What’s new in civilization? We went to Cafayate last night. Our old friend Doug Casey hosted an intimate little dinner – for about 150 people. He’s developing a community down there – the kind of place he wants to live in…surrounded by friends, good food, bright sun, beautiful views…and everything else a man might want.
Whether this is a good idea or not, we can’t say. But it is fun to get together with Doug and his crowd.
Since we were back in Internet range, we checked in with our usual sources. Here’s what we found:
The economy is either growing slowly, or contracting.
Housing is probably going down. Remember, Mr. Market has to destroy the idea that “housing always goes up.” When he’s finished people will think that “housing never goes up.”
Unemployment? People are gradually beginning to realize that the last ten years were the worst for creating new jobs in America’s history. If they keep thinking about it they will realize that it is not just the bust that is destroying jobs; there was something very wrong with the boom too.
Meanwhile, the markets are still calculating, figuring, deciding what things are worth. In the last couple of days, they’ve been thinking that maybe stocks and gold got a little too uppity. Gold has lost more than $50 in the last two days. Stocks lost ground on Tuesday, but bounced up 36 points yesterday.
From all we can tell, the Great Correction continues. And here’s a report from The New York Times that tells us where it leads:
OSAKA, Japan – Like many members of Japan’s middle class, Masato Y. enjoyed a level of affluence two decades ago that was the envy of the world. Masato, a small-business owner, bought a $500,000 condominium, vacationed in Hawaii and drove a late-model Mercedes.
But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo – for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.
“Japan used to be so flashy and upbeat, but now everyone must live in a dark and subdued way,” said Masato, 49, who asked that his full name not be used because he still cannot repay the $110,000 that he owes on the mortgage.
..For nearly a generation now, [Japan] has been trapped in low growth and a corrosive downward spiral of prices, known as deflation, in the process shriveling from an economic Godzilla to little more than an afterthought in the global economy.
“The US, the UK, Spain, Ireland, they all are going through what Japan went through a decade or so ago,” said Richard Koo, chief economist at Nomura Securities who recently wrote a book about Japan’s lessons for the world. “Millions of individuals and companies see their balance sheets going underwater, so they are using their cash to pay down debt instead of borrowing and spending.”
And more thoughts…
The air was cold. We mounted up after breakfast. We were headed up into the hills for a showdown.
The horses seemed eager to get underway. They headed out at a fast trot, down the hill, past the stone pillars that marked the entrance to the house, then across the front stockyard, between the rows of Alamos trees and out through the gate.
The sun hit our backs as we cleared the trees. It was only about 8 AM, but the sun was already hot.
“This way,” said Jorge, pointing off to the left, the road to the high pastures.
We stuck with the main track for about an hour…then, Jorge led the way over the edge, down among the rocks. We put our heels forward and arched our backs to keep from falling over the horses’ heads.
The trail led by a couple of adobe houses…through terraces that had been laid out by Indians hundreds of years ago and then maintained and recycled by generations of people since. Finally, we got down to the deep sand along the river. Jorge edged his horse down the bank and into the water, and then up the other side, rockier and steeper than the way we had come down. The horses’ hooves slid on the rocks and clattered among the stones. But they kept going. Up, up, up…through channels worn into the rock…until they finally reached the top. At the top of the hill they seemed relieved and slowed their pace.
We were going through an area of abandoned Indian terraces, houses, storerooms and other ruins whose usefulness was not apparent.
“This is the Quebrada Chica,” Jorge announced.
Everywhere we looked there were ruins. At first glance, we barely noticed them. There were rocks everywhere. But then the patterns became clearer and we realized that they were all around us. Terraced walls to hold the dirt and provide level places to plant corn. Small walls of what must have been dwellings or workshops. Walls probably designed to protect the community.
“There must have been more rain back then,” Jules suggested. “Otherwise, this place doesn’t make any sense. You couldn’t plant anything here now. “
We came to the top of a ridge and looked ahead. There was a house…some trees – weeping willows, poplars and molles – and fields. The fields were meant to be pastures. In one of them there were two white horses. But there was not a blade of grass. It looked more like a giant parking lot than like a pasture. All it lacked were lines painted to mark the spaces.
In one of the fields, someone was working. A stout young man looked like he was hoeing something. But there was nothing in the field. It was nothing but sand as near as we could tell.
“Edouardo,” Jorge called out.
“What are you doing?”
Edouardo was not as lean and weathered as the other pastajeros we had met. He couldn’t have been more than 30 years old, with a full, unlined face under a broad blue Andean hat. His clothes were clean. He might have been a clerk at Wal-Mart.
“Nothing… I’m planting…but if it doesn’t rain soon, I’m just wasting my time. It is so dry… I don’t know how much longer I can go on like this… I don’t know where this leads…”
We passed through his parched fields and then went up another rocky hill. The horses followed the track…up along the ridge…and then down the other side to another group of houses, fields and trees in what must have been a very beautiful valley, when there was enough water.
We crossed a junction in the ‘acequia,’ the irrigation ditch. One stream flowed down the hill. The other cut off towards the adobe house in front of us. Jorge stopped. He studied it for a minute.
“They’re using water.”
“They’re not supposed to?”
“No, not today. Each one has the right to use water only one day out of every 10. This is not their day. And these are the insurgents. I’ve got to have a talk with them…”
We rode up to the miserable adobe house. There was smoke coming out of the door. Jorge, Jules and I stayed on our mounts…
“Come on out,” said Jorge, or words to that effect.
“We know you’re in there…”
Jorge’s two dogs circled the local animals. The dogs growled at each other…
“Chango…where are you?”
Then, a boy of about 14 came out…hitching up his pants. He looked mildly retarded…or maybe he was just a teenager.
“Why are you using water? You know it’s not your time…”
“Where is your uncle?”
“The family is up in the high pastures with their animals,” Jorge explained. “We’re not going to be able to meet with them. They left him here to keep an eye on things.”
Jorge turned back to the teenager.
“How come the water course is open? It’s supposed to be closed. This is not your water day…”
“Uh… I dunno…”
Jules and I were waiting for one of them to go for his gun…
But Jorge soon tired of politely trying to get an answer out of the kid. We turned around and went back to the acequia. Jorge dismounted and blocked it with stones and mud.
The whole ranch is dry. The pastajeros are not only refusing to pay their rents and claiming they own the land…they’re also cheating on the water…
Where does it lead for any of us?
for The Daily Reckoning Australia