Economic Collapse- Your View

I have 2 questions that I've been pondering for some time now.
When I was 16 years old, gasoline was 20 cents a gallon at the pumps and minimum wage was $4.00 an hour. If minimum wage had increased at the same rate as gasoline, it would now be around $90.00 an hour.
Question #1 - Who is getting the other $86.00? (Surely not the poor struggling oil companies)

Question #2 - Why is Canada the only oil exporting (not just oil producing) country in the world where we have to pay more than 25 cents a liter for gasoline at the pumps?

I think gasoline is a by product of the oil after it has been refined. And since Canada does not have a refinery, we do not actually produce gasoline. So, oil is like all other natural resources that Canada ships outside of it`s borders. We take the natural resource, send it off shore, and then pay a huge markup to bring back the finished products. Does that sound about right?

Couple of comments about oil:

- Canada does have some small refining capacity. Sarnia Ontario for one. St. John's New Brunswick is another and I think Montreal has a small refinery. Not enough to meet all our needs, but we do have some refining capabilities. When Alberta smartens up and starts upgrading their own oil, we will have even more capacity.

- As for why we aren't paying 25c a litre when we export and others like Venezuela and most of the middle east pay next to nothing? Well that is pretty simple. Their oil money means they don't have to run competetive economies. They can do whatever they want as long as the oil lasts. They use their oil wealth, to subsidize the lifestyle of the masses, with amongst some things cheap gasoline, natural gas for heating and cooking and the rest. They also use their huge oil wealth to subsidize food...again to keep the public peace. It is partly the rise in populations in oil producing areas (because of subsidiezed living costs) that has prompted the rise in the price of wheat/flour/bread that helped destabilized Egypt. They do not have enough oil money to keep subsidizing food, and when they stopped, they became politically unstable. Desperate and poor people will do anything and support anyone who promises them what they need. Look up the term "bread and circuses" when you want to understand how shallow rulers can be when governing a people.

If you remember recent history with the advance of communism in the east, desperate masses were duped into supporting the communist party on the promises of of supporting the working class. Events even bribed people off the street with joining a demonstration to get a bag of rice. People who didn't care about politics came just for the rice.

The real problem is what do these countries do when the oil wealth dries up? They are vastly overpopulated compared to their agricultural and resource base. The arab spring will turn into Arab hell.

The montreal refinery has been moth balled for a while, and they are trying to find a buy for it. The others I don't know, I just keep hearing about the montreal one in our local media.

A very large part of eastern Edmonton is covered in oil refineries. Canada has a lot of oil refining capacity we just don't have stored oil reserves.

Also I just remembered....Canada can't legally sell oil domestically for anything other than the price the US pays as a condition of NAFTA. The oil companies don't want to sell for anything less than market price as they are in it for the money. We'll never see cheap gas here. If we tried 25cent gas it would mean nationalization of the oil industry, and the US and Alberta would revolt before that ever happened ... again.

Gotta love NAFTA. But, we were paying more than 25 cents before NAFTA. You're right though, the U.S. would be miffed if we nationalized because they might not be able to tell us how much to charge. I think though, the biggest revolt would come from those who would lose the 85 cents a liter in revenue. However, since our government depends so heavily on the U.S. to form our policies and the corporations have so much influence, nothing will change. Us peons will keep getting charged more and more until the only vehicle we can afford to buy fuel for is a bicycle. Oh well, it's healthier and pollutes less.

Just a couple of questions.
#1 - How many of you are doing your best to get out of debt in case of national, North American or global economic collapse?
#2 - Why?

1) I am. I only have a mortgage left after killing student debt, stupid youth credit cards and car loans etc...
2) Because credit is the rope you hang yourself with. Home ownership brings several advantages like no landlord, equity in land, independence to do your own thing without anyone nosing around, land to garden, a permanent space to store stocked goods and so much more. The real reason why I am focusing all my efforts on killing the mortgage dragon is because if the Fed, of the BOC pulled a Volcker like in the 80's and interest rates rose to 20% most people today would lose their homes in the most spectacular housing crash ever witnessed by Canadians, more brutal than the US crash. Once my house is paid off, I'm beyond that risk. Getting by can be done with minimal sacrifices and maximum comfort in case of long term unemployment. Plus if you aren't paying rent or mortgage...you have more money for everything else. I hope my son inherits my home, so he won't have to pay a mortgage himself. Even with low interest like 5%, over 25 years it doubles the cost of your home and takes wealth away from you and gives it to the bankers to pay for their families lavish lifestyles. When you go debtless...you pay only for yourself and fair value of what you buy.Imagine what a head start in life your kids would get if they didn't have to pay double for a home. Once for the purchase price and one again for the cumulative interest.

I will never go into debt again...this mortgage is the last. I won't ever take out a car loan. My savings account has more than my credit limit and bills are paid every month in full. We make 2 incomes, but live on 1 and save the other. I hope my children will inherit a legacy I'm trying to build of quiet positive wealth generation. Slow and steady and diversified so they have choice in life and aren't forced to make bad decisions to due subsistence living paycheck to paycheck.

I too, have paid off my debts, all of them. I've paid off 2 homes a student loan and my credit cards and am now debt free. I have ready access to a line of credit worth well over $100,000. But, if the U.S. economy collapses I'm going to max out my line of credit. I think that it's a given that if the U.S. economy, goes ours is next. By that point I think we can say that the global economy will be toast. A collapsed economy means that the banks are bankrupt. When that happens there is no one to come after that $100,000 plus and for a short time, cash will be king. With luck, I'll still be able to use that cash to acquire more supplies that I can use, including silver.
When the economy collapses, there's no one to collect your debt.

Well, we just moved a few months back so we are still facing obstacles in getting stable income since relocating The goal is to pay off the debt at the first moment we can, thankfully a manageable sum. Prepping after switching provinces was our first goal, we are at least far enough along in that (even with employment issues and with thanks to VanIsleMom's sharp eye for bargains!) to feel like we can hold our own for a bit in a severe crisis. I talk to my adult kids ( 23 and 25) about the potential for an economic collapse often and encourage them to prep, be aware. I have had a few discussions with them on what hyper inflation would do to us in every day life and what the impact of that would be on a mortgage. I truly believe an economic collapse will likely be either the first or second domino to fall in a SHTF scenario and follow this subject pretty close in the news and financial blogs.

Car debt... nope. We will buy another junker for cash, probably an older small truck - hopefully old enough to make it through a cme and still be running!

Mr Momo... I have watched a number of friends mortgage beyond their means... a few are mortgage poor already and trying to sell on a soft market. If we have hyper inflation and/or an economic collapse, people will be devastated.

Is it me or is there a rise in the homes for sale - especially in the burbs.

When the economy collapses, there's no one to collect your debt.

You hope. In the great depression there was still collections. In every case of economic collapse I've ever read about, from the fall of Rome to the weimar republic to hyperinflation in Zimbabwe and the Argentinian collapses there was still government and business left intact. I suspect that anything short of the most severe forms of TEOTWAWKI you would be giving big business the perfect reason to confiscate all your assets and leave you homeless.

Think about it, if there is enough stability for you to access your line of credit and purchase SHTF supplies, there will be enough stability fro them to shake you down to get their money back. Worse still on the way down, you'd be taking your money out (liability) before anyone could accurately gauge if there was any chance of them collecting. If you're wrong you couldn't pay them back and could be forced into a disastrous liquidation.

Mr Momo... I have watched a number of friends mortgage beyond their means... a few are mortgage poor already and trying to sell on a soft market. If we have hyper inflation and/or an economic collapse, people will be devastated.

Too true. I believe it will take less that that for many people to be devastated. A simple rise in interest rates will wipe out many many people who overmortgaged. A ride from today's 3.5% 'ish to a healthy 10% would wipe out 20% or more of the mortgaged. Credible estimates are all over the map, but given how everybody credible said everything was fine up until the very end of the 2008 crisis, I'm inclined we're in for a rough ride in the housing market. It's not the end of the world, but that won't matter to you if you're one of the overleveraged.

I can't even say I'm safe until my mortgage is gone. If rates go up to 10-15-20% in the next few years like they did in the 80's AND I lose my job, I'm toast. I just need to make it a little longer and I'll have slayed the last dragon and built a modest but comfortable home for my family. I've been studying economics like mad for the last 5 years. I can't say I've ever seen the equivalent of how f'ed up our markets are. I can't guarantee or even predict collapse. But I fully expect widespread poverty though persistent high-but-not-hyper inflation, stagnating real wages and continued negative real returns on equity. I think the guy who sums up my beliefs best is this guy:

http://www.chrismartenson.com/ <-The best site on non-panic but holly shit I'd better prep now on the web IMHO. His crash course is a must see.

When the economy collapses, there's no one to collect your debt.

You hope. In the great depression there was still collections. In every case of economic collapse I've ever read about, from the fall of Rome to the weimar republic to hyperinflation in Zimbabwe and the Argentinian collapses there was still government and business left intact. I suspect that anything short of the most severe forms of TEOTWAWKI you would be giving big business the perfect reason to confiscate all your assets and leave you homeless.

Think about it, if there is enough stability for you to access your line of credit and purchase SHTF supplies, there will be enough stability fro them to shake you down to get their money back. Worse still on the way down, you'd be taking your money out (liability) before anyone could accurately gauge if there was any chance of them collecting. If you're wrong you couldn't pay them back and could be forced into a disastrous liquidation.

You make a valid argument. But I was talking about a global economic collapse. When a national economy collapses there are still banks, whether domestic or foreign, who are willing to buy up the debts and assets of bankrupt institutions. In a global collapse who would have the werewithal to to purchase our debts. Yes the debt collectors still came out during the great depression but, there has never been a global collapse and not even the experts who got the world into this mess can tell the consquences of that.
As for the money I withdraw, not even I am stupid enough to start spending it until I need to. Until I know for sure, I can make the minimum payments on the account and if a collapse doesn't come after a couple of months, I can deposit it back into the account. Anyway, it's just an idea I had and I wouldn't carry it out unless I was convinced that it was in my best interests and basicly as a last option.
As for confiscating my assets, both of my lines of credit are unsecured, that means that they have no legal recourse to my property.

Good point about secured vs unsecured credit Tazweiss. However in a bankruptcy court, you could still be forced to liquidate durable assets like land at undersirable times and prices. Also if SHTF, on the way down we should be reminded that laws may change to favour big business. We are seeing this to a certain degree now, so I wouldn`t count on the legal protections of secured vs unsecured either. The law could change because when the chips are down everyone will do whatever it takes to do the best for themselves.

In defense of your idea, I`ve been told by one dude that he doesn`t mind risking major credit in a business. If we wins he gets a viable business (the only way to make real money these days) but at the same time, he said if he knows he is 6 months away from bankruptcy, he will take whatever liquid credit he has, will buy gold bullion, bury it in the forest then declare bankruptcy. After liquidation, he could then at his own discretion access what he wants. It is likely illegal, definitely immoral and not good prepping. Doesn`t mean that he couldn`t benefit from such an idea.