NORMANDY, FRANCE – We had gotten a bid of $4,000 to redo the old fireplace.
The carved stones that held the wooden mantel beam had cracked and fallen down. Other stones along the side had broken off or worn down. It was a mess.
But it was also a weekend challenge!
We drilled holes through the broken-off headstones on either side. Then we cemented them in place with gobs of spackling compound, driving pieces of 3/8-inch rebar through the holes to keep them from falling down.
Just to be safe, we propped them up with 2x4s until the cement had hardened.
When this operation looked like a success, we mixed up lime and fine sand, and, using a masonry adhesive, began rebuilding and reshaping the fireplace.
The result can be seen below. Hardly fine craftsmanship. But a perfectly acceptable country hearth.
Bill’s country hearth
The weekend behind us, we move on to our sad and sorry weekday work – trying to make sense of our money world.
We look. We connect the dots. Sometimes right. Sometimes wrong. Always in doubt.
For the last year, our money beat has been overshadowed by politics.
One of the candidates for president promised something new – a break from the pattern and policies of the last 30 years.
Although his program seemed largely incoherent, he personally appeared to be such a robust and fearless (perhaps reckless) character that there was at least some chance that he would shake things up.
If so, it would be the biggest shock to the money world since President Reagan and former Fed chief Paul Volcker set off the bull market of 1982-1999.
By some accounts, we’re still in that bull market, with stock prices now 21 times those of 35 years ago and debt up almost as much. When this boom comes to an end, there will be hell to pay.
Ronald Reagan changed the world in ways few noticed and fewer understood. He came to Washington and found a city of socialists who pretended to be liberals. He left it a city of socialists who pretended to be conservatives.
The true conservative is a skeptic. He’s a “no” fellow. He is suspicious of new eras. He is wary of fads and fashions. He doubts that government can do much good.
And he knows the feds’ resources are limited; he doesn’t want to waste them on boondoggle projects.
More free pills for old people?
No, thank you.
Nah… I’ll sit this one out.
The old-time conservative thought the best way to build a better world was to mind his own business… cleaning his doorstep, as Goethe put it, to make a cleaner world.
Reagan was an old-time conservative. But it’s hard to be a real conservative when the money seems to be unlimited.
More money for the military? More money for domestic programs? More debt? More meddling? Sure. Why not?
Although much of the blame should be put on the people around him… Reagan became a yes-man. And debt ran wild.
Today, we have 20 times as much national debt as we did when Reagan came into office. But we have only six times as much GDP.
In other words, debt has increased three times faster than output. And today, instead of having debt equal to about 30% of GDP – as we had when Reagan took office – it now equals more than 100% of output.
And there are hardly any old-time conservatives left.
Year after year, spending increases. Most of it is more or less automatic – driven by aging Americans retiring at the rate of 10,000 per day.
Each one costs the government $35,000 a year. Over the next 10 years, spending is scheduled to outstrip tax receipts by about $1 trillion a year. Bankruptcy is practically guaranteed.
The old-timers could have put up a fight. But even in the best of times, it would have been a long-odds battle.
With so few real conservatives… and so many people lobbying for more money… geezers (such as your editor) who want more drugs and medical services… and crony gunmen who make money from the empire racket… it wouldn’t be easy.
But conservatives always had one last-ditch weapon. They may not be able to stop individual spending programs. But they could put a limit on how much the feds could borrow.
That was the importance of the debt ceiling. The fake money might be unlimited, but the total credit of the United States of America was not.
Ultimately, members of Congress had the grenade in their hands. They had to approve the amount of debt that the feds could take on. Using the debt ceiling, they could set a limit… and force the politicians to make hard choices.
All they had to do was pull the pin.
That is why last week’s events on Capitol Hill were so important. The debt ceiling is the one and only thing that might prevent the bankruptcy of the U.S. government.
It is the only ammunition fiscal conservatives (the few of them still in Congress) have left. When the going gets tough, Congress could use the debt limit to find its backbone and tighten its belt.
That’s why the big spenders and Deep Staters wanted to get rid of it.
Phony “conservatives” and fake “liberals” share the same goal – to use the government to take wealth and power from the Main Street economy and shift it to themselves.
But they keep running into the debt ceiling.
Still, none of them – not even Barack Obama or Hillary Clinton – dared to suggest eliminating it. For that, it took the Great Disruptor, Donald J. Trump.
Mr. Trump may shake things up after all – in a way almost no one expected.
He has proposed to take away true conservatives’ last bullet.
Along with the deepest of the Deep State Dems – Nancy Pelosi and Chuck Schumer – he has a “gentleman’s agreement” to abolish the debt ceiling… leaving conservatives unarmed… and defenseless.
BY CHRIS LOWE, EDITOR AT LARGE, Bonner & partners
International diversification has paid off handsomely so far in 2017.
Today’s chart compares the returns of the S&P 500 with the top five-performing overseas country stock markets.
As you can see, the S&P 500 has returned 11% year to date.
That compares with dollar-denominated returns of roughly 29% for India, Hong Kong, and Italy… and roughly 27% for China and Spain.
– Chris Lowe
New Survey: Bitcoin Is in a Bubble
Popular cryptocurrency news website CoinDesk asked its readers if they think that bitcoin is in a bubble. It found that the majority of readers (58%) believe these digital assets are in bubble territory.
Value Investing Legend – Bargains Are Scarce
Value investor Seth Klarman is one of the world’s most respected value investors. He plans to return some capital to investors at the end of the year because of the scarcity of value in today’s market.
Bill’s recent take on America’s increasingly irrelevant legislature – “Congress Is a Carnival of Clowns” – has struck a chord with readers.
One of your best columns ever. Could not agree more. We are doomed. It’s just a matter of time.
– Chris J.
I just read Trump wants to do away with having to vote for increases in the debt ceiling. Did he just submerge below the water level in the swamp?
I mean, it’s a joke really… but at least there was a pretense of trying to restrain the swamp critter spending.
– Gregory D.
Anyone who has ever been on a committee knows how hard it is to come to a decision with 15 people. Meanwhile, our legislatures have hundreds.
And this is a problem worldwide. Every democratic area is adding members. Is it any wonder nothing ever gets done? Also, if we made the legislators pay for the time they spend grandstanding out of their own pockets, that would at least rein it in. Our Canadian prime minister would be deeply in debt.
– John B.
Your article about Trump making a budget deal with the Dems missed one key point. The Dems have 48 Senators plus 3 Republican Senators who vote with them. Trump made a deal with the defector majority in the Senate – Dems 51, Republicans 49!
– Bruce H.
When facing a problem, one of two courses exists: undertake to fix the problem or let the problem fix itself. It seems we have opted for the latter in almost every case I can recall in my 65 years. As Don and Phil Everly sang in 1960, so sad to watch good love go bad.
– Paul M.