It was year that was flat and lifeless - The Daily Reckoning
The Daily Reckoning by Bill Bonner
On This Day - 30 December 2010
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It was year that was flat and lifeless A  A  A

Los Perros, Nicaragua

The year is almost over. Time to write the obituaries.

What kind of year was it? A flop. A failure. A loser. Just like we said it would be.

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It was a "year that fizzled," writes David Leonhardt in the New York Times.

"It was the year that the economy started to recover and then slid back into a slump - only to offer reason for renewed hope in the final weeks."

"When 2010 began, hiring and consumer spending were finally picking up. But then something changed in the spring - a combination of the debt troubles in Europe , the fading of stimulus spending and the usual caution by businesses and consumers after a financial crisis. By the summer, the unemployment rate was rising again, and Americans' attitudes about the future were again souring."

"Making matters worse, many of the economy's long-term problems also became more severe this year. Health care costs continued to rise faster than inflation, and the number of uninsured continued to grow. The most recent climate data suggested 2010 would be the hottest or second-hottest year ever recorded; the 10 hottest have all occurred in the last 13 years, creating serious risks for the planet and its economy. The federal budget deficit ballooned further (though it should grow during an economic slump). "


Fizzled? Nah. He just doesn't understand what is going on. The year couldn't fizzle out. It never had any real gas in it. It was flat and lifeless from the get-go.

No great progress for humanity was made in 2010. There were no great achievements. The health care bill was a muddled fraud. The I-pad may make communication easier. Then again, it might make it harder. The year's big movie - Inception - was a dud.

But what about the economy?

The real, private economy spent 2010 paying for mistakes it made over the last 20 years - particularly in the last 5 years. It couldn't undertake anything new; it had to reckon with things that it did in the past.

Consumers generally paid down debt...or defaulted. Businesses hoarded cash and refused to hire new employees. Bankers made fortunes gaming the Fed's easy money system. They took the Fed's money and speculated. They lent out little money to the real economy.

Meanwhile, the authorities were actively making the situation worse. Not just with low interest rates. They had other bamboozle programs and crackpot projects - notably 'quantitative easing.'

In Europe, peripheral countries such as Ireland and Greece were deep in debt. So, what did the authorities do? Lend them more money! Result? They are deeper in debt at the end of the year than at the beginning of it. Now, their problems are worse than ever.

In America, the year ends with the private economy a little better off and the public economy a lot worse off. Two trillion worth of debt and liabilities were added to federal accounts this year. In terms of federal finances, the average man, woman or child will be about $7,000 poorer when he rings out the old year.

This extra money was supposed to spur the economy to growth and prosperity. Did it do so? There is no evidence of it. Housing will generally be cheaper at the beginning of 2011 than it was at the beginning of 2010. And fewer people will have jobs.

Among investors, some did well...some did poorly.

But at least our Dear Readers will have something to celebrate. Just as they have had every year of this millennium. Gold investors end the year nearly 30% richer.

*** Elizabeth and Henry went to the "Hippica" in the nearby village of Tola.

"We got to the village," said Henry. "It's not a very prosperous place. It has a Third World feel to it, with a large central square, a church and a playground. Not much else.

"When our horses finally came...we mounted up. We had the best horses in the parade. Because our friends breed horses, which they kindly let us ride. Andalusians. The horses went very slowly, because they all do that high-stepping. It was a real melee. People. Horses. Lots of noise. Drinking. Laughing. It was very hot and very noisy.

"This guy we met introduced himself to three girls who were standing outside one of the houses. These girls were barely 16 years old. He must have been about 40. But then the girls' mother came out... She scowled at the man and told the girls to get back inside.

"Finally we got to the center of town. There were little girls dressed up in Santa outfits. And there was a group of cheerleaders. I couldn't figure out exactly what was going on. There were a couple of piñatas...one had had its body whacked off.

"As near as I could make out, they were selecting a young girl as "Miss Tola"...or maybe they had done it before. She was dressed in white. "La Novia de Tola" they called her (Tola's girlfriend). When she was announced, there was a lot of clapping and whistling.

"There were also some gringos sitting in the back of a pickup truck. They were drinking beer. Chino came over to me. He told me that the girl in the truck was French. So, I went over and spoke in French to them. It turned out that they were all French. Most of them were from Paris. But the girl was from Marseilles.

"They were very French. Very typical French attitudes. Very superior. Very bored. One of them had married a Nicaraguan. That's why they were there. The Nicaraguan wife was a friend of Miss Tola. So we met her.

"It was very hot. And there was so much commotion. It was a lot of fun and very interesting. But I was glad to come home."

Elizabeth adds her account:

A Day at the Horse Parade

One of the most endearing aspects of Nicaraguan culture is the pervasive presence of and the affection for the horse. So it was with enthusiasm that Maria, Henry and I set off to the little town of Tola to take part in the hippico on December 28.

The parade gathered in the middle and on the sides of the main road into town; luckily, there is no traffic to speak of. Carts decorated with colorful balloons and drawn by the wiry little local horses plied in and out of the crowd, offering rides. Women in frilly aprons, carrying trays of snacks and sweets on their heads, wended through the milling spectators. We bought a pert blue cowboy hat for Maria from a man carrying stacks of hats. A piñata (Barney, the purple dinosaur) dangled from a rope slung over the branch of a tree, and two clowns dispensed a stave to a line of enthusiastic children. Once Barney had been smashed into pieces, and his body parts stuffed with candy thrown to the children, Santa Claus took his place. The children made short work of the Santa piñata, too. By the time we were ready to ride, nothing but his smiling head in a red stocking cap swayed from the rope.

Maria, Henry and I took a little walk while waiting to mount up. We saw Lionel, the former trainer from Rancho Santana, on a fancy grey horse, prancing along, and surrounded by two of his beautiful daughters. Lionel's youngest daughter was dressed as a cowgirl, and wearing a white banner with "Novia de Tola 2010" in blue. The Novia de Tola is a fiancée of local legend, who was left at the altar. There is a statue in cast cement of her in the town square: she wears a white dress tied with a pale blue ribbon, and stands patiently with downcast eyes; in the words of the local cliché, she is "triste como la novia de Tola."

Our horses were provided by Rancho Santana's stables - they belong to the Granados and are trained by his trainer Lencho. I was on the big grey stallion El Inamorado, Maria rode the trusty Celaje, and Henry rode the beautiful golden El Mono (whose name means "the monkey"). Alvaro rode his white stallion. Chino - one of his cronies - also rode his own horse (with the reins in one hand and a plastic glass of vodka in the other, and a happy grin on his face), and Lencho rode a little mare that attracted too much attention from the aptly named El Inamorado. We rode off together, but it was hard to stay that way.

The parade was like contemporary accounts of the French cavalry of Agincourt. It was a melee: cowboys on skinny little Barb horses darted from one side of the road to the other, mounted fathers led their little sons on ponies, theatrically made up local beauties of all ages, riding in everything from long Spanish skirts to hot pants, dashed up and down; firecrackers exploded; a gigantic puppet 10-feet tall danced down the street, and trucks blaring load Latin music carried little girls - some dressed in as cheerleaders in blue and white, another group got up as little Miss Santa in red and white. A loudspeaker occasionally broke into the music and hubbub and we distinguished the words "revolution" and "Daniel" (the former revolutionary and current president) a few times. But the mood was cheerful, and we also heard the presence of la familia Bonner from Rancho Santana of announced more than once. We tried to live up to the publicity by having our horses do some extra prancing steps of "passaje" and "marcha espagnol", especially as we went by a local reporter who was filming the occasion. From time to time, we would burst into a gallop in place. It was very satisfactory, especially as Lencho and the grooms were delighted with the effect their horses were having on the admiring crowd.

The parade ended with Yours Truly and Lionel's daughter arriving together at the soccer stadium, and all of the riders galloping and prancing in every direction. The objective in the beginning was to show off the horses' paces. By the time Maria and I left, it was clear that the objective was also to consume quantities of beer and get to know the local senoritas. We left Henry in the good hands of such experienced campaigners as Alvaro, Chino, and Uncle Sugre, headed back to the beach. We felt we had done Rancho Santana proud.

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

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