As we’ve pointed out before, there are two parts to a political system. One part is shrewd, calculating and corrupt. The other is stupid, senseless, and earnest. The first is surprisingly predictable. The second is predictably surprising.

Like the two sides of the brain, people use politics both ways. On the right side, they use it to do something that is completely preposterous…and often completely at odds with their own interests.

Start a war, for example. National pride. Sentiment. Anger. Humiliation. There’s no telling exactly what emotion will stir up the mob. And there’s no telling what mischief it will get up to when it’s been properly stirred and shaken. India was the site of the biggest political demonstration of all time. What was it about? Killing cattle. The Hindu population was against it…

Meanwhile, from Nigeria comes news that the Christians and Muslims are killing each other. And in europe, just a century ago, people tried to kill each other for 4 long years…

But the right side of politics is beyond our scope for today. We’re concerned with the left side…the rational…goal seeking…angle playing side…where people use politics like a burglar uses a crowbar – to get something that isn’t theirs.

For example, a report in USA Today tells us that government employees have used politics to get more money. The paper said that 8 out of 10 professions are better paid by the government than by the private sector.

Lobbyists use the government to get money for their employers. If we read the item in The Wall Street Journal correctly, there were 10,000 “earmarks” in the latest budget bill.

What’s an ‘earmark?’ It’s a special little provision that gives a contract – or other favor – to a specific company, industry, or locality. A congressman might insert a little provision awarding a $100,000 contract, for example, to one of his constituent companies. Directly or indirectly, the company may have contributed $50,000 to the congressman’s re-election campaign…or may be ready to hire him if he is booted out of office…or may have hired his son or daughter. The amount is so small that the rest of the Congress is not going to pay much attention to it. Besides, other members of Congress are doing the same thing. Ten thousand earmarks…that’s more than 20 apiece.

Giving out money to friends and supporters is not exactly what Congress was set up to do. A Congressional Ethics panel was organized to investigate. Its report just came in this week. What did it find? That there was no impropriety; it was just business as usual!

Even the Ethics Committee has been corrupted by the left side of politics – the rational side. Everybody is looking out for Number One. Even the Ethics Committee.

Very predictable. And no harm in that. Everyone does it.

But as the political system matures, it supports more and more people who are looking out for Numero Uno and don’t much care what happens to Numero Duo. And as the host weakens, the parasites become bolder.

Even the right side of politics is corrupted. Instead of going to war for purely absurd reasons, lobbyists for pentagon contractors urge the nation to war for practical ones…specifically, to add to their own profits…and generally to boost employment.

Eventually, between the left side and the right side, the nation runs out of juice. Or worse. When the politicians have squeezed all they can out of existing taxpayers they go to work on those who aren’t even born yet. The debt rises and rises…until it is too heavy to carry. Then, all Hell breaks loose.

A few days ago, the Congressional Budget Office reported that the Obama administration’s deficit forecasts were a little on the low side – $1.2 trillion short over the next 10 years.

How reliable are those CBO forecasts? Not very… The deficits are likely to be a lot higher than either the administration or the CBO now imagine.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.

We are in an era of accelerating change, moving toward a future that will be profoundly different from the past we grew up in. But what will the nature of that change be? What will the future look like? For the last 7 days I have been in an executive program designed by Singularity University ( www.singularityu.org) to give some insight into that complex question. We looked at a number of technological fields, lectured by experts assembled to give us some idea as to where current research is and to where it is going. We visited some of the cutting-edge companies here in Silicon Valley.

Just as interesting, I got to visit with 44 of my fellow information seekers from 15 countries and extremely diverse backgrounds, along with a dozen college students, as well as the faculty. The group ranged from very successful entrepreneurs to academics to relatively high-level government workers to starry-eyed young people just starting out. There were a lot more applicants than could be accommodated, and the staff did a good job of choosing a group of people who all “brought something to the table” besides their entry fee of $15,000. The days were typically 14-15 hours, and there was a lot of discussion amongst us on the topics of the day.

This week we depart from my usual letter on finance and economics so I can report on a few of the ideas I came across. Some truly grabbed my interest, some confirmed my thinking, and others quite frankly either disappointed or alarmed me. This will not be my normal narrative, but rather short observations cribbed from my notes and thoughts. As I am on (yet again) a plane to San Antonio for a speech tomorrow morning, there will not be the usual links; and in some cases I must confess I made notes without writing down the name of the speaker. Mea culpa. So, sit back and let me share what has been a great week. (And I suspect that a few of you will be happy that we are ignoring Greece for at least one week!)

I, Robot

I think the positive surprise takeaway (for me at least) was how far we have advanced in artificial intelligence and especially robotics. Artificial intelligence has been promised to us for decades, and has been a disappointment for so long that I have consigned it to the dustbin of my research. Ditto for robots. I mean, seriously, if the Roomba (a glorified vacuum cleaner) is the best we can do after decades of work, how are AI and robots going to change the world? This is hardly the world that I grew up reading about in Isaac Asimov’s brilliant I, Robot sci-fi series some 40 years ago.

It is all well and good for a single-purpose robot to be designed to make a spot weld on a car, but a general-purpose robot seemed a long way off. As far as AI goes, I am reminded of the old joke about a young geek who specializes in AI sitting at a bar, and this gorgeous blond comes up to him and they begin to talk. One thing leads to another and they end up in her room, where he proceeds to spend the entire night telling her how good things are going to be. AI has been a lot of talk for decades, and as with our geek, not much more.

The robotic sessions were led by Dan Barry, a three-time astronaut and veteran of many space station adventures (as well as appearing on Survivor!). What I saw onscreen and heard about has made me rethink my doubts about robotics. There are significant strides being made in mobility and utility in robotics. I saw robots walking on four feet through very difficult terrain, on ice, and up stairs. Robot “hands” are a lot further along than I had thought. Mobile robots on wheels, and walking balanced on two feet, are working today.

The ability of robots to recognize their surroundings, to differentiate between a table and a glass on the table (which is a very difficult thing to program), to pick up the glass, etc. is advancing at a fairly good pace. Dan is an enthusiastic advocate, and it was easy to get infected with his vision, but I can see a robotics industry in the 2020s actually having some significance in the US and world economy. We explored all manner of potential uses for robots, some with more economic potential than others. I am often asked where the jobs of the future will come from. It may be in robotics.

I was particularly drawn to the personal assistant robot. It is actually plausible to design a robot to be the “maid” in a home, to be able to purchase groceries, to assist the elderly, etc. These are the repeatable types of tasks that can be programmed and learned. We may only be ten years away from a nascent and powerful new industry. Now, this is not the robot of I, Robot. It will not have intellectual conversations with you. But it will respond to voice commands and clean up, put away toys, etc. Cooking, however, other than microwave foods, is a LOT harder. You will have to make your own omelets for a few decades.

The Mauldin Test

When (if ever) do we get computers that are self-aware? Alan Turing proposed in 1950 what has become known as the Turing Test of a machine’s ability to demonstrate intelligence. It proceeds as follows: a human judge engages in a natural-language conversation with one human and one machine, each of which tries to appear human. All participants are placed in isolated locations. If the judge cannot reliably tell the machine from the human, the machine is said to have passed the test.

One participant suggested that in the future, as we get closer to true AI, computers should be tasked with designing the next generation of AI and computers. I pointed at that if we were to do so, then the Turing Test might not be the best way to determine if we had true artificial intelligence rather than just extremely sophisticated programs. I proposed the Mauldin Test. When a computer tells us that it no longer wishes to program a smarter computer, we will have arrived at the point of self-awareness and survival instinct. I suggest that is true AI. Just a thought.

Who Stole My Nanotech?

Ralph Merkle regaled us with the promise of nanotechnology to make anything and everything. Very tiny molecular machines would assemble all manner of things, from roads and homes to furniture to computers. The problem is that this was pretty much the same speech he was giving ten years ago. Not much progress has been made in the ensuing decade. This was perhaps the most disappointing note at the conference for me.

Let me differentiate between nanotech and nanoscale. Nanotech is the ability of very small machines to build useful objects one atom and molecule at a time. Nanoscale is the technology that creates very small objects to do useful things. An example would be carbon nanotubes, which are proving to have all sorts of useful properties.

There is very little money being put into actual nanotech research. We are at least two decades and hundreds of billions away from Merkle’s (and Freitas’ and others’) vision, if even then. It is still in the arena of pure research, far from any potential commercial application. And there does not seem to be a lot of research in the field.

Nanoscale, however, is a different story. Batteries made from carbon nanotubes hold tremendous promise for better storage (by 400 times less weight per watt output). Filtering of seawater to produce fresh water, increased computer speed and power - there is a long and rapidly growing list of nanoscale advances.

If we ever do get actual molecular nanotech, it may look more like biotech, as we slip in on nanotech from the side. After all, combine a few cells and you eventually get a human being. For some, this is the path to robust nanotech.

Water, Water Everywhere, Nor Any Drop to Drink

And speaking of water (above), I was hoping to hear that we were further along with the cheap purification of water. I queried several venture capitalists, who see literally thousands and thousands of business proposals. While lots of people are working on it, they are aware of nothing on the near horizon. Water may be my #1 concern about the future. It is an intractable problem and one that must be solved. There is Microsoft- or Google-type wealth awaiting the team that creates an inexpensive way to purify water. Water management will be a major issue in the future. There are those who think we will go to war over oil or energy in the future. I rather doubt it. Water rights are going to be the issue that will divide nations and peoples unless we can find new technologies to create cheap supplies of fresh water and move it to where it is needed.

The Promise of Biotech

Ok, I am on record of late with my view that biotech is going to be a bubble in the latter part of this decade. I am actually starting to invest in smaller-cap biotech companies that hold what I think is significant potential intellectual property. In conversations with my fellow attendees, I think the consensus is that biotech holds the most immediate promise for transforming our lives.

A little background. The human genome project was launched in 1990. It cost $3 billion. At the time, detractors said it was a waste of time, as it would take a thousand years - and they were right, if you assumed then-current technology. It actually took only 11 years (to 2001), as new technologies were constantly invented. Craig Venter started Celera in 1998 and finished in a dead heat with the government for a fraction of the cost, at around $300 million.

Where are we now? Ray McCauley of Illumina told us of a machine they make that can do the entire human genome in one week. The cost of the machine is $750,000. He predicts that by 2013 the cost of doing your personal genome will be around $100, and in the future the cost will be as little as $1.

A prize has been offered for the first team to sequence 100 human genomes for $10,000 each in ten days or less. The $10 million USD prize, donated by diamond prospector Steward Blusson, will be claimable until the deadline of 4 October 2013. Many scientists around the world think it is highly likely the prize will be claimed before the deadline, probably substantially before.

Moore’s Law says computing power is doubling every few years? That’s so slow and old hat by biotech standards. Genome “power” is doubling every six months. It will be routine for you to get your own human template in a few years.

Those expensive toys that do your genome? Jun Wang (for some firm) in China bought 128 of them. That is the equivalent of being able to process the entire NCBI genome databank every 15 minutes. Although Ray would not say, I got the impression the Chinese simply opened their checkbook and said “How many will you sell us?”

Put this into context. Arguably one of the true US experts on stem cells, Mike West of Biotime, is also going to China to do a joint venture with the leading stem cell researcher there. They will be in human trials soon. (It’s the same story with International Stem Cell Research, which is going to Russia.) Mike lamented to me over dinner that he could not get the trial speed he needs here in the US. There are a lot of other areas of research that are going offshore, too. Biotech is an area where the US has a clear lead today. We are in danger of losing that. Someone at the FDA needs to start a program that can keep up with the warp speed of change in the biotech world, or watch our lead go to the rest of the world, which is quite willing to leapfrog us. For all the talk about jobs, you would think someone would pay attention here.

DIY-Bio

I don’t know how I feel about this next one. It has possibilities for both good and evil. Do It Yourself Biotech (DIY-Bio) is becoming a real movement, akin to the movement created by computer nerds in 1975, looking to build their own personal computers. But the real difference now is that this time they are connected by the internet.

The movement is just what it sounds like. The equipment and technology to do genetic experiments is getting cheaper and easier to access. Literally, some people do it in their closets. Want to drop a duck gene into a pig cell? That could be fun. Do you get a pig that can fly? But you can also test the water ecology around you and do other quite socially useful things, and even have a chance to stumble on a real advance. One teen group in New York recently bought a lot of fish from various restaurants and stores. Their genetic testing determined that 35% of what was sold as a particular type of fish was something else. Just cover it up with sauce and who can tell?

I like the idea of ten thousand people randomly working on solutions to real problems. But, and this is a big but, playing with genes seems a little problematic to me in a non-lab setting. The presenter pointed out that there are all types of really bad bugs out there, and the human race has survived, but somehow that did not allay my concerns.

The next presentation was from Special Agent Edward You of the FBI, who told us that the FBI is paying attention. That made me feel better, until he basically said they were not sure what to do. We can’t dial back the clock, but some self-policing mechanism needs to be set up. As one person pointed out, we require all sorts of licenses for people who want to dive into the ocean. Increased complexity (diving into caves, for instance) requires additional licenses.

I am generally your basic libertarian. Let people do what they want to do - but I think I draw the line here. Access to equipment, materials, etc. ought to require some sort of license and some awareness training. Call me old-fashioned, but just as we don’t let kids randomly experiment with uranium, maybe we should think about how we go about playing God. Don’t get me wrong, I want people experimenting and pushing the edges. I just want someone supervising the sandbox.

Random Takeaways

OK, the next few pages are going to be short paragraphs from my notes, with no real connections among them. Very stream of consciousness. Take a deep breath and dive in.

The major cost of biotech is people. China has cheap people, and that may give them an advantage.

In regards to the DIY-Bio movement, one of attendees behind me said, “OK, does this mean in the future we buy 99-cent bio apps for our iBiophone?” Think about that for a second. Just a few years ago, the thought of 100,000 iPhone apps for a few bucks or even pennies or free seemed ridiculous. Now it is commonplace. By the way, I met a young kid from India. He has an app to turn my letter into a very easy iPhone app and is also programming for the rest of the phone world. Watch for me on your phone in a few months. It is indeed a brave new world.

The theme of the conference was accelerating technology. Things are going faster and faster. I had a thought. Our bodies can take only so much acceleration before we pass out. Will an increasingly fast world have the same effect on our minds? Is there a limit to how much change we can adapt to? Just a question; not sure of the answer.

Greg Papadopoulos, who is the Chief Technology Officer of Sun Microsystems, gave us his thoughts on the breakthroughs that are likely to happen and will change the world as we know it. New approaches to energy efficiency are on the horizon in 5-10 years. We will see a major breakthrough in memory, which will make the ability to remember (store) things really cheap. He speculated that there will be a new energy technology that will come out of left field to completely change the energy equation. By the way, this prediction showed up several times, from a variety of speakers. (I must admit that is also my personal prediction as well.) Greg thinks we will have silicon photonics by 2020 (think faster, more powerful computers). Quantum computing is way out there, but biocomputing may be here in the mid to late 2020s.

Steve Jurvetson, the #1 most influential geek (according to Wired, I think) simply blew us away. I would like to tie him to a chair for five hours and find out why he invested the billions of dollars in the scores of companies he has helped launch. He is focusing on clean tech, as is a lot of Silicon Valley. He sees 5,000 business plans a year. He talks about how we are soon in for Perpetual Future Shock. There are 6 x 10 to the 21st microbes in the ocean. There are microbes that only exist in certain parts of the ocean. We have only begun to explore the world. It is going to take a long time to switch to renewables. Maybe by 2030. He is blown away by how many incredible ideas there are. This is a guy who did his EE major at Stanford in 2.5 years and was #1 in his class. Intimidatingly smart.

As an aside, someone mentioned that at the TED Talks a few weeks ago, Bill Gates made a major commitment to nuclear energy. Did you know that the nuclear waste we already have could power the US for centuries? The technology exists to use it, as France has done for a long time. If someone truly thinks the US should be energy independent from foreign oil, this is the path. And it is green! Why not government-guaranteed loans for nuclear power and a requirement that every state or locality find a place to put a nuclear plant in their area. Pick a locale. If you choose not to put one “in your backyard” then you pay double for your power, which makes the power for the areas that choose to have nuclear plants free! That would attract some voters for nuclear plants. We need to stop sending money to the rest of the world for oil. Now that is stimulus you can believe in! (OK, off my soapbox.)

Another speaker saw potential game changers in low-cost photovoltaics and a smart grid. (Let’s hope he’s right!) He also speculated and laid out the technology to use CO2 as a source for fuel. Basically, you take CO2-emitting sources and use them to feed biofuel farms. Seems plausible.

Christopher deCharms, CEO of Omneuron, blew me away. Seems they can recognize patterns in your brain when you see certain (simple) objects. And they are teaching patients to control certain regions of their brains that have to do with pain. They are having some success, although he stressed that it was early and the tests were rudimentary. That aside, that we are even potentially in that world is amazing.

Jason Bobe from the Personal Genome Project at the Harvard Medical School talked about how they intend to first publish (publicly) 100 personal genomes and then go on to 100,000 in order to create a database for researchers to use to find correlations between certain genes and diseases. I plan to volunteer to be part of that initial 100, if they will take me. I really don’t care who knows my genome, and if it will help move the science forward I am more than ready.

They are also moving beyond the human genome. They can now “sample” your blood to see what kind of exposure to certain diseases, metals, cancers, etc. you have had and then relate that to your genes. That is going to produce some very powerful and controversial results. But what we learn is going to give us clues to how to fight all sorts of diseases.

Jason noted that people who participate have no guarantee of being anonymous. It seems some young man a few years ago, upon hearing that he was the offspring of an anonymous sperm donor, did some research and found out who his father was. “Surprise! I’m your anonymous son!”

In the future, the world will get turned on its head. Instead of 15 minutes of fame, you will only get 15 minutes of anonymity.

The day before something is seen as a breakthrough, it is a crazy idea.

One guy was asking for dollar bills and other small foreign currency. They are doing DNA samples to see where and how many people have touched a particular dollar bill. In the not too distant future, you’d better be careful who you pay with cash if you don’t want to be traced.

Dr. James Canton gave a very interesting talk on the future of the internet. He predicts that within 3-5 years we will live in a blended reality. Everything will be connected. The internet will become self-assembling. In the near future, information will find you rather than the other way around. Future networks will mimic living ecosystems. Web 3.0 will be the Collaborative Web. Not human to human, but human to machine to avatar to network. I am not sure what that means exactly, but he was quite convincing.

Information that finds you? Will there even be a need for me in the future? He too thought the really big surprise in the future would be a new source of energy, not to mention a new search topology with more predictive analytic search. There is a lot more, and if I can get a link to his speech I will.

We are now landing in San Antonio, so I need to call a halt and get ready to hit the send button. What a week!

John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. Contact John at John@FrontlineThoughts.com.

Disclaimer
John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions.

Miserable cities…ghost towns…angry voters…

Market flash:

The Dow was flat yesterday. Gold rose $2. And Greece said it was making progress towards cutting its deficit.

Yesterday we looked at America’s most miserable cities. Today, let’s take a gander at its new “ghost towns.”

There are many towns and cities that are losing population…losing key industries…and probably on the verge of extinction. USA Today mentioned some of them in a cover story this Tuesday.

Ravenswood, W. Va., for example. It has 4,000 people and one major business. It’s a one-horse town, in other words, and the nag is leaving. The aluminum works are partly shuttered already, says USA Today; the rest is for sale.

What’s going to happen to Ravenswood? It could become a ghost town.

There are already dozens of towns in West Virginia that are inhabited mostly by ghosts. They’re relics of the booms and busts of the past. Mining, logging, railroads – each one created it own towns. Then, the profitable industries of the 19th and 20th century became unprofitable somewhere along the line. People left. Those who remain live among the shades.

The booms and busts of our time are simply claiming more victims. Cleveland is losing population. So is Baltimore. So are dozens of US cities.

“In the America where things are made the recession has a depression,” continues the report. “According to a new Northeastern University study, one in every six blue-collar industrial jobs have disappeared since 2007.”

And one in five adult males of prime working age is out of work. There are fewer and fewer factory towns in the US…and fewer and fewer jobs for people who work in them. And now comes word that auto sales in February fell nearly 4%. And early estimates suggest that the job report coming tomorrow will be depressing.

“Industrial workers are dinosaurs,” says one laid-off worker, now retraining to be a traveling nurse.

Hmmm… Let’s see. How does this work? No one makes anything anymore. We all become service industry workers…looking out for one another. I give you $5 for cutting my lawn. You give me $5 for cutting your hair. Neither of us has a penny more. How then do we afford to buy anything?

“An industrial town makes products that bring wealth into a community; a post-industrial ghost town as a zero-sum economy – people in marginal jobs ‘serving and paying each other,’” says USA Today.

Services don’t make people wealthier. They may make them more comfortable. But real prosperity requires real stuff – food, cars, tables, light bulbs, iPads.

Of course, you could offer services to people who make these things. A small nation, such as Singapore, for example, could earn a living by offering financial services. A Caribbean island could offer vacations. But what can a great nation like the US offer? It can’t get by on services. And it can’t support half its population on welfare, unemployment and food stamps. It needs manufacturing…it needs to make things…and sell them.

Why doesn’t it do that already? How come so many people are out of work? How come men can find jobs?

Ooh la la…too many questions. But when was the last time you heard a mother proudly announce that her son was going into manufacturing? Or that he was learning to be a machinist? When was the last time you saw a major factory under construction? When was the last time you picked up something in a shop, turned it over and found “Made in America” stamped on the underside?

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.

There’s good news and bad news…and a lot of news in between.

Consumers spent a little more than was expected of them. And manufacturing did a little better than expected too.

On the other hand, the federal government’s tax receipts plunged in the month of February…and bank lending is still contracting. Last week it shrank $33 billion – the 7th week in a row it has contracted.

How does an economy expand when the banks are lending less money? Beats us.

We believe the “expansion” reported in the GDP figures is mostly counterfeit. It’s government spending and hot money filtering into the economy. Still, it’s amazing that the GDP figures are positive.

The Dow was flat yesterday. The euro rose a little – on expectations of a settlement of the Greek affair. Greece only had a month to sort out its problems. That was two weeks ago. The “clock is ticking,” say news reports. Most likely, the Hellenes can’t really sort their problems out on their own. Greece will need some sort of bailout – even if it is limited and tentative – from Germany. Stay tuned.

It will be interesting to see what happens when Britain runs into trouble financing its deficits. It won’t have the Germans to help. Britain never took up the euro. It will be on its own.

But the big news from yesterday was the $19 boost in gold. Why did gold suddenly shoot up?

We don’t know. But our guess is that gold will suddenly shoot up a lot more. We’re in a deflationary period. That means everything is going down in price. But against what? Well, against money. Against real money that is – gold.

So gold should continue to go up until this deflationary period is over. That doesn’t mean there won’t be more hiccups and reverses in the gold bull market. But one of the surest trends of our time is the crack-up of the paper money system. And that is bound be good for gold.

Chris Wood of CSLA says he gives the dollar standard 5 more years. Maybe it will be a bit more…maybe a bit less. But one thing is sure. Governments cannot continue to run such huge deficits forever. There will come a day of reckoning…

The feds are hoping it comes at a time and place of their own choosing. They all want to ease their way out of their troubles…with the help of consumer price inflation. You heard central bankers talking last week about increasing the inflation target from 2% to 4%. If they can actually control inflation so precisely, it will be a miracle. But that is what they hope to do.

A few years of 4% inflation would do wonders. In ten years, they would have cut a third of the national debt – in real terms, of course (supposing that they don’t add to it even faster). Not only that, the debts of the private sector would be eased too. At 6%…debts would be cut in half in a decade. With half the debt burden – the private sector might be ready to begin a new period of growth. That is the feds’ real strategy…to de-leverage the private sector enough that it can grow…and increase tax receipts.

By the way, that was what happened in the Reagan administration. The inflation of the ’70s forced up interest rates and caused the worst recession since the Great Depression. But it also lightened debt loads – so much that the economy was ready for another big growth spurt.

This growth really paid off in the ’90s…and the very early years of the Bush junior administration. Thanks to growing tax revenues, both Clinton and Bush were able to pay down the huge debts of the Reagan years…and still increase spending. The economy was able to “grow its way” out of debt.

Then, with the war on terror and the micro-recession of 2001, the budget magic of the ’90s was lost. Bush apparently never met a spending bill that he didn’t like. Spending exploded…especially time bomb spending for health care, which increases automatically year after year.

Then came the depression…known popularly as the Great Recession of 2007-2009. Tax revenues fell. Spending increased even more. And now the deficits come hard and fast. And there seems to be no way to “grow our way out” of them. All of the conditions that made for a boom in the early ’80s are making for a bust in the early 2010s. Interest rates are at record lows, not record highs. Stocks are high, not low. Bonds are high, not low. The government is the solution, not the problem.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.

“I can’t stand it anymore. I have to say something. You act like you actually want a depression. What’s wrong with you?”

The above letter came from a dear reader who has missed the point. We are as generous and warm…as caring and sharing…as anyone outside a mental institution. We only want the best for our fellow countrymen…really.

But what is best? What’s best for the fellow who bought a house he can’t afford? Isn’t it to get out the house as soon as possible? What’s best for the fellow who didn’t save enough for his retirement? Shouldn’t he start saving as much as possible as soon as possible? And how about the banker who lent money to people who couldn’t pay it back…or the investor who put his money into projects that weren’t really very good investments? Shouldn’t they take their losses as soon as possible…and more on?

The period of time in which mistakes are recognized and corrected is called a depression. Best to get it over with.

You see, dear reader, we do not believe in the perfectibility of man and his institutions. Instead, we see material progress. Man’s machines and inventions get better. But man himself? He is what he always has been…prey to sin and folly…prone to error…and ready for a good time.

If he makes mistakes, he must correct them. If he spends more than he earns in the present, he must spend less than he earns in the future.

The Dow rose 78 points yesterday, but is still more than 200 points below its high for this rally. The euro is at $1.35 – down substantially, from its high…but still 50% above where it started. Immediately after the euro was introduced, it fell. It dropped to 88 cents. People thought it was weak and irresolute. They called it the “Esperanto currency” – referring to the artificial language invented in the 19th century and designed to unite the world. Esperanto never really caught on. People feared that the euro would never really catch on either.

But it seems to work as well as any other paper currency…at least for now. So, you see, some innovations work. Some don’t. But behind them is the old rag and bone shop of the heart… As far as we can tell, either progress of the human race is glacially slow…or there is none at all.

Even real material progress is slow. Over the last two centuries, real increases in human wealth – in the west – average out to only about 2% per year. That doesn’t leave a lot of room for error. Make a few big mistakes…such as those caused by miscues from the central banks…and you’re actually going backwards.

Are bankers really smarter, better, shrewder than they were 100 or 1,000 years ago? How about investors? Don’t they make exactly the same mistakes they always made…?

Not many humans have the luxury that we have. Here at The Daily Reckoning headquarters, we’re paid to keep our eyes open…and to try to figure out what is going on.

Of course, we’re not paid very well. Still, what a luxury it is to be able to watch… Economists on Wall Street have to answer to the big banks that employ them. Naturally, they want to show that the world is always getting better. They want their customers to buy more stocks and bonds…which will become more and more valuable, forever and ever.

And then, there are the economists working for the government. They want to prove that they can control the economy…and improve it! Otherwise, why bother to hire them?

There are other economists working for universities and colleges. What do they want to do? They want to show that they are part of the elite classes…capable of leading the country…capable of making decisions. Capable of running things. You don’t get important posts in academia by being “negative.” You don’t win the Nobel Prize in economics by saying “hey…this is all very entertaining…this economics…but there’s not really very much you can do about it.”

Here at The Daily Reckoning, on the other hand, we have no hope of getting tenure…a Nobel…or even a raise. We have no boss and no one to flatter or mislead. We answer to no one but our Dear Readers. And we don’t even pay any attention to them!

Do we want a depression? Well…yes…bring it on! But not because we enjoy seeing people lose their houses and stand in bread lines. It’s only because we know that a lot of mistakes were made during the bubble years – thanks largely to the government’s mishandling of the economy. While real, underlying wealth only grew at maybe 2% per year, people spent an extra 5% to 10%. This spending gap grew during the bubble years, effectively consuming wealth that had not been earned yet…and leading to so many capital investment mistakes that there is no way to avoid a bit of backtracking – which we recognize as a depression.

Here at The Daily Reckoning, we love depression like we love mid-winter. It clears the air…and prepares the earth for spring.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.

Everyone says the euro is falling apart…that europe itself can’t survive as a political unit.

europe seems to lack the things that make for a strong political system. It has no common language, for example (there are more than 200 different languages in Europe). And it has no common culture either…or even a common religion…or a common race.

The Greeks are rioting in the streets. They’re upset because their government is trying to cut back on ‘services.’ Actually, it’s not the services that anyone would miss. It’s the money. The rioters are mostly people who live, in one way or another, at the expense of others…thanks to the government. They work for the government…or get handouts from it.

The poor Greek government is stuck. As in almost all other democracies, politicians bought votes by giving out jobs and money. This leads to a bidding war…in which political parties vie for favor with the voters by offering more and more “services.” One gives away bread. The other prefers circuses. Whether it is food stamps or foreign wars…the price is high. And eventually, the bids go beyond the capacity of the economy to pay them.

Greece is at that point. So are half the US states. They’re out of money. It’s “doomsday” in Illinois, says one headline. It’s a “state of emergency,” in New Jersey.

Lenders don’t want to give them any more money. Wisely, they worry they won’t get paid back. So, lenders demand higher interest rates to cover their increased risks…which puts the Greek budget even further in the red.

The Greeks think the Germans should come to their aid. Why? Because, in a way, it was the Germans who got them into this mess. Nobody would have lent so much money to the Greeks had it not been for the strong teuton-backed euro…and the implicit promise that if the Greeks got into trouble…which everyone knew they would…the rest of Europe would come to their aid.

Well, what do you know? The Greeks are in trouble. And the Germans don’t want to come to their aid. The Germans saved. They ran their own economy better. They are one of the few countries in Europe that is living, almost, within the terms of the treaty they all signed, in which they agreed to keep deficits below 3% of GDP. The German deficit is just a little more than 3%. The Greeks don’t even come close – with a deficit of 12.7%.

In America, the situation is a little different. The economy and the population are more homogenous. And much more of the money is in the hands of the central government. The Germans don’t see why their savings should be used to bail out the Greeks. They’ve got their economy. The Greeks have theirs. In the US, while there are regional differences, there is basically one economy…with one government that messes it up for everyone.

Is the US better off? Does central planning on a larger scale make the US dollar or the US economy stronger?

In fact, the looseness of the European experiment is a strength, not a weakness. What damages a paper currency is not an act of omission; it’s an act of commission. Neglecting to provide more cash and credit is not what kills paper money; on the contrary, it’s the willingness to provide unlimited amounts of it. So far, the Americans are. The Europeans – or at least the Germans – are not.

So, we’ll bet on the euro over the long term…both the euro and the dollar are “elastic” currencies. They both get stretched out of shape. But there are more people pulling at the dollar than the euro.

In the short run, anything could happen. There are probably more reasons for the dollar to go up than for it to go down. But in the long run, our money is on the euro.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.

The economy grew in the fourth quarter by 5.9%, the most in years. The adjusted monetary base is exploding. Bank reserves are literally through the roof. The Fed is flooding money into the system in an effort to get banks to lend. An historically normal response by banks (to increase lending) would have been massively inflationary, causing the Fed to stomp on the brakes. Despite raising the almost meaningless discount rate (as who uses it?), this week Ben Bernanke assured Congress of an easy monetary policy, with rates remaining low for a long time. Many ask, how can this not be inflationary?

This week we look at some fundamentals of money supply and the economy. If you understand this, you won’t get misled by people selling investments, telling you to buy this or that based on some chart that shows whatever they are selling to be what you absolutely have to have to protect your portfolio and/or make massive profits. And we touch on a few odds and ends. And yes, I can’t resist, a few more thoughts on Greece. It will make for an interesting letter, as I’m writing on a plane to San Jose. And it will print a bit longer than usual, because there are a lot of charts.

Where Is All that Greek Gold?

Last week I mentioned the (what seemed to me and much of the world) odd incident of Greek politicians talking about the need for Germany to pay its debts to Greece. I got this response from a Greek reader. Comments afterword.

“Dear Mr. Mauldin,

I am an avid reader and I just wanted to correct you about a comment in one of your articles, “The Pain in Spain”, specifically:

‘Somehow they forgot about the German government paying 115 million deutschmarks in 1960 — not a small sum back then.’

This repayment of 1960 is undeniable. but the total amount owed was $10 billion ($3.5 billion for the return of the gold stolen and the repayment of the war loans Greece was forced into giving Germany, and $7 billion in war reparations awarded to Greece in 1946). As the DM/$ parity was then four for one, this means they gave Greece $29 million out of the $10 billion owed.

Germany also proclaims that they have given Greece over the years, in one form or another, €16.5 billion. But the fact of the matter is that despite these alleged payments, the issue of the war loans and gold is still not settled.

Greece has never stopped asking for the money to be paid back … it is estimated that this sum owed now totals $70 billion [I assume the Greeks want interest – JM]. So even taking into account the €16.5 billion, more than $50 billion is still owed.

Helmut Kohl refused to even discuss the repayment, presenting as an excuse that this amount was owed by the whole of Germany and until Germany is unified the issue could not be discussed.

Guess what, Germany is unified….

Best Regards,

Anthony Kioussopoulos

P.S. Do not take my e-mail as a refusal to acknowledge the fault of successive Greek governments in creating this mess; just take it as a correction for a specific issue.”

+++++

The point here is not that Anthony is 100% right, though his statements have the ring of authenticity. The point is that the Greeks believe it. And thus my lack of surprise last week when I noted that leading Greek politicians of both the conservative and liberal parties were talking the same line. This is an issue that runs across the Greek political spectrum. And that makes the situation all the more intractable, as emotional responses are not the stuff of rational debates.

(I should note that if the US demanded payment from europe of all the money we loaned them after the war, at full interest, our national balance would be a lot better. But I doubt that ever gets brought up, nor should it at a remove of 65 years.)

This week saw riots and a national strike as Greek unions demonstrated against budget cuts. Yet polls seem to indicate a majority of Greeks recognize the need for rather serious austerity measures. As I have documented, they really have no good choices, only very bad and disastrous choices. The austerity measures that will be forced on them by market realities if they default will be far worse than those they can self-impose over time. In fact, yesterday EU inspectors visiting Athens told authorities they see a deeper than expected recession.

Two very condensed reports from european media:

1. After the German magazine Focus ran an issue with a Photoshopped picture of Venus de Milo giving the middle finger to “Greek con artists” (referring to the fraud the Greeks perpetrated when they joined the EU by hiding debt), street protests demanding the boycott of German goods were organized in Athens and endorsed by the Greek administration. There was also name calling by the Greek administration, blaming Germany for all of Greece’s economic and financial problems because the Nazis stole all of Greece’s gold in World War II. In general, the Greek public believes that all this is just excuse-making on the part of the Government, but a boycott is loudly supported by members of all the public workers’ unions. (Reuters report)

The situation is exacerbated by news today that Greece needs to refinance $27bn of bonds in March, vs. the statements JUST TWO DAYS AGO that only half that amount was coming due, and then not until April and May.

2. Financial Times Deutschland reported the results of a poll of German banks that was conducted yesterday. No German bank polled said it would make any further investments in Greek sovereign debt. The following banks and building societies are at risk of collapse due to excessive Greek bond holdings: Hypo Real Estate ($13 billion exposure), Commerzbank ($7 billion exposure, and the bank was bailed out last year by the German government), LBBW ($4 billion), Bayern Landesbank ($2.2 billion). It should be pointed out that Greece is a small country, with 11 million people and a GDP of $313 billion that is running a trade deficit of $11bn. Banking experts generally stated that any private purchases of Greek bonds are now completely out of the question. Any future aid will have to be government to government, and that will exclude Germany, as Angela Merkel stated earlier in the week. Within the eurozone, there are no other countries outside of Germany that have, or can raise, any capital to invest in Greece. (Hat tip to Steve Stough for the above points.)

For what it’s worth, I do not see Germany bailing out Greece in the current climate. If Germany were to force Greece to undertake the severe measures they would be required to take for a bailout, the streets of Greece would be full of demonstrators denouncing Germany. I just don’t see it happening.

If not Germany, who? France? Spain? Italy? They all have their own very real problems. Everyone else is too small. The US will not. Neither will China.

My guess is that at the end of the day (which will come soon) the IMF is going to have to step in. It will be a blow to European pride, but what else is there?

The Euro and a Conspiracy of Hedge Funds

The lead story in this morning’s Wall Street Journal is that hedge funds are holding “idea meetings” and deciding that shorting the euro is a good bet. Der Spiegel called them “secret meetings,” as if somehow a cabal of hedge funds is conspiring to push the euro down. A few points for the writers of Der Spiegel:

There is no secret about the problems with the euro. Let’s see, when the head of Germany’s leading debt-management agency warned this week that the euro would collapse if any member defaulted on its debt, was he part of a secret conspiracy? If he is right, do you want to bet that Greece will behave, and go long the euro?

The currency market is a $2 trillion dollar a DAY market. That’s over $50 trillion a month. Even with 20:1 leverage, $50 billion in hedge funds shorting the euro is a drop in the bucket, and I seriously doubt anywhere close to that much is at risk. George Soros won his bet against the pound sterling because the pound was fundamentally flawed and overvalued, and he put his money where his mouth was.

If a hedge fund is betting against the euro, someone has to be on the other side of that trade. Are those guys (on the other side) conspiring in secret to drive the euro up and the dollar down? Are they in “secret” meetings to take advantage of the poor, dumb, misinformed hedge funds? Who are they? The world needs to know who is conspiring against the dollar and other currencies! Whatever. One side will be wrong. Fundamentals will out.

I get invited to “idea dinners” from time to time. They are indeed private, but they don’t rise to the level of “secret.” I do very little trading, but these meetings help to hone my ideas, and I hope that helps make this letter a better source for you.

The Journal wrote that these hedge-fund managers expect the euro to go to parity with the dollar, as if that is some novel idea. I made that prediction in 2002 when the euro was at $.88, suggesting that it would rise to $1.50 and then fall back to parity by the middle of the next decade. Maybe it will get there a little faster than I thought. Stay tuned, and I do NOT suggest making 20:1 bets on currency moves. A lot of those hedge funds will lose a lot of money if the market moves against them.

So Where’s the Inflation?

Now for a series of graphs. First, let’s look at the Adjusted Monetary Base (or M0). This is the one monetary aggregate that the Federal Reserve actually controls. Notice that it exploded in the middle of 2008, as the Fed started quantitative easing and pushed rates to zero. They were desperate to try and thaw out the credit markets that had frozen.



That in turn caused M1 to increase.



But the broader measure on money that is M2 rose into 2009 and has then gone sideways. Normally the stimulus of such raw money growth in M0 would have M2 exploding upward, as you get a money multiplier effect.



We all know that a US bank can lend out about nine times the deposits it has on hand. When the Fed puts money into the system, it can be multiplied rather quickly if banks choose to lend. This is called the money multiplier.

“Restated, increases in central bank money may not result in commercial bank money because the money is not required to be lent out – it may instead result in a growth of unlent reserves (excess reserves). This situation is referred to as ‘pushing on a string’: withdrawal of central bank money compels commercial banks to curtail lending (one can pull money via this mechanism), but input of central bank money does not compel commercial banks to lend (one cannot push via this mechanism).” (Wikipedia)

This described growth in excess reserves has indeed occurred in the financial crisis of 2007–2010, with US bank excess reserves growing over 500-fold, from under $2 billion in August 2008 to over $1,000 billion recently. Look at the chart below. This is what has all the gold bugs salivating. Where else has this happened without hyperinflation?



Now let’s turn to our old friend Paul Samuelson and his textbook that we all read in Econ 101 to learn about the money multiplier:

“By increasing the volume of their government securities and loans and by lowering Member Bank legal reserve requirements, the Reserve Banks can encourage an increase in the supply of money and bank deposits. They can encourage but, without taking drastic action, they cannot compel. For in the middle of a deep depression just when we want Reserve policy to be most effective, the Member Banks are likely to be timid about buying new investments or making loans. If the Reserve authorities buy government bonds in the open market and thereby swell bank reserves, the banks will not put these funds to work but will simply hold reserves. Result: no 5 for 1, ‘no nothing,’ simply a substitution on the bank’s balance sheet of idle cash for old government bonds.”

–(Samuelson 1948, pp. 353–354)

And that is what has happened. And all those mortgage bonds and other assets the Federal Reserve has purchased? They have been put right back into the Fed by the banks. There has been no money multiplier. In fact, the money multiplier, as measured by the ratio of MO to M1 growth is at its lowest level ever. Look at the graph below:



What this graph shows, astonishingly, is that a dollar added to the monetary base now has a NEGATIVE multiplier effect. Without showing yet another chart, bank lending has fallen percentagewise the most in 67 years. The actual amount of bank loans is falling each and every quarter, with no signs of a bottom. Consumers are reducing their debt and leverage. Bank loans are being written off at staggering rates. Over 700 banks (I think that is the figure I saw) are officially on watch by the FDIC, with more banks being closed each week.

There is at least $300-400 billion in losses on commercial real estate waiting to be written down. Housing foreclosures are rising and hundreds of billions have yet to be written off. As more families fall into unemployment or underemployment, there will be more writedowns. Is it any wonder that banks are having to shore up their balance sheets and make fewer loans?

With capacity utilization just off all-time lows, why should we expect businesses to borrow to increase capacity? Inventory levels are much lower than two years ago. Businesses no longer need to finance as much inventory. They simply need less.

Dennis Gartman writes:

“Effectively the Fed had become a cash machine rather than a monetary expansion machine. At the end of last year, the multiplier had actually fallen to less than 1.0 and the trend remains downward. If anyone had told us five years ago that the money multiplier would be down to 1.0 we would have laughed. The laugh, however, would have been upon us, for it is there and it is still falling. Hard it shall be to sponsor strong economic growth when no one really wants to take a loan or when few banks want to make a loan. The “game” of banking has been turned upon its head, and the strength of the economy suffers while inflationary pressures (at least for now) remain virtually non-existent.”

Next week (or within a few weeks) we will review the velocity of money, as the normal, accustomed relationships about money supply and inflation are proving to be wrong. We live in extraordinary times. We are coming to the End Game of the debt supercycle that has lasted for 70 years. Everything is changing in front of our eyes. It compels us to understand the basics of how economies function, and what is both different and not different about the times we are in.

No Help for Homebuilders

Before we close, this note from Mark Hanson about the home-building market:

“In January, builders sold a whopping 1000 houses per day nationally. During the same month, Foreclosures rang up at 4300 and Notice-of-Defaults at 5100 per day nationally. What a mess. I really thought earlier in the year with massive mortgage rate and tax stimuli — and the purposeful lack of distressed inventory due to HAMP and other mortgage mod and foreclosure prevention initiatives — that builders had a shot at some volume.

“But their window of opportunity has now passed. With HAFA coming on line and foreclosures, short sales and deeds-in-lieu about to dump significantly more distressed inventory on the market throughout 2010, the odds that of any meaningful pickup in builder output or sales is significantly decreasing daily.”

John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. Contact John at John@FrontlineThoughts.com.

Disclaimer
John Mauldin is president of Millennium Wave Advisors, LLC, a registered investment advisor. All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors before making any investment decisions.

The depression is alive and well!

unemployment claims just came in higher than expected.

And new house sales in January were at their lowest ever. Pundits were quick to blame the snow. But sales were off even in areas that had better-than-usual weather.

Household income has gone nowhere in 10 years. Stocks have suffered a lost decade too. And now Ben Bernanke says we’d better be careful…because the recovery ain’t no sure thing.

The Fed chief has no idea. But average people know what’s going on. They know how hard it is to find a job. If you’re in the building trades…or you have only a year or two of college…you’re pretty much out of luck. You may have to retire before you ever start work again.

That’s why there was such a big drop in consumer confidence.

But look on the bright side. Building more houses for people who couldn’t afford to live in them was not exactly the greatest business strategy. And all those people who were appraising, mortgaging and selling houses can now find more useful work. Real jobs. Doing something more useful. What are those real jobs going to be? We don’t know yet. But it could take a long time to find out. And in the meantime, we have a depression on our hands…

So, let’s enjoy it…

How do you enjoy a depression? Well, the first thing is to make sure you’re not in its way…

Dear readers may not know this, but in addition to writing The Daily Reckoning your editor also has a serious job…

Yes, in the morning he is a moral philosopher…gratuitously insulting public officials, whole professions, and entire nationalities. He is grateful to them all…they make life so entertaining! Imagine what kind of world we would have if people minded their own business and got on with their lives… People would be richer and happier, we don’t doubt it…but at whom could we point a finger and laugh?

No, dear reader, the world needs its bumblers, fools, politicians (are we repeating ourselves?), grifters (sorry…we did it again!), and megalomaniacs. It needs someone to challenge the gods from time to time. Otherwise, the gods wouldn’t have the fun of whacking them. And we wouldn’t have the fun of watching.

But getting back to the point…what was the point? Oh yes, the point is we have a serious job to do too. In addition to writing about the world of money, we actually have to live in it.

You see, we have a Family Office…a little group of researchers and analysts that actually has to make decisions… In the afternoon, we have to decide. What to do? Long or short? Buy or sell?

One thing we need to be on guard against is allowing our emotions to take over. For all our deep thinking and cynical detachment, we’re human too. We get emotionally attached to our own ideas. Then, we’re very reluctant to give up on them…no matter how bad they turn out to be.

We remember…sadly…our own feet dragging after the bull market in gold of the late ’70s. We didn’t want to sell. So we delayed…we hesitated… By the time we realized how wrong we were we didn’t have to sell. The bear market in the yellow metal was over! Gold had hit bottom. Gold was down 70% from the top. Much more in real terms.

But there’s nothing like a 20-year bear market in your favorite asset class to sharpen your wits. We realized that we needed a better way…

When you’re investing real money, you need some discipline…and some rules. At the Family Office, we’ve developed a methodical approach that let’s us choose investment themes very carefully – after much thought, consultation and deliberation. And then it prevents us from making any changes…again, except with much reflection and discussion. We also have our own timing index, which would practically take an act of congress to override. If the timing index says to get out…we get out.

Why are we telling you this? Because you need to follow some rules too – or you’re going to suffer in this depression along with everyone else.

What’s the number one rule in a depression? Conserve cash. In a depression, cash goes up. Everything else goes down.

Almost everyone loses in a depression. All assets go down. Against what? Against money…cash. So, the thing to do is obvious. Get rid of your investments. Cut your expenses. Sit tight. Do nothing. When you’re given an investment opportunity, just say no. Wait until the depression has run its course.

If Japan is any indication, this could go on for another 10 to 20 years – with generally sinking prices for just about everything, but particularly for stocks and real estate.

It’s going to be hard to sit out a downturn that long. You’re going to be tempted to speculate…to get back in… You’re not going to want to be left behind.

And yet, in a real depression, getting left behind is the best you can hope for…

A year or two ago, we would have thought that you couldn’t increase the monetary base so dramatically without grave inflationary consequences. Inflation – with a lag of about 18 months – was a dead certainty. Now that we’re closer to the situation, we see that inflation may be hard to avoid…but it’s hard to summon up too. Japan couldn’t do it. And now the Bernanke Fed can’t seem to do it either.

Central bankers are talking about increasing their inflation targets from 2% to 4% in order to give themselves more flexibility to deal with situations such as the crisis of the last 2 years. But they are dreaming. They can’t really control inflation that perfectly. Maybe they can’t really control it at all, except in the grossest, clumsiest way. They have tripled the world’s monetary reserves in the last 7 years. Prices for gold and oil have responded more or less in line with the monetary base. But most consumer prices are heavily dependent on capital investment in China…housing prices in the US…and a million other things that the economists at the Fed can’t begin to control.

Of course, in extremis, as Ben Bernanke once told the world, a central bank can always create un-controlled inflation. They “have a technology known as the printing press,” he said. Crank up the presses…and let people know that you are cranking up the presses…and you’ll have price inflation lickety split.

But the financial and economic costs of cranking up the presses are so great that very rarely is any central bank…and certainly not any major central bank of a civilized nation…reckless or bold enough to do it. It’s the nuclear option of the monetary world. You have to be very desperate to take the nuclear option. We don’t think Bernanke and crew will get there…not for a long time.

That said, there are also conventional weapons…such as those being used now. One in particular…quantitative easing…packs a lot of firepower. It’s not nuclear. But it can still make one helluva mess. Stay tuned.

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.