VANCOUVER, Canada – What would the world do without well-intentioned, earnest, and intelligent public servants like Hillary Clinton?
We don’t know. But we’d like to find out!
Before we get to that… a quick market update.
Shanghai stocks took another big dive. They fell 8.5% for the session, the biggest one-day rout since 2007.
Meanwhile, the Dow fell another 128 points. Gold fell below $1,100 an ounce. And oil his a new 52-week low of $46.68 a barrel.
The world is still falling apart.
Easy Money… Hard Times
What’s going on?
As we explained yesterday, the Fed’s EZ money is creating hard times. It led to overconsumption… then overproduction… and now to a big bust.
Just what you’d expect.
And what you’d expect next is more crashing, sliding, and busting up in the world’s markets… followed by more EZ money.
Eventually, it will explode into consumer price inflation. But that could still be far in the future.
Back to Hillary…
We keep our political coverage balanced at the Diary. On the Republican’s side, there is an unusually rich assortment of fools and knaves. And on the Democrat’s side, there is the aforementioned Ms. Clinton.
We don’t know what we would do without her.
How would we know, for example, how long we should hold an investment without her to tell us?
She seems to believe that today’s average holding period is too short. It causes an obsession with short-term results that she calls “quarterly capitalism.”
CNBC reports:
How will “working to end short-termism” help working families?
How many months of holding an investment is acceptable to the Democratic Party’s front-runner?
A Crony Unmasked
Why would anyone even think that Ms. Clinton – who has never held an honest job in the private sector – could possibly have any idea about how to save capitalism… or how long an investment should be held?
These questions leave us panting, sweating… and in need of a drink.
All Ms. Clinton knows about capitalism is what the cronies tell her when they are slipping her cash. Wall Street is a major financial contributor to her campaign. They know she can be bought. She won’t disappoint them.
Hillary still has to grandstand for the benefit of the Democratic masses. But she’s clearly on the side of the cronies and the zombies. And they both hate capitalism.
Why?
Because capitalism is a zombie killer.
Capitalism is not a wealth distribution system, as supply-side economist and techno-utopian guru George Gilder makes clear in his latest book, Knowledge and Power. It’s an information system… a knowledge system… in which entrepreneurs take risks and find out what works.
They learn how to build better things… putting old zombie manufacturers out of business. They figure out how to cut costs and increase quality, too… squeezing out the cronies and forcing the zombies to get to work.
They discover the knowledge that makes us wealthier.
Naturally, the zombies and cronies try to put capitalism out of business. Typically, their candidates claim to be “improving” or “saving” capitalism from itself.
What they are really doing is saving the crony lobbyists and zombie voters from real capitalism.
Regards,
 |
Bill
Further Reading: A quick heads-up for Bonner & Partners Investor Network subscribers. Your August issue will be hitting your inboxes later today. This month, Chris has been talking to “quant” investor Mebane Faber about simple ways to boost your long-term returns without picking a single stock… and how to get out of your own way as an investor.
In yesterday’s Market Insight, we highlighted the ongoing global rout in commodities…
But it’s not just commodities that are taking it on the chin. It’s also the so-called commodities currencies.
This is Wall Street’s term for currencies of countries that depend heavily on their natural resource exports for revenues.
As you can see in today’s chart, in the wake of the collapse in commodity prices, the Canadian dollar… the Australian dollar… the New Zealand dollar… and the Brazilian real have all hit multiyear lows against the U.S. dollar.
Yesterday, the Australian dollar and New Zealand dollar hit six-year lows against the greenback. Meanwhile, the Canadian dollar hasn’t been this weak since 2004. And the Brazilian real hasn’t been this weak since 2003.
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Mailbag
In last Friday’s Diary, Bill warned that the Canadian housing market is a bubble in search of a pin. And many of you agree…
But before we get to that… Do you have any personal experiences with zombies and cronies you’d like to share with Bill and the team?
We’d love to hear them. Write to feedback@bonnerandpartners.
I live in Calgary, Alberta – population 1.2 million and counting. I sell real estate here and have done so for the better part of 40 years.
Average price for one of those vinyl-siding atrocities you hate so much? About C$550k or so… but you can also get a reasonably good one for C$450k in some of our “blue collar” areas.
Are we due for a correction?
You bet… but then I’ve been saying that since 2007, so what do I know?
Well, for one thing, I know that same C$550k house sold for not much more than C$280k in 2005 = a 7% compounded increase = high… even for this country.
Vancouver and Toronto are just glaring examples of how crazy we’ve all become in the land of ZIRP.
– Bryan M.
I am not a Canadian, but rather a Californian. And I agree with your position that it is time to sell.
The warning signs have been flashing, giving ample opportunity to take action before being swept up in the forthcoming collapse.
It is not just Canada but also other resource-rich countries such as Australia that are facing the same problem. A commodity collapse will affect their economies… and something as illiquid as housing can fall in value quickly, as we experienced in the States.
– James T.
I currently work in Burnaby (a suburb of Vancouver) as an engineer for a resource company.
During the boom, property was expensive – but affordable… barely. In 2012, the USD/CAD was at parity, and a modest detached house could be purchased in the suburbs for $500k.
In the past few years, our business has gone from bad to worse. When coal crashed, we laid off 30% of my office. This year, the bank of Canada has cut rates twice. As the exchange rate against the USD plummets, that $500k house is now C$700k three years later.
Guess what? My friends are STILL buying, getting mortgaged to the MAX.
Back in 2007, I was living in Seattle; the property frenzy was just the same. It’s unclear to me how these accelerating prices and decelerating incomes can be sustained. I think we are in for a rough ride.
– Mike M.
In Case You Missed It…
Bill’s childhood friend and economist James Dale Davidson continues to cause controversy with his latest video. He is warning that the U.S. stock market could be on the cusp of crashing by 50%… maybe more.
