|QE2 has had unforeseen benefits. Really?
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Los Perros, Nicaragua
This week, between Christmas and New Year, is always slow. Traders have mostly taken the week off. The Dow was down a little yesterday. Gold was up a little. Nothing to get excited about.
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Here's a guy who should have taken off too. Bloomberg reports:
"QE2 has had unforeseen benefits in raising risk appetites and improving confidence across the board," said Mark MacQueen, a partner at Austin, Texas-based Sage Advisory Services, which oversees $9.5 billion.
What? Unforeseen benefits? Those are exactly the flimflam benefits the Fed promised. Put more money in the system; hope it causes "animal spirits" to pick up.
How do increased "risk appetites" really help anything? The US economy gorged itself on risk during the bubble years. The Fed should be helping it stay on a diet; not waving chocolate éclairs in front of the slob's nose.
But we're already beginning to apply our New Year's Resolution for 2011. We're going to improve ourself. We're not going to be so critical (see below).
Yeah... more risk appetite. Sure. Why not? Just what we need, right? We need speculators to make bigger bets. We need homeowners to take chances again - buy a new house...flip one or two of them... Who knows; maybe they'll go up. And we need consumers to buy things they don't need with money they don't have.
Yeah...that's just what we need -- more credit-fueled risk-taking. Thanks for bringing that to our attention, Mr. MacQueen.
*** "Family get-togethers are difficult, because families are difficult," said Elizabeth.
Christmas snuck up on us. On the eve, we were still wrapping presents. Then, at about 8pm we settled down to watch a movie - Family Christmas, with Chevy Chase.
"Family Christmases can be intense," Elizabeth continued.
Maybe it is true of all family get-togethers. Or maybe it is particularly true of Christmas. Our children are young adults. They have their own ideas now. They have their own personalities, their own standards and their own expectations. Mom and Dad may not measure up.
"It's not like it used to be. When the children were little we set the entire agenda. We directed the conversation. It was all up to us. It was our family.
"But the family is different now. We have a house full of people whom we can't completely control. They're adults.
"They're adults. But they're not entirely settled into adult life. They're not sure who they are. Or where they belong. Or how they should get along with their brothers, sisters and parents. Or whether we did a good job of bringing them up.
"It seems like they're testing each other...and us too."
*** "Dad, you are so negative...so critical..." Jules had said that afternoon. "I don't see how you can live with yourself. I would be very unhappy if I were you."
"What? I'm not negative. And I'm not unhappy," we replied
"Your father is usually cheerful," Elizabeth backed us up.
"He sure doesn't appear to be..."
"Of course, I'm cheerful...what do you think I am, some kind of grinch or Scrooge? I'm an economist, for Pete's sake. I have to be cheerful.
"What, do you think the negative GDP growth depresses me? Or Ben Bernanke's crackpot moneyprinting? Or the phony 'stimulus' program? Or the idea that the same feds who had no idea what was happening are now running the whole world's fraudulent financial system?
"Nah...it doesn't bother me at all. Just the opposite. I HAVE to be positive. And cheerful. Otherwise I'd slit my wrists."
"Oh Dad, you're always making jokes. But they're always dark jokes. They always have kind of sour twists to them. They are just your way of covering up your own gloomy personality."
"That's not true. Of course, I think that most of what goes on in public life is a fraud and a scam. But that doesn't mean that I think everything is a scam and a fraud. Private things - like spending Christmas with you and the rest of the family...or like looking at something beautiful, like the view out our front door...or when someone says something that is true...or does something that is genuinely brave or genuinely kind...
"...well, I appreciate these things as much as anyone. In fact, I appreciate them more than most people.
"You always have to separate the cheap and tawdry from what is really worthwhile. You can't recognize something that is beautiful unless you can also recognize something that is ugly. And you can't really appreciate the truth unless you can compare it to a lie.
"Trouble is, it's not all equally balanced out. For every truth, there are hundreds of lies. For everything noble, honorable, sincere and intelligent man there are hundreds of jackasses."
"That seems like a very negative view, Dad..."
"Jules isn't really criticizing you," Elizabeth explained later. "He's a lot like you himself. He's probably just trying to think through how and why people are happy. In a way, he's testing himself..."
*** On Christmas Day we loaded into our cars and drove up the dirt road to Salinas. We were going to a new Catholic church for Christmas Mass. But the church looked so little like a church, and so much like an abandoned warehouse, that we drove right by. We had to stop twice for further directions.
The priest was a man with a face that looked vaguely like a South American dictator. He was a man of the cloth. But he might just as well have been a man of the machete or of the machine gun.
"Circumstances rule men; men do not rule circumstances," was how Herodotus put it.
If he had come along a few years earlier, he might have joined the Sandinista revolution. But that is now history. Only aging hippies and hallucinating communists still care about the Sandinistas. Daniel Ortega is back in office. But this time was elected. And now he's said to be more interested in money than in ideology.
The church had a new tin roof. It had a dirt floor. No windows or doors. The dust blew in with the wind, causing the choirboys to cover their noses and eyes. A pig wandered in during the reading of one of St. Paul's letters.
Our family made up about half the congregation.
"Most people go to church on Christmas Eve," said a nice woman in shorts. She might have added that most people also go to one of the competing churches - either the Apostolic church up the road...or the Evangelic church in the next village. The holy rollers are grabbing market share fast. They put on a better show. It was standing room only at one of them that we passed earlier. Mainstream churches are lagging behind.
We were going to report the sermon to you. But we couldn't remember a word of it.
"It was about salvation," Elizabeth reminded us. "The priest explained why Christ was born...why he came down to Earth...why he suffered. He had to join us in our suffering so he could deliver us from it."
"Why did he have to do that?"
"I don't know..."
*** After church, we turned off the dirt road at a sign indicating, improbably, a "Café de Paris." Even more improbably, there actually was a french café, on the ocean, run by a French couple, and housed in a building such as you would find in an African safari camp. It was curved, with solid white masonry walls and roof of "palapas" - thatched with palm fronds.
"We've been here for 24 years," the woman explained. "My husband got sent to Managua by his company. But then, when that was over, we didn't want to go back to France. Life is so much better here. We live on the beach. The weather is nice. We don't make much money, but who cares? We live the way we want."
The woman was very glad to see us. Most of her customers were backpackers. Maybe she was happy to see adults. Maybe she was just happy to speak French. She hugged Maria. She took your editor's arm. It was as if she had been on a deserted island for a quarter of a century.
"Please come back," she begged when we left.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.
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