Bill Bonner Has Found

A little more than a year ago, a very successful professional investor declared, “If you don’t own a home, buy one. If you own one home, buy another one, and if you own two homes, buy a third and lend your relatives the money to buy a home.” Since that declaration, house prices have continued drifting lower in most parts of the country. The Case-Shiller index of national home prices is down about 4% year over year. Even so, we’re betting this professional investor was merely early…not wrong. US housing isn’t just cheap; it is the cheapest it has been in more than 40 years. And when one considers the possibility that inflation may rear its head soon, housing looks even cheaper still. If you think we’re crazy, you’re not alone. The housing market is a complete bust right now. The following ...

The US dollar has been rallying strongly for several months. That’s what we call a “gift horse.” And just as the saying goes, “Don’t look a gift horse in the mouth.” Instead, look for ways to exchange your strong dollars for other currencies and investable assets that don’t fly out of Federal Reserve Chairman Ben Bernanke’s printing press. For many Americans, foreign investments are more of an accident than an objective. They might own a few foreign stocks through a global mutual fund. Or they might have some exposure to foreign economies and currencies through the shares of an American multinational corporation like Johnson & Johnson or GE. But American stocks and bonds remain the steak and potatoes of traditional American investment portfolios. Foreign stocks and bonds are merely the ...

This will be our last Daily Reckoning until April 17th. So, what well-chosen words can we leave you with? How about “if,” “but” and “maybe?” Yes, dear reader, if everything continues to clunk along as it is today…maybe the world financial system will hold together until we get back. We certainly hope so. We’ve been waiting years to watch the final crack up of the phony-money system. We don’t want to miss it! But you never know. For all we know, the system is cracking up now…right before our eyes. We just don’t recognize it. Take this item from yesterday’s news. It proves that Lent is bad for you: WASHINGTON (AP) — Europe has endured the pain of layoffs, wage cuts and tax increases designed to bring government debt under control. So where’s the gain? Far from falling, debt burdens ...

$100 billion down… $40 trillion left to go! Hey, don’t hold us to those figures. But yesterday European sages cut another deal to stave off the truth. Instead of defaulting openly and honestly — as Greece has done over and over again ever since 1827 — the Greeks will be ‘rescued.’ Sayeth Lucas Papademos, the technocrat leading Greece through its vale of deceit: “It’s no exaggeration to say that today is a historic day for the Greek economy.” He’s right. It’s no exaggeration. It’s an outright lie! What’s historic about the 15th rescue? And as soon as the Greeks are fished out of the water, they’re to be given a shave and a haircut. No kidding. They’re supposed to shave off more public employees, more spending, and more benefits. Already, one of 5 people is out of a job…with 2 out of ...

If only Keynes had gone to Carnival! Buenos Aires is hot and humid. We wilt. We slow down. We find it hard to breathe. It’s like Maryland in the summer time But the humid weather doesn’t stop the partying. We arrived at 2AM. A drum band was performing…amid shrieks of laughter…about a block away. It’s Carnival time in South America, a rush of late night revelry before the party stops for Lent. Yesterday was a holiday; so is today. The origin of the word ‘carnival’ means ‘take out the meat.’ Christians are supposed to give up meat for the 40 days preceding the crucifixion and resurrection of Christ, from Ash Wednesday to Easter Sunday. Fat Tuesday, or Mardi Gras, gives them a last chance to let loose…to eat and drink heartily…before the Lenten fast begins. Pleasure is a greater ...

Dow up 45 points on Friday. The 10-year T-note right on the 2% yield mark. Almost all the news is good. It looks like recovery is finally here. Or, are we just getting used to a punky economy…where even a little improvement looks like a boom? As far as we know, the US economy is still in a Great Correction…with plenty more correction ahead. But people get used to correction…and used to the feds pumping in cash and credit to keep things from getting too rough. It is not exactly “normal” for a central bank to lend money below the rate of consumer price inflation. And it is not exactly “normal” for the government to run a deficit equal to 8% of GDP…or for it to spend $1.50 for every dollar it gets in tax revenues. A lot of things aren’t “normal.” But if you do them for long enough, ...

The headlines still focus on Greece. It is broke. Here is Lucas Papademos, describing what an orderly default would mean. In the Telegraph: “The savings of the citizens would be at risk. The state would be unable to pay salaries, pensions, and cover basic functions, such as hospitals and schools, and…the country — public and private sector alike — would lose all access to borrowing and liquidity would shrink. “The living standards of Greeks would collapse. The country would drift into a long spiral of recession, instability, unemployment and prolonged misery. These developments would lead, sooner or later, to exit from the euro.” Sounds good to us! The Greeks have been living beyond their means. Living standards must fall. Best to get on with it. But the efforts of a whole class of ...

The Dow down 97 points yesterday. And the Greek story nears its conclusion… The Germans agree to bail out the country…at least for a while… …and the Greeks agree to act more like Germans…at least while everyone is looking… But now everybody agrees that the farce has gone on long enough. Let’s recap: The big banks lent the Greeks money. Then, the bankers paid themselves big bonuses, rewards for having booked so much business. The Greeks spent it like they stole it…which they practically did. With the help of Goldman Sachs, they rigged their accounts so as to appear to be better credit risks than they really were. Then, of course, the Greeks could not repay. Since they gained independence from the Ottoman Turks in 1828, the Greeks never, ever repaid a loan as promised. Instead, they ...

Tired of running out of time and money? Scrimping and saving just to make ends meet? Try moving to Harlingen, Texas. The cost of living there is only about 40% of the cost of living in Manhattan. Here’s Real Time Economics with a report: Obama has spoken about having the rich pay their fair share, and $250,000 is a lot of money. But to characterize those households that earn that sum as “rich” depends very much on where they live. Thanks to regional differences on costs, $250,000 does not go so far in places like New York City and Honolulu, compared with cities in Texas or Tennessee. The Council for Community and Economic Research calculates cost of living indexes for US cities based on goods and services bought by households in the top-income quintile, which nationally covers incomes ...