A pox on our houses




Bill Bonner's Diary

A Pox on Our Houses

By Bill Bonner, Chairman, Bonner & Partners

COVID-19 is God's spear ready to be driven unerringly into our aging hearts!

– A Dear Reader

Bill Bonner

SAN MARTIN, ARGENTINA – Yesterday was another exciting day in the markets.

Stocks opened down 2,000 points… then recovered a bit… and crashed again. By the time the bell sounded, the Dow was down almost 3,000 points.

But you knew that. Everyone knows that. Because everyone is watching… and wondering what comes next.

Now, all doubt is gone. This is one mean bear market. So far, $11 trillion has been lost on Wall Street.

But who lost it? Why?

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Moral Markets

Longtime Diary sufferers will remember one of our most important dicta:

Markets don't always give you what you want or what you need; they give you what you deserve.

The feds think they can manipulate markets by turning screws and pulling levers. And to some extent, they can.

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But markets are not mechanical. They're moral. That is, moral in the sense of the "moral of the story."

When you go away on a long vacation, for example, don't forget to disconnect your car battery, or you won't be able to start it when you get back.

And so, today, word comes from the millennials: #BoomersGetWhatTheyDeserve.

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Fantasy Economy

The boomers took over the U.S. government when Bill Clinton was elected in 1993. Then, the federal government owed $4.4 trillion.

Since then, boomers have added nearly $20 trillion to federal debt, along with similar increases to household and corporate debt.

And they invented a fantasy economy, based on unlimited inputs of fake money, fake interest rates, fake expertise… with huge rewards to the old, rich elite… but nothing but debt and disappointment for most people.

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Young people now start out in life with student debt… auto debt… credit card debt… and their share of the national debt, too.

The boomers borrowed for free pills, dumb wars, and claptrap programs. And who will pay the debt? Not the geezers.

And now they're telling young people to stay home… to give up their incomes and their social lives… to protect the boomers from a virus.

But the virus is vengeful and implacable. And it's coming for us. So is the bear market.

Chart

Financial Leprosy

Yes, woe to us… the baby boomers. A pox has been put on our houses. A pestilence loosed on our finances.

We can run from the virus. But we can't hide from the hideous financial leprosy we caused. It is the biggest challenge of our lives.

Young people will have time to rebuild their finances after the crisis is over. Old people won't.

After the market crash comes a recession/depression. The airlines face bankruptcy. Oil fell to under $30 a barrel on Monday. The whole shale oil industry is reeling…

Ten trillion of corporate debt – added over the last 20 years – wobbles. Pension funds, insurance programs, and federal finances themselves all begin to stagger.

Most likely, half of the stock market's peak value will evaporate. Gradually… and then suddenly… the value of U.S. Treasury bonds will fall too.

There will be a lot of blind alleys and head fakes along the way. Stocks may soar, as they did in Zimbabwe at the height of its hyperinflation.

But at the end of this crisis – which could last for five to 10 years – Americans will have lost $30 trillion or more. That is a rough estimate of how much fake wealth was pumped into the U.S. economy since the boomers took over.

One way or another, that fake wealth is going back whence it came… to nowhere.

But wait. Fake money "saved" the bubble finance era of 2008. The stock market took off… and rose 300%. Can the boomers pull off the same trick in 2020?

We wouldn't bet on it. Our guess is that we're getting what we deserve… and we're damned.

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Jeff Clark knows because he's done it.

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--

Chronicles of the Argentine Wilderness

But let us continue the light-hearted chronicle of our own unique situation:

We are enjoying our confinement here in the Argentine wilderness, in a strange and almost magic world.

Our only contact with the outside world is via a rickety footbridge over the Calchaqui River.

image
Our connection to the outside world

On Sunday, we walked over the bridge… retrieved our truck, and drove up to the ranch in Gualfin.

The two properties touch each other. But it takes about two hours to drive from one house to the other.

Normally. But the times are out of joint.

The madness in the stock market… the oil market… the battle with the bug et al… seemed to have spilled over into the weather.

This is a desert. But a storm on Saturday night brought so much rain, it washed out the roads and swelled the rivers.

We arrived at the Molinos River about a half hour after leaving San Martín, bumping over deep ruts and gunning our 4x4 through puddles up to the door frames.

The Molinos River is usually dry. But now, water rushes by. It is hard to tell how deep it is.

image
Another river to cross

On the far side of the river we saw a truck and a motorcycle. An old man stood beside the river.

"Hey…" we asked. "Can we make it across?"

"No… Nobody's getting across. Nobody. Where are you going?"

"Gualfin."

"Oh… No way… The road is cut. You'll never get up there."

Then a young man approached. He had another message.

"You have a 4x4? I saw a 4x4 get through. You can probably make it."

We decided to take a chance.

"Can we go with you?" he asked, as a woman and a small child appeared out of nowhere.

"Sure, hop in."

It turned out to be a long, difficult trip. But we made it.

image
Stuck in the mud… Your editor on the right not helping

But we couldn't stay long. Storm clouds were gathering. If it started raining, we would be trapped somewhere along the road, unable to get back "home" to San Martín.

So, after a jolly lunch with our friends, we began the descent… and got back without incident.

Tomorrow… the police come looking for us… and the carpenters turn against us.

Stay tuned.

Regards,

signature

Bill

Like what you're reading? Send your thoughts to feedback@bonnerandpartners.com.

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MAILBAG

On Dear Readers' minds again today: President Trump's track record in the White House…

Trump is just the president, no more no less. Like all that came before, he will be around for a while then gone. Another will rise and do the same. The people make the change. We elect them and we are responsible for them, so only "we" should be blamed for whatever ills they perform. We the people deserve what we get, so I'm to blame, as well as every citizen.

– Steve L.

Hi Bill, I haven't done a statistical analysis on your past writings, but my gut feeling is that you do give our poor, innocent POTUS the short end of the stick more often than the other main characters in our unfolding Greek tragedy, e.g. Pelosi, Schumer, McConnell, Powell, etcetera ad nauseum. However, I think the imbalance you seem to demonstrate is due more to the fact that Trump is the chap holding the flag than due to a personal vendetta on your part.

Trump is a clown, but he has two traits that warm the cockles of my heart: (1) Unlike Hillary, he is NOT a criminal, and (2) Not being a card-carrying Bolshevik of the Deep State, he is something of a loose cannon that provides me no end of entertainment while the Deep States tries to catch him and tie him down!

– Steve M.

Bill is right about Trump. I knew Trump when he was younger. Trump hasn't changed much over the years since I knew him and that's sad.

Bill Bonner has been decent, fair, and honest about Trump, which is more than Trump has been with us. What's good for Trump is not good for the USA.

– Julian C.

Are citizens responsible for the ills a president performs, as Steve says? Are Trump's and America's interests opposed, like Julian believes? Write us at feedback@bonnerandpartners.com.

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Bonner and Partners

Bonner & Partners
55 NE 5th Avenue, Delray Beach, FL 33483
www.bonnerandpartners.com

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