10/27/09 Beunos Aires, Argentina – It’s a delight to be back in Buenos Aires. It’s springtime. The sun is shining. The birds are singing in the trees. What more can you ask for?
Another national emergency! Terrorism…the banking crisis…now Swine Flu.
Why it is an emergency, we don’t know. Our sister, living in Virginia tells us that several of her grandchildren have come down with the Swine Flu. It doesn’t seem to bother them anymore than any other flu.
But every emergency is an opportunity. The feds don’t want to waste it. Instead, they swing into operation with a rescue plan. It will end up costing billions…hundreds of billions…or maybe even trillions. We don’t know what they’ve got in mind. But we know what will come of it. It will end up extending the power and influence of the government. So far, the feds are the only real winners from any of these crises. Federal outlays, as a percentage of GDP have shot up from less than 20% of GDP in 2000 to more than 26% in 2009.
Will it do any good? Public health is not central banking. And it’s not economic planning. Force everyone to wear a surgical mask and maybe lives would be spared. Or, maybe not. Without the immunity of occasional bouts of flu, who knows? Maybe people would be more susceptible to the next disease. The American Indians were almost wiped out…because they had no immunity to European diseases.
Interesting…
Ain’t nature amazing? Disease works like an economic correction. It winnows out the weak…and it toughens up survivors. Allowing people to get sick is a little like allowing them to go broke. It keeps the whole system from softening up…from becoming more vulnerable. It protects people from moral and biological hazard. In other words, it’s the correction that really provides protection…the disease itself, not the cure. Or, to put it another way, it’s the crash that is beneficial, not the rescue.
David Einhorn, one of the few people to make money in the crash of sub-prime debt:
“The financial reform on the table is analogous to our response to airline terrorism by frisking grandma and taking away everyone’s shampoo. It gives the appearance of ‘doing something’ and adds to our bureaucracy without really making anything safer.”
The Wall Street Journal reports that even bankruptcy can be a good thing. “Household Debt Can Hasten Recovery…when it goes unpaid,” says a headline.
The whole idea of a correction is to wash out mistakes. If people can pay their debts down, the mistakes are corrected. The system is strengthened. If they can’t, the process of correction can happen faster. Bad debts are written off quickly. Then, a real recovery can begin. Either way, the system comes back in better shape.
Too bad the feds are getting in the way!
A decent correction should carry off those who made the biggest mistakes – in the present case, the firms on Wall Street that wagered billions on a bigger and bigger bubble. But instead of letting them go broke, the feds rewarded them.
Wall Street profits are a ‘gift’ from the state, says George Soros.
But wait, what kind of gift is this? If you give $100 to your neighbor, that’s a gift. But what if you tax your neighbor on the left $100 in order to give the money to your neighbor on the right? That’s a gift too…but of a special kind. You’re ‘redistributing the wealth,’ you might say.
And what if you do a quantitative easing? You know, you print up a $100 bill and give it to your neighbor? That’s a gift too.
Yeah, thanks a lot.
Meanwhile, the recession is said to have come to an end in the US. GDP growth is positive, say the papers. But if this is a recovery, let’s hope it comes to an end soon.
Existing house prices continued to fall in September.
Unemployment continued to worsen. “Signs of recovery don’t extend to jobs,” says the WSJ.
Sign Up for The Daily Reckoning e-letter and receive a copy of Bill Bonner's The Trade of The Decade report… at NO CHARGE.
We Value Your Privacy.
If it weren’t for your disregard for the poor and sick I wouldn’t mind you comparing nature’s and economic corrections. But as I know your musings since quite some time, I consider them outright disgusting, nowadays. Of course, in essence you’re right. Bailouts of economic entities are always wrong. But bailouts for individuals, i.e. especially poor and sick people is never wrong. It is called Christianity. If catholics should have gotten it by now.
Sorry, it should have read “Even” catholics should have gotten it by now.
That is, unless they are Buddhist or Muslim or Jewish or Hindu.
Lost & Found…
Troll troll troll!
(everyone sing the troll song!)
A REAL “Christian” wouldn’t take shots at Catholics (whose church founders actually knew Jesus).
And if people steal my money to ‘render unto caesar’ I’ll cut off their hands like I was a Muslim who caught them stealing.
The government robs from its citizens and pays off the Harvard Banker Mafia,,, Mr Bonner is all over them for doing just that and “He” is the disgusting one?
I think Lost & Lost might be more appropriate.
It’s a delight to be back in Buenos Aires. It’s springtime. The sun is shining. The birds are singing in the trees. What more can you ask for?
Another national emergency! Terrorism…the banking crisis…now Swine Flu.”
I thought that was pretty funny.
Ain’t nature amazing? Disease works like an economic correction. It winnows out the weak…and it toughens up survivors. Allowing people to get sick is a little like allowing them to go broke. It keeps the whole system from softening up…from becoming more vulnerable.”
But that was brilliant.
I thought comparing the flu to the economy was spot on. Both are managed and inflicted on all of us sheep at the bottom. In the case of the economy, there are private individuals with the right to print money and lend it to governments. In the case of the flu, there are companies that do research to create viruses that are released for the purpose of selling bogus shots and maybe killing a few in the process.
BONNER was right to include the Indian example. They were purposely given blankets infected with small pox. Germ warfare is an old strategy.
As long as you can profit from the misery and get a laugh in the process, who cares? Right?
Bill, I like every word you say. Edgy and true. We need you to buy an island, set up a new country, based on the common, straightforward reading of our constitution. No watering down by 200 plus years of judicial manuevering. You could be el Presidente, and we would be saved from the Socialists now in power in Washington, D.C.
I think it should be “Lost and Can’t be Found”. Why is it that everybody takes things so darn literllay these days??
‘Milk cows not taxpayers’
Bill – I’m confused about the house price movements in the US, I read a report yesterday that house prices had risen for the 4th month in a row?
Lost and Found:
you are an idiot. Stop posting on the internet.
what has happened to richard daughty ?
More to the point. Why are we quoting George Soros? Is this guy partially responsible for this economic fiasco? Doesn’t he fund radical political groups that helped usher in the era of Barack Obama?
Not to say Jay McQ would have been any better.
But, “It winnows out the weak…and it toughens up survivors”.
Ouch, Bill.
Couldn’t that be considered a hate/thought crime in the New Socialist World Order. Get with the program.
Didn’t you get the Obama Messiah memo? Its now all about transferring the wealth of the producers to the social parasites of the world.
I am neither a troll nor an idiot (for those who want to know). But it is nice to see how many catholics Bonner has captured. By the way, I doubt he himself is one. He is smart, ok, but for bad ends. Well, those who don’t notice or neglect will feel it in the end or as Bonner likes to say: people get what they deserve, not what they wish for or expect… And anyway, my comment wasn’t meant for the audience but for old Bill. But then, thanks that you all noticed
.
Mr. Bonner-
Brilliant article
Lost & Found-
I have read my Bible and find that nowhere in it does it tell me to go, take the money of your neighbor, and give it to the poor. In-fact, it allows for us each to be responsible for his or her own conscience and money.
The rich young ruler was commanded to sell all his possessions and then follow. When he chose not to do that, the goons were not sent to do that for him — wether he wanted to or not.
The Bible does condemn theft though. Taking other peoples money is a sin. Even if the theif intends to give it to the poor.
Dear Bill,
I’m reading through your archives and just read, “Moonstruck” (6/19/00) – hilarious! I loved how you compared “everything happens at the margins” with women’s wear.
To other newcomers to DR like myself I encourage you to browse through BB’s archives – everything is just as relevant today, and just as fun to read.
(I will change my name hereon from “Scott” to “Scooter” as I have noticed that there is another Scott writing as well.)
The Solid-
The Bible isn’t about money. Well, not in the first place, that is. You will learn that sooner or later. Or not.
Well, Bonner seems to be a libertarian of sorts – which is good. If he’s a catholic, or any other brand of christian, that of course, sucks.
Jerry M writes:
“Bill, I like every word you say. Edgy and true. We need you to buy an island, set up a new country, based on the common, straightforward reading of our constitution. No watering down by 200 plus years of judicial manuevering. You could be el Presidente, and we would be saved from the Socialists now in power in Washington, D.C.”
________________________________
And I will move in next door to Senor Beel and every day he will gift me $100.00 from his stash.
Lost & Found-
I fully understand that the Bible is not about money. I know that very well, however, the fundamental text for Christianity is called the Bible. I mentioned the Bible because you said the following:
“But bailouts for individuals, i.e. especially poor and sick people is never wrong. It is called Christianity”
If you are not advocating here the stealing of MONEY from one individual to “bailout” the individual to give it to the poor, what are you advocating for?
LOL! What used to be a pretty relevant site a few years back has now turned into a waste land of pathetic religious arguments. See BB, you’ve lost your doomer crowd and gained the lunatics.
But what do expect from a site that has been saying the economy is going to collapse daily yet GDP was strong today. As a matter of fact, earnings are strong as well. There are plenty of bearish sites/blogs around with actually good information and great back and forth commentary. This, on the other hand, has turned into religious freak show!
As always, I think Mr. Bonner’s article is brilliant. In this case it was a statement on the government intervention in the lives of the citizens. Specifically the theft of our money for questionable purposes such as giving it to unscrupulous and irresponsible organizations who had VERY recently displayed that they could not be trusted.
However such musings do invite a certain level of religious commentary. But, I would hardly call it a religious freak show, simply and honest and frank discussion without timidity toward the subject of religion.