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!
Everyone knows how comically terrible government accounting is, but few people may realize just how bad it's gotten... This infographic shows how trillions of dollars of government money has gone missing money over the last several years. And what's worse... that no one seems to care where it went...
It's amazing what some people will do out of sheer boredom. Investors, for example, will often throw money around, simply because they have nothing better to do - as if making MORE moves automatically translates to MORE money. Today, Chris Mayer explains why this emotion is so dangerous and how staving it off can save you a ton of money...
When a big company IPOs, investors can hardly contain their excitement. In a flash of exuberance, they throw money at a company they've already decided is worth something... even if the market hasn't made up its mind yet. Today, Jonas Elmerraji explains how one simple word can change the fate of every IPO investor. Read on...
Think it's impossible to escape the throes of Obamacare? Think again. Today, Chris Campbell relays the story of one man was able to get out from under the (un)Affordable Care Act, and how you can do it too. Don't see another doctor, take another pill, or shop around for better medical insurance until you read his story...
For the last few days, the market has been buzzing with excitement over the Alibaba IPO. Well, the day is finally here. And while some investors line up with their lotto tickets, ready to snatch it up no matter what the price, Greg Guenthner suggests a slightly more restrained approach. Read on...