Ah, let’s have a little fun today. I’m going to float a conspiracy theory that I just developed this morning. A few dots connected in my mind, and the dots made me pause.

Now, keep in mind, this is only a theory. I’m toying around with ideas, and I don’t believe them. But the fun part with weaving a story together is knowing that it could be possible given the information you have at hand.

After reading an article on Time’s website regarding Ben Bernake’s recent moves to salvage Bear Stearns I re-thought about my personal view of Alan Greenspan. A few key statements in the Time article made me start thinking harder about Mr. Bernake as well (I’ve never given the guy much thought, as I thought he was nothing more than Greenspan’s flunky). What were the dots? Why is it worth your time to read further? Here, I’ll give you the dots first….. one sentence set me off…..

Bernanke, himself an authority on the Depression, has been pushing ever more creative and aggressive means to avoid this, mostly by lending cash or Treasuries in exchange for mortgage securities.

What caught my attention, and has been over the past week, is that Bernake is an authority on the Great Depression. At this current moment in time the Fed has been examining the Great Depression at length. We’re apparently right on the edge if folks know that those running our banking system are examining that period of time closely.

So, how does all this work up to a fun theory that I’m toying with? Well, let’s talk about my personal thoughts on Greenspan for a moment.

During the 90’s I read a great deal about Alan Greenspan. Being a “gold bug” I learned that Greenspan was extremely vocal about NOT going off the gold standard in 71. He actually wrote a paper on the subject. Beyond the paper, Greenspan had deep concerns regarding leaving the standard, and the power of a central bank without a peg for a currency.

During the 90’s Greenspan went on to manipulate the money supply almost at will. Without the check of a peg for currency Greenspan helped to create and exacerbate the Dot Com bubble (sock puppets anyone), and from the tech bubble we moved immediately into the real estate bubble. Any person without rose colored glasses could see both bubbles forming, and more importantly, could trace the bubbles back to the easy money policies instituted by Greenspan.

I’ve always wondered, “Did Greenspan change his mind between the 60’s and the 90’s?” Sure, it’s possible. Actually, I’ve always thought about 3 options regarding Greenspan embracing the easy manipulation of an economy after strongly opposing such manipulations a few decades earlier. The options are:

1. Greenspan completely changed his mind, and now believes that the “right” person could guide an economy without a pegged currency, and that manipulation is not dangerous.
2. Greenspan forgot everything he believed back then.
3. Greenspan decided to manipulate the economy in such a way as to prove his thesis from the 60’s correct. Economists often show up as petty dictators in 3rd world nations, and that’s a fact. They’ve got an inherent belief that they can move an economy with the right models, etc. And from my personal perspective, given the opportunity, I too would attempt to prove my thesis correct even at the expense of the global economy. Ah, ego is fun.

I’ve always toyed around with option 3. Could the former chairman be so devious as to set out to create bubbles and bring our economy to the brink? Anything is possible. And I know I would have a hard time not doing it if I were in that role (yes, I’m grinning and doing a tongue & cheek thing here).

I haven’t run through my 3 options as to why Greenspan did what he did in a while. But reading this morning’s article regarding Bernake and Bear Stearns something struck me.

Bernake is an authority on the Great Depression.

Both Greenspan and Bernake were well aware of the causes of the Depression. One cause was massive mal investment and over investment in companies that would not fly long. Bubbles formed, just like the bubbles of the past decade.

It struck me. One man who warned of using a fiat currency (Greenspan) and one man who has studied the Depression and it’s causes (Bernake) spent a lot of time together at the Fed. Could they have chatted together, shared the experiments they’d like to conduct, and reached the conclusion they could help each other out?

Hey, if you create huge destructive bubbles I bet I could navigate us through them….. What do you say?

Well, you really think you could avert a Depression if we lowered real interest rates to nearly nil, over leveraged an entire country, and obliterated the value of the currency?

Not sure really, but I sure wouldn’t mind trying just to see what happens…..Want another beer?

It’s only a theory, and not one I believe, but you have to admit, it’s plausible. Take one guy who warned of leaving a pegged currency, and then demonstrates over a decade and a half that he was right, and take another guy with an interest in the Depression and how it could have been averted. Put them together with a few cocktails and you never know what could happen.

Ah, the fun things that bounce through my mind!

Once again, I find myself thinking back to my recent Borrego trip.  Actually, I’m thinking about all of my travels with the Airstream in the past few years.

This morning my inbox started chiming away to tell me that e-mail was coming in.  The latest round of accepts and denials of photos from the Borrego trip have been evaluated by Dreamstime.

A new angle on my stock photography efforts shows through in the latest submissions to the site.  What’s different?  Well, how about a person in the shots?  Yup, I’ve done some climbing photos with people, but you never really see who they are.  They’re working up the rock.  I think I’m expanding the possibilities a little more adding people in.

My friend Bill was kind enough to sign a Model Release, and now his image is available to designers, magazines, and anyone else looking for stock photography.  Thanks Bill!

As I find my niche with stock photos I find myself wishing I could revisit so many places that I traveled to in 2006.  Over the course of my travels I was still feeling pretty sick, tired, and adjusting to a lot of change.  While I saw many cool places I didn’t enjoy them too much.  So many other distractions.

Now that I feel well and normal again I know exactly where some amazing shots can be found.  And I’d love to return to document the out of the way spots with a new perspective……. ah, maybe at some point……gas prices need to stabilize first though….. 

Over the past few months I’ve learned something.  Arizona has winter too.

Well, at least Northern Arizona has winter too.  Shocking, but true.  It has a lot to do with the elevation here!

But I’ve been watching the forecasts with great interest.  See, the winds have returned (not windy today though), and with them I expect the warm up.

Last year when I arrived each day warmed further, with afternoons in the 60’s and evenings in the 30’s and 40’s.  Perfect weather in my opinion.  I like it cool, but during the day I like getting out and about.  60’s and 70’s are perfect for hiking and climbing, and the 40’s are perfect for sleeping.

So, my priorities are hiking & climbing, and then for the evenings sleeping.  Have you noticed I don’t write about Whiskey Row or Night clubbing?  Yeah, I’m a little dull when it comes to night time activities. 

With the return of better weather you can expect more sunset shots, more climbing shots, and more outdoor shots once again.  And I’ll have more local trip reports.  While I’m not “on the road”, the Prescott area has so much to explore and report on.  For anyone on the road, the area is worth a stop, and a multi-week visit if you can swing it.

And yes, this morning’s temperature is 32.  Brrrrr.  Fortunately when it’s above 30 heating the Airstream is easy.  20’s is a different story altogether.  But check out the highs for the days…..and it’s only March! 

After my sleepless night Sunday I countered with a super restful night last evening.  Very glad to get some much needed sleep.

In addition to the the weird market action that bothered me the other evening, one other thing was keeping me up.  See, I got into some food I shouldn’t have a few days ago.  Always be sure that it really is Soy Cheese when they say it’s Soy Cheese.  Otherwise you could end up having extreme stomach troubles for days.  You’ll also end up needing your Benadryl.  That’s what’s been going on the last few days.

Last night I finally got that much needed rest.  And my tummy is finally becoming calm.  Finally.

So, 8:00 p.m. bedtime, one wakeup @ 3:00 a.m., but then right back to sleep.  In total, about 9 hours.  Finally.  And I can tell that the inflamation in my gut is now calming.  I was worried it would continue, but things have eased.  Whew!

Little else to blog today.  I’ve been run down due to my food incident, so I haven’t been too exciting.  The most I’ve been doing extra would be tons of submissions to Dreamstime (more photos from Anza-Borrego).  Other than that, super dull.  Hey, it happens, and it’s all still happening in an Airstream. 

Before bed I made the mistake of looking at the latest metals prices on Kitco.com. I hadn’t looked since Thursday, as I don’t always watch the markets close (you have to take a day off here and there).

Gold was spiking more than $20 per ounce last evening…..why? I checked Prudentbear.com to see what’s going on. Bear Stearns. Ah, there was the explanation. The near collapse of a major financial institution, and it’s rescue.

From the New York Post I learned the following:

The panic struck trading desks early in the morning when the Federal Reserve announced that it was invoking a procedure from the Great Depression to save Wall Street giant Bear Stearns from going belly-up.

Click the quote above to read the entire article, entitled “US Economy’s Collapse Fear.”

So, the Fed moved to save Bear Stearns. Rumors several weeks ago indicated that the $200bn planned bailout for the financials was due to the coming collapse of a large financial house. Looks like it was Bear Stearns. It’s good to know that we’re going to bail out the financial institutions. I wonder how we bail out the American consumer and homeowner given the massive inflation the Fed has created over the last few years?

Oh wait, there’s no real inflation…..that’s their line. Did I ever mention that the chicken feed my dad uses for his hens has tripled in price over the course of 1 year? That’s 300% inflation gang. Too bad food prices don’t get counted.

In the end, we’re only at the starting point of what’s happening in the financial markets. More will fall in the near future, and I’m not the only one who believes this. Even with the bailout on Friday, Bear Sterns still imploded, and JP Morgan ended up buying them on the cheap.

I could provide links all day on this post, but I’ll stop. For regular readers I suggest you go through Prudentbear.com each morning. I suggest reading that site not to make you nervous, but to make sure you’re informed about what’s happening. Our Fed and government have been eroding the value of the dollar for years. In the end, we’ll be paying for it, and we already are. Oil is jumping because of inflation, nothing else. Food prices are soaring due to inflation and our insane ethanol policies. You might recall I once asked the question, “What great nation has ever burned its food supply?” The answer is none by the way.

Ugh. I wish I slept better last night. I know what’s coming. The mortgage bailout is next. For those of us without one that brings no relief thanks to the massive inflation in all necessary items. Being prudent and not overbuying is not being rewarded in this market. Over buying, maxing out your credit, etc., is being rewarded, and that’s a shame. At least living out of an Airstream is cheaper than other options.

Several days ago I complained to myself about a lack of wind.

See, when I arrived here last year I was almost immediately greeted by insane Airstream rocking winds. I’d literally grip the couch at points thinking, “This is it, the Airstream’s gonna roll……!”

Somehow I missed the winds on March 13th (my 1 year anniversary here in Prescott). Everyone had told me it was a yearly thing, yet on the 13th….well, there was no wind. But on the 14th……I struggled to keep the truck on the road! Hooray for the insane / freak winds in Prescott! They’re back.

Speaking of insane and freak items…..The snows returned today. I mean real snow. White outs. Crazed winds at moments, blizzard like conditions, the works. Oh, but the snow doesn’t stay. Sorry to everyone in New Hampshire…..we get the appearance of winter, but then it fades fast. No sucking up rocks and logs with snow blowers here.

So, today I got the invite to the Skull Valley Cafe. While in Anza-Borrego Sadira got a call from an old friend (Molly). Apparently Molly is the person who recently opened the Skull Valley cafe (I’ve taken photos there before you know). For fun, Molly decided to round up some old high school friends to her cafe for an impromptu reunion.

How do I fit into that? I don’t know, but I went into the white out conditions, insane winds, and life threatening weather just to get a few photos for my regular readers……so dramatic.

So, I braved the elements, dashed off to pick up Sadira, and we ventured out to Skull Valley.  I have to say, for Arizona the snows can really blot out visibility!  Almost like back home, but I haven’t broken out a shovel this year!  Nice! 

We arrived extra early (one of my faults), and Molly was in readying the cafe.  Nice place.  Very cozy (seats 25), plus there’s a deck area for more customers.  Unfortunately we couldn’t hang out on the deck today.  See, even with the elevation drop we experienced sleet, snow, and freezing rain (the Titan is still coated).

One by one other invitees showed up at the cafe.  Soon it was a packed house, and it seemed like the cafe was actually open.  Even with the closed sign lit several locals showed up hoping the cafe was actually open.  Hey, there’s a bunch of people in there eating…..let’s stop in……….

Sorry to say, those fellows missed out.

Before we headed out everyone wanted a group photo.  I’d already put my camera gear away, so I ran back out and got ready.  A few specks of snow melted on the lens, so apologies for the spots here and there.  What can I say, the elements will always win out!

It’s always hard when people “pose” to get that right photo.  But the one to the left is a close approximation.  There are a few others I like, but somebody has their eyes closed, or they’re making a funny face, etc.  I’m still working on “people” shots.  Why can’t they just all hold still and munch on bog grass like moose do?  Ah, probably because there’s no bog grass available here……

Overall, a fun day.  My morning was spent napping off and on, watching some anime, and generally relaxing.  Then a snowy ride into Skull Valley, and taking the time to meet some really pleasant folks. 

If you’re ever in Skull Valley, stop in and say hi to Molly!  Who knows, you might even want to get a few snacks for your trouble…..

By the way….I think I’m going to patten the pharmaceutical rights to bog grass…… I have a feeling it helps to keep photo subjects docile………

As you may know, I’ve been searching for a cliff dwelling near Perkinsville for quite some time.  Once again, with some new information provided by a person I recently met I headed out again, knowing I was closer to finding these remote ruins.

The Titan was ready for another off road trip early.  My Garmin GPS V (normally used on my bicycle) was mounted on the truck window.  It has local topo maps loaded on it, helping me to identify where canyons might be off the beaten path.

In addition to the Garmin, my Yaseau VX-5R was hooked up and squawking away for most of the ride.  Glad to find out that even way out along the back roads of Perkinsville I can still reach the Mingus Mountain repeater.  That means even while I’m exploring, I’ve always got a tie back to the world in the event that I get stuck.

On the ride out I listened in to local HAM operators chatter away.  Somebody is currently selling a Nissan Frontier.  His friends all encouraged him to sell his Toyota Tundra instead, as they all wanted to buy it.  Others talked about making radio contacts over seas.  It was fun and entertaining to tune in and learn about my HAM neighbors. 

As with every ride toward Perkinsville things were bumpy, slow going, and covered in dust.  Fortunately I didn’t have to go all the way to Perkinsville.  Instead, a few miles before the “town” I took a left to follow along with a set of power lines.  Destination….the canyon that the Verde flows through.

I never did find the canyon.  See, what my most recent guide neglected to tell me was how many cross roads intersect with FS 164.  And he did tell me I eventually would leave FS 164.  So, I tried to explore as many as possible.  After 2 hours working my way up and down roads I finally decided it was time to turn around.

No complaints on not reaching my goal.  The ride out into the unknown is fun.  Finding the cliff dwellings would have been a bonus.  And not finding them just means I need to return and search some more.  I’ve GPS’d the spots that don’t work, so I’m narrowing it down!

I’ll let you know when I finally find the ruins!

Here’s the scoop in a nutshell. The dollar is backed by debt (US Tresuries), and the debt is backed by the dollar. The dollar had previously been backed (partially) by gold. That all changed in 1971 as we went off the gold standard.

From that point forward, debt backed the dollar and the dollar backed the debt.

Is that a head scratcher? Paper backs paper. It’s all about a promise to pay, nothing more.

If it makes you a little nervous, then I’ll let you know, it gets worse. Let’s talk simply about these credit derivatives that are causing problems for banks now.

Each bank is only allowed to lend a certain percentage of their assets. Pretend it’s 90%. And pretend the bank in question has $100 on deposit. That means that the bank can lend $90. Once they’ve lent up to the percentage allowed (the percentage is basically set by the Fed) they’re done. No more lending. No more cashing in on the housing boom.

Oh, woe to the banks. How can we cash in further? Ah, how about creating some derivatives?

The debt the banks held (from their lending) in the form of mortgages gets packaged up with magical paperwork, and is sold out as an asset. See, if you bundle enough debt paperwork it magically becomes an asset. The asset is a “derivative”, and there are institutions willing to take these blocks of debt and pay you for them. They’ll get a percentage of the returns when the debt is paid off (these derivatives are viewed as “bonds”).

Now the bank has more money on hand. What to do with that money? How about lend it out, and then repackage those loans as derivatives too? Sounds like a good plan. You can keep lending beyond what you’re allowed to. Brilliant!

This of course is an extreme over simplification. It gets deeper, and there are more layers to the derivatives. But if you’ve followed so far you understand….Banks were lending way more money than they should have thanks to these magic derivatives. In essence, they were creating an expansion in our money supply (the Fed’s job) in an unchecked fashion. Really nice!

Recently we’ve all heard that the Fed is going to inject $200bn (that’s billion guys) into the banking system. How are they doing it? Giving it out free and willy nilly? Of course not. The “loan” into the system will come at a cost. The banks will be turning over current debt as an asset to the Fed.

Alright, let’s stop for a moment. The dollar is backed by debt, and the debt is backed by the dollar. Credit derivatives are basically debts already loaned out, but then considered an asset. Money is given for them, so more of the same cycle. Now, with a few layers of debt backing cash, we’ll do a little more with the Fed’s move.

I ask you….if you went to your personal accountant with a scenario like this, would your accountant resign? Would they run fast? Maybe a few words would escape their mouth mentioning “fraud” and their fear of being implicated along with you…..just a thought.

The easy money, loose rates, structured finance, etc., are what brought both the dot com bubble and the housing bubble. Instead of unwinding all of this nonsense our course has been laid out to save the system. We’re going to get a little deeper with a little more of the same.  Do you think it will keep the inevitable correction at bay?  Business cycles still exist.  Maybe instead of digging a deeper hole we should let the cycle play out, clear out the bad paper and companies in the system, and gear ourselves for the recovery down the road……  just a thought.

Sure it would be painful, but often times doing the right thing isn’t the easiest thing to do.  Here’s my question for the finance folks out there…..  Where’s a Paul Volker when we need him?  The guy willing to do the tough stuff (even if it means recession), be disliked by the finance community, but is still willing to do it to hasten the system’s correction (read what he said back in 05′).  Think Mr. Volker would volunteer a second time at the Fed???

PS…..I’m not the only one who thinks we need a Volker.  As I was writing this post I googled Mr. Volker, and found a NY Post article from March 4th pointing at the same thing.  Read it, the John Crudele is dead on (and a good finance columnist).

I pulled my Airstream into Prescott to stay for a week. The town had caught my attention just days earlier as I passed through it on my way to Sedona, and then on to Colorado. I never made the final leg of the journey to Colorado as planned. That trip waited for months, and for different reasons.

With only one day in town I knew I’d found a special spot. And I hoped it was the right spot for me.

What I can tell you is I still really like the place. The tech market is rather weak, but I’m trying to work around it you know.

I can say, after a year of knowing Prescott I still like it here. In the “tech turn downs” I’ve often heard, “With your background, you probably won’t stay 6 months.” Ah, guys, you were so far off it’s not funny. Too bad you missed an opportunity…..or maybe you haven’t (they’re probably not reading my blog).

Climbing season is at hand, and I’m looking forward to improving more this year. Last year got me back on the rocks, we’ll see what this year brings. More fun with friends, more photos, and maybe more opportunities on the horizon. I’ll just have to wait and see what comes.

Click back on the two links above, and you can see my reaction to this place last year. Makes me smile!

A decade ago the story of the Titanic was retold. It was a box office hit. Not just due to cast members like Leonardo DiCaprio, but because of the story behind the tragedy.

Some of my personal favorite channels such as Discovery, The History Channel, and The Learning Channel have all dedicated time to the story of the Titanic. Special subs have gone out in search of the wreck, major research studies have dedicated countless dollars to investigating what happened.

Overall, it’s safe to say that decades later, we as a population have an interest in the story of the Titanic to this day. Is it the timeless love story of two people who were unfortunate enough to be on the ship? Is it the wonder that technology did not triumph over nature? Maybe it’s the arrogance of being too big to fail, and not bringing enough life boats…..?

Whatever it is, whatever the major fascination has been, we’ve learned nothing from the story.

You see, for more than a decade and a half now we’ve all bought into the concept of “too big to fail.” Think back just a short way. The Internet revolution had brought on a “New Economy.” An economy that seemed to defy business cycles. It created profitless businesses that we were all eager to get in on. Buy a stock today, sell it tomorrow and retire to a small tropical island.

Too big to fail…….. the unsinkable ship of the new economy.

But the new economy (it just doesn’t deserve capital letters) was not too big to fail. And it still isn’t. It was built on fast talk, profitless companies with promises of a new age, and it was built on the same hype that made the 1920’s the “Roaring 20’s”.

Every IPO in the 20’s seemed to be for companies with the word Motor or Radio buried in the name. Thousands made their debut. Only a handful of truly profitable companies survived. The same can be said today of the Dot Com’s, Wireless, Communications, etc. Every technological revolution promises and delivers a lot. However, only the “real” companies survive. Many others toss their names into the ring just to capture the dollars of the over enthused and under informed. So went the 20’s, and so went the 90’s.

After our dot com bust people still had a ton of liquid finance to invest. And the over enthusiasm (irrational exuberance, as coined by a seemingly responsible Fed Chairman at the time…) carried itself right into the real estate markets. Housing prices went up not due to higher quality, better neighborhoods, etc. The prices went up because bidders had more money to bid thanks to low rates, loose lending, and more liquid finance pulled out of the last bubble.

Now as we find ourselves unwinding the errors of the real estate bubble mania most pundits believe it’s just the bad loans. Not even close. Since the 90’s the derivatives trade has grown to proportions that dwarf global economic production. The best part……Nobody understands how derivatives work. Many do acknowledge that they could be dangerous. Just like icebergs, derivatives are much bigger and more mysterious below the surface. And they could easily sink a ship like the Titanic.

In a recent Market Watch article, derivatives are described as “the new ticking time bomb.” Funny, they’re not new to me. Back in 98′ I was concerned about these financial devices. And they’ve only spread into more corners of our economy. Be sure to read the entire link.

So, where is the ship known as the American Economy really going? Some claim there’s no recession, but a risk of recession. They’re the folks on the deck telling the band to keep playing, and asking the guests to continue dancing. They surely don’t want you heading for the life boats or panicking that the unsinkable ship is indeed going under. But there are others who will still call it as it is……From the London Telegraph we have the following….”Fed takes boldest action since the depression to rescue the US mortgage industry.”

It’s nice to see some folks are getting escorted to the life boats. Keep in mind, just like the Titanic, seating is limited. For a society enamored with the Titanic story, you’d think more of us would have learned more from it. Are you watching the band, or are you looking outward at the rough seas around you?

***Note:  The photo in this article was licensed through Dreamstime.com.