The Battle for Qualfin

Sep 9, 2015

- By Bill Bonner

Bill Bonner
Gualfin, Argentina

Dear Diary,

Almost all stocks were up yesterday, all over the world. The Dow rose 390 points "on optimism over China," said Bloomberg. We're amazed. We hold our breath and wonder: what next? The American investor actually thinks he has some idea of what is going on in China. Good luck to him!

In a healthy market stocks rise and fall, depending on which ones investors think are gaining on the others. Overall, the market should rise no more than GDP, assuming that is a decent measure of overall economic activity. As the market gets bigger, stocks can - in the aggregate - be worth more, because they are selling more But any time stocks are going up more than the economy...something funny is going on.

Over the last six years, US stock prices have risen approximately 15 times as fast as GDP. We know what was going on. Optimism over China had nothing to do with it: the Fed was manipulating the value of America's equities, essentially stealing wealth from Main Street (savers, workers, retirees, small businesses) and giving it to Wall Street (insiders, cronies, investors, bankers, speculators, big businesses.)

There are many ways to take what isn't yours away from its rightful owners. Here's another one:

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"The Indians who lived here were the last to surrender, according to legend, anyway."

Jorge, the foreman, is getting ready to retire. He was reflecting on the problems facing the ranch.

"They retreated all the way up into the mountains, to that rock we call 'the fortress.' There, they made their last stand. You've been there. You can see all the pieces of broken pottery on the ground. Apparently, they went up there with food and water. It's called the fortress because it is a natural fortification; it was impossible to get them out. So, the Spanish just laid a siege. And when the Indians ran out of food and water, they threw their pots down at the Spanish...and then threw themselves off the cliff.

"They were tough people."

And now, if you believe today's legends, they are mounting a counter-attack, trying to take back what they lost four centuries ago. There have been whispers of insurrection ever since we got here 9 years ago. Now, things are heating up.

News of the coming revolt reached your editor last week. He went to visit a neighboring property - the Hess Vineyard at Colome. There, one of the executives gave us a warning:

"It's coming. They have brought in professional organizers. They're paid by the government to stir up trouble. It's part of the Kirchner administration's attempt to buy votes, of course. They tell the local people that they have the right to the land because their great, great, great grandfathers lived here. The organizers go around and appoint a 'cacique' - a chief - who is supposed to bring the people together to fight the landowners.

"These caciques had a meeting recently. One of my employees reported that they have a plan to take the whole valley. They're beginning here...and then they're going to march up and take your place too."

This was bad news. But it had a comic tinge to it. How could they really take back land that had been stolen, fair and square, in the 1600s? What kind of precedent would that set? Would it mean that Americans would have to give Manhattan back to the descendants of the tribe that lived there - if they could find any? And of all the thousands of descendants of the original inhabitants, who may or may not have crossed the river at what is today St. Louis, which would have the right to the city? And wasn't all of Australia taken from the aboriginal people in the 18th century? Will they have to give it back? It seemed crazy.

"No, it's true," said Hugo.

Hugo is one of the local people who calls himself an "originario." He is a young, burly man who, aside from making adobe bricks, has no visible means of support. Rumor has it that he receives money from the local mayor; he is a political operative. He may be the local 'cacique.' We don't know. But he came to see us on last Friday, with a declaration of war.

"Hugo," we asked, "are you saying that you have special rights simply because your great grandparents may have lived here?"

"Yes. We are 'originarios.' We have a right to the land, the air, and the water. It is only natural."

"Does that mean that the land I bought is actually yours? Have you been paying the property taxes on it?"

"No, no," Hugo smiled slyly. "We don't have to pay property taxes. And I don't have to sign your rental contract. Because I'm an 'originario.' I have special rights.

"How many other people who live here have these rights?" we wanted to know.

"Well, I don't know. It is for each person to declare himself."

"Most of these families are not originally from here," we continued. "They came from neighboring farms a generation or so ago."

"I don't know if that matters," Hugo replied.

"Well, if where your grandparents came from doesn't really matter...doesn't that create a problem? Couldn't you claim any property you want? I mean, the rest of us have to pay for property. Either we rent or we buy. Or we inherit. I've never heard of anyone who got someone else's land simply because his ancestor may or may not have once lived there."

"It's a law. It's an international law that was made in the '90s. You can look it up."

"Funny that I never heard of it before...

"And I don't see how it can work. You probably had a lot of ancestors who lived here...and at Tacuil and Colome too (neighboring properties). How do you know which one you have a right to?

"It is for each 'originario' to declare it for himself...depending on where he lives now."

"Hmmm, sounds a little vague. Everybody has to have 4 grandparents, 8 great grandparents...am I doing this right?...and 16 great, great grandparents. It is likely they come from different places. So, does this mean you have the right to 16 different properties...or more...?

"Or look at from the other angle...if each of your 16 great, great grandparents had 4 children...and each of them had 4 children...and so on...that would mean about 1,000 descendants. How do you decide who gets what?"

"Senor Bonner, no; it doesn't work that way. It's just where you live. You have the right to that."

"So you're saying that I don't have the rights to my land that I thought I had."

"Yes...that's right. This land belongs to the 'originarios.' We don't have to pay you. We don't have to sign a contract."

"Maybe we should get all the people who claim to be 'originarios' together and figure out who has the right to what. I mean, I just want to know. I'm investing a lot of money down here. I think I'll just leave if I don't have the right to the land. I'll stop paying salaries. I'll stop buying equipment. I'll stop investing. And if I get chased off by this 'originario' thing, who will take my place? Nobody. And how will anyone here be better off is no one is bringing in money from the outside to try to make it a viable property?"

"I don't know...we're not trying to drive you off..."

"Oh..."

To be continued...

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

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