Not Very Good

• "Rents sag, sales soar, can’t last," says a CNN/Money headline.

• Oops… foreclosures rose in March, says the Associated Press.

• Ooh la la, dear reader. We described the likely effects of globalization: wages in rich countries will probably fall, while wages in poor countries rise. With the same capital and technology available to him, there is no reason a man in Shanghai should earn less than a man in Des Moines. But — especially in Europe — it’s very hard to cut wages. Instead, unemployment rose; wage rates were just too high to create jobs. In America, real wage rates have been mostly stagnant. Employment has grown, but mainly in low-wage jobs, such as retail clerks and soda jerks.

But along come two Germans with an innovation that threatens to turn the labor market into real market. At a site called www.jobdumping.de, you can go and bid for a job, almost as you would for an antique lamp. But the way to win is to bid low — as if you were an independent contractor, rather than an employee. This allows the employer to find the most desperate candidate — the one who is willing to do the job for the least amount of money, and the one most grateful to have it.

• We ran into our old friend Issy Bacher in Jo’burg. We met Issy in 1983. He had developed a computer program that would predict gold price movements. We were about to offer it to some of our readers when Issy called:

"I don’t think we should make the offer to investors," said Issy. "Olby [his computer model] says the price of gold is going down. Nobody’s going to be interested in gold."

Olby was right. Gold was in a major bear market that lasted for almost 20 years.

We lost track of Issy. But by pure chance, he was sitting in a restaurant when our colleagues just happened to be discussing business. The business they were discussing was the business of trying to figure out which way prices were going… a subject that has fascinated Issy all his life. So he broke into the conversation. One thing led to another… that led to our getting together at the Palazzo hotel.

"I’ve been working on these programs for the last 20 years," Issy explained. "I teamed up with a real genius. We have a model that tells us when short-term cycles reach their tops and bottoms. I know it sounds crazy… but it’s right 80% of the time."

"What does it say now?" we wanted to know.

"Well, the Dow was at a short-term bottom a day or two ago. Remember, it’s short term… "

"What about gold?"

"I don’t know. It’s not very good at gold."

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