LAUSSANE, Switzerland – Stocks fell a little yesterday – led by biotechs.
Otherwise, the markets were relatively calm.
So, we dip into the mailbag for a little sharp pain:
This is Bill Bonner, at the Agora Swiss Night, a $200-a-night hotel in Lausanne. We are traveling on business – visiting friends, colleagues, and associates in Germany and Switzerland.
It is 7:30 a.m. We have to write our Diary before our meetings begin so that Chris (in Berlin) can correct our errors and send it on to Florida where Will, Amber, James, Dana, Sheila, Tony, and the rest of the team there can put in their advertising links and send it out to subscribers.
The real Bill Bonner doesn’t know exactly what each and every of those advertising links will offer. But he believes they are savory. And he trusts his team in Florida to make sure that’s the case…
But “savory” doesn’t mean the same thing to everyone. The word suggests it is a matter of taste.
The real Bill Bonner has his personal tastes – which, when it comes to money are stoic… almost ascetic.
He wears blue jeans he buys at Kmart for $10. (Comment from his wife: “They look like $10 jeans.”) He drives an old Ford F-150 pickup.
He doesn’t understand options or derivatives or currency trading strategies and is distrustful of almost any system that promises “alpha” (the returns you make above the market’s returns due to your stock picking or market timing skills). The market is hard to beat.
But he also knows that other people are smarter than he is and often make a lot more from their investments than he does. And he knows that many of the analysts working at Agora have outstanding track records of beating the market over time.
Also, other people (including his own family members) have very different tastes, different objectives, and different ways of trying to achieve them.
What’s more, he knows that his business has to sell something.
We get a lot of criticism for what we sell and how we sell it. Most recently, the magazine Mother Jones took a whack at us.
This is bound to be more about our business and Bill Bonner than you, dear reader, want to know. But the real Bill Bonner wrote a response to Mother Jones:
We have not heard back from Mother Jones.
So, let’s move on…
Yesterday put us in the company of Swiss bankers. One of them had this comment:
“We survived World War I, World War II, the instability of the 1960s, inflation of the 1970s, the fall of the Berlin Wall, the credit crisis of 2008, QE, and now negative interest rates. But FATCA [legislation requiring foreign banks to provide extensive information on their clients to the U.S.] is killing us.
“We have to turn away all clients with any U.S. contacts, even if they’re not U.S. citizens. Because if they have contact with the U.S., they may owe tax in the U.S. or be subject to the SEC. We could be attacked by the IRS or the SEC without doing anything wrong.
“This is all very strange, too. I deal with people from all over the world. Many of them – say, the Italians and Argentines – take it as a point of honor not to pay their taxes. But Americans pay. They actually want to pay.
“They try to pay. But it’s not easy. If you’re an American – or a green card holder – and you have a lot of business and investments around the world, you have to pay in the local country and also in the U.S. And it can be hard to figure out what you owe to whom. A lot of people try to escape and dodge. But my U.S. clients come in and they say, ‘Just tell me what I owe, so I can pay it.’
“And yet, the IRS has an office here in Zurich. Imagine that. A foreign country has a tax collection office in our city. It’s crazy. And I don’t think it is just about collecting taxes. FATCA is about collecting information. They need to know everything about everybody… like the secret police in East Germany during the Cold War. They want to know everything. I think it gives them power. Information is power.
“You remember what happened to DSK [Dominique Strauss Kahn, the former head of the IMF and French presidential candidate, who was arrested in New York and tried for attempting to rape a hotel cleaning lady]. You could read between the lines of that case. It was obviously a setup. They knew his weakness. They set him up.
“I imagine that’s the real goal. They will know everyone’s weakness. They’ll be able to get rid of anyone. I know I sound like a paranoid. But otherwise, this FATCA doesn’t make sense.”
Japanese QE looks increasingly like a bust…
The latest data show that, in the year to September, Japanese exports grew by just 0.6%.
That compares with a 3.4% gain expected by economists polled by Reuters.
QE is supposed to boost economic growth by weakening countries’ currencies versus their rivals.
The Japanese experience shows that it is far from a panacea.
Goldman: Maybe We Were Wrong About Gold
There’s nothing Wall Street loves more than to bash gold. But in light of gold’s 8% rally off its July lows, even the bearish analysts at Goldman Sachs are having second thoughts about gold’s future.
Warren Buffett: How to Know If You Are Rich
Being rich isn’t just about having money. You’re rich, says Buffett, if you are working around people you like. And you will make money if you are energetic and intelligent. Just make sure you do something you love…
Jim Rickards’ high-tech currency evaluation system has identified three global currencies that are in danger of crashing. And the first of these “doomed” currencies could even collapse before the end of this year.
More of our readers are writing in after Canada’s election surpriseon Monday…
Your reader Charles M. believes that the Canadians voted Trudeau in because of his promises to “spend, spend, spend.”
Perhaps they voted the Liberals in because 30 years of Conservative economic policies morphed into crony capitalism that enriched the few while the middle class was looted.
The move away from neoliberalism economics is happening around the globe and will happen here. Just as America turned to Franklin Roosevelt after the carnage caused by Wall Street in the 1920s, America will probably turn that way again.
The pendulum swings. The conservatives will have no one to blame for not reining in their greed.
– Bryan M.
I enjoyed today’s Diary (as always)and thought you might enjoy this ( video ) analysis of Canada’s election by Canadian commentators James Corbett and Dan Dicks: Canadians Vote for 4 More Years of Oligarchy
– Kent D.