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 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.
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!
"There are two sides to every coin," as the saying goes. And nowhere is that phrase more apt than in matters of money, especially as regards the U.S. Federal Reserve. Today, Mark Spitznagel squares off against none other than Paul Krugman to discuss that very topic. What follows is sublime entertainment. Read on...
As long as markets exist, there will people who try to predict where they are headed. Of course, no one can know for sure. And as Greg Guenthner explains, their prognostications can sometimes do more harm than good. Read on...
A massive storm recently blanketed the U.S. northeast. And as it did, most people ran to their thermostats to keep warm. But staying warm and cozy this winter comes at a price, even with the U.S. nat gas boom in full swing. Today, Matt Insley explains why, when it comes to nat gas prices, seasonality definitely matters. Read on...
Like it or not, size does matter. But contrary to a popular saying, bigger is not always better. Especially when it comes to the size of the state. Marc Faber explains why a world of smaller states might function better than one dominated by excessively large "superpowers." Read on...
Pope Francis recently warned people to beware the "tyranny" of capitalism. Hmmm... Would that be true capitalism and trust in free enterprise? Or the crony capitalism we're currently saddled with? Bill Bonner explains why, even though capitalism is easily corrupted by the capitalists, that doesn't necessarily mean it is a bum creed. Read on...
The average postwar U.S. expansion has lasted 58 months. In the midst of major policy dislocation in Congress and at the Fed, we are at month 52 of the current expansion, which began in June 2009. But we are running out of time – and luck.