There is a development in the markets that will ultimately impact all of us - the rates charged by commercial banks on items like car loans and credit cards carry a huge spread to the official rates targeted by the central banks (at least times 10, for good borrowers).
Interest rates were always free market, and now the central banks are trapped. About 30% of the bonds issued by governments and companies worldwide are trading at negative yields, which is about $17tn of outstanding debt. This means you loose money if you hold them to maturity.
The scheme works like this: say you hold a $100 bond, maturing in one year with a coupon payment (interest) of 3%. At the end of that year you will be paid $103 by the issuer. But the bond is trading in the market for $110. This means that whoever holds it, needs to get rid of it before it matures, or he will loose money.
Trading these bonds is a game of musical chairs and nobody thinks twice as long as the rates decline. This is possible as central banks buy government debt, if they stop and even slow down, where is the bid going to come from? The rates in the real world show that there is a shortage of liquidity, which makes perfect sense – with low interest rates you need to spend less and save more for retirement.
The European Central Bank is in the 10th year of Quantitative Easing, meaning pumping fresh money into the economies, and they have failed to reach their inflation targets. They are not even close.
One more thought to close the topic – in many countries pension funds must invest into the negative yielding government bonds (the proportions vary). Which means a guaranteed loss – it simply just became another tax.
Now, to the good side of life. I had a nice lunch with a friend of mine, who looks like the actor John Goodman who just skipped a meal.
Rumor has it that he owns the legendary dress Marilyn Monroe wore when she sang that famous “Happy Birthday” to JFK.
Actually I just made it up, but I think it may be true.
He held up his glass of red wine at the end, looking at the great river and said:
“if this is not nice, I don’t know what is.”
In an unrelated thought he said: "I enjoy fake science. If a piece of news starts with the sentence “according to a recent study...” I am listening to the whole nonsense with enthusiasm."
That was after he finished the wine, putting him in philosophical mood.
“Sometimes you’re ahead, sometimes you’re behind – the race is long, and in end it’s only with yourself.”
“What do you think?” he leaned over the table.
“About the nature of this conversation or the nature of you?”
“Take your pick.”
“There is only one rule in this jungle – if the lion is hungry, he eats.
It’s called life.”
“Exactly”, he said, “we’re all in it. Working hard to eat, not to be eaten.”
“Women make it right”, I said.
“Life wouldn’t be bearable without them, hell if I understand how they do it.”
There was a good story about a flight to New York when lighting hit the plane in the air. Bono, the one of U2 fame, got up and walked to Claudia Cardinale, who was sitting not far.
“God just took a picture of you,” he said.
And he was right, because it was so worth it.
CC is a great actress and a beautiful woman; she was in 142 movies so far.
Truly Italian in looks, character and temperament, still sweet after all these years (she started her career in 1958).
I have a weak spot as a man and as an art lover.
Now to the movie from the title of this essay.
“When you hear a strange sound,” Charles Bronson said to her in the scene by the well, “you drop to the ground.”
“Like how,” she asked.
“Like that” he dropped a cup of cold water.
And after the ordeal was over, she realized – “he can not only play the harmonica, he can shoot too.”
And she was the only woman in the movie full of rough men and she made an impression on everyone.
Here is another great line from this movie:
“Your friends have a high mortality rate, Frank.”
He looked and the Harmonica man, finally starting to be afraid.
It took him a while to say it:
“And you’re making the appointments…”
Charles Bronson was a Lithuanian-American actor, born Charles Dennis Buchinsky, and he learned to speak English when he was a teenager; before that, he spoke Lithuanian and Russian, which are close languages, and as a Polish guy I can understand them both pretty well. Small world.
When Bronson was 10 years old, his father died and he went to work in the coal mines.
He said later that his life was tougher than the characters he played.
My move to the wild West happened a long time ago and I consider Toronto home ever since. It’s a great place to be, North America - land of the free. Nothing beats it.
So much different than Europe.
Which is why Sergio Leone went to America to deliver his life performance, as did Roman Polanski with “Chinatown”.
Milos Forman came here too, to make his “Amadeus”.
For a while I was not sure how my European affair is going to play out, but sitting on a fence it’s a dangerous course, you could even catch a bullet from the peace-keeping force (Dire Straits song).
So, I am going to take a 777 across the ocean and ride my big motorcycle there until the snow stops me. I’ll be in the big wide North typing my next essay.
Man’s got to know his limitations, but they appear in the body, not in the mind.
The mind is stronger - I went to hell and back lately, but I am back, so it appears that the devil loves his children. One of them is me.
I may be around for a while longer, writing more essays.
Let’s get back to thinking about women - they make the life worth living.
Screw the recent diversity theme in the press, like, were we all just born yesterday?
Who just woke up?
Don’t teach me what I already know.
Women are sweet, and loving and smart and I don’t need a policy, official Communiqué,
to tell me that.
It’s in my blood, I am not a lonely man.
Claudia C. and Catherine Deneuve are charming women from times gone by.
I may be old fashioned and I enjoy a great old wine too, plus a vintage Ford Mustang, all done up. And I like my music slow and strong.
Take that from an Eastern man.
Tom Kubiak is the author of The Traveler