Tuesday, 27 April 2010
Oh my...oh my...
Locusts...earthquakes...tornadoes... What next? Fire and Brimstone!
There's a plague of locusts eating crops in Australia...
Earthquakes are becoming more common...after devastating quakes hit Haiti and then Chile.
"We could definitely feel it in Buenos Aires," said our friends. "It was very unsettling. The heavy blinds we have up outside began smacking against the house as if there were a wind storm. But there wasn't any wind."
Then, a volcanic eruption in Iceland grounded air travelers between Europe and the US...
And now deadly tornadoes have ripped into the Southern US...and a "giant fireball" was spotted in the Midwest.
Is it the "end of time?"
At least, you're probably better off betting against it. That is, 9 times out of 10, time continues. Every time people think that something totally new has come along, it turns out that it's not so new after all.
Like all those goofballs who thought a "new paradigm" meant eternally rising stock market prices in '99...or real estate prices that went up forever in 2006.
You'd think these people would have learned their lesson when the crash/Great Recession of '07-'09 wiped out $30 trillion worth of nominal wealth. But they'd been exercising their optimism for so long that it's in pretty good shape. Now, comes the rebound and they're ready to flex their good-time muscles again.
The Los Angeles Times reports, for example, that people are "flipping houses in South LA again."
Emerging markets have soared - almost recovering all that was lost. And consumers, who had retreated from spending money once they realized they didn't have any, are once again on steroids - pumping up sales to give the impression of a healthy recovery.
And there's a report that the small fry are finally getting back into the stock market. After staying on the sidelines for the last two years, they're now getting up the confidence to tempt the fates. Good luck to them...
Of course, it's perfectly normal for people to believe the de-leveraging is over. Who wants to cut back? Who wants to accept a lower standard of living? Who wants to admit that he's been a fool? Instead, he'll tell himself:
"It'll all blow over..." "Things are back to normal..." "The feds have the situation under control..." "Now it's safe to get back into stocks..."
Meanwhile, the key indicators are still weak or undecided.
New jobless claims went up unexpectedly last week. The Baltic Dry index is still telling us that there is no genuine pick-up in world trade. The feds' new homeowner tax credit will expire soon - with property auctions and bank repossessions at record levels...and foreclosures taking their biggest jump in 5 years.
Robert Shiller warns that we should expect another dip in the housing market.
And the Fed itself tells us that it will keep extend its "extended period" of emergency low rates a while longer.
What is all this telling us?
That the Great Correction continues...and that there is far more danger on the downside than there is reward on the upside.
Barron's Big Money Poll tells us that bonds are the most detested asset class. Frankly, we don't like them either. But the Great Correction will eventually take a whack at stock prices...and real estate prices...and commodity prices...
...bonds could be the only major asset to escape!
The big money could be dead wrong...just as the small money is almost always wrong. Bonds might go up as the de-leveraging continues.
We'll wait to see what happens....
And more thoughts...
*** Santa Maria, Madre de Dios, Ruege Para Nosotros
Sunday morning, the Padre gave a mass at the little chapel next to the school. Then, he came over and blessed the new backhoe:
"Lord, we ask that this machine may help make the farm more productive and may make it a better place to live and work for all who live here."
"Amen," we said.
Local priests are in short supply. Ours is an intelligent man with thinning hair, who came from Spain to minister to the poor of the Andes. He and another priest take care of 22 different churches, covering a region bigger than the state of Rhode Island. Once he left on Sunday, he could not come back to bury Jorge's father. So, blessing of the clergy was performed in Salta, before the journey to our ranch began.
Javier caught on quickly. After a few minutes of training, he could operate the backhoe better than your editor. There are some things economists can do well. At least, in theory. In practice, we've never found anything.
Backhoes were not designed for intellectuals. By the time we have calculated the angle of attack, a good operator has already dug two holes. Maybe most things in life are like that - better done by instinct than by calculation.
Javier turned off the motor and came down from the cab. We were giving him instructions in maintenance - ‘graselo cada dia, sin excepcion' -- then we heard the deep, full throated noise. It was an old Chevy truck coming up the hill.
"That must be Jorge, with his father's body," we said to Javier.
"Mi abuelo [my grandfather]," said Javier. The cowboy's face was as hard and immobile as the stone mountains behind him. It was not an unfriendly face. But it was not a face you'd like to see in a bar fight, either, at least not unless he was on your side.
The old truck usually ran on bottled gas. But it could only get gasoline at the station in Molinos...so it switched back to gasoline, which caused it to run poorly, occasionally coughing and sputtering.
Still, it made the trip from Molinos in an hour and a half, across the desert to our ranch, with the coffin of Jorge's father in the back. Along with it came four other dusty pickups - each one carrying more of Jorge's family. Brothers and sisters, nieces and nephews...all came back to the cradle of the family itself, where Agostin, father of Jorge, Evo, Rosa, Candelaria, Josephina and Fermina, was born.
The body already lay in the chapel, in front of the altar, when we got there. Candles were lit on all sides. A few people kneeled, praying in their pews. Others milled around outside.
We shook hands with the men standing outside our church. The women inclined their cheeks upward for a kiss. All were shy. Many of them had never had met a real economist; probably, they never will. Then, we went inside, took off our hat, stood before the closed casket and made the sign of the cross on our chest and went back outside to await events.
Soon after, Jorge's wife took charge.
"In the name of the Father, the Son, and the Holy Ghost," she began. "We are gathered here to say goodbye to Agustin... He has taken a road we all must take. Santa Maria, Mother of God, Pray for Us."
"Santa Maris, Madre de Dios, Ruege Para Nosotros....
"Santa Maria, Madre de Dios, Ruege Para Nosotros...
"Santa Maria, Madre de Dios, Ruege Para Nosotros...
Once the litany began, it seemed like it would never stop. Maria called upon the saints, by name...and asked for the help of the angels and Heaven itself...counting out the beads of her rosary...reaching out to the Kingdom of God and imploring its denizens to welcome her father-in-law, to take him up into their celestial hotel and make him feel like he belonged there. As for those left still alive, she asked for help for them too. Would God give them a little help...a raincheck...she asked...a reservation for the future, for the time when we too must join Agostin...and all the saints...in our eternal home.
When the litany ended, the choir assembled. Gustavo led it in a death chant...a simple tune sung over and over, with old women keening in the background. The effect was unlike any church music we had ever heard. There were no musical instruments in the chapel, but the keening filled the air, like an organ or bagpipes. It was a soothing and melodic...but deeply sad...
"It's the music the Indians sang when they came down from the mountains," Maria explained. "It's called a baguala."
Each person in the church then stood in line to take communion...and touched the casket on his way back to his seat, some merely placing their hands on it for a moment, others making the sign of the cross.
When the last of the eucharist celebrants had sat down, Jorge's wife blew out the candles, while Jorge, his brothers and nephews moved up to the front of the church. They picked up the coffin, and put it back onto the pick-up truck. The rest of us got in our trucks too, in order to follow the procession out to the graveyard.
Across an arroyo from the chapel is an old adobe house. It was the house where Agostin lived as a child and where Javier lives now. The procession drove to the house; the casket was taken out of the back of the pickup and carried around the house. Then, it went back in the truck for the trip to its final resting place.
About a half mile from the house, out on the range by itself, is the graveyard. It is a giant square, surrounded by stone walls, about 6 feet high, so remote that life above ground is almost as peaceful as it is below it.
Here, in this high plains Boot Hill, some 50 or so bodies lie unmolested by the living. Here, the dead are on their own...save when someone comes to join them. They enjoy their sleep without interruption - no lawnmowers and no internet signal.
Some graves are marked by piles of rocks. Others by concrete tombstones. Still others only have a wooden cross to mark the spot. Some of the dead appear to have been forgotten completely. Other gravesites are garnished with a few faded, plastic flowers.
Off to the right, as we entered, was a pile of pick axes and a little farther was a hole, much deeper than we expected. It must have been hard work digging it.
"I guess the next one will be dug with the backhoe," we said to Calvert.
"I don't know. They might rather dig those graves by hand."
Jorge's wife spread a blanket on the bottom of the grave while Jorge and his kin attached ropes to the coffin. They then set the coffin on the top of the hole supported by a couple metal bars across the opening.
Again, mourners began their lament, while one by one the rest of the group, beginning with the closest family, approached the casket. Each one dipped a sprig of green leaves into holy water and made the sign of the cross on top of the casket.
Now that the body was closer to the grave, the keening grew louder and eyes grew redder. Some cried. Some merely looked blank and sorrowful.
When everyone had paid his last respects, a bent grey felt hat, the kind an old ranch hand might wear, was put on top of the coffin. Jorge and his brother pulled out the metal bars while other relatives held the ropes. Then, the body was lowered into the hole. When it came to rest on the bottom, they pulled up the ropes.
The wailing and keening continued. The relatives each took a hand of dirt and threw it on the coffin. Then, one of Jorge's sisters threw on some of his clothes. Another tossed a pack of cigarettes into the grave.
When the symbolic burial was over, three of the ranch hands, Natalio, Omar, and Juan, picked up shovels and began seriously filling the hole with dirt. A cloud of dust formed around them. Juan smoked a cigarette as he worked.
Soon, the grieving friends and family were beginning to drift away. Bottles of coca cola and orange soda came out. Anna, Juan's son, came over and offered us a cup of coke. Out of the corner of our eye, we noticed Javier, the toughest hombre in the Calchaqui Valley, wiping away a tear.
Santa Maria, Madre de Dios, Ruege Para Nosostros.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.