’t have. I’m a little stunned to realise one of our sons easily outperformed us last year, in indexed funds (unusual strategies I don’t pretend to really understand) and in cash.

    Trying to remember a period in the past similar to this… but I can’t.
    At times it seems similar to that long flat spell in the eighties, but there wasn’t as much ‘contradictory stuff’ happening. Consoling ourselves that we’re well ahead of inflation, even though the pace has slowed!

    Given our ageing population, I think you’re well-advised to have ‘health’ in there!~

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  43. Small fry money but some of DR may be interested. I put a 1KW solar array on roof (Max rebate for the size) and got my first quarterly bill: $189 credit, nothing to pay. During a very wet/overcast winter too. I haven’t put on the Gross meter yet which will double returns, and I’m putting another KW on in early Sept. System will pay itself off in 3 years or so.
    Considering the tax implications here, in a few years I can see myself getting interested in an electric vehicle of some description to min tax exposure.

    Bearamundi
    August 11, 2010
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  44. Interesting, Bear. We’re getting paid 47c per unit from the grid (WA).
    What’s your rate?

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  45. Biker, 68c in NSW (some say 60c but our Energy Australia provider states former). Gee, we have to get up early to be ahead of you!!
    We were away for 6 weeks mind you but then we only get paid on nett production. Once the gross meter gets installed ($460 fitted) we get 68c every KWh produced, and then pay for our power usage @16c per KW. We’ll be ahead.
    Another guy at work has 1KW panels as well but all his kids are grown-up, suck power, and mooch at home. For the year he has used 2KWh so his total bill is 32c plus service fees.
    The gross feed-in tarrif subsidy is locked in for 7 years but by then we’ll have paid for system many years ago and continue to use free power ‘forever’. Hopefully, your govt in WA will follow suit re subsidy.
    2 things I enjoyed was the shading in summer. Panels sit over N roof and suck up the radiant heat so forget air-con, don’t need it. Another was the pleasant feeling of opening a Bill (must be unconscious ‘dread’) and meeting a credit. I looked twice at the $0.00 owing. Not bad for $1826 nett cash outlay with 25 yr warranty on panels.
    Trying to get ar*e into gear re watertank $1500 subsidy. The window closes on that in June 2011. I’ve been thinking about your AMEX card too, I avoid cards and most times travel on savings but a card with points sounds like a good idea so I’ll look into that :D

    Bearamundi
    August 11, 2010
    Reply
  46. We’re installing them on rentals, Bear: 1.5 kW and 1.7 kW. Cost to us is $2.5K and $4K per house.

    Our main property will get 5 kW, to serve the house and guest chalet.
    Cost after rebates is $19K, but we’ll be getting cash payments from the grid.
    We figure it will pay itself off in a decade; even less if Synergy payments back to us rise above 47c.

    At 16c per kW, you’re _buying_ very cheap power. In WA it’s as high as 40c.

    Reply
  47. Wow, I thought you were putting them on to rentals, improving tenancies and eventual capital gain. Muchos kudos!!
    5 KW is huge power, you’ll have that EV too eventually and be cruising. Maybe you started out with a ‘bad hand’ as they say, but boy, you have sure overcome that (if it were ever true)!!

    bearamundi
    August 11, 2010
    Reply
  48. “Maybe you started out with a ‘bad hand’ as they say…”

    Never thought of it that way, to be fair, Bear.

    I was born with all parts working, good health, average intelligence, in a free country. I had a good education, encouragement from good people; and met and married a patient, highly-intelligent adventurer.

    The fact that I couldn’t afford a home in Perth was one of those things most U30s simply accepted. I could afford a home in a regional centre and owned one outright by thirty. Never complained about it… simply accepted that I didn’t want to _rent_ in the capital… and moved north. Good move, in my case.

    Rentals and solar electricity: The plan is to equip all north-facing rentals first, then west-facing. Where panels or solar HWSs aren’t aesthetic, it may not happen. This will be the first year we’ve had them assessed for Depreciation Schedules. Once we have a lot of them in use, we’ll survey tenants. Then we’ll equip the home property… .

    Reply
  49. Bear, Biker: Just reading your stuff, I get the impression that if one has gas cooking and solar HWS maybe(?), 1.5 kW minimum in other panels is needed to keep ‘the lights’ on??? – Where ‘the lights’ run to a fair bit more than that of course! (Although I wouldn’t expect to run a welder! :) )

    Do you know of any site where I can get details on the real basic maths? (Rebates and grid buybacks and tax depreciations being potential bonuses from my perspective; But not stuff I especially want to factor in as part of the initial sums.)

    Reply
  50. Just checked my last 4 electricty bills – Seems I run at about 360 kWh per quarter – That’s all electric – Including cooking and HWS – What I need to know is what solar ?.? kW panels I might need to provide that and a bit more – Because at that I’ve had to watch my consumption.

    Reply
  51. Easiest approach we have used recently is to simply call each company and ask what they’d supply, at what cost, Ned. The Bear can get away with a 1kW system because his grid pays 60 – 68c per kW. We put in 1.5 – 1.7 kW systems because the grid pays us 47c. I’d start there: What will QLD pay you per unit?

    The great thing about these current high rates is that it will be hard (impossible?) for the grid to drop the rate paid, without facing almost certain class action.

    Years ago I erected a 3.2 kW system, back when it was far more expensive.
    I did all the research… spent weeks of my life on the project, in fact. These days, I just call the companies and request the following:

    * Number of panels to achieve the goal;
    * Company manufacturing panels;
    * kW rating of each panel;
    * Warranty on each panel;
    * Size/make of inverter;
    * Inverter’s capacity to increase number of panels later;
    * Cost to us.

    We argue there’s a nice symmetry between warranty and depreciation. If the panel warranty is five years, your tax write-off _should_ be 20% per year. Note that we’re about to test this. Ideally your panels should have a ten-to-twenty year life. The 3.2kW Sharp system I erected had 122kW and 125kW panels with a twenty-year warranty. These days the panels are 200- 300kWs… with a five-to-ten year warranty.

    We think it is the future. Our state government must think so, too… having recently more-than-doubled the rate Synergy will pay us… . :)

    Biker Pete
    August 11, 2010
    Reply
  52. Our emails crossed, Ned.

    I guess you’ve got to ask what it is you want to do… .
    In our case:

    RENTALS: Provide an extra no-one else does; Reduce tenant costs; Retain good tenants longer; Add value to asset; Maximise tax claims.

    HOME PROPERTY: Generate excess from our own ‘power station’*; Make sufficient income to claim on tax; Operate little projects: fruit dehydration, aquaculture, egg incubation; Become totally independent.

    * Interesting that despite pushing this initiative, the Barnett Liberal government caps rebates at 5.0 kW… indicating they _may_ be concerned about us competing with the state’s energy company, Synergy! :D

    Biker Pete
    August 11, 2010
    Reply
  53. Much appreciated Biker – I’ve printed out and bookmarked your reply. As Yes, when I looked at it briefly a while back I got the distinct impression I could weeks on this! :)

    Reply
  54. No rebates in QLD at all that I know of now Biker – Doesn’t mean I’m not interested though. For both my home and my rentals. By and large I work on the theory that if I like it then my tenants might too. Although that can have a downside when I look at it along the lines of if I wouldn’t be worried, then why would they? But accept that they are paying some cash so can probably expect to live a bit better than me … :) :) :)

    Reply
  55. “But accept that they are paying some cash so can probably expect to live a bit better than me … :) :) :)”

    We also put our tenants first, Ned. All our rental homes have top-quality A/Cs, dishwashers, reflective tint, etc., which we haven’t bothered to install at our own place. As I stated earlier, our home property may be the last to get a Solar Electricity System.

    There’s logic in this. Our tenants are our-bread-and-butter; and we get full write-offs for all the extras. ;)

    Biker Pete
    August 11, 2010
    Reply
  56. Electricity buyback in QLD looks pretty good, Ned:

    http://www.enviro-friendly.com/feed-in-tariff-pv.shtml

    We think it’s likely to increase in WA and QLD, perhaps to NSW levels.

    Biker Pete
    August 11, 2010
    Reply
  57. First rule of success in a business is to value one’s customers very highly Biker! Cheers.

    Reply
  58. Sorry if I sounded impolite Biker, I often post at work, and don’t have time to think too much about it. I suppose I allowed myself to say what I thought because I was thinking that your story has a happy ending. By bad hand I meant that here was a guy that probably could have gone either way, and drifted off into obscurity somewhere had it not been for the good fortune of his marriage to a wise person. It sounded like your parents may have had some odd ideas about how the world works, not the greatest start in some ways; that your education was somehow interupted and that you came back to it later in life(hence a focus on spelling). Then 5,10,15 years and you have become a force of nature. You’re not of average intelligence either.

    bearamundi
    August 11, 2010
    Reply
  59. “You’re not of average intelligence either.”

    Hey, c’mon Bear. I’m at least _close_ to average; and improving daily!~ :D

    “…here was a guy that probably could have gone either way..”

    Nah, always been _rigidly_ hetero, mate!

    “I often post at work, and don’t have time to think too much about it.”

    Well, as long as you’re not working for the government… and I’m not paying your wage with my taxes… that doesn’t trouble me at all, Bear. ;)

    “…your story has a happy ending…”

    Often wondered about that. Pleased to hear it. I die in bed, breathing heavily, drenched in sweat, right???!!!~ :D

    Biker Pete
    August 11, 2010
    Reply
  60. Mr Rude, not to be confused with Rudd, here again. Ned, on your bill, what is your average daily usage in KWh? That’s all you need to know. I’ve calculated yours to be 4KWh which is nothing. A 1KW system will supply 4-5 KWh’s daily and should cost you less than $2000, in NSW anyways. (In QLD you’d probably generate up to 6 or even 7 KWh I would guess). That is 6 170W panels, rails, brackets, inverter, enclosure for inverter, surge protector, installation etc. So even without any subsidy your system would pay for itself pretty quickly (divide your annual bill into cost of system, sorry, you said basic maths). I personally like 2KW as then you can run an electric scooter into town to pick up a few bottles of Vodka. “Holy Sh*t!!” thinks Ned….

    bearamundi
    August 11, 2010
    Reply
  61. “I die in bed, breathing heavily, drenched in sweat” – And you’re imagining you’re blanket being … ? Not at all sure you won’t come to a bad end myself me ole mate??? :)

    Reply
  62. “a few bottles of Vodka” – I’m only up to half bottles these days Bear – A few hours apart. What can a bloke say? – It’s nice to age ‘n mellow out a bit … ????? :)

    Reply
  63. Now I lay me down to sleep,
    I pray the Fed my soul to keep,
    Should I die before I wake,
    May not the market eff’n break!
    :)

    Little Johnny
    August 12, 2010
    Reply
  64. “blanket?”
    ‘snuffed out’ and trying _hard_not to think about Eva Mendes (sound of Ned typing google images)

    bearamundi
    August 12, 2010
    Reply
  65. “Mr Rude, not to be confused with Rudd, here again.”

    This from the fella who referred to my kids as ‘dependent spawn’? :D

    Reply
  66. Er, comedic effect hopefully, nothing funnier than calling someone elses kids ‘spawn’ wouldn’t you think?
    Kind of in the same vein as gays referring to hetero’s as “breeders” ;D

    Bearamundi
    August 12, 2010
    Reply
  67. :D

    Bearamundi
    August 12, 2010
    Reply

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