The Dow fell 101 points yesterday. Gold managed to climb back over $1,300 an ounce.
But the important news was barely noticed. Of those who bothered to read it, few realized its significance. For the first time, oligarchs from North America and the steppes of Eurasia have teamed up to lie, cheat and steal together. The Wall Street Journal reports:
Vice President Joe Biden‘s son and a close friend of Secretary of State John Kerry‘s stepson have joined the board of a Ukrainian gas producer controlled by a former top security and energy official for deposed President Viktor Yanukovych. […]
Hunter Biden, a lawyer by training and the younger of the vice president’s two sons, joined the board of directors of Ukrainian gas firm Burisma Holdings Ltd. this month and took on responsibility for the company’s legal unit, according to a statement issued by the closely held gas producer.
Standing on Hind Legs
Most people have no idea what government is about. They think it is a benign institution, designed to make life better for everyone.
“The government is all of us,” said Hillary Clinton, talking her book.
This myth helps keep the voters and the taxpayers in line. Some governments, desperate to get more “buy in” from the public, even insist eligible voters go to the polls – or face penalties.
In Argentina, for example, you can collect welfare benefits – but only if you can prove you voted. In other words, you have to stand on your hind legs before they throw you a bone.
Other countries, such as the US, merely excite the voters with dreams of avarice and threats of sanctions. One group votes because it hopes to score more of another group’s money. The other group votes to protect itself.
Among “get out the vote” campaigns, Denmark’s recent cartoon for the European parliamentary elections (by all accounts a snooze-fest) must set a new milestone in the history of democratic fraud and absurdity. The Financial Times reports:
The 90-second video features “Voteman,“ a muscleman first seen in bed with five naked women who then proceeds to beat up young people to force them to vote. He then decapitates one man, interrupts a couple having sex to throw them out of a window, and uses a dolphin to help chuck people into voting booths.
The Danish parliament withdrew the video on Tuesday.
Politicians want you to vote so they can claim to represent you. Then they do what they want.
Like any other organization, government promotes the goals of those who control it. In that sense, it is no different from the Kiwanis International club or the electric power company. Every business, club or charitable institution is meant to do something – and always and everywhere it does what the people running it want done.
As Naked as a Christmas Goose
This is not a bad thing. In a civilized society, as Adam Smith explained, it is self-interest that fills the marketplace with products and services.
A baker counts on the hunger of his clients to fill his own stomach. A cobbler depends on others’ sore feet to enable him to shoe his own family.
But an oligarch? This bird sings a different song altogether. He provides no real service… produces no real products… and exchanges no tit for tat. Instead, he feathers his own nest with forlorn hopes plucked from an ignorant and impotent public.
The voters believe they are in charge. They believe the government – as imperfect as it is – nevertheless reflects the desires of the public, as filtered through elections, lobbyists and back-room deals.
It is not a perfect system, the voter bravely tells himself, trying to recall Churchill’s word, but it is better than the alternatives. But by voting the poor democrat sets himself up for disappointment and despoliation.
Ouch! He loses a feather to the financial industry. Ouch! Another to the health-care oligarchs. Ow! There go a few to the farm lobby. Before you know it, he is as naked as a Christmas goose… cooked in his own stupid juices.
“The government that governs least, governs best,” said Jefferson. He understood it better. All governments work for their masters – the elite, the oligarchs. All are essentially parasitic, larcenous… and often, murderous. The more government you have, the worse off you are.
Further reading: Washington has moved a long way from Jefferson’s ideals of small government. And it continues to take on crazy amounts of debt to support itself. As Bill explained in his bestselling book The New Empire of Debt, one day American’s chickens will come home to roost… and the US Empire of Debt will collapse. To learn more – and find out how you can protect yourself – claim your FREE hardcover copy of The New Empire of Debt here.
Has Russia Reached the “Point of Maximum Pessimism”?
From the desk of Chris Hunter, Editor-in-Chief, Bonner & Partners
Russian oligarchs appear to be doing okay these days…
Since its recent low on March 13, the Market Vectors Russia ETF Trust (NYSE:NYSE) – which tracks a diversified group of many of the largest and most liquid stocks on the Russian stock exchange – is up 22.5%.
On March 13, the drumbeat of war in Ukraine reached a fever pitch…
In the strongly pro-Russian eastern city of Donetsk a 22-year-old man was killed, and several others were injured, as pro-Russian and pro-Ukrainian demonstrators clashed…
…the Russian defense ministry announced a massive military buildup along Ukraine’s eastern borders – including 80,000 troops… and hundreds of tanks, warplanes and heavy artillery…
…and Ukraine’s parliament voted to create a 60,000-strong national guard to defend the country from Russian troops, which at this point were already in full control of Crimea.
This strongly resembles what emerging market investing pioneer John Templeton called the “point of maximum pessimism.”
On March 13, Russia and Ukraine were on the brink of all-out war. Nobody in their right mind would have bought a Russian ETF, right?
For every panicked seller that day, there was an eager buyer. And those buyers are up over 22% on their risky bets. And yes – those bets were risky.
But that’s what investing is all about: getting paid to intelligently bear risk.
Does it always pay off?
But if your aim is to do better than the average investor, by definition you have to do something different to the average investor.
Most folks call this being a contrarian. The problem, as our friend Rick Rule reminds us, is that everyone wants to be a contrarian. But only when it’s popular.
“Invest at the point of maximum pessimism,” was one of John Templeton’s maxims. It helped his Templeton Growth Fund post a 13.8% annualized average return from 1954 to 2004… compared with an average annualized return of 11.1% for the S&P 500.
Don’t bet the farm on “maximum pessimism” opportunities. And make sure you have plenty of time to wait until optimism replaces pessimism. (It can take many years.)
But next time you think things can’t any get worse, you may be right. And that means it’s time to buy.