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| The Daily Reckoning | Saturday, April 21, 2012 |
- Elizabeth Bonner recalls the family trip to northern Argentina,
- Readers weigh in on fuel costs...and the cost of government intervention,
- Plus, all this week’s reckonings archived for your environmentally friendly enjoyment...
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| Joel Bowman, checking in today from Buenos Aires... |
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| Joel Bowman |
This week we welcomed our Reckoner-in-Chief, Bill Bonner, back from his mountain sabbatical. He was only gone for a couple of months, but for those of us who have grown used to reading his daily musings, it seemed like much longer.
Not much has changed back here in the “real” world of fake statistics, bureaucratic bumblings and funny money markets. As Bill noted himself in yesterday’s issue:
The Dow was about 13,000 in mid-Feb. It’s still about 13,000.
The yield on the 10 year US note was about 2%. No change there either.
The euro was about $1.30. It’s $1.30 today.
Gold is a little lower. Big deal.
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This spectacle will likely proceed as usual...until, that is, something very unusual interrupts it.
Meanwhile, we turn our attention to the goings on up at the ranch...
Elizabeth Bonner brings us some of the details of the Bonner family adventure in this weekend’s feature essay, below. Please enjoy...
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| The Daily Reckoning Presents |
Tales from the End of the Road
By Elizabeth Bonner |
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Our trip to Gualfin this year coincided with the greatest rainfall the finca had known in half a century or more. Gustavo and I were riding along the steep trail that clings to the mountainside along the way to our high pastures of Compuel, and he stopped at a pool of water soaking into the path. “I’ve never seen water here in my entire life”, he said. And neither had his 86-year-old grandfather, he added. Gustavo was taking me to see ancient petroglyphs that he discovered on the mountainside facing his arriendo, or farmstead. But the presence of water is perhaps the most impressive sight that anyone at Gualfin can remember. Everywhere we went when we first arrived at Gualfin five weeks ago, the question was the same: “Y el campo?”
“Que linda!” would follow the answer rhetorically, without a pause for our tentative Spanish. The rain brings life to every nook and cranny of the ranch — the cattle are visibly fattening, their coats gleaming in the strong clear light of this high altitude valley, the alfalfa has been cut and harvested four times, the new reservoirs are brimming with water that reflects the intense blue of the sky, and a profusion of flowers decks meadows, mountainsides, and the marshy land along the riverbeds. There are even weeds springing up between the stones of the courtyard and audaciously growing out of the mud-based barro that tops roofs of houses and the stone walls of corrals.
Being at Gualfin, cut off from our regular daily life, was meant to be quiet, possibly even dull. It has been nothing of the sort. Electricity is furnished by solar panels; after a cloudy day we light candles as darkness falls, have dinner, talk, listen to Jules play guitar, go to bed. But the days are full of action.
The day starts with the sun appearing as a reddish glow in the quebrada between two mountains, visible from our bedroom window. It’s chilly in this early autumn season, so you have to leap out of bed and dress fast. We have breakfast in the comedor: hot tea made from juju, eggs, toasted pan casita, local honey and goat cheese.
In the farmyard next to the house, the cock is crowing and out the window of thecomedor we see Jorge, the capataz or farm manager, surveying the sky, looking over the machinery, and giving the day’s order of work to his assembling crew. Natalio, his right-hand man, is carrying a square-edged shovel and will be working on the irrigation canals or asequias, directing water into fields and pastures. Up in Compuel, a small crew (Martín and his 18-year-old son Gabriel) has spent the night along the road they are repairing. And now that we are at Gualfin, a construction crew also assembles.
We are building a one-bedroom house in Pucarilla, the small fertile valley an hour’s drive to the east. Several people have told us that in Argentina the ‘patron’ does not normally work with gauchos. Instead, he gives instruction to the farm manager — the capataz — but has no direct contract with the gauchos themselves. But Bill insists on sharing their burdens.
After the first day, I wasn’t sure he was going to make it. He came back, after 10 hours, so tired he could barely shuffle in the door. He said he couldn’t raise his right arm or bend his left leg. He was not used to lifting 100-pound rocks or carrying 120-lb bags of cement. At least, not at this altitude. But now he is getting accustomed to it. And the workers are getting used to him.
First to arrive in the morning is José the mason, plump and quick, who lives closest. Next comes Javier, with his characteristically slow and deliberate tread and solemn expression. He is Jorge’s nephew and the dogs greet him joyfully, with silent leaps. Pedro, who works full-time for the finca and is also a mason, comes along briskly, wearing his leather apron. And then the young men, the changos, Bartólo and Aleji, hurry in. They are two of Natalio’s nine children and walk an hour to get here along the Compuel road. This week, the crew includes another chango, Cristian, who lives with his mother in the far reaches of Compuel. He is staying with Jorge and his wife Maria. And finally, Maria adds to the animation of the scene, dispensing greetings and advice while she bustles about organizing her household, our own, and the life of the parish. If it is a Friday, she will be leading the camina de la cruz up the hill behind the chapel, with a short and well-considered remark at every station.
The construction crew loads up at eight AM in one or two trucks, depending on the temperature and material to be transported. Temperature, because if it is too cold, everyone has to ride inside for the one-hour drive across the campo. A strict hierarchy is observed. If Jorge comes along, he sits in front with Bill or drives one of the trucks. Next in priority are older workers like Pedro, and Javier, who though only 30, drives the backhoe and the tractors. He is also next in line as capataz. Jules and Edward, sons of the dueño, also get a seat inside. Everyone else hops into the truck bed. Today is cold but sunny and not windy, so one truck, loaded up with José and the changos in the truck bed, heads off to the jobsite.
Trip to Molinos
On Friday night, Bill and I took a weekend trip to the little town of Molinos. We set off on the “new” road there — new only in the sense that it was created three months ago to replace the old road that washed out with the rains. It avoids the now swollen and impassable river at Amaicha, one of the fincas near us. Otherwise, this new road is so riven with cortadas cut by water that it seems as old as time. We jigged and jogged for two hours getting there and even more hours coming back on Saturday afternoon — when the truck was loaded to the gills with a barrel of diesel fuel, two propane tanks, two containers of engine oil, two iron beds, two wooden benches and various pieces of hardware.
Molinos is a tiny town situated along its river, in a valley wrapped in layers of steep, high mountains. As we drove there Friday evening, the late afternoon light lay on the mountain slopes in patches, as gently as pools of still water. The mountains, the sky and the light were uncharacteristically soft, as if the whole landscape partook of the fertile promise of the green resurgence fed by the recent rains. We drove along the spines of the sandy, rocky hills descending from our valley of Gualfin into gullies between immense walls of red composite stone, where the stubborn algarrobas with their twisting trunks and spreading canopies of feathery leaves offer shade to herds of goats. We passed not a soul for an hour and a half, when suddenly the Friday pick-up truck run from Molinos appeared, crowded with students going home from the colegio at Molinos to Taquil and Gualfin for the weekend. We had to back up to allow them to pass. And we saw a guaypo, a ground bird with a plump partridge body, a long slender neck and a tiny head topped by a spray of feathers. It was scurrying along the ground, seemingly unaware of a fox the color of desert sand totting silently after it.
By the time we got to Molinos, it was dark and we were relieved to see the points of light shining out from the houses and streetlights. We passed a little public housing development as we drove into town; perched on the side of the hill above these ungainly little boxes was a shrine — the Virgin of the Valley watching over her faithful ones. The Virgen del Valle is an Indian version of Mary, who appeared in the Calchaquí Valley in the 17th century. She is a straight-backed bronze-skinned maiden, with long black hair and high cheek bones, wearing silver earrings and a full length robe of white embroidered satin under a sky-blue satin cape.
Our hotel, Hacienda de Molinos, is across from the little church of San Pedro, built in the 16th and 19th centuries. Its slender twin domes were dimly silhouetted against the mountains in the failing light.
The hotel is in the former house of the Spanish colonial governors of the province of Salta. Like the church it is modest in scale, a one-story hacienda around a series of courtyards. An immense molle tree dominates the middle of the first courtyard, and there is a simple formal garden of lavender and white roses in the more private courtyard where we had our room. The place was restored with consideration for its original use; every beam, gallery post, door and window is either original or hand-made in Molinos. Right around the corner is the workshop where the pieces were made.
Dinner at the Hacienda
The purpose of our trip was dinner with one of our neighbors. One of them we met by accident at the Salta airport when we arrived; he thought he might know us and explained that he was suffering from amnesia after a car accident. “And it’s not a joke!” he added, taking me by the arm. He was walking with two canes. He was meeting his mother, who also coincidentally walked with a cane, and who had just arrived from Holland. He is Dutch and came to Argentina as a very young man — he is now 42 — the scion of an aristocratic Dutch family. He stood out immediately in the Salta airport: very tall, very thin, blond, with a strong Dutch nose in a fine-featured face, and unlike anyone we have met in Salta or Buenos Aires, dressed like an English squire in corduroy trousers and a tweed jacket.
The dinner was a chance for us to get to know each other. (When you have spent a month in Gualfin, you are eager to meet your neighbors.)
We had a delightful dinner. Other friends had been invited. We had drinks in a little sitting room with a warm fire. It was very interesting, because working fireplaces are a rarity here, as we have found at Gualfin. In the course of the evening, we learned about how our Dutch friend had come to Argentina, how he farms, his family and his original points of view about a multitude of subjects.
He came first to Buenos Aires province, where he bought a farm. Ten years ago, he sold it and bought a huge ranch — some 30,000 acres — including thousands of acres of rich bottomland farm along the Molinos River. To get there, now that the river has flooded, you either drive for an hour or take the short route: wade across the hip-deep rushing river holding your pants over your head.
He paid only $250,000 for the farm, buying wisely during one of Argentina’s financial crises. He’s a methodical farmer and his place is a model of agronomical calculation — he knows exactly how much it costs to pump a liter of water out of the aquifer under the hills to water the rich land below. When Bill went to visit him the next day (taking the wading route), he was sitting in a chair on his porch, surveying the fields with his binoculars. He hates littering. He saw one of his laborers drop a plastic bottle and ordered him to go pick it up. Presumably he also uses his binoculars to keep up with the work on the farm, as he can’t get around easily with a cane.
There’s a slightly melancholy side to this lively and eccentric personality. At least, after he has been drinking. He went over a cliff on the cuesta road about six months ago, having unwisely allowed the young woman accompanying him to drive. Rather hesitantly, I asked him what had happened to her. “Oh,” said he, “she went skiing two weeks later.” It was a grisly accident. No-one saw them at first, since the cliff dropped straight down 150 feet. His driver, coming along the cuesta and expecting to meet them later, sighted the wrecked truck. A rescue crew carried him out on a board made for a much shorter person. The driver’s assistant tried to hold his head during the two-hour drive to Salta along the jolting road. He said he kept thinking he would faint but unfortunately never did.
One of his friends, who joined us for dinner, was a Daily Reckoning reader. Originally from Alabama and descended from an old Virginia family from along the James River, he has lived in Salta for 30 years, where naturally he is known as Don Juan. And not just in name, we gathered. He has two grown daughters from his marriage and a two-year-old “natural” child from one of many girlfriends (as he described it). He is one of Jan’s most intimate cronies. Later, we went to visit his fabulous house — the only castle in Northern Argentina — but I will have to tell you about that some other time.
All in all, we had a stimulating dinner with good conversation, good local fare and good wine from Cafayate.
And back at the ranch...
Not that Gualfin is dull. In fact, in some aspects it is rather alarming. As our local manager said after out interview on Sunday morning with the directora of the escuelita: “Pequeño pueblo, infierno grande.” (Small town, big hell.)
The big hell last year was the menace of an insurrection of the local farmer, which Bill seems to have put down firmly, by agreeing to all their demands. This year, the alarm bells were ringing in the local school.
I went to see the two school teachers. One has been there for 26 years. The other for 18 years. They work together. They live in the unheated school together. They have no transportation, so they spend weekends and most holidays together too. They have no friends in the area. There are just the two of them...in the middle of nowhere...with no television, no new books, no magazines or newspapers, with 20-30 children to take care of.
And from what we have been told, they have not spoken to each other in 15 years.
A cupola rises at Pucarilla
Meanwhile, the casita project, the main reason for our two-month sojourn at Gualfin, is coming along well despite its complex design. It is a stone and adobe structure with an intersecting double- vaulted ceiling on two sides and a central dome in the middle. Bill says it is a miniature version of a great cathedral in Europe, but he doesn’t know which one. His ambitious architectural tour de force is being built (without formal plans, need I add) by himself, Jules and Edward, Pedro and José the masons, three sons of Natalio aged 21 to 16, and Hugo the bricklayer and his helper Omar.
The casita is set in Pucarilla, a valley tucked into a group of low hills on the Gualfin side and a high cerro on the other separating us from the neighboring finca of Pucará.
The valley is planted in alfalfa and vineyards, walnuts and quinoa. A few abandoned houses and orchards give it the feeling of a lost paradise. One of the houses is inhabited during the week by Nolberto Casimiro, the regador or waterer.
Pucarilla means little fortress in the language of the Hualfin Indians — reputedly the last Indian tribe in Argentina to be vanquished by the Spanish. Up the river about an hour’s ride is an Indian fortress, where you can find pottery shards and the remains of stone edging around hillside terraces.
Maybe that is why this place appeals to Bill. It is a refuge...a last-ditch holdout for diehards and lost causes. It is literally the end of the road...
Regards,
Elizabeth Bonner,
for The Daily Reckoning
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| ALSO THIS WEEK in The Daily Reckoning... |
Despair and the State
By Jeffrey Tucker
Auburn, Alabama
Maybe a dark column is appropriate for tax day, but, I must tell you, it is not my usual way. Nonetheless, there are certain terrible realities in the world, preventable ones, that we must speak about if we expect to end them. The sad and tragic story of Andrew Wordes — the chicken farmer who was driven to despair by government harassment and killed himself last month — continues to haunt me. And it turns out to be just one of millions of cases of similar psychological torment caused by government, directly and indirectly. These are wholly unnecessary events, inflicting terrible loss on the world.
Thoughts While Sitting in Chilean Traffic
By Chris Mayer
Gaithersburg, Maryland
Sometimes good investment ideas are stupidly obvious. I recently read about Mark Lightbown, who used to run the Genesis Chile Fund. Author John Train described him as a quirky and well-mannered Englishman who traveled with a shopping bag full of his effects, on the theory that no airline would ever make him check it.
“Net Sober”
By Eric Fry
Laguna Beach, California
Derivatives are the “meat and meat by-products” of the financial markets. They look, smell and taste just like regular securities, but almost no one understands why we need them in the first place. After all, what’s wrong with actual meat? Or to re-phrase the question: Is Spam really an advancement over ham? More importantly, can we trust the derivatives markets? Or might they be toxic? Might they subject the financial markets to devastating side effects?
Profiting From Apple...Without Investing in Apple
By Ray Blanco
Marco Island, Florida
Apple released the latest iteration of its popular tablet computer this week. The latest iPad upgrades features already present in existing Apple products. Improvements include a higher-resolution display, 4G wireless capability, an upgraded processor and a pared- down version of Siri — the voice recognition platform first released on the last iPhone. Apple hit home runs when it first launched the original iPad and iPhone. The successful launches of these products will be tough to beat, however. While Apple doubtless has a road map of future product releases, its visionary founder, Steve Jobs, is no longer at the helm.
No Way Back
By Frederick Sheehan
Gold and silver will both rise far above their current levels. “When” is unknowable. “Why” is due to the unremitting and insolent amorality of central bankers and their practices. If not Simple Ben at the Fed, his compatriots across the globe are a daily source of confusion, contradiction, and stupidity. The stupidity may be real or it may have evolved from an unwillingness to think, as George Orwell wrote of Stanley Baldwin’s and Neville Chamberlain’s abdication of responsibility in the 1930s: “What is to be expected of them is not treachery or physical cowardice, but stupidity, unconscious sabotage, an infallible instinct for doing the wrong thing... Only when their money and power are gone will the younger among them begin to grasp what century they are living in.”
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| The Weekly Endnote... |
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And now, it’s over to a few readers for some thoughts, ideas and rumors...
First up, Reckoner Tom A. writes this in response to one of last weekend’s reader emails...
I must dispute Charles M.’s assessment of gasoline prices being cheap now, based on his 1960 dollar figures. They are only cheap compared to Europe and a few other places. Charles gives the figure of a gallon of gasoline in 1960 dollars priced at $0.50-0$.60 — but this is grossly inaccurate. I was in my teenage driving years in the late 1950s and remember well that gasoline in Colorado, where I was reared, bounced around $0.15 or $0.16 per gallon. The lowest price that I personally recall was $0.139 per gallon at Shorty’s Conoco in Littleton, Colorado, in 1958 or 1959. I agree that the “true value” of a 2012 dollar is only about 1/10 to 1/12 of its 1960 value — but, charitably assuming that a 1960 gallon of gas averaged $.20, the current price per gallon should only be $2.00 or $2.40!
I remember quite distinctly the first time that I paid more than $.50 per gallon of gas — it was in Eagle, Colorado, over the 4th of July holiday in 1976 — and I was outraged! Little did I suspect what awaited us.
On the topic of inflation, Reckoner Charles K. writes...
A similar thing I started, back in the early 1970’s at the time of the first oil price kick (I was a professor of petroleum engineering then), was to compare the price of oil and gasoline to three commonly used commodities: Big Macs (borrowing from the Economist Index for currency comparisons), a gallon of milk, and (being in Golden, Colorado) a six-pack of locally-produced brew.
Oil and gasoline did not keep up except for a few spikes from time to time associated with revolutions, invasions, and other such events but they dropped off again quickly. I dropped it a few years ago and now cannot find the old data. The point is that oil and gasoline have not gone up as much as other common products, so why do people get their knickers twisted over gasoline prices but not hamburgers? Do they not realize the people who look for, drill for, and produce oil eat as well? So do the people who make the steel we use, etc., etc.
Of course OPEC has been pretty frank in their press conferences that stimulus bills make the price of oil go up — $15 for stimulus 1 and about $8 for stimulus 2. Big Oil?
Dinosaurs — only two American companies left, Exxon and Chevron and Exxon is 14th in the world for size now; they influence just about nothing.
And finally, departing from conventional fuel sources, Reckoner Karen S. writes...
[Fellow Reckoner] Mr. Forbes bashes solar energy because of all of the failed government-subsidized projects. Solar energy would be viable in many places, if the government would stay out of it. I live in Arizona. I don’t see any reason the entire state can’t run completely on solar energy — there are all solar homes in my neighborhood. I’m looking forward to when my all-electric house and electric car can run for free — I’m just waiting for the price of panels to fall enough. But when the government gets involved, there is no accountability, and no worries about cost, so of course projects go bankrupt while the managers live high on the hog! And without government involvement, people wouldn’t buy solar in places that don’t have enough sun.
Being from Southern California originally, I can tell you there is enough sun in many parts of it to run houses on solar. Solar water heaters are popular there, for houses that currently use natural gas as their main energy.
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As always, we welcome your thoughts. Email them to the address below and...
..enjoy your weekend.
Cheers,
Joel Bowman
Managing Editor
The Daily Reckoning
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Here at The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor atjoel@dailyreckoning.com |
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