Bill Bonner’s Diary of a Rogue Economist

Prepare for Hormegeddon

Bill Bonner, Chairman, Bonner & Partners, July 26, 2014

This book has a modest ambition: to catch a faint glimmer of truth, perhaps out of the corner of our eye. What truth? It is a phenomenon I call Hormegeddon. German pharmacologist Hugo Schulz first described its scientific antecedent in 1888. He put small doses of lethal poison onto yeast and found that it actually stimulated growth. Various researchers and bio-chemical tinkerers also experimented with it in subsequent years and came to similar findings. Finally, in 1943, two scientists published a journal article about this phenomenon and gave it a name: “hormesis.”

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Think 2008 Was Bad? You Ain’t Seen Nothing Yet

Bill Bonner, Chairman, Bonner & Partners, July 25, 2014

Dear Diary, Not much action in stocks yesterday. Gold continues to fall – down $13 yesterday, to close below $1,300 an ounce. Meanwhile, Alan “Bubbles” Greenspan is back in the news. At 88 years old, his mind is still sharp as a tack. He still sees his own interests clearly. And he is still clever enough to distort the facts to suit them. Asked in an interview what he thought of Janet Yellen’s recent IMF speech, in which she maintained that bubbles should be addressed with more regulation, he replied: “Bubbles are functions of unchangeable human nature. The obvious question is how to manage them…”

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Credit Cycle RIP

Bill Bonner, Chairman, Bonner & Partners, July 24, 2014

Dear Diary, Not much action in the markets yesterday. So, let us return to the economy. That’s where the excitement is. According to leading economists – notably those paid by the US government to forecast the future – interest rates are going to stay low for a long time. Perhaps we should pause and say an Ave Maria… or whatever you say when you put a market cycle into the grave. Maybe we should proclaim a day of mourning. Or at least raise a glass or two. Yes, the feds have pronounced our old friend dead. Dead… dead… stiff dead… cold dead. Immobile.

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In Defense of Vladimir Putin

Bill Bonner, Chairman, Bonner & Partners, July 23, 2014

Dear Diary, “Russia is behind it. They were the ones who shot down that plane.” That was the line given to us by one of our fellow parishioners at the 8 a.m. service, in Maryland, on Sunday. Oh my… he is losing his mind, we thought. How would he know who shot down a plane over 4,000 miles away? And why would he care? But in the US media… dinner time chat… and after-church conversations, Russia’s president, Vladimir Putin, is condemned. Without trial. Without due process. The rush to judgment was so fast even the kangaroos hadn’t gotten to the courthouse when the verdict was handed down.

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“The Rebels Attacked Our Camp… and Started Shooting at Our Helicopter”

Bill Bonner, Chairman, Bonner & Partners, July 22, 2014

Dear Diary, “The rebels attacked our camp. We had to make a run for it. The government troops, who were supposed to be guarding us, ran too.” “‘Musungu! Musungu!’ I heard them yelling. A ‘musungu’ is a white person. They wanted to capture us.” This springs not from the fertile imagination of an early 20th century novelist. It came to us yesterday via an email from our youngest son, Edward, who was on a summer job at a mining project in the Democratic Republic of the Congo. (More from Edward in just a moment…)

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The Dumbest Investment Mistake You Can Make

Bill Bonner, Chairman, Bonner & Partners, July 21, 2014

Dear Diary, There are thousands… millions… gazillions of dots in the universe. Today, we connect two of them. First, let us note that so Zen-like and calm are investors that the worries of Thursday – triggered by the downing of Malaysia Airlines Flight MH17 over eastern Ukraine – were forgotten by Friday. The Dow closed up 123 points on the last day of the week. Gold sold off. So, let’s return to our dots. The first one is epistemological. The second is an important observation about investing. If you remember from a week or so ago, we concluded that humans can never know – with certainty – anything.

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The Accelerators of Change

Bill Bonner, Chairman, Bonner & Partners, July 19, 2014

A CENTURY AGO, one out of every three US workers worked in agriculture. Today, the number is less than one out of 50. But, in the face of this staggering decline, productivity has increased spectacularly. When early 20th century dairies produced milk by hand, it took two workers 7.5 minutes to milk a single cow. In the modern dairy, a single worker hits a button on a machine. The machine milks 10 cows in 7.5 minutes… less than a minute per cow, no men required. In the fields, the story is the same…

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There Is No Security in Bonds Right Now

Bill Bonner, Chairman, Bonner & Partners, July 18, 2014

Dear Diary, US stocks dropped yesterday, after news broke that someone shot down a Malaysian passenger airplane over eastern Ukraine. Then came the report that Israel had ordered a ground assault on Gaza. The Dow lost 161 points. Gold shot up $17 an ounce. This comes only days after the Princess of Peace, Janet Yellen, assured investors that most stocks were fairly priced. We don’t doubt that she was right. Prices are set by willing buyers and sellers, operating on the basis of what they know at the time. What they knew the day before yesterday was that Yellen had their backs.

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Was This Sexist?

Bill Bonner, Chairman, Bonner & Partners, July 17, 2014

Dear Diary, Let us begin with some criticism from a reader: “What you said about Janet Yellen is disrespectful to All Women. You said you meant no disrespect, and then you go ahead and say most women her age are baking cookies for their grandchildren and saying she has soft shoulders. You would not make the same kind of sexist comment about a man holding the position that she does. You should grow up… your comments are so old fashioned and out of touch. If you are going to put someone down because you don’t agree with what they are doing, resorting to sexist commentary as a metaphor only makes you look like the fool.”

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No, Germany Didn’t Start World War I

Bill Bonner, Chairman, Bonner & Partners, July 16, 2014

Dear Diary, Among all the discussion, on the 100th anniversary year of World War I, appeared a new booklet by French economist and journalist Philippe Simonnot. It’s called “No, Germany Was Not Guilty.” In the first instance, Simonnot reveals that war guilt, forced onto Germany like a noose at a lynching, was a bum rap. Germany did not want war. Nor did she start it. At the start of the war, it was widely reported that German soldiers in Belgium were acting like monsters – bayonetting babies, cutting off thousands of hands, raping nuns.

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