Bill Bonner

This afternoon, your editor’s aging aunt called from Pennsylvania.

“This economy has been very hard on my family,” she explained. “I’ve got two sons-in-law…and they’re both laid off from their jobs.”

“What do they do?” we wondered.

“One drives a truck for a steel producer. The other is in construction. There’s just not much work, I guess.”


And that’s why, despite all the recovery talk, real people are turning real gloomy. Consumer confidence just registered its lowest reading since 1983. People don’t have jobs…and they’re beginning to worry that it could be a long time before they work again. Mortgage demand just fell to its lowest point in 13 years. State tax receipts are still falling – for the 5th quarter in a row. And the number of problem banks just rose 27%.

Recovery? Forget it. There is no real recovery. This depression has to run its course, like it or not.

You’ve heard us say that a depression is a period of transition from one economic model to another. You might ask: what’s an economic model? And what economic model are we leaving behind? What economic model are we going towards? And what’s this got to do with monetary and fiscal stimulus?

Good thing you didn’t ask those questions before. We didn’t have any answers. But here is David Goldman with a partial explanation:

“There is some analogy to the Great Depression in the present situation. Between 1918 and 1939, American agriculture was in permanent decline, because the end of the First World War reduced demand for American exports, and because the substitution of the tractor for draught animals freed up an enormous amount of land set aside for animal feed. There was nothing to be done but to get the farmers off the land into other occupations, and that was not accomplished until the Second World War.”

The farmers found work in wartime factories…and in military service. After the war, they took up new jobs, in a new economy with new factories and new professions.

What work will today’s laid-off construction workers find? Darned if we know.


Bill Bonner,
for The Daily Reckoning

Bill Bonner

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.

  • Capista

    Pillaging the countryside maybe?

  • Daniel Miller

    Hey Harry where TF was the market today?

    You’re such a coward that you never show up here on down days for you.

    Gold will skyrocket as China hoards production, India buys, and the sovereign defaults proceed like dominoes.

  • Daniel Miller

    “U.S. Jobless Claims Rise Unexpectedly”
    “U.S. Economy: Equipment Demand Slows to Start 2010″
    “New Home Sales Hit Record Low, Prices Tumble”
    “Consumer Confidence in U.S. Falls More Than Forecast”
    “Economic Indicators Rise Less Than Expected, Mixed Open”
    “Consumer Sentiment Index in U.S. Declined in February”
    “Businesses Slashed Wholesale Inventories 0.8 Percent in December”
    “Instant View: ISM Services Index Below Forecast in January”

    With a RECOVERY like this, who needs a depression?

  • Harry

    No coward here. Market showed great strength today rallying from those lows. That should lead to a triple digit Dow gain tomorrow. Especially after a solid revision to GDP.

  • CommonCents

    They have to go back to the farm.

  • CommonCents

    My grandfather immigrated to this country in the early 1900’s as a teen. He became a carpenter, finally being able to save and borrow enough to construct 6 homes to be rented and/or sold. The Great Depression hit him hard and he lost everything. With a great work ethic he was able to recover but he gave my father some advice.

    He told him to never borrow from a bank, because they own you. My father passed this on to me and I take heed. Being a builder myself I’ve never seen a downturn like this one. It must be a lot like the experience my grandfather suffered through. Luckily I have never forgotten his advice and I owe the banks nothing. And I too have my grandfather’s work ethic and will survive this.

    However, the government has through taxation, regulation, licenses, rules; laws, fees, tolls, etc. have made up for the banks. We are now all owned by the government. It’s a sad state of affairs that won’t change without a total collapse.

  • blah blah blah

    [[[Gold will skyrocket as China hoards production, India buys, and the sovereign defaults proceed like dominoes.]]]

    Do the opposite of what China does, they are terrible investors.

    India has always bought lots of gold, but, jewelry demand is down in India plus they are turning to silver because of it’s lower cost.

    Defaults initially frighten people into metals, but defaulting loans are deflationary long term. This house of cards has been going on for years, so the “prop up jobs” are getting good at what they do, kicking the can down the road. The world understands they can’t handle another “Lehman” incident. Look for de-leveraging to last many years…..kind of like a death of 1000 cuts. This will only make a depression last longer. Hold 5% precious metals, the rest in Treasury Bills. Stay out of stocks and real estate.

  • blah blah blah

    The IMF is selling gold at all-time highs to knuckleheads that want it at this price. The IMF is hording cash in it’s dream of becoming the “one-world banking system” 5-10 years down the road.

  • trollscanner

    a contractor walked up to me and said,

    “a few years ago I had 65 workers in my shop. now we’re down to 35-40. we need jobs just to keep them working.

    we closed our shop and moved it to a less-expensive location.

    we will compete on all offers. no job is too small. i’ve never seen it this bad before and i hope it doesn’t get any worse. we will have to keep laying off workers”.

    This market isn’t helping business, employment, the environment or anyone but the Wall St. Cons. You are a shill or ignorant to express otherwise.

    The market peaked over 14,000 three years ago.
    I hit a trough last year.
    The DOW has yet to recover over half its losses. In the meantime, the jobs situation is much much worse, public and private debts are growing more burdensome, there are waves of foreclosures waiting to hit the RE market which is already suffering from a glut of inventory and collapsing prices, our auto manufacturing industry is shot, our highways are shot, our bridges are shot, our canals and rails are antiquated, our refineries are 50-90 years old, our gov’t is corrupt and nearly useless and real U-6 employment figures (see John William’s Shadowstats) is south of 80%.

    Yup, expect more strong growth.


  • Texcession

    C’mon, Bill…you know the answer. Today’s construction workers will end up exactly where government wants them, just like the farmers did. Just as it wasn’t a straight line from the farm field to the bomber factory, it will not be a straight line this time either. The similarities, though, are too great to ignore.

    Give away farmland that can’t produce enough to live on, fool the farmer into believing it can, then loan the farmer money, then foreclose and kick him off the land after you’ve taken every penny he ever had, then take it over and make it productive again.

    How is that any different than what’s happening now? Give the dolt a home with nothing down, loan him a fortune, take every penny he has, foreclose, wash, rinse, repeat. Pretty soon we’ll get to see what they have in mind for all those neighborhoods and all the people who used to live in them. I’m pretty sure it will be profitable to the new owners. Certain of it, as a matter of fact. If you don’t already have a pretty good idea, then you’re not as plugged in as I thought you were. You might want to read this book called Mobs, Messiahs and Markets. The answer is in there.

  • alex verlinden

    hey Harry, :-)

    spot on !

    not really a “strong” revision of GDP, but an upward revision it is !

    I sincerely hope your “triple digit DOW gain” will come true today or Monday, because I’m starting to doubt my 10500 …

  • Scott

    Texcession’s assessment is correct. My bet is on WW 3. In fact we are already in it. The middle east is looking like a beachead for it. The mass suffering will get everybody on their hands and knees. That’s when we’ll be ready for a new preplanned system.

    Have a pleasant day.

  • 99 cent Nation

    “real people are turning real gloomy,” In our immediate gratification society people want instant solutions to huge problems that may take years to solve if at all. We have willingly put ourselves into these positions while blindly flying along without a thought of consequences. Pitiful.

  • Donnie Darko

    Destruction is a form of creation

  • Harry

    alex: snowstorm keeping volumes down so the triple digit might not hit today. But Monday is Mutual Fund Monday and we all know that’s when the markets spring to life!

  • sierra

    I’ll say it again; yellow “crime scene” tape surrounding Washington, Wall Street and the Supreme Court.
    From the “age of gluttony and narcissism, welcome to the “age of reality.”
    The problem with gold and silver, “….you can’t put either between two pieces of bread” (kind’a like “prestige”)
    Yes, you may be able to “buy bread.”

    But, for those who have tales of the Great Depression, my father was one of fourteen immigrant farming partners just outside of San Francisco. Crops were dumped because they couldn’t even pedal such amounts as 200lb crates of cauliflower or cabbage for 25 CENTS or less!!
    As we joined in business for some years, the changes we observed pointedly disturbed my father to finally come to the conclusion that, (This in the age of the 1950’s-60’s) “….this country will see another depression that will make the last on look like a picnic!”
    He may be right…..
    One commenter above mentioned being, “tractored out” in the Midwest and he is correct…
    For the last twenty years we have been, “high-teched” out and “outsourced” if nothing else works….
    Enjoy the ride, Harry…this is market for you guys but not for the other 98% of the country……
    We may welcome destruction as part of creation, but it “ain’t going to be pretty.

  • Mj Sterne

    What we need is to re-establish America, our values and integrity in family & business. Utilizing our country for all it’s resources, and jobs and start looking into greener technology, pro-survival components, not greed..

  • Beats by Dre Tour Sale

    Unquestionably believe that which you said. Your favorite justification appeared to be on the net the easiest thing to be aware of. I say to you, I definitely get annoyed while people think about worries that they plainly don’t know about. You managed to hit the nail upon the top as well as defined out the whole thing without having side-effects , people could take a signal. Will probably be back to get more. Thanks

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