My Own Son!

• If we have a global boom, which countries are likely to benefit the most? The fast-moving Asian countries, says Marc Faber in Barron’s. If we have a global bust, which companies are likely to get hurt the least? The low-priced Asian producers, he continues. Asian companies are selling for prices that are lower than they were in 1990. If the Dow were back to 1990 levels, it would be priced below 2400.

Buy land in India, Faber concludes.

Or how about a hospital management company in Thailand that yields 5%? Try Bangkok Dusit Medical Services.

• We hear bells ringing.

First, our oldest son called from Florida. Could we lend him some money so he could buy a house not far from the inter-coastal canal, he wanted to know. Prices are soaring…he is sure he’ll make a killing. He can’t imagine that prices can go down — they’ve gone nowhere but up since he was born.

Second, from the Christian Science Monitor comes news that real estate is “one of the hottest curriculums on college campuses.” NYU is said to have 5,000 people signed up for its Real Estate Institute.

Third, the insiders are selling. Barron’s reports that the CEO of Lennar, one of the largest homebuilders in the nation, just sold a big slug of shares — pocketing more than $5 million. He may have sold the shares because he is sending his boy to NYU’s Real Estate Institute. Or maybe his son asked for a loan. But he’s not selling them because he thinks they’re going up.

Marc Faber also considers the homebuilders a “sell.”

• Wanna buy something that will go up? Buy gold…or Newmont Mining. When change does come breaking down the door…people will want gold to protect themselves. Oil would be a good by too — maybe not this year, but sometime soon. The world is set up to use cheap oil. But the cheap oil has nearly all been pumped already. Oil should hit $100 a barrel before the end of this decade. And what else? Oh yes…food! In the last 20 years, world grain production rose only 25%, but as people — particularly in Asia — grow richer, they want to eat more meat. And you can’t produce more meat without a lot more grain. Inventories peaked out 18 years ago and are now less than half the level of 1987. And nearly all the grains are selling at very low prices — 20-year lows, in fact.

• Another long-suffering correspondent:

“Gold has its virtues and fiat money its dangers. But your argument is a tad simplistic.

“Since at least the 1920’s our economy has been driven by consumption, and to use the supply of any substance, gold included, as an artificial constraint on productive capacity is an act of sheer lunacy in a consumption driven society.

“It is much like the battle of Isandlwana Mountain in the Anglo-Zulu war. Legend has it that the quartermasters for the right and left sides of the battle line had ended up on the left and right sides of that same battle line. Rather than issue ammunition to the troops near them, the quartermasters insisted on having the ammunition passed the length of the battle line to their own troops. This slowed down the receipt of ammunition and diverted the attention of soldiers being massacred to unnecessary transportation issues. The troops were killed almost to a man, but at least the quartermasters would have been able to account for their distribution of ammunition according to the most stringent army standards — if any of them had survived!

“Now a consumption driven society at this point in history probably represents lunacy itself, but artificial restrictions on productive capacity will not get rid of this lunacy. They will simply result in widespread poverty and wars.”

We offer a note of clarification. We do not propose gold backing as a solution to the world’s many money issues. We only propose it as a solution to OUR OWN money issues. In other words, we see no reason why the world should go to war simply because we have stashed a few gold louis in our backyard.

• More reader mail:

“I personally think that McDonald’s should counter sue the children’s parents for negligence. They neglected as their parental duty to ensure that their children grew up healthy. Due to their laziness, they failed to provide healthy, nutritious food, so instead of taking the time to shop for and prepare wholesome dishes, they took the easy way out by piling their children in the car and pulling up to the drive-thru or bellying up to the counter to order a few Big Macs. As a former food service industry worker and manager, I still take offense to people blaming the food. I cannot remember one instance when Ronald McDonald or the Hamburglar drug anyone into the store and force-fed him or her. I have worked for more than one restaurant chain, and no matter which one I was employed at, never has there been an instance of force-feeding any member of the public.

“When my son was a teenager and started frequenting McDonalds by himself, I reprimanded him about eating healthy, he reminded me that he had been raised to make good choices, and most of the time ordered a salad. Children will practice what you preach, as long as you practice what you preach. I personally think that if we are going to go forth with this litigious society, then the Pediatrics Association of America ought to require all pediatricians to report parents of overweight children for child abuse and neglect. I think they should be required to attend nutrition classes, and if they are overweight themselves, they should be required to lose weight as an example to their children. If they or their children fail to lose weight, they should be trotted off to fat camps at their own expense.

“How big do we want our government to be? And if I sound outraged and sarcastic, it is because I am so tired of people not wanting to be responsible for their own actions. This entitlement mentality has got to stop.”

Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.