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Editor's note: This week, the U.S. government released several key economic reports. To spare you the fine details, just know unemployment is getting worse. And one manufacturing report was so bad, some thought the key number was a misprint. These problems are so severe and so much in the public eye right now, that we're doing something unusual for our Saturday guest essay...
Our sister site, The Daily Crux, called this essay the "best rant of 2009." It's no surprise it's from our colleague Porter Stansberry. While it was written months ago, we believe this is far and away best insight you can possibly read on the unemployment situation in America.
Saturday, August 21, 2010
I'd like to make you a business offer.
Seriously. This is a real offer. In fact, you really can't turn me down, as you'll come to understand in a moment...
Here's the deal. You're going to start a business or expand the one you've got now. It doesn't really matter what you do or what you're going to do. I'll partner with you no matter what business you're in – as long as it's legal.
But I can't give you any capital – you have to come up with that on your own. I won't give you any labor – that's definitely up to you. What I will do, however, is demand you follow all sorts of rules about what products and services you can offer, how much (and how often) you pay your employees, and where and when you're allowed to operate your business. That's my role in the affair: to tell you what to do.
Now in return for my rules, I'm going to take roughly half of whatever you make in the business each year. Half seems fair, doesn't it? I think so. Of course, that's half of your profits.
You're also going to have to pay me about 12% of whatever you decide to pay your employees because you've got to cover my expenses for promulgating all of the rules about who you can employ, when, where, and how. Come on, you're my partner. It's only "fair."
Now... after you've put your hard-earned savings at risk to start this business, and after you've worked hard at it for a few decades (paying me my 50% or a bit more along the way each year), you might decide you'd like to cash out – to finally live the good life.
Whether or not this is "fair" – some people never can afford to retire – is a different argument. As your partner, I'm happy for you to sell whenever you'd like... because our agreement says, if you sell, you have to pay me an additional 20% of whatever the capitalized value of the business is at that time.
I know... I know... you put up all the original capital. You took all the risks. You put in all of the labor. That's all true. But I've done my part, too. I've collected 50% of the profits each year. And I've always come up with more rules for you to follow each year. Therefore, I deserve another, final 20% slice of the business.
Oh... and one more thing...
Even after you've sold the business and paid all of my fees... I'd recommend buying lots of life insurance. You see, even after you've been retired for years, when you die, you'll have to pay me 50% of whatever your estate is worth.
After all, I've got lots of partners and not all of them are as successful as you and your family. We don't think it's "fair" for your kids to have such a big advantage. But if you buy enough life insurance, you can finance this expense for your children.
All in all, if you're a very successful entrepreneur... if you're one of the rare, lucky, and hard-working people who can create a new company, employ lots of people, and satisfy the public... you'll end up paying me more than 75% of your income over your life. Thanks so much.
I'm sure you'll think my offer is reasonable and happily partner with me... but it doesn't really matter how you feel about it because if you ever try to stiff me – or cheat me on any of my fees or rules – I'll break down your door in the middle of the night, threaten you and your family with heavy, automatic weapons, and throw you in jail.
That's how civil society is supposed to work, right? This is Amerika, isn't it?
That's the offer Amerika gives its entrepreneurs. And the idiots in Washington wonder why there are no new jobs...
Free health care, nearly unlimited military spending, a bankrupt retirement scheme, and government-backed banks... The U.S. economy "is a charade," Porter argues. "And when it falls apart, the consequences will be devastating." Read more here: Don't Fool Yourself: America Is "Now a Communist Nation".
With all the government is promising its citizens, Porter argues, a collapse of the U.S. dollar is inevitable. In a two-part series we published earlier this year, Porter showed readers exactly what to do to protect themselves. He believes it's the most important advice he's ever written. Read Part I here and Part II here.
CHART OF THE WEEK: THE GOLD STOCK DIVERGENCE CONTINUES
Our chart of the week shows the "gold stock divergence" we highlighted months ago is still in place.
For much of 2010, gold stocks and the broad market increased at roughly the same pace. Then, when the market stumbled in April, the two diverged. The broad market kept falling. But gold stocks remained solid, supported by the incredible strength in gold.
As you can see from the "performance chart" below, this divergence is still in place. Gold stocks (the black line), are showing positive returns and climbing. The S&P 500 (the blue line) is showing negative returns and falling.
Stat of the week
In The Daily Crux