Luc tipped me to watch the Dutch VPRO program “Tegenlicht” (click on the orange “bekijk uitzending")
He was my first boss at PING back in 1995. I have learned a great deal from him and still vividly enjoy reading his posts and talking to him. One of the things we differ on: Luc is a big fan of the US(A) and I would not be surprised if he’d announce tomorrow he's moving to Carifornia. I on the other hand feel at home in Brazil. I don't see Luc spending 3 months in Brazil -if I'm mistaken, Luc, we're leaving for 5 days with a group entrepeneurs end March-, just as I couldn’t stand living 3 months in the US. The reasons why I’ve always felt uncomfortable in the 'American society' are the same which are bringing the country to its knees. The VPRO video clearly illustrates the phenomenon. It’s a fake country, with fake people and fake figures. When the shit hits the fan, the masks fall. Brazilians on the other hand have flexed their muscles in a chaotic mix of cultures and economical tornado’s which makes the quote “Courage is grace under pressure” from Hemmingway far more appropriate on them than on the gringos.
Take for example the two main topics of discussion when people refer to the current economical context:
1. Will the US enter a recession?
2. What is inflation? Yes, what is inflation is a huge topic of discussion of I read through all the economical opinions these days.
1. The US is entering its first full-blown economic recession in 16 years.
Fact. Those are not my words but the words of Merrill Lynch today. The GDP rate (1% in Q4) is a bad indicator for flagging recession. The graph below shows that on moments whenever the unemployment rate goes up 0,5ppts more proofs, an economy enters into an official recession.
Moreover, even US Treasury Hank Paulson has admitted today that the US economy faces severe challenges in his most bearish speech ever. What prevents the Americans (and ourselves) from seeing what’s already so long obvious? Blind pride, or the Kübler Ross model?
2. Inflation is a monetary phenomenon (did we all forget Milton Friedman?)
Jean Paul Thys is right of course, the last years the whole world has been fooled about what inflation really is (except if Ron Paul probably, one of the reasons why I would vote for the man; but then again, I never set foot in the US). And the market swallowed it: for years we believed inflation was under control with the Fed talking about capacity utilization, trade deficits, oil, productivity, inflation expectations, etc… making us believe whatever they wanted us to believe. The Fed never talks about expansion of money and credit. Honestly, until October 2007 no one of my friends would even understand what I was referring to when I was talking about a “Money supply explosion”. I even suggested my wife to introduce my friends to some Brazilian girls. Brazilians older than 25 know everything of Money supply explosions. But then I figured showing them this graph would do the trick (showing the since 1959 the daollar's purchasing power collapsed 85%, as the money supply exploded 3.000%):
The next big thing for which we are all blind is that credit crunch and the 100 U$ oil prices are nothing compared to the real looming catastrophe: a global food crisis that will be beyond anything the world has ever seen. Whereas Brazil used to desperately sell their food, you already see small signals of embargoes on food and keeping prices under control internally. Each time I visit Brazil, I’m surprised how cheap fresh fruits, vegetables, potatoes are there compared to food in Belgium. Not to mention meat, milk, eggs, chicken spaghetti and bread. And this is just the very beginning.
Jim Rogers his kids will speak Chinese, mine will speak Portuguese. Not because Brazil is all rosy, they will have their bumps. But the fact that they are structurally energy self-sufficient and have an unmatched reserve of food production capacity and primary resources is very reassuring compared to vulnerable countries like Belgium. You see the tendency starting with Hillary Clinton turning to a more protectionist agenda. And also the VPRO interviews state that Europe might review the Schengen agreement. Most people consider this to be a dangerous tendency. Is it? For some yes, for others less. Impossible to stop the globalist evolution? I don’t know, why? My wife is 34 and she lived in a country which had next to nil imports. Looking at the pictures and hearing their stories, they didn’t miss all that much in Brazil and actually had glorious times, leaving aside the political dimension of course. I’m convinced the current crisis goes way beyond an economical one. We will remember the last decade as the heydays of our globalist world. Where do you wish to be and what do you want t do in this new worldscheme, that’s the tricky question.
