Category Archives: Writing

Mobs: Male Consumption Patterns Related to Reproductive Strategy

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And more research vindicating the premise of “Mobs, Messiahs, and Markets,” from the Journal of Evolutionary Psychology. 

“Darwin was initially puzzled by costly traits such as peacock tails that could not be

accounted for by survival advantage; he later concluded that these were features that led to

reproductive advantage (1871). For humans, male displays of wealth may literally be a

costly signal analogue to the peacock’s tail (Miller and Todd, 1998). Displays of

prestigious consumer goods could be an honest signal of male mate value, as they would

indicate available resources as well as skills at acquiring wealth (Colarelli and Dettman,

2003). Veblen (1899/1953) remarked on the relationship between prestige and the

consumption of consumer goods and even suggested that inherited psychological

mechanisms were responsible for this relationship. Colarelli and Dettman (2003) note that

advertisers are well aware of the importance of prestige when marketing products, and will

try to associate a product with prestige even when there is no functional relationship. An

ethnographic study of Amazonian foragers and slash-and-burn farmers found that those

who had greater monetary resources allocated a greater portion of expenditures towards

luxury goods, and this tendency was stronger in men than in women (Godoy et al., 2007).

Male displays of wealth and social status may facilitate mating competition. During

ancestral times, men with greater resource control married younger women, married more

women, and produced offspring earlier (Low, 1998). Males who did not have substantial

resources or status may have been unable to establish long-term relationships. Across a

wide variety of societies, male reproductive success is a function of social and economic

status (Hopcroft, 2006). Even in current foraging societies that are relatively egalitarian,

men with higher status have more mating opportunities (Chagnon, 1992; Hill and Hurtado,

1996).

Several laboratory studies have demonstrated that situational primes making mating

effort salient can induce male intentions to increase economic power as well as allocate

financial resources to conspicuous products. Roney (2003) found that men reported

stronger ambition and desire to earn money when in the presence of attractive women. This

effect was even seen when the men simply viewed photographs of attractive women. In

another study, men who were shown photographs of attractive women had intentions to

allocate more money to conspicuous products, but not inconspicuous products

(Griskevicius et al., 2007). Neither men who viewed photographs of unattractive women,

nor women who viewed photographs of attractive or unattractive men exhibited this

pattern. In a third study, men who viewed photographs of attractive women discounted the

future more so when choosing between small monetary rewards than men who viewed

unattractive women or women who viewed pictures of men (Wilson and Daly, 2004)….”

Comment:

Marketers target our basic drives, where we tend to act with the crowd. For example,  some middle class Americans try to buy the “lifestyles of the rich and famous” in response to aggressive marketing by realtors and bankers.

But once the rise in price begins, even those who’ve adopted a more individual and rational approach are compelled to buy or rish being priced out of the market. In the Indian farming crisis, as well, farmers were lured to buy expensive seeds by very aggressive marketing that played on religious sentiment and dazzled them with the prospect of extraordinary gains. (Link to follow).

One of the things I want to explore is to whether and how libertarian language (about “free choice” and “free speech”) needs to take into account these complexities.

The Paulson Put(sch): Questions for Hank Paulson

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The Paulson Put(sch)

Questions for the new CEO of US Government Inc.

[Last Wednesday, Hank Paulson was installed as CEO of US Government Incorporated, replacing the now defunct United States of America].

Charles Krauthammer wrapped up an astounding week in American history with a hosanna to Ben Bernanke and Hank Paulson. The best possible team to have on your side in a financial crisis bigger than any since the 1930s, says he. Bernanke, because he is an economic historian specializing in the Great Depression. And Paulson because he knows everyone in the banking industry and is the perfect person for arm-twisting and deal-making. Financiers aren’t all bad, sniffs Krauthammer. There were all those greedy realtors and home-owners too.

Yes, Charles, we do see that greed is a many-splendored thing, visiting the poor and rich alike. But on a mundane level, the yearning of the cleaning lady who gets herself in over her head with a home loan she can’t pay is not the same sort of public hazard as the cosmic larceny of financiers who’ve skipped out with hundreds of millions from companies they’ve skinned like pole cats…

Read the rest of my latest piece on Paulson’s power grab at Lew Rockwell. You can find other articles of mine on the old archive of Dissident Voice. I will (eventually) get my pieces onto this site in a more approachable way, but being bloggitudinally challenged, that may take a while.

 

The Meisterhucksters of Marketing

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This is an age when huckstering is considered a fine art.
A successful hypester is now a Wagner of marketing, a Van Gogh of persuasion.

This might be vanity or it might be deep-rooted insecurity, it’s hard to tell. It is certainly an inaccurate use of language.

But these days, counting yourself an artist is not a matter of precise definition. It is a kind of self-anointing, the kind typical of the mob mind? We live in an age where there are no priesthoods we can believe in. What could be more democratic than an order into which anyone can be inducted, with a clever turn of phrase, a dab of paint….or a long form sales letter?

You might say, so what? What if salesmen think they are painting the Sistine Chapel? What’s wrong with it?

So many things, it would be hard to know where to start.

In the first place, it reeks of envy…..

Terrific salesmen are not Michelangelos or Leonardos. It would be flattery to call them even hacks.

A salesman does a very necessary and important task. He might do it superbly. That does not make him an artist, let alone an artistic genius.

There may be novelists for whom writing is a business and salesmen for whom selling is a pleasure, but in general there is a difference between activities that have their own reasons for being (the sciences and arts) and activities that are means to those things (selling).

A great artist is not an easy thing to come by. A number of things have to get together – talent so extraordinary as to occur only once in generations… the necessary training…the proper socio-economic soil… enough physical and intellectual vitality…drive…luck…

So many things, in fact, that it isn’t really in anyone’s hands to “decide” to be an artist of that stature. If it is given to you, it will be. If it is not, it will not. Talent does what it can. Genius does what it must, as someone said.

Great art and hype are things that no person of sense, especially a sense of proportion, would confuse or think of comparing. It isn’t just arrogance but arrogant foolishness to think that selling anything, however well, is equivalent to composing the Goldberg Variations.

In fact, a sensible person would laugh at the comparison, if it were not also profoundly sad. It betrays a temperament so shallow it cannot grasp that there are limits to how we shape ourselves. Limits not set by ourselves at all, but by that formless form and ever-changing changelessness that a less self-conscious period in the West called God and the East still calls the Self.

Women Business Leaders in India: Some Notes

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Here are some notes I made recently that turned into a full-fledged article. I thought people interested in the Indian business scene might find it interesting:

Women Business Leaders in India – Are Things Any Better Today?

Women in India do better in business today than they did about 35-40 years ago, but it’s fair to say there’s still a lot more they could do. In the professions and at lower levels things might have gotten better, but at the higher levels, you still don’t see the number of women you’d expect, given the available labor pool (in 2001 women were 48% percent of the population).

There are lots of reasons why Indian women at the top still have problems:

How women do is influenced strongly by how well educated they are. So, the more women have access to schooling, the better they perform economically. That’s why there’s been progress, especially at lower levels. But at the upper level, the situation is different. In the 1970s, you could say the main difficulties were the absence of role models and the shortage of financing and opportunities, which to some extent, still persist. But the overwhelming problem today in upper management remains culture: notions of what women should and should not do in the work place.

Traditional gender roles make female bosses unacceptable to a lot of Indian men. Tradition also places the bulk of family responsibilities on the shoulders of women. (This is strictly a generalization, and in particular cases, just the opposite can be true). Culture demands that women stay at home. That make it harder for them to develop networks and mentoring of the kind that men use to launch business careers.

Then there are problems of perception. Women are often seen as needing more time to balance work and family commitments, even when this isn’t really the case. Many male colleagues see them as opting for (and better at) the “soft-focus” areas of a business rather than its hard core. Women tend to get shunted into roles that provide support, communication, and coordination rather than profit and loss evaluation, or expansion and acquisition. That means that while women account for a good part of the ordinary work-force and mid-level positions, they aren’t so visible in the very highest positions. Kiran Mazumdar Shaw, CEO of Biocon, says there’s a credibility hurdle that women face when they go out to get financing. People see them as less willing to take risks and less capable of solving problems and trouble- shooting.

Not much research so far:

Another difficulty is that there isn’t much research on the subject available. What there is supports what I’ve observed. Studies in the last 2 years show that Indian women make up 16 percent at junior levels of work but at the highest level (CEOs), that tapers off to only 1 percent. There are only 2 -3 women in administrative and managerial positions for every 100 economically active people. That’s far behind the rest of the world. And while the rest of the world has spent time researching the matter (for example, Breaking through the Glass Ceiling, ILO, 2004), Indian examples haven’t usually figured in the research.

Of course, some of the problems in India are common to other countries too , problems like sexual harassment, patriarchal attitudes and some gender bias in hiring and employment practices. Just as in other countries, these are likely to get better with targeted effort.

Culture can help women too:

Surprisingly, culture can be a positive too. The statistics for top- level managers and leaders in the US may be better. But there are other areas where Indian culture, counter-intuitively, provides a a friendlier environment.

*Studies show that women in Asia tend to draw more of their income from business than women elsewhere. That’s proof of a solid tradition of female business acumen, even if it’s a tradition that’s largely been centered around the family. (Powerful Indian business women usually came out of powerful Indian business families: Simone Tata, from the Tata family (Trent Ltd); Vidya Chabria (Jumbo Group) and Priya Padamjee (Thermax) all owe their positions to family connections).

But even that might be changing now. Now you can also find a Kiran Mazumdar Shaw. Shaw started the biotech giant Biocon, from her garage, after being turned down for a job as a master brewer. And there is a whole crop of managerial divas – from Naina Kidwai (CEO of HSBC) to Microsoft India’s Neelam Dhawan.

Technology spurs womenomics

*There’s another angle to this. It shows how “culture” as an explanation can cut both ways. In India, engineering had been (and still is) a field for men. One side effect was that the “alternative” discipline of computer science was left wide open for women. So, when the Internet revolution brought the outsourcing industry to India, Indian urban women with computer skills got a good chunk of the financial benefits.

*Technology has helped. Contrary to Luddite rhetoric, globalization and the Info-tech revolution have helped womenomics in India. Take transportation. In the past, it’s been a major barrier for would-be business women in India. Now women can set up shop whenever they turn on their computers. Not only do computers let house-bound women become entrepreneurs, they also open up a whole new market of home-shoppers to whom other businesses can sell. Computers also make networking and mentoring easier and cheaper. An example of a bottom-up network enabled by the computer is the popular Indian work-at-home site, sitagita.com

Some people even credit computer technology with the renaissance of Indian female entrepreneurship. That might not be completely true. But what’s true is that female home businesses are a success story overlooked by activists who focus only on the negatives, like the impact of multinationals on female agricultural workers.

Other cultural factors that help

*Despite the traditionalism shown in gender roles, Indian women leaders, at the highest levels, seem to be judged more fairly. A comparison of national politics in the US and in India bears this out. In the US, female candidates have to suffer far more remarks about their appearance than Indian candidates do. And Indian female business leaders are called upon in the media as much as, or more than, American female business leaders.

I believe that one reason for this is a streak of misogyny hidden under the surface of a lot of popular culture in the US. Being able to command the respect of her peers and subordinates is perhaps the most crucial element in a woman getting to the top. But public culture in the US is permeated by demeaning imagery and language. Violently misogynistic rap lyrics and pornography and sexualized epithets for women do not help the perception of them as workers. Asian cultures tend to be less permissive about this.

* Another positive for Indian women in business is that although women are only a tiny part of top management, the women who are at the top are very powerful and in crucial sectors where they make an enormous impact.

How demographics can help women in India

*Demographics also helps in India. India (like China) suffers…and will continue to suffer…a shortage of skilled personnel. This seems incredible given the population figures. But first-class education there really does not reach down as deep as it does in the west. In a number of disciplines, including computer programming and management, there simply aren’t enough people for all the start-ups, expansion and relocation going on. That’s going to be good for women. Human resources departments will have to go after them more actively and groom them for higher positions.

*There are other positives. About a third of India consists of young people below the age of 15. That means that the pool of experienced labor is relatively small and HR departments will be forced to turn to an overlooked resource: women who’re done with rearing their children and want to reenter the job market. Since women live longer than men by several years, there’s no reason why women couldn’t outlast them to reach the top in managerial positions.

*Companies looking to hire Indians who live abroad and relocate them to India are running into obstacles. The Indian- origin employees want pay and benefits equal to other employees. Also, they’re often not in touch with what’s happening in their home country, unless they revisit frequently (as I do). Local employees resent the “foreign-returned” Indians. There are only a few areas where this isn’t so, and two of them are computers and finance. Not surprisingly, some of the most powerful women entrepreneurs and managers are in those areas.

The most important Indian business women

* Who are the most important Indian business women?

It’s difficult for an outsider to judge but it’s possible to pick a dozen of the most visible.

  • The capital markets are important as India opens up to foreign direct investment. And Naina Lal Kidwai, who was the first Indian woman to graduate from Harvard Business School and runs the Indian operations of HSBC, has been named repeatedly on lists of the most prominent Indian business women.

    Lalita Gupte and Kalpana Morparia, the joint managing directors of ICICI Bank, India’s second largest bank are important figures as well.

    So is Manisha Girotra, who chairs the India operation of Swiss banking giant UBS.

  • In Information technology and computers, one of the most visible managers is Neelam Dhawan, head of Microsoft’s Indian operations.

  • In Biotech, the biggest name is Kiran Mazumdar Shaw, who heads Biocon.

  • The automotive industry has also been pretty important in recent developments, with a number of large auto manufacturers opening branches in India (including Ford, Toyota, and Hyundai) and with large-scale investment in highway projects and in other infrastructure.Sulajja Firodia Motwani, joint MD of Kinetic Motor, which manufactures two-wheelers, scooters and motorcycles and various auto components, as well as elevators, escalators and auto parking systems, is a noteworthy figure here. Her company has attracted investment from the likes of Citigroup and is likely to do well as the transportation business profits from the real estate boom in India.

  • Priya Paul, the chairwoman (chairperson is an awful word – I prefer chairman or chairwoman) of Apeejay Surendra Park Hotels is a business woman in a field which has a pivotal role to play now – travel and tourism. Commercial real estate and the hotel business is slated to be very profitable in Asia and Paul is the president of the Hotel Association of India and leads the Indian team at the World Travel and Tourism Council.
  • Health and medicine is an area where India offers extremely competitive rates for world class services and I expect that private medical groups like the Apollo Hospital will do very well, especially as medical tourism grows. Since Apollo caters to that demand, the heads of Apollo, Preetha and Sangita Reddy are positioned at the center of the development.
  • In alternative medicine, Shahnaz Hussain, CEO of Shahnaz Herbals which has hundreds of world wide franchises, was one of the earliest to realize the business potential of Ayurveda and alternative medicine.

  • In the food and beverage industry, Indra Nooyi, PepsiCo’s CEO (and one-time president and CFO) is one of the most noted managers and has been listed among Forbes top 10 women CEOs. She’s also on the board of the Federal Reserve Bank of N York, one of the most important banks in the US.
  • Shobana Bhartia (of the famous Birla family) is a news maker in the area of media. She’s is the Vice President of Hindustan Times and was appointed to the Rajya Sabha, the upper house of parliament.
  • Vidya Chabria (a non-resident Indian based in Dubai) who took over Jumbo Group (which includes one of the largest distributors of consumer electronics, IT and Telecom in the Middle East as well as several breweries and other companies in India) from her husband,

And you can’t leave out Jyoti Naik, President of Lijjat Papad (pappads are fried lentil crisps very popular in Indian households), the first cooperative business by housewives with no experience to make it big.

My Writing on Women:

My interest in India and Indian women stems from writing about the complexity of language, and about how small groups and businesses (and a contextual approach) do better at catering to the the needs of communities than big businesses.

I am not a gender feminist, although I’ve used the language when it’s useful. I’ve blogged on men’s rights and done some very anti-feminist pieces where I think it’s been warranted.

I would say I’m interested in marrying methodological individualism (from the right) with psycho-social awareness (from the left). Applied complexity theory might be another way of saying it.

Some writing that’s related:

  • “Witches and Bastards,” 2005, Counterpunch, is a complex piece about Indira Gandhi and what it means to be a powerful woman in India. It argues that India is in many ways a very female-centered culture, where even village women are more powerful than many give them credit for being. It also suggests that Gandhian political economy has more sense than it’s been given credit for and might be the basis of a small group approach to politics and the economy. (This is a theme I take up in my book “Mobs, Messiahs and Markets,” 2007)
  • “Missing Women,” 2004 The Gowanus Review – is a piece I did about female foeticide in India that explores cultural and economic explanations and suggests remedies. I make the point about technology and female entrepreneurship for the first time there.

“Psychic Injuries and Double Standards,” – a chapter contributed to One of the Guys(Seal Press, 2007).

It argues that female soldiers should be held to be as accountable as the male soldiers.

  • “The Globalized Village,” Alternet, 2003 (included in the book, The Third World: Alternative Views, 2006)demonstrates how ambiguous language has obscured the negative impact of free market policies on small-scale community efforts. The piece was widely reprinted. I make special note of the impact on village women’s access to water.
  • “How About Your Back Yard?” 2004, Himal South Asian, argues that “north-south” language doesn’t help explain the problem of waste disposal in India, and that turning to multinationals doesn’t help. It actually disrupts the successful efforts of local small groups.
  • *I did an extended research paper on images of India in the American media as part of my graduate studies and also did graduate work in theories of representation focusing on how speech and imagery affect political discourse, with special reference to pornography.
  • This was continued in a series of popular articles in the alternative press, “Iraqi Women and Torture” questioning the media emphasis on the torture of men during the Iraq war. This led to a book on the subject, “The Language of Empire” (MR Press, 2005), which was well-regarded and influenced the work of many establishment journalists.
  • I am contributing an article on torture and performance theory to the Routledge Key Concepts Series, 2009. I make an extended argument to show that depictions of women in violent pornography can be torturous, given the cultural context.

Solzhenitsyn on the Cancer of Conformity

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Alexandr Solzhenitsyn died today. For most of his life, he was the conscience of the Soviet Empire. Some of the most forceful passages in his writing were directed against the intelligentsia who allowed themselves to be puppets for their rulers:

“A man sprouts a tumor and dies — how then can a country live that has sprouted camps and exile?” he asked questioning the complicity of ordinary Russians in the crimes of Stalin’s era.”

More at MSN

The Unbearable Lightness of the Buck – Bonner & Rajiva on the Declining Dollar on 7/20/2007 (reprinted)

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THE UNBEARABLE LIGHTNESS OF THE BUCK
by Bill Bonner and Lila Rajiva

It was the Chinese who invented paper “money” around the beginning of the ninth century A.D. Because it was so light it would blow out of their hands, they called it “flying money.”

The ancient Chinese were right about the lack of substance of paper currency. The greenback seems to have less substance every day. But we do not wonder why the greenback seems to be dying. We wonder why it isn’t dead already.

In search of an answer, we look back, to a case brought by the First National Bank of Montgomery, Minnesota, against one Jerome Daly in 1969.

The bank had lent Mr. Daly $14,000 in a mortgage loan. Then it tried to get its money back by foreclosing on Daly’s house. Daly took to the courts with a defense so ingenious even a Chinese banker might wish to emulate it.

You can’t enforce a mortgage contract, said he, when there was no contractual obligation. And there was no valid obligation because no “consideration” had been given by the bank. Having gotten nothing from the bank, he had nothing give back.

In support of his testimony, Mr. Daly, a lawyer, called the bank president to the stand and demanded to know if the bank had actually handed him a wad of $20 bills.

“Isn’t it true,” he began, or words to that effect, “that the bank did not actually give me a stack of $20 bills? In fact, the bank didn’t give me any bills of any sort, right?”

“Well, yes…but…” the bank president must have replied.

“Nor did the bank convey any property to me…or give me gold coins…or any other valuable, tangible thing…right?”

“Well, yes…but…” came the next reply, also cut off by Mr. Daly’s next question.

“And isn’t it true that the bank did not go out and borrow extra money so it could lend it to me…nor did it draw down its depositors’ accounts in order to give me money?”

“Yes, that is correct.”

“In fact, the so-called mortgage loan was, from your point of view, just a bookkeeping entry. Is that not right? And is it not true that the ‘money’ never existed at all…at least not in the sense that most people think of money…and that this ‘money’ was actually ‘created out of thin air’ as the economist John Maynard Keynes once described it?”

“Well, yes…but…”

By this time, both judge and jury were nodding their heads, sure that they had a combination of Charles Ponzi, John Law and Kenneth Lay on the witness stand.

“Fraud!” concluded Justice Mahoney and went on to rule that the bank had given Daly no lawful consideration, had created $14,000 out of nothing, and had done so without the backing of any U.S. law or statute.

Therefore, it followed, the bank was obliged to let Mr. Daly keep his house. And, thus it was that Mr. Daly kept his house.

Whether the reasoning behind this case was right or wrong is not at issue here. Our questions are more numerous but much simpler.

We want to know why there are not more Dalys demanding to keep their houses today. And why there are not more Mahoneys around to let them.

Why did one small court adopt this argument while it left no mark otherwise on American jurisprudence? Despite Justice Mahoney, U.S. courts have rejected every other attempt to argue that the U.S. dollar is not the lawful, valuable money everyone thinks it is. But just how valuable the U.S. dollar is, is a question not for the courts, but for the markets.

The euro, the pound, the Canadian dollar, oil and gold have been pronouncing a judgment of their own this week – all soared against the dollar. And yet not a whimper is to be heard from the great American masses. The dollar may be in trouble abroad, but at home its reputation is still spotless. Gas may cost more, heating bills may be higher, but so far milk, eggs, and beer have not soared beyond the budget of the masses. The people may have mortgaged their futures for the roof over their heads and sold their souls for a mess of credit, but with home prices still holding up and stocks pushing at all time highs, the devil has not come around for repayment yet.

Helping to postpone the day he does, the government also quietly stopped reporting M3 money in March 2006. M3 is the broadest measure of the “money supply” in the U.S. economy. As the supply of money increases, typically, consumer prices go up. Independent analysts who keep an eye on these things tell us that the green stuff is being pumped in at one of the highest rates ever – 12% per year, or four times the rate of GDP growth.

“Then why has it not gone to swell the prices of groceries yet?” you might ask.

The answer is that the people with the most money are spreading it around in places far distant from the local Superfresh. The ersatz money is circulating these days in art houses and auctions, in exotic vacation houses and rental properties, in retirement funds and pensions. Securitized and derivatized, packaged and repackaged, it is lent from one end of the globe to the other, forcing central bankers all over the world to work their own printing presses night and day to keep up with it. The resulting global “liquidity” is the bilge upon which asset prices float and make this boom so great for asset owners.

But this liquidity is no different from the non-existent “consideration” that Mr. Daly received from the First National Bank of Montgomery. It was this shaky credit that was packaged into new debt instruments like CDOs that are so intricate that teams of mathematicians cannot fathom all the ramifications and complications thereof. In a miracle rivaling any by the Galilean, these same oily pretzels of debt were twisted into Triple A rated bonds and sold to pension funds and institutional investors. Now the buyers are finding that the grease has turned rancid: Last week, the three leading rating agencies downgraded debt linked to the shakiest part of the housing market – the subprime loans. And following swiftly, one hedge fund at Bear Stearns took ill and passed away altogether while a third gave up 91% of its returns.

Ben Bernanke would like to boost rates to support the dollar and help American tourists, but faced with a liquidity crisis in the $500 trillion derivatives market, he’ll have to think thrice before doing so. But rates are going up with or without him. Lenders are finally growing wary.

Afraid of the poisonous debt packages, buyers are passing up another helping. “All but one of the 15 ABX indexes fell to a record low,” says Bloomberg news. Offers for CDOs are said to be going “no bid.” And several major debt offerings had to be withdrawn or rescheduled as promoters were afraid that they, too, would go “no bid.”

We don’t know if the First National Bank of Montgomery still exists. But if it does, we wouldn’t be surprised to learn that it is growing more cautious about lending. And dollar holders all over the world are tightening their grip, fearing that their flying money might fly away.

Bill Bonner and Lila Rajiva

From The Daily Reckoning

Part I The Daily Reckoning Won’t Cry for Evita – Bustling Buenos Draws Outsource Workers….

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Here’s the first of a short series of notes I did at the Daily Reckoning that got used – one way or other – in “Mobs, Messiahs and Markets.” This one from May 12 2006 showshow outsourcing might attract global info tech workers to Buenos Ayres. I’ve moved the note to the front of the newsletter from its original place to make it easier to read.
Fri, May 12, 2006 07:04:06 PM

From: The Daily Reckoning

Today’s Daily Reckoning

Don’t Cry For Evita

The Daily Reckoning

London, England

Friday, May 12, 2006

———————

*** We hate to brag – but we saw this bull market coming from a mile
away…people are losing faith in paper…

*** Unreliable contrarians…debt has a mind of her own…

*** Prices are becoming a barrier to homebuyers…laying low in things
settle down in the United States…and more!

———————
——————————————————
You are receiving this email as a part of your FREE
Subscription to The Daily Reckoning. You signed up
for a free subscription on Tuesday, December 27, 2005.
Should you wish to *** please follow the
instructions at the bottom of this email.
——————————————————
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More views from Bill Bonner…*** Ameriquest, one of the nation’s leading mortgage lenders closed 229
branches and laid off 3800 employees. Households are paying more in
mortgage interest than they have for the last quarter century – 15.8%. It
appears that they have reached a limit. Mortgage applications are
declining. Unsold inventories of houses are increasing. The bubble in
America’s property market is over. At last, it looks as if prices are
becoming a barrier to buyers.

But what will those who need a roof over their heads do now?

Where they will go?

*** Colleague Lila Rajiva, down south, offers a possibility:

“Buenos Aires is bustling. Not just with tourists or casual visitors
either. It seems a lot of foreigners are here to take advantage of the
relatively cheap price of real estate. The real bargains, of course, were
snapped up during the slump a few years ago, but there are still good
deals to be had – especially for refugees from the inflated prices of the
American and British housing market.

“It seems that housing is only one reason people are coming down here. On
the subte (underground rail) downtown, I ran into two visitors who must be
a sign of things to come. The weather is summery right now, though it’s
the beginning of fall in the Southern hemisphere, and both of them were in
the usual get-up of the European at large – khakhi shorts, tennis shoes,
and baggy tee-shirts. So, at first I thought they were students
backpacking for a semester, but Ross, the younger one, was an English
teacher who had taken off a year or two to “lie low” until things settled
down in the United States.

“‘What things?’ I asked.

“‘The economy, politics…everything,’ he shrugged.

“‘Things’ were too turbulent in the United States just now for his taste.
When they settled down, he’d have a better idea whether he even wanted to
return or not, he claimed. Meanwhile, South America was inexpensive and
warm. He’d spent a week lying on the sand in Uruguay and was now on his
way north to the Iguazu falls. When he got back, he’d look for a job. He’d
heard that a lot of businesses were looking for native speakers to teach
English as a foreign language in Buenos Aires.

“‘Just like all those Dell call-centers in Bangalore,’ he pointed out.

“Neil, the older man, was English and a trifle paunchy. He had been in and
out of Argentina for six months. As he chatted, he balanced a laptop on
his knees into which he was busy punching figures.

“‘Checking my portfolio,’ he explained.

“It was a healthy one, from the looks of it.

“‘Telecoms are good investments still,’ he confided. ‘I bought some shares
in a company at home a while back and doubled my money in just two months.
You should try them. Of course, I was working for a telecom at the time
and got them pretty cheap.’

“I wanted to know how he got to take off six months from his job.

“‘Actually, I don’t have one,’ he admitted. Though he was not yet forty,
he was retired. How come?

“‘Sold my house in Nottingham, that’s how,’ he chuckled. ‘The price had
gone through the roof and I knew it was time to get out. I invested the
money and now I travel. I still do a bit of software consulting, but only
over the net. The main thing is to go where it’s warm and cheap to live.’
He looked over at me hopefully.

“‘I was actually thinking of India…’ Continue reading →

Part II Riding the Gold Bull at the Daily Reckoning – or How She Missed Conquering the Rock 5/17/2006 (reprinted)

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Here’s me in Buenos Ayres rushing around checking out house prices in 2006 while trying to jump on and off the gold bull (scroll down for the note):

Wed, May 17, 2006 12:41:28 PM

From:

The Daily Reckoning

Subject:

Today’s Daily Reckoning

The Conquest of the Rock

The Daily Reckoning

St. Michael’s, Maryland

Wednesday, May 17, 2006

———————

*** Having the courage to grab the bull by the horns…how do you know
when it’s time to get in, and time to jump off?

*** GM lays off thousands of Americans – and hires in India…an economic
“Code Red”…

*** The perfect ingredients for a plunging dollar…it’s all about
timing…and more!

———————

The only thing more frustrating than a long bear market is a long bull
market. Riding a great bull market is like riding a real bull. You are
always in danger of getting thrown off. And once on the ground, it is hard
to get back on.

(See colleague Lila Rajiva’s attempts to get into gold, below…)
*** Lila Rajiva, trying to climb onto the bull’s back:

“Bill: As a faithful believer in the doomsday scenario for the dollar and
the final revenge of gold, I admit I am not having an easy ride. In fact,
I think I have had a bit of a mauling. With some nervous selling across
the board in the metals, and options expiration at the end of the week,
the ride gets stormier.

“Of course, I’m still a dollar bear. What’s not to hate?

“Massive trade deficits, staggering debt at all levels, a tumescent real
estate market hissing into an inevitable slump, saber rattling in the
Middle East, a war of words with China, oil bubbling steadily around $70,
and inflation simmering under the cooked-up numbers the government spews
as it sees fit…it’s all a recipe for a plunging dollar.

“And way back in 2004, it seemed the dollar was taking that ride in a
straight line down as it fell nine percent against the Euro. Some of us
opened Everbank accounts and got ourselves a basket of mixed foreign
currencies or other exotic goodies. Buffet was betting against the damn
thing – how could we be wrong?

“But in 2005, Buffet and the rest of us sinners, had to dine on crow. The
dollar strengthened, if it did not actually flex its pecs, erasing half
its losses against the backdrop of continuing tight money policy and
higher interest rates in the United States versus the euro area and Japan.
The dumping of the European Union’s Constitutional Treaty in France and
the Netherlands, also stiffened a few rickety vertebrae in the greenback’s
spine. Of course, it was merely a touching coincidence that corporations
got to repatriate earnings in stronger dollars, courtesy of a convenient
window created by Congress.

“Even the trusty little GLD ETF, which was supposed to cushion my dive
into the big bad speculative world of metals, stayed down the whole year.

“Naturally, as a newbie I’d bought it just when it came out in November
2004. And naturally, after being heralded like the Second Coming, it sank
almost immediately. On sundry Web sites, reports surfaced hinting darkly
at dire manipulations, the lack of verification of its holdings, and all
manner of sinister machinations calculated to strike terror in the heart
of someone’s whose last encounter with the metal was buying an ankle
bracelet at a souk in Dubai. Equity bulls of our acquaintance cast a
derisive eye at us. Gold? Had we forgotten that stash of 850 buck ingots
from the eighties still moldering in our basement? I was ready to cave in
and sell for what I’d bought it.

“But then as the year ended, the metals minuet ended and the action on the
floor became hot and fast.

“Sleeping Beauty leapt out of her coffin and darted ahead almost 25% in a
matter of weeks. Too much too fast? It seemed that way to me. I wasn’t
going to wait around to see that thing fall back just as fast as it had
shot up. A profit is only paper, until you book it, right? I booked it.

“Yeah! Wait for the correction and ride it right back up again like a
Ferris wheel. But market timing is never as easy as it sounds, which is
why some gold bulls, like Doug Casey, of the International Speculator,
will tell you that this isn’t a market you can trade – the moves have been
too fast. You drop out when it drops and you’re liable to be left
standing. You miss the big profits.

“And that’s how it’s been. The first correction came in February as
expected, but the next leg up was so fast and furious that by April we
were hitting multi-decade highs with hardly a pause along the way

“Too bad I wasn’t on board. I was still figuring out the right moment to
buy… and clearing the dust out of my eyes.” Continue reading →

Part III A Scoop at the Daily Reckoning – the IMF Gold Fix 6/8/2006 (reprinted)

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And here’s a note I did for the Daily Reckoning on gold price manipulation at the IMF (scroll down for the note)

Thu, June 08, 2006 01:29:50 PM

From:

The Daily Reckoning

Subject:

Today’s Daily Reckoning
Black Sheep in the Marketplace

The Daily Reckoning

London, England

Thursday, June 08, 2006

———————

*** The worldwide sell-off…Bernanke talks the talk, but he’ll never walk
Volcker’s walk – not even with lifts…

*** GATA is looking saner everyday…being a central bank means never
having to say you’re short…

*** Always helps to have friends in high places…unwinding in Japan…and
more!

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———————

And more thoughts:

*** Daily Reckoning correspondent, Lila Rajiva, finds a scoop…in India:

“After years of being called crackpots in tin – or gold – foil hats, GATA
(the U.S.-based Gold Anti-Trust Action Committee) seems to look saner by
the day, next to the thorough-going loopiness of the financial
establishment. The latest evidence is an IMF report that shows how IMF
rules wink – if they do not actually blow kisses – at central banks that
double-count the gold reserves they’ve lent out for sale in the open
market. Apparently, being a central bank means never having to say you’re
short.

“Aha, says GATA, which has charged all along that the IMF along with the
U.S. Federal Reserve and other central banks have tried to hold down gold
prices. The shady rules suggest that when they lent gold out for cash, the
banks actually got to double their reserves by counting the leased gold as
an asset on their books, as well as the cash. That was pretty sweet both
for the lenders – the central banks, who got a small return for their gold
– and for the borrowers, the bullion banks who got to sell and reinvest
the proceeds for a higher return in what’s called a ‘carry trade.’

“Even the IMF report admits, delicately, that IMF rules have encouraged
‘overstating reserve assets because both the funds received from the gold
swap and the gold are included in reserve assets.’ But except for a lone
article yesterday in The Financial Express in India, (Sangita Shah, Double
counting of gold may have aided the price suppression, June 7, 2006), the
mainstream media has ignored the story.” Continue reading →

IV An India Hand at the Daily Reckoning: What the Yonghy Bonghy Bo Didn’t Know 11/13/2006 (reprinted)

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From the Daily Reckoning archives — my first encounter with globalisation in India (we used this in the book). My note is down in the middle of the newsletter.
Mon, November 13, 2006 02:24:26 PM

From:

The Daily Reckoning

Subject:

Today’s Daily Reckoning:

Worthless Dollars in a Drafty Shack

The Daily Reckoning

Baltimore, Maryland

Monday, November 13, 2006

———————

*** What’s that? Greenspan isn’t always right?! We are shocked!

*** Toll Brothers CEO worries that there is no recovery in sight for the
U.S. housing market…

*** A special report from India…cars are now competing with people for
the same agricultural commodity…and more!

———————

*** Lila Rajiva sends us this note from Tamil Nadu, India: “Not only are the happenings here varied across industries, they are also
geographically diverse. Chennai prices and infrastructure are looking more
and more attractive next to the skyrocketing real estate and moribund
roads in Bangalore. But far-sighted companies are already looking past
Chennai to smaller towns. There is a lot of potential here, since the
growth that has taken place so far seems concentrated in the larger
cities. Foreigners writing about the country sometimes forget that there
are over a billion people here, and that most of them live in the
countryside and in villages and small towns.

“Small, of course, is a very relative term. A small town in India can have
a couple of hundred thousand people. And it can have wayward dirt roads
and power shortages at the same time as it has cutting-edge technology.

“That’s the case with Vellore. A dusty town ringed around by desolate,
rain-worn hills; and until recently known mainly for its Christian mission
hospital and college. Today, it’s a bustling overcrowded educational hub,
sprouting engineering colleges, the latest electronic gadgets, and a
supermarket. World Bank money has poured in to refurbish the old fort from
which the rebel Hindu prince Shivaji once fought the mighty Mughal Empire.
The Vellore Institute of Technology, which gets 7000 applicants, has been
featured in the Washington Post, and computer support and technical help
abounds. Getting on the net was a cinch. It only took a quick call to a
computer center that charged me a hundred rupees (less than three dollars)
for the cable and the house call.

Continue reading →