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 Bonnerfor The Daily Reckoning
Since founding Agora Inc. in 1979, Bill Bonner has found success in numerous industries. His unique writing style, philanthropic undertakings and preservationist activities have been recognized by some of America's most respected authorities. With his friend and colleague Addison Wiggin, he co-founded The Daily Reckoning in 1999, and together they co-wrote the New York Times best-selling books Financial Reckoning Day and Empire of Debt. His other works include Mobs, Messiahs and Markets (with Lila Rajiva), Dice Have No Memory, and most recently, Hormegeddon: How Too Much of a Good Thing Leads to Disaster. His most recent project is The Bill Bonner Letter.
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??
You tell us when you’re ready and we’ll be all ears.
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.
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…
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
To both “Harry’s”
Your world is not the real one.
Good job, BB
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.
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.
In Canada the correction will because of high taxes like the HST (13%) on goods and services bought!
People assume that markets and financial instruments have some kind of long-term average they tend to flock toward. But in reality, a handful of wild swings in various directions often skew these averages to a point where the "long-term" is not at all reliable, let along predictable. Chris Mayer has more...
The debt and leverage that Washington and Wall Street have built up over the years will eventually blow up. And when it does, it could be "worse than 2008." But there is at least one way to protect yourself. And today Dave Gonigam explains how you can get started before any of this occurs. Read on...
By now you've probably heard about the violence in Gaza and Isreal. It's tragic, but there's more to it than the mainstream media lets on. Today, Byron King explains how, amid the conflict, there's also resource scarcity behind the Israeli-Palestinian crisis - namely, in the enormous offshore natural gas deposit known as "Leviathan..."
Last year, when Amazon announced they would be using drones to send packages to customers, a lot of people saw it as a clever marketing ploy just in time for the holiday shopping season. But, as Matthew Milner explains, this use of drones could soon be widespread, and that presents a unique investment opportunity for savvy investors...
After the 2008 financial crisis, little could be heard over the deafening cries of "mission accomplished." And while the Fed's massive QE program seemed to work, the question remains: for how long? Addison Wiggin explains why the next round of QE will fail miserably, paving the way for the IMF to step in with something called "special drawing rights." Read on...