The Ultimate ”Contrarian” Investment for 2007 — Be Prepared

Of all the “investments” one might make at this time, one of the best may be to be prepared for a breakdown of the economy as we know it. This is not necessarily a prediction — any more than having fire or flood insurance is a prediction that you will have a fire or flood. Nevertheless, it is based on an observation that there are many factors which may render the relatively near future quite a bit different than the recent past. This may seem kooky to some, but at least I am kooky in good company. I note the billionaire master investor Richard Rainwater has gone public with his own “preparing for major change” plans, and if you begin to pay attention you will find that many wealthy individuals have been making similar preparations for themselves. Is there something they know that you aren’t hearing about on the evening news?

What I am talking about could be summed up as: the lights go out and don’t come back on again. Foreign oil shipments stop, or are blocked. Maybe freight shipments of goods from China and elsewhere become impossible. Maybe food is no longer delivered to the supermarket. In short, an economic breakdown something like what happened to the Soviet Union, but possibly on a worldwide scale. In such case, there will be no rescue because there will be nobody to do the rescuing.

There is a surprisingly long list of factors that may lead to such an outcome. The gradual and irreversible decline of world oil production, beginning approximately now, is one that has been getting the most attention. I would also note the much more dramatic potential collapse of North American natural gas production, which is imminent since the continent’s natural gas production verifiably peaked in 2001. Major ice deposits such as the Antarctic ice shelf or the glaciers of Greenland have been melting at an accelerated pace, with some geologist and geophysics types now whispering that their collapse could take place within a couple decades, raising sea levels by tens if not hundreds of feet. Given that most of the metropolises of the world are less than a hundred feet above sea level, we can imagine the effects of all of these going underwater simultaneously. Fisheries production is near collapse, and grain production has been falling for several years now. Grain production is now well below consumption, and formerly large world grain stockpiles have been run down to multi-decade lows on a days-use basis.

This is just a short list, which does not address the verifiable and dramatic increase in geophysical activity worldwide, notably earthquakes and volcanic activity, or increasingly bizarre weather. Seattle was just hit by a hurricane — in December. It was called a “windstorm” in the news, and downplayed, since we all know Seattle doesn’t have hurricanes, but when you have a cyclonic storm hundreds of miles wide with hurricane-force winds in excess of 100mph, what is it if not a hurricane? Disappointed skiers in North America (where the temperature is 14 degrees Fahrenheit above normal, again) might try getting on the plane to Israel, which recently got snowfall. A New Madrid fault quake would cut every connection — bridge, gas line, electric line, etc. — across the Mississippi, and potentially reroute the river itself into the Atchafalaya drainage, where it would have naturally gone years ago if not for a lot of levee work. This would bring to an end the entirety of Mississippi-based shipping. Even this doesn’t get at all the things that have been going on, and the more perceptive have probably noticed that the moon and stars have been misaligned for a number of years now, or that anomalous weather has not just been an Earth phenomenon, but a phenomenon of other planets in the solar system as well.

New World Economics