News broke hours ago that Chinese banks have been forbidden from lending money to US banks. Although it may seem insignificant, the US cash deficit has averaged over $2 billion a day for several years, and the number one source for that cash has been China. The Congress may continue to argue over the $700 billion bailout of the financial sector, but the package aims to save local institutions. Take the Chinese money off the table, and the crisis is even more serious again.
No one knows exactly how hard the economy will fall, or whether the Government will be able to save the day, but just in case, here’s some handy tips for surviving the global financial meltdown.
Cash is good…really good.
The moment you see a run on the banks, particularly your bank, you’re in a serious trouble. The best way to protect yourself is to keep a cash reserve. In the absolute worst case scenario, cash may be worthless, but for the rest of the time, particularly if plastic loses value, folding cash is where it’s at. If you’ve got extensive savings, look at keeping a portion at home, or somewhere else safe. Insurance schemes such as the FDIC only cover you to $100,000, and even then, in a full blown crisis it may mean nothing. Have a reserve handy, just in case.
Just in case, it pays to have a reasonable supply of food handy, particularly pre-packaged food that doesn’t require cooking. Even if we don’t see anarchy, power utilities with debt burdens risk going under, so essential service provision may face disruption.
Be prepared for job loss
Even the best case scenario now has the US economy heading south at least to some extent, with a flow on effect globally. Very few industries will be spared, and your job could be a risk, no matter how safe you think you might be. You need to be prepared for the worse so your family doesn’t starve.
Be aware that rises in unemployment usually result in increased levels of crime. Even if you manage to keep well, civil society may deteriorate. I’d never recommend anyone own a gun, but certainly you should consider self protection in case things get really bad. I already know where to find the golf clubs just in case.
This isn’t an exhaustive list of things you need to consider, but as the bailout package remains delayed, and now with China cutting off money, things don’t look good. We may not see another great depression in our time, but just in case, do as the scouts do, and be prepared.
If there’s anything you’d recommend that should be added to this list, live a comment.