Empire of Debt and Delusion
by Bill Bonner
We have been fascinated by the big, big picture.
You'll recall, dear reader, that we resisted the idea of "empire" for a long time. We denied it. We dragged our feet. We insulted the neocons every opportunity we got. We insisted that America should stick with its old ideals...and mind its own business. Not that the old tattered republic was a perfect country by any means. It was full of bosh and claptrap, but we had gotten used to it. Like watching a favorite old comedy, we knew the punchlines and pratfalls by heart; still we always got a laugh.
But the neoconservatives said we were fools. America was an empire whether we liked it or not. No one chose to turn America into an empire; the role was thrust upon us. We had the last imperial ideology still standing, they said. It was time to stop whining and shoulder our imperial obligations.
Getting to like empire, we found, was a little like eating something new and nasty in a Chinese restaurant. After we got over our initial nausea and revulsion, we found we liked the taste of it. We got used to it. We found it helpful in understanding what was really going on. We found that the neoconservatives were right: looking at the United States as an empire explains a lot.
But the harder we looked, the more we saw that the neocons were even bigger imbeciles than we realized. They have noticed that America really is playing an imperial role. They have encouraged it and expanded it. What they haven't bothered to notice — because they are too busy gazing at their own glorious reflections — is that it is a mad empire of debt and delusion, one that ruins the imperial race rather than enriches it.
That is what makes history so entertaining. As People seem to come to believe just what they need to believe — just when they need to believe it, in order to make public spectacles of themselves. That is, they need to believe six impossible things before breakfast so that can do something absurd before lunch. It is the aberrations — the exaggerations, the mass movements way beyond the ordinary mean, the empires, the bubbles — that give us some place from which we can regress. And it is the delusions, vanities, and preposterous flatteries that make it all so amusing.
According to a report in Britain's Guardian newspaper, Americans now spend $1.08 for every $1 they earn. But American economists, politicians, and media manage to spin the numbers so they seem almost normal — if not favorable. Americans spend more than they earn, say the latest hallucinators, so that people in Asia can continue saving so much money. Get it, dear reader? America's current account deficit is not America's fault; it's the fault of all those Asians who haven't the wit to spend their own money.
That is the sense of the delusion known as the "glut theory of savings," according to which, America does the world a favor by being willing and able to recycle excess savings from Asia. We have to spend the money for them! Thus, we do the whole world a service...helping to match up savings with borrowings...spendings with makings...and takings with gettings. We do not doubt the math of it; for every debit, we are sure there is a credit somewhere (most likely in Asia). We just don't see how the imperial arithmetic favors the imperial race. That, of course, is the funny part of America's empire...a little joke on the neoconservatives themselves, with a punch line that is likely to knock the whole nation on its derriere.
Gold dropped below our most recent buying target — $425. Buy.
Dan Denning's new book, The Bull Hunter, has hit number 13 on the New York Time's best-seller list...
"I am just a humble American writer with a weakness for old French 'pierres,'" we explained to the farmers.
The little speech seemed to need a little joke. The farmers looked at each other. Finally, one of the Pierres got it.
The luncheon was organized by one Pierre in order to introduce another Pierre. The two Pierres are going into business with us, raising limousine cattle on his farm in Normandy. But what the farmers wanted to know was what we were doing there. That was where the other "pierre" came in. In addition to the Christian name, Peter in English, the word "pierre" means "rock." Christ told the same little double entendre in the French-language version of the gospels, when he said: "On this Pierre I will build my church." St. Peter did as he was told.
Your columnist can't seem to pass a pile of them without wanting to own it; thus had he become the owner of a vast ruin of stone, stale and wood-munching fungus in the Norman countryside. And thus had he become an expert on French fix-up projects.
MoneyWeek magazine asked us for our views on French chateaux yesterday. We have lived among the frogs for more than a decade. We have learned their ways and the ways of their dwellings.
We recalled when we bought our first chateau during the early years of the Clinton administration. "It never rains in the summertime," said one of the Pierres. "And, no, the roof doesn't leak." One day in July, we found that he lied twice. But this was the just the beginning of the adventure. Nothing is ever quite as straight in France as we Anglo-Saxons imagine — neither the people, nor the laws, nor the chateaux walls. There is always a little "play" in them.
We began our chateaux counseling by explaining our search for our first chateau. We looked at a dozen of them, many of which were owned by English people. They mostly suffered from the same problem — the owners had begun something but were unable to follow through. A few rooms were done up. Others were left undone. Roofs still leaked. Heating systems creaked. Plaster cracked. And finally, the owners packed up and left, often in different directions.
"When I arrived here," said one older Englishman who had not cut and run, "the chateau was broken down. But I was in good shape, financially as well as physically. Now, the chateau is in good shape...and it is I who is broken down. You can make these things work. But it will cost you."
Chateaux are relatively cheap to buy, but expensive to repair and run. Our experience suggests that buyers should expect to spend twice as much on repairs as they did on the purchase. Compared to English prices, however, they will still get a lot for their money. A place already done up will sell for only a third to one-half as much as a roughly-equivalent place in England.
A buyer must also consider the non-financial costs. Doing up a chateau is a consuming occupation. It breaks down not only pocketbooks, but also nerves and marriages. There are all the Pierres to deal with. And the language. And the government. And the community. And the travel back and forth. And the sense of alienation. Taken together, it breaks down buyers.
July 7, 2005
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.
Copyright © 2005 Bill Bonner