- By Bill Bonner
Want to know what happened yesterday? Read the newspapers!
There are 4 big stories here in London.
Number One: The Greeks are making a 'last ditch' stand to get more money from the EU. Most likely, after countless delays, it looks like the spark and the fuse will come together this weekend. Things could get hot. Your intrepid reporter loves a financial blow-up. He'll make his way to Athens tomorrow Saturday to see it for himself.
Number Two we saw first-hand: we walked along the street in the City (the equivalent of Wall Street) at about 6pm. The sidewalks were mobbed. A strike on the London underground had left millions of people to make their way home as best they could. Bus stops looked like Greek ATMs...with long lines stretching down the street.
Number Three: We'll let the Financial Times tell it -- "Rebound in China equities spurs rally in US and across Europe." The rally in the US was nothing to write home about. The Dow was up barely 30 points. In China itself, however, gains were substantial, after the government prohibited large sales and also eased margin requirements.
Number Four: The British government has unveiled its budget and revealed a proposal to increase the minimum wage to about $10.
But the headline reports only give you the public stories - a simpleminded narrative that even a democratic voter can understand. The real, hidden story is that these are all clashes, battles and skirmishes in the great Zombie War.
On the one side: honest workers, businesses, entrepreneurs, and households.
On the other: fixers, meddlers, thieves, layabouts and criminals.
Is it really that easy to understand? Probably not. But it helps us put things in perspective.
Take the proposal for a higher minimum wage, for example. The Financial Times is usually wrong about everything, but it is right today: "Politicians cannot 'magic up' a national pay boost."
From the beginning of time until the moment you read this, politicians have never added one single cent to the wealth of the world. They can move it around. They can suppress it. They can steal it and destroy it. But if you could add wealth by legislation, they would have gotten the hang of it long ago.
Everything has a price, and a value. You can change the price by passing a law. But you can't change the value. And when the price gets out of line with the value, it triggers distortions, shortages or hoarding. When the price of labor is set too high, for example, a shortage of jobs soon appears. If it is too low, you soon run out of labor. Minimum wages, like the Fed's interest rate policies, only do no harm when they do nothing at all. Why, then, are minimum wages the 'law of the land' not only in Britain and the US but almost all developed nations? Because the way the news media tells the story, you'd think the politicians were helping minimum wage workers, protecting them from greedy employers. This helps the zombie politicians keep the masses in line.
But the UK budget is just one front in this worldwide Zombie War. In China, the authorities are desperately trying to prop up a debt-addled stock market by allowing investors to borrow more money. There is even a report that investors may put up their houses as collateral. Why is keeping stock prices up so important? Because asset prices are the collateral of the whole capital structure. The zombies' credit depends on it.
In Greece, the Tsipiras government tries to keep the credit flowing its way, too. Greece is already so deeply in debt, creditors are threatening to cut it off; why so eager to borrow more? Because it is the only way to keep the zombies fed.
What about the London Underground? Public employee unions have become nests of zombies. The market should set their wages near their real value. But zombies aren't content with market wages, they want the politicians to set the price. And they're willing to shut down much of the city to get the money they want.
There is always a fight between the living and the half-dead. What makes this period especially interesting is that the zombies have won so many battles already, they have greatly reduced the real productive capacity of their hosts. Growth rates go down as debt increases. Zombies, more numerous and powerful than ever, are running into the limits of their leechy power. They depend on credit. The Zombie War is a huge fight to keep the credit moving their way.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.