Peak Moment 170: Preparing for disasters and hard times (transcript added)
In this animated dialogue, natural resource analyst Sean Brodrick provides a sharp-eyed perspective on what may be coming in this precarious economy and how to prepare for it. The author of The Ultimate Suburban Survivalist Guide, Sean is hip to peak oil and other resource declines as well as the Katrina hurricane lesson - don’t rely on government to save you during disasters. Urging us to prepare for hard times while we’re in good times, he covers smart money moves, food and water storage, basic preparations in case you have to evacuate, and creating bonds with your neighbors to increase home security. [UltimateSuburbanSurvivalist.com and UncommonWisdomDaily.com].
Sean’s Financial Crisis Survival Kit (pdf) goes into far more detail than our conversation, and covers personal financial preparedness and investment advice.
Listen to audio for this episode here.Janaia Donaldson – Hi, welcome to Peak Moment, I’m Janaia Donaldson. My guest today is Sean Brodrick who’s a natural resources analyst for Weiss Research Incorporated where he also edits several financial newsletters including, The Crisis Profit Hunter. Sean is speaking to us from Florida via Skype. Sean thanks for joining me.
SB: Thanks very much for having me on.
JD: I want you to know that my partner Robin and I really enjoy your contribution to Uncommon Wisdom Daily – every day or nearly every day that you put them out and I think it fits its name, it really is uncommon wisdom because we find folks in the investment world don’t tend to be onto topics like climate change and peak oil and things crumbling around us, so thank you for being there.
SB: My pleasure.
We also have fun listening to you on Howe Street, that’s great fun.
SB: Howestreet.com is a great website and you will hear me ramble at least once a week on that website.
[Laughter] JD: Sean, you’re the author of a book, new book – good book I want to say – called, The Ultimate Suburban Survivalist Guide, which I found really readable and personable. Your personality comes through and you’ve packed it with some really useful information so what I’m hoping we can do is a kind of whistle stop tour through the book so that folks have a sense of your thinking and what is all packed into this. So I want to start actually by reading to folks what you wrote at the very beginning. You said:
Do you have a pervasive sense of anxiety as if our modern world is on thin ice? Do you have an uneasy feeling that Wall Street seems to be collapsing under the weight of bad debts and bad decisions and dragging your job along with it? Or maybe you can feel our society is coming apart at the seams and our civilization could actually break down and collapse – you are not alone. A lot of people are worried and in fact there’s a growing movement of people who are preparing for the end of the world as we know it.Well, those are gutsy things to say and I think you really put your finger on the pulse for a lot of people. So, what are the kinds of emergencies or disasters or situations that were on your mind when you wrote this book?
SB: Well, the main thing that actually made me write the book was when I saw what happened after Hurricane Katrina – those poor people down there. We just saw the huge floods, loss of life, people herded into pens like animals, that kind of thing. I realized watching that because I live in Florida – so I’m kind of obsessed with hurricanes anyways as most people are down here – that if something bad happened around here the government would be too busy trying to save itself, you know it has to pull itself back from the brink, from being washed out to actually come and save me so I decided that I had to get to work, making sure that I prepared to save myself and my family as much as possible from any kind of disaster – any disaster whether it’s a hurricane, flood, fire, or else maybe something that has to do with the economy – I also cover a lot of that in my book – something like an oil crisis. I mean our oil demand around the world is actually suspected to raise 1.5 million barrels per day this year to 86.5 million barrels per day. That’s over a thousand barrels per second. The old oil fields are kind of running out; we are finding new oil, but they have to drill down as deep as Mount Everest is high to find new oil so that makes any oil that they actually get out of there more expensive and the huge oil fields, they don’t seem to be finding so many of those. So peak oil is out there; peak oil is coming. It may not be here now, but it is there in the future and things aren’t staying really static on the user end either. Over in China and India they are seeing enormous amounts of purchases for automobiles and stuff so it’s not just us wanting to use it and we use one-fourth of the world’s oil, but it’s these emerging markets that are having tremendous growth. So I believe there’s an oil crisis out there and it will be coming toward us or else we’ll be speeding toward it.
Then, you can also have things like a food crisis. Now, one way we can have a food crisis is to have an energy crisis because food has to travel 1,500 miles to get to your table. So if we have an energy crisis it’s harder for the food to get there. Well, we have plenty of food right now, there’s no arguing against that, however there are over six billion people in the world – they want to live like big, fat Americans. So we’re having more strains on the global food supply which only puts us one bad harvest away from a real crisis.
So those are the kinds of things I was trying to cover when I started writing the book and then I started talking to people and just more and more stuff came in and well you saw what happened in the end.
JD: Well, you got carried away…you got into shut down of the electric grid might happen and the one that we’re experiencing right now, Sean, which is the economic depression, deflation – whatever we want to call it – and that’s hitting everybody.
SB: If you listen to the people on Wall Street, happy days are here again but that’s because they’re so disconnected from Main Street. Now there are many economic indicators that have turned positive, but one that hasn’t is employment. We only had a slight bump in the employment figures in the last month and one report does not make a recovery in that area.
I think that there could be an economic recovery of sorts, but we won’t see actually employment recover the way we might hope because as all of these large companies recover, one thing that they have to think about constantly – because they have to report to their shareholders – is how can we save more money? The way they can save more money is by shipping our jobs overseas, so as these companies recover they’ll ship more jobs overseas which just worsens the crisis. Until we actually address that we won’t see that change and that’s only part of the larger picture. I can really go on about this, but you have to understand that last fifteen years of really good times we had was because the government was writing bad cheques and all the companies were writing bad cheques. Those cheques have to be paid off some day and I think they’ll have to be paid off sooner than later, but even without that we can’t keep writing bad cheques because eventually you just have a whole nest of economic problems happen.
JD: Well actually that’s part of the picture that I wanted you to talk about. We’ve got this huge deficit, the debt is huge; what might we see going forward in the economy?
SB: Well, if we continue to fight multiple wars around the world; I mean, we hear about we have to cut back this, we have to cut back that, but we don’t cut back on the empire. We have military bases in over 160 countries – by just shedding some of those things; you’ve heard about what’s happening over in Afghanistan, Karzai is thinking of joining the Taliban now – what are we there for? What are we trying to accomplish?
So we certainly need to cut back and there are many areas that really need to be cut back – it will not be easy because people in Congress are used to living on this big gravy train where they can hand things out to just about anybody.
It really takes a change in thinking in Washington to accomplish this, it will not be easy, I don’t think it’ll be easy at all. I’m not sure it can actually be accomplished by someone who tells us the truth because if someone runs for office saying, ‘well, I’m campaigning to give you at least eight years of really frugal times so that we can get to the end of the tunnel, who’s going to vote for the guy? We’re voting for the guy handing out ice cream and free unicorn rides – that’s the guy that they’re voting for. So this is the problem.
We had a real financial crisis in this country – how did we solve that crisis? We solved the crisis by taking all of the super gambling addicts, the people who were running those banks, giving them more money and sending them back to the roulette table. The chance of another financial crisis happening is actually quite high because we didn’t fix the problem. No one ends up in jail; they haven’t even changed the rules, we’ve seen these proposed rule changes – they’re pathetic. That’s because they’re written by the banks and everybody screams anytime you restrict capitalism. We’re not restricting capitalism, we’re trying to restrict the crooks who were actually running things. That’s what we’re trying to restrict. I like capitalism; I don’t like what’s happening on Wall Street right now.
JD: Woah. Obama came in saying we’re going to get change and we got more of the same, so how does … one of the parts of your book that I really appreciated was your subtitle which is, The Smartest Money Moves to Prepare for a Crisis; what are the kind of ways people – you know main street – how can main street protect themselves or weather what may happen?
SB: Absolutely, there’s things you should be doing right now. I have a whole list of them in my book, but just to give you some brief ideas: you have to pay down debt; don’t rush to pay off your home mortgage because you might need that money and who knows, the next mortgage bailout might be you, right? Pay off your credit card debt and other high interest debt and other debt like that – the stuff that crushes you month after month after month. You also have to take a good look at your current spending – where can you cut? Now, arguments over finances are more prevalent than arguments over sex in marriages so this can be a tricky one for people to actually work out, but if you’re honest with each other and what can we cut back? That’s important because then you have to make a budget on how much you might want to spend on new tools, equipment for a garden, perhaps you want things you can use if we have an oil crisis like a new bicycle, something that has nice baskets on it or maybe a moped because what if the price of gas goes up to maybe $5 a gallon, $6 a gallon; not to say that it will, but if it does can you get back and forth to work in this huge fuel hog you had for a car? You might want to think ahead to that. You might also want to think about learning a new skill. Why, because if we have a severe economic crisis your job might go away but if you learn a new skill now while you have time, perhaps you can turn that into a job and also make your connections with your friends and neighbours. There is actually a good reason to do that because if there’s a really severe crisis where we lose law and order, your friends and neighbours, those around you, that will be your best line of defence – yes, sure you should secure your home and stuff like that, but having your block work as a group, that’s your best defence, but it’s also good economically because that’s where you will find a new job if there’s some kind of big economic situation, your friends, your neighbours, that’s where you’re going to really find your new jobs and stuff.
Now, if you want to invest, I mean if you’re thinking of buying stocks, consider exchange traded funds. Why, because it’s harder for them to blow up in your face like an individual stock can. You don’t have to do as much research; I do stock research all day long, most people don’t have the time to do that and so they can’t get into these things as deep as I do so an exchange traded fund can really protect you.
If you do buy individual stocks, look for ones that have nice yields – say a dividend of at least three percent. Over time, ones that have those nice yields actually outperform – this has been shown historically – they outperform ones that have no dividends. These are the kinds of things you can do.
Also, one last thing is to keep enough money at home to pay your expenses for two weeks. Why? If we have a major banking crisis like we had in the Great Depression, they can shut the banks down for two weeks. Back then, people said, ‘oh, that’s terrible’. If they had any money it was probably in their pocket. Nowadays, everybody lives on plastic – if they shut the banks down for two weeks people are going to freak out, they do not carry money, but if you have some stashed away in your house, you can ride out a very brief thing.
I’m not expecting the end of civilization, I’m thinking that we’ll go through rough patches, a really severe rough patch – it would be like what they had in Russia. Basically, the government they had broke down and a new one came along but that wasn’t overnight, it took years. I don’t think ours would be that severe but we could have a time where what you’re used to – your normal life – will go away and then you get some other kind of life afterwards. It might be an improved life; it might be more simplified life where you’re not rushing around. But it will be a different life and so the way you can prepare yourself now is going to be much more flexible, not to be in debt, to be prepared for the institutions you trust not to be there all the time. These are the things you can do.
JD: Wow, we could sign off at this moment, but let’s not. I want to go back to one of the preparations that you mentioned because you are a money guy in the financial world there and you suggest that people have some alternatives besides the cash in their pockets for two weeks; some alternatives to plastic; some hard assets. What would you – if people have a little extra money, what would you do with that?
SB: Well, I believe in owning hard assets like gold and silver and here’s the thing, I believe you need to own the physical metal, not a fund that it’s owning the physical metal for you. We’re hearing lots of rumours nowadays and none of these rumours have been proven. It seems to be coming at a steady drip and stuff happening over in London I don’t want to get into, that’s a whole other show you can have me back. You need to own the physical metal because the banks may be pulling the biggest scam of all which is not owning the gold and silver that they say they have in storage to back these funds up. If that’s the case, physical gold and silver in your hand is going to become worth a lot more – it really is. It’s also good, just in case, we have a currency crisis.
Now, right now, the US dollar is strengthening – make no mistake about that. Why is it strengthening? Because the euro is in crisis – the euro is in crisis, again for a whole bunch of reasons, we could go into that for a whole other show, but basically the US dollar is winning a beauty contest in a leper colony. It’s the one losing the least amount of fingers, so it’s you know, winning that contest, but that doesn’t change the fact the US dollar has very strong underlying problems which are not being fixed and these problems are mounting over time so what if we have a currency crisis here in the US where the US dollar loses half of its value in say the course of a year. It would be quite catastrophic for most people, but if you had just a small portion of your wealth in physical gold, in physical silver you would at least be cushioned. I’m not saying it would be a happy ending for everybody but you’d have that cushion that would help see you through to whatever life comes next.
JD: Actually, that notion of a cushion seems to be central to not just the money advice you give – being less vulnerable – but that cushion and flexibility seems to be behind the whole section you have on the physical preparations. So tell me about what are those most critical, physical preparations?
SB: Right, the two most critical things are food and water. Most people think about food, however I can tell you – and this is a story from Florida, and yes I know we have a weird state and the weird things happen here, but it might be happening in your neighbourhood too – which is one year we had three hurricanes and after every single hurricane I saw people lined up at the grocery stores to get just something because they had nothing stored at home. They never learned from one hurricane to the next to store food and water. Now, you’re thinking, ‘well, silly Floridians’ – maybe. But maybe you have the same kind of thing going on around you and if there’s say an earthquake – we’ve seem to be having a bunch of those lately – if I lived in the California earthquake zone, I’d be kind of nervous actually. There will be many people around you have been living in a bubble and oblivious and they’ve been watching Sports Center and they know nothing about the earthquakes so when an earthquake happens they are just going to panic. You will see people loot for food and water and it’s really sad to get shot trying to get food and water for your family when just some simple preparations will actually help you out. And you should be storing water anyway, that’s the thing no one ever stores and it drives me bananas because in the US our systems for water are as old as the Civil War.
A major water main breaks in the US every two minutes. In the Washington, D.C. area a major water main breaks every single day so the chance of you going into a situation where you turn on the tap and nothing comes out is actually quite high. Now, you should store two gallons per person plus extra for your pets per day and you need at least three days. However one thing you can do is to get a water purifier. Why? Because that allows you to take water out of a ditch and turn that into something you can drink. That way you don’t have to store so much and I really go over your different options on that. You might want to have one that can travel with you because a big part of my book which is not in other survivalist books is how to be a refugee and you have to think about this because if something bad happens in your area, you might want to leave and one thing you should be doing now is, you should be making calls to your friends who live outside your area right, saying, ‘if something terrible happens where you live, then you can come stay with me and if something terrible happens where I live, I and my family can come stay with you’ – and plan your route now. You can use Google to do that. Find out which hotels you might stay in on the way. Hopefully it’s some place that’s not more than one day’s drive away. However, if everyone’s trying to evacuate town at the same time, then you know, it could be quite slow.
Two other points I really want to just really touch on: you should have a bag in your car at all times with a change of clothes for everyone in your family, some cash and the small things you need to just get through a weekend. Why? Because if you’re away from home and something bad happens you’ll at least have that. Also, in your garage you should have a larger bag stocked with a bunch of stuff that you can just throw in the car and take off when and if you see the bad news on the t.v. saying you know, ‘get out of town’ you don’t want to the person packing when that happens. You want to be the person at the front of the herd getting way out there.
Finally, your medicine. No one thinks about it but if we have a major crisis, right, the government doesn’t allow you to stock pile medicine, what are you going to do? First of all, have your medicine in the freezer in a bag clearly marked so you can grab that on your way out the door to the garage so you can grab the big bag with the other hand throw them in the car and go, right. But also…
JD: [running motion]
SB: Yes, yes…but also you need to think about what if I couldn’t go down to the store for my prescriptions. Over half of America is on some kind of drug or another so this is actually important. You can grow things in your own garden and I’m a big believer in gardening anyway, but grow things in your garden that might see you over a rough patch depending on what your particular ailment is.
I really go into a lot of depth in the book. It’s not something that you’d want to do unless you had to but then again we’re talking about a really serious situation here, you might have to. So you can grow something in your garden that can see you over that, so that’s one thing you should think about doing too.
And if you don’t have room for a garden – and I’ll just close on this – if you don’t have room for a garden, yes you do. I cover container gardening and stuff like that. You can at least grow something – I have this upside down tomato tree in my patio and people look at that and say, ‘that’s obscene, there’s no way that that thing should be that big.’ But you can get these new containers and stuff that actually grow a lot of stuff and since I live in Florida, I’ve recently been pulling tomatoes off – it’s kind of a year-round thing.
So there is stuff you can do. Read the book and just learn your options; the more options you have, the better off you are. Your brain is the best weapon you ever had. You just have to think about these things.
JD: Well, actually one of the things I really – that’s a lot to think about. But one of the things I really like in your book is that at the end of every – I mean you’ve got a chapter on food and you’ve got a chapter on water and details on what to store and how much for people and like you mention before alternate transportation. What I like is at the end of every chapter you have a little section on the very least you can do.
SB: How to survive for lazy people, yes.
JD: Or couch potatoes.
SB: Right, exactly. I mean what’s the absolute least you should have? You should have food, water, flashlights and batteries; you should have some kind of plan to actually secure your house which is important, but you should also have a plan to escape, to leave. Plan your escape routes ahead of time, that’s extremely important. And make those contacts now with your friends out of the area. I mean even a couch potato can do that. You don’t have to leave your couch; you just have pick up your phone and call somebody and say, ‘hey, if some kind of serious situation happens in my town, can I come stay with you and if something serious happens where you are, you can come stay with me.’ These are the things you can do. I mean you can do it all in an hour really and it’ll just make your life so much easier because one thing that may not work when everything goes to heck in a hand basket is your cell phone – that’s one more thing to consider. So you won’t be able to make those calls ahead of time. You can text people sometimes when the cell phone isn’t working. I don’t know why their protocols work that way but a text will get through. That’s one more thing to think about is you might want to be able to send texts to people what you might want to write – you can write those things ahead of time saying meet me at mum’s and stuff like that and just have those ready to go because in a crisis situation, I swear to god, you’ll see people running around in a panic. Americans live in a bubble, they don’t think that bad things can happen here, but they can. I mean we aren’t immune, we’re like any country and our big problem is we’re such a great and massive empire – any empire, the larger and more complex it gets the more inputs it needs of all types – energy, food, you name it, money – to keep on going. So it takes more and more just to keep things going the way they are. Our supply lines are stretched around the world. The status quo may be on the thin ice right now. You may not realize it, certainly the people on t.v. don’t want you to realize it. I mean, the stuff we see on t.v. why watch it. This is why the ratings for t.v. shows are going down; this is why newspaper readership is going down because people can find the truth on the internet, why would they possibly tune in to whatever they’re lying about on t.v. I think your kinds of shows really tries to raise awareness on this do a great service to the public because they will not get this unlike say the CBS news, Fox news and anything like that. But the people who are willing to dig in and find these facts ahead of time and to prepare ahead of time will be so much better off than the mass herd of the people around them. Just doing these things ahead of time is a huge survival advantage. If you can live through the first forty-eight hours, your odds of living out the week go up very much; if you live through the first week, your odds of actually surviving the whole thing go up a huge amount. So these are the things you should be doing just the small things. And yes, just pick up my book and in the bookstore, read the end of each chapter, it’ll say the least you can do and make sure you have those bases covered. Whatever works for you, but definitely plan, prepare and be proactive because your life and the life of your family may depend on it.
JD: Thank you, thank you so much for this. This has been a whistle stop tour.
SB: Well, it’s been great fun. Next time you can have me on we can talk about climate change, we can talk about any of the other topics that should be dealt with in depth, I’d be more than happy to that. I had a great time.
JD: Thank you, you’re on. You’ve been watching Peak Moment, locally reliant living for challenging times and my guest today is Sean Brodrick who is the author of the, Ultimate Suburban Survivalist Guide, join us next time.