Bill Bonner’s Diary of a Rogue Economist

Don’t Trust the Government’s GDP Claim

Bill Bonner, Chairman, Bonner & Partners, July 31, 2014

Dear Diary, The feds pulled a rabbit out of the hat. We had just been speaking with Simone Wapler, our colleague in Paris. “I think GDP will come in lower than expected,” we told her. “And then it will be revised downward. Probably negative.” We were wrong. Instead, the number that the feds delivered yesterday surprised to the upside. The US economy grew at an annual pace of 4% in the second quarter. Four percent! Hey, that’s almost like a healthy GDP growth rate. Well. What can we say? The feds were right. We were wrong. The recovery is real!

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The New Subprime…

Bill Bonner, Chairman, Bonner & Partners, July 30, 2014

Dear Diary, Dow down 70 points. Gold back under $1,300 an ounce. Nothing much to talk about there… Meanwhile, we see pain and suffering. At the bottom of the financial heap, day by day, people struggle to get by. The averages hide it. The average figures – for wages, household incomes and household wealth – are lifted skyward by the gas at the top. Thanks to the rise in asset prices, those with substantial assets have become substantially richer, raising the averages. But what about those at the bottom? This is not the middle class we’re talking about, but those down below.

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This Recovery Has Been a MASSIVE Fraud

Bill Bonner, Chairman, Bonner & Partners, July 29, 2014

Dear Diary, It is cool in Paris. We have put on a sweater. To bring you fully into the picture, we are sitting at a sidewalk café in the 16th arrondissement, having a café crème with our mother. We have periods of real joy in our lives, but we count on our natural tendency towards gloom and depression to get us through them. Our mother lacks this essential quality. A woman walks down the street, trailed by a small, white dog. The poor old girl looks sorely used, we think. As if she ran over her other dog… and got beaten up by her husband.

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How to Avoid the Coming Bear Market in US Stocks

Bill Bonner, Chairman, Bonner & Partners, July 28, 2014

Dear Diary, On Friday, the Dow fell 123 points. On Saturday, our youngest son, Edward, returned from Africa. He had escaped capture by a rebel army in the Democratic Republic of the Congo… walked 50 miles through the jungle… and eventually made his way to the US embassy in Kinshasa, where he was given a new passport. As to the Congo, Edward reported to his grandmother: “Rich country (in natural resources). Hard place to do business. The local people are nice. Until they decide to kill you.”

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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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