A personal note.
Many thanks to those who agreed to try our wine. We ran out quickly. Apologies to those who were unable to get any. Next year, we will have fewer bottles; a frost wiped out half our crop. But if you missed it this year, we will give you first dibs!
Also, thanks to those who offered advice on how to deal with our altitude/heart issues. Some said to drink more wine. Others proposed drinking less. We’ll try both remedies, though not at the same time.
And for the rest of the week, we are taking a little holiday from the Diary. Several times in the past year, we wrote about our mother, 95 years old. We thought we lost her in January… and again in February.
Each time, she bounded out of the grave and back into our lives. We began to think she was eternal. But yesterday, she decided to move on. Despite the many years of anticipation, the news came as a bigger blow than we expected.
We are on our way back home.
As usual, more to come…
Editor’s Note: Bill is currently addressing an important family matter and is unable to pen his daily Diary. Today, we share a classic essay Bill wrote in July of last year.
VIENNA – Real money must reflect the realities of the real economy.
If it becomes detached from economic reality, like a clock that no longer tells the right time, it becomes a hazard to everyone.
Appointments are missed. Trains crash. You show up at the airport and find the plane left two hours ago!
Air France is on strike. Our flight – with Austrian Airlines – left an hour late as a result.
“This is a mess,” we said to nobody in particular as we waited for a plane this morning.
“Welcome to France,” said a voice behind us.
Puzzling out the secrets of money and interest rates was interrupted by the news… and nostalgia.
The gruesome details: An 86-year-old French priest was forced to kneel in his church. Then his throat was cut.
“Murdered by Barbarians,” screamed a headline in the French newspaper Le Figaro.
“We must be pitiless,” said former president Nicolas Sarkozy. “It’s war.”
He may have picked up a few lines from Saint Bernard, rehearsed nearly 1,000 years ago.
In the Burgundian town of Vézelay, on March 31, 1146, Saint Bernard of Clairvaux delivered his famous oration on responding to the Muslim threat:
Will you allow the infidels to contemplate in peace the ravages they have committed on Christian people? […] Fly then to arms; let a holy rage animate you in the fight, and let the Christian world resound with these words of the prophet: “Cursed be he who does not stain his sword with blood!”
In France – as in the U.S. – saintly politicians compete to see who can most convincingly promise to “get tough.”
Of course, getting tough is just what the so-called Islamic State (known in France by its Arabic acronym Daesh) wants.
The strategy is ancient. More than 2,000 years ago, radical Jewish groups conducted a war of terror against their Roman masters, hoping to provoke a crackdown by the authorities… leading to the radicalization of the masses.
Did it work?
Depends on how you look at it. The Jews got their crackdown. Vespasian and Titus put down their insurrection, leveled Jerusalem, destroyed the Temple, and, according to Josephus, killed 1.1 million Jews.
We remember discussing the radicals’ strategy back in 1969.
This is where the nostalgia comes in…
Last night, we stayed at a tiny hotel in Paris near where we first got to know the city 43 years ago.
We had gone for a semester abroad after discovering that the tuition at the University of Paris was only $80. That meant that even with airfare, it was cheaper to go to the Sorbonne than to the University of Maryland.
The semester turned into a lifelong relationship, marked by equal periods of affection and disgust.
We didn’t speak French at the time, but we had had four years of it in high school. That seemed like plenty. (Although it later proved comically insufficient.)
But we were adventurous back then. And penniless. So we got ourselves to Paris… and hung out at the bars around Saint-Germain-des-Prés.
It was a very different city in the 1960s. It was a world leader in fashion, technology, movies, food, and philosophy.
But Paris had a problem back then, too.
Communists, Trotskyites, Maoists, anarchists, syndicalists, and students – in 1968, they rebelled, ripped up the streets to build barricades out of the paving stones (the streets were covered with asphalt soon after), and engaged with the police in pitched battles.
By the time we arrived a year later, skirmishes between gendarmes and radical groups were still going on.
The organized rebels would race around a corner and throw rocks and Molotov cocktails at police who formed up into protected phalanxes with their clear plastic shields.
Then the cops would suddenly charge the insurgents, swinging their billy clubs at anyone they could reach.
Trained and practiced, the terrorists would retreat quickly. This left the police with nobody to rough up except innocent onlookers.
That is how your editor nearly got hospitalized. Walking down the street, he was mistaken for a radical… knocked to the ground and worked over by three policemen, who eagerly went about their work with happy cudgels.
Sitting in a café with a bandaged face, we discussed the revolutionaries’ strategy with a young French intellectual of Trotskyite tendencies.
Even almost a half-century later, we recalled the conversation when we passed the café (still in business) where it took place.
“Oh… sorry to see you got beaten up,” he said. “But it’s just collateral damage. We’re making headway.
“The police don’t like it when we attack them. It’s a point of pride more than anything else. So they overreact. But the more they show on TV people like you getting beaten up by the cops, the more the working class comes over to our side. We’re going to win.”
The revolutionaries did not win. They did not topple the Fifth Republic. But they eventually got much of what they wanted – free schooling… free drugs and medical attention… a high-cost, zombified, crony economy… a bureaucratized, tightly regulated society… even a 35-hour workweek.
And now look at it.
“Yes, it’s a mess…” repeated the voice behind us.
BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners
Bitcoin is powering ahead of major world currencies.
Today’s chart looks at how bitcoin has performed relative to the dollar so far this year.
And it tracks that against the performance of the British pound, the euro, and the yen relative to the dollar.
As you can see, bitcoin is up 131% in dollar terms.
That compares to a rise of 4.5% for the pound… a rise of 7% for the euro… and a rise of 6% for the yen.
– Chris Lowe
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The chance of legitimate tax reforms in D.C. continues to shrink, but stocks continue to climb. Here’s one possible reason why.
In today’s mailbag, Bill’s essay “Mexicans and Chinese Aren’t ‘Stealing Our Jobs’” has gotten some readers thinking…
The Deep State can’t fix the economy because they are the problem. But you leave us with the impression that if we can just get the government out of the way, we will save ourselves. However the government is just a bunch of ourselves.
– Galyn B.
I always voted conservative, but on 8th June, I’ll be voting Labour. I always thought success was based on meritocracy. Boy was I wrong! I can’t get a job. I’ve reskilled myself for an IT profession at my own expense, but no one is interested. I’m 47. The fix is in!
– Andy D.
The Fed has been flooding the economy with free money for years; why hasn’t this resulted in huge inflation? I believe I figured it out. The answer is the deflationary impact of technology.
When I was a boy, we had a black and white TV, but now I have two huge flat screen TVs in high definition for the same amount of money in real terms. As a boy, one thought about trading in your car after 50,000 miles. Now if you don’t get 150,000, one is angry for buying a lemon. The cheapest car comes outfitted with features only luxury cars had in 1960. My four year old iPhone makes the first supercomputer look like a calculator. The impact of all of this is deflationary.
To compensate, the Fed prints money by the trillion. We end up in an environment where we have deflation and inflation at the same time. The result seems normal. Until it isn’t.
– Ronald S.
Meanwhile, readers comment on Bill’s plan to save the Gualfin ranch…
I purchased a case of your Malbec. That’s one reason why you’re wealthy and we aren’t. Please notify us when you market the vines or the ranch in sections.
– Art L.
Great idea to sell your wine to save the ranch. If I drank wine, I’d sure order some. Wishing you the best of fortune in the enterprise.
– Dan G.
I enjoy your Diary. I grew up playing cowboys and Indians (yes, I was a girl, but loved horses and all things Western) I even worked on a dude ranch one summer during my college years. Combine that with a brother who owns a vineyard in Stonington, CT, and you get a similar knowledge of your circumstances. Being a farmer and a cowboy as you are is très difficile. Thank goodness you don’t count on it for your livelihood.
If your wine sales take off, you can always purchase grapes to add to your offering as there may be years when your grapes don’t produce. And you could offer a special harvest festival for all the well-heeled wine enthusiasts who would want the adventure of coming to your vineyard. Good luck with your new venture – and the story continues.
– Betsy B.
I purchased a case of your wine a few weeks ago, knowing how good it is. I had my first taste in Nicaragua a couple years ago at Bill’s opening dinner at the Family Wealth Forum. I’m not a big wine enthusiast, but my dad and mom both partake, and both have said this Malbec is one of the best they have had. You shouldn’t have a problem selling it.
– John L.
I have tried to order 6 bottles of your wine and the red tape people are out in force. Your U.S. representative will not accept the order, and the Canadian Customs will be out in full force were the order to arrive close to their doorstep. Isn’t it a wonderful world?
– Dave T.
Wow… this whole wild story… the ranch, Argentina, absorbing a foreign culture via immersion, risky investments made for the love of it. It reminds me of my adventure in Argentina, which continues to this day. Hardly an investment in the traditional sense. Yet somehow, I am enriched – a better person for it. One can’t make these kinds of stories up. Here’s to the pursuit of happiness!
– Dan K.
Our colleagues at Casey Research just released a new video presentation.
In it, they show how the United States is on the cusp of the biggest military spending boom since World War II. And it won’t be the defense giants like Boeing and Lockheed Martin that see the biggest gains…
Instead, four relatively unknown small-cap defense companies could turn a $1,000 investment into $550,000 in the coming years. Learn more here.