“It’s called guadeado. You take the whole head… without the skin, of course. You dig a hole in the ground. You build a fire. And when you have hot coals, you put the head in the hole with the coals… and you can put in herbs, if you want to… and then you cover it up and wait for 24 hours. Then you uncover it. The skull will come out clean and white. And the meat, with the brains… will be delicious.”

Thus did Javier explain a local culinary tradition. When a cow is butchered, the head is interred with hot coals until it is ready to eat. It sounded quaint and folkloric. Until we were invited to eat it.

Pilgrim’s Progress

Yes, dear reader, we continue our pilgrim’s progress.

We arrived as dudes from the big city of Baltimore. Our delicate digestive system… our pale Irish skin… our flatlander legs and sea-level lungs… our big-city sentiments (we eat animals we never met; we never point at cripples and laugh)… our sweet business and investment life, cocooned, cushioned and cottoned by a credit-fueled bubble that began practically on the day we were born and continues until today – all have been challenged by the harsh conditions of Andean life.

No one here expects to borrow his way out of a financial bind. No tears are shed for the lamb you have for dinner. No one wears sunscreen. No one thinks twice about a four-hour walk up and down mountainsides… or blinks at the bother of getting up at 5 a.m. to get a head start on the cattle roundup.

Little by little, our greenhorn status is giving way to dysentery, callouses and weight loss. Our Ford F-150-adapted derriere has been hardened by the saddle and our soft business instincts have been tempered by the unforgiving math of a marginal mountain ranch. Even our gentle Episcopalian God is being shoved out of Heaven by an older, tougher deity.

Margins? Forget it. We can’t compete on price. And we’re a long way from a product that can hold its own on quality. Our wine is still a work in progress. And our beef is as lean as the farm that produces it.

Life in the Bubble World

Not that we’re complaining. We’re just trying to understand… and beginning to realize that most of what we thought we knew is phony, false and artificial. Every year of our life has been spent rolling along on fully-inflated tires, on smooth-surface highways… with the top down… and gasoline at 25 cents a gallon.

We grew up… entered the business world… and reached retirement age… the whole thing in a kind of bubble, where earning money was relatively easy… and was made even easier by the biggest credit binge in the history of mankind.

People had money to spend, thanks largely to the eagerness of the authorities and the financial industry, who were happy to lend money even to people who could never pay it back.

These consumers bought our books… our newsletters… our ideas and our recommendations. (Thank you very much, dear reader!) We earned a decent living while hardly breaking a sweat.

How many of our instincts and reactions, formed in this bubble world, are honest and worthwhile? How many are bent… distorted by a grotesque and unnatural economy?

And now, when most men begin collecting Social Security and prepare for a life of visiting grandchildren and walking on the beach, we find ourselves face-to-face with the real world.

This authentic world has a tough, hard face. Not the pudgy mug of a man who has spent his life in air-conditioning and government employment. This is a face lined by worry… creased by hard experience… a face that expects little.

This is the world as it must be for most people, where every centavo must be scraped out of the dry, barren dirt as though it had been deliberately hidden there by a cynical and unforgiving god.

Lunch Time

“It’s ready,” said Marta, our cook. The cow’s head was ready to pull out of the earth. She had innovated. Rather than dig a hole, she had put it into an adobe oven… with cans of water for moisture… and sealed the door closed with a large flat stone and mud.

Your editor, head in hands

The mud quickly dried and hardened, leaving the head entombed in the hot coals. Twenty-four hours later, we went to the oven, broke the clay seal and rolled the stone out of the way. We drew the head out of the oven… took it to the kitchen and cut off the meat.

It was time for lunch.



Market Insight:

Which World Do You Belong To?
From the desk of Chris Hunter, Editor-in-Chief, Bonner & Partners

We’ve been discussing what is being billed as the most important economics book of the new millennium with paid-up Bonner & Partners subscribers.

The book: Thomas Piketty’s Capital in the Twenty-First Century. The venue: Our new bonus e-letter for paid-up subscribers, the B&P Briefing.

To say Piketty’s book is creating a stir is an understatement. The Frenchman (Piketty teaches at the Paris School of Economics and talks in a thick French accent that makes him hard to understand and easy to parody) has met with Treasury Secretary Jacob Lew… talked with President Obama’s Council of Economic Advisers… appeared at a packed public talk alongside Nobel Prize winners Paul Krugman and Joseph Stiglitz… and journeyed to the United Nations headquarters.

Meanwhile, his book has hit the New York Times bestseller list and sold over 46,000 copies – beating even Michael Lewis’s high-frequency trader exposé, Flash Boys.

What’s so interesting about Piketty’s book?

In a nutshell, it suggests – based on an extensive look at tax records across more than 20 nations – that returns on capital tend to outstrip returns on labor. As we wrote in Tuesday’sB&P Briefing:

What Piketty’s data shows, empirically, is that there are two worlds. In one world income consists of wages, which for most people are stagnant. Let’s call this the world of the not rich and the never to be rich. […]


In the other world, income comes from capital… in the form of profits, dividends, rent, interest, capital gains and royalties. Unlike wages, this source of income is growing. Let’s call this the world of the rich and the getting richer.


And it’s different to the world of the not rich and the never to be rich because of an important distinction: Its inhabitants have ownership of capital.

Fortunately, there is a way to escape the wage-dependent world of the not rich and never to be rich… and cross the invisible barrier into the capital-owning world of the rich and the getting richer. And that is to get your hands on capital.

The first port of call is to buy shares in quality businesses at bargain prices. This is why we recently launched our newest investment advisory service, Braden Copeland’s Building Wealth.

The aim of this letter is to help readers reach what Bill calls “financial escape velocity” – the point at which you are no longer wholly depending on the income you earn from your job.

Since its launch, Braden has recommended an energy company that is tearing down the electrical grid… and a “picks and shovels” company the Saudi royal family depends on to maintain political power.

You can try Braden’s service out – risk free – by subscribing here. Or you can continue to benefit from the free research we pass along in Diary of a Rogue Economist. (We guarantee it’s worth every penny!)

Either way, we strongly urge you to pick up a copy of Piketty’s book. And, if you’re serious about building wealth over the long term, start accumulating as much capital as possible – starting today.