Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Economic Statistics for 31 Aug 12

Here are today’s statistics on the state of the economy:

The Chicago PMI fell slightly to 53, but this is eclipsed by the new orders index jumping 2 points to 54.8.

The consumer sentiment index rose 0.7 to end at 74.3 this month, but the future expectations index is declining as gas prices rise.

Factory orders snapped back from June’s decline with a 2.8% increase for July. The big jump is led mainly by a 4.8% increase in durable goods from transportation orders for airplanes and autos. Ex-transportation, durables orders were up 0.7%. Capital goods orders show a big dip when aircraft orders are excluded. Despite the aircraft orders skewing the numbers, however, the overall report points to modest economic growth.

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Dale Franks
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Economic Statistics for 30 Aug 12

The following US economic statistics were announced today:

Personal income rose 0.3% in July, while personal spending rose 0.4%. The PCE price index was unchanged at both the headline and core levels. Year-over-year, the PCE shows 1.3% inflation, with the core rate, which doesn’t count food or energy costs, at 1.6%.

Initial Jobless claims were unchanged at 374,000. The 4-week moving average rose slightly to 370,250. Continuing claims fell 5,000 to 3.316 million.

Following last month’s strong results, today’s sales reports from chain stores are good to mixed, and, on net, slightly higher than last month.

The Bloomberg Consumer Comfort Index remains weak, rising only 0.1 to -47.3, following a 6-week decline in the index.

The Kansas City Fed manufacturing index rose to 5 in July from 3 in June, indicating a slightly better growth rate. That headline hides some underlying weakness, however, as the production index fell from last month’s 12 to 2 in July. New orders are also declining, though at a slightly slower rate than last month, as the index rose to -4 from -7.

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Dale Franks
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Economic Statistics for 29 Aug 12 (Updated)

The following US economic statistics were announced today:

The National Association of Realtors’ pending home sales index rose a strong 2.4% in July t0 101.7. The year-on-year rate of 12.4% is the highest since 2010.

US corporate profits in the second quarter decreased to $1.648 trillion annualized, compared to $1.671 trillion in the first quarter, falling an annualized 5.3 percent.

The Commerce Department’s initial revision to 2nd quarter GDP growth was 1.7% on an annualized basis, up from the initial estimate of 1.5%.

The Mortgage Bankers’ Association reports mortgage applications fell -4.3%, with purchases up 1.0% and refinancings down 6.0%.

UPDATE: The Federal Reserve’s Beige Book report on the state of the US economy says that economic activity "continued to expand gradually" in the current period. Retail sales and real estate were mainly positive. Six of the Fed districts had modest growth; five were moderate; two were slower; and one was mixed.

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Dale Franks
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Economic Statistics for 28 Aug 12

The following US economic statistics were announced today:

The seaonally adjusted S&P/Case-Shiller 20-city home price index rose strongly in June at an adjusted 0.9%. This follows three strong gains in a row of between 0.7% and 0.9% between March to May. Prices came off the bottom, reflected in the year-on-year rate which is finally positive at 0.5%. Non-seasonally adjusted results are much stronger, with the index up 2.3%.

The Conference Board’s consumer confidence index in July fell 5 points to 60.6. July was revised -0.5 lower to 65.4.

The Richmond Fed manufacturing index rose in July to -9 from last month’s -17 to show continued contraction. New orders rose to -20 from July’s already very weak -25.

The State Street Investor Confidence Index, which measures the changes in investor holdings of equities, is down sharply this month, more than 3 points to 90.9.

In retail sales, Redbook reports a weak 1.5% year-over-year sales growth. Conversely, ICSC-Goldman Store Sales rose a solid 0.5% for the week and 3.4% year-over-year.

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Dale Franks
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Economic Statistics for 23 Aug 12

The following statistics were released today on the state of the US economy:

The FHFA reports the house price index rose 0.7% for June, and is up 3.6% year-over-year.

Initial jobless claims rose 4,000 for a second straight week to 372,000. the 4-week moving average rose 1,000 to 368,000. Continuing claims rose 4,000 to 3.317 million.

The Markit Economics PMI Manufacturing Index Flash rose 0.5 points to 51.9, indicating low but rising manufacturing activity.

The Bloomberg Consumer Comfort Index fell a steep 3.0 points to -47.4 for the sixth straight drop and the lowest reading since December, 2011.

New home sales rose 3.6% in July to an annual unit rate of 372,000, well above consensus, and the best since July 2010.

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Dale Franks
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Be Prepared

It’s no secret that I’m a pessimist about the economy, as we travel along our current path, and the danger of a collapse of the currency and financial system, and the possibility of civil disturbance that might follow. Because I occasionally make snarky comments on Twitter and elsewhere about being prepared for 20 days of combat operations, I am occasionally asked about what that actually entails.

Of course, the still-remote possibility of civil unrest isn’t the only reason to be prepared to rough it for a while. There are plenty of earthquakes, floods, fires, hurricanes, tornadoes, and other natural disasters that might require up to several days of living in the pre-industrial era.

So, since I have a couple of hours free this afternoon as I wait for my flight to Albuquerque, I thought I’d jot down a few thoughts.

First off, there’s all sorts of survival lists on the Internet. This is a good one. There’s about 1,000 others available if you simply Google "survival checklist". That’s just a list of items, which is a good start, but here are some other things you might want to think about.

Map out a route away from urban areas, using roads that are off of the main routes of travel. Highways, freeways, etc., may be jammed with traffic, and you’ll be going nowhere fast. Find the little-used back roads. It’ll require a more circuitous route, but your chances of getting caught in traffic while escaping the city are much smaller. Go sooner rather than later, however, or you still might not get out. If you live in, say, Manhattan, and you wait too long, you’re screwed as far as escaping goes.

If you have a diesel vehicle with a towing package, you’ve got a 12-volt generator. If you don’t have a towing package, but have a cigarette lighter or 12-volt vehicle outlet, you’ve still got a generator, but you’ll need a couple of AC converters, like these.

If your vehicle is not diesel-powered, it should be. You should also have a portable generator, of course. It should also be a diesel. Dependence on gasoline is, in general, not good. If you have a diesel, you can, in an emergency, run it on heating oil, kerosene & vegetable oil, lamp oil, or almost any other low-volatility flammable fuel. You can even make your own bio-diesel fuel. Leveraging your future to gasoline is a Bad Thing if civilization collapses.

Get a small travel trailer, and keep it stocked with your survival supplies. One nice thing about travel trailers is that they already have a 30 or 50 gallon water tank. Drain and fill it every couple of months at minimum, and if you have to leave, you can hook up and go in minutes, and you’re already stocked with food and water for several days. Small used travel trailers are cheap, and easily turned into mobile, pre-stocked, survival shelters.

Have lots of honey on hand. Honey doesn’t spoil, so it keeps for ever. Bacteria cannot live in honey. Archeologists once found a huge pot of honey that was a couple of thousand years old. They ate it, found it very yummy, and suffered no ill effects from it. (They later discovered a body preserved in the bottom of the pot.) In a pinch, honey can be used as an antibiotic covering for wounds, though it does raise the chance of further injuries from bears trying to lick the wound.

Also, if you have honey and salt, you can mix them in water to drink when you get diarrhea, which you almost certainly will in the wilderness, and they will keep you hydrated and supplied with electrolytes so you won’t crap yourself to death, which, prior to 1900, was not an uncommon way to die. So, have salt, too.

Speaking of wounds, if things are really bad, and civilization is actually collapsing, you need to head over to CVS or Walgreens and raid the pharmacy. First, take any drug that ends with "cillin". That’ll be an antibiotic. Also, take anything that ends with "codone" or has "codein" in the name. Those’ll be painkillers. Hydrocodone, Oxycodone, Oxycontin…you know what I’m talking about. If you have antibiotics and painkillers, you’ve got a far better chance of surviving an open wound than if you do not. Like, 1000 times better. Use the painkillers sparingly. Don’t get hooked.

Get a copy of the US Army Field Manual 21-76. It’s easy to find. Here it is. Print it out. Read it. Know it. Live it.

Guns. In general, pistols are useless. Sorry, but there’s nothing you can hit with them with any reliability beyond 25 meters, and in combat, beyond 10 feet. At the OK Corral gunfight, 10 guys were jammed into an enclosure about 20 feet square, and two of them walked away without a scratch, after about 50 rounds being fired. You need rifles, and you need more than one. Two guns is one gun, and one gun is no gun. You need at least two rifles per person in the same caliber.

What caliber? Personally, I prefer the 7.62×39 over the 5.56mm/.223 caliber. It’s a harder-hitting round, punches through brush or obstructions more reliably, and is widely available cheaply, as are the weapons which fire it. It’s a better all-round caliber, in my opinion, for hunting or combat, though hopefully you’ll need it for the former, rather than the latter. You cannot go wrong with an SKS rifle in good condition, and you can find a surplus SKS for cheap as dirt. You can also get 1,000 round cases of 7.62×39 cheaply as well. If you want to spend real money on something more modern than the SKS—though, I stress again, the SKS is as fine, accurate, and dependable rifle as you can buy—then spring for a Czech SA Vz58, and you can add all the cool dongles to it. Do not buy an AK-47. For survival purposes, the SKS or Vz58 are superior in every conceivable way. You should assume a combat day will require 100 rounds of ammunition with a semi-automatic rifle (The combat load for the M1 Garand, for example, was 96 rounds per day in WWII). You should have enough ammunition for at least 20 combat days. If you are in, or going to, a big-game area, a surplus Springfield rifle or a Garand are perfect for elk, moose, bear, or other big game. 30-06 ammo is really expensive, however.

Finally, you have to think about your attitude. There’s no easy way to say this, but if things get really bad, like an asteroid wipes out civilization, then you need to be determined and ruthless to survive. Many ethical concepts that are useful in civilized society will be…how does one put this…counter-productive to survival in the state of nature. Many of the survivors you may encounter will be really bad people. Everyone you encounter will be desperate and/or terrified, which will make them extraordinarily dangerous. You will have to keep this uppermost in your mind at all times, and make the appropriate decisions in your dealings with others to ensure your own survival. And that’s all I have to say about that.

In less extreme circumstances, attitude is still everything. Remain calm. Think before you act. Remain positive.

Happily, we do not, for the most part, have to worry about the complete collapse of civilization as a high-order probability.  But there is a chance of some natural disaster in which you may need to be ready to go for two weeks or so living roughly. Ensuring you have adequate food, water, and shelter for those two weeks is not survivalist extremism. It’s just good planning, and good planning may save your life, and will certainly make those two weeks more comfortable.

On the other hand, if you’re also prepared for the asteroid’s arrival…well, you’re prepared for that, too.

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Dale Franks
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Economic Statistics for 21 Aug 12

The following statistics were released today on the state of the US economy:

In weekly retail sales, Redbook’s year-on-year chain store sales growth came in at a 1.9% rate, the 5th time in 6 weeks it’s been below 2%. Redbook’s month-on-month rate is -0.3%, signaling weakness in the upcoming government reports on retail sales. ICSC-Goldman showed a -1.5% sales decrease for the week, and a year-on-year rate of 3.1%, which is down -0.5% from last week.

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