The Lit Fuse – Where we are going, and why.

Derivatives: the global financial house of cards

Mar 282013

While the US and some other world governments have taken some serious financial risks with overspending and excessive debt load, companies and banks around the world are taking even more startling financial risks. Some of those could easily crash the world financial system even if the governments all had no debt and strong finances. Let’s take a look at the worst financial risk — the worldwide derivatives market. What is a derivative? From Wikipedia: A derivative is a term that refers to a wide variety of financial instruments or "contract whose value is derived from the performance of underlying market factors, such as market securities or indices, interest rates, currency […]

The United States of Insolvency, part 8: What should I do?

Financial, Survival No Responses »

Mar 282013

If the United States does become insolvent, and a currency crisis occurs, there will be great disruption. Banks will fail, businesses will fail, and the government will be forced to cut services, which could include a reduced level of police protection. There will be substantial increases in crime and violence. Utility service will be less reliable. There will be intermittent shortages of some goods and services. Poverty and homelessness will swell as more people lose their jobs and can’t pay their bills. Things will be tough all around, and at times, dangerous. No one will be immune to the hazards and hardships to come, but being prepared for them will […]

The United States of Insolvency, part 7: Is Insolvency Avoidable?

Financial No Responses »

Feb 202013

In this series of articles on insolvency, we’ve seen that: The Federal government takes in about $2.5 trillion in tax revenue – In Joe’s terms, a $25,000 salary. The Federal government is spending much more than it gets in revenue – in excess of $1 trillion more, which would be Joe spending an extra $10,000 per year (spending $35,000 a year when he makes $25,000). Our governments at the federal, state, and local levels collectively owe a lot of money – somewhere around $20 trillion, which is like Joe owing $200,000 to creditors. The government has large and looming unfunded liabilities – somewhere around $100 trillion of today’s dollars, which […]

The United States of Insolvency, part 6: Insolvency

Financial No Responses »

Jan 142013

So far in this series we’ve established that the United States government is spending a lot more than it gets in revenue. Because of this excess spending, it has borrowed a lot of money. Our government has also promised to pay for certain programs for which it has not set aside money to fund. If things continue on this way, sooner or later the government will be insolvent. What exactly does this mean for our government? Up until now we’ve been scaling our numbers to create the fictitious example of Joe — a worker who makes $25,000, spends $35,000, has $200,000 in debt, $1 million in unfunded liabilities, and has […]

Basic Survival Foods

Survival 2 Responses »

Jan 022013

The major concern with food in a survival situation is preserving the food over time. There are four items that last indefinitely they are: Whole Wheat Flour, Salt, Honey And Powered Milk. Keep the flour and salt in air tight containers. As for the honey just cover the cap in melted wax. The flour and salt can be mixed in a paste and then baked into cakes called “Hard Tack”. Now granted, this diet is not very appealing. It has two big advantages though: it will keep you alive and it is not very expensive. The amount needed to support one adult for one year is: Whole Wheat Flour 300 […]

The United States of Insolvency, part 5: The Debt Problem

Financial No Responses »

Jan 022013

In our previous posts in this series, we’ve established that the United States government is spending about $1 trillion more than they get in revenues, has accumulated somewhere around $20 trillion in debt of various kinds, and has unfunded liabilities so high that they would need perhaps as much as $100 trillion in the bank right now to cover the future expense. Why is this debt a serious problem? It is a problem for the same reason that high personal debt is a problem. Debt has to be repaid, and while it is being repaid, it has to be serviced – meaning, the interest has to be paid. The higher […]

Survival Food that makes life easier

Survival No Responses »

Jan 022013

These four foods can be stored for over 10 years and can add some flavor to your cooking. If stored properly they can probably last indefinitely. Salt Sugar – Brown or White Honey Alcohol – Whiskey, Vodka, etc… Hard Grains: Stored properly 10 – 12 years shelf life. Buckwheat Dry Corn Kamut Hard Red Wheat Soft White Wheat Millet Durum wheat Spelt Soft grains: Stored properly 8 years shelf life at 70 degrees sealed without oxygen. Barley, Oat Groats, Quinoa Rye Beans: Stored properly 8-10 years shelf life sealed without oxygen. Pinto Beans Kidney Beans Lentils Lima Beans Adzuki Beans Garbanzo Beans Mung Beans Black Turtle Beans Blackeye Beans Flours […]

The United States of Insolvency, part 4: Unfunded Liabilities

Financial No Responses »

Dec 282012

In part 3 of this series, we showed that our government owes somewhere around $20 trillion in debt from various sources. This number is growing rapidly as they continue to spend more than they get in revenue — the deficit. $20 trillion sounds like a lot of money, and it is, but there is an additional problem – unfunded liabilities. Unfunded liabilities are what the government has promised to pay for in the future, but does not have money set aside to make those payments. The largest parts of the unfunded liabilities are Social Security, Medicare, and Medicaid, which is split between the Federal and State governments. Current credible estimates […]

The United States of Insolvency, part 3: The Debt

Financial No Responses »

Dec 272012

What is the national debt? In the last article, we explained the deficit – the amount the government spends in excess of what it receives in revenue. Year after year, the deficit adds to the debt. The government has run sizeable deficits since Ronald Reagan became president*, and the debt has piled up year after year. * Some incorrectly state that president Clinton did not run a deficit for part of his presidency. Unfortunately, he did run a constant deficit in the hundreds of billions or more even though the official numbers showed a surplus. The government used accounting tricks such as off-budget spending to hide large amounts of spending; see […]

The United States of Insolvency, part 2: The Deficit

Financial No Responses »

Dec 272012

What is the deficit? The word deficit goes along with the word deficient. When more money is being spent than received, the received amount is deficient; the deficit is the amount of money spent in excess of what is being received. For example, let’s say Joe has an after tax income of $400 a week ($20,800 a year, or about $1,733 a month). He has these basic monthly expenses: Rent: $900 Utilities: $400 Car payment: $400 Gasoline: $200 Other: $200 Total: $2,100 Joe needs to pay about $367 more than he is taking home. His annual deficit is $20,800 – ($2,100 * 12) or $4,400. Since he can’t make his […]

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