Endless Fall – Part 1: So It Begins

Note: The fol­low­ing is the first install­ment of a series that rep­re­sents a first-hand chron­i­cle of a fic­tion­al eco­nom­ic col­lapse in the Unit­ed States. No one can say with any cer­tain­ty how such an event would unfold or the social impact it would have. This series is to be viewed as only one pos­si­ble sce­nario.

Octo­ber 14 – 9 days after Black Swan Day

My Dear­est Chil­dren -

A cou­ple of years ago Glen Beck sug­gest­ed start­ing a chron­i­cle to doc­u­ment the events in your life as things came apart that he pre­dict­ed. I’ve nev­er been a chron­i­cler or a diary keep­er. Until now. I make no illu­sions this will be a work her­ald­ed like the Diary of Anne Frank. And I pray that lev­el of events doesn’t come true, thought Mr. Beck and a few oth­ers have been most­ly right until now so who knows. But I feel it’s nec­es­sary for you my daugh­ters to have an unbi­ased first­hand account of the events hap­pen­ing now. I am sure in years to come in what­ev­er class­es you are in (pre­sum­ing there still is a school sys­tem) the Polit­i­cal­ly Cor­rect crowd will have rewrit­ten the his­to­ry of today just as they have tried with Sep­tem­ber 11^th, 2001.

Nev­er in my life time did I believe the events I am liv­ing would hap­pen. Until now the fall of great soci­eties like the ancient Greeks and Romans was regaled only in his­to­ry books to me. Even the fall of the Weimar Repub­lic seemed ancient his­to­ry to me. But now every time I turn on the TV or radio, check the net, or just go to work it seems beyond sur­re­al. I sur­vived 9/11 in down­town Man­hat­tan. Maybe it’s the pas­sage of years since that soft­ens the view but this seems even more unbe­liev­able if I were not liv­ing it myself.

“Black Swan Day” is what the media-at-large has dubbed it. “Octo­ber Sur­prise” is anoth­er term often used.  Prob­a­bly will ulti­mate­ly be called some­thing else in future his­to­ry books, no doubt imply­ing the end of cap­i­tal­ism as if that was a good thing. But either way the end result is the same.

His­to­ry rarely fol­lows a script but this day did. It unfold­ed more or less as many pre­dict­ed:

Nine days ago Chi­na and Rus­sia both announced that, due to the con­tin­u­al deval­u­a­tion of the U.S. dol­lar by the Fed­er­al Reserve print­ing mon­ey out thin air, both coun­tries were impos­ing a “dol­lar pre­mi­um sur­charge” fee on trans­ac­tions paid for in green­backs. This they said was to make up for con­tin­u­ing fall of the val­ue of the dol­lar. This announce­ment effec­tive­ly made the Euro (as shaky as it was) and the Ren­min­bi the new worlds’ reserve cur­ren­cy as trans­ac­tion paid for with them were cheap­er than paid in dol­lars. Sev­er­al Euro­pean coun­tries and South Amer­i­can coun­tries chimed in with in hours adding more fuel to the fire. As such the dol­lar index drop faster than a coin in a slot machine as cen­tral banks around the world sold dol­lars to buy Euros and Ren­min­bi – and gold! Gold shot up over $200 an ounce with in the first 10 min­utes of the Chinese/Russian announce­ment and hit $5,000 an ounce by week’s end (hang­ing at $5,726/oz as I write this).

Nat­u­ral­ly the Wall Street mar­kets dropped like a stone which forced the Fed­er­al Reserve to announce bil­lions more fun­ny mon­ey to be pumped into the mar­ket. But no one was buy­ing it this time. I’m sure a lot of polit­i­cal pres­sure was put on Gold­man Sachs and JP Mor­gan over that first week­end to come out with rosy fore­casts on Mon­day. But by then even these guys had seen the writ­ing in the wall and refused. Besides, they were so glob­al by now so what if the Jus­tice Depart­ment launched a witch hunt lat­er. It would like giv­ing out park­ing tick­ets while Godzil­la tram­ples the street – who cares?!

But when the Dow fell to 9700 on the third day all the rhetoric in the world couldn’t stop mom&pop investor from call­ing their mutu­al fund and Etrade bro­ker yelling “SELL!” When the dust set­tled the Dow held at just a lit­tle over 8400. Just think – it was near­ly 14000 3 months ago!

That’s it for the his­to­ry les­son. Now the today view.

Thank­ful­ly your moth­er and I still have our jobs. Either by Devine will or dumb luck our indus­tries are still seen as “crit­i­cal” for now. A lot peo­ple have already lost their jobs in a mat­ter of days. The pink slips were prob­a­bly already print­ed and this was just a good excuse. Going to be inter­est­ing to see the next unem­ploy­ment fig­ures if they stay below 10%. I’m sure some­one will believe that, along with a bridge I have to sell. And our employ­ers still offer a few good ben­e­fits that seem all that more valu­able today.

MSNBC and CNBC are open­ly using the D‑word “Depres­sion” now. A lit­tle late to the game I think but at least it’s in the open. Nat­u­ral­ly, the usu­al talk­ing heads are say­ing they saw it com­ing (so why didn’t they sound the alarm long ago?!) and claim the mar­kets have already fac­tored that in. Dam­age con­trol at best. Hope they are among the ones who lose their jobs soon!

When Black Swan Day came my first thought was “Thank G‑d I have made some preps!” I am nowhere near as pre­pared as I should have been. Your moth­er has strong and often heat­ed dis­agree­ments with me on prep­ping but I think she final­ly has accept­ed it could be use­ful. I hope her accep­tance isn’t a har­bin­ger of things to come. But I’m glad we just did a Cost­co run and filled the freez­er with good stuff. The cab­i­nets are full of canned stuff, plus what I have the prep pantry (your moth­er will blow a gas­ket when she sees my stock but I have a respon­si­bil­i­ty to you my daugh­ters). Fresh milk seems still plen­ti­ful but I am notic­ing it’s tak­ing longer to restock the super­mar­ket shelves. I hope it’s just logis­ti­cal issues. A lot of our friends and cowork­ers aren’t any­thing like as pre­pared as we are. I tru­ly fear for them.

As of this moment the banks are still open with busi­ness as usu­al but I don’t expect that to last. The ATMs are almost con­tin­u­al­ly emp­ty and long lines inside indi­cat­ing to me peo­ple are pulling their mon­ey out. Even to get into the vault takes a wait on a long line (I cleaned our out the sec­ond day).  I did read a few online arti­cles that claimed runs on small­er banks in some parts of the coun­try but noth­ing in the media at large the one of the local S&Ls has short­ened their hours. That seems odd.

So that’s where things stand as of tonight.

It’s a chilly night. Very appro­pri­ate. Which reminds me to check the oil burn­er. Going to be a cold win­ter.

You’re still way too young to under­stand what’s hap­pen­ing around you and for that I’m glad. I’ll do all the wor­ry­ing for you. G‑d bless my chil­dren. And grant me with wis­dom to make the right deci­sions for you.

PS- MSNBC and Fox News just report­ed that OPEC has announced they will now val­ue oil in gold only instead of U.S. dol­lars! Crude has already jumped over $20/barrel in overnight trad­ing. Oh boy!  And I thought $5/gallon gas was going to be bad. Glad I have a heat­ing oil cap for this win­ter at least. Don’t know what the spot buy­ers like your Aunt Don­na and Uncle Frank will do. Blan­kets are going to be a good sell­er this win­ter I think.