Sunday, September 28, 2008

Social Consequences of an economic meltdown?

Back in Jan 08, I pondered aloud several questions related to the potential Social Implications of (what was then) a looming economic crisis. Turns out, many readers were wondering the same and this was one of my highest traffic posts ever.

If you haven't already done so, read the info at the following link then come back to read the rest of this post.


Well, nine months have passed since those words were written and there can now be no doubt (1) that this crisis is one of the most significant economic downturns in history and (2) the Massive bailout package being worked is just a bandaid to slow the controlled financial implosion. Even John McCain realizes this and recently stated in his debate with Obama: "This is not the beginning of the end, but the end of the beginning - if we come out with a package that will keep these institutions stable..

With that digested and the knowledge things are likely to get far worse, what can we anticipate for our future - just how bad could things get for the little guy living in the suburbs - trying to raise a family?

I'll refrain from trying to list all possible consequences, as there are far too many potential outcomes, but I would like to highlight several major consequences that could be initiated by a worst-case financial panic...

Note: I'm not trying to scare anyone here, but merely trying to create an awareness and food for thought - so that you can use the information to better prepare your family (in the event the worse-case scenario actually happens).

Let us hypothetically propose the economic crisis intensifies:

Hundreds more banks/financial institutions implode and the FDIC runs out of money - a nationwide run on the banks ensue; consumer credit has consistently gotten worse and available credit-card credit-lines have finally been turned off/reeled in - unemployment skyrockets due to the lack of new credit/spending; inflation rages as the dollar falls sharply; the economic crisis deepens and trillions in unpayable derivative contracts unwind quickly - stock markets collapse around the globe and the crushing pressure is exacerbated by foreign holders of US Debt who finally rush to the exit doors.

The Gvt panics and Stock Markets are closed indefinitely while ATM machines, banks and electronic commerce are shut down across the nation (as the government tries to figure out what to do). People grow anxious as their credit cards and debit cards don't work, and with no cash on hand, they can't buy food or gas... Those who do have cash rush to fill up their gas tanks and empty the shelves at their local grocery stores. The real economy comes to a screeching halt as deliveries of food, gas, etc can no longer make it to market.

Social unrest and general panic set in as our just-in-time economy breaks down. People are confused and scared while the government repetitively tries to reassure that they have everything under control. Hysteria eventually sets in as social chaos, looting, and roving gangs terrorize the masses (taking what they need from the unprepared). Similar situations take place across the nation as people who were on the fringes of society become hungry/desperate and/or take advantage of the lawless situation.

Martial law is ultimately declared and National Guard troops are deployed to major cities around the nation - to help restore order, distribute food, etc.

So many unknowns

Could this actually happen? I don't know - you be the judge; but it's probably better to be a prepared alarmist than an unprepared victim... Think about it.

If you've watched Paulson, Bernanke, Bush and the rest of our worried leaders over the last couple of week, you've probably been able to sense their state of alarm - Yes, they truly realize how big this crisis is...

What can you do to prepare?

I could list a thousand things here from generators, flashlights, etc, but the most important (I believe) are:

1) Have at LEAST a couple of weeks worth of non-perishable food/water on hand
2) Have enough cash on hand to make it through a possible electronic commerce shutdown
3) Maintain close relationships with friends/neighbors (help each other out)
4) If you have a gun, know how to use it - to protect your family, friends and valuable assets (cash/food).


Yes folks this could be bad, but we Americans are an industrious/resolute bunch and (though it will take some time) we will find a way to pull out of it.

However, be aware: regardless of the ultimate significance of this downturn, America is likely to forever change as the US Dollar loses it's reserve currency status in the not too distant future.

At a MINIMUM, this economic crisis will cause our standard of living to fall and our cost of living to increase significantly.

Bottom Line:

Our future is uncertain, and we're definitely in for some difficult times ahead, but the world will NOT end - and we will survive.

Again, this post was no meant to scare, but to inform by thinking outside the mainstream box. Use this information as you may, but it's probably not a bad idea to prepare for whatever the outcome.

Best regards



The Analyst said...

"Yes folks this could be bad, but we Americans are an industrious/resolute bunch and (though it will take some time) we will find a way to pull out of it. "

The strongest survive during chaos because they are willing to stoop to things that laws punish during peacetime.

*Some* Americans are industrious and charitable but many are greedy, violent and selfish and those are traits which, in times of need, trump the nice stuff. I'm leaning toward the worst happening --if only for a relatively short while.

Also, the writer doesn't comment upon the very real possibility of emerging from martial law in a neo-nazi police state holding Ameros. This is also a very likely outcome.

PDM said...


You are despicable.

Randy said...

Thanks PDM - just saw the comment and deleted it.


Dann said...

With tinfoil hat firmly in place... All these realistic possibilities but by extension, I do believe that martial law is what the Shrubs will use to stay in power. They have had this in mind from day one of their administration and have amply demonstrated a disdain for the Constitution and any rule of law that restricts their ambitions to power. Failure of their economic power grab will trigger the creation of panic by the media, and our 'representatives.' This in turn will lead to social chaos and their excuse for their final abrogation of the constitution and the achievement of their ultimate goal of a blatant dictatorship as opposed to the more subtle market dictatorship we now have in place.
Strap it up folks, could get ugly, since we have insufficient representation in the congress to actually slow or stop this process. Unless a bunch of guys grow cojones like Ron Paul and Dennis Kucinich, we're toast.

Ramanand said...

We probably know that for the past 20-25 years or so, the US has become a melting pot of people from around the globe. It's now a multi-cultural and multi-ethnic society, in addition to being multi-racial.
Today, along with the regular US Citizens, there are:
1. Naturalized US citizens (people who were not originally born here, but have become citizens after fulfilling all the immigration clauses)
2. Green Card holders (Legal immigrants)
3. Temporary workers on Visa (Non-immigrants)
4. Illegal Immigrants

What will be the effect of this economic collapse on such a society? Will all kinds of tensions rise to the surface? Will we see racial discrimination making a comeback? Without meaning to offend anybody, hurricane Katrina incident showed many African-Americans were worse hit than their regular American counterparts...

Do certain groups of people have more to worry?


Randy said...


Re: "Will we see racial discrimination making a comeback?"

depending on the severity of this situation and whether or not one group feels threatened by another - it's quite likely.

Anonymous said...

During the upcoming times of "strife", one of the most important of suggestions you gave -making certain you have CASH is priceless. During Katrina and the major power blackout in NYC, ATMs didn't work, as well as most cash register terminals. The only places that stayed open were some small stores that could "physically count change" and didn't mind customers "roaming the dark aisles".

Black Star Ranch

Anonymous said...

food wine fire wood for the winter-
won't have to mail the bills folks-
could be a little vaca for some of us:)-
no seriously- it would suck - no services-
and I am a nurse; if relief can't get in- you can't leave-people would suffer-not pretty-
but good wine may help us through it- stock up!

Anonymous said...

Randy, Love the blog. When we talked today, the market was only down 248. That was bad--but 777 is a nightmare. I came home and started taking precautions and will continue on Tuesday. Can we now say we have gone over the edge? The implosion is well underway.

Randy said...

I think we'll muddle through for a little while longer -- more Fed bandaids will be applied in the days ahead, but eventually the bloodletting will be so uncontrollable the body will suffer a massive coronary and die.

HIGH PROBABILITY of a Complete Banking System SEIZURE by Christmas.

Good speaking w/you today

Anonymous said...

Electronic commerce that is conducted between businesses is referred to as business-to-business or B2B. B2B can be open to all interested parties (e.g. commodity exchange) or limited to specific, pre-qualified participants. Electronic commerce that is conducted between businesses and consumers, on the other hand, is referred to as business-to consumer or B2C. This is the type of electronic commerce conducted by companies such as


Future economic prospects appear very grim indeed.


Great going