A Lehman Moment for Commodities?

LONDON – Today, we continue our philosophical look at what you should do if you are running out of time and money. (You can catch up on Part I here.)

Where do we begin? With how to add wealth? Or how to lose it? The way to lose it is simple. You buy something that is not worth the money you paid for it. You are instantly poorer, whether you know it or not.

 

fat_spies_by_jdeer69-d60927gThe pleasingly plump.

Illustration by jdeer69

 

 

DJIADJIA, daily – still unsettled – click to enlarge.

 

That is what is happening today to stock market investors. The stocks they bought were not worth the money; now Mr. Market is letting them know. On Monday, the Dow dropped almost 2% to 16,002 points. Next stop: 15,000.

“It’s a bear market,” says Jim Cramer. It will be a “bloodbath,” says billionaire investor Carl Icahn. We don’t know. But our guess is that 10 years from now your stocks will be worth no more than they are today.

The biggest losers on Monday were in the commodities and biotech sectors. Well, Glencore – one of the world’s largest resource companies – is one of the companies not buying them.

Glencore shares have lost 75% of their value so far this year. If commodities prices stay at these low levels, it could be worth nothing by the end of the year. Glencore could be headed the way of Lehman Brothers…

 

GlencoreGlencore, daily. On Tuesday the stock recovered a bit, after Glencore tried to refute speculation about its imminent demise with a press release “responding to speculation”… click to enlarge.

 

Biotechs dragged the Nasdaq down yesterday. But the sector is still up more than 425% since 2009. Plenty of room left on the downside, in other words. Icahn, by the way, seems to have signed on as an advisor to Donald Trump. This is a good thing. The presidential hopeful needs advice.

Trump unveiled his tax plan yesterday. It looked good to us, with a top rate of 25%. You have to give him credit. Few career politicians, aspiring to the Oval Office, would dare a major overhaul of the tax code.

Over the years, every pig in America has muscled up to that trough. A more conventional candidate wouldn’t take them on. But Mr. Trump is refreshingly naïve in many ways. He often doesn’t know what he’s talking about; he hasn’t been thoroughly coached by the cronies.

 

donald-trump-cartoon-luckovichTrump: yet to receive crony instructions.

Cartoon by Mike Luckovich

 

A Necessary Philosophy

But let us turn from how to lose money to how to make it. We left Paris early this morning. It was still dark. It’s that time of year. The days grow short… and damp… and dwindle down. The sidewalk was slick with decaying leaves. The hint of approaching death makes the dying autumn days especially rich, like the last bites of a favorite dessert.

And over Paris this morning shone a “super moon” that must have set hearts yearning for something. But what? Romance? Love? Pity the poor tin heart – like an empty trash bin – that looked at that full moon lighting up the slate roofs of Paris and wished for money.

 

paris supermoon-2Super-moon over Paris – a money moon?

Photo credit: Charles Platiau / Reuters

 

But money is our beat at the Diary. We will stick with it. But money means nothing without philosophy. Beyond what we need to survive, money has no importance. Is it good? It is bad? It depends.

We need a simple philosophy to make sense of it – to guide us past the Gucci bags… past cable TV… and past the million-euro apartments of the 16th arrondissement. Not that there is anything wrong with them. But they are expensive.

And if you don’t have money, you need to be able to pass up luxury, gluttony, and self-indulgence with your nose in the air… not with your shoulders bent in defeat and self-disgust. And for that you need philosophy. Or at least aesthetics.

All people – unless they are saints or mental defectives – want to feel good about themselves. That is their primary aim in life and the only reason they are interested in money (save the minimal amount for survival). Since we are a competitive species, we feel good about ourselves in direct measure as we feel superior to those around us.

If we are trim, it does no good unless those around us are not. If we are smart, we get no advantage from it unless others are dumb. And if we are rich, it is only meaningful to the extent that others are less rich.

But so clever is our race that we are able to find superiority almost everywhere. If we are fat, we redefine the corpulent spectrum so that we are “pleasingly plump,” while others are “unhealthy” and “too thin.”

If we are dumb, we focus on our “common sense,” as opposed to the uncommon nonsense of the “pointy-headed intellectuals” (to borrow a phrase from George Wallace).

And what if we have no money? Then spending money is vulgar, shallow, and pointless!

 

Pity the Rich

One person feels superior because of what he owns. Another for what he does not. Still another for what he knows. And another for what he knows not. And one feels superior from who he is, while another measures his stature by who he is not.

But the one who feels superior to them all is the one who owns nothing, knows nothing, and is a complete nobody. He is free from the vanities that clutter others’ lives!

In 10th-century Europe having little became fashionable. People gave up their possessions in search of a life of contemplation. They wanted to get away from the distractions and temptations of everyday life, so they could live in a purer way… in simplicity and godliness.

 

St._Benedict_delivering_his_rule_to_the_monks_of_his_orderSt. Benedict handing his rulebook (“ora et labora”) to his monks at the monastery of St. Gilles, AD 1129

 

So great was the demand for poverty that the monasteries and convents could scarcely keep up with it. They had to build new ones all over the continent. But there is no need to insist. We just need to recognize that there are people with little or no money who live well. And there are people with a lot of money who live badly.

Our goal will be to live better. We will take as a challenge and a point of pride to do so without spending money. We will have less, but we will treasure our frugality as a man might value a collection of old cars or well-developed biceps.

Then – as our days decline, our appetite wanes, and our energy subsides with the tide of life – our treasure of nothing increases, for we will need less and less. A bed. A book. A candle. What more could we want?

Yes, we are talking about a program of radical deprivation and happy pennilessness. Our goal would be to feel superior to rich people… without having any money. We will wear our new-found love of poverty as a badge of honor… and use it to get rich!

Already, we pity the rich. In our empty coffer, we have the greatest treasure of all – the hope of happiness. Yes, dear reader: Blessed be the poor. For they enjoy the gift of ignorance. They still believe that they could be happy… if only they had more money!

 

lottery-cartoon-funny-funniest-lotto-winner-picturesThere’s always the lottery …

Cartoon by Mark Hughes

 

This, of course, is an illusion that only the poor can afford. Rich people know better. They have too much money. They know it cannot buy them happiness. That’s why the suicide rate in Aspen is three times the national average.

But how lucky are the poor! They still have hope! They might win the lottery. They might get a raise or a better job. They might inherit money from a rich uncle. Money is always close at hand.

So, happiness must be too… only a funeral or a lottery ticket away. More to come… including the practicalities. How DO you get more money?

 

Charts by: StockCharts, BigCharts

 

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: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Japan: It isn’t What the Media Tell You
      Known for Being Terrible For the past few decades, Japan has been known for its stagnant economy, falling stock market, and most importantly its terrible demographics.     A chart of Japan's much-bewailed demographic horror-show. Most people consider a declining population to be a bad thing due to the implications for assorted state-run pay-as-you-go Ponzi schemes, primarily those related to retirement. It is hard to be sympathetic, since it would have been possible to...
  • An Update on Polly: She May be Coming Back to Life
      A Twitch of a Toe In our recent update on credit spreads we proposed to use the seemingly deceased  Monty Python parrot Polly as a stand-in for the suspicion of creditors in today's markets.  The question was whether Polly was indeed dead or merely in a deep coma. Depending on this, one should be able to gauge how powerful a miracle will be required to resurrect her.   Meet Polly. Is she alive?   In the first half of November there was actually a small sign that...
  • The Complete Idiot’s Guide to Being an Idiot
      Style Over Substance There are many things that could be said about the GOP tax bill.  But one thing is certain.  It has been a great show. Obviously, the time for real solutions to the debt problem that’s ailing the United States came and went many decades ago.  Instead of addressing the Country’s mounting insolvency, lawmakers chose expediency without exception.  They kicked the can from yesterday to today.   The empty chairs meeting – this is slightly...
  • The Zealous Pursuit of State-Sponsored Collapse
      When Bakers Go Fishing Government intervention into a nation’s economy is as foolish as attempting to control the sun’s rise and fall by law or force.  But that doesn’t mean governments don’t meddle each and every day with the best – and worst – of intentions.  The United States government is no exception.   From the “When the government helps the economy” collection: Breaking a few eggs while baking the bridge to nowhere omelet. [PT]   Over the...
  • Precious Metals Supply and Demand – Thanksgiving Week
      Grain of Salt Required The price of gold fell $7, and that of silver 24 cents. This was a holiday shortened week, due to Thanksgiving on Thursday in the US (and likely thin trading and poor liquidity on Wednesday and Friday). So take the numbers this week, including the basis, with a grain of that once-monetary commodity, salt. We will keep the market action commentary brief.   Relatively modern examples of salt money which was widely used in African countries until the...
  • What’s the Point? Precious Metals Supply and Demand Report
      Questions and Answers A reader emailed us, to ask a few pointed questions. Paraphrasing, they are:   Who cares if dollars are calculated in gold or gold is calculated in dollars? People care only if their purchasing power has grown. What is the basis good for? Is it just mathematical play for gold theorists? How does knowing the basis help your readers? Is it just a theoretical explanation of what has already happened? Prove that if someone has known the basis...
  • The Stock Market and the FOMC
      An Astonishing Statistic As the final FOMC announcement of the year approaches, we want to briefly return to the topic of how the meeting tends to affect the stock market from a statistical perspective. As long time readers may recall, the typical performance of the stock market in the trading days immediately ahead of FOMC announcements was quite remarkable in recent decades. We are referring to the Seaonax event study of the average (or seasonal) performance across a very large...
  • The Party of Spend More vs. the Party of Tax Less
      Eternal Spendathon The Senate just passed a 500-page tax reform bill. Assuming it lives up to its promise, it will cut taxes on corporations and individuals. Predictably, the Left hates it and the Right loves it. I am writing to argue why the Right should hate it (no, not for the reason the Left does, a desire to get the rich).   The Federal debtberg has grown beyond all measure since Nixon's gold default. So has the money supply and the amount of private debt. No-one...
  • The Santa Claus Rally is Especially Pronounced in the DAX
      The Gift that Keeps on Giving Every year a certain stock market phenomenon is said to recur, anticipated with excitement by investors: the Santa Claus rally. It is held that stock prices typically rise quite frequently and particularly strongly just before the turn of the year.   Unbeknown to many, Santa Claus paid a high price for enriching investors [PT]   I want to show you the Santa Claus rally in the German DAX Index as an example. Price moves are often...
  • Heaven Forbid Peace Should Break Out Between the US and North Korea!
      Rude Interruptions As long as the US Empire can be funded and maintained on the backs of its taxpaying public, the chance of a deescalation of tensions not only on the Korean peninsula, but throughout the world are practically nil.  And as long as the nation’s current interventionist ideology holds sway, it will only be through a financial meltdown that the role of the US as global policeman will come to a much-needed end.   Hamhung, North Korea, June 30, 1950; an example...
  • The Rug Yank Phase of Fed Policy
      Bogus Jobs Pay Big Bucks The political differences of today’s two leading parties are not over ultimate questions of principle.  Rather, they are over opposing answers to the question of how a goal can be achieved with the least sacrifice.  For lawmakers, the goal is to promise the populace something for nothing, while pretending to make good on it.   The short and sweet definition of democratic elections by eminent American wordsmith and political philosopher H.L. Mencken...

Support Acting Man

Top10BestPro
j9TJzzN

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]

 

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com