Hayseed Cronies and Other Dreamers

BALTIMORE – “Facts are better than dreams,” said Churchill. Maybe. But dreams are much more appealing. And far more dangerous. Dreams were much on display in Iowa last night. The caucuses opened at 7 p.m. Then voters were allowed the fantasy that they were actually making a difference.

Trump supporters dreamed of making America great again… and basking in its reflected glory. Sanders supporters dreamed of making America fair again… and spending other peoples’ money.

 

hayseed moonshineThere, just over the horizon… I see even bigger subsidies… Iowan hayseed crony after ingesting a generous measure of claviceps purpurea by mistake

Illustration by

 

Clinton supporters dreamed of having their woman in the White House…Cruz supporters dreamed of NOT having Trump, Clinton, or Sanders in the White House…and of course, the hayseed cronies of the corn state dreamed of forcing people to buy more of their ethanol.

As of this morning, Cruz has won the contest on the Republican side. Clinton and Sanders are in a “virtual tie” for the Democrats.

 

Wings of Debt

On Monday, the Dow fell early in the session. It spent the rest of the day recovering the losses. Worrying investors is news that the U.S. manufacturing sector is in its fourth month of recession.

If you don’t make ‘em, you don’t need to ship ‘em. So rail freight traffic in the U.S. is also down – about 25% from its peak in 2010. And you don’t need trucks to move them, either. Volvo says its heavy truck orders are running 30% below their 2014 level.

The source of the slowdown is that demand is falling around the world. The orders just aren’t coming in. And nowhere is the pain felt more keenly than in the economy most dependent on satisfying those orders: China.

China makes; the world takes. If the world taketh not, China finds itself with excess capacity. Then the world’s leading exporter gets quiet. The furnaces cool. The factories slow. And creditors’ palms grow moist.

“Big China steel producers suffer $9.8 billion in losses,” says a headline in the Financial Times. Chinese heavy industry produces half the world’s steel. Last year, it went into recession for the first time in 35 years.

Naturally, container freight from Chinese ports is falling, too; the shipping index is now 40% below its 2012 level. Too bad they invested so much money to satisfy the world’s needs. Suddenly, the world doesn’t seem to need so much.

 

containerized freight indexChina’s container freight index (measuring prices for container shipping) looks sick – click to enlarge.

 

Here at the Diary, we are always suspicious of “facts.” The only ones we trust are those we make up ourselves. The rest – especially if they come from economists – turn out to not be facts at all. Instead, they are just guesses, wishes, or lies.

Still, as near as we can tell, the facts support the idea that China is slowing down, along with the rest of the world. And why shouldn’t it? After such a breathtaking sprint of growth, surely, China is tired. Surely, it deserves a breather.

Alas, you can stop and rest when you have your feet on the ground. But when you are flying through the air on wings of debt, you can’t afford even to slow down. Or you will crash.

 

Stagnation or Collapse

This leads former banker and financial author Satyajit Das to anticipate “the mother of all crashes” in China. There are only two likely outcomes in China, he said: stagnation or collapse. And colleague Tom Dyson, in the January 23 issue of the Diary, predicted a massive wave of Chinese bankruptcies.

A nightmare, in other words. But dreamy people can hope. Maybe this time really is different. Maybe the Dow will go back to 18,000… and just keep going.

 

DJIA-dailyDJIA, daily – maybe it will, one day…but not right now – click to enlarge.

 

Maybe the combined assault of Draghi in Europe, Kuroda in Japan, and Yellen in the U.S. will be enough to beat back a correction… and even triumph, finally and conclusively, over the credit cycle. What a dream! Dow 25,000? Sure, why not?

 

The Road to Greatness

And why shouldn’t the American people choose a candidate who will put the U.S. back on the road to greatness? Or, at the very least, the road to somewhere someone might actually want to go.

And why shouldn’t the sober citizens of Iowa get to point the direction? After all, the U.S. government is supposed to be a government of, by, and for the people. And some of its people live in Iowa. But wait. There are facts, and there are dreams.

 

luciusannaeusseneca125252What? The road is rough? We want our greatness and we want it now! For free! Who is this Seneca dude anyway… just some old Roman curmudgeon… what does he know?

 

The voters dream that someone somewhere actually gives a damn what they think. PhD economists imagine that they know better than God or markets. Should we wake them up?

The plain people of Iowa think they can control the Deep State elite. And the Deep State elite think they can control the markets.

Our prediction: Both will be proven wrong.
Oh, cr*p…

 

Charts by: Shanghai Shipping Exchange, StockCharts

 

Chart and 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:

  • India: The World’s Fastest Growing Large Economy?
    Popular Narrative India has been the world’s favorite country for the last three years. It is believed to have superseded China as the world’s fastest growing large economy. India is expected to grow at 7.5%. Compare that to the mere 6.3% growth that China has “fallen” to.   India's quarterly annualized GDP growth rate since 2008, according to MOSPI (statistics ministry) - click to enlarge.   The IMF, the World Bank, and the international media have celebrated...
  • Don’t Blame Trump When the World Ends
    Alien Economics There was, indeed, a time when clear thinking and lucid communication via the written word were held in high regard. As far as we can tell, this wonderful epoch concluded in 1936. Everything since has been tortured with varying degrees of gobbledygook.   One should probably not be overly surprised that the abominable statist rag Time Magazine is fulsomely praising Keynes' nigh unreadable tome. We too suspect that this book has actually lowered the planet-wide IQ –...
  • Silver Speculators Gone Wild – Precious Metals Supply and Demand
    Silver Gets Frisky Last week, the prices of the metals had been up Sunday night but were slowly sliding all week — until Friday at 7:00am Arizona time (14:00 in London). Then the price of silver took off like a silver-speculator-fueled-rocket. It went from $16.68 to $17.25, or 3.4% in two hours.   March Silver, 30 min. candles. Someone certainly piled in last Friday... - click to enlarge.   What does it mean? We don’t know. We would bet an ounce of fine gold against a...
  • What is the Best Time to Buy Stocks?
      Chasing Entry Points Something similar to the following has probably happened to you at some point: you want to buy a stock on a certain day and in order to time your entry, you start watching how it trades. Alas, the price rises and rises, and your patience begins to wear thin. Shouldn't a correction set in soon and provide you with a more favorable buying opportunity?   Apple-Spotting – a five minute intraday chart showing the action in AAPL on February 1, 2017 - an...
  • Incrementum Advisory Board Meeting, Q1 2017 and Some Additional Reflections
      Looming Currency and Liquidity Problems The quarterly meeting of the Incrementum Advisory Board was held on January 11, approximately one month ago. A download link to a PDF document containing the full transcript including charts an be found at the end of this post. As always, a broad range of topics was discussed; although some time has passed since the meeting, all these issues remain relevant. Our comments below are taking developments that have taken place since then into...
  • Gold and Silver Divergence – Precious Metals Supply and Demand
      Gold and Silver Divergence – Precious Metals Supply and Demand Last week, the prices of the metals went up, with the gold price rising every day and the silver price stalling out after rising 42 cents on Tuesday. The gold-silver ratio went up a bit this week, an unusual occurrence when prices are rising. Everyone knows that the price of silver is supposed to outperform — the way Pavlov’s Dogs know that food comes after the bell. Speculators usually make it...
  • Trump and the Draining of the Swamp
      Swamp Critters BALTIMORE – The Dow is back above the 20,000-point mark. Federal debt, as officially tallied, is up to nearly $20 trillion. The two go together, egging each other on. The Dow is up 20 times since 1980. So is the U.S. national debt. Debt feeds the stock market and the swamp. What’s not up so much is real output, as measured by GDP. It’s up only 6.4 times over the same period. Debt and asset prices have been rising three times as fast as GDP for 36 years! Best...
  • Making America Great Again – How to Judge Policy
      A Simple Formula MIAMI – How do we know if new programs will make the economy better... or worse? Here’s a simple formula:   W = rv (w-w – w-l)   That is, wealth is equal to the real value of win-win exchanges minus the loss from win-lose exchanges. Yes, dear reader, it’s as simple as that. Like a whittler working on a piece of wood, we’ve shaved so much off, there is nothing left of it... except the essential heartwood.   When devising a win-win,...
  • When Trumponomics Meets Abenomics
      Thirty Year Retread What will President Trump and Japanese Prime Minister Shinzo Abe talk about when they meet later today? Will they gab about what fishing holes the big belly bass are biting at? Will they share insider secrets on what watering holes are serving up the stiffest drinks? [ed. note: when we edited this article for Acting Man, the meeting was already underway]   Japan's prime minister Shinzo Abe, a dyed-in-the-wool Keynesian and militarist, meets America's...
  • The Great Wailing
      Regret and Suffering BALTIMORE – Victoribus spolia... So far, the most satisfying thing about the Trump win has been the howls and whines coming from the establishment. Each appointment – some good, some bad from our perspective – has brought forth such heavy lamentations.   Oh no! Alaric the Visigoth is here! Hide the women and children! And don't forget the vestal virgins, if you can find any...   You’d think Washington had been invaded by Goths, now...
  • Gold Sector Update – What Stance is Appropriate?
      The Technical Picture - a Comparison of Antecedents We wanted to post an update to our late December post on the gold sector for some time now (see “Gold – Ready to Spring Another Surprise?” for the details). Perhaps it was a good thing that some time has passed, as the current juncture seems particularly interesting. We received quite a few mails from friends and readers recently, expressing concern about the inability of gold stocks to lead, or even confirm strength in gold of...
  • Receive a One Percent Gift When Buying or Selling a Home
      How to Save Money When Buying or Make More When Selling a Home In your professional capacity and perhaps also in your private life, you may be closely involved with financial and commodity markets. Trading in stocks, bonds or futures is part of your daily routine.  Occasionally you probably have to deal with real estate as well though – if you e.g. want to purchase an apartment or a house, or if own a home you wish to sell.   The people who took this photograph probably want to...

Austrian Theory and Investment

Support Acting Man

Own physical gold and silver outside a bank

Archive

j9TJzzN

350x200

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]

 

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

 
Buy Silver Now!
 
Buy Gold Now!
 

Oilprice.com