The Yellow Machines Go Silent

PARIS – What should you do if you are running out of time and money? This is the question we get from readers over 50… over 60… and sometimes over 70.

We baby boomers were famously “na… na… na… live for today.” Now, it’s tomorrow. And many of us – often through no fault of our own – are having trouble making ends meet.

At the Diary, we write about the world of money. About economic policy and how it affects you. But what if, in your world of money, you are running short? What should you do to get more? Check under the seat cushions? Rob a bank?

We’ll come back to this question in a few moments. First, let’s take a look at the big picture.

It appears that the world economy is headed for recession. An economy makes and takes. Whatever you make – whether it is an apartment building or a plastic toy – you have to begin by taking dirt out of the ground.

 

Fleet_830X240Caterpillar-made fleet of mining trucks

Photo credit: Caterpillar

 

You need to dig a hole before you can put up a building… or even make a parking lot. And you need to scrape up raw materials – copper, iron, oil, etc. – before you can make anything at all.

This requires machines. Yellow machines. When economic activity goes down… so do sales of these machines. Yellow machines move dirt. They are used in construction, mining, and every sort of resource industry. We’re talking about backhoes… tractors… forklifts… excavators… bulldozers… and loaders.

Ominously, demand for these machines – along with the stuff they move – is collapsing. Two of the biggest suppliers are Caterpillar in the U.S. and JCB in Britain. Both report catastrophic drops in sales.

Caterpillar says its sales have fallen three years in a row. And it expects a fall of another 5% next year. This marks the first time in its 90-year history that sales have fallen four years straight.

 

CAT retail sales 2CAT’s worldwide sales have been declining for quite some time (via Zerohedge) – click to enlarge.

 

The Illinois-based company – which gets 60% of its revenues by selling machines outside the U.S. – says it has had to lay off 31,000 people so far… with more job losses to come.

JCB says that it, too, is suffering a devastating fall in sales. Commenting on falls in demand of 70% in Russia, 47% in China, and 36% in Brazil, JCB’s CEO, Graeme MacDonald, said:

 

“Market conditions in the construction equipment sector have been difficult for some time, but they have worsened quite rapidly in recent weeks.”

 

The yellow machines are at the beginning of the process, not the end. You have to move dirt before you put up a factory. Or build a house. So, when the wheels stop turning on the yellow machines, it won’t be long before it shows up in falling GDP figures.

 

CATCAT weekly – after the 2009 low, the stock rallied strongly until 2011 – since then it has gone sideways, but it looks now as if it may be about to break down from this extended trading range – click to enlarge.

 

What Really Matters

Now, back to the question on the table: You are 70. You have no money. What do you do? Sell your body for medical experiments? Invent a new app? As we said last Wednesday, sophisticated trading systems and expensive investment programs are not a good idea if you fall into this category.

They are for people who have money already. If you have money, want more, and enjoy the thrill and challenge of financial adventure, they can be highly lucrative. But what if you don’t have money already?

We don’t know anything more than anyone else on the subject. We don’t have any secrets. But after thinking about it, we have some ideas. This is not advice. This is just what we would do if we were in that situation…

First, we would go back to philosophy – Democritus, Epicurus, Zeno, Seneca, Marcus Aurelius, and Lucretius (not to mention Jesus of Nazareth!). They argued – albeit in different ways – that what matters in life has little to do with wealth or status. What matters (at least according to Plato’s description) are courage, wisdom, justice, and temperance.

We would add beauty and dignity. And a good wine. And a good cook. But nowhere on the list is a Rolex or a house in Malibu. The nice thing about Plato’s list… as well as the whole Epicurean/Stoic/ascetic creed… is that it doesn’t cost much!

As many philosophers and religious teachers have said, wealth may get in the way of the things that matter. It may distract you and reduce your real happiness.

You may be better off without it…

 

underpass-libraryThe underpass library in Toronto, for those with no money at all.

Photo credit: Stephane Blais / CBC

 

A Better Philosophy

We are not ducking the question. We are just putting it in context. If you want more money, you first have to understand what you want it for… and how it might affect your life.

Our goal is not to “come to terms” with financial misery. Nor is it to submit to poverty – even happily. Instead, we want to master poverty… to live better.

As Nietzsche put it, we aim to “set to dancing with arms and legs.” And for that we need context. Tomorrow – a simpler, better philosophy… and how to use it to get more money!

 

Charts by zerohedge, stockcharts

 

Image captions by PT

 

The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Trade War Game On!
      Interesting Times Arrive “Things sure are getting exciting again, ain’t they?”  The remark was made by a colleague on Tuesday morning, as we stepped off the elevator to grab a cup of coffee.   Ancient Chinese curse alert... [PT]   “One moment markets are gorging on financial slop like fat pigs in mud.  The next they’re collectively vomiting on themselves. I’ll tell you one thing.  President Trump’s trade war with China won’t end well.  I mean, come...
  • From Fake Boom to Real Bust
      Paradise in LA LA Land More is revealed with each passing day.  You can count on it.  But what exactly the ‘more is of’ requires careful discrimination.  Is the ‘more’ merely more noise?  Or is it something of actual substance?  Today we endeavor to pass judgment, on your behalf.   Normally, judgment would be passed on a Thursday, but we are making an exception. [PT]   For example, here in the land of fruits and nuts, things are whacky, things are...
  • Getting High on Bubbles
      Turn on, Tune in, Drop out Back in the drug-soaked, if not halcyon, days known at the sexual and drug revolution—the 1960’s—many people were on a quest for the “perfect trip”, and the “perfect hit of acid” (the drug lysergic acid diethylamide, LSD).   Dr. Albert Hoffman and his famous bicycle ride through Basel after he ingested a few drops of LSD-25 by mistake. The photograph in the middle was taken at the Woodstock festival and inter alia serves as a...
  • Rise of the Japanese Androids
      Good Intentions One of the unspoken delights in life is the rich satisfaction that comes with bearing witness to the spectacular failure of an offensive and unjust system. This week served up a lavish plate of delicious appetizers with both a style and refinement that’s ordinarily reserved for a competitive speed eating contest. What a remarkable time to be alive.   It seemed a good idea at first... [PT]   Many thrilling stories of doom and gloom were published...
  • US Stock Market: Happy Days Are Here Again? Not so Fast...
      A “Typical” Correction? A Narrative Fail May Be in Store Obviously, assorted crash analogs have by now gone out of the window – we already noted that the market was late if it was to continue to mimic them, as the decline would have had to accelerate in the last week of March to remain in compliance with the “official time table”. Of course crashes are always very low probability events – but there are occasions when they have a higher probability than otherwise, and we will...
  • No Revolution Just Yet - Precious Metals Supply and Demand Report
      Irredeemably Yours... Yuan Stops Rallying at the Wrong Moment The so-called petro-yuan was to revolutionize the world of irredeemable fiat paper currencies. Well, since its launch on March 26 — it has gone down. It was to be an enabler for oil companies who were desperate to sell oil for gold, but could not do so until the yuan oil contract.   After becoming progressively stronger over the past year, it looks as thought the 6.25 level in USDCNY is providing support for the...
  • The “Turn of the Month Effect” Exists in 11 of 11 Countries
      A Well Known Seasonal Phenomenon in the US Market – Is There More to It? I already discussed the “turn-of-the-month effect” in a previous issues of Seasonal Insights, see e.g. this report from earlier this year. The term describes the fact that price gains in the stock market tend to cluster around the turn of the month. By contrast, the rest of the time around the middle of the month is typically less profitable for investors.   Due to continual monetary inflation in the...
  • Russian Gold Rush - Precious Metals Supply and Demand
      Goldfinger Strikes, Sort Of This week, we saw a tweet from a prominent goldbug. He said, "Russia added another 9 tons of gold to its reserves in March. The hits just keep coming." How many errors in this short quip? We count six, exactly one error for every two words.   This one's got everything: Smersh, Spectre, Putler and Pussy Galore! [PT]   One, we call this the fallacy of the famous market actor. Russia is famous. Its purchase of 9 times is therefore imbued with...
  • Flight of the Bricks - Precious Metals Supply and Demand
      The Lighthouse Moves Picture, if you will, a brick slowly falling off a cliff. The brick is printed with green ink, and engraved on it are the words “Federal Reserve Note” (FRN). A camera is mounted to the brick. The camera shows lots of things moving up. The cliff face is whizzing upwards at a blur. A black painted brick labeled “oil” is going up pretty fast, but not so fast as the cliff face. It is up 26% in a year. A special brick, a government data brick of sorts, labeled...

Support Acting Man

Item Guides

Top10BestPro
j9TJzzN

The Review Insider

Austrian Theory and Investment

Archive

350x200

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com

Diary of a Rogue Economist