We read through this morning’s papers and checked the usual websites. If anything important happened yesterday, we can’t find it.
The International Herald Tribune gamely tries to interest readers in the politics of the Ukraine and Germany. We don’t know why we should care. But, oh yes, we are the imperial race; we have to care about everyone’s politics. No sparrow can fall anywhere on the planet without it triggering some sort of alarm in the Pentagon and high-minded humbug in the national press.
In today’s paper alone, we are given “what we should do about it” opinions concerning Egypt, Britain, Asia and the United Nations and New Orleans. On this last problem area, David Brooks has a particularly buffoonish proposal. “Katrina has given the United States an amazing chance to do something serious about urban poverty,” he writes. Well, what is it? Brooks suggests we now have a chance to “rebuild a city that wasn’t working."
Great. Rebuild a city. Get right on it. How? Brooks cites something along the lines of the Clinton administration’s Moving to Opportunity program which would, “Break up zones of concentrated poverty…” He goes on to say, “In the post-Katrina world…we ought to give people who don’t want to move back to New Orleans the means to disperse into middle-class areas nationwide.” Right, buy them all houses in the suburbs of Chicago, San Diego and New York. By God, he’s right…that will solve the New Orleans problem!
Who will pay for it? Even if it would improve the lives of those moved, what would it do to the lives from whom the loot to pay for it was stolen? Mr. Brooks is silent.
The British papers, meanwhile, have thrown off their purple burden. They can get down to essential business without having to worry about improving the world.
On the front page of the Daily Express, for example, we find out about “The Baby with two mothers.” Having printed the entire headline in large capitals, the poor hacks at the Express had no way to emphasize the word ‘two’ for their dimwitted readers, so they printed it in red!
And over on the cover of the Daily Mirror, the most important thing the editors could find for the front page is a photo of a group of slouching young people. “Cheers… To Our 5 Dead Friends,” is the headline. The poignant story behind the photo is this: Five young people were killed in a car crash. Their friends, dressed in T-shirts and jeans with bellies bulging, bid adieu to their companions by pouring a can of beer out near the scene of the accident.
The only story of much interest is the continuing saga from down below sea level. “If you wanted to kill someone here,” said a Louisiana state trooper, “now is the time to do it.”
We thought about it for a moment, but we are unable to think of anyone in New Orleans at the moment that we would like to murder. We will have to let the opportunity pass.
In addition to the flood victims, the police are finding people who have been killed by other people. Amid the slosh of bodies, confusion, and humbug, it seems as if you could get away with anything.
Soldiers are going door-to-door telling people to get out of town, according to the IHT report. Other stories say that people are being allowed back in the city. But every report we’ve seen agrees on one thing: the flood in New Orleans revealed the incompetence of American officials.
• A note from Dan Denning, reporting from Sin City…
“While I was delighted to be the keynote speaker [at the Gold Conference in Las Vegas] on Wednesday, I have to admit I always look forward to hearing Jim Grant. Jim was Thursday’s keynote, and spoke about ‘Gold: The Quietest Bull Market.’
“‘Here we are in the city of dreams at a hotel called the Mirage talking about gold. The Mirage is just the place for a convention of central bankers,’ Grant began.
“‘The real gold story is the dollar story. And the entire dollar system is still with us. This is the system by which we Americans spend dollars on goods from Asia. Those dollars never leave the country because our friends in Asia pour them right back into our stocks and bonds, keeping interest rates low and asset prices high.”
“‘It is,’ said Grant, ‘the sweetest road to leisure since the invention of the weekend. And it’s all going to end. In 1986.’
“Grant was poking fun of himself for having been rather early on calling the demise of the dollar. But can you ever be too early in calling the end of a global currency system? As in investor, I’d rather by early and get out of the dollar while I can than be late and lose everything.
“‘In 1906 the San Francisco earthquake became the costliest and deadliest financial disaster in American history,’ Grant told us. ‘It may, in fact, have caused the financial panic of 1907, which led to the clamour for a more ‘elastic’ currency. We have that currency today, and in no small measure due to the creation of the Federal Reserve in 1913.’
“‘What will America’s creditors think of us post-Katrina?’ Grant wondered
We wonder too. And while we wonder, we’re buying gold and leaving the gambling to the casinos and the central bankers. Another way smart investors are safeguarding their assets from the fall of America’s currency is by self-educating — and you can do the same. Buy Addison Wiggin’s bestseller: The Demise of the Dollar…and why it’s great for your investments
• What country has a positive trade balance with China? Germany.
“This is the time to buy Germany,” says Sven Lorenz and a growing group of analysts. Prices are low. Profits are rising. The German economy is bottoming out and the country seems on the verge of a major shift towards free-market reform, whether or not the ‘German Maggie Thatcher,’ Angela Merkel, is elected on September 18th.
One of the most appealing ways to invest in Germany is to buy property. While the rest of the world’s property markets have been suffering booms and bubbles, Germany’s houses and business real estate have been going down in price, relative to rents and incomes. According to MoneyWeek magazine, you can get a yield of 8% to 10% on German property.
Berlin is the best city to look for property: a city increasingly favored by artists and entrepreneurs.
• “Hold on,” said a German friend over dinner a few nights ago. “Angela Merkel is no Maggie Thatcher. She is a nice lady, but she doesn’t really know anything. She doesn’t know the difference, for example, between a business’s gross and net.
“And Germany has problems that will not go away readily. Do you know why real estate is cheap? It’s largely because the population is falling. Thirty-five percent of German women now have no children. The average woman has only 1.3 children. That is far below the replacement level, which is 2.1. Even minority groups — the Turks, for example — have birthrates that are not much higher.
“Bismarck began the welfare state in Prussia during the last century. But it was a very modest form of welfare. He started a system of old-age pensions, but you didn’t get any benefits until you were 70 years old. And at the time, the average person only lived to be 47. If we had the same system today, adjusted to today’s life expectancies, you’d have to wait until you were over 100 to get a pension. We could afford that. We can’t afford the system we have now…it’s killing Germany.”
• “I found a house for us to live in,” Elizabeth announced yesterday. “It is nothing fancy…just three bedrooms…not far from the school. It’s perfect, except for the rent. But I couldn’t find anything cheaper that was big enough for the family.”
“Well, sit down…it’s 1,500 pounds per week…”
“That’s about $10,000 a month…”
How do people afford to live in London?
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.