Bill Bonner

What’s new in civilization? We went to Cafayate last night. Our old friend Doug Casey hosted an intimate little dinner – for about 150 people. He’s developing a community down there – the kind of place he wants to live in…surrounded by friends, good food, bright sun, beautiful views…and everything else a man might want.

Whether this is a good idea or not, we can’t say. But it is fun to get together with Doug and his crowd.

Since we were back in Internet range, we checked in with our usual sources. Here’s what we found:

The economy is either growing slowly, or contracting.

Housing is probably going down. Remember, Mr. Market has to destroy the idea that “housing always goes up.” When he’s finished people will think that “housing never goes up.”

Unemployment? People are gradually beginning to realize that the last ten years were the worst for creating new jobs in America’s history. If they keep thinking about it they will realize that it is not just the bust that is destroying jobs; there was something very wrong with the boom too.

Meanwhile, the markets are still calculating, figuring, deciding what things are worth. In the last couple of days, they’ve been thinking that maybe stocks and gold got a little too uppity. Gold has lost more than $50 in the last two days. Stocks lost ground on Tuesday, but bounced up 36 points yesterday.

From all we can tell, the Great Correction continues. And here’s a report from The New York Times that tells us where it leads:

OSAKA, Japan – Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.

But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo – for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.

“Japan used to be so flashy and upbeat, but now everyone must live in a dark and subdued way,” said Masato, 49, who asked that his full name not be used because he still cannot repay the $110,000 that he owes on the mortgage.

…For nearly a generation now, [Japan] has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought in the global economy.

“The US, the UK, Spain, Ireland, they all are going through what Japan went through a decade or so ago,” said Richard Koo, chief economist at Nomura Securities who recently wrote a book about Japan’s lessons for the world. “Millions of individuals and companies see their balance sheets going underwater, so they are using their cash to pay down debt instead of borrowing and spending.”

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 ReckoningDice 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. 

  • Harry

    Haven’t been here in a while but nothing has changed. Still waiting for that Great Correction? At what point do you just admit you were wrong??

  • Not Harry

    Well-written, Harry!

    You tell us when you’re ready and we’ll be all ears.

    Cheers!

  • Bruce Walker

    Way-to-go Bill Bonner on picking an interim high on gold a week or so back. While its counter-productive to rely on short term trading, I too had the irrepresible suspicion that gold was over-bought by nearly $100 a ounce. I would be very intereted to hear what your interim predicition is for the next dip. My own inclination is $1165 an ounce. Perhaps more important for the underlying rally, volitility has increased considerably. Matters little if it’s up or down given the relentless gains the past 2 months, but having $40 moves a day presages the first $100 move, which I expect to be towards the upside after touching the interim dip.

  • http://www.investorsfriend.com The Investors Friend

    So a silly fellow from Japan decided to buy high and sell low on a Condo… Boohoo

    What about the next buyer, he got a deal. Meanwhile the Condo is probably about the same as it ever was… still reasonably new, still provides the same functionality as it ever did.

    Apparently, If you are good with writing about financial doom and gloom, everything looks like a recession…

  • ducdorleans

    Bill,

    please let us know how your foraging into Green Energy is going along … whether we can dump the traditionals for some sun and some wind …

    thanks beforehand …

    PS Harry’s back … therefore, big chance that IT will habppen in the next few weeks

  • sierra

    To both “Harry’s”
    Your world is not the real one.

    Good job, BB

  • Bloomer

    If one is unemployed or underemployed, we are in a great recession. Even for those who are able to hold onto a job, chances are their wages and benefits have been rolled back. Like the fellow in Japan, many people have been living above their means. We are slowly returning to fiscal reality where purchases are made with saved earnings and you don’t spend what you dont have. I agree with Mr. Bonner, we are still slowly spiralling down and haven’t yet reached the bottom.

  • theophiluspunofall

    He’s baaaaaack. Must be GOOG that re-animated him.

    BB will admit he’s wrong when unemployment goes below 5%, or Harry moves out of his Mother’s mobile. Whichever comes first.

    ducdorleans… +1

  • http://www.rightinsurance.ca Brian Poncelet

    In Canada the correction will because of high taxes like the HST (13%) on goods and services bought!

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

  • Pingback: Trackback

Recent Articles

5 Min. Forecast
What Your Grocery Bill Says About Your Investment Future

Dave Gonigam

Despite rapidly rising food prices, American households still spend relatively little on groceries. And while plenty of factors contribute to lower food costs in the US, that can lead to serious competition... and that means a good investment opportunity is right around the corner. Dave Gonigam explores...


New Index Points to a Steep Drop in Asset Prices

Chris Mayer

Wouldn't it be convenient to know how fragile or how prone to cracking up the stock market... bond market... and housing market are? Well, Chris Mayer recently created a new index that does just that. And it's signaling that a sharp drop in asset prices is a high possibility. Read on...


How Google Helped Legitamize Bitcoin

Luke Mcgrath

Since its introduction more than nine years ago, bitcoin has gone from fledgling digital currency to complete phenomenon. And while it still has its detractors, there's good reason to believe that bitcoin could very well be the "currency of the future" its proponents claim it is. And Google just agreed with them. Luke McGrath explains...


Protect Yourself from the Crony Capitalists

Richard Ebeling

Capitalism has become a dirty word in America. But that's only because the current form of capitalism being practiced in the U.S. is a corrupt version of what the Founding Fathers had in mind... It's now something wholly unrecognizable and far more dangerous than what any of them had in mind. Richard Ebeling explains...


Addison Wiggin
Cash-In on the Long-Term Trend in Farmland

Addison Wiggin

"Buy land," the old saying goes, "they're not making it anymore." Of course, there's more to it than that. But if you look closely at some of the disturbing trends in US farmland, you'll find that this could be some of the best investment advice you get all year. Addison Wiggin has the full story...


Why You Should Rethink Your Earnings Season Strategy

Greg Guenthner

From heightened political pressure on Russia to the conflict between Israel and Palestine, it seems world events in the last week have really spooked the markets. But even before that, there was something else that was worrying investors... earnings. Today, Greg Guenthner explains how this will play out...