03/05/10 Baltimore, Maryland – As I was floating down impassible rivers
I no longer felt myself steered by the haulers…
– Arthur Rimbaud, “The Drunken Boat”
The news yesterday pushed against us like a gentle wind. Pending house sales were bad. Consumer spending was good. Unemployment was bad. Manufacturing was good.
The Dow rose 47 points. It has moved without much conviction for several weeks. It can’t seem to make up its mind. We thought it had headed down decisively a few weeks ago…and then, it stabilized…and wandered about…
Gold has more sense of destiny about it. It’s been in a bull market for the last 10 years…and shows no sign of wanting to do anything else. It lost $11 yesterday, but still trades at $1,132…not that far from its all-time high.
Gold is in a real bull market. As near as we can tell it is still in the developing stages. There are a few old gold bugs around. But the public is not yet talking about gold. Investors are not yet adding major positions in gold to their portfolios. Ordinary people are not yet expecting gold to go to $5,000 or $10,000 an ounce.
But the news keeps coming…the opinions…the rants…the data…and the theories…
This way and that…we begin to feel like a “drunken boat.” That was the title to a poem written by a 17-year-old Frenchman named Arthur Rimbaud. It describes how we meander. We are driven by the winds…and pushed by the back-eddies… Turning our bow this way …and then that way…
Never quite sure what direction we’re going…or what to think… No one is in control…
And still, the current continues…and we keep heading downstream…carried by the great river…always moving along.
One day we’re fascinated by what is going on in Japan. The next day it’s China. Some days we think we might somehow muddle through…on others, we’re sure something is going to blow up any minute.
But that river just keeps rolling along…and we’re on it.
Where does it lead? Well, that’s the point. We’re not sure…
All we’re sure about is that it doesn’t lead where most people think. They think they see a ‘recovery.’ Forget it. Won’t happen. We could have another speculative period…but it won’t be like the Bubble Epoch of 2005-2007. Houses would have to go up 20% just to get homeowners’ heads above the water. Then, maybe they could borrow and spend like it was 2005 again…but that’s not going to happen. People don’t have the incomes…or the credit…to bid up house prices again.
Here’s a headline from The Wall Street Journal: “Employment of Adult Males at Record Low.”
Where does that lead? We’re not sure…but we don’t think it leads to ‘growth’ in the US economy. Instead, it leads to bankruptcy, deflation…and maybe insurrection.
And what about the Chinese economy? Isn’t that growing at breakneck speed – over 10% per year?
The trouble with breakneck speeds is that you do break your neck. China should slow down…or it’s going have an accident. And if it slows down, the whole world slows down with it…
And as to that ‘growth’ – it’s counterfeit anyway. It’s not real growth…it’s ersatz growth, caused by greater and greater government involvement and spending. The feds (the haulers) pretend to be in control. They want us to believe they are in control. But they are out of control themselves!
Can increasing government spending really make people more prosperous?
Show us an example!
Bill Bonner
for The Daily Reckoning
Bill Bonner
Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill’s daily reckonings from more than a decade: 1999-2010.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
The DJA rose about $122 today, climbing ever closer to its new goal of 11,000 by the end of the month, 15,000 by August, and 18,000 by 12/31.
Great post, Bill. The way they spin the numbers on unemployment is how they are trying to say government spending is making more people prosperous. Like today, the government money created 15,000 jobs for the census. And they say there will be another million created too. Which says to me that the only thing being created is smoke and mirrors as those are all temporary and in my opinion, wasteful. They really aren’t adding to the economy because they aren’t producing anything. Well, except more debt because the government is powering money to pay them all. So the river continues to move us alone, toward Niagara Falls.
Great, DOW 18,000! That means the rich (those that can afford stocks) will get richer and the poor (those that had to sell all their shares b/c they cannot afford food/healthcare/housing) will get poorer because they can’t afford to play the game.
Wonderful! Land of the free, home of the vile sociopaths, banksters and corrupt politicians.
If the DJIA is at 18k by 12/31 then gold will be @ 5000k making it a 3.5/1 ratio instead of the 10/1 it is now. But then we’d be comparing it against real money. 18k by Dec, I’ll take that bet.
Bill, you’re completely wrong here. Just read what this person says is the real deal and it will all become crystal clear just how off base you really are about what needs to get done. (sarcasm added)………
This article really gets with it as it goes from page 2 onward. A must read. Cough.
RH
Great, DOW 18,000! That means the rich (those that can afford stocks) will get richer and the poor (those that had to sell all their shares b/c they cannot afford food/healthcare/housing) will get poorer because they can’t afford to play the game.
Wonderful! Land of the free, home of the slick banksters and corrupt pols.
“Can increasing government spending really make people more prosperous?” Seems to be two opposing thoughts here. First is the concern of making people prosperous and I assume what is meant by that is everyone. The second thought is to get all the gold you can to save yourself. Interesting?
Like .99 cents is so much less than $1.00. Pitiful
Two conflicting thoughts here. One is the seeming concern of prosperity of people assuming that means everyone and if the government can spend to increase prosperity. The second is to buy and hoard all the gold you can to save yourself. Interesting.
Like .99cents is so much less than $1.00. Pitiful.
@Rick Halsen : rofl. I’ve read quickly through your article and now I’m left with the question : did someone actually write that crap, and more important, does that person believe it ?
“Fortunately for us, however, there is a major difference between our debt and the debts of Greece, Latvia and Iceland. Our debt is owed in our own currency – US dollars. Our government has the power to fix its solvency problems itself, by simply issuing the money it needs to pay off or refinance its debt.”
Yikes. The Great and Mighty Mogambo (GMM) would scream in horror at the simple evocation of it (like anyone should, for that matter)
Thanks for the article, Rick. That guy is spot on.
Jason, I think you’re a bit optimistic with your outlook but I’d go with 13,000 EOY no problem
The long term unemployment of young adults in the west is going to be the major legacy of this depression. The baby boomers choose to delay the inevitable day of reckoning, and pass it on instead to their grandchildren in the form of higher taxes; but those grandchildren may not have jobs to pay for those taxes in the first place. The mainstream media reports obsessively from the perspective of the boomers, I am glad Bill is however starting to give this issue more attention.
Future production is the only real way to pay off debt of which natural resources are required. Has anyone conducted a worldwide inventory of natural resources recently?
good article with some inconsistencies.
Like .99 cents is so much less than $1.00
Rick, I couldn’t handle that article.
Puh-leez , is a 13k Dow prosperity or is it inflation? Hmmm…
>Can increasing government spending really make people more prosperous?
—
Prosperity is not in the money, it is in the things that are of use to us (houses , factories, machines, food,..)
Even if the government goes bust and the dollar becomes worthless, what difference will it make to our prosperity?
All our houses and factories will still be there (unless we knock them down), ready to be used, and owned by somebody.
Even if the government in Wastington spends money on totally useless things, that money does not disappear because of it. That money ends up in some pockets somewhere and that person may do something useful with it.
Whenever we invest we don’t invest money, we invest our time.
Time used wisely becomes prosperity.
Time used smartly becomes leisure-fun.
Time used stupidly becomes destruction of prosperity.