| By Bill Bonner, Chairman, Bonner & Partners Give me some of that. Give me some of that money. I want some of that money. – Donald J. Trump YOUGHAL, IRELAND – The stock market is hitting new high after new high. But the economy is slipping. Wall Street and the rich flourish; Main Street and the middle classes fall behind. Capitalists get rich; the proletariat gets nothing. That has been the main storyline in the U.S. for the last 30 years. Pretax corporate profits – the actual earnings of America’s biggest businesses – have gone nowhere since 2012. But the Dow is up by more than 100%. | Recommended Link | | (Bizzarro World) Fed nominee launches his own cryptocurrency! But that’s just the tip of the iceberg. Our research shows there’s a bigger story coming… And it could forever change the way you save, spend, invest, and retire. Consider yourself warned. This story is unfolding quickly… And once it hits the mainstream, it’s going to be too late… You can get all the details you need to prepare for this massive change – as well as profit from it – by clicking the button below. | | | -- | Battle of the Billionaires A big story in the papers lately is that arch-capitalist Michael Bloomberg may enter the Democratic race. If so, the election of 2020 could turn into a Battle of the Billionaires. Trump vs. Bloomberg. But they have more in common than just money. They’re both New Yorkers. And both believe in the power of Big Government to make the world a better place. But today, we focus on the money – on Wall Street, not Main Street. More specifically, we look at the rich. Not with our mouths open, drooling in envy, struck dumb by their private jets and gaudy mansions. Nor in a spirit of revulsion or revenge. We have nothing against them. Nor do we particularly admire them. We’ve lived among them. We’ve learned their language and their ways. And guess what? They’re just like everyone else. Except they have more money. And one other thing… which is probably more important. | Recommended Link | | Are you ready to discover how to make more money in less time? Last night, former Wall Street trader Teeka Tiwari unveiled the details of what may be the most important stock market breakthrough in 40 years… A breakthrough only made possible by combining rocket science with today’s modern computing power and 350 years of data. It’s a revolutionary new tool, credited with calling almost every major market turn in the Dow for two decades… | | | -- | Not Feeling the Love But first, let’s see why they’re not feeling much love these days. Then, we’ll take a quick gander… and not for the first time… at how they got so damned rich and what they’re doing with their money now. The Guardian reported: The share of wealth owned by the top 0.1% is almost the same as the bottom 90% Wealth inequality in the U.S. is at near-record levels, according to a new study by academics. Over the past three decades, the share of household wealth owned by the top 0.1% has increased from 7% to 22%. For the bottom 90% of families, a combination of rising debt, the collapse of the value of their assets during the financial crisis, and stagnant real wages have led to the erosion of wealth. The Guardian, the rest of the media, academia, the Democrats, and much of the public think there’s something wrong. They claim wealth inequality causes “social tension.” Some think great wealth disparity slows economic growth. And many believe that the rich get rich by taking wealth from the poor and middle classes. They’re almost right about that final charge… as we’ve explored in these Diaries… but few have any idea how the swindle works. But we’ll come back to that… again… and again… and again, because it is what is driving the whole world to its biggest financial crisis ever. Taking Donations Sticking with the rich… most people just don’t like to see people getting so much richer than they are. And they look to the feds to square things up. CNBC: Presidential contender Elizabeth Warren infuriated America’s wealthiest individuals when she unveiled her wealth tax proposal earlier this year, which would tax them 3 cents on every dollar over $1 billion in net worth. Now, seeking to pay for an overhaul of the nation’s health-care system, she’s calling on them to pitch in a bit more. The Massachusetts senator on Friday called for a doubling of her billionaire wealth tax as part of a new “Medicare for All” proposal, from 3% to 6% on wealth over 10 figures. Warren’s wealth tax proposal would also impose a 2% tax on net worth between $50 million and $1 billion. Ms. Warren thinks she has a winning campaign issue. After all, there are only about 600 billionaires in the U.S. (And if Bloomberg announces… three of them – Trump, Bloomberg, and Steyer – will be running for president.) Losing Strategy Ms. Warren figures that everyone hates billionaires and everyone loves free medical care – which they think they can get by forcing the rich to pay for it. CNBC again: Sen. Elizabeth Warren [net worth: $12 million] is launching a new attack on the billionaires who have criticized her proposed taxes and policies with a new ad set to air on CNBC this week, according to a campaign aide. Titled “Elizabeth Warren Stands Up to Billionaires,” the ad takes aim at longtime investor Leon Cooperman, former CEO of TD Ameritrade Joe Ricketts, former Goldman Sachs CEO Lloyd Blankfein and Silicon Valley investor Peter Thiel. But standing up to the billionaires may not be the winning strategy Ms. Warren hopes. Billionaires have few votes, but they have lots of money. And they’re likely to use it to make sure someone else is elected in Ms. Warren’s place. CNBC: Democratic donors on Wall Street and in big business are preparing to sit out the presidential campaign fundraising cycle – or even back President Donald Trump – if Sen. Elizabeth Warren wins the party’s nomination. In recent weeks, CNBC spoke to several high-dollar Democratic donors and fundraisers in the business community and found that this opinion was becoming widely shared as Warren, an outspoken critic of big banks and corporations, gains momentum against Joe Biden in the 2020 race. Blame the Rich S.O.B.s In some ways, the rich have never had it so bad. Americans used to admire them… and aspire to join them. Now, Americans think there was something underhanded about the way they got their loot and that they should “give back” some of it. Politicians rip into them. Movies portray them as villains. The police love to make them do the perp walk. Yet it is likely to get worse for the rich, not better. When the next crisis comes… who’ll take the fall? The Federal Reserve – for not restocking its shelves with interest rates so it would have something to cut to fight the downturn? The president – for running trillion-dollar deficits when he was flush, leaving little room for maneuvering when times got tough? Or, the no-good, greedy, rich S.O.B.s who profited most from the boom? They’re likely to be blamed for the crisis… and soon, they’ll be accused of poisoning the wells, putting the hex on their neighbors, and cavorting with the devil too. Tomorrow – the real source of the rich’s riches. And what they are doing with it now… Regards, Bill Like what you’re reading? Send your thoughts to feedback@bonnerandpartners.com. POSTCARDS FROM THE FRINGE: THE CATALYST FOR THE NEXT RECESSION Maria’s Note: Maria Bonaventura here, managing editor of the Diary. On Tuesday, Bill looked beyond the headline news… and what he saw spells trouble for the economy. But the trouble isn’t limited to America. As our editor pointed out, our man on the ground in Asia – Tom Dyson – sees worrying signs in China as well. Today we turn to Tom, who just spent eight weeks backpacking around China… and what he saw there, he believes, could kick off the next global recession…
By Tom Dyson, Editor, Postcards From the Fringe Uh-oh. More evidence China’s property market is cooling. This time it comes from a survey of 300 sales offices in 40 Chinese cities just published in the Financial Times (FT)… If you read my postcards, you know there is a massive construction boom in apartment buildings happening in China right now. There must be over 100,000 new towers going up at this very moment, all over China. Cranes on the roofs, men in yellow vests, sparks flying… the whole thing. It’s such a massive project, I’ve compared it to the building of the Terracotta Army in 200 B.C. It must account for a huge portion of China’s current GDP… (The FT says real estate is 20% of China’s GDP. I think it’s bigger… see below.) If China’s housing market turns down long term, it’ll have consequences all over the world… By the way, if you haven’t been keeping up with our travels, my family and I have been traveling around the world now for nearly 18 months. We’re living out of a suitcase and sleeping in cheap hotels. You might think we’d get tired or “over” this lifestyle after spending so much time on the road, but we continue to have the BEST time. We were just in a place called Yangshuo, in southern China, which is famous for its landscape of karst formations. They look like dragon’s teeth covered in dense tropical foliage. Thousands of them all over the place. It’s one of the most beautiful landscapes we’ve ever seen. You can see one of Yangshuo’s famous “karst” formations up close on the left here We took the boys to climb one of the karsts. Here they are climbing… Our sons, Miles and Dusty, climbing one of the “dragon’s teeth” in Yangshuo, our last stop in China Back to China’s housing market… The Chinese LOVE owning property. Not long ago, I wrote that Chinese culture sees property as the best store of value for life savings. More than 70% of private wealth is tied up in property. Sometimes men cannot get married unless they own a property. According to the FT, 90% of Chinese households own at least one property, and 35% own two or more. Most people alive in China today have never seen a decline in property prices. Prices have been rising continuously for decades. And as you’d expect, with China’s incredible economic transformation over the last two decades, China has had a red-hot property market. They call it the “Iron Bubble.” In places like Beijing and Shanghai, apartment prices have risen 15x since 2003. And even in recent years, it’s shown no sign of slowing down. My friend Jessica says her apartment in Xi’an, a big city in central China, has doubled in price in the last three years. Until now… As I reported in my postcards, Beijing property prices have started to fall. The FT confirms this. It just released its China Real Estate Survey. It shows slowing sales volumes and falling prices across 40 cities in China. “The Index fell to a three-month low in October,” the FT says. “And 2019 is shaping up to be the second weakest year for the housing market since our series began at the end of 2012.” And “28% of property owners in China now say one or more of their properties currently stand empty.” If property prices keep falling – and I think that’s likely, with the glut of new apartments about to hit the market and the high level of vacant units already on the market – China could see a recession in the construction industry. But even more worrying, if property prices fall, there’ll be a big hit to consumer spending. (Property prices and consumption spending are highly correlated, meaning they tend to move together.) Consumer spending represents 60% of China’s economic activity. If my central hypothesis about the Dow-to-Gold ratio is correct, we’ll see at least three recessions over the next decade. China is the world’s second-largest economy and the fastest-growing big economy. Falling Chinese property prices could be the catalyst for the next recession… – Tom Dyson P.S. I track this story in my free e-letter, Postcards From the Fringe. I send a new one out every weekday, and I’d love to have you on board. Just enter your email address here to sign up. FEATURED READS Billionaires Lash Out Against Warren’s Tax Plan
As Bill pointed out above, Elizabeth Warren thinks her billionaire tax is a winning campaign issue. But one of the latest one-percenters to bash this plan says he knows the real reason Warren is drawing our attention to it… Misguided Optimism?
Faithful Diary readers know Bill sees clouds forming over the markets. But President Trump clings to the hope that the economy won’t tank before the 2020 election… and thinks he has found a case for renewed optimism… There’s a “War” Going On… And You’re Funding It
Last week, Bill noted that government interference is hindering Americans’ happiness. Now, colleague and former hedge fund manager Teeka Tiwari reveals how it also threatens your savings… and your retirement… MAILBAG Today, Dear Readers with firsthand experience shed more light on Bill’s commentary on Cold War-era Berlin… including one who believes Bill’s interpretation of life in East Berlin may be “fake news”… I love reading Bill’s essays and commentary, and “A Lesson From East Berlin’s Big, Bold, Dumb Experiment” was no exception. However, I lived in Germany off and on for over 10 years with the U.S. Army beginning in the mid-60s. I am fluent in German… and belong(ed) to a pipe-smokers’ group in Frankenthal… where other members were from the former Deutsche Demokratische Republik… and none seem to share your opinions… In fact, they have such pleasant memories that it has made me wonder if perhaps the concepts you raised in the article (all Gospel concepts from the Cold War era) might in fact be fake news. My primary concern: What is true? What is fake? And what’s in between? – E.L. M. Your Berlin article is so well-researched that I assume you must have spent some time there before the wall came down. As a U.S. Army-enlisted soldier stationed in West Berlin from Jan. 1982 to Dec. 1983, I would make occasional shopping/tourist trips from West to East Berlin on my off days. Not often, mind you; I was required to wear my dress green uniform, and as such became a target for East German soldiers and Stasi (secret police) with questions about my purpose of visit. I was fortunate to avoid detention by the curious Germans so I could see how poor the eastern sector was for myself. There were a number of border crossings between East and West Berlin. People flowed freely as I recall. I would exchange West Deutsche Marks for East Marks (10:1 exchange rate). I used the East Marks for inexpensive but edible food, and leaded crystal vases and other baubles, which I purchased as gifts for family. You’re correct about no advertising. Most items in shops were wrapped, and you had to take the shopkeeper’s word for the contents of packages purchased. And yes, there was a black market for goods in Berlin. Thanks for writing about Berlin on Veterans Day 2019. I enjoyed the trip down memory lane! – Bradley S. Do you believe the commonly accepted stories of Germany during the Cold War era? Was East Berlin as terrible as Bill recalls it? Write us at feedback@bonnerandpartners.com. IN CASE YOU MISSED IT… Donald Trump’s Days As President Are Numbered. Here’s why… Are Donald Trump’s days as president numbered? Will he be your last president… The last guardian of American freedom and liberty… The last guardian of personal wealth… The last guardian of small government… The last guardian of everything “American?” Find out the chilling reason why one well-connected author and multi-millionaire thinks so in this video. Watch now. 
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