POITOU, FRANCE – We spent the weekend in our favorite place: the workshop.
In the foreground is an old altar; we are preparing it for our tiny chapel.
Bill’s workshop at his home in the French countryside
The family chapel in Poitou
One of our sons is working in China. He called Sunday with this report:
This morning, I went over to the Irish pub, Paddy’s Place, here in Beijing. I wanted to see the fight between Conor McGregor and Floyd Mayweather.
It was interesting because Mayweather has never lost a boxing match… and McGregor has never won one. He’s a mixed martial arts champion, but this was his first professional boxing match.
I guess the promoters thought it would be a big moneymaker. And it probably was. When I got to Paddy’s, the place was mobbed… with a big crowd out in the street. They were mostly English and Irish, with a small group of Americans, too.
Everybody was rooting for McGregor. There were Irish flags flying. People were drinking tankards of Guinness and singing “Too-Ra-Loo-Ra-Loo-Ral.” And this was at 9:30 on Sunday morning. It was amazing.
But McGregor was really no match for Mayweather. He put up a good fight. He even won the early rounds. But Mayweather paced him… let him wear himself out like Ali used to do with his “rope-a-dope” technique.
Then, in about the fifth round, Mayweather took charge. Finally, they had to stop the fight in the 10th round because McGregor was taking such a beating, the refs were worried about him.
The odds against McGregor were running at about 5 to 1.
Still, since he was the popular favorite, the bookmakers were heavily exposed. If he had won, they would have had to pay out a lot of money.
“The race is not to the swift, nor the battle to the strong,” saith Ecclesiastes.
“But that’s the best way to bet,” say the professional gamblers.
“Not exactly,” we add. What really matters is the likelihood of an event times the potential gain or loss.
You might put a bullet in the pistol, spin the chamber, and have only a 1 in 6 chance of blowing your brains out. But though the odds are in your favor, the potential consequences make it a bad bet.
Back here in America, a long-odds flood has drenched South Texas. Not in 50 years, say commentators, has Houston seen such a storm.
And in France, a late-summer heat wave is scorching fields and wilting flowers. On the Chesapeake littoral, summer temperatures of 90 degrees are as ordinary as shorts and cayenne pepper. But here, with little air conditioning, the frogs sweat.
“You know, everybody wants to badmouth Trump,” said a cool fund manager on a hot Friday night.
“We French are proud that our man, Macron, is better educated, more polite, more sophisticated… and even more handsome. But it is all nonsense.
“The problems are much the same. Like Trump’s, Macron’s job approval rating is slipping. But there’s still a good deal of support for him. Macron is young. Dynamic. He’s smart. And he knows we need to reform the system or it will go broke.
“But his idea of reforming the system is changing it just enough so that the ruling elite will have something to rule over. He doesn’t really want to change the system. He wants to preserve it… protect it… allow it to survive. I don’t think it can be done.
“In America, it is much the same thing. You’ve got a different kind of president. Where Macron is careful to say the right thing, Trump is reckless and says whatever comes to his mind.
“And where Macron has studied the issues – he used to be the finance minister – Trump doesn’t seem to know much about how the government works or what problems it faces.
“Another important thing is that you’ve got an empire to maintain. We’ve just got an expensive welfare state.
“And while Macron has large parts of the elite… the intelligentsia… and the press behind him, your Trump has put himself at odds with them.
“But in the end, the problems are more or less the same. Everyone was riding high during the growth years – I’d say up until the end of the last century. So we programed our spending for a world where GDP growth continued at about the same pace.
“And politicians being politicians… their promises went way beyond even what we could. Now, we have obligations and expectations that can’t be met.
“The French are getting older… consuming more resources… producing less… and contributing less to the tax revenues.
“The rate of economic growth in France has fallen to levels we haven’t seen since the Napoleonic era. France has still not recovered from the setback of 2008–2009. The U.S. has come back, but barely.”
“The elites are making it worse, adding more and more restrictions and requirements to help their crony friends and promote their pet projects,” continued our guest.
“So it’s harder to do business… and harder to make money.
“That’s why small businesses are disappearing in France. The people who started them – in the 1970s and 1980s – are retiring. And young people don’t take them up.
“It’s too hard… too complicated… and there’s too much paperwork. A young person can live almost as well on social welfare programs as he can on a starting wage. So he never learns to do anything.
“And when you call a local plumber or cabinet maker, you find he’s retired. And you can’t find anyone else who knows how to do the work.
“That’s true in farming, too. This is an agricultural area. But all the farmers around me are in their 50s and 60s… and their children have moved to Paris. I don’t know what’s going to happen when this generation retires.
“As you’ve pointed out – yes, I am a reader of your Diary – new technology doesn’t seem to pay off the way it used to. Amazon can make it faster and cheaper to shop. But it doesn’t make much profits.
“So there’s no real increase in capital. Its customers aren’t getting richer, either. And when people spend hours a day on their iPads and iPhones, it is essentially time wasted – a drain on real output.
“Except for the technology issue, all these problems were imposed by the elite. They and they alone benefit from them. And they control the government in both France and America. So they’re not about to change the system that rewards them.
“And now we live in a low-growth world with high-growth debt. We’d like to bet on Trump or Macron fixing the problem.
“We’d like to believe we could buy stocks and sit tight for the next 30 years. And maybe the next 30 years will turn out like the last 30… with a 2,000% gain.
“But stocks, too, are priced for a world that hasn’t existed for the last 20 years.
“I’m still buying stocks because my clients want me to. But it looks like a bad bet.”
BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners
As Bill mentioned, France has its own set of problems. But at least they’re not dealing with a currency collapse like their neighbors across the Channel.
Since British voters chose to take their country out of the European Union (EU), the British currency, the pound, has been tanking.
Today’s chart tracks the pound-euro exchange rate going back to the start of 2016.
As you can see, the pound hit €1.31 on the eve of the Brexit vote.
Since then, it’s tumbled 17% to just €1.08.
That’s the lowest level for the pound versus the euro since the wake of the 2008 financial crisis.
– Chris Lowe
The Trump Trade Fizzles
As a candidate, Donald Trump promised to deliver a $1 trillion infrastructure program. Construction stocks soared on Election Day. But as Trump’s plans stall in Washington, those same stocks are now sinking… fast.
China Plans to Crack Down on ICOs
Initial coin offerings (ICOs) are a way for companies to raise capital by issuing new crypto tokens to early backers of a project. They’re often compared to initial public offerings (IPOs). But now, China is planning to crack down on ICOs, and may even ban them outright.
Financial Martial Law Is Coming
Most Americans don’t realize it, but banks are now arms of the federal government. Editor at Large Chris Lowe shows how far these new capital controls extend, and what it could mean for your savings.
In today’s mailbag, readers consider if Trump has been broken…
Congress is the disgrace, not President Trump. Congress could not even get rid of Obamacare. The media has picked on Trump from day one and they don’t give up. I am a Republican, and I didn’t like Obama. I didn’t know him personally, I just didn’t like his politics. But I respected him, I gave him a chance. A lot of people are not giving President Trump respect and time. I don’t think protecting our borders, lowering taxes, and giving business a chance to work is being a “disgrace.”
– Kent S.
You have it wrong. Trump is not the reason the swamp isn’t draining. It’s because of people like you that blame the man. For decades, Congress has been the source of abuse for the American people.
Everyone that has their personal agenda is preventing Trump from draining the swamp. Do you really think one man can do it? If you do, you are more challenged than I thought. Rather than being like everyone else and piling on, here’s an idea: Why not look at the positive things Trump has done? If it weren’t for Trump, you and everyone else would really be running for the hills by now… or in your case, the failed ranch. I am so sick and tired of people like you that claim to be so smart about everything. You are no different than Congress. You are all the same… the swamp that will destroy this country.
– Michael P.
You said that President Trump has been beaten into submission by the swamp rats. You are way off base. The president won’t be throttled so easily. In my opinion, you have swallowed too much swamp water and are now jumping to absurd conclusions.
I still love you and the Diary. Keep those columns coming. No one can be right all the time.
– Robert B.