It is another cool, cloudy day in Poitou. The whole summer has been like this — like a winter in Georgia, with hardly a single warm day. Vacationers head back to Paris with the same white skin they came with. Beach resorts empty out…embarrassed at the way they treated their loyal customers.
But the roofers have liked it. No hot sun has beat down on them.
We are redoing the roof of one of the barns. Alas, it is a slate roof, which costs a fortune. But at least you only have to replace it once a generation. Slate roofs last for 60 to 70 years.
Every day the roofers arrive at 7:30am…mount their scaffold and get to work, nailing the new slates to the roof. At noon, they stop and go to lunch…resuming work at 1:30pm…keeping at it until 6pm.
Just two angry young men.
What are they angry about?
‘We learned a trade. We work hard. But other people get as much as we do without working. They get rent assistance. And welfare payments. Many of them live better than we do.
‘Of course, it’s not just their fault. The education system orients young people to office work. But there aren’t enough of those jobs. And they don’t want to do this kind of hard work anyway.
‘I don’t know how it’s going to end… but I don’t think it is going to end well.’
‘The latest French statistics have been awful. Income tax came in at €10 billion less than last year, despite painful and unpopular tax increases. Growth was 0% in the last trimester. And France’s promise to the EU to bring the annual deficit down to 4% was officially broken.’
The longer we spend in France, the more similarities we see between its economic problems and those in the US economy. Same bureaucracies. Same deficits. Same zombies. Same claptrap theories and self-serving delusions. Same slowdown. Same policy responses (more or less).
The world’s economies were ‘globalized’ in the 1990s and the 2000s. Now, the economic problems are globalized, too.
Instead of individual economies — each one mucked up by its own policymakers, each speaking his own language — now, Shinzo, Janet and Mario muck them all up together in the language of international financial muck: English!
This is a little worrying to the technical traders and theoreticians. The aforementioned authorities have promised to do ‘whatever it takes’ to keep the credit bubble expanding.
But aside from jaw-dropping moves in the bond market — where prices for Italian, French, Spanish and Portuguese debt are higher than any time in history — progress to the upside has been plodding rather than soaring.
This bespeaks weakness and weariness.
We bring it up to remind readers that rising markets always end in falling markets. Usually, assets that are way overpriced drop suddenly, often for no apparent reason.
This brings the ‘buy the dip’ crowd into the market, which gives the impression — briefly — that the party is still going on. Reassured and misled, investors stick with their overpriced positions far too long…and suffer big losses.
Psychologically, it is very difficult to get out of a position with even a small loss…especially when you have been trained by many years to believe that ‘prices always go up’…or that ‘the Federal reserve won’t let prices stay down for long’.
That is why it is best to get out early, before the sell-off begins. Better too early than too late.
For Markets and Money
From the Archives…
Everything is Awesome in the Market
18-8-2014 by Nick Hubble