The following appeared on our home page in Ocotober 2008 at the beginning of the financial crisis. becuase much of the information presented herein is still valid and useful today, we have preserved it here.

The Economic Crisis

A wise man once said that a recession is when your neighbor gets laid off, a depression is when you get laid off. This is going to be the case during this period of economic strife as well. As long as you can minimize its direct impact on you, you can weather the economic downturn. Unfortunately, not everyone will escape:

• If you have a mortgage you cannot afford, you are in big trouble.

• If you plan on retiring in the next few years, you may need to revise your plans.

• If you and/or your spouse lose their job, it may take some time to find another one, and you may need to settle for a lower paying position.

• If you owned complicated mortgage-derived securities, invested in hedge funds or the financial industry, or gambled in the market hoping to make a quick buck, then you probably lost big time.

But on the other hand…

• If your house is worth less than you owe on it, that doesn't really matter as long as you can pay your mortgage. As long as you do not need to sell it right now, the loss of value is a paper loss. Things will come back up… eventually.

• If you can make your mortgage payments and your employer is pretty steady, you can get through this mess with only a little belt tightening.

• If you are relatively debt free, if you don't need a car loan, a college loan, or rely on a line of home equity to finance your way of life, then you shouldn't feel the pinch as badly as many will.

• If you have a portion your assets in gold or other bullion, you are probably far better off than many of your neighbors.

• If you have a year's worth of food in your basement, then you are better able to weather a layoff or a complete economic melt down. You may not be able to afford going out to eat, but it is nice to know that you won't starve.

• If you have a garden, raise a bit of livestock, hunt or trap game, then you have some insulation and protection that many people lack.

In short, most people who have been living the survivalist lifestyle and who strive for self sufficiently should be able to get through this economic scare without life-changing upset. As long as you can stay employed or have a source of income, you will come out far ahead of what the media is referring to as "main street."

Keep in mind, the people that are losing the most money are the people who had the most to loose. Big cats with big investments are worth 30 or 40 percent less than a year ago. So the rich are a little less rich. But for many living folks from paycheck to paycheck, the high cost of gas has a bigger day-to-day impact than the low price of stock. So don't let this talk about the worst economic crisis since the 1930s get you down. That's nothing but political scare mongering

Right now, we are nowhere near the low point of the Depression. We are also far better off than we were in the late 1970s and early 1980s when inflation drove interest rates up to around 20% and unemployment was in double digits. While layoffs are starting, they are nowhere near as bad as they have been in the past. So while Captain Dave always recommends being prepared for the worse, this isn't it.

Maintaining Employment and Cash Flow

They key to surviving an economic downturn is cash flow. You need to do whatever you can to keep your job and maintain money flowing into your bank accounts. You may loose some of your retirement savings, but that is a problem you can address in the future. A low 401k balance is unlikely to result in you being homeless. A lack of income might. So focus on short term financial survival and worry about the long term a little later when things stabilize.

To retain your job, do everything possible to be the last man laid off. That means working hard, staying out of trouble, and maintaining a good attitude. But it also means don’t willingly change employers unless the writing is on the wall or it is in a high risk area, such as mortgage broker. You want to be the person with seniority and avoid being the last hired, first fired.

What are high risk jobs? Jobs that are dependent on the economy. For example, being a new car salesman is high risk right now because people just aren't going to be buying new cars at the rate the were a few years ago. But on the other hand, with more people hanging on to their older vehicles, there could be an increased demand for mechanics. Or maybe you can make some side money stripping old parts out of junked vehicles and selling them on eBay. People are going to be keeping older vehicles running longer, and that is an opportunity.

The building trades also suffer during tough times and with dropping prices, no one is building new homes or renovating old ones. But they will still need to make repairs. I maybe able to defer putting on a new roof put on until thing look brighter, but I will have to be pretty broke to avoid calling the HVAC repair guy when my air conditions conks out in July.

With the exception of elective surgery, jobs in the medical field are also resistant to downturns. People still get sick, have accidents and need hospitalization. Government and education jobs are also somewhat resistant to cut backs, specially for people with seniority.

To take a look at why we are in this mess and what might happen next, click here to see Captain Dave's Best Case and Worst Case Scenarios for the economic crisis.

Cause and Effect

It should come as a surprise to no one that home values in Florida, California, Nevada and much of the North East spiraled up and ridiculously fast rates. Everyone know there was a housing bubble, and anyone who was a student of history know that it would eventually pop. What they did not know is that it was jot just speculators who got caught.

Unfortunately, people either ignored or were ignorant of what the bursting of the housing market bubble would mean to the complicated, interwoven and inbred structure of our financial markets. If someone know that a couple million folks being behind on their mortgages would cause the failure of some of our largest banks and financial companies in the world, they were keeping quiet. I think it is safe to say that no one really thought the shock wave from the housing market bubble bursting would suck 40 percent out of the stock market in 12 months, or 20 percent in a 10 days.

So thanks to Fannie Mae and Freddie Mac buying mortgages from people with no down payment and no reliable income, we are all going to suffer. And not only are we losing any money we had invested in the stock market, we will probably have to pay higher taxes in the future. It's not fair, but then, life is not fair. That's why we prepare.

How to Prepare

Captain Dave has always said that if you are prepared for one major disaster, you are probably 80% prepared for another. So if you have a high level of personal and family preparedness, you are in better shape than 95% of the populace. Here are some suggestions to weak your preparations for this economic crisis:

• Cash is king. Not only will a cash reserve help you weather the downturn in the stock market, we may see a time when credit cards are no longer accepted. Have plenty of cash on hand.


• Bullion rules. If Cash is king, than gold and silver are the emperor and empress. If you have bullion, save it for an emergency; don't think of selling, even if you can double your money. Those dollars may be worthless one day, but the gold will not be.


• Store food. If you stop paying your mortgage today, it will probably take six months for your mortgage holder to evict you. But you will hungry long before you are homeless. Stored food is not as good as fresh food, but it is better than stone soup. We are now accepting orders for 6-gallon pails of wheat and legumes.


• Grow/raise food. Stored food may keep years, but it can be consumed quickly. You need to be able to provide an ongoing supplement to your stored food through gardening or raising livestock. You don't need a cow or a pig. Raising rabbits, pigeons and chickens are good alternatives for people with little or no land. Dairy goats are good alternatives to cows for people with a few acres of cleared land.


• Store household goods. Food is important, but so are common household items like laundry detergent and maxi pads. Look at your consumables – from toothpaste and razor blades to paper towels and motor oil – and see what you need to store.


• Make extra money. Look for extra opportunities to raise cash. Maybe you can kill two birds with one stone and raise chickens. This will give you meat and eggs to consume and to sell. If you can make something or repair something people need, there may be a market for it. If the transportation system collapses, the soap or candles you make may be the only ones available. If you can sharpen a chain saw and split wood, you may be able to sell firewood to people who either do not have the skill or the trees. Be creative.


• Stock up on guns and ammunition. This is for hunting as well as self defense. Ammunition prices have doubled in the past couple of years, and if the Democrats take the Whitehouse and control Congress, we will likely see more anti-gun legislation.

Read Captain Dave's Survival Guide and the Food Storage FAQ for more information on how to prepare. Prepare for the worst, while you still can…

Click here to see Captain Dave's Best Case and Worst Case Scenarios for the economic crisis.