04/22/10 Cafayate, Argentina – Last week, we went to a bootmaker in Salta. The old man showed us a pair of red boots.
“Here, try these on. I made them for a big norte-americano like you.”
We put them on. But they were a tad too large. Then, we saw the initials on the order form.
“Who are you making these for?” we asked.
“A fellow named Casey. Dooglas Casey.”
Ah, now we know for sure. We could never fill Doug Casey’s boots.
We had dinner with our old friend before leaving for the ranch.
“The situation is worse than even I thought it was,” said Doug.
But Doug didn’t seem any more worried about it than we are.
This is the strange bifurcation in today’s financial world. Those of us who bother to think about it (both of us) believe there’s trouble coming. You can’t de-leverage a 60-year credit expansion in just a few months. You can’t correct a debt problem by adding more debt. And you can’t fix the private sector by beefing up the public sector.
Still, the ‘recovery’ has gone on for so long we’ve forgot what the crisis felt like. Remember in the fall of ’08…when stocks were crashing and Lehman went bust? Fear…and loathing. Deep down. Dreadful. Terrifying. That’s what people felt back then. It was the ‘end of the world.’ The day of reckoning had come…
Fear makes you do things you don’t want to do. It makes you cut expenses…cut projects…cancel vacations…trim…tighten… All the things you knew you should do but really don’t want to do.
But as soon as the fear subsides, you’re able to shelve those plans and get back to doing what you were doing before. Even if the causes for the fear are still there…and even if you understand them and see them clearly.
Probing our own feelings the other day, we realized that we were no longer afraid. As near as we can tell, the Great Correction is developing as it should. But the rebound has lasted longer and gone further than we expected. It’s taken the edge off fear. The Dow is over 11,100…bond yields are still near record lows…and more people believe the feds have mastered the art of crisis control than believe in the virgin birth.
But the risks are still there. Sooner or later they will express themselves.
Again, stay tuned.
Regards,
Bill Bonner
for The Daily Reckoning
Bill Bonner
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.
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Henry helpfully posted this note before his arrival: “Here’s a quick Christmas list. A lot of you are on a tight budget, what with this worldwide financial meltdown, so I’ve included items that can easily be shop-lifted…”
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those were the days of exteme fear …
We had a “recovery” in America between the spring of 1930 and the summer of 1931 and then the major European banks began to fail leading to a world wide banking crisis that knocked the legs out of our “recovery” and lead to the worst depression we ever experienced. Sound familiar?! Greece anyone?
Greece?
Spain, Portugal, Ireland……..
Bill – Where have you been for the last week? We’ve missed you!
This was a really good piece by Bill. I can’t fathom why the market continues to rocket higher contrary to everything I am seeing on the ground. It seems to me that the stock market is not being allowed to fall, it’s being forcibly propped up by forces other than the free market.
“But the risks are still there. Sooner or later they will express themselves.”
Yup, but maybe not the way you expect.
Hooray, Bill! Glad to see you’re back. We’re all looking forward to the stories you have to tell. Regarding today’s essay, I agree with lagirl. The unseen hand writes, and having writ moves on, but I don’t understand a word the market is telling us, because it makes no sense at all
There is another way of looking at the situation that is weird. In a real recovery the real economy should be leading the way. This time it seems that the real economy (industry) is following along on the coattails of the finance economy. It just seems like it would feel a lot more comfortable if it was the other way around. But is this even possible in the US/Europe? Where have our priorities gone? I guess laborers in the developed economies just have to learn computers/SW and become day traders. Remember “We’ll think, They’ll sweat”? Is that working?