Wednesday, October 13, 2010

Charity and Favors during the Crisis

One of my other concerns is how to deal with the neighbors if times ever get real tight.  I'd have no problem handing a chainsaw to any of the current neighbors to trade wood cutting for a few meals from our reserves but I think I would melt when they came walking up the road with the little kids in tow? any ideas on how to mentally prepare for that?
Keep up the good work. There's a whole nation in denial up here.

That gets a bit complicated. In fantasy we can all write about how charitable we would be, giving ammo and food to the refugees in our make-believe worlds, in reality when you start handing out stuff all you get is even more people waiting in line for their share. Oh, by the way, giving away ammunition to people you don’t even know must be the most stupid thing I’ve ever read. That round you just gave away to a total stranger may as well have your name written on it.

You loan your chainsaw to your unemployed neighbor, and he uses it to bring down every tree he finds to sell it for firewood, you give him a gallon of gas, he’s going to be there next day asking for a bit more. A person with no other choice will do these things to survive, who could blame him?
I completely understand being friendly to your neighbors, being there for them and them being there for you. That’s ok and you do want that kind of relationship, I scratch your back and you scratch mine. This is important for emergencies of course, and something as simple as keeping an eye on your property while you’re away may mean the difference between having a house anymore or not after a few days out of town. But charity is completely different creature. Charity means you only get moral satisfaction out of it, its not a “you scratch my back I scratch yours” relationship, its not friends doing favors for each other, its just one person giving and another one receiving… let me tell you, there’s going to be a lot of people looking to “receive” after an economic collapse. If you hand out  an old jacket or a sandwich to everyone that knocks on your door, soon enough the word spreads and you’ll have more people wanting your charity, more than you could possibly  handle.

You also have to understand that there’s a business behind this too, specially with kids. Around here many parents have  +10 kids only so as to have them on the streets begging for money. They make sure they are as dirty as possible, and take away their shoes so that they look more pitiful. The parent (sometimes its just a relative) then rounds them up at the end of the day and goes get high or drunk with the money you thought was going to feed that kid. I know of a few cases where babies are actually rented for begging. The person, often a woman, goes around begging with the baby in arms. Sometimes the baby is drunk or drugged (dog drops ) so that it doesn’t bother while “working”. Even some famous charity events organized by local TV channels, we later learned that  20% or less of what is donated ends up in the hands of people in need, the rest goes to the network, technicians, organizers, etc. So many times you see about charity programs on TV, consider most of them scams unless you’re 100% certain of where your money is going, preferably know the caliber of the people involved.

For these reasons, I simply never give money, under any circumstance, unless its to the Church or a Priest working on missioning or some other form of charity I have some knowledge of. Regarding kids, if they come knocking on my door or sometimes when I come across them on the street begging, I’ll buy them some food or hand them over some food I have. I’m careful with this and if I see more of them coming the next day I’ll say sorry, I don’t have nothing for you today. Again, you don’t want to be known as the guy that gives food away.

You ask about mentally preparing for this. Can’t tell you how to do that. All I can say is that when you start turning away kids you know are in need, your heart hardens up some. No, its not something you want to do, but you really don’t have a choice. What if its your neighbor, family, friends? The advice I’d give here is understanding the difference I mentioned earlier, understand the difference between neighbors or friends helping one another and charity. Once you know you’re doing charity, know that it may get to a point where you cannot keep it up, so do stop before it gets to that point. Either way the person is not going to like it when they are cut out, so you might as well stop it before it gets there. Take it case by case but be very cautious about handouts.
I’ve written about this before in case you want to check it out: Charity During and After the Crisis



Anonymous said...

The old saying "If you feed a stray, it won't leave" comes to mind. We've helped people who later were found to be semi-professional moochers and manipulators, so we had to wise up, lesson learned, (hopefully).

Sometimes neighborhood kids come to our door selling popcorn, girl-scout cookies or what-not as a fund raiser. As long as it's a legitimate organization we usually buy something small, if it's not too much.
I would caution to get any arrangement in writing, so that both agree on expectations and terms, plus you would need to be cautious in case you loan a chainsaw to someone who then cuts down trees that aren't his or hits someone's house with a tree or something. Which seems like it might be a good way to get sued.
Eric in Michigan

Anonymous said...

Off topic-Here is a short article I would like you to comment on, it can be found here....


The Argentine Boom…And Why It’s Killing the Peso
By Bill Bonner

10/13/10 Buenos Aires, Argentina – “This country is in a boom,” said the editor of a financial magazine in Buenos Aires. “Everything is going up. Everything is selling. And inflation is roaring at 25% per annum.”

To hear him tell it, Argentina is everything America wishes to be. Its people shop. Its restaurants are full. Its economy is growing at more than 8% a year.


“Inflation. Everyone wants to get rid of cash. You hold onto it and it’s worth less and less. So you buy an apartment.”

Amazingly less than 10% of property transactions in Argentina include mortgages. People pay with cash. Still, prices are not as low as you would expect. The lot next to our office is on the market for $250,000.

“It should be about $100,000,” said a friend who keeps an eye on real estate. “But everything is high.”

The cab ride from the airport was 70 pesos when we came 4 years ago. This time it was 128 euros. Two glasses of wine at a local bar were 40 pesos. They would have been half that a few years ago.

“There’s a boom going on,” continued the financial editor. “But it can’t go on forever. You can’t have 25% inflation and have a healthy economy. People don’t make wise investments. They just try to avoid getting ripped off by inflation. They don’t make long-term investments. They just try to park their money where it won’t disappear. That’s why real estate is so expensive. People will save their money and buy an apartment whether they need it or not. They figure it will still be there in five or ten years. The peso won’t be. At least not today’s peso.”

Nor will the dollar.


Bill Bonner
for The Daily Reckoning

Anonymous said...

Anon 8:48, that sounds like a toned down version of what happens during every hyperinflation, when people spend money as fast as they can because tomorrow the currency will be worth half or whatever.

What happened in Argentina in 2001 was a DEVALUATION, not HYPERINFLATION. A devaluation is when the value of the currency declines by a set amount. The peso went from 1:1 to 4:1. What is happening now is inflation, where money is printed and prices rise by a large amount.

The rise in prices during a devaluation is relative to the new value of the devalued currency. During hyperinflation prices rise because of all the money being pumped into the system. Fernando says that "a house that is worth 200,000USD will still be worth 200,000 Euros after the crash". That's devaluation. Hyperinflation is where the house is worth a million USD which equates to 50,000 Euros. See the difference?