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The Reality of Collapse: “Many Preppers Will Die”

The Reality of Collapse: “Many Preppers Will Die”.

Selco
March 21st, 2014
SHTF School

 

Editor’s Note: In the following article well known Balkan War survivor and developer of the SHTF School Selco shares yet more of his insightful experiences. Many of us have taken steps to insulate ourselves should the worst happen. But is that enough? Selco explains that regardless of the supplies and tools you have in your possession, you still face the very serious risk of injury or death should the system around us collapse. 

many-preppers-will-die

Why Many Preppers Will Die
By Selco

Survivalists and preppers are (or are supposed to be) by definition something like smart folks, people who do not trust mainstream bu..s..t, who follow their own path to be winners at the end.

Actually in reality truth is different.

We all like to say that we are different but just like everyone else we fall under the influence too.

How many times you or some prepper you know built or formed opinion without even checking it? How many times you bought some item and store it just because you think it makes sense, not because you know it makes sense and you check on it. It is often easier way to believe others and you can not try everything yourself of course.

One of the most stupid things or worst mistakes that you can make in prepping is to become “mainstream”. Slap label of prepper on you and you start to think you are smarter than others. You may think that preppers and survivalists can not be mainstream because it is not logical, but yes we can.

We gonna buy bug for BOB because someone said “it is best for BOB” usually without checking who is the guy who said it. Or we gonna say “I have best gun for SHTF” because someone put huge amount of money for marketing it. If most preppers look at their storage they can find items they know theory of using it, but never used it.

The problem here is not buying these things. The problem is with forming your opinion and many survivalists think they know and they have plan but that makes them in reality less flexible to consider all options.

When SHTF and you realize quickly that you have completely wrong boots (or weapon, or BOB or whatever) you maybe still can fix it if you act. Changing way of thinking (or plan…) is harder.

There was man who before SHTF was owner of few cafes, pretty wealthy man. He was involved in some crime business and you could hear from time to time how he was involved in some fight, or he was arrested, or served some time.

Sometimes he was out of the country for months or year, rumors were that he was something like professional thief, specialised for breaking into “high class” homes, jewellery and safes and similar.

Those stories were rumors only, but in his cafe in town all guests were his crew, and going there for coffee was not forbidden, but also was not bright idea. If you entered there (probably) nobody would kick you out, but atmosphere and faces there clearly would tell you that you are outsider.

In short he was something like “tough guy” in city talks. Weapons, secret gambling, prostitution etc. Guy with his crew.

On first rumors of troubles he started to sell his cafes I guess in order to leave the area, but he was too late. When SHTF, and groups and gangs started to form, he simply gave his cafe to the leader of one group in exchange for protection.

Later when that leader and group were destroyed he found himself imprisoned for some time. Lot of people around were robbed and tortured or killed.

He immediately agree to write statement that he is “selling“ all his cafes to the leader of new group, of course in exchange for the life and freedom.
They had it anyway, but they needed that piece of paper for time after war.

After that he was something like “lone crazy dude” through the rest of the SHTF period. He was nobody.

He survived everything and after that he needed quite some time, few years to prove that he was forced to “sell” his cafes.

Court gave everything back to him. Soon after that he sold everything and emigrated somewhere, probably to place with less chance for another SHTF event.

My friend talked with him before he left the country, and after some time they touched the subject that lot of people wanted to know.

Why did he go down so easy? Why did he not resist at the beginning with his crew? Why did he not had his own strong group during SHTF? Things like that.
He had original answer: “Every time they were stronger than me, I simply had to let it go”.

His story is not so unique, but I know much more stories about how folks got killed because they refused to leave their home (and run) when under attack by several people armed with firearms, while they were unarmed, or armed with pistol or knife, clearly outnumbered.

I read every day on web sentences like “having this gun will save you when SHTF” or “with this BOB you can not lose when SHTF”. Of course this is marketing crap from people who want to sell you something.

Please do not get yourself killed, or allow your family to die when SHTF just because you put your “perfect” BOB on, your “zombie survival” rifle in your hands and went out to save the world.

Or to get killed because you “draw line and here you stand your ground” for example when they attack your home or your storage. Do you really want to die just to hold onto things?

In world of survival number of people who are gonna blindly believe in their equipment, or just blindly stay where is impossible to stay are much higher from folks who are gonna take the smartest option (however bad it could look). This is why many preppers will die. Regular folks will run but some preppers take so great pride in their plan or equipment they do not make right decisions when it matters because of their ego.

You can hear me being not hero and just doing what I had to do for 8 hours in my course.

I am not the dude who is living on tree armed only with kitchen knife and big mouth. I also have BOB, BOL, equipment, weapons and plans.

But if I see that my SURVIVAL is in question I am ready to say f..k it to everything.

Sometimes to survive means not to win but to give up, and wait for next chance. Do not expect to be winner all the time.

You can follow Selco’s story at SHTF School and learn how he survived one year in hell. 

The Reality of Collapse: "Many Preppers Will Die"

The Reality of Collapse: “Many Preppers Will Die”.

Selco
March 21st, 2014
SHTF School

 

Editor’s Note: In the following article well known Balkan War survivor and developer of the SHTF School Selco shares yet more of his insightful experiences. Many of us have taken steps to insulate ourselves should the worst happen. But is that enough? Selco explains that regardless of the supplies and tools you have in your possession, you still face the very serious risk of injury or death should the system around us collapse. 

many-preppers-will-die

Why Many Preppers Will Die
By Selco

Survivalists and preppers are (or are supposed to be) by definition something like smart folks, people who do not trust mainstream bu..s..t, who follow their own path to be winners at the end.

Actually in reality truth is different.

We all like to say that we are different but just like everyone else we fall under the influence too.

How many times you or some prepper you know built or formed opinion without even checking it? How many times you bought some item and store it just because you think it makes sense, not because you know it makes sense and you check on it. It is often easier way to believe others and you can not try everything yourself of course.

One of the most stupid things or worst mistakes that you can make in prepping is to become “mainstream”. Slap label of prepper on you and you start to think you are smarter than others. You may think that preppers and survivalists can not be mainstream because it is not logical, but yes we can.

We gonna buy bug for BOB because someone said “it is best for BOB” usually without checking who is the guy who said it. Or we gonna say “I have best gun for SHTF” because someone put huge amount of money for marketing it. If most preppers look at their storage they can find items they know theory of using it, but never used it.

The problem here is not buying these things. The problem is with forming your opinion and many survivalists think they know and they have plan but that makes them in reality less flexible to consider all options.

When SHTF and you realize quickly that you have completely wrong boots (or weapon, or BOB or whatever) you maybe still can fix it if you act. Changing way of thinking (or plan…) is harder.

There was man who before SHTF was owner of few cafes, pretty wealthy man. He was involved in some crime business and you could hear from time to time how he was involved in some fight, or he was arrested, or served some time.

Sometimes he was out of the country for months or year, rumors were that he was something like professional thief, specialised for breaking into “high class” homes, jewellery and safes and similar.

Those stories were rumors only, but in his cafe in town all guests were his crew, and going there for coffee was not forbidden, but also was not bright idea. If you entered there (probably) nobody would kick you out, but atmosphere and faces there clearly would tell you that you are outsider.

In short he was something like “tough guy” in city talks. Weapons, secret gambling, prostitution etc. Guy with his crew.

On first rumors of troubles he started to sell his cafes I guess in order to leave the area, but he was too late. When SHTF, and groups and gangs started to form, he simply gave his cafe to the leader of one group in exchange for protection.

Later when that leader and group were destroyed he found himself imprisoned for some time. Lot of people around were robbed and tortured or killed.

He immediately agree to write statement that he is “selling“ all his cafes to the leader of new group, of course in exchange for the life and freedom.
They had it anyway, but they needed that piece of paper for time after war.

After that he was something like “lone crazy dude” through the rest of the SHTF period. He was nobody.

He survived everything and after that he needed quite some time, few years to prove that he was forced to “sell” his cafes.

Court gave everything back to him. Soon after that he sold everything and emigrated somewhere, probably to place with less chance for another SHTF event.

My friend talked with him before he left the country, and after some time they touched the subject that lot of people wanted to know.

Why did he go down so easy? Why did he not resist at the beginning with his crew? Why did he not had his own strong group during SHTF? Things like that.
He had original answer: “Every time they were stronger than me, I simply had to let it go”.

His story is not so unique, but I know much more stories about how folks got killed because they refused to leave their home (and run) when under attack by several people armed with firearms, while they were unarmed, or armed with pistol or knife, clearly outnumbered.

I read every day on web sentences like “having this gun will save you when SHTF” or “with this BOB you can not lose when SHTF”. Of course this is marketing crap from people who want to sell you something.

Please do not get yourself killed, or allow your family to die when SHTF just because you put your “perfect” BOB on, your “zombie survival” rifle in your hands and went out to save the world.

Or to get killed because you “draw line and here you stand your ground” for example when they attack your home or your storage. Do you really want to die just to hold onto things?

In world of survival number of people who are gonna blindly believe in their equipment, or just blindly stay where is impossible to stay are much higher from folks who are gonna take the smartest option (however bad it could look). This is why many preppers will die. Regular folks will run but some preppers take so great pride in their plan or equipment they do not make right decisions when it matters because of their ego.

You can hear me being not hero and just doing what I had to do for 8 hours in my course.

I am not the dude who is living on tree armed only with kitchen knife and big mouth. I also have BOB, BOL, equipment, weapons and plans.

But if I see that my SURVIVAL is in question I am ready to say f..k it to everything.

Sometimes to survive means not to win but to give up, and wait for next chance. Do not expect to be winner all the time.

You can follow Selco’s story at SHTF School and learn how he survived one year in hell. 

Peak Oil: A Peek At The Data – Peak Oil Matters

Peak Oil: A Peek At The Data – Peak Oil Matters.

IMGP1109_watermarked

 

 

 

 

 

 

 

 

An observation worth noting … and pondering, from Dr. Nafeez Ahmed (quoting Lieutenant Colonel Daniel L. Davis):

‘We put the event [Transatlantic Energy Security Dialogue conference] together because the prevailing idea that we have a bright future of increasing oil and gas production that can sustain our current way of life indefinitely is based on a selective appraisal of the data. We brought together experts from across the spectrum, and with a wide range of opinions, to have a comprehensive look at all the relevant data. When you only look at certain things, like the very real resurgence of US oil and gas production, the picture looks fine. But when you dig deeper into the data, it becomes clear that this is only part of the picture. And the big picture proves that our current course cannot continue without significant risks.’

Who knew?

Just when you think we’re up to our eyeballs in vast abundance of energy independence (or something like that), some other big-shot full of evidence and facts has to do a quick script edit, and we go from the deny-everything-about-peak-oil crowd’s “Nothing to Worry About, Just Trust Us” fairy tale to the sobering, chock full of reality “Here Are Some Facts, Trust Them First”  story.

So close….

Who woulda thunk that ignoring the higher expenses, greater technological needs, diminished energy efficiencies, greater energy inputs, rapid depletion rates, environmental and health considerations—among other items—was something that could not and should not continue indefinitely? All this Happy Talk, and now it seems that we actually have to pay attention to facts and evidence.

What a huge disappointment. It continues to amaze me how different a story can turn out when results depend on the facts rather than scrubbed, fanciful versions.

It almost makes one wonder what is gained—and lost—when those who know choose not to tell those who don’t.
 
~ My Photo: Corona del Mar, CA – 02.16.14

 

 

I invite you to view my other work at richardturcotte.com 

Ukraine Acting President Calls Emergncy Meeting Of Security Chiefs; Russia Threatens To Cut Off The Gas | Zero Hedge

Ukraine Acting President Calls Emergncy Meeting Of Security Chiefs; Russia Threatens To Cut Off The Gas | Zero Hedge.

All the dominoes are tumbling now. Moments after the Russian upper house of parliament approved the decision to use Russian troops in the Ukraine as expected, Ukraine’s acting president called an emergency meeting of security chiefs according to his spokeswoman. Oleksander Turchinov summoned his Security Council after Russian President Vladimir Putin sought parliamentary approval to deploy Russian forces in the Ukrainian region of Crimea. At this point the biggest and perhaps final wildcard is whether NATO does or does not get involved. If it does, and if Russia does not back off – which it has clearly telegraphed it won’t – futures may be looking at a limit down open on Sunday.

And while military escalation is now an official reality instead of merely YouTube clips of unidentified crap troops , Russia just sent another major warning shot across the bow when it issued several warnings on Saturday that Ukraine may lose a discount to the gas price it now pays to Gazprom due to Kiev’s outstanding gas debt. Russia’s state gas company Gazprom estimates Ukraine’s outstanding gas debt at $1.55 billion for 2013 and gas deliveries so far this year. This of course, was Russia’s trump card from the very beginning. Via Reuters:

“It seems that with such gas payments and fulfilment of its obligations Ukraine may not keep its current gas discount. The gas discount agreement assumed full and timely payment,” Gazprom spokesman Sergei Kupriyanov told Reuters.

A price increase would deepen Ukraine’s already dire cash situation and could lead to a new “gas war” between Kiev and Moscow as well as interrupt gas shipments to Europe, which gets around third of its gas from Russia.

In December, Russia agreed to reduce gas prices for Kiev by about a third, to $268.50 per 1,000 cubic metres from around $400 which Ukraine had paid since 2009, after ousted President Viktor Yanukovich spurned an EU trade deal in favour of closer ties to Moscow.

The deal allowed for the price to be revised quarterly between the 5th and 10th day of the first month every quarter.

The news agency Interfax cited a representative of the Russian energy ministry as saying on Saturday that Moscow sees no reason to extend the discount to Ukraine for the second quarter – because of the outstanding debt.

If this continues to happen, is there any point in continuing the existing agreement on gas supplies at discount prices? No,” the agency cited an unnamed ministry representative as saying.

“It is important that the proposal for a reduced gas price is confirmed quarterly. It would be stupid and wrong to extend it to the second quarter.”

Ukraine’s newly appointed Energy Minister Yuri Prodan told reporters on Saturday that the price for Russian gas would stay unchanged in March but it could jump to around $400 per 1,000 cubic metres in the second quarter if the two sides fail to sign an agreement.

Ukraine, which has seen its currency spiralling down and cash and gold reserves falling significantly as a result of the political protests that led to the ousting of President Viktor Yanukovich last weekend, is in dire need of cash.

It faces a further $6 billion in foreign debt payments this year and has asked the International Monetary Fund for financial assistance of at least $15 billion. Ukraine’s newly appointed leaders estimated Kiev’s needs at around $35 billion.

Prodan told journalists that the Ukrainian energy firm Naftogas is in “active talks” with Gazprom over pricing. Ukraine consumes about 55 billion cubic meters of gas each year, and more than half of this amount is imported from Russia.

But far more important than Ukraine, which is merely a sacrificial lamb in the latest proxy war between east and west, is the Russian hint that what is likely to happen to Ukraine’s gas may soon hit Europe too if it also gets involved.

Apart from through Ukraine, Russian gas flows to Europe via Belarus and two subsea pipelines – under the Black Sea and the Baltic Sea. Gazprom plans to build another subsea pipeline – the South Stream – to bypass Ukraine by 2016.

So check to you NATO: will you defend the territorial integrity of Ukraine even as NATO actively pushed for a split in Yugoslavia some 15 years ago, or will it do the “right” thing… in the dark?

Ukraine Acting President Calls Emergncy Meeting Of Security Chiefs; Russia Threatens To Cut Off The Gas | Zero Hedge

Ukraine Acting President Calls Emergncy Meeting Of Security Chiefs; Russia Threatens To Cut Off The Gas | Zero Hedge.

All the dominoes are tumbling now. Moments after the Russian upper house of parliament approved the decision to use Russian troops in the Ukraine as expected, Ukraine’s acting president called an emergency meeting of security chiefs according to his spokeswoman. Oleksander Turchinov summoned his Security Council after Russian President Vladimir Putin sought parliamentary approval to deploy Russian forces in the Ukrainian region of Crimea. At this point the biggest and perhaps final wildcard is whether NATO does or does not get involved. If it does, and if Russia does not back off – which it has clearly telegraphed it won’t – futures may be looking at a limit down open on Sunday.

And while military escalation is now an official reality instead of merely YouTube clips of unidentified crap troops , Russia just sent another major warning shot across the bow when it issued several warnings on Saturday that Ukraine may lose a discount to the gas price it now pays to Gazprom due to Kiev’s outstanding gas debt. Russia’s state gas company Gazprom estimates Ukraine’s outstanding gas debt at $1.55 billion for 2013 and gas deliveries so far this year. This of course, was Russia’s trump card from the very beginning. Via Reuters:

“It seems that with such gas payments and fulfilment of its obligations Ukraine may not keep its current gas discount. The gas discount agreement assumed full and timely payment,” Gazprom spokesman Sergei Kupriyanov told Reuters.

A price increase would deepen Ukraine’s already dire cash situation and could lead to a new “gas war” between Kiev and Moscow as well as interrupt gas shipments to Europe, which gets around third of its gas from Russia.

In December, Russia agreed to reduce gas prices for Kiev by about a third, to $268.50 per 1,000 cubic metres from around $400 which Ukraine had paid since 2009, after ousted President Viktor Yanukovich spurned an EU trade deal in favour of closer ties to Moscow.

The deal allowed for the price to be revised quarterly between the 5th and 10th day of the first month every quarter.

The news agency Interfax cited a representative of the Russian energy ministry as saying on Saturday that Moscow sees no reason to extend the discount to Ukraine for the second quarter – because of the outstanding debt.

If this continues to happen, is there any point in continuing the existing agreement on gas supplies at discount prices? No,” the agency cited an unnamed ministry representative as saying.

“It is important that the proposal for a reduced gas price is confirmed quarterly. It would be stupid and wrong to extend it to the second quarter.”

Ukraine’s newly appointed Energy Minister Yuri Prodan told reporters on Saturday that the price for Russian gas would stay unchanged in March but it could jump to around $400 per 1,000 cubic metres in the second quarter if the two sides fail to sign an agreement.

Ukraine, which has seen its currency spiralling down and cash and gold reserves falling significantly as a result of the political protests that led to the ousting of President Viktor Yanukovich last weekend, is in dire need of cash.

It faces a further $6 billion in foreign debt payments this year and has asked the International Monetary Fund for financial assistance of at least $15 billion. Ukraine’s newly appointed leaders estimated Kiev’s needs at around $35 billion.

Prodan told journalists that the Ukrainian energy firm Naftogas is in “active talks” with Gazprom over pricing. Ukraine consumes about 55 billion cubic meters of gas each year, and more than half of this amount is imported from Russia.

But far more important than Ukraine, which is merely a sacrificial lamb in the latest proxy war between east and west, is the Russian hint that what is likely to happen to Ukraine’s gas may soon hit Europe too if it also gets involved.

Apart from through Ukraine, Russian gas flows to Europe via Belarus and two subsea pipelines – under the Black Sea and the Baltic Sea. Gazprom plans to build another subsea pipeline – the South Stream – to bypass Ukraine by 2016.

So check to you NATO: will you defend the territorial integrity of Ukraine even as NATO actively pushed for a split in Yugoslavia some 15 years ago, or will it do the “right” thing… in the dark?

HAA HAA: Will Another Creditanstalt Be Revealed Once The Hypo Alpe Aldria “Black Box” Is Opened? | Zero Hedge

HAA HAA: Will Another Creditanstalt Be Revealed Once The Hypo Alpe Aldria “Black Box” Is Opened? | Zero Hedge.

Recall that the bank which precipitated the first Great Depression was Austria’s Creditanstalt, which declared bankruptcy on May 11, 1931 and which resulted in a global financial crisis, after its failure waterfalled into the chain-reaction of bank failures that marked the first systemic financial collapse. As part of CA’s rescue, Chancellor Otto Ender distributed the share of bailout costs between the Republic, the National Bank of Austria and the Rothschild family (and as a bit of historic trivia, following the Austrian Anschluss to Nazi Germany in 1938, Creditanstalt-Bankverein was targeted for a variety of reasons, leading to the arrest of Louis Nathaniel Rothschild and his imprisonment for the losses suffered by the Austrian state when the bank collapsed. Aggrieved, he emigrated to the US in 1939 after more than one year in custody).

A little over 80 years later, while the world is knee deep in explaining how snow during the 4th warmest January on record is the culprit for an abrupt and dramatic slowdown in world growth, and is following the geopolitical developments out of Crimea with great attention, the real action may once again be taking place in the small, quaint and quiet central European country, where yet another bank may be sowing the seeds of further financial mayhem.

Presenting Hypo Alpe Aldria (or “HAA” although certainly not funny as in funny HAA HAA: more shortly), a bank which in reality has been in the news for years following its nationalization in 2009 by the Austrian government to prevent a bank collapse. In fact, just last week, Austrian Chancellor Werner Faymann said the government is right to avert the collapse of Hypo Alpe-Adria-Bank International AG, as he cited the precedent of Creditanstalt, whose crash helped trigger the 1930s depression. “The crash of Creditanstalt in 1931 caused economic meltdown,” Faymann told parliament’s lower house in Vienna today. “There was a consensus in 2009 to act where necessary, to avoid the mistakes of the 1930s, to avoid a collapse by nationalizing and by installing protection measures at the European level.”

As a follow up, as Bloomberg also reports, the fate of HAA – whatever it ends up being – may have significant political consequences for the Austrian government. Again Bloomberg reports that “support for Austria’s ruling coalition is slipping five months after it won a narrow majority as inaction over the nationalized Hypo Alpe-Adria Bank International AG lifts backing for protest parties. Latest polls suggest voters are losing trust in Social Democratic Chancellor Werner Faymann and People’s Party Vice Chancellor Michael Spindelegger and warming to the euro-skeptic Freedom Party before May’s European Parliament elections. The Green and Neos parties also stand to gain, said Hubert Sickinger, a political scientist at the University of Vienna.”

“The ruling parties have a problem,” Sickinger said in an interview. “They postponed the Hypo Alpe ‘dead bank’ problem hoping that the economy would change but they’ve known since early 2013 that this wouldn’t help.”

One party that has been quite vocal on the issue of HAA is the Austrian Freedom Party nationalists, who seek to restrict immigration, and which has the most to gain from detouring the status quo as they would finish first in the EU parliamentary election, according to a Feb. 14 Gallup poll commissioned by the Oesterreich newspaper. The Freedom Party under deceased leader Joerg Haider helped build Hypo Alpe from a regional lender into one of the biggest banks in the Balkans.

“The European elections will be payback day” over the government’s handling of Hypo Alpe, said Franz Schellhorn, director of Agenda Austria, a Vienna-based research group.

“Anger is growing,” Schellhorn said in an interview today. “This black box has to be opened to see what is going on inside.”

It is the “opening of this black box” that suddenly has the entire investment community on edge, even if most of them hope the story simply goes away as it has for the past five years. Only this time it may be impossible to once again kick the can, er, box.

And while the legacy story of the post-bail out HAA may be known, it is the recent developments that are largely unknown and where the risks lie. This can be seen in the recent dramatic drop in HAA bond prices.

So why should people care about HAA? Bank of America explains:

The real surprise of the Hypo Alpe Adria (HAA) situation is not that bondholders may lose money, but the sight of the third richest country in Europe by per capita income apparently looking for ways out of paying what are clearly guaranteed debts of a 100% nationalized bank, for HAA debt is guaranteed by the Austrian State of Carinthia under a deficiency guarantee. The Austrian Finance Minister may be targeting a contribution from bondholders, according to reports on Bloomberg on Friday, We would consider it an astonishing turn of events if this actually ever came to pass, with wide-ranging negative implications for investors in not just Austria but potentially Europe as a whole.

What are the other implications from a potential HAA fallout? Here are the cliff notes:

  • Direct impacts: other Austrian banks?

Erste Bank and RBI will likely trade as proxies in any negative newsflow which could pressure their spreads. They aren’t really affected, though, in our view.

  • Indirect: negative for marginal banks

The Carinthia guarantee is a throwback to a very different banking world – when banks enjoyed implicit and explicit institutional support. Those days are over. We underline
that we have moved to a bail-in regime where investors will contribute to the costs of bank clean-up. This has implications for other very marginal banks e.g. the Cooperative Bank in the UK which we think is struggling.

  • Why the fuss? Who pays for HAA?

The European Commission in its decision on State Aid (dated 3rd Sept 2013) puts the capital need at €5.4bn in a stressed scenario. Liquidity needs are put at up to €3.3bn, meaning that the total outlay could be as high as an extra €8.7bn, in addition to the billions that have already been committed by the current and former shareholders. HAA’s total assets as of June 2013 were ‘only’ €31.3bn, recall.

  • What kind of outcomes for HAA?

We struggle to see how those positing bondholder losses get around the guarantee from Carinthia and all that implies. However, with lower cash prices in many of the bonds, perhaps the way forward opens up for e.g. substitution (of Austria for Carinthia) at a discount. There may also be the time value of return of principal to factor in.

  • Negative outcomes: maybe tough to do

If the Austrian Government decides to be tough, then the negative scenarios for HAA bondholders are potentially many. The Government may be somewhat hampered however by the fact that HAA bonds under the 2006 Prospectus are issued under German Law.

* * *

For the extended, and must read, notes on what Hypo may lead to, here is the full note from Bank of America’s Richard Thomas:

Funny HAA HAA or funny peculiar? Implications of Hypo Alpe Adria

HAA – the implications

The emerging crisis re: how to resolve Austria’s Hypo Alpe Adria (HAA) looks like it’s already one destined for the textbooks.

It has been rumbling around in our ‘bank peripheral vision’ for years as a problem child but now seems to be coming to a head because of what appears to be increased political pressure for a solution that potentially involves the imposition of senior bondholder losses in the mix. As such, we need to look at it to see what read-across, if any, there is to other European banks, as it seems to represent a hardening of attitudes to bank resolution amongst one of Europe’s richest countries.

We do not express an opinion or investment recommendation on the securities of HAA itself. Using conventional bank analysis, we believe that HAA is potentially uninvestable not only because of its evident non-viability and the lack of appetite to save it but also because of the allegations of past misconduct, as widely reported in the press, and what appears to be ongoing incompetence e.g. leasing invoicing ‘irregularities’ in Italy provided against as recently as in 1H13 numbers. The outcome for bondholders will ultimately be based on Austria’s view of its obligations and how it deals with the Carinthia guarantee, in our view. We expect that prices will therefore trade according to the last comment from someone important – highly unpredictable. For example, they were down on Friday following comments from the Austrian FinMin, but up this morning on comments over the weekend from the Head of the Austrian Central Bank. A final decision on what happens could be many months out.

For us, the shock of the current situation is not so much about bail-in being applied in the case of a failed bank – like most credit investors, we are used to this by now. The real surprise of the situation is the sight of the third richest country in Europe by per capita income apparently trying to manoeuvre out of paying what are clearly guaranteed debts (HAA debt is guaranteed by the State of Carinthia). We would consider it an astonishing turn of events if this actually ever came to pass, with wide ranging negative implications for investors in not just Austria but Europe as a whole.

Direct implications?

The read across from HAA to other banks is weak, in our view. However, there are a few implications to highlight which may impact spreads.

  • The most directly impacted bank would seem to be Bayerische Landesbank (BYLAN), former owner of the bank and where there is still some outstanding exposure. BofAML analyst Jeroen Julius talked about this in his note on BYLAN last week here. We remain Underweight-70% the BYLAN 5.75% T2 bonds. There is still an outstanding line of €2.3bn from BYLAN to HAA of which we understand €1.8bn was due at end 2013 – by March (if not sooner) then this will need to move to an impaired classification. HAA is saying that these monies are an equity substitute and are trying to claw back €2.3bn already repaid. Our view is that BYLAN may sacrifice some of the outstanding amount in  any settlement but seem unlikely to have to pay back the repaid amount. In the meantime, it seems that they do have a say in some of the levers which Austria may want to use in resolving HAA, so their negotiating stance looks solid.
  • Other widely traded banks where spreads could come under pressure are Erste Bank and RBI. We will likely see these banks trade as proxies in any negative newsflow which could pressure their spreads – their illiquid CDS is probably already trading some 10-15bps wider in senior and ~13bps wider in sub CDS. These banks should be much more sensitive to negative news from Central and Eastern Europe rather than Austria though, in our view, given their focus on emerging economies.
  • RBI’s exposure to Austria reflects its domicile and the corporate ties between Austrian companies and the EE corporates where most of RBI’s operations are placed. It does not have direct exposure to the Austrian complex in the way that e.g. BAWAG or Erste Bank have. The RBIAV 6% is probably down a point from its highs in the last week or so. We see the impact on RBI as quite tangential: if Austria takes a tough stance with bondholders, it’s more negative for sentiment on the banks, given that it implies a reduced sovereign exposure – so hardly negative for the sovereign from e.g. higher debt levels, albeit lower contingent liabilities.
  • About half of Erste Bank’s credit risk exposure is to Austria. It is therefore more of an ‘Austrian’ bank than RBI but that’s not really the problem here, in our view.
  • We are still very comfortable with RBI at this point, especially given the recent capital increase. However, we recommend reducing risk by switching into lower cash priced bonds versus higher cash price bonds. That means out of e.g. the 6.625% bond with a cash price of about €113 into lower cash priced bonds like the 6% (€106.5) or the 5.163%, though this is a much more illiquid security. We downgrade the 6.625% bonds to Underweight-30%.

Indirect implications?

The wider implications of what happens in the HAA case include:

  • If we do move to some kind of forced loss imposition from Austria on these bonds, then it probably isn’t a good moment for bank risk (or indeed European risk). However, as we explain, in this case loss imposition is rather tricky to do, given the existence of the guarantees from Carinthia.
  • Whatever happens, we see the HAA situation as reflecting a growing impatience with marginal and near-failing banks and that a hard line is likely to be followed in resolving them. It underlines that we have moved to a bail-in regime where investors will contribute to the costs of bank clean-up. This has implications for other very marginal banks e.g. the Cooperative Bank in the UK which we think is struggling. Underweight-70% the 11% T2 bonds of the Coop Bank at £123.
  • The Carinthia guarantee is a throwback to a very different banking world – when banks enjoyed implicit and explicit institutional support. Those days are over. Such support often allowed excessive expansion on the back of cheap funding – we can point to the continued need for adjustment in the Landesbank sector for evidence of that.
  • One final point: in our view there would be a negative read-across to the German Landesbanken more generally if a way was found around the deficiency guarantee in this case. The Landesbanken heavily rely on State guarantees. For example, HSH Nordbank has a €10bn guarantee (that helps its capital position) form Hamburg and Schleswig- Holstein.

Funny HAA HAA or funny peculiar?

A special case?

We think there is a good argument for saying that HAA is a special case amongst European banks. One can read its downfall and subsequent full nationalization as a familiar juxtaposition of overexpansion (in the former Yugoslavia) without sufficient risk controls being in place as a result of too cheap funding, owing to its funding guarantee from the Austrian State of Carinthia (currently rated A2 by Moody’s). Yet the narrative is worsened by allegations of serious past misconduct involving money laundering, fraud and possibly murder. See for example The Economist, Sept 9th 2010 or the New York Times, October 20th 2010.

Whilst mismanagement may well have been a feature of some European banks before the crisis; we would hesitate to attribute this level of alleged misconduct, however, to even many of the most stressed European banks. The nature of the allegations, in our view, serves to underline Austrian public antipathy for taxpayers having to pay for the continuing losses at the bank. It also differentiates it sharply from other European, and of course Austrian, banks. HAA’s situation and alleged misconduct is simply too severe to have systemic implications for other Austrian banks, in our view.

Could there be a haircut? Wait!

Bloomberg reports that two thirds of the Austrian public is against the use of further public monies being used to prop up the bank. With such a powerful consensus against such a move and elections next year, it’s not surprising that recently the rhetoric has turned firmly towards finding solutions for HAA that involve imposing losses somewhere – anywhere – other than at the door of the Austrian taxpayer. Hence, the comments from the Finance Minister Spindelegger on Feb 21 that Austria was looking at ways to get bondholders to contribute.

So far, so straightforward: the only problem is that the bulk of HAA senior bonds enjoy a deficiency guarantee from the State of Carinthia. This complicates the burden sharing. We note, by the way, that the EC ruling on State Aid for HAA made no mention of senior bondholder losses at all. Is it really possible to get around the deficiency guarantee and impose losses?

Our understanding is that the deficiency guarantee is not quite like other guarantees. It’s this ‘gap’ that allowed Moody’s to downgrade HAA to Baa2 from A1 on Feb 14. It means that a creditor must have attempted in vain to satisfy his or her claims against (in this case) HAA first before he can use the guarantee, though not if bankruptcy proceedings were already started. Non-payment alone may not be sufficient to invoke the guarantee, absent due process. Even so, it still looks to us that it’s just a matter of time before creditors could ask Carinthia to satisfy their claims. It seems doubtful that the State could afford to perform on the guarantee however with the €12.3bn or more of bonds being many multiples of Carinthia’s income, according to Moody’sIt seems hardly credible that we could be looking at bankruptcy of a Federal State of one of the richest countries in Europe.

Hence, the dilemma. This really would be a new departure for a European country – we’ve had bondholder haircuts before, but not on instruments guaranteed by a governmental entity like Carinthia.

What’s the size of the hole at HAA?

The European Commission in its decision on State Aid (dated 3rd Sept 2013) puts the capital need at €5.4bn in its stressed, or worst case, scenario. Similarly, the liquidity needs are put at €3.3bn in the stressed scenario, assuming that the above capital is provided in cash, meaning that the total outlay could be as high as €8.7bn, in addition to the billions that have already been committed by the current and former shareholders. HAA’s total assets as of June 2013 were ‘only’ €31.3bn, remember, and of this, €3.5bn was already earmarked as for disposal – giving a pro forma number of €27.8bn. To put this in further context, existing capital resources at HAA (equity plus sub debt) are €3bn, and provisions existing already are €3.5bn. Loans net of provisions are ~€17bn.

The now former Chairman of the Bank, Mr. Liebscher, has previously commented that HAA could require up to €4bn of further capital (‘only €400mn a year over 10 years’). Capital needs could vary considerably if assets were transferred out of the regulatory capital environment e.g. to an asset management company, since these require much less capital. We note too that Weiner has reported that the loss for the year at HAA may have grown to €1.8bn (from the €0.8bn at half year 2013) – we think it’s likely that is already reflected in the EC’s numbers though we’re not completely sure.

The €5.4bn of capital needs calculated by the EC could be higher or lower therefore but let’s use it as a basis for thinking about outcomes. Are there any offsets? Certainly,
HAA believes so. It is claiming that €4.6bn of funds extended to the bank in 2008 by BayernLB is an equity substitution under Austrian Law. €2.3bn of this is still outstanding (it’s not being serviced by HAA) but HAA has applied to the Munich Regional Court for a return of amounts that they’ve already paid back. Our core case is that BayernLB will lose some of this money (if only to settle the case) but we have no real idea how much they and HAA would settle at, of course, or if they will settle at all.

How (much) could bondholders pay?

Is it conceivable that the senior bondholders could be expected to contribute a sizeable chunk of the €5.4bn? As of end-June 2013, issued bonds at HAA totaled €11.1bn (we exclude Pfandbriefe); we don’t have data for any redemptions in 2H13. We do however know that there is a very substantial redemption of senior debt on March 17th of €750m (the HAA 3.75% bond). Again, the interim financials showed a cash balance of €2.6bn at the bank which on its own should comfortably cover the repayment. We are more skeptical about HAA’s liquidity, given the continued deterioration of its financial position implied by the reported further €1bn loss in 2H13. Perhaps it is this that is focusing the attention of Austrian policymakers on bondholders.

Repaying this bond would be a substantial cash outflow from the bank and bondholders would be getting par – these bonds are currently quoted at a mid-cash price of ~€96 but the bid/offer is something like 5 points, underlining the huge uncertainty. But it would also probably be taken as a pointer towards future treatment of bonds and so, if repaid, would likely positively impact prices.

The €5.4bn additional capital need would imply a forced senior bondholder haircut of anything from 20% upwards in our view depending on what is considered the pool of bailin-able liabilities, though admittedly we find it quite hard to believe this will be the actual outcome at this point. This number could be kept down not least by any  settlement with BayernLB – and we can’t really imagine that Austria will make a zero contribution here. Even the €5.4bn total capital needs number calculated by the EC is ‘only’ about 2% of Austrian GDP.

We also struggle to see how those positing bondholder losses get around the guarantee from Carinthia and all that implies. It’s this, we think, that is the really interesting part for European bank bondholders. We have seen headlines suggesting that the Republic of Austria would substitute itself as guarantor for the bonds, subject to bondholders agreeing to a substantial haircut.When the bonds were at par, that looked really unlikely, but with e.g. the 2016 and 2017 bonds having traded down so dramatically in the last few days (currently quoted with a cash price at around €85-86), perhaps the conditions are beginning to evolve for this type of liability management.

Ultimately, we think it’s unlikely that Carinthia could pay back bondholders and remain solvent itself – as Moody’s highlights in its downgrade of the State on Feb 14 2014, the debt outstanding is some six times Carinthia’s 2013 budgeted operating revenue. Recall that HAA is 100% owned by the Republic of Austria – it seems unlikely that the shareholder would enforce the insolvency of a regional State without acting itself.

We also wonder if there is some leeway in terms of the timing difference implied by the final payment under the deficiency guarantee – how prompt might this be? Months? Years? Longer? If it could be demonstrated that bondholders would have to wait many years before getting any of their principal back, then perhaps there is the basis for an offer that gives investors liquidity today, albeit at a discounted price.

What could induce bondholders to agree to any changes?

We suspect that this is currently under consideration – there likely is little limit to the scenarios that could be conceived, but it all depends on the view the Republic takes of itself in the markets and its concerns about any likely fallout from its actions. Freezing the liabilities of the bank and the guarantee? Rescission of the guarantee? Anything is possible but perhaps some of these worst scenarios are not the most probable. However, what is clear is that the outcome for bondholders, as we have seen before in these haircut scenarios, is highly unpredictable and politicized.

In spite of the Austrian Finance Minister’s comments to the contrary, we are of the view that most HAA bonds are still with the original, investment grade, investor base. We believe that the rotation into ‘trader’ or ‘hot money’ hands is probably only still at the beginning – only recently have we heard that blocks of bonds have been coming out, rather than the trading of very small amounts. This could change rapidly in the coming weeks if Austria decides to step up the bondholder loss rhetoric of course but at this point, it would be ordinary money managers, we think, who would be absorbing most of the losses, not hot money or speculators.

As an added twist, we note that HAA bonds issued under the August 2006 Prospectus are under German Law (rather than Austrian). Again, this points in the direction of either repayment of the bonds under the guarantee, or a negotiated settlement with bondholders, rather than the imposition of an arrangement by the Austrian Government, since legally they may not have the flexibility to do much else.

* * *

In conclusion all we have to add is that it would indeed be supremely ironic if the “strong” foreign law bond indenture would be tested, and breached, not by Greek bonds, as so many expected in late 2011 and early 2012, but by one of the last contries in Europe which is still AAA-rated. We would find it less ironic if the next leg of the global financial crisis was once again unleashed by an Austrian bank: after all history does rhyme…

Selco On Riots: Do Not Go Out: “You Do Not Prepare to Be a Hero… You Prepare to Survive”

Selco On Riots: Do Not Go Out: “You Do Not Prepare to Be a Hero… You Prepare to Survive”.

Selco
February 21st, 2014
SHTF School

Editor’s Note: The following article has been shared with our community by Selco ofSHTF School. His personal experiences during the Balkan war have been documented in One Year in Hell and are an invaluable knowledge base for any serious preparedness minded individual. When riots break out in your city or the infrastructure systems upon which we depend begin to destabilize there will be confusion, panic and violence. Selco explains what to expect from those around you, and what it might look like in what was once your friendly and peaceful neighborhood. Pay attention, because this is how things really go down when the ‘S’ hits the fan. 

If you are not eating right now take a moment and watch this video of a monkey eating a gazelle.

It feels very wrong for most people to look at this. This shows how much we are out of touch with nature. Most people want to eat meat but not kill it themselves for example. What happens to gazelle is not good and not bad, its nature. It simply is.

When you find yourself in survival situation you get quickly in touch with nature again, and nature is cruel and concept of fairness does not exist.

It is hard to be prepared for that before you experience it. But understanding how nature really is and that we only live in soft bubble protected from true face of nature, is a first step.

I talk a lot in interview in my course about events that lead to total collapse. Here is one more experience I want to share.

selco-nature

When SHTF started, in the time when great majority of us thought that what was going on around us is something like temporary rioting that got a bit out of control, city services still worked in some parts of the city, everybody was waiting for madness to stop.

In that short period before the S. hits the fan with full force, people usually lost their lives because they did not recognize situation.

People were out rioting, stealing, fighting. But all that was still like “moderate”.

At that moment people were still ”inside” the system, so we all were trying to hide more or less when looting was going on in the neighborhood. Police were still arresting people and trying to control things. People were shooting each other yes, but it was not yet like full scale shooting and violence, mostly people were scaring each other with shootings.

One of my friends was involved in shootings in those days, after looting some stores, he got wounded. Wound was not too dangerous, he was shot in foot.

As I said, most of the city services were still working and trying to bring order to that chaos. City ambulances came and picked him up and they rushed to hospital with him.

About one kilometer from place where he got picked up, the group of people that actually shot him stopped the ambulance on some improvised barricade, first shot the driver and then killed my friend in the back of the ambulance. They killed him little bit slower than driver, and more painfully, they used knives. We got there a bit later, too late.

Now this story may sound confusing to you, you may say “it happens in war” but for 95% of folks at that time it was not war, it was something like violent rioting, and those 95% of folks still trusted the system, had trust in police and government that they are going to restore law and order. People still trusted that ambulances are like “protected” and nobody will stop them, not to mention shoot at one.

In this story here that wounded guy and ambulance driver simply did not recognize situation. He was a nice guy, why would this happen to him? Back then I probably would go with ambulance as well if I was shot. It felt very wrong that this happened but was one of first wakeup calls that fair and unfair are concepts of the past.

My friend in the first place should not have been there in that time of chaos. Ambulance driver should have said ”screw it” take valuable medicines and go home at first signs of real violence and total collapse. He did not. It is easy to call him hero and maybe day before or hours before he helped save life of someone else but it was still too high risk to be out at this point in time.

It is easy to say that now, in those time we all still called things by old names, police, trust, government, law, system, penalty…
If that happened maybe day or two later my friend would have crawled and treated his wounds alone, or driver would have refused to drive, or…

Few days after that event s. hit the fan with real force, and nobody had illusions anymore that something temporary is going on or that things get back to normal.

But point is that lots of people died in that short period before realizing that things aren’t the same. You can not still believe in good of people around you, but most people did. This ambulance event was one of many that ended with similar deaths.

So next time, when some rioting erupts in your city, some violence after football game, or some protests because high unemployment or similar and you hear gunshots and screams, and words about people being killed on the streets, stores being looted, you need to hope that it is temporary disturbance but you can not trust in that.

Be suspicious, trust in your bug out bag, trust in your storage, trust in your weapon. Do not go out just “because everyone goes out”. Avoid being greedy and go looting to have a bit more, even if it sounds easy, you prepare to not have to go out.

When you realize how random and brutal nature and violence is, then you realize you do not prepare to be hero, you prepare to survive. That ambulance guy could have helped many more people in later months when we were fighting for survival if he would not have died. But back then, we did not understand situation.

If you experienced situation that reminded you that fairness and unfairness are just concepts in our “civilized” world, please share in comments.

You can follow Selco’s story at SHTF School and learn how he survived one year in hell. 

Reviving the ‘Real World’ Scenario That’s Disappeared from Government Reports | CYNICONOMICS

Reviving the ‘Real World’ Scenario That’s Disappeared from Government Reports | CYNICONOMICS.

Posted on February 22, 2014 by ffwiley

For 50 years or so the federal government has deliberately and to an increasing extent misstated probable future budget deficits. Democrats and Republicans are guilty. The White House is guilty. And so is Congress. Private firms that deliberately misrepresent their financial statements in this fashion would be guilty of a crime… The magnitude of the misrepresentation is breathtaking.

– Former St. Louis Federal Reserve Bank President William Poole, writing in the Wall Street Journal last April

In the op-ed excerpted above, William Poole harshly criticizes government budget projections, including those published by the Congressional Budget Office.

We’re guessing he was especially miffed with the annual budget outlook released by the CBO on February 5th.

Consider that Poole favored the “alternative scenario” that can sometimes be found deep within CBO reports and spreadsheets. This scenario corrects for at least a few of the absurd assumptions in the primary budget projections (the “baseline scenario”) that receive 99% of the media’s attention. Poole called the alternative scenario “the only truly honest and useful effort in town.”

Alas, the alternative scenario is no more – the CBO removed it from their annual outlook. Taxpayers can no longer find meaningful budget projections anywhere in the CBO’s work.

Let’s see if we can fill in the gap.

We’ll start with the baseline from this month’s report:

real world versus baseline chart 1

The chart shows a shrinking deficit over the next couple of years, but don’t get too excited. Apart from other issues we’ll discuss, this is explained by a long-standing prediction for a robust economic recovery, which hasn’t yet come to pass. It’s not so much a budget outlook as a hopeful forecast.

After the supposed economic boom levels off in 2018/19 (according to the assumptions), the figures no longer hide our deteriorating finances. But the deterioration is likely to be much worse than the chart suggests, as we’ll explain below.  To create a more realistic outlook, we’ll adjust the baseline scenario for four different types of deficiencies in the CBO’s approach:

Step #1: We deal with dishonest lawmakers

One of the challenges in budget forecasting is that tax and spending laws are full of provisions that are all but guaranteed to be reversed before they take effect. These dead-on-arrival provisions only exist to create the appearance of fiscal rectitude. And the deception works because the CBO is required by governing statutes to build the phony provisions into its baseline, which the media then endorses as an authoritative view of public finances.

Fortunately, though, the CBO’s new report provides data we can use to neutralize some of the lawmakers’ tricks, as explained in Table 1 below:

real world versus baseline table 1

Step #2: We get real with the economy

The good news in the CBO’s latest report is that they made a few needed changes to the underlying economic assumptions. The bad news is that they have much more to do – the economic outlook remains unrealistic.

Once again, though, we can use data in the report (Appendix E, in this case) to improve the projections. We explained our adjustments in detail in “Why Mr. Smith Has More Work To Do,” and they’re summarized in Table 2 below.

Note that we’ve accepted the CBO’s strongly optimistic outlook for the next four years, not because we like it but because it’s easier to show inconsistencies and come up with a more realistic scenario in later years (after the assumed recovery reaches historic extremes).

real world versus baseline table 2

Step #3: We put on our actuarial hats

It doesn’t take much business experience to know that budget plans are regularly thrown off track by unexpected events, and the federal budget is no different. In fact, the CBO always acknowledges the risks of such setbacks. Yet, its governing statutes don’t permit accounting for most types of unexpected events in the baseline scenario.

In any case, the CBO doesn’t provide sensitivity analysis estimating their possible effects. Here’s what we had to say about this in an earlier post:

[M]any events are deemed too unpredictable to be estimated – an excuse that defies both collective knowledge and common practice. Actuaries, accountants and financial risk managers are all trained to place numeric estimates on unforeseen risks. Insurance premiums, credit loss provisions and investment decisions are all based on these numeric estimates.

The key is that any positive number is better than nothing. We can see the problem with nothing just by noticing that the debt debate almost never gets around to the risks of recessions, financial crises, wars, natural disasters, and so on. Political leaders and pundits habitually ignore the CBO’s warnings that these events will occur from time to time, relying instead on its incomplete projections.

In the same post, we explained our approach to adjusting budget projections for unforeseen events. One of our recommendations, which accounts for the effects ofautomatic stabilizers and doesn’t violate the CBO’s statutes, was implemented by the CBO for the first time in this month’s report. The other adjustments are summarized in Table 3 below:

real world versus baseline table 3

Step #4: We recognize that debt owed to trust funds is, indeed, debt

The question of whether to look at gross debt (including obligations to trust funds such as the Social Security and Medicare hospital insurance funds) or net debt (excluding those obligations and other intra-governmental holdings) is a tired subject. It’s probably fair to say that net debt advocates don’t care much about debt to begin with, while those who point to gross debt do care. We offered our two cents here. Among other points, we described the paradox that fiscally profligate governments can lower net debt (but not gross debt) by merely expanding certain types of entitlement programs, even if the expansions are fiscally unsustainable. In fact, America’s current financial position shows that this is exactly what we’ve done. For this reason and others, trust fund debt should be added back to the net figures highlighted by the CBO.

Putting it all together

Note that the figures in the tables above exclude debt service costs. After breaking the baseline into components and making our adjustments, we then create new projections that include recalculation of debt service.

The Steps 1 and 3 adjustments are combined into a projection that we call “Congress does what it usually does,” while the Step 2 adjustment is blended into our “and the economy does what it usually does” projection. The Step 4 adjustment is shown in the “and trust fund debt counts” projection in the final chart.

Here are our results, for deficits first and then debt:

real world versus baseline chart 2

real world versus baseline chart 3

While the charts speak for themselves, we’ll turn again to Poole’s op-ed to sum up America’s finances:

U.S. fiscal policy is in a chaotic state. Policy decisions are wrapped around the convoluted budget accounting that Congress and the White House use to obfuscate, dissemble and hide what is really being done. That is a tragedy, and our democracy is worse for it.

Indeed.

(Click here for an appendix to this post containing the year-by-year added deficits for each of our adjustments, in dollars.)

Two Ice Floes | Two Ice Floes

Two Ice Floes | Two Ice Floes.

Blue_ice_cubes

TWO ICE FLOES

Regardless of who we are or where we live one truth seems unmistakably clear; we live, work, play, think and just plain exist in two very different worlds simultaneously, while moving seamlessly between and within them in real time. The more obvious of these two realms is the physical ‘real’ world that lay all around us, the place where our physical bodies reside and the space in which we live and eventually die. And then there is the dominion of our (non local) consciousness, some might call it the ‘mind’, ‘soul’ or ‘self’, the place only ‘I’ may find me, myself and mine.

Essentially we exist on two ice floes, which for the vast majority of us are permanently locked together and seemingly inseparable. But for those of us who begin to open our minds and plumb the depths of the rabbit hole, there is an increasing awareness that these two ice floes can and will not only move separately, but at different speeds and levels of awareness.

For the most part we believe that the first world, the so called ‘real’ world, is authentic and genuine, while the second place is just a space, a figment of our mind. And I guess the proof of this lay within our global insane asylum, for if we inmates were not so crazy in the mind, then our world would not be so very confined. But for this particular inmate it is well past time to release me, myself and mine from the self imposed ties that bind.

I am not a victim and I am not a slave. I am what I decide I am both in the physical realm and within the space of my mind. For far too long I have allowed…….no, more honest words would be passively enabled, my physical world to be fused and formed not by my own mind, not by my own inner being, my ‘self’, but by all the other minds with whom I share this physical world, some of which are much more nefarious and soul sucking than me and mine.

My ego proudly asserts that I alone make my fate, and to a large extent this may be true, at least in the ‘real’ world. But up to this point if it is true it’s only because I have allowed the prevailing default mind control program to dominate me with only slight alterations and modifications to suit the egotistic belief that I am unique in a world not of my own making.

For the most part I live in a reality created by those who do not have my best interests in mind, who wish to control my mind and subvert my consciousness so that the body obediently follows.

My Cognitive Dissonance is that up until a half dozen or so years ago this Cog did not believe he was just another custom colored gear in the reality machine operating system, an emotionally comforting self deception that I desperately wanted to believe in order to rationalize my conformity.

Few wish to march to a different drummer, to be a self imposed outcast from the herd, a contrarian, a loner. Please, please, may I join your self-affirming pod? Born a perfectly unique individual, we spend the rest of our physical lives trying the die just like all the others. Conditioned from birth to believe that ‘I’ was only fit to be part of a ‘we’, breaking up is hard to do.

As I began to seek out answers to the questions that were rapidly forming in my mind and soul I quickly found that there were no end of people, places and things that promised me they had “The Answer” (which as we all know is actually 42). The problem was that often, if not always, “The Answer” promoted by “A” conflicted with “The Answer” offered by “Z”. And yet when examined individually, and most importantly with an open mind, they both made some sense while isolated from both worlds.

Worse, regardless of whether I was examining explanations promoted from the ‘real’ world perspective (aka the scientific worldview mindset) or the esoteric point of view (the woo woo world as some would call it) they all ultimately required blind ‘belief’, a giant leap of faith that this was truth and that was not. “They” of course would loudly claim that this was not so, that it was the other side that required the faith. See…here is my proof.

The one common denominator I consistently found among the self professed truth purveyors was that whoever was speaking from whatever point of view they were promoting, the narrative was always one of self assured confidence that wisdom and light was their exclusive domain. No wavering, no self doubt, no hedging allowed when spouting “The Truth”. To express any uncertainty whatsoever was, and still is, considered a sure sign of weakness and will never be entertained. This belief is nearly universally held and is of course promoted by all self proclaimed authorities.

Two Worlds

While the word “Propaganda” has been almost completely intertwined with government controlled information, the reality is that we are all propagandists in the purest sense of the term. When we speak, write or communicate an idea or thought, we tend to present our best argument in favor of our point of view and either diminish, ignore or subvert contrary information that does not help our case and might actually torpedo it.

I am just as guilty of this practice as anyone else, though I do try my best to at least expose myself as a propagandist by declaring myself one with as much certainty as possible. What I try to do in an attempt to compensate for what comes naturally to all of us, primarily because we have been immersed in this authoritarian culture from birth, is to inject a smidge of humility into the equation by exposing my flaws, doubts, confusion and uncertainty. In short, to be aware of my ego and its sometimes subtle, sometimes enormous, influences upon “me”.

There is a saying I am sure I’m about to butcher. There is your truth, there is my truth, and then there is the ‘truth’ which can usually be found somewhere in between, possibly even in the middle. I suspect the actual location is not fixed and will almost certainly not be found between the two promoted “truths” simply because it would be outrageously narcissistic to proclaim that all the undiscovered territory is safely contained between the two “know” end points. It is the epitome of egotistic expression to confidently claim that I occupy one end of the universe, let alone the very center.

Even if one does not accept this premise, and you most certainly should not simply because I am promoting it, what is one to do if one is lost in the wilderness without an accurate compass, maps or signposts, also known as static answers? Well….if you want better answers, the only solution is to ask better questions. And the only way I can see how we can formulate better questions is to expand our perceptive minds and awareness and dump our preconceived notions and beliefs overboard.

I don’t have all the answers. In fact I only have a few. What I have, at least when I can convince my ego that new knowledge is not threatening to it, and thus to me, is the desire and capacity to explore and expand my severely limited universe and seek out those better questions. I am willing to go it alone, but it seems silly to even try when I am not alone in my desire to look beyond my nose and push back the barriers of the ‘known’ body of knowledge and wisdom.

Better Questions

How do you eat an elephant, particularly one that just appeared out of nowhere right in front of your eyes? One bite at a time is the only answer that works for everyone and one that seems to work for me. Over the last seven years, as my growing awareness of the grand facade grew, I began to make changes both personally and professionally, some small and seemingly inconsequential, and others huge and life altering. With the help and encouragement of Mrs. Cog I am once again turning the wheel of life and embarking on another life altering metamorphosis.

Would you care to join me, to observe or even to participate, in a real time thought experiment of alternative reality creation played out in a semi public forum? If you would like to do so then may I introduce you to a new portal into the mind of Cognitive Dissonance?

Cognitive Dissonance

“House Of Cards”‘ Top 3 Lessons For A Naive Voting Public | Zero Hedge

“House Of Cards”‘ Top 3 Lessons For A Naive Voting Public | Zero Hedge.

Unlike so many television shows, House of Cards shows how politicians use their power to help themselves and their friends – not the people who elected them. The fictional character at the center of the series, Frank Underwood, shows us the pitfalls of bureaucratic democracy. As professor Steve Horwitz explains in this brief clip, the series exposes the truth of public choice theory, rent seeking behavior, psychopathic tendencies, Machiavellian inclinations, corruption, and scandal. House of Cards is not that far from reality theses days and the following 3 lessons should be heeded by every voter.

 

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