Book reviews

The Good:

Plan B: Food, Cash, Fuel & Self Sustainability

by Aaron on July 31, 2008

I’ve just finished reading two very good books: Howard Ruff’s How to Prosper During the Coming Bad Years, and Garth Turner’s Greater Fool. Both books fall along the same line of logic: tough times are ahead, and it’s time to prepare.

In some respects, these two books conflict with one another, but in others, they mesh nicely.

On the subject of investing in gold as a hedge against economic catastrophe, there is conflict bewteen Ruff and Turner. Ruff argues in favor of holding physical gold and silver, which probably stems from his Austrian-esque economics. Ruff believes the future will be hyperinflationary; the US government and the Fed will churn up the money-mills to Zimbabwean proportions in an effort to escape the throes of depression. Thus, the only safe store of value will be in physical gold. But how practical is it? If I take physical possession of gold, will it be widely accepted as money in the event of a crisis, or will other commodities become the basis of money? I’m thinking a few pot plants would definitely suffice the average Canadian. In some places in Canada, this is the real green that forms the economic lifeblood of communities. I suppose it depends on your community, because I can’t see Ruff, a Mormon, advocating illicit substance production as a means of subsistence.

Turner, on the other hand, sees gold as just another bubble, akin to the dot-com and subprime balloons. In my mind, it will semingly play out thusly: as the little guys flood their capital into gold, those at the top who have the real leverage will flood the market and short their contracts, cause panic among the uninitiated, and will buy up gold for pennies on the dollar. I think Turner might see this, too; he seems to be parking his cash with a trusted money manager and hoping for the best.

Both Turner and Ruff agree on one fundamental thing: the essentials one must have during a crisis are food, cash and fuel. Ruff, a Mormon, is compelled by his Church to keep a storehold of food as a hedge against crises. He points out that, during a crisis, the first thing to inflate is food, and having a store of goods purchased when times were good will always help one hedge against the riots at Wal-Mart. He personally lived through such a minor crisis during the assasination of Kennedy, when store shelves went bare in some parts of the US as people panicked.

Turner, like many Ontarians, has lived through the 2003 brownout in Toronto. While the duration of the crisis was short, the effects highlighted the vulnerability of our modern society to energy shocks.

With no electricity, it was impossible to use the phone, get cash, check the internet, fuel up the car, etc. Traffic was snarled because traffic lights did not work. For Turner, this crisis highlighted the importance of energy self-sufficiency; he returned home that day to find his generator running and providing power for his home. If anything, he claims it shows the importance of the Boy Scout’s motto: Always be prepared (but hope for the best).

In a deeper crisis, everything goes Katrina. Without the basics, humans regress as a species. Electricity and power, like cement, coal and oil, are the fundamental building blocks of modern society, and without them, humans quickly retreat to the Olduvai Gorge. We lose a part of hour humanity as our reptilian brains kick into survival mode. People riot. Others loot.

Are we headed for a Mad Max future? It’s hard to tell. But here are some indicators:

Reuters: Impending Global Food Crisis

World’s Biggest Food Storage Company Empty Through All 2009

Alternet: Catastrophe Seems Inevitable: Will Survivalists Get The Last laugh?

Bloomberg: Former Morgan Stanley Guy: Buy Guns, Head for the Hills

Tehran times: 29 Food-Hoarding nations driving food prices even higher

WND: Feds Stockpiling Food?

A Wall Street Journal columnist has advised people to “start stockpiling food” and an ABC News Report says “there are worrying signs appearing in the United States where some … locals are beginning to hoard supplies.” Now there’s concern that the U.S. government may be competing with consumers for stocks of storable food.

Who knows what the future holds? It’s hard to imagine here in Alberta. But it could happen here. If there are lunatics who will decapitate fellow bus passengers here in this province, then surely there are cold-hearted freaks who would try to sabotage the Glenmore Reservoir. If Greenpeace can smuggle a sixty-foot banner past Syncrude security, then it’s possible for people with more sinister intentions do even worse damage, especially with the slew of company-owned airports used for shuttling oil sands workers to and from work.

Turner and Ruff might not agree on everything, but they have some foresight to recognize that the economy and its dependent social structures are in for a rough ride. Mr. Turner might not advocate going out and buying six month’s worth of storable food, but at least he has the wits about him to know the importance of having food cash and fuel on-hand in the event of a crisis.

In my mind, both these authors point to a new form of sustainability – Self Sustainability. This concept differs from self-sufficiency, and has a lower threshold of requirements. Self-sufficiency implies being totally off-grid in a geo-thermal solar bunker, growing your veggies and hunting for your food on some crown land, deep in the bowels of northern B.C., whereas Self-Sustainability points to the ability to sustain one’s self through a crisis until times are better.

From an economic angle, one can view their house as an economy. In fact, that’s where the root words of economics come from – ‘oikos’, which shares meaning with ‘house’ and ‘nomos’, which shares meaning with ‘laws or rules governing thereof’. The concepts of ‘weak’ and ’strong’ sustainability are two such rules that have been applied to national economies, and measure the ability of a capital stock to be maintained (strong), or for increases in one capital stock to offset declines in others (weak).

I suppose the best way to examine self-sustainability would be to examine your economic picture in the event of major shocks.

What would happen if you lost your job tomorrow? Will that six month’s salary you had saved up still be accessible if your bank shuts down due to a run on it? Do you have debts you’ll need to service? You can see how this can quickly descend into a worry-wart’s orgy of despair; we should not live in fear of the future. Nevertheless, a Plan B always helps, and you can’t make an effective Plan B until you’ve looked into this abyss. Turner and Ruff have helped me do that.

The original review is here.

The Ugly:

Just saw this “news” on CBC Newsworld, the story lasting a full SIX MINUTES, and I have questions:

image1. What the hell is a sitting MP (Garth Turner, LIBERAL) doing writing a tendentious, negative, alarmist, freak-out-and fear-inducing book called “Greater Fool: The Troubled Future of Real Estate” which calls for a real estate market CRASH, and touting it on the liberals’ state-owned CBC? On its “Newsworld” channel no less.

2. What the hell is the liberals’ state-owned CBC doing touting a book—particularly one portending a financial CRASH as a result of policy decisions among other things—written by a sitting MP? Is this in the national interest? Is doing it over the helpful CBC banner “REAL ESTATE CRASHING?” in the national interest? Or just in the do-anything-to-bring-down-the-Conservatives interest?

3. How did a sitting MP have time to write a book? On our dime? He gets paid at least $150,000 taxpayer dollars per year plus we give him a $22,000 yearly expense allowance. The CBC gets over a BILLION taxpayer dollars per year.

4. Can I get on there and talk nonstop about the ProudToBeCanadian website for endless minutes, and get asked nothing but fluffy leading questions by the suckup CBC Newsworld anchor? (And by the way, even if invited, I wouldn’t, citing a ridiculous waste of taxpayer dollars, its inherent and total lack of it being newsworthy, insane unfairness, the fact that state-owned and state-run media should be banned in this country and therefore the CBC shouldn’t even exist…)

6. Did Turner pay taxpayers for this free ad? Is this what the CBC is doing now?

7. Does Liberal leader Dion support this use for our state-owned CBC? Did he know about this book-promoting segment in advance? Did Dion sign off on this?

Outrageous. This is an abomination. I demand answers.

EXTRA QUESTION:

8. Doesn’t Garth Turner have an demonstrated interest in the real estate market (and by extension possibly the entire economy) tanking and crashing now, if only to prove how awesome he thinks he is in prognosticating, and to possibly sell more books? And how will that affect his policy decisions and votes in the House and his demands of government?

The original review is here.