RANCHO SANTANA, NICARAGUA – Yesterday, the House put off its vote on the Republicans’ medical care bill.
Stocks barely moved.
Used car prices dropped last month by the biggest amount since 2008.
Homeownership hit a half-century low. Sears may no longer be a “going concern.”
And discount footwear retailer Payless is preparing for bankruptcy.
Also in the news yesterday was a further report from Princeton economists Anne Case and Angus Deaton who first sounded the alarm about the shocking increase in death rates among middle-aged white men.
According to the latest figures, the death rate for a white man between 45 and 54 years old without a college degree is rising faster than any other demographic group.
And the death rates for black and Latino men the same age continue to decline.
Forget terrorism and Mexican murderers; a middle-aged white man is much more likely to kill himself than to die at the hands of foreigners.
“Deaths of despair” – from alcohol, drugs, and suicide – have more than doubled in the last 20 years. The mortality rate has risen to over 900 per 100,000.
At least one county in West Virginia has been so overwhelmed by these deaths that the funeral homes haven’t been able to keep up.
In our last visit to our father’s hometown – Donora, Pennsylvania… a steel town that peaked out in the 1960s – we were shocked.
Not that so many had killed themselves, but that so many were still alive.
We’d hit the bottle hard, too, if we had to live there. Empty buildings. Derelict houses. It might as well have been West Baltimore.
Economists, do-gooders, and social activists argue about the causes. Not enough spent on education and job training, says one. Globalization, charges another. No, it’s the unequal distribution of income, announces a third.
But we think we know the real cause: the swamp monsters.
They are coming to get white men. In 1971, the feds changed the money system. Since then, money has been almost unlimited. But the working-class man still sells his time by the hour. And time is limited.
The swamp critters get their money from the credit industry… Wall Street… and the feds.
Currently, it is nearly free to them. They use it to buy back shares, peddle influence, suborn the voters… and mostly to shift real wealth from Main Street to themselves.
Over the last 35 years, their stocks have gone up three times faster than the economy that supports them.
For instance, Treasury Secretary Steve Mnuchin and his hedge fund pal Eddie Lampert (both former Goldmanites) made millions running Sears into the ground – using cheap money from the feds to finance their schemes.
But the poor people who shopped at Sears and Kmart or worked for those retailers just got poorer and more depressed. The shelves grew spare and the company sank close to bankruptcy.
This wasn’t the Mexicans’ fault. Or the Chinese. It was our fault.
The slippery trail, left by the swamp monsters, leads from Donora, Pennsylvania, via Wall Street, to the Federal Reserve headquarters in Washington, D.C.
But it is so obscured by fake news, it’s hard to follow.
We’ve been talking about fake news… and trying to understand what it is and what role it plays in today’s world.
As we noted two days ago, people had no “public” information at all for hundreds of thousands of years.
It is only since the advent of cheap newsprint, in the 19th century, that it exists. And we still don’t know what to make of it.
The newspapers tell the average man that he is a victim of “unfair trade,” for example. What is he to think?
He imagines that he has been a chump. It makes him mad and eager to get even.
Or they tell him that America’s central bank is giving Wall Street “free money” to stimulate growth.
He imagines that an economy can be directed and improved. And that the Ph.D.s know how to do it.
There is no real point in refuting these facts – with evidence, statistics, and logic — because they exist in a different space.
Told that your village is under threat of an imminent attack, you might venture out… scout out the surrounding country… and report back:
“No, it isn’t.”
That kind of fact can be verified or disproven. It is a real fact.
But when told that the country is in danger of “terrorism,” how can it be shown to be true or false?
Who are these terrorists? You don’t know.
Where are they? You don’t know that, either.
The further you get – in time, space, and abstraction – from something that is here, now, and real, the harder it is to tell whether there is any truth to it.
Even the truest and most indisputable category of public facts are mushy.
You say World War II began when Hitler invaded Poland on September 1, 1939. Then what about the attack on Jablunkov on August 25?
What about the invasion of Albania by the Italians on April 7? What about the German occupation of Czechoslovakia in March?
But wait… Hitler didn’t invade Poland anyway. He was in Berlin the whole time.
So to make it a true “fact,” you’d have to say: “Germany invaded Poland.”
But that wasn’t correct, either.
Germany is a country. The country didn’t move. And probably, if you had asked the Germans themselves, most didn’t want any part of it.
You could be more precise and say “the Wehrmacht invaded,” but it surely wasn’t all the Wehrmacht, either. Some parts of it invaded. But surely one soldier, crossing the border, would not have begun the war.
Then two? Three? How many had to cross into Poland before the war began?
We presume the Wehrmacht, Hitler, and Germany all acted with a single mind… as a single actor… But is that true?
And did they really “invade” Poland? Not according to Hitler. He was merely trying to protect “German interests.” There were many ethnic Germans in Poland who didn’t consider it an invasion at all, but a liberation.
The city-state of Danzig, for example, had a majority German population.
Besides, 17 days later, the Soviet Union invaded Poland, too. Perhaps Germany really was just trying to protect its civilians in Poland? So, maybe the war really began when the Soviet Union invaded?
You get the point.
Real history is infinitely complex… infinitely detailed and infinitely nuanced.
You can’t possibly know what happened. (You would need the mind of God.) So you instead come up with a narrative that you can handle.
Since this story is necessarily a simplification, an abbreviation, and a bowdlerized version of what really happened, it is also false.
It is not what happened.
What really happened was far more complicated – with thousands of missed details, any one of which may be far more important and meaningful than the ones you chose to look at.
What is true of history is true, too, of contemporary events.
When President Nixon asked Chinese leader Deng Xiaoping what he thought was the effect of the French Revolution, Deng replied: “It is too soon to know.”
(There are some accounts claiming that Deng was referring to the communist revolution in China…)
Historians claim it is impossible to get a grip on history until after at least a quarter-century has passed. It takes that long before the dust settles and you can see “what it meant.”
But as you move away from events, the confusions and contradictions are harder and harder to see. Then you can develop a narrative that is comfortingly flattering and satisfactorily false.
So, give it another 25 years… then some historian who never saw a swamp monster in his life can tell us what caused these “deaths of despair.”
Unable to follow the fake-money system – even after it has crashed down around him – he will blame them on the “failure of capitalism.”
But for now, continue reading to see today’s Investing Insight from our friend Chris Mayer.
BY CHRIS Mayer, EDITOR, Chris Mayer’s Focus
Value is entirely relative.
If I had a glass of water and an ounce of gold on a table and said you could take whatever you thought was worth more, you’d take the gold.
But if I change the setting – say you’d been in a desert for two days without water and knew you’d not get any water for another couple of days – then the calculus is different, isn’t it?
As I say, it’s all relative…
Contrasts and comparisons make the game. Context is everything.
Would you want to own the stock of a good company that trades for just 12 times earnings and pays 4%? The S&P 500’s historical averages are about 16 times and 4%, respectively. So it sounds good, right?
But what if I told you that the market overall was trading even lower at 10 times earnings… AND paying 5%?
Well, now that stock may not seem like such a good deal. Point is, you can’t know without comparing it to whatever else is out there.
Even a stock that trades for just two times earnings is not necessarily a bargain. If it’s a fraud, the stock could be worthless.
Similarly, a stock that trades for 100 times earnings might be a bargain if earnings grow 1,000%.
Context, context, context…
I write this because readers tend to focus on a favorite number. I don’t know how many times I’ve recommended a stock only to have a reader write in to point out that the price-earnings (P/E) ratio is “high.”’
By itself, a price-earnings ratio – or any number – tells you nothing. You need that context – especially in a market such as today’s, where many stocks seem expensive on earnings.
But there are some hidden assets that make things interesting. There are companies with valuable real estate that could be sold, or new businesses starting up, or investments in other companies that will pay off big…
None of these show earnings today, yet they are a source of potential wealth that investors tend to overlook.
As an example, my first Focus pick – internet services and telecommunications company Tucows (TCX) – is up 75% since September.
And the key here was finding a business within a business that the market was entirely overlooking… one that didn’t produce any earnings. But the market is starting to recognize that value now. (This stock is still a buy in our Focus portfolio.)
If you just looked at the price-earnings ratio, you would’ve seen nothing too special. It would’ve looked “normal” for a company in that industry.
This is how I’m finding value today, not by looking for elusive, mystical, “objective” value in a single number. Instead, I look at the big picture and see what I can find…
— Chris Mayer
P.S. I’ve made a career for myself by bucking trendy investments and finding consistently profitable opportunities that often fly under the radar. My time in corporate banking put me on the “inside” and allowed me to uncover lucrative investments that you’re probably not aware of.
And last night, I told an exclusive group of your fellow readers about one of the most exciting investment opportunities I’ve seen in recent years.
You missed your chance to watch my presentation about this special strategy that has NEVER once lost money for me or my subscribers. But I put together a summary for those who couldn’t attend. You can check it out here.
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Today, some tongue-in-cheek humor from one of Bill’s Canadian readers in response to yesterday’s essay, “Picnics on Vesuvius.”
I always enjoy reading your perspective on current events. As a Canadian I was intrigued by your comment about investing in real estate in the “foreign rat hole” of Canada.
Further details would be very interesting to me as well as many of your Canadian readers. Who knows, you might even be able to persuade some of the Trump emigres to stay at home (or not!).
– D. Marshall
Meanwhile, strong opinions continue to pour in in response to Wednesday’s Diary, “No Quick Fix for the U.S. Economy…”
Bill, you rail against the war against drugs, poverty and terror… so I guess the fake attack in London today can be shrugged off by you as what??? A drunken motorist becomes delusional?
– A. Viggiano
“No Quick Fix for the U. S. Economy” hit the ball out of the park. Americans are the most gullible and one of the least intelligent populations on earth. Give them beer, football and sex (not necessarily in that order) and 99% of them are happy and content.
It’s no wonder that they swallow the claptrap that the Deep State/corporate/government propaganda machine churns out, without question. The internet — the supposed savior of humanity, because it gives us instant access to vast stores of data and information in real time — has only exacerbated the problem because people use it to consume only the information that they choose to believe.
Heaven forbid that they read or listen to the viewpoint or beliefs which are the opposite of theirs! They might actually learn something! As "The X-Files" so succinctly put it, “the Truth is out there,” but no one wants to learn it . . . or believe it when they are confronted with it. Is there any hope for us?
I fear not.
– D. Armelin