Living on the Bubble
Sep 10th, 2009 | By Linda Brady Traynham | Category: Featured, Morning Whiskey
Some bubbles are more resilient than others.
Some bubbles have a significant amount of yield to them, depending upon how fully they were inflated and how sharp the object poking them is.
Some bubbles have thick, yielding coverings and are never inflated to rigidity beyond the point at which little kids sit on them and bounce along happily.
No bubbles can be reinflated after bursting, not even the ones which are blown through a little straw from smelly goo and harden almost instantly, a favorite toy of my youth. Those wonderful bubbles could be pinched close to survive quite a while after the first rent appeared, and stuck to each other in the most delightful fashion.
Some bubbles can be reblown almost instantly and infinitely, particularly from gum formulated for that purpose.
You now know all there is to know about bubbles except what the title of this article means.
Bill Bonner made another excellent point recently: why hasn’t the bond bubble burst messily all over the scenery? I’ll play Cindy Lou Who: is it because, Mr. Bonner, the wind blowing out of Washington gives the appearance of increasing activity and many people haven’t caught on that the wind is circular (as are those in hurricanes and tornadoes) blowing the money around and around through the Fed and the Treasury and the Banks? Sound and fury, signifying nothing? Far more apt than the Bard, the sound and fury which some of us have seen rising for many moons indicate that when this whale finally blows there’s going to be a spout to end all spouts and Moby Dick (if we even have a Moby Dick in this scenario; it sure isn’t Ben Bernanke.) is going to go back to port and sit in the local sailors’ bar telling sea stories.
Our own beloved Gary Gibson pointed out recently that sometimes we’re a little off in our timing, but that it is better (and far more comfortable in the long run) to see problems and react early. Y’all know my inner Cassandra: sometimes she’s early in her warnings but sooner or later she is almost always right, and it is a whole let better to begin our preparations as soon as we can rather than to wait for further cracks to appear in the walls. Sometimes, true, our fears are OBE, “overtaken by events.” My detractors (who are blessedly few that I know about) point out gleefully that I was wrong about the Democratic National Convention slightly over a year ago. I reply sweetly that Hillary Rodham Clinton may not have stolen the Convention from Barrack Hussein Obama–I’m still astounded that she didn’t–but that if she had done so there would have been riots in the streets. It cost none of us anything to keep our heads down quietly in the country that week just in case. Slight ridicule is a very small price to pay for having taken out an insurance policy that lapsed unused. Most insurance never pays off, but when sixty years’ growth crashes across the roof (as happened to us two weeks ago) in the course of a storm that didn’t last five minutes paying the premiums makes excellent sense.
The Bond Market is going to go “Kablooie!” with ricocheting remnants that will have us whimpering for the good old days of upside down mortgages. Which won’t have gone away either. Which will probably have been augmented by the commercial real estate bubble which is covered by an integument stretched so thin that we can see through the shiny spots. Go drive by any strip mall at random. Look at the Big Front stores. They have “for lease” signs in the windows.
How could this not be so? The bonds are of even less value than the currency which, by definition, is worth less every time a new cargo ship full of fiat money blows out the doors of the Treasury. “Safety” is locking your current value into government paper at an interest rate that is lower than anything since the day before someone thought the concept up?! Said value to be replaced at a later time in valuta that cannot fail to be worth less at a time when inflation has risen steeply?! Anyone who thinks so should just go blow the money now in Vegas.
Which takes us over to “Why is there no inflation?” At present in selected areas there is deflation, which in this case means you can buy a horse and buggy for a quarter of what they cost three years ago because almost no one has money to put in horses and buggies and even fewer see any need for them. The carriage trade is still a small elite, as it has always been, as it will always be.
Inflation is defined casually as “more dollars chasing fewer goods.” There are still plenty of goods, another situation that must, of necessity, by definition, change in the foreseeable future. The more dollars aren’t chasing them because those who have more dollars are at government levels or in unions or in Hollywood, but they aren’t down here at the grocery store level. They aren’t walking into car dealerships, where one out of four Cash for Clunkers suckers is feeling buyer’s remorse. The dealers haven’t been repaid the $4500/car they fronted for the government and every car that goes back to the bank or dealer has lost the 20% or whatever it is now that it lost the moment it was driven off the dealer’s lot. That’s one reason we passed a dealership yesterday offering to finance a major car brand for nothing for five years.
We have several situations which are going to collapse or explode and the only questions are “When?” and “Which comes first, the ARM mess or the Bond debacle or the Commercial Real Estate plummet or the next round of the Dow dive-bombing or devaluation of the currency either through butterflies being loosed in the Far East or deliberate governmental action?” I don’t know. It doen’t matter. What matters is to be sure you don’t have funds tied up in any of those but have stored all of your value elsewhere.
I’m watching silver nervously. Watching. As ancient wisdom and Gary noted Friday, if you don’t know who the mug in the game is, you’ve already been tagged to be “It.” Those of us with low, cunning, suspicious minds remain convinced that there are mice in the clockwork and those account for the strange things the clock has been doing. We don’t perk right up, preen ourselves, and carol, “SEE! We told you so! We told you to buy silver.” At least I am hunkered down in our little Whiskey Bunker. I don’t jump on invisible magic carpets because a genie invites me for a ride. I don’t pounce on unseen coattails that may be whisked away before I have even located them, leaving me to fall on my face. If some fellow tries to pick me up in a drugstore I don’t suppose I’m Lana Turner, an example so old it may be meaningless to anyone under seventy.
Yeah, long term silver is going up, and up, and up because it is real “money.” Between now and at least the end of the year silver is almost certainly someone else’s game and he/she/it isn’t telling me the rules. I understand Quidditch perfectly. I can tell Offsides from Encroachment. (No, gentlemen, the little lady isn’t trying to show off and revealing her ignorance. She’s telling you that she has been in the game long enough to know that Offsides is Offsides no matter what you call it.) I don’t know who or what is pulling the strings in metal but I’m content with the cheese I stole off the trap for now. When–if, admittedly–silver gets below $13 again I’ll start buying again. In the meantime, I’m going to store value in Galvalume. Snap-ring barrels. Whatever I see that is a traditional trade good, item that is always useful, or luxury at a great price.
I just bought two septic tanks! Wow, is that a sexy investment, or what? Well…if you want to circle the “guest quarters” (aka motor homes and travel trailers), and it will cost $20,000 plus tax to “have the man come do it,” and your gravedigger’s back hoe will dig out holes to bury the concrete vaults in a couple of hours…so far as I’m concerned we just turned eight hundred dollars into a twenty-five-fold profit AND the septic tanks will not be subject to costly annual inspections by the government. And that’s without figuring the 8.25% tax in my head while typing although it should be obvious that it will be on the close order of another two-point-five increase. If this is not intuitively obvious you’re probably buying into a PE of 130. And you don’t read W&G. Or you weren’t taught arithmetic in the Forties.
I got a diffident note from an old friend who sent me–pleased chuckle!–today’s Daily Reckoning. Said friend doesn’t know investments from vestments from verticulitus. This may well be the modern version of the urge to stuff gold coins into the straw, when people who have never had any interest at all are trying to find out what is going on. And where better than right here?!
I’ve run out of space to tackle the unemployment and the jobless, venture capital-less, expansionless, profitless in most sectors, meaningless “recovery,” so I’ll close with where I intended to start which is saying that the giant sucking sound isn’t jobs going to Mexico, it is the millions who are living on the bubble. That doesn’t mean those who profited from the real estate market collapsing or playing ring-around-the-banks.
I’ll put this first in the form of an old joke: if you and I are walking through the woods and a bear rears up out of the berries and starts chasing us, I don’t have to run faster than the bear, I only have to run faster than you do. Or climb a tree before you think of it. Whisk myself to safety, and the Bear take the hindmost.
“Living on the bubble” is a racing term. Let us suppose that 40 people will qualify to enter the Indianapolis 500 or whatever. There are still trials going on, and you’re in 40th place. Never mind the 39 ahead of you; you had your chance and you didn’t best them. What you must worry about are the ten left who could still knock you out of competition.
That’s living on the bubble. That is what almost all of us who don’t own thousands of hectares in Argentina are facing.
Don’t look forward other than to avoid snares, pitfalls, swamps, and alligators. Keep your eye on the bears and those thundering up on your six.
Regards,
Linda Brady Traynham
September 10, 2009
You realize, Linda, that there are times when you are just too cotton-pickin’ perceptive! Never mind that you’re right a heckuva lot more than not. So am I, but that’s another story. Of course it does mean that we frequently wind up being prophets without honor in our own country.
As you have so eloquently and accurately stated, bubbles exist only until they eventually burst. What effect they have on any given individual when they do depends on whether or not they’re listening to those prophets without honor (but who are usually right), rapidly developing their own accurate perceptions and/or making sure that there’s at least one person between their backside and that oncoming bear.
BTW, in case anyone doubts the intention of that bear, consider an old Baptist joke (and probably other denominations have told it as well) that tells of a Christian confronted by a humongous bear. The Christian falls to his knees, closes his eyes and prays “Lord, please protect me from this hungry bear!” When finished praying, the Christian opens his eyes and sees the bear on his knees and eyes closed, while praying “Lord, thank you for this meal of which I’m about to partake!”
Unlicensed septic tanks are sooo sexy.
I read your writing and keep on looking to find me a girl like my Auntie Linda. I only hope to find her before Gary does, cause currently we are both looking in the continental 48 and their aren’t too many available contenders.
Linda,
I like the article except I do not understand the septic tank bit.
Could you enlighten me?
Willard
Thanks, Willard!
And of course I’ll talk about septic tanks. In the country we don’t have city sewer lines… because we’re in the country.
The solution for a very long time has been to build an underground container with two tanks for the waste to go into where, in time, it breaks down in the original chamber and runs over into the second (being liquid at that point) and finally is flushed out through drain lines which end up hundreds of feet from the house. You can always tell where they are because the grass stays green from the extra water. Sometimes we toss in a packet of enzymes to assist things getting started, but a well-made and balanced septic tank works very, very well for decades. Occasionally a truck may have to come pump the tank out if people forget and dump plastic, cigarette butts, or large amounts of kitchen grease in it consistently, or it may need a crash course of enzymes.
I hope this isn’t like the mom who told her son about sex when he asked, “Where did I come from?” when it turned out he was looking for “Denver, Colorado.”
We have multiple motor homes and modest travel trailers and we want to be able to locate them away from the house with their own septic systems so that “black water” tanks do not have to be emptied. Each system can handle four people pods, and they can be used for deer hunters, fishermen, or visitors. This is almost certainly a once in a lifetime need, but I thought it was a good example of how we can look for things that we can do ourselves using simple skills and supplies we bought from Craig’s List. I watched the septic tank being built here at the ranch when it involved digging a large hole by hand, framing it in, and pouring concrete. That system has worked almost perfectly for sixty years, so I was pretty sure we could bury a commercial concrete box and dig trenches we line with gravel for the pipes!
Any time we can barter our skills and labor for someone else’s work or use them to avoid professionals we can use our dollars to buy something else and we don’t feed the tax monster. Please let me know if this doesn’t explain what you asked, and thanks very much for asking. Linda
Richard…what can I say? Thank you.
Great comment in the middle paragraph, one that deals with an article I’m writing today speculating on how many of us are actually making preparations for hard times.
Thanks again, Linda
Hi Rancherlady:
Dead-on as usual. I particularly liked your septic tank speculation. Should we let Willard in on it? Considering your recent storm destruction, I applaud the Galvalume purchase too. That way you have a roof over your head while you’re enjoying your septic tanks. Also, while not intentionally desiring to publish my age, Lana Turner didn’t go over my head, either. Keep ‘em coming!
Cheers, Tex
Hi, Tex. Thanks for the compliments from a glittering source! The Cyber Space Monster ate my reply to Willard explaining the intricacies of septic tanks and thanking him, but I’ll try again. It was very nice of him to write and say such complimentary things~
Chuckle…my chic, elegant, beautiful senior mortgage banker daughter (who looks nothing like her dear old hag of a mother, being the image of her super model gorgeous grandmother), who just moved into her large new custom built house just north of D/FW tells me that Galvalume roofs (why isn’t that “rooves?”) are very chic~ Chic, schmeek! It will last for fifty years, go up quickly, and is very cost effective at less than $7,000 in materials for 3400 square feet or so. We can lay down the plywood, styrofoam, and metal over the old roof! If I were a fiend I would get a couple of estimates just so I could gloat on how much we’ll save and keep out of circulation, but that wouldn’t be fair to roofing companies, so I won’t. Supper calls and the rolling thunder and lightning strikes say I had better shut down my computer! Linda
Hey Linda- another good read. I can’t speak for others, most of my circle are frozen like a deer in the headlights- hoping someone saves them from our Kenyan commie and his enablers.
As for myself, I take it so seriously that I ditched a 70k dead end job so I could get my money out of the company stock.
I have my old cars, my machine tools, lots of fabrication metal and supplies, my garden, and my skills. The only question is once I get my money out of the company, what on earth do I do- take a tax hit and put it all in metal in hand? Hope it’s not so bad and take out just enough to cover losses in my consulting business (boy there’s lots of tax deductible losses in starting a business…)? and keep the rest tax deferred in an IRA?
Anyone else have any ideas- what would you do with a few hundred k FRN’s coming with government tax strings attached?
Best- EP
Dear Ernie:
What a great letter, thanks, but…whoosh, what a question. I am not a financial advisor. All I can do is tell you what I did and why and ask what you really want out of life. I’ll ask Gary to send me your address because it may take a while to discuss this, or you write first and ask him to forward it.
My plan, which sometimes leaves me feeling the way we did when we found a large snake in the bathroom this evening, is to turn all the fiat money I have other than pensions into metal, commodities, and other durable resources. Charles picked up a .22 kept handy for emergencies, dispatched the creature, and apologized for dinging the tile lightly. No problem, darling, no problem! Thank you. And I admire the one shot one kill performance.
I urge others to prepare the best refuge they can outside of the city, living there if they can, or arranging to stay with friends or family if not. The interests you mentioned–old cars, machining tools, structural materials, the garden–and your obvious ability to make decisions suggest that you are quite capable of telling me easily what the constraints of a consulting business will be (and I’m sure it is one which will have customers for the immediate future) and what you are comfortable with doing to guard against the future. For myself, I paid the taxes to have the use of money NOW. Do you own land, how self-sufficient do you wish to become, what area of the country do you live in, is there a Mrs. Ernie and/or little Ernies?
I am torn by what is going on in the metals market, and the last time I looked silver was roughly $16.50. At that price, plus premiums for rounds, coins, or ingots…umph. The classic conundrum! If it goes up we kick ourselves for not buying, and if it goes down, well, at least we’re all certain that the long-term trend will be higher. I just have this…”feeling”…that something is going on that I’m not going to like. This is a lousy way to make investment decisions, but I, myself, would not put more than fifteen or twenty thou’ in metal if I were in what I understand of your position at present. If you have any interest in a small farm or ranch I suggest you find some place congenial, with reasonably clement weather and at least a yard of rainfall a year. That, I think, is the SAFEST choice in many ways, but not if you dislike the thought of country living deeply. Please write ASAP and let’s talk this over privately.
Sincerely, Linda.
Dear Willard:
Today just isn’t my day! The answer I wrote you hours ago is still gone, and the one I just sent to Ernie didn’t post, either! Ernie–write and tell me about yourself and what you want out of life and send it to Gary with a request to forward it to me, please.
I hope I’m not getting myself into one of those things where the little boy asks his mother where he came from and she tells him about sex when what he wanted to know was “Denver, Colorado.”
We use septic tanks in the country because we do not have city sewer lines. The tanks can be purchased or made by digging a hole, framing it in, and pouring concrete. The tanks have two sections; raw sewage goes into the first and breaks down through enzymatic action. In time reasonably clear and not very smelly liquid flows over into the second tank. Thence it goes, in time, out through pipes laid on a bed of gravel, trickling out gently over the course of hundreds of feet, nourishing the land and providing much-needed water. So long as people do not dump plastic, cigarette butts, large hunks of vegetables, and copious quantities of oil down the drains the tanks function very efficiently for many decades. The one here at the ranch had to be pumped out last year for the first time ever because those rules had been broken.
More than ever we need to be on the lookout for ways we can cut expenses by doing things ourselves, renovating older possessions, swapping our fruits and labors with others, and turning our precious assets into durable goods. Installing septic tanks is very old technology and well within our capabilities, just as putting the new roof on ourselves will be.
I hope that answers your question, and if it doesn’t, ask me again! Cordially, Linda
Happy Gulliver (bless him!) wrote:
“Unlicensed septic tanks are sooo sexy.
I read your writing and keep on looking to find me a girl like my Auntie Linda. I only hope to find her before Gary does, cause currently we are both looking in the continental 48 and their aren’t too many available contenders.”
Dear Gulliver:
No wonder you’re happy! My handsome, brilliant 26-year-old son is also looking for a girl “just like the girl who married dear old Dad,” without success either. Someone else wrote recently complaining that there are at least 20 superior “libertarian” (for short hand) males for every like-minded female, and I’m astounded that he thinks there are that many.
Life has its little surprises. I thought the rise of cable TV would alleviate the “Ebonics” problem, but it didn’t. One would think that fifty years of more and more women entering the work force would have lead to greater personal growth, but that didn’t happen, either–probably because the gals still have to do the wife and mother thing. I’m who and what I am in large part because I WAS a classic Donna Reed housewife most of the time! Sure, I was reared with splendid principles (Thanks, Mother and Daddy!) but I had TIME to go back to college to do graduate work in five fields, TIME to read, and TIME to write and think.
Signature chuckle! I never knew what a wonderful thing a wife is until I got my Asia! Oh, it IS so nice always to have clean clothing hanging in the closets, never have to clean bathrooms, and find a plate of something luscious set beside my computer while I’m writing…
The biggest problem, guys, is that the kind of lady you want has to grow just as you do. You aren’t going to find the mind and principles of your dreams in a co-ed. Unfortunately! The good news is that the older you get the easier it is to find someone who has developed as you did, who really shares your interests, thoughts, goals, and dreams. Auntie Linda’s search was restricted because she not only threw out all applicants over 6′3″ tall and all Liberals from consideration, but would not consider anyone who did not want to live La Vida Whiskey! Sorry, guys, I refuse to be stuffed into a gilded cage in Dallas. I’m going to stay home on the range, where the Dexters and Dairy Goats play. Everything I love is either right here or available through my computer, including terrific guys who pay me great compliments!
Hugs and keep looking, Auntie Linda
Dear Willard:
See, I told you so! Beats me why your first answer from me appeared a day after I wrote it, but it is always nice to have one’s veracity demonstrated.
NOW if I could just figure out why the response I wrote to the delightful Happy Gulliver went…if it doesn’t appear out of the black hole of cyber space by this evening I’ll answer him again. Hey, I can deal happily with men with the wit, taste, and kindness to admire me! LBT
I have the answer! Embarrassing but true! The SPAM filter eats my longer responses! Gary has to go tickle its innards occasionally and rescue them. Fortunately, I think this is funny. Or I would, except I want all of you to know that unless you start to write in the tens of thousands every last one of you will get a personal reply. Thanks to all of you. Linda
[...] on Wednesday, Aug. 26, and Sunday, Sept. 6, a total of 101,758 were scooped up by collectors. Living on the Bubble – whiskeyandgunpowder.com 09/10/2009 Some bubbles are more resilient than others. Some bubbles have [...]