Money isn't everything

Feb 27, 2015

- By Bill Bonner

Bill Bonner
Gualfin, Argentina

Dear Diary,

First, let us check in with the markets. Little change since yesterday. Gold holding above $1,200. Stocks still near record high, as profits fall. Bloomberg:

    ...the current estimates show [earnings] will drop 4.5 percent this quarter. And don't forget, that's compared with a 2014 period that included the famous polar vortex... The second quarter's not expected to be much better, with a 2.8 percent drop projected.

    "The stock market's march into record territory in the face of deteriorating profit trends makes many professional investors, including ourselves, instinctively uneasy," Carmine J. Grigoli, chief investment strategist at Mizuho Securities USA Inc., wrote to clients today

Our advice: stay in cash, gold, and investments you won't want to sell, even if their market prices get cut in half. This is no time for the amateur speculator to be in the US stock market.

Now, back to...

Part II in our series: Money isn't everything

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We spent all day yesterday getting here. Where is here? It's in Salta Province, Argentina. It's high. It's dry. Mountainous. At the end of a long valley, with the snow-capped Nevada de Cachi at the North end and the giant Remate at the other. It's almost impossible to get here unless you know where you are going. In places, the road is a dirt track, with no signs to guide you. In other places, you might get stuck in sand...or in a river...depending on the weather. When we reach Molinos, we leave the main highway (a gravel road) onto on a rougher dirt road. We cross the river (which was dry) and head southwest towards Remate at the far end. As long as we can see Remate, we know we're going the right direction, because our farmhouse sits at its base, with the ranch stretching out around it.

It is beautiful this time of year. The 'rainy season' is largely wishful thinking here. Still, this year we got an average rainfall, totalling about 6 inches. But it all fell in the last few weeks, so the hills are covered with flowers...sage, cactus, yellow flowers, red flowers, fragrant flowers and bushes. What isn't yellow, red or blue, is green. And the cattle are eating it as fast as they can, trying to load on as many calories as possible before it all dries up.

You'll hear more about life on the ranch over the next few months.

Yesterday's Buenos Aires Herald carried the news that there are some 200 million people in Latin America who live on between $4 and $10 per day.

These people are "vulnerable," says an assistant Secretary General at the UN. She might have been describing about half the people in this valley.

That is, she might be describing them if she had even the faintest idea of what she was talking about. Until the government began its latest welfare program, people here had almost no money. They lived on what they produced with hoes - corn, onions, potatoes, quinoa, beans - and on the animals they raised -- beef, lamb, llama, goat, cheese. They weaved the llama hair into blankets and ponchos. They traded calves and goats for shoes and hats.

As near as we can tell, they lived decently, even with a rustic elegance. And many survive into their 90s without ever seeing a doctor or a psychiatrist.

But now, with money coming from the Argentine feds, life is changing fast. The young locals watch TV (using solar panels also supplied by the government) and go into town rather than weaving their blankets or planting their ancient varieties of corn. Now, they depend on the government as they once depended on the rain.

"We need to invest in the skills and assets of the poor," suggests the UN official.

Meanwhile, she admits as to how "well-being means more than income."

Further on in the Herald, actress Patricia Arquette is featured. Accepting an Oscar last week, she confessed her concern about equality between men and women. Unlike the world improver from the UN, she seems to think that income is all that matters. The paper notes that having children seems to slow down women's earning power. "Women with children are far worse off than single ones," it proclaims.

Therein, of course, hangs a long tale. Single women - without children - make about as much as men. But women cursed with offspring, make much less. Apparently, there is no joy in motherhood sufficient to offset a decline in wages, least none that occurred to Ms. Arquette.

We once spent a year in a small village in the French alps. Among the residents was an old man, named Emile. He lived in a rustic chalet on the side of a mountain and tended a garden and a small orchard. From the garden, he took generous harvests of beets, salads, carrots, leeks, and other vegetables. He used cold frames to extend his growing season. And he packed away his carrots and potatoes in dry sand so they lasted all year. His small orchard gave him apples and pears - from which he made cider and jam. It was too cold for peaches. He over-produced, intentionally, and traded much of his produce with a dairy farmer, from whom he got milk and cheese.

Emile never left the village. When he wasn't tending his garden or his orchard, he sat out in front of his house carving wooden bears, reading, drinking coffee or just enjoying the warm sun. In the cold weather, he stayed in his kitchen, which was heated by a big wood-burning stove. He brought bread from a local bakery. He must have bought flour and sugar too, but we never saw him do it.

Emile was far happier than most of our millionaire friends. And far healthier than most people - even those half his age - with luxury health spa memberships. Whenever we passed, he invited us into his cozy kitchen for a drink of cider.

Yet, Emile must have lived on less than $4 a day, which would have put him below the poverty level, even for South America.

'Vulnerable?' Not at all. He was probably the least vulnerable person we have ever met. If the stock market got cut in half, he wouldn't have noticed. If the country fell into a recession or depression, it wouldn't have changed a thing about his life or his living standard. He needed no job. He paid no mortgage. He awaited the arrival of no check, neither from the government nor from anywhere else.

It's not lack of income that makes you vulnerable. Nor is lack of income equality that makes you a schmuck.

More to come...

Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.

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