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“Supranational” Investing

By Addison Wiggin

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02/17/12 Baltimore, Maryland – Some of the very best Argentine steak houses are in Amsterdam, some of America’s very best rodeo cowboys are Brazilian and some of the world’s very best beach volleyball courts are high in the Swiss Alps. The “cosmopolitanization†of the world is under way — creating vast, new and diverse patterns of commerce… which also means vast, new and diverse investment opportunities.

Because cultural influences continuously tend to travel and disperse like pollen on the breeze, the resulting cross-pollination produces a dizzying array of cultural hybrids. In one sense, therefore, the world is becoming smaller. But as it “shrinks,†it is also expanding culturally. When cultural influences combine with one another, they sometimes produce sociological phenomena and expressions that defy strict national categorization.

To illustrate the point, let’s return to those Argentine steaks, American cowboys and beach volleyball courts…

According to a colleague who sometimes knows what he’s talking about, “There’s an Argentine restaurant in Amsterdam named CAU that serves a filet mignon that is as good as any filet I have ever eaten in Argentina or Uruguay…maybe better. CAU stands for ‘Carne Argentina Unica’…and that’s exactly what CAU serves. Argentina itself still holds the title for best-ever rib-eye, but the filet at CAU was incredible!â€

A similar Southern Hemisphere/Northern Hemisphere curiosity is unfolding in the American rodeo world.

“Five of the top six riders on the Colorado-based Professional Bull Riders Tour all hail…Read more…

The Role of Youth Unemployment in Staving Off Default

By Bill Bonner

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02/17/12 Rancho Santana, Nicaragua – The headlines still focus on Greece. It is broke. Here is Lucas Papademos, describing what an orderly default would mean. In the Telegraph:

“The savings of the citizens would be at risk. The state would be unable to pay salaries, pensions, and cover basic functions, such as hospitals and schools, and…the country — public and private sector alike — would lose all access to borrowing and liquidity would shrink.

“The living standards of Greeks would collapse. The country would drift into a long spiral of recession, instability, unemployment and prolonged misery. These developments would lead, sooner or later, to exit from the euro.â€

Sounds good to us! The Greeks have been living beyond their means. Living standards must fall. Best to get on with it.

But the efforts of a whole class of over-paid meddlers have been directed at trying to avoid this outcome. They’ve hesitated…prevaricated…vacillated…and generally fornicated up the situation.

They’ve swept so much dirt under the rug that there’s now an Everest in the middle of the room… It can no longer be ignored.

But Greece isn’t the only country to live beyond its means. And the Greeks aren’t the only ones to suffer. In Britain, the economy is holding its own…but only by loading the young with debt in order to continue supporting the old in the style to which they’ve become accustomed.

Here, The New York Times reports:

Perhaps the most debilitating consequence

…Read more…

Is a US-Iran War Inevitable?

By Doug Casey

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02/16/12 US-Iranian saber-rattling or impending shoot-out? In his usual, candid manner, contrarian investor Doug Casey talks about why he believes it’s serious this time… why the US is the greatest threat to peace today… why Iran might move towards a gold standard… and what smart investors should do.

Louis James: Doug, I’ve heard you say you think the US is setting Iran up to be the next fall guy in the wag-the-dog show — do you think it could really come to open warfare?

Doug Casey: Yes, I do. It could just be saber rattling during an election year, but Western powers have been provoking Iran for years now — two decades, really. I just saw another report proclaiming that Iran is likely to attack the US, which is about as absurd as the allegations Bush made about Iraq bombing the US, when he fomented that invasion. It’s starting to look rather serious at this point, so I do think the odds favor actual fighting in the not-too-distant future.

L: Could they really be so stupid?

Doug: You know the answer to that one. We’re dealing with criminal personalities on both sides, and criminals are basically very stupid — meaning they have an unwitting tendency to self-destruction. One thing to remember is that most of those in power in the West still believe the old economic fallacy that war is good for the economy.

L: The old broken-window fallacy. Paraphrasing Arlo Guthrie, it’s hard to believe anyone could get away with making a mistake that dumb for that…Read more…

A Greek Debt Crisis Recap

By Bill Bonner

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02/16/12 Rancho Santana, Nicaragua – The Dow down 97 points yesterday.

And the Greek story nears its conclusion…

The Germans agree to bail out the country…at least for a while…

…and the Greeks agree to act more like Germans…at least while everyone is looking…

But now everybody agrees that the farce has gone on long enough.

Let’s recap:

The big banks lent the Greeks money. Then, the bankers paid themselves big bonuses, rewards for having booked so much business.

The Greeks spent it like they stole it…which they practically did. With the help of Goldman Sachs, they rigged their accounts so as to appear to be better credit risks than they really were.

Then, of course, the Greeks could not repay. Since they gained independence from the Ottoman Turks in 1828, the Greeks never, ever repaid a loan as promised. Instead, they were in default about half the time.

But rather than let Mr. Market sort it out…as he had every other time, Mr. Government Fixer stepped in. He promised to manage the situation so that the careless lenders wouldn’t have to take the losses they deserved. How? By lending the borrower more money!

So, the Greeks were given more money…and told to straighten up.

And the Greeks made an effort. Rather than spend money as freely as before, they cut back. Thousands of government employees were laid off, budgets trimmed…belts tightened.

This, naturally, led to an economic slump. GDP fell at a 5% rate in the 3rd quarter of last year. In the 4th quarter it was falling even faster, at a 7% annual rate. The New York Times reports:

…Read more…

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