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Beginning of the end?




Bill Bonner's Diary

Beginning of the End?

By Bill Bonner

Tuesday, November 17, 2020 – Final Day of the Quarantine

Bill Bonner

SAN MARTIN, ARGENTINA – Marta works for us at our house at the ranch. She comes down from her mountain puesto (outpost) on foot, a hike of about six hours.

She and her family are about as unsophisticated about money as anyone in Christendom. They live in a mud house, with a dirt floor and no microwave nor washing machine.

Their hands are as hard as boot leather. They get no newspapers. They see no TV. They are not readers of the Diary.

But even Marta is hip to the dangers of inflation.

"Could you change pesos for dollars?" she asked on Saturday.

You know you are near the end of a stock market bubble when taxi drivers begin giving you stock tips. But where are you when subsistence farmers high in the windswept Andes begin to trade currencies?

Losing Value

Marta's father, Martin, has saved 300,000 pesos – accumulated over a lifetime of hard work. His pile, in a single stack of bills, measures more than a foot high.

image
A lot of smackers

At today's black market exchange rate, it is worth about $2,000.

But if Martin keeps this money in a lumpy mattress, it could soon be worthless. A lifetime of savings – poof!

He has no bank account. He has no credit card. He has nothing other than a wad of cash… and no easy way to protect himself against Argentina's currency debasement.

Inflation in Argentina is running at about 50% per year. The country has been strictly locked down in an attempt either to stop the coronavirus… or to provide an excuse for the developing economic disaster.

In either case, the shutdown seems to have accomplished little – the coronavirus death rate is about the same here as in the U.S. And the economic crisis has gotten worse.

We have no way of knowing what will happen next. But if history is any guide, pesos will continue to lose value against the U.S. dollar. And then, the dollar will lose value against everything else.

The post-1971 dollar has already lost 96% of its value, in terms of gold. In the years ahead, it will almost surely lose the rest of it.

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--

Not Normal

But yesterday, America's investors were sans souci. The Dow leapt to absurdity, coming to rest only 50 points shy of 30,000 – a new record.

What is driving stocks higher?

Two things…

First, there was more "good news" about a coronavirus vaccine. According to the popular narrative, the economy will soon get a shot in the arm and life will return to normal.

But it is not normal for stocks to be so expensive. And it is not normal for an economy to depend on printing-press money.

Businesses have had the life crushed out of them. Jobs have been permanently lost. Habits have changed. States are telling families not to get together for Thanksgiving. Santa is shopping for a face-protector.

The second reason is even more absurd.

Now that Sleepy Joe Biden is packing up for his move into the White House, investors expect the fake money to flow as promiscuously as it did under Trump. There may even be more of it.

Nancy Pelosi and Chuck Schumer announced last week that their last proposal – $3.4 trillion of additional fake money – was now just a "starting point." Is this "normal?"

And the Federal Reserve is "printing" new money – debasing its own currency – at the rate of $11 billion per day. Is that "normal?"

Don't Be Left Empty Handed — Why Banks Bought 1,300 Tons of Gold.

Grotesque and Unnatural

Far from it. The whole program – spend, borrow, print… boom, bubble, crash… pain, panic, bailout… spend, borrow, print… boom, bubble, crash… pain, panic, bailout… – is grotesque and unnatural.

And the weak link in this freakish chain is the U.S. dollar. The feds can print 'em. But they can't control their value.

COVID-19, along with lockdowns and lockups, have caused people to be fearful. Savings rates have gone up. The velocity of money – a key to the value of the dollar – went down sharply… exaggerating a trend that has been going on for almost a quarter of a century.

Consumer spending, meanwhile, went up – thanks to the feds' excessive giveaways. Economists, naturally, mistook this spending for "growth"… and a "recovery."

But it was nothing of the sort. It was as fake as the whole shebang. The recovery… the dollar… interest rates… stimulus – all phony baloney.

Faster Money

But wait… what's this? The St. Louis Fed reports that the "velocity" of money – the rate at which money changes hands – has suddenly turned up.

Is it a blip? Or a trend? Nothing worth mentioning? Or time to high-tail it out of town?

We don't know. But the smart money is selling dollars. Here's Zero Hedge:

In a Friday note from Goldman's chief FX strategist Zach Pandal, he predicts that "depreciation in the broad Dollar can continue in 2021" and writes that his USD cross forecasts translate into a 6% decline in the broad trade-weighted Dollar index over the next 12 months, and a "sustained but orderly" 15% real depreciation from its 2020 peak to the end of 2024.

Is this the beginning of the end for the fake dollar… the fake interest rates… the fake stimulus… the fake bailouts… the fake recovery… the fake stock market boom… and all the rest of the fakiness?

It is too early to tell.

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--

Farewell Asado

In the meantime, let us finish our story of the asado we held at the weekend to bid our friends and neighbors goodbye.

A sheep had been slaughtered on Saturday… By 9 in the morning on Sunday, it was roasting on an open fire, its legs stretched out as if crucified.

It is rare to eat a sheep. Typically, we eat a cordero (a male lamb). Sheep reproduce; we don't like to give them up.

"This sheep was sterile," explained the foreman. "She wouldn't lamb."

We began the lunch with a toast… a "thank you" from Don Bill… followed by a blessing. We all crossed ourselves and sat down to eat, our seven cowboys along with their families.

The cowboys and your editor sat at the head table. The women and children sat at another…

Even Samuel was there.

image
Samuel looking hale and hearty

Samuel was thrown from a mule last week. He was still seeing double when we visited him in the local clinic. He described what happened next:

"They took me up to Salta and put me in a machine to look at my head. They didn't find anything, so they brought me back yesterday. I'm fine."

"How many fingers am I holding up?" we asked him. "Just checking."

"Four," he replied, smiling (we only had two in the air).

An asado is no place for a vegetarian. It begins with meat… and then the meat continues… fresh off the grill, for at least an hour.

First come the sausages. Then comes the beef. Then the mutton. And then the sausages again… all hot and dripping with grease.

The grease was cut with a lavish flow of our own wine… as well as Coca-Cola. Sometimes, the locals mix the wine and Coca-Cola together to make a "South American cocktail."

Strange Holdings In Buffett's Portfolio…

Flowing Conversation

At first, the cowboys are timid in front of Don Bill and La Señora. But after a few courses of meat… and a few bottles of wine… the conversation becomes looser and faster.

"Hey Samuel," said Javier across the table. "They took a look inside your head and didn't find anything. That's what I thought."

Everyone laughed.

"I told them they were wasting their time," Samuel replied, playing the straight man.

He took out his phone, as if it had rung.

"This must be that cute little nurse at the hospital. She said she didn't want me to leave."

"Yeah," replied Javier. "In the city, they don't get many people who fall off mules.

"We're going to need more safety precautions around here," Javier continued. "Samuel is going to have to wear a helmet when he rides a mule. "

"And a seat belt," said one of the others.

They were enjoying themselves. But the looser the conversation became, the harder it was for the gringo to understand it. They were using their mountain slang… incomprehensible to an outsider.

Outside World

Meanwhile, Elizabeth was doing the serious work. Sitting with the women, she was getting the low-down on what was going on.

The people of the ranch are remarkably hard and tough. But they often find it difficult to synchronize with the outside world. One of them described what it was like for her when she left the ranch for the first time, aged 15, to go to school in the city.

"It was such a shock. I didn't understand anything. I didn't know how to cross a road. I'd never seen running water – in the house. Electric lights. Automobiles. TV. It was all new to me.

"At first, I wanted to come back to the ranch. It all scared me. I felt alone. Nothing was familiar to me. I was with girls who had never seen a live cow. They thought beef came from the supermarket. And they laughed at me because of the way I talked."

Those who leave for the city quickly become hip to modern life. But those left behind often need help.

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--

Hospital Visit

"They told me about Camilla," Elizabeth explained later.

"What about her?"

"You remember… she had a baby. She's only 18, but she had a baby. And then, she couldn't walk. They didn't know what was wrong with her, so they took her to the clinic. And the doctor there sent her up to Salta.

"They discovered that she has a tumor on her backbone. They're testing now and deciding what to do.

"But she's in the hospital, with no family to look out for her. And they took the baby away, because she couldn't take care of it. They didn't seem to know what they were going to do with the baby.

"The poor girl is up there… She really needs her mother. But I think the mother is afraid to go up to the city. She doesn't know where she would stay… or what to do there.

"I told her that we could take her up there and rent a little apartment on AirBnb… or something. We could figure it out. But I think she's just terrified by the idea."

"I'll go to visit Camilla, before we go to the airport," Elizabeth offered. "If they let me into the hospital."

More to come…

Regards,

signature

Bill


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


MAILBAG

One dear reader shares his thoughts on the U.S. COVID-19 situation…

There is much truth to your assessment of our reaction to COVID. But it is also true that the number of deaths isn't the virus's biggest impact (although it is more lethal than regular flus).

The larger impacts are the number of hospitalizations, which are greatly straining healthcare systems, even in developed nations, and the unusual longer-term effects of COVID on a significant number of old and young alike – damage to organs (especially heart, lung, and kidney), and months-long recuperation, in many cases. It's not as cut and dry as you imply.

– Gary M.

Meanwhile, another gives his take on Donald Trump's presidency…

Trump who has not had a vision for this country. It is all about Trump; it's not about this country, it's not about his base/supporters, or the people. Donald Trump's presidency is all about himself. Trump took advantage of the seat of presidency, just like before he became the sitting president. We all know his tactics of lies and deceit; that's who he is.

Trump has no truth in him. He had no good purpose for this country, and it is evident that he lost. He is not a big man… It takes a big man to admit he lost, to admit he failed, to admit he, too, has weakness. But he is none of those things.

– Mel E.

And finally, a dear reader is sorry to see Bill leave Argentina…

I have been enjoying your tales and stories about your meanderings. It has been fascinating and a real pleasure to follow. But all good things must come to an end, I suppose. Maybe we can someday even put the evil spirit called COVID-19 to rest. But that would mean eliminating the fear in the people behind the masks; not going to be an easy task.

Thank you for your stories, comments, and wisdom. And most of all, for your common sense…

– Benny J.

Have any of your friends or loved ones been sickened with COVID-19? Do you agree with Mel, that Donald Trump "has no truth in him"? Write us at feedback@rogueeconomics.com.

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World’s largest trade deal (RCEP) signed in Vietnam as Sri Lanka controls imports.



ECONOMYNEXT – Economic ministers from ten Association of South East Asian Nations and five other partners inked a Regional Comprehensive Economic Partnership (RCEP) Agreement in Vietnam, touted as the world largest trade deal.

The partners include China, the world most populous nation, Japan, Korea, Australia and New Zealand and covers 47.5 percent of the world population (3.6 billion people) and 28 percent of global trade and a combined gross domestic product of 32 trillion US dollars.

Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand making up the ASEAN already has low tariffs and visa free travel.

Viet Nam said the deal, signed in semi-virtual 37th ASEAN meeting, would allow the countries to bounce back faster from a Coronavirus pandemic.

“In the light of Covid-19, RCEP could enable ASEAN to bounce back more quickly as such a deal allows firms to diversify their supply chains and increase resiliency of the regional economies,” Vietnam’s government said.

“The agreement aims to reduce tariffs and improve supply chains between Asian nations.”

The agreement comes after eight years of negotiations, and after the US pulled out of a Trans Pacific Partnership (TPP), after Donald Trump, a nationalist with Mercantilist beliefs on trade deficits, was elected to office.

He lauded efforts made by relevant sides to address issues in the negotiations, saying he is delighted as after eight years of working hard, the sides have completely concluded the negotiations, enabling the signing of the agreement within the framework of the 37th ASEAN Summits and Related Summits.

“The global and regional economies are facing huge obstacles and challenges caused by not only COVID-19 but also the decreased global trade,” Vietnamese Prime Minister Nguyen Xuan Phuc said.

“Therefore, the conclusion of the negotiations of the RCEP, the largest free trade agreement in the world, will send a strong message of ASEAN’s leading role in supporting the multilateral trade system, helping to create a new trading structure in the region, facilitating trade sustainably, developing the disrupted supply chains and supporting post-pandemic recovery.”

Vietnam’s continued reliance on free trade comes as Sri Lanka which is burdened by Mercantilism and monetary instability, tightened import controls and industries have to get permission to import raw material with blocked supply chains.

The supply chain to the cooking pot is also been hit by a ban on turmeric, which is encouraging smuggling and raising the risks of Coronavirus entering through fishermen, critics say.

“RCEP is primarily beneficial for goods trade because it will progressively reduce tariffs on many products,” Vietnam’s government said.

“In addition, the deal will allow businesses to sell the same goods within the bloc but do away with the need to fill out separate paperwork for each export destination and help Asian producers to sell more of their products to the rest of the region.

“Even for companies that export goods outside the bloc, there’ll be incentives to build their supply chains across RCEP member countries.”

CSE plans single window to facilitate new listings.

 CSE plans single window to facilitate new listings.


The Colombo Stock Exchange (CSE) plans to introduce a “single window” customer relationship unit that will be set up within the CSE to identify potential listing candidate companies, work with such companies, and assist them through the listing process.


The CSE expects this to make it easier for companies and their advisors to understand and address any problems faced in the process through a single point of contact.


This single window is part of a larger CSE action plan that has been launched to address key areas relating to the process of listing a company on the CSE with the objective of enhancing its efficiency, thereby better serving the funding requirements of companies belonging to both state and private sectors. The CSE said it expects the action plan to further simplify the process, eliminate any redundant approval steps, reduce documentation, and improve the time to market for companies’ new and follow-on offerings of equity and debt.


Measures have already been taken to change listing criteria by offering a wider choice of listing options for companies and further amend the listing rules to enable a simplified process in addition to carrying out changes to internal infrastructure of the CSE to ensure a smoother process workflow.


Commenting on the new plan, CSE Chairman Dumith Fernando said: “Increasing the number of companies listed on the exchange is one of the CSE’s key strategic objectives. We have to make exponential progress on this front. As businesses approach the post-Covid period, it is likely that funding will be a top priority, and we have versatile options available to address the different funding requirements of corporates.


“We have put in place systems and processes to cater to an ever-evolving business landscape in Sri Lanka and we stand ready to meet the requirements of our corporate stakeholders. We strongly believe that the steps we are taking to simplify the listing process would attract more companies to raise capital through the CSE, helping them unlock value and create wealth for their shareholder.”


The CSE has already commenced stakeholder engagement to obtain feedback to carry out further improvements to the CSE’s overall listing process.


Improvements expected from this new CSE plan include the reduction of documentation that has to be submitted with the listing application and the removal of certain disclosures in the prospectus/introductory document. In this connection, the CSE said it would commence discussions with the Securities and Exchange Commission of Sri Lanka (SEC) to streamline the current dual-approval process.


With the objective of further enhancing the transparency of the listing process, an online tracking tool for all listing applications that have been submitted to the CSE will also be introduced, which would provide issuers with more transparency in tracking the status of their applications and understanding which parties hold primary responsibility at each step of the process.


The CSE now offers equity or debt-based fundraising options for companies of all sizes, from large conglomerates to SMEs (small and medium enterprises), through versatile listing platforms such as the Main, Diri Savi, and Empower Boards.


 


THE MOBILE APP - "MYHEALTH SRI LANKA"


MyHealth Sri Lanka Mobile App Launched by the Ministry of Health, Nutrition and Indigenous Medicine together with the Information and Communication Technology Agency (ICTA) of Sri Lanka

[Colombo, Sri Lanka] – Ministry of Health, Nutrition and Indigenous Medicine together with the Information and Communication Technology Agency (ICTA) of Sri Lanka, the apex ICT institution in the country has developed an application to inform, engage and react to the deadly spread of the New Coronavirus also known as Covid-19 under the instructions of his excellency the President Gotabhaya Rajapakse. This is in the wake of a global pandemic reaching the shores of Sri Lanka and with the steadily rising number of infected citizens, the need for a robust mobile application was felt.

Representatives from both organizations including volunteers from the private sector worked tirelessly to ensure that through this app citizens will have access to a news feed that shares verified information on the current MyHealth Sri Lanka mobile app populated by data shared by medical authorities. Once downloaded through either the Google PlayStore, Huawei Appstore store and Apple app store, citizens will be prompted to record their location at the time of using the application. The application locally maps the trail of the mobile app user's locations traveled so that in an unfortunate event of the app user being infected with the virus, they can disclose the stored location history information with the authorities to protect their family and friends who they have associated with, in the last 14-days. All recorded location data are kept securely within the mobile, and will not be transmitted to any external systems without the consent of the mobile app user. If you have crossed paths with an infected individual, you have the option to self-register with the national disease surveillance system.


What Are the Top 10 Signs of Porn Addiction?

What Are the  Top 10 Signs  of  Porn Addiction?


Here are 10 signs that your kidneys are not functioning properly. ඔබේ වකුගඩු හරියට ක්‍රියා නොකරන බව පෙන්වන ලක්ෂණ 10 ක්.

Here are  10 signs that your  kidneys are not  functioning  properly.
ඔබේ වකුගඩු  හරියට ක්‍රියා  නොකරන බව  පෙන්වන  ලක්ෂණ  10 ක්.

Trump Vs. Biden: Who’s Better For FX?

Trump Vs. Biden: Who's Better For FX?
ترامب مقابل. بايدن: من الأفضل بالنسبة إلى الفوركس؟

Billionaire Adani set to develop Sri Lanka’s port terminal

 

Adani Group is the front-runner to develop Sri Lanka’s stalled East Container Terminal in Colombo port, people with knowledge of the matter said, helping billionaire Gautam Adani expand his port business overseas.


Adani Ports and Special Economic Zone Ltd and a local partner received an in-principle approval to sign a deal with Sri Lanka Ports Authority, which will hold majority stake in the project, the people said, asking not to be identified citing rules for speaking with the media.


Details of the stake holding are still being worked out after a review of the project following labor protests that had stalled the deal before parliamentary elections in August, they said. India’s foreign ministry and the Adani Group didn’t immediately respond to requests seeking comments.



Adani, India’s biggest ports and logistics company, had signed a preliminary agreement for the project last year.


Work on reviving the project, being jointly developed by Sri Lanka, India and Japan, comes at a time of rising regional tensions with China. Both India and Japan are members of the informal Quad grouping that along with US and Australia is seen as a counter to Beijing’s influence in the Indo-Pacific region.


While the deal was agreed upon last year, President Gotabaya Rajapaksa had announced a review after protests by labor unions who feared foreign control over the strategic project, according to reports. The island nation had earlier depended heavily on China for its infrastructure development in the first half of this decade, creating tensions with New Delhi.


The neighbors began rebuilding trade and investment ties before the coronavirus pandemic struck. In July, India extended a $400 million currency swap facility to Colombo to assist with post-pandemic economic recovery. The two countries also discussed deferring of debt repayment during Prime Minister Mahinda Rajapaksa’s first high-level virtual meeting since his re-election with Narendra Modi in September.


Sri Lanka — which emerged from a three-decade civil war in 2009 — was known for taking Chinese loans to fund vast infrastructure projects, including ports and highways, that eventually became part of Beijing’s Belt and Road Initiative. Its appetite for Chinese cash waned after rising debt forced it to sell the Hambantota port back to China Merchants Port Holdings.


Meanwhile, the country’s port authority last week started operations at parts of the East Container Terminal that it has already built, said Chairman Daya Ratnayake.


The agreement signed between Sri Lanka’s former government with India and Japan “is still on,” he said. The Sri Lankan government “is in discussions on how to operationalize it.” (timesofindia)



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