Bill Bonner – Page 3 – The Burning Platform

The Glorious Imbecility of War

Guest Post by Bill Bonner

Napoleon Returns

Today, on the eve of the bicentennial of the Battle of Waterloo, we do not celebrate war. Only a fool would celebrate something so horrible. But we pay our respects to the glorious imbecility of it.

War may be dreadful, little more than a racket in many ways, but it is also a magnificent undertaking. It engages the heart and the brain at once and exposes both the genius of our race and its incredible stupidity.

But we are talking about real war. Not phony wars against enemies who pose no real threat. Phony wars earn real profits for the war industry, but only an ersatz glory for the warriors. Real soldiers take no pride in them. Instead, to a real hero, they are a source of shame and embarrassment.

Wars are not conducted to “Free the Holy Land.” Or “Make the World Safe for Democracy.” Or “Rid the World of Tyrants.” Or “Fight Terrorism.” Those are only the cover stories used by the jingoists to get the public to surrender its treasure… and its sons. Wars are fought to release the fighting spirit – that ghost of many millennia – in the scrap for survival.

And so it was that, 200 years ago tomorrow, one of the greatest military geniuses of all time, Napoleon Bonaparte, faced the armies of the Seventh Coalition – principally, the British, under the Duke of Wellington, and the Prussians, under Gebhard von Blücher.

Napoleon Bonaparte, born in Ajaccio, Corsica, later emperor of France and famous (and usually victorious) general, and later still, pensioner on the island of St. Helena

Painting by Paul De La Roche, 1814

Napoleon had been run out of France, but he had come back. The veterans of the Napoleonic Wars rallied to his cause, and he soon had an army of 73,000 seasoned soldiers. Moving fast, he put his forces in his favored “central position” between Wellington and Blücher.

On June 16, he attacked the Prussians at the Battle of Ligny and drove them back. Then he turned to Wellington, who had formed his army on a low ridge, south of the Belgian village of Waterloo.

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You’re (Probably) a Federal Criminal

Guest Post by Bill Bonner

Crony Hung in Own Noose – But No Reason to Celebrate

Imagine our delight! “Crony Hung in Own Noose” is the headline we would have put on the story. The New York Times has the report:

“J. Dennis Hastert, who served for eight years as speaker of the House of Representatives, was paying a former student hundreds of thousands of dollars to not say publicly that Mr. Hastert had sexually abused him decades ago, according to two people briefed on the evidence uncovered in an F.B.I. investigation.

Federal prosecutors on Thursday [May 28] announced the indictment of Mr. Hastert, 73, on allegations that he made cash withdrawals, totaling $1.7 million, to evade detection by banks. The federal authorities also charged him with lying to them about the purpose of the withdrawals.”

Dennis Hastert in better days, armed with his speaker’s gavel

Photo credit: US House of Representatives

John Fund of National Review continues:

But his fall from grace should prompt other questions about how a former high-school teacher who held elective office from 1981 to 2007 could leave Congress with a fortune estimated at $4 million to $17 million. When he entered Congress in 1987, he was worth at most $275,000. Hastert was the beneficiary of very lucky land deals while in Congress; and since leaving office, he has earned more than $2 million a year as a lobbyist.

Denny Hastert used to visit the Wall Street Journal where I worked when he was speaker. He was a bland, utterly conventional supporter of the status quo; his idea of reform was to squelch anyone who disturbed Congress’s usual way of doing business.”

Although everyone else is down on the apparent child molester/crony enabler/and hack politician… today, taking a line from the French and the “Affair Charlie Hebdo”: We Are Dennis Hastert.

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Who’s On The Other Side Of The Trade?

Submitted by Bill Bonner via Bonner & Partners,

Our opinion – unchanged from the bottom of the crisis in 2009 to today – has been not only that the economy was not recovering, but also that it couldn’t recover – not as long as the feds were on the case. This week, we have more evidence…

A Massive Shift in Wealth

Six years after the “recovery” train supposedly left the station, and GDP is backing up again. That is according to the feds’ own numbers, just revised. They tell us that the economy shrank at a 0.7% annual rate in the first quarter. Household spending growth, meanwhile, was cut in half from the last quarter of 2014.

If there were any recovery, it certainly isn’t visible in these numbers. Which shouldn’t surprise you. Instead of unloading excess and unpayable debt, the feds were adding more. According to McKinsey, global debt grew by $57 trillion between the fourth quarter of 2007 and the fourth quarter of 2014.

Worse, cheap credit has shifted real wealth from Main Street to Wall Street.

In doing so, the feds have perverted the entire system… and stopped real growth. After all, Main Street – factories and businesses – is where wealth is created, not on Wall Street.

The rich – who own financial assets – got richer. The poor, the young, and middle class – who mostly have only their labor to offer – got poorer.

Since 2009, the U.S. stock market almost tripled shareholders’ portfolios.

But it added nothing to the net worth of the working stiffs, as illustrated by the following calculation: In 1982, a typical workingman could buy the entire S&P 500 with 15 hours of his time. Now, the poor fellow would have to work two and a half weeks to get his hands on the same assets.

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America’s Second Greatest Generation

Guest Post by Bill Bonner

Dream On

Fed chief Janet Yellen is talking about raising rates. From USA Today:

“If the economy continues to improve as I expect, I think it will be appropriate at some point this year to take the initial step to raise the federal funds rate target,” Yellen said in a speech at the Providence Chamber of Commerce in Rhode Island.

She added, however, that after the first hike, “I anticipate that the pace [of subsequent increases] is likely to be gradual. […]

Yellen said that “it will be several years” before the Fed’s benchmark rate is back to normal – which is close to 4% in an economy that’s performing well.”

Janet Yellen levels her rate-hike gaze at us …

Photo credit: Kevin Lamarque / Reuters

No Real Recovery

We have proven – beyond reasonable doubt – that if anyone can predict the market’s movements, he doesn’t work at the Diary.

But when it comes to the economy, we claim a little credibility. We saw the debt crisis of 2008 coming. Addison Wiggin and I wrote about how America was due a debt collapse in our 2006 book, The Empire of Debt.

It was so big … so obvious … and so in your face, who could have missed it? And after the worst of the crisis subsided, we saw not only that there was no genuine economic recovery, but also that the economy couldn’t recover.

Genuine economic growth is something you can allow, but you cannot force. If you try to trick your way to it – with phony interest rates, more debt, and cockamamie inflation targets – you will retard the growth, not speed it up.

This is obvious, too. But Ms. Yellen is paid not to see it. And in the absence of real growth, the Dow at 18,000 looks vulnerable. It wouldn’t be at all surprising to see a rolling top take shape… with a sharp break in the fall.

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A Vision of Monetary Hell …

Guest Post by Bill Bonner

… Troubles Our Sleep …

It is the vision of what the United States will be like when the authorities have obliterated almost three millennia of monetary progress and have their boots on our necks.

Here’s Peter Bofinger, a leading German Keynesian economist, in Der Spiegel magazine:

“With today’s technical possibilities, coins and notes are in fact an anachronism. They made payments incredibly difficult, with people wasting all sorts of time at the cashier as they wait for the person ahead of them to dig through their belongings to find some cash, and for the cashier to render change (rather than, for example, waiting for someone to find the right credit card, complete the transaction, and wait for approval).

[…]

But the additional time is not the largest benefit of the elimination of cash. It dries out the markets for moonlighting and drug trafficking. Almost a third of the euro cash in circulation consists of 500-euro notes. No one needs those for shopping; light-shy figures use them for their activities. [Also] it would be easier for central banks to impose their monetary policies. At this time, they cannot push interest rates appreciably below zero because the savers would hoard cash. If there is no cash, the zero bound is eliminated.”

They said they were going to make me an advisor ... Bofinger discovers they lied to him.

Painting by Zdzislaw Beksinski

A Slide Back into Prehistory

Yes, dear reader, it seems to be coming – a dreadful slide back beyond the darkest ages and into the mud and slime of prehistory. Back then, modern “money” had not been invented. Using rudimentary credit and barter systems, you could only trade with people you knew – and on a limited scale.

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Are You Guilty of Crimes Against the Young?

Guest Post by Bill Bonner

The New Land of Opportunity

“This city is great. It’s beautiful. It’s cheap. The climate is agreeable. And it’s becoming a haven for Internet savvy marketers.

“I think they’re coming partly because it’s a great place to live. And I think young people want to get away from the U.S., too. It’s just not the land of opportunity that it used to be.”

So sayeth our dinner companion last night. He was the second young man in the last 24 hours to make the case that Medellín is a “buy.”

“It just seems to be catching on with people who work on the Internet. I guess because it is such a great place to live. People are helpful and nice here. And everything is unbelievably cheap.”

We can back him up on both points: Our taxi driver went far out of his way to help us find our hotel. (We had the wrong name.) And after driving us around for a half an hour, he was delighted to take the equivalent of $8 for the fare.

Medellín – city of the future

Photo via turismoenmedellin.com

A Country for Old Men

Several readers have commented on the coming generational storm in the U.S., which was the theme in last week’s Diary. (You can catch up here, here, and here.)

“Billie Boy, I don’t like where your head is lately. Your writing depicts our debt situation as being caused by baby boomers when it is the Fed and the government who never listen or do what the public desires…”

Here’s another:

“You are beginning to sound like “Obuma” in his class warfare dialogue. I am one of those old people who is not benefiting from the greed and lack of morals evident on Wall Street and in particular in Washington, DC. Leave me out of it and do not blame all old people for the actions of the elites in DC and state governments…”

To clarify, we are not blaming innocent beneficiaries… or innocent victims. And we readily admit we couldn’t get a conviction for willful larceny. Most of the people involved stole unwittingly. They were just playing the piano; how could they know what was going on in the back room?

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To the Class of 2015 – You Chumps!

Guest Post by Bill Bonner

Dull, Embarrassing, Earnest and Trivial

A long, long time ago
On graduation day
You handed me your book
I signed this way

“Roses are red, my love
Violets are blue
Sugar is sweet, my love
And boy are we screwed”

– With apologies to Bobby Vinton

Image credit: Merlon Drâs

Last year at about this time, we waited for the phone to ring. Not calling were thousands of universities in need of someone to give the annual commencement speech.

Every year, we prepare an appropriate graduation speech. And every year, with the unanimous accord of America’s institutions of higher learning, we do not give it.

With six children who have gone to college, we have heard more than our share of these speeches. They are almost always dull, embarrassing, earnest and trivial.

The University of Virginia had a TV newscaster. St. John’s College had socialist philosopher Cornel West.

When socialist philosopher Cornel West is in a good mood, he actually looks vaguely threatening …

Photo credit: Evan Agostini / AP

We can’t remember the others – most likely because they had nothing memorable to say either.

Class of 2015: The Most Indebted in History

It is unlikely that we would ever be called upon to give a speech to graduating students. But if we were, we would say the following: Congratulations, Class of 2015: You chumps! The Wall Street Journal reports that you are the most indebted generation in history.

The average graduate with student debt has a little more than $35,000 of it. The whole bill for student debt this year is expected to reach $68 billion – a tenfold increase over the last 20 years.

Average graduate debt over time – 2015 produced yet another record.

That may seem like a lot of money. And big numbers get reported in the headlines along with the celebrity news. But student debt is like the foul smell of gangrene: It testifies to a deeper, inner corruption.

We are now 25 centuries after Pericles and Socrates. But today, the typical university has no more interest in learning than a rat terrier or a congressman. Our government is a disgrace to honest democracy, if there were such a thing; it is a scam and a deceit.

Rich, powerful special interests wager billions of dollars on hollow puppet candidates, knowing their investment will pay off hugely if they are successful. Our money system is an elaborate fraud, too. It steals from laborers, merchants and artisans and rewards speculators, insiders and layabouts. The entire system is sick and dysfunctional.

Continue reading “To the Class of 2015 – You Chumps!”