• Doug Casey: Prepare for Social Upheaval

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    L: Tatich,
    I’m in Minsk, where I just recorded/participated in an illegal march
    through the city. Opposition supporters rallied… there has been
    some violence… I hear they’ve broken into a government building,
    but I have not been able to confirm that yet.

    Editor’s
    Note
    : For new readers, “tatich” is Mayan for “big chief.”

    Doug:
    Sounds like fun. Maybe some appropriate music should accompany the
    festivities. The Marseillaise worked for the French in the
    1790s… let me think… you should play them Street
    Fighting Man
    on your iPhone.

    L: I
    should have stayed longer. The crowd seemed to be breaking up, so
    I came back to my flat, and now I’m seeing reports that the “special
    police” have turned violent. I left friends there…


    Estimates vary
    between 10,000 and 50,000 people who took to the streets of Minsk,
    in spite of ice and snow, to protest election fraud in Belarus.

    Doug:
    Big group. It’s always an interesting question what it takes to
    get people out in the streets, and then what controls their mood.

    L: I’ve
    got a bunch more pictures like that. Too bad they don’t have V masks,
    as in the film, V
    for Vendetta
    .

    Doug:
    I’m a huge fan of Guy Fawkes, who is said to be the only man who
    ever entered Parliament with honest intentions. But even more so
    of V, his near-future alter ego. We should get them some V masks
    for next time. Everyone, everywhere, should have a V mask hanging
    in the closet, awaiting the signal to put it on.

    L: My
    friend is back — thank goodness! She says she was on the front line,
    as the police formed up and pushed people off the square. She says
    she shouted at them, “What are you doing? We’re your brothers and
    sisters!” and that they were ashamed — but they followed their orders…

    Doug:
    I’m glad she’s okay. That’s the only problem with these things,
    they’re inherently volatile, unpredictable, and can be very dangerous.
    Sometimes it goes the way of Tiananmen Square in 1989.

    L: The
    TV news here is saying that it’s a smaller number of angry drunk
    people. It’s a lie — I was there, and the crowd was absolutely positive
    — almost giddy — with people laughing and helping each other. Some
    strangers helped me climb up on a frozen fountain so I could take
    pictures. They used the same lies as last time, in 2006; the authorities
    said the tent city that had sprung up on the main square was just
    some drug users and advised people to stay away for their own safety.
    They showed pictures of syringes they claimed to have found in raids,
    over and over again on TV. This time, they are showing footage of
    some people breaking the glass door of a government building — my
    friend says it was KGB agents who provoked the action, that you
    could see them using hidden radios at times. I saw a guy in plain
    clothes smash a camera out of a woman’s hands, so I’m pretty sure
    the authorities do have agents in the crowd.

    But they’re
    not going to get away with it, this time. There were too many people
    there — this is a small country, and if 20,000 people who were there
    each tell 10 others the truth, that’d be about a fifth of the population.
    People are going to know what happened, this time.

    Editor’s
    Note
    : Two weeks later, Doug and Louis continue the conversation.
    Meanwhile, thanks to the Internet, powerful
    images
    of the violence
    of December
    19
    have made the truth
    available to all.

    Doug:
    About Belarus… It’s disgusting how not just lazy but completely
    stupid and dishonest the media generally are. The reporters appear
    to be chosen for how credulous and psychologically pliable they
    are, although factors like how well their hair blow dries and how
    many producers they sleep with must also be important. They basically
    just parrot what they are fed from the local media, which, certainly
    in the case of Belarus, is all controlled by the state — and composed
    of people just like themselves. Then running dogs of the establishment,
    editorialists like Thomas Friedman — who’s never had one thought
    in his whole life that was both original and correct — will spin
    it one way for their crowd, while rabid dogs like Sean Hannity —
    who’s rarely right, but never in doubt — will spin it another way.
    None of them actually have a clue. I believe 90% of everything in
    the news is bullshit. I watch it and read it purely for entertainment.
    And to have an idea what other people are supposed to believe.

    But sorry to
    go off on a tangent. How are your friends in Belarus doing?

    L: Only
    one of my former students was arrested, but many friends of friends
    were in jail. Most did 5 to 15 days’ time and are out now.

    Doug:
    So, what are the implications? Belarus is famous for being Eastern
    Europe’s last communist dictatorship — is there another “Orange
    Revolution” in the making?

    L: Not
    right away. The dictator, Lukashenko, actually does have a lot of
    support, particularly among pensioners and other dependents of the
    state, who know their apple carts will be upset when real economic
    reform hits the country. But the regime’s brutality has been well
    and fully exposed. Even the pensioners will have to admit, if only
    to themselves, that they are living off a despotic system.

    I do think,
    however, that Lukashenko may have just made a big mistake. Before,
    the opposition was very splintered, centered on a variety of leaders
    with very different views on which way the country should go. The
    opposition leaders remain as before, but now a large portion of
    the population sees the dictatorship for what it is, and they are
    joining hands, at least in spirit, to oppose it.

    When I went
    to one of the jails in Minsk with my friend, to take a toothbrush,
    a change of underwear, etc., to a friend of hers, I found that people
    there were giving approved food and water to those who brought care
    packages for other prisoners and may not have known the rules. Some
    others were arrested for singing Christmas carols outside of another
    prison. I feel a sense of solidarity forming among these people.
    Differences remain, but an opposition community is forming, and
    that could become a powerful force.

    But it will
    take time to grow. People are afraid. They don’t want to get blacklisted
    and lose their jobs. The police are still raiding and searching
    homes of suspected troublemakers.

    Doug:
    I looked it up, and after the U.S., Belarus has the highest percentage
    of its population in prison. A bit surprising, in a way, because
    the poorer the government, the fewer people it can afford to imprison
    — but perhaps they make up for their lack of means with extra desire.
    Unfortunately, the U.S. has lots of both.

    Did it ever
    come close to the edge? Might the people in the square have decided
    to fight back if things had gone a little differently?

    L: I
    doubt it. Not this time. The police were outnumbered, and you can
    see in some of the video footage that they look scared at times.
    But they had the armor, and I’m told the army was there, behind
    them. The people were not looking for a fight; they were doing the
    Belarusian equivalent of holding hands and singing Kumbaya
    — until the police started beating them with their night-sticks,
    at which point they fled.

    But next time…
    it could get really ugly. And if the crowd gets big enough, the
    military could even switch sides, as has happened in other peaceful
    revolutions.

    Like many so-called
    turning points in history, nothing changed that night. Most people
    went back to work, to school, to the stores, as usual the next morning.
    It’s more like an inflection point; I believe people will look back
    on that night and see it as a shift in the tides that will eventually
    lead to great changes. Historic days don’t exist on their own: months
    and years of building social pressures lead to them — they are just
    the exclamation points at the ends of long sentences, or even paragraphs
    and pages of history.

    What about
    you, Doug? You’ve traveled in active war zones — did you ever see
    history being made?

    Doug:
    I’ve been most fortunate wandering through the valley of the shadow
    of death. Statistically, though, even in the worst places, when
    hundreds of people get killed — which is a considered a big deal
    anywhere — the odds of dying are thousands to one against. As a
    matter of fact, for discretionary travel, my first choice is always
    some place on the U.S. State Department’s “stay away” list. I hate
    crowds, and due to the hysteria, the hotels, restaurants, attractions,
    and taxis are empty. So they appreciate your business, and prices
    are low. And, if you’re actually concerned about that stuff, security
    is usually much improved after an “event.” So I was in Israel during
    the last intifada. I went to all the hot spots in Rhodesia during
    the war… Guatemala and Colombia when the guerrillas were active.
    There are lots of others…

    In point of
    fact, though, I generally feel more at risk at a traffic stop in
    the U.S. these days. It seems that U.S. cops have been brainwashed
    into thinking that any contact with the public may actually be with
    a terrorist, or rampaging militia member, or a heavily armed religious
    cultist. Things have definitely changed in the last ten years, and
    these guys all seem to be on a hair trigger. I really don’t like
    getting near droopy-eyed teenage soldiers in the Congo, but I now
    consider U.S. cops almost as dangerous.

    All those soldiers
    and police in Belarus were essentially average people — although
    I’m sure, like police everywhere, more than a few have extra Y chromosomes.
    The key is that when they put on uniforms, they do as they’re told.
    They’re no different from their U.S. counterparts. Always remember
    with cops and soldiers: their first loyalty is to each other. Their
    next loyalty is to their employer. They aren’t there to “protect
    and serve” the people in the street. People are all potential criminals
    and rioters. The people are the last priority, contrary to the fairy
    tales.

    L: Hm.
    You know, things didn’t go over the edge that night I was on the
    streets in Minsk, but I was thinking about how quickly things can
    change. The blood the police shed, beating peaceful, unarmed people,
    including women, reminds me of the amazing speed with which the
    “thin veneer of civilization” can be stripped away. The former Yugoslavia
    comes to mind: a relatively wealthy European country turned into
    a bloody chaos of multiple warring factions, war crimes, and mass
    graves, all in a matter of weeks.

    Doug:
    And as you point out in this month’s edition of the International
    Speculator
    , no matter where you live, even in the United
    States, it’s dangerous wishful thinking to tell yourself, “It can’t
    happen here.”

    L: Maybe
    especially in the United States. I used the links you sent me of
    the videos showing the police
    joining the looting
    in New Orleans, and National
    Guardsmen confiscating guns
    from people who wanted to be able
    to defend themselves from looters, in the wake of Hurricane Katrina.

    The big question
    is not, “Can it happen here?” but, “Will it?” Or maybe, simply,
    “When?”

    Doug:
    You know I’ve been saying for years that the coming crash is going
    to be even worse than I think it’s going to be. The correction in
    2008 was very scary, but minor by comparison. A warmup. Minor trembling
    in the ground, just before Krakatoa blows.

    That the world
    financial system will have to face a reckoning day has been pretty
    much a given since the U.S. took the dollar, the world’s reserve
    currency, off the gold standard. Since then, decades of profligacy,
    not just in the U.S., but all around the world, have distorted the
    global economy to the breaking point. It’s only lasted as long as
    it has because of the great increases to productivity the computer
    and other wealth-creating technologies have created, and the fact
    that many individuals still produce more than they consume and save
    the difference — even as governments have stepped up their efforts
    at wealth confiscation.

    I thought things
    might go over the edge in 1980, but I was early. I underestimated
    how much wealth there was left in the world for the politicians
    to plunder. But now, while there is more physical wealth in the
    world, in the form of factories, homes, powerful technologies, etc.,
    there is also massively more debt. Governments — first-world governments,
    not just banana republics — are sliding towards default, and in
    the West most individuals have little or no savings. In the East,
    many have savings tied up in a deflating gargantuan real estate
    bubble.

    For all the
    reasons we’ve discussed in many different ways, the Greater Depression
    we’re sliding into is going to be catastrophic for the old world
    order.

    Uneconomic
    patterns of production and consumption are going to be liquidated
    — they have to be — and that’s going to smash a lot of people’s
    rice bowls. In today’s richest societies, people won’t be able to
    move back to the family farm the way they did in the 1930s; there’s
    no farm left in most families. There’s not even that much family
    left in many families — instead of extended families that care for
    their elders, who educate the young while the able-bodied adults
    work, we send our elderly to fade away in institutions and our young
    to be indoctrinated in other institutions, and we barely know what
    our brothers and sisters are doing, let alone our other relatives.
    What happens to the huge masses of such people when unemployment
    benefits can no longer be extended?

    Yes, “It can
    happen here,” and it’s going to. Maybe not this year, maybe not
    for several, but when the real crash gets underway, it’ll be unstoppable,
    and it will destroy the status quo with a speed that will leave
    most people still waking up to the danger after the harm has already
    been done.

    L: Sounds
    like a sci-fi horror film…

    Doug:
    I know, and it’s unsettling to sound the alarm. People dismiss you
    for being a Chicken Little. But the plain truth is that we’ve already
    gone beyond the point of no return. There is simply no way the U.S.
    government can pay all its obligations without defaulting or destroying
    the dollar — which is just a different kind of default. The same
    goes for a lot of other governments. There is no way out that does
    not force a lot of people to make painful adjustments.

    L: Are
    you talking blood in the streets or something more like a chapter
    13 bankruptcy, where everything gets sold off to satisfy creditors?
    Do you see the world of Mad Max ahead, or are we all going to work
    for the Chinese?

    Doug:
    Both could happen, but I’m leaning toward the latter. I think most
    of the world’s wealth will still exist, but it will change hands.
    Better start learning Mandarin. You’ll need it to do business in
    the new world after the crash — or to get a job as a houseboy, working
    for those who do learn to do business in the world after the crash.

    L: How
    else do we prepare, besides learning Mandarin?

    Doug:
    You know my mantra: liquidate,
    consolidate, speculate, and create
    . To which I add and must
    emphasize again: diversify
    your political risk
    . I truly believe that increasingly desperate
    states will be the greatest risk to your wealth, going forward.
    The swelling masses of have-nots are going to turn their increasingly
    hungry eyes on the haves, and the politicians are going to pander
    to them — and these days, if you have any net worth at all, you’re
    a have. When the food riots start in New York, LA, London, Paris,
    etc., I want to be good and far away.

    L: But
    isn’t that true all around the world? Is there any point in trying
    to escape a global crisis when it’s global?

    Doug:
    Well, in places where people live closer to the land, where farmers
    can shrug and go back to growing food, the people are less likely
    to turn cannibalistic — metaphorically, or literally. Countries
    with economies still largely focused on agriculture, or the production
    of raw materials, and, frankly, where the people are used to poverty
    and inequality, should see less social unrest, even as the world’s
    former leading economies go off the deep end. Countries that have
    already had tough times have some advantages, such as having no
    debt. That’s one reason I’ve
    been investing so heavily in Argentina
    .

    L: I
    had that thought about Paraguay, too, when I visited a couple weeks
    ago — and they have no personal income tax in Paraguay.

    Doug:
    A sound thought. I’m looking into land there as well, although,
    unlike Argentina, Paraguay is quite isolated and rather backward.
    Just in case the world fails to make it through chapter 13 in a
    reasonably orderly manner — if we are looking at apocalyptic Mad
    Max-type scenarios — I’m setting things up in Argentina so that
    we are growing our own food. If nothing happens, we’ll have the
    benefit of great organic produce, finely prepared and served. For
    what it’s worth, I’m increasingly averse to “industrial” food, full
    of steroids, antibiotics, and pesticides. Stuff that’s packaged
    in a factory and frozen for months, or shipped thousands of miles
    before you eat it. I understand the necessity of all that for the
    world at large, but I prefer something better. And more secure.

    L: That’s
    why I’ve placed some chips on your La
    Estancia de Cafayate
    project myself. Shameless plug to our good
    readers: you should check it out. It’s hard to imagine a nicer place
    to weather the storm if things get really bad.

    Doug:
    Not if. When. But even if I’m wrong about the Big Picture over the
    next few years — after all, there’s always a possibility that friendly
    aliens will land on the roof of the White House and present Obama
    with a magic technology that cures all the world’s ills — I’ll still
    have excellent diversification, and an utterly fantastic place to
    hang out, play polo, and perfect my nonexistent golf game…

    L: Do
    you think we’ll have much warning for when it’s really time to get
    out of Dodge?

    Doug:
    The warning bells are ringing loudly now. The time to prepare is
    now, before currency
    controls
    get any worse. Once they do put America and Europe
    on financial lockdown, that’s when it’ll be time to treat those
    countries as places you visit, rather than live. I write about these
    trends in The
    Casey Report
    , and I’ll do my best to give readers as much
    warning as possible. While also looking for the lowest-risk and
    highest-reward investment opportunities in the world. I’d like to
    think that some day we’ll be able to buy Belarusian property, when
    10:1 gains seem plausible.

    L: Me
    too. It’s precisely because Belarus has been held back while the
    rest of Eastern Europe has surged ahead that I like it so much as
    a contrarian play. But what if the world manages to avert financial
    Armageddon?

    Doug:
    Then we change our strategies. But right now, the train is absolutely
    barreling down a track that ends in the air over the edge of a cliff.
    And you got a feel in Belarus, for yourself, just how quickly things
    can turn when you skate too close to the edge.

    L: Indeed
    I did. By the way, if any readers want to help the victims of the
    brutal regime in Belarus, my friends at the International
    Society for Individual Liberty
    have agreed to accept charitable
    contributions for that purpose. People can call to make arrangements:
    (707) 746-8796. I’m a director of ISIL, so I can make sure the funds
    go to people who were jailed, fined, or blacklisted (lost their
    jobs, etc.) as a result of their participation in the protest of
    December 19 or other opposition to the Lukashenko regime.

    Doug:
    I don’t
    generally believe in charities
    , as you know, but there are exceptions…

    L: Okay
    then — but let’s try to find something more positive to discuss
    next week.

    Doug:
    Sure, but I think this was an important topic. It’s important for
    people to realize that it can happen here — wherever “here”
    is for them. They should realize and prepare.

    L: Prepare
    for the worst, hope for the best. We’ll do all we can to help.

    Doug:
    Right. Until next week then.

    In today’s
    interlinked global economy, it’s more important than ever to not
    only look at market gyrations — politics has become inseparable
    from the economy in most countries. Every month, Doug and his fellow
    editors of The Casey Report discover and analyze critical
    big-picture trends — to determine which way the economic, political,
    and social winds blow and how investors can profit from it.

    Try The
    Casey Report for 3 months, risk-free, with full money-back guarantee.
    More
    here
    .

    January
    6, 2011

    Doug
    Casey (send him mail)
    is
    a best-selling author and chairman of Casey
    Research
    , LLC., publishers of Casey's
    International Speculator
    .

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