POITOU, FRANCE – From comedy… to farce… to tragedy.

We laugh. We guffaw. And then we wish we hadn’t bought a house in inner-city Baltimore.

Already, in Charm City, police helicopters peer into our windows… sirens wail at 3 a.m.… and the monuments to our dead ancestors disappear in the night.

What will happen when the real crisis comes… when the debts come due… and the feds can no longer afford to pay off their crony friends and zombie clients?

ZIP Code Politics

Where you stand on the important issues depends largely on where you sleep.

If you live in a ZIP code favored by the Deep State – most of which are on the two coasts – you are likely to approve of the system and disapprove of anyone who threatens to shake it up.

Your stocks are up. Your house is up. Your café latte and Pinot Grigio are waiting for you. You may have even voted for Hillary and counted on her to keep the good times coming.

If you live in a ZIP code in “flyover country,” on the other hand, you may see things differently.

A report from the Economic Innovation Group think tank:

One in six Americans lives in an economically distressed community.

In total, 52.3 million individuals live in economically distressed ZIP codes. […] Such communities can be found in every region of the country and in rural areas, suburbs, and city centers. […]

Perhaps most troubling, the prime years of the national economic recovery bypassed many of America’s most vulnerable places altogether.

Far from achieving even anemic growth from 2011 to 2015, distressed communities instead experienced what amounts to a deep ongoing recession, with a 6% average decline in employment and a 6.3% average drop in business establishments.

The Bonner & Partners research department, headed by Joe Withrow, is on the case. He’s checking the figures… county by county. And the picture is worse than we thought.

Remember, the system runs on credit. And the feds (with their crony friends on Wall Street) control where the credit goes.

Not surprisingly, it ends up in their bank accounts, investments, enterprises, and salaries – in big businesses and boondoggles around the big megapolises on the East and West Coasts.

If Washington calculated inflation, wages, and employment honestly, we would see that most of the rest of the U.S. has been in a near-depression for the entire 21st century.

Stay tuned…

Headed for Bankruptcy

In the meantime, we read the news along with everyone else. We are amused… and often appalled.

After much meditation, reflection – and singing maudlin songs to two kittens (one of whom finally showed up after sleeping rough out in the garden) – we have laid out our “Bonner Doctrine.” We summarize:

  1. The economy has been weakened by politics – more and more win-lose deals imposed by the feds.

  2. The government is controlled by insiders who benefit from those deals; the last thing they want is change.

As a result, the U.S. empire is headed to bankruptcy… or to Hell. It would take a remarkably talented and determined leader to alter the direction of the march.

Donald J. Trump will not do that job; instead, he busies himself on Twitter to keep his fans distracted.

Entitlements are never brought under control. (The latest attempt to reform O’care failed yesterday.) Expensive wars continue, with no hope of victory… and no end in sight. (The junta of generals – Mattis, McMaster, and Kelly – controls U.S. foreign policy.)

One regulation is updated… another is amended. One crony gets a payoff… another, who has bet on the wrong politician, waits for the next election…

One tweet tells us NFL players are bad guys. Another tells us NHL players are good guys.

Kneeling is bad. Locking arms is okay. How does POTUS know these things?

Debt and Dissatisfaction

And all the while, debt and dissatisfaction mount up.

Once the debt ceiling was pushed out of the way – a collaborative effort between the president and the Democratic wing of the Deep State – it was off to the races.

Federal debt shot ahead to over $20 trillion just hours later.

The fundamental problem… or at least the thing that makes the fans squirm and causes the show to turn from a farce to a tragedy… is that time and resources are limited.

You either do win-win deals, which help people get what they want… or at least get what they’ve got coming. Or you do win-lose deals, which reward the few at the expense of the many.

The richer, fatter, and sassier the insiders become… the more the rest of us are out of pocket.

Most people aim to get what they want from voluntary win-win deals in the Main Street economy. But the Swamp (insiders, Deep State, Establishment Republicans and Democrats) relies on win-lose deals.

Want to know why the economy has slowed down… and wages no longer rise?

The simple answer: A half-century ago, the feds controlled about one-quarter of the economy. Now, they’ve got about half of it under their thumbs.

And fake money, too!





Market Insight: Commodities Are Standing Still


bill bonner

Commodities are going nowhere…

Today’s chart is of the Thomson Reuters/CoreCommodity CRB Index.

It tracks prices of 19 commonly traded commodities – including aluminum… cocoa… coffee… crude oil… gold… live cattle… natural gas… and silver.

As you can see, the CRB Index is back to where it was in April 2016.

Chris Lowe

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In today’s mailbag, readers consider the Fed’s plan to unwind its balance sheet.

Under normal circumstances I would agree with you that the Fed will not follow through with their bond liquidation, but these are far from normal times. There is such a deep hatred for Trump by the Deep State… he has threatened their fiefdom and they will stop at nothing.

Whether Trump has the ability to drain the swamp remains to be seen, but they can’t take any chances. I think the Fed would be willing to have a sacrificial recession just in time for the 2018 election to ensure Trump does not retain satisfactory support in Congress to pass anything that will jeopardize their cozy lifestyle.

Still, the destination is the same, and so, carry on, sir. Many thanks and best always.

– Ron J.

The Fed moving toward “normalization” really just means that all hell is about to break loose. Bill, I fear you are right on. The Fed has been manipulating something they could not and should not manipulate. And the beat goes on…

– Larry F.

I’ve been reading your work for years. I watched IOUSA in the theaters. Things seem to be getting down to the end game. Your comments about Toys “R” Us seem to indicate that the elite manipulators/vultures have harvested the meat and are now picking the bones.

They have built their hidey holes and are loading up everything they can reap and getting ready to cut the cord and let the rest of us fend for ourselves. The crash is going to be horrendous. Good luck, we’ll need it.

– Jim L.

Meanwhile, feedback on Bill’s newest feline companions

Cute kittens! Tell Elizabeth that my wife has 11 cats, ranging in age from 18 down to 3. All were strays and all are well looked after. The 2 dogs have had to get over their natural prejudices.

I have long been wary of those who are indifferent to the suffering of domestic and working animals, it is usually an accurate gauge to the way one will act when other forms of compassion and empathy become necessary.

– Mark C.

Both you and Elizabeth are also wonderful people for saving those kittens! I have adopted many abandoned kittens that have turned up at my home asking for help over the past 25 years. I find that eventually they will care for you just as much as you care for them. Well done to show such compassion.

– David R.

You won many points from me by saving those kittens from their terrible potential fate. Thanks for posting their photo.

– Brian B.

In Case You Missed It…

Our colleague Jeff Clark isn’t your typical trader. He doesn’t have an MBA, an Ivy League degree, and, by his own admittance, didn’t do all that great in college, either.

But that didn’t stop him from finding a trading strategy that lets him make gains as high as 400%, 700%, and even 1,610% in under a week. Jeff reveals this trading secret to readers right here.