The Old Line bugle, fife, and drum,
She is not dead, nor deaf, nor dumb.
Huzza! She spurns the Northern scum!
She breathes! She burns! She’ll come! She’ll come!
Maryland! My Maryland!– Maryland’s State Song
BALTIMORE – Yesterday, one dear reader wrote in to say we were “cynical” and “anti-American.”
Today, we rise to defend our reputation… such as it is.
Guilty as Charged
Nah… We’d need a big dose of positive thinking and earnest optimism to be cynical.
According to the Oxford English Dictionary, people who are cynical are “suspicious,” “doubting,” and “skeptical.”
We’re way beyond that. We’re pretty sure that the system is rigged… and rotten.
Elections are exercises in solemn deceit. And the Fed’s management of the economy is a mixture of delusion and self-serving scam.
We don’t have much doubt about it. That’s just the way it is.
As for “anti-American,” our accuser needs to clarify the allegation.
Is he talking about the Deep State?
Or is he talking about the 50 sovereign states… and the Old Republic?
Or the language? The culture? Reality TV… the Kardashians… NASCAR racing… Old Faithful and the mighty Mississip’?
No one can be anti-America; America is too many things to too many people.
But if he’s talking about the federales who control half our national output… tie us in knots with Obamacare, National Labor Relations Board rules, and all their other dopey programs… and stomp around the world trying to justify their trillion-dollars-a-year security budget…
… if he’s talking about Hillary, Bernie, The Donald, the Bushes, et al… and all the 535 members of the U.S. Congress… and the 2,783,000 zombies on the U.S. payroll…
… if he’s talking about the connivers who pump out phony credit… stifle real savings… sabotage real wealth creation… and shift trillions of dollars from the people who earned it to the cronies favored by the Establishment…
If he’s talking about THAT America, he’s right. We’re agin’ it. Guilty as charged. And we’re not alone. Apparently, about half the country is “anti-American.”
Here’s our friend and Black Swan author Nassim Nicholas Taleb explaining The Donald phenomenon:
The “establishment” composed of journos, BS-vending talking heads with well-formulated verbs, bureaucrato-cronies, lobbyists in training, New Yorker-reading semi-intellectuals, image-conscious empty suits, Washington rent seekers and other “well-thinking” members of the vocal elites are not getting the point about what is happening and the sterility of their arguments. People are not voting for Trump (or Sanders). People are just voting, finally, to destroy the establishment.
The Failure of NIRP
Yesterday, stocks took a little rest. The Dow went approximately nowhere.
At first glance, things don’t look bad. U.S. crude oil is back over $40 a barrel. And U.S. stocks are back in the black for the year.
But China is on a debt binge that is bound to end in a blowup. And U.S. corporate earnings are falling, leaving only borrowing and share buybacks to hold up prices.
Frackers are still operating at a loss. Auto and student debt are going into default. Global trade – as measured by freight indexes – is still sinking.
And Japan – the pacesetter in the race to the bottom – is proving that negative interest rates have an effect exactly opposite to what the meddlers intended.
NIRP (negative-interest-rate policy) is supposed to spur lending and spending.
In Japan, it has done neither – the yen is strengthening as the economy weakens.
NIRP was always an “experimental” policy.
Central banks in Sweden, Denmark, Switzerland, the euro zone, and Japan have all pushed their target lending rates into negative territory. All that has been learned so far (apart from that this doesn’t work) is that sales of home safes go up… as people take out cash and keep it at home.
Negative interest rates amount to a tax on savings. You pay to save instead of being paid to save. Whether the people hoarding cash are worried about the prospect of paying a negative interest rate tax on their bank deposits… or anticipating some more awful crisis… we don’t know.
More to come on QE and negative rates… and why they really are old-fashioned “money printing” after all… tomorrow.
For now, let us return to the “anti-American” allegation.
Anti-American… in Maryland
We’re fond of the place we grew up – the Maryland Tidewater. At least, we are fond of it as it was when we grew up in it.
But it has changed.
Last week, the Maryland State Senate voted to change the words of the state song, bringing it more in line with the spirit of the Empire.
The song recalls the period – in the early 1860s – in which Maryland was attacked… by the United States of America. “Northern scum,” is how our state song describes its historic enemies.
Maryland was a “border” state… not sure how it felt about the secession movement. Then the Yankees invaded, cutting off civilized discussion on the matter.
They arrested Baltimore’s mayor, the city council, the police commissioner, and the entire board of police. All were held without charges. Habeas corpus was suspended.
Then when the Supreme Court ruled that the feds had no power to ignore constitutional protections, Abe Lincoln simply ignored the Supreme Court. He continued to hold his prisoners in the “American Bastille” – Fort McHenry.
One of the prisoners – held without charges – was the grandson of Francis Scott Key, who had written the American national anthem.
He must have seen the black humor of his situation. In 1814, during Britain’s attack on Fort McHenry, his grandfather had wondered whether the flag still flew “o’er the land of the free and the home of the brave.”
In 1861, Lincoln gave the answer: No.
Editor’s Note: How did our newest Bonner & Partners analyst, Chris Mayer, beat the market three to one for a decade? By buying cheap stocks. Below, he discusses two sectors trading at deep discounts – and why one of his favorite firms believes they’re ripe for a turnaround…
Last week, I traveled to Washington, D.C., to meet with one of my best sources for on-the-ground intel on foreign markets: Vanshap Capital.
The firm was holding its annual partners’ meeting at the Hamilton restaurant, just a block from the White House.
Set up in 2012 by Evan Vanderveer and David Shapiro, Vanshap focuses on global deep value investing. Today, Vanderveer and Shapiro travel all over the world in search of cheap stocks, wherever they may be.
So what foreign market do they like today?
Vanderveer and Shapiro met over 30 management teams in Greece. They’ve met Greek analysts and brokers and fund managers. And they think the worst is over.
Greek stocks make up almost 20% of Vanshap’s portfolio. One of them is the largest publicly traded real estate investment group in Greece – Grivalia. Prem Watsa, the “Warren Buffett of Canada,” owns 42% of the stock.
And it does look cheap.
It’s trading at just 56% of appraised value and a 14% rental yield. Because the stock does not trade on a U.S. exchange, it can be hard for individuals to buy.
Vanshap talked about other distressed opportunities that are easy for U.S. investors to buy – such as oil stocks.
Vanderveer noted that few oil projects are viable at $30 oil. So the price will have to revert to a more sustainable $50 to $70 range.
Vanderveer cautioned that more distress is on the way for oil companies. Many have contracts in place to sell oil at higher levels than the market price. But many of these contracts will expire in 2016.
Vanshap had no investments in oil and gas at the time of the meeting. But they are shopping…
Right now, I’m compiling a shortlist of the very best oil stocks – such as Baker Hughes and National Oilwell Varco. Sometime in 2016, my gut tells me we’ll get a chance to scoop up assets like these at ridiculously low prices.
P.S. Buying cheap stocks is crucial if you want to beat the market. But it’s only one part of my stock-picking system. I’ve developed a four-part method that’s helped me outperform some of the world’s best investors… like Warren Buffett, Carl Icahn, and other billionaires.
For the next few weeks only, I’ll be sharing this system in a series of free training videos and essays… Along with some of my top investments. If you’d like to receive this exclusive content, follow this link.
Billionaire: I Know Trump, and I’d Vote for Him
Billionaire industrialist Wilbur Ross supported Jeb Bush. But now, Ross says, “I think you’re going to see a different Donald if and when he becomes the nominee.”
Desperate Central Banks Talk “Helicopter Money”
Six hundred interest-rate cuts and $12 trillion of QE failed to stimulate the economy. Central banks are running out of ammo… and the next “stimulus” may hand money directly to the people.
Don’t Listen to the Gold Haters
One top resource investing expert explains why, if you believe in buying low and selling high, this is the time to buy gold and sell stocks.
Being “un-American” and “unpatriotic” isn’t the only criticism Diary readers are leveling at Bill. In today’s mailbag, he is also accused of having an “abominable fetish with Hitler”…
Notwithstanding Bill’s Deep State warning, it does indeed matter who wins the White House in November. Can anyone, even Bill, minimize the increasing role the Supreme Court plays in deciding critical issues on political bases?
How SCOTUS decides pending and future seminal questions after November crucially depends on who is the elected president awaiting inauguration after November.– Richard P.
Please remember that Donald Trump had the courage to address the huge immigration problem and other destructive programs that most politicians ignored for years. I give him a huge amount of credit for that stance.
Is he arrogant? He should be by reason of amassing a fortune using his wits.
Is he a dictator? Most strong leaders have been. Using similar criteria, the Roosevelts (Teddy and Franklin) have been labeled dictators and both made strong enemies.– Alan W.
Oh! Do you have one person in mind who can stop the increasing unfolding insanity in America and/or globally?
Do you in all of your wisdom have one strategy (other than smearing a leading candidate) that will stop the coming carnage in the world?
Why don’t you leave the USA and migrate to Germany, since you have an abominable fetish with Hitler? Would you be honest and admit that you’re a Hitler lover from 1930 to the present?
Would you be intelligent enough to admit that Hitler was the “Evolution of Evil” and that the American spirit emerged at the last “moment” to stop his evolution of evil from world domination?
Did you decide to write such treachery and betrayal of one American who has decided to FIGHT to stop the abomination rapidly unfolding in America?– Jack A.
If your quoted authorities are as informed as your Diary quotations today, its [sic] no wonder they are aghast and baffled at Donald the Dictator’s success.
The economist that couldn’t run a laundry is like the historian claiming that the USA is a democracy. PLEASE! The USA is a Constitutional Republic – the oldest continuous one in the history of the world – not a democracy.– Bjorn A.
Is it fair to say Bill has a “fetish with Hitler”? Or is he just using a powerful analogy to illustrate his point?
We want to hear from you. Write to us at [email protected].