Get your Wife an Oil Rig
BALTIMORE – What do you get your wife for her birthday? Here’s a suggestion for the woman who has everything: Get her an oil rig. The daily rental rate was about $500,000 in 2014. Now, you can get it for half off.
The faithful gather for an audience with the rig god. Nowadays you can rent him real cheap.
Photo via likesuccess.com
And the price could go lower. When the industry was flush and foolish, drillers put in their orders for new rigs. Those rigs are still being delivered, even though the number of idle rigs is now the highest in history.
Unfortunately, many of the companies that ordered the rigs borrowed the money to pay for them. That’s what you do when it looks like the sky is the limit. Then, when the sky falls on your head, you don’t have any way to pay your loans. Borrowers default. If enough loans go bad… lenders go broke, too.
Yes, a few borrowers and lenders going to go broke – that much is already certain. This is the effective yield on the Merrill CCC and below index, which contains the lowest rated junk debt. There’s quite a bit of energy debt in it these days. Note how far it has increased above the late 2011 spike induced by the euro area debt crisis – click to enlarge.
But we’re not going to worry about it today. We’ve got other things to worry about. Big things. At least, that’s what the chief economics commentator at the Financial Times, Martin Wolf, tells us.
He says our great republic is in danger of being hijacked by a “narcissistic bully.” You know who he’s talking about. And he says that if Donald Trump wins the White House, it “would be a global disaster.”
How does he know that? Would it be less of a global disaster if Marco Rubio, Ted Cruz, or Hillary Clinton were elected?
Fortunately, Mr. Wolf is wrong about everything. And when he quotes Robert Kagan, a war-mongering Washington insider and Deep State mouthpiece, telling us that Trump is the “GOP’s Frankenstein monster,” we begin to feel a warm affection arising for The Donald.
We are stoics, here at the Diary. Yes, the people may vote in a monster (what choice do they have?). Yes, Trump may be a global disaster. But at least the voters will get what they deserve. And if it is Mr. Trump who gets the crown, we have no real reason to think he will be a more benighted and misbegotten ruler than any of the others.
Globalist establishment mouthpiece and etatiste Martin Wolf – if you were unsure whether Donald Trump deserved support, you have just been given a strong reason to reconsider in his favor. As a matter of principle, one should believe and do the exact opposite of what Wolf thinks and recommends…it is the only safe course. Trump in the White House a “global disaster”? Hardly, considering his competition.
Photo credit: Carnegie Council for Ethics in International Affairs
Besides, the election process is an exercise in solemn deceit. The U.S. government is among the oldest in the world. It works, on paper, more or less as it was meant to do. But in practice, it is as far away from the federal government of 1789 as downtown Los Angeles is from the little Mexican village on that spot 200 years ago.
For one, government has become a much bigger business. As it added to its own wealth and power, smart people discovered how to use it to get wealth and power for themselves. Lobbyists, insiders, and the elite figured out how to get special treatment – privileges, favors, tax breaks, contracts, sinecures.
The Pentagon got weapons it didn’t even want. The corn states produced ethanol consumers didn’t want or need. And the Deep State – a permanent government of bureaucrats, think tanks, cronies, special interests, zombies, and politicians that nobody wants – made elections merely gestures of mass mythology.
We are supposed to believe our vote can change the course of an election… and that our candidate can change the course of history. Like most myths, it can’t be disproven. But the odds of it are extremely remote; rye whiskey will accumulate in rain barrels first.
The Deep State decides important matters, not elections. It decides who gets what, for example. And its new money system – put in place by President Nixon in 1971 – makes it possible to shift money to idlers and chiselers, without even a token vote in Congress.
A rentier is someone who gets his money without providing anything in return. The game is rigged in his favor. He uses the power of the government to enforce an unfair deal.
The old rentiers of the 17th and 18th centuries held title to land – which probably dated from some ancient conquest. They “earned” their living by renting that land to tenant farmers.
The new rentier rents money. He gets it for next to nothing. And he rents it out at market rates. The system is so subtle… so clever… and so complex that even today not one person in 1,000 understands what is going on.
The common folk know something is wrong. But they don’t know what. So, they turn to Trump, who promises to “kick ass”… or to Bernie Sanders, who promises to tax and spend on their behalf.
He promises to kick ass and take names… and this year the Republican base, which rightly feels spurned by the party establishment, clearly prefers this promise to “more of the same”.
Photo credit: Scott Audette / Reuters
Do Sanders or Trump have any clue as to what is really going on? Probably not. Have they already made peace with the Deep State? Probably. As for Rubio and Clinton, they were the Deep State candidates from the get-go – both promising more intervention… more wars… more programs… more this, more that…all of it to further the interests of the Deep State and its clients.
Next time… we bring this series to a spectacular close.
Chart by St. Louis Fed
Chart and image captions by PT
The above article originally appeared at the Diary of a Rogue Economist, written for Bonner & Partners. Bill Bonner founded Agora, Inc in 1978. It has since grown into one of the largest independent newsletter publishing companies in the world. He has also written three New York Times bestselling books, Financial Reckoning Day, Empire of Debt and Mobs, Messiahs and Markets.