Author Archives: Bill Bonner

     

 

 

The Nasty Habits of Reality

BALTIMORE – People never intend to bring disasters upon themselves. But they sometimes put themselves in situations in which disaster is the only way out.

The War Between the States was supposed to be quick and decisive. The glorious histories of the war were already written – at least in the minds of the combatants – by the time of the First Battle of Bull Run.

 

General Thomas “Stonewall” Jackson inspects the action at the First Battle of Bull Run. Confederate observers were suitably impressed. We’ve got this in the bag, they said to themselves. Let’s start writing the history books!

 

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Donald vs. the Swamp

BALTIMORE – Judging by the Diary mailbag, dear readers would like to see a more positive attitude towards the president-elect. We would like to take a more positive approach; we like wishful thinking as much as anyone. In particular, we’d like to see Mr. Trump do away with the inheritance tax.

 

swamp-thingA message from the swamp thing: all you’ll get is a maw-full of muck –  it is knitting itself back together already. And besides, it is ticked off.

Illustration by Len Wein

 

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Democratic Fantasy

BALTIMORE – Fidel Castro was regarded as a revolutionary and a “change agent.”

But he is better understood as a throwback, more of a counter-revolutionary than a real revolutionary. The real revolution in human affairs happened long before he was born… and is still going on – the revolution led by civilized free-market capitalism.

 

timeFinger-wagging Fidel Castro on the cover of TIME in 1965, which by this time accused his revolution of “decaying”. The US government initially continued to subsidize Cuba in the wake of Castro’s takeover as he had given less than truthful assurances that the “handful of communists” in his cabinet had no influence on Cuba’s policies. The Batista government’s economic policies had a great many statist features as well, so at first it seemed as though the differences between the two regimes would only be marginal – mainly, someone else would do the stealing. By the time the above cover story was published, the US was waging a full-scale economic war against Cuba. It is rare for a classical peasants’ revolt to actually succeed. Castro’s victory over Batista was quite a feat in that sense; not surprisingly, it elicited the admiration of Leftists the world over. Castro was not a Stalinist, presumably not least because Khrushchev had “de-Stalinized” the Soviet Union, but he did declare himself a Marxist-Leninist (which Stalin incidentally had claimed to be as well). The political Left’s misguided admiration for Castro never wavered though.

 

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Free Money!

BALTIMORE – Last week, the Dow punched up above 19,000 – a new all-time record. And on Monday, the Dow, the S&P 500, the Nasdaq, and the small-cap Russell 2000 each hit new all-time highs. The last time that happened was on the last day of December 1999.

 

1-djia-daily-annIronically, two events that were almost universally expected to trigger large stock market declines were followed by quite rapid and strong gains. Would the market have fallen if Hillary Clinton had won the presidential election? That would have confounded expectations as well. Also, the S&P 500 declined for nine days in a row (even if not by much) just before the election – at the time Clinton was still widely expected to win. it remains to be seen whether and for how long the recent discounting of Nirvana will last – click to enlarge.

 

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Permanently Skewed

TRUMP HOTEL, New York – Trump’s rambling army – professionals, amateurs, camp followers, and profiteers – is marching south, down the I-95 corridor. There, on the banks of the Potomac, it will fight its next big battle.

 

team-aLieutenants in Trump’s army: Bannon, Flynn & Sessions

Photo credit: Drew Angerer / AFP

 

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The Trump Trade

After 35 years of waiting… so many false signals… so often deceived… so often disappointed… bond bears gathered on rooftops as though awaiting the Second Coming. Many times, investors have said to themselves, “This is it! This is the end of the Great Bull Market in Bonds!

 

1-bonds-long-termThe long bond’s long cycle – red rectangles indicate when the post 1980 bull market was held to be “over” or “over for sure” or “100% over”, etc.  We have repeatedly seen bear percentages close to or even exceeding 90% in the Barron’s “smart money” poll over the years. There can be no doubt that Donald Trump’s election has boosted inflation expectations in the short term – but will the momentum persist? – click to enlarge.

 

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Depravity and Degeneration

BALTIMORE – Finally, it’s over. We were both delighted and appalled by the news. A smile spread over our face… and our steps lightened… as we looked ahead to four years without Hillary Clinton’s know-it-all mug in the news.

 

no-hillaryPraise be! This mug will be largely missing from the airwaves and the intertubes in coming years. And your caption scribbler PT won’t have to look for a fall-out shelter! We thank the Lord and the American public for this not inconsiderable favor.

 

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$8 Trillion Transfer

RHINEBECK, New York – It is a beautiful autumnal day here in upstate New York. The trees are red, brown, and yellow. Squirrels hop across the lawn, collecting their nuts. Unseasonably warm the last few days, rain showers are moving in from across the Hudson, driven by a chilly wind.

 

1-ff-rateThe effective federal funds rate, or: the Fed sends savers a message… – click to enlarge.

 

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Making Flimflam Float

RHINEBECK, New York – Poor Mr. Obama. In an apologia in The Economist, the president reveals that he has learned nothing during his time in the White House.

More importantly, he has forgotten nothing…

 

guest-essayAt the time this ad appeared it was just a threat…  then he actually went ahead and did it, dispensing advice to his successor. In case readers are not familiar with it, the Economist is essentially a socialist rag, advocating government intervention at every turn – it is not very different from the FT in this respect.  As a friend of ours recently remarked, the last year in which the magazine was worth reading was 1993, it’s gone downhill ever since. We will concede though that it continues to work very well as a contrary indicator  (its title pages have a near perfect record in this respect).

 

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A Confession

RHINEBECK, New York – Is the stock market dead? Nothing is happening there. It is the first of November. The countdown to the elections has begun; the nation seems to hold its breath.

 

supreme1The US Supreme Court is “up for grabs”  – but does it even matter? Not if one considers the court’s history. It is essentially a rubber stamp for the State, giving legal cover to its transgressions.

Photo credit: Joe Ravi

 

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Calm Before the Storm

BALTIMORE – It was another slow news day for the stock market. At least at 7 a.m. here on the East Coast it was. But bonds are starting to show signs of topping out.

 

hawk-2Hawk in waiting

Cartoon by Bruce Plante

 

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Deep State in Control

BALTIMORE – What is going on in the markets? Well, nothing much. The U.S. stock and bond markets have been as dull as a teetotaler’s funeral. No dancing. But no teary breakdowns, either.

 

1-spx-and-tltS&P 500 Index and the long term (20 yr. +) bond ETF TLT – both have weakened recently, but not dramatically (at least not yet) – click to enlarge.

 

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Most read in the last 20 days:

  • Gold Price Skyrockets in India after Currency Ban – Part III
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  • Gold Price Skyrockets in India after Currency Ban – Part IV
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  • A Note on Gold and India – What is Driving the Gold Price?
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  • Gold Price Skyrockets in India after Currency Ban – Part V
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  • Attaining Self-Destruct Velocity
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  • All Aboard! Trump’s Express Train to the Future
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  • India's Currency Debacle – An Interview with Jayant Bhandari
      A Major Crisis Last week Jayant Bhandari related the story of the overnight ban of certain banknotes in India under cover of “stamping out corruption” (see Gold Price Skyrockets In India after Currency Ban Part 1 and Part 2 for the details).   Banned 500 rupee banknotes   The problem is inter alia that the sudden ban of these banknotes has hit the Indian economy quite hard, given that 97% of all transactions in the country are cash-based. Not only that, it has...
  • Will the Swamp Swallow Trump?
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  • There Are Two Types of Credit — One of Them Leads to Booms and Busts
      Stumped by the Bust In the slump of a cycle, businesses that were thriving begin to experience difficulties or go under. They do so not because of firm-specific entrepreneurial errors but rather in tandem with whole sectors of the economy. People who were wealthy yesterday have become poor today. Factories that were busy yesterday are shut down today, and workers are out of jobs.   What has caused the bust? The modern-day economic orthodoxy continues to be unable to provide...
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  • Too Early for “Inflation Bets”?
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