Global stock markets had a strong day of gains yesterday.
Bloomberg reported that the Dow rose 390 points — or 2.4% — ‘on optimism over China.’
We hold our breath and wonder: What next?
The US investor thinks he has some idea of what is going on in China. Good luck to him!
And there is no reason for stocks to ALL be worth more money… even if China were looking up.
Some should go up and some should go down — depending on how investors see new developments affecting their earnings. For some companies, China is a competitor. For others, it is a supplier. Some want China’s costs to go up. Some want them to go down.
Studies have shown no hard and fast relationship between current economic growth and stock prices. But it’s more than fishy that, over the last six years, the S&P 500 has risen about seven times as fast as US GDP.
We know what was going on; it has nothing to do with optimism over China. The Fed was manipulating the price of US stocks by way of ZIRP and QE — essentially stealing wealth from Main Street (savers, workers, retirees, and small businesses) and giving it to Wall Street (insiders, cronies, investors, bankers, speculators, and big businesses).
There are many ways to take what isn’t yours away from the rightful owners. Here’s another one:
‘The natives who lived in Gualfin were the last to surrender to the Spanish… according to legend anyway.’
Jorge, our ranch foreman, is getting ready to retire. He was reflecting on the problems facing the ranch.
‘They retreated up into the mountains to that rock we call “The Fortress.” That’s where they made their last stand.
‘You’ve been there. You can see all the pieces of broken pottery on the ground. Apparently, they went up there with food and water. It’s called “The Fortress” because it is a natural fortification; it was impossible to get them out.
‘So, the Spaniards laid siege. And when the locals ran out of food and water, they threw their pots down at the invaders… and then threw themselves off the cliff.
‘They were tough people.’
And now, if you believe today’s legends, their descendants are mounting a counterattack. They are trying to take back what was lost four centuries ago.
There have been whispers of insurrection ever since we got here nine years ago. Now, things are heating up.
Taking back the valley
News of the coming revolt reached your editor last week…
He went to visit a neighbouring property, the Hess family’s Bodega Colomé. One of the executives gave us a warning.
‘It’s coming. They have brought in professional organizers. They’re paid by the government to stir up trouble. It’s part of the Kirchner administration’s attempt to buy votes.
‘They tell the local people they have the right to the land because their great-great-great-grandfathers lived here. The organizers go around and appoint a cacique – a chief – who is supposed to bring the people together to fight the landowners.
‘These caciques had a meeting recently. One of my employees reported that they have a plan to take the whole valley. They’re beginning here. Then they’re going to march up and take your place too.’
This was bad news. But it had a comic tinge to it.
How could they really take back land that had been stolen, fair and square, in the 16th century?
What kind of precedent would that set?
Would it mean that Americans would have to give Manhattan back to the descendants of the tribe that lived there (if they could find any)?
And of all the thousands of descendants of the original inhabitants, who may or may not have crossed the river at what is today St. Louis, who among them would have the right to the city?
And wasn’t all of Australia taken from the Aboriginals in the 18th century? Will that have to be given back?
It seemed crazy…
Rise of the originarios
‘No, it’s true,’ said Hugo.
Hugo is one of the local people who calls himself an originario. He is a young, burly man who, aside from making adobe bricks, has no visible means of support.
Rumour has it that he receives pesos from the local mayor; he is a political operative. He may be the local cacique. We don’t know. But he came to see us last Friday, with a declaration of war.
‘Hugo,’ we asked, ‘are you saying that you have special rights simply because your great-grandparents may have lived here?’
‘Yes. We are originarios. We have a right to the land, the air, and the water. It is only natural.’
‘Does that mean that the land I bought is yours? Have you been paying the property taxes on it?’
‘No, no,’ Hugo smiled slyly. ‘We don’t have to pay property taxes. And I don’t have to sign your rental contract. Because I’m an originario. I have special rights.’
‘How many other people who live here have these rights?’ We wanted to know.
‘Well, I don’t know. It is for each person to declare himself.’
‘Most of these families are not originally from here,’ we continued. ‘They came from neighbouring farms a generation or so ago.’
‘I don’t know if that matters,’ Hugo replied.
‘Well, if where your grandparents came from doesn’t really matter, doesn’t that create a problem?
‘Couldn’t you claim any property you want? I mean, the rest of us have to pay for property. We rent or we buy. Or we inherit. I’ve never heard of anyone who got someone else’s land simply because his ancestor may or may not have once lived there.’
‘It’s a law. It’s an international law that was made in the 1990s. You can look it up.’
‘We don’t have to pay you’
‘Funny that I never heard of it before…’ we replied.
‘And I don’t see how it can work. You probably had a lot of ancestors who lived here…and at Tacuil and Colomé, too [neighbouring properties]. How do you know which one you have a right to?’
‘It is for each originario to declare it for himself…depending on where he lives now.’
‘Hmmm, sounds a little vague. Everybody has to have four grandparents, eight great-grandparents…am I doing this right?…and 16 great-great-grandparents. It is likely they come from different places. So, does this mean you have the right to 16 different properties? Or more?
‘Or look at it from the other angle. If each of your 16 great-great-grandparents had four children…and each of them had four children…and so on…that would mean about 2,000 descendants. How do you decide who gets what?’
‘Señor Bonner, no. It doesn’t work that way. It’s just where you live. You have the right to that.’
‘So you’re saying I don’t have the rights to my land that I thought I had.’
‘Yes…that’s right. This land belongs to the originarios. We don’t have to pay you. We don’t have to sign a contract.’
‘Maybe we should get all the people who claim to be originarios together and figure out who has the right to what. I mean, I just want to know.
‘I’m investing a lot. I think I’ll just leave if I don’t have the right to the land. I’ll stop paying salaries. I’ll stop buying equipment. I’ll stop investing.
‘And if I get chased off by this originario thing, who will take my place?
‘Nobody. And how will anyone here be better off is no one is bringing in money from the outside to try to make it a viable property?’
‘I don’t know…We’re not trying to drive you off…’
To be continued…
For The Daily Reckoning, Australia