TheCenterLane.com

© 2008 – 2019 John T. Burke, Jr.

Doomsday Deluxe

Comments Off on Doomsday Deluxe

I frequently enjoy watching the Doomsday Preppers program on the National Geographic Channel.  I get a particular kick out of hearing the reason each particular family gives for building a bunker and making plans for Armageddon.  At the end of each story, the producers at Nat Geo usually reference the consensus of expert opinion concerning the particular doomsday scenario discussed by the featured family.  A popular fear is that earth will get knocked off its axis, causing a polar shift.  (You’ve probably heard Matt Damon mention that one on the TD Ameritrade commercial – wherein he credits the Mayans for starting the rumor.)  Although many of the preppers’ fears are far-fetched, there are certainly many legitimate causes for the sort of concern which could lead a perfectly reasonable person to initiate efforts toward the Ultimate Plan B.  My personal favorite threat is Fukushima.

A number of reports have recently been published concerning the efforts made by more upscale preppers to build designer bunkers.  This situation really cries out for a new television program:  Beverly Hills Bunkers or Celebrity Preppers of Palm Beach.

The Raw Story website ran an AFP report describing the efforts by developer Larry Hall to convert abandoned missile silos into luxury bunkers.  At this point, Hall has found four buyers who have plunked down nearly $2 million each for a silo bunker:

“They worry about events ranging from solar flares, to economic collapse, to pandemics to terrorism to food shortages,” Hall told AFP on a tour of the site.

These “doomsday preppers”, as they are called, want a safe place and he will be there with them because Hall, 55, bought one of the condos for himself. He says his fear is that sun flares could wipe out the power grid and cause chaos.

*   *   *

Built to withstand an atomic blast, even the most paranoid can find comfort inside concrete walls that are nine feet thick and stretch 174 feet (53 meters) underground.

Instead of simply setting up shop in the old living quarters provided for missile operators, Hall is building condos right up the missile shaft. Seven of the 14 underground floors will be condo space selling for $2 million a floor or $1 million a half floor. Three and a half units have been sold, two contracts are pending and only two more full units are available, Hall said.

*   *   *

He is also installing an indoor farm to grow enough fish and vegetables to feed 70 people for as long as they need to stay inside and also stockpiling enough dry goods to feed them for five years.

The top floor and an outside building above it will be for elaborate security. Other floors will be for a pool, a movie theater and a library, and when in lockdown mode there will be floors for a medical center and a school.

Complex life support systems provide energy supplies from sources of conventional power, as well as windmill power and generators. Giant underground water tanks will hold water pre-filtered through carbon and sand.

*   *   *

Interested buyers have included an NFL player, a racing car driver, a movie producer and famous politicians, he said, but he now requires all the money up front.

Blake Ellis of CNN Money gave us a peek at how “the one percent” is getting ready for doomsday:

Northwest Shelter Systems, which offers shelters ranging in price from $200,000 to $20 million, has seen sales surge 70% since the uprisings in the Middle East, with the Japanese earthquake only spurring further interest. In hard numbers, that’s 12 shelters already booked when the company normally sells four shelters per year.

Who spent $20 million on a bunker?  Oprah?  Bill Gates?  Lloyd Blankfein?

Inquiring minds want to know how their favorite celebrities will be riding out The Apocalypse.  Which porn stars will Charlie Sheen invite to his Doomsday Den?  How many people within one degree of Kevin Bacon will Kyra Sedgwick allow into his bunker?

There is definitely a television show here – and it’s bound to draw a bigger audience than the number watching Doomsday Preppers.  Any guesses as to which network runs with this?


wordpress stats

When the Music Stops

Comments Off on When the Music Stops

Forget about all that talk concerning the Mayan calendar and December 21, 2012.  The date you should be worried about is January 1, 2013.  I’ve been reading so much about it that I decided to try a Google search using “January 1, 2013” to see what results would appear.  Sure enough – the fifth item on the list was an article from Peter Coy at Bloomberg BusinessWeek entitled, “The End Is Coming:  January 1, 2013”.  The theme of that piece is best summarized in the following passage:

With the attention of the political class fixated on the presidential campaign, Washington is in danger of getting caught in a suffocating fiscal bind.  If Congress does nothing between now and January to change the course of policy, a combination of mandatory spending reductions and expiring tax cuts will kick in – depriving the economy of oxygen and imperiling a recovery likely to remain fragile through the end of 2012.  Congress could inadvertently send the U.S. economy hurtling over what Federal Reserve Chairman Ben Bernanke recently called a “massive fiscal cliff of large spending cuts and tax increases.”

Peter Coy’s take on this impending crisis seemed a bit optimistic to me.  My perspective on the New Year’s Meltdown had been previously shaped by a great essay from the folks at Comstock Partners.  The Comstock explanation was particularly convincing because it focused on the effects of the Federal Reserve’s quantitative easing programs, emphasizing what many commentators describe as the Fed’s “Third Mandate”:  keeping the stock market inflated.  Beyond that, Comstock pointed out the absurdity of that cherished belief held by the magical-thinking, rose-colored glasses crowd:  the Fed is about to introduce another round of quantitative easing (QE 3).  Here is Comstock’s dose of common sense:

A growing number of indicators suggest that the market is running out of steam.  Equities have been in a temporary sweet spot where investors have been factoring in a self-sustaining U.S. economic recovery while also anticipating the imminent institution of QE3.  This is a contradiction.  If the economy were indeed as strong as they say, we wouldn’t need QE3.  The fact that market observers eagerly look forward toward the possibility of QE3 is itself an indication that the economy is weaker than they think.  We can have one or the other, but we can’t have both.

After two rounds of quantitative easing – followed by “operation twist” – the smart people are warning the rest of us about what is likely to happen when the music finally stops.  Here is Comstock’s admonition:

The economy is also facing the so-called “fiscal cliff” beginning on January 1, 2013.  This includes expiration of the Bush tax cuts, the payroll tax cuts, emergency unemployment benefits and the sequester.  Various estimates placed the hit to GDP as being anywhere between 2% and 3.5%, a number that would probably throw the economy into recession, if it isn’t already in one before then.  At about that time we will also be hitting the debt limit once again.   U.S. economic growth will also be hampered by recession in Europe and decreasing growth and a possible hard landing in China.

Technically, all of the good news seems to have been discounted by the market rally of the last three years and the last few months.  The market is heavily overbought, sentiment is extremely high, daily new highs are falling and volume is both low and declining.  In our view the odds of a significant decline are high.

Charles Biderman is the founder and Chief Executive Officer of TrimTabs Investment Research.  He was recently interviewed by Chris Martenson.  Biderman’s primary theme concerned the Federal Reserve’s “rigging” of the stock market through its quantitative easing programs, which have steered so much money into stocks that stock prices have now become a “function of liquidity” rather than fundamental value.  Biderman estimated that the Fed’s liquidity pump has fed the stock market “$1.8 billion per day since August”.  He does not believe this story will have a happy ending:

In January of ’10, I went on CNBC and on Bloomberg and said that there is no money coming into stocks, and yet the stock market keeps going up.  The law of supply and demand still exists and for stock prices to go up, there has to be more money buying those shares.  There is no other way in aggregate that that could happen.

So I said it has to be coming from the government.  And everybody thought I was a lunatic, conspiracy theorist, whatever.  And then lo and behold, on October of 2011, Mr. Bernanke then says officially, that the purpose of QE1 and QE2 is to raise asset prices.  And if I remember correctly, equities are an asset, and bonds are an asset.

So asset prices have gone up as the Fed has been manipulating the market. At the same time as the economy is not growing (or not growing very fast).

*   *   *

At some point, the world is going to recognize the Emperor is naked. The only question is when.

Will it be this year?  I do not think it will be before the election, I think there is too much vested interest in keeping things rosy and positive.

One of my favorite economists is John Hussman of the Hussman Funds.  In his most recent Weekly Market Comment, Dr. Hussman warned us that the “music” must eventually stop:

What remains then is a fairly simple assertion:  the primary way to boost corporate profits to abnormally high – but unsustainable – levels is for the government and the household sector to both spend beyond their means at the same time.

*   *   *

The conclusion is straightforward.  The hope for continued high profit margins really comes down to the hope that government and the household sector will both continue along unsustainable spending trajectories indefinitely.  Conversely, any deleveraging of presently debt-heavy government and household balance sheets will predictably create a sustained retreat in corporate profit margins.  With the ratio of corporate profits to GDP now about 70% above the historical norm, driven by a federal deficit in excess of 8% of GDP and a deeply depressed household saving rate, we view Wall Street’s embedded assumption of a permanently high plateau in profit margins as myopic.

Will January 1, 2013 be the day when the world realizes that “the Emperor is naked”?  Will the American economy fall off the “massive fiscal cliff of large spending cuts and tax increases” eleven days after the end of the Mayan calendar?  When we wake-up with our annual New Year’s Hangover on January 1 – will we all regret not having followed the example set by those Doomsday Preppers on the National Geographic Channel?

Get your “bug-out bag” ready!  You still have nine months!


 

wordpress stats