THE DIAMOND BUBBLE

Dana D. Dlott: ‘The diamond business is a classic bubble. It has to burst some time, but I can’t say when. [Ain’t that the way with bubbles?-A.T. But, no, I don’t think it’s a classic bubble, because those involve crazy hyperbolic price appreciation before the crash, not a gradual, decades-long, managed ascent.] There are two reasons for the bubble. First, although diamonds were valuable and rare in the past, that is no longer true. The cartel has so many diamonds in their vaults that if they were released, prices would plunge. Second, there are many ways of making diamonds in the laboratory and the technology is improving every day. Diamond dealers dismiss synthetic diamonds. Somehow the story goes, natural diamonds are worth a lot but synthetic diamonds are not. But what is the difference? The real difference is that natural diamonds have flaws while synthetic diamonds are perfect. Dealers and jewelers tell you with a straight face that its the flaws that make the natural diamonds worth so much, and people seem to believe it. These are the same guys who hyped worthless dot.com stock and told people that tulips were worth million of guilders because their petals had a certain shape. Diamond buyers are the same gullible people who always get creamed when the bubbles burst. The only two things supporting present day diamond prices are the unwillingness of the cartels to open up their vaults and the willingness of people to believe a crazy story.’

THE DOOFUS IT IS!

Michael White: ‘Okay, you convinced me. Roberts’ question could have been mine. [Roberts asked whether one should vote for the slimeball who votes the way you want him to, or the upright candidate who votes the wrong way.] Here in Augusta GA the slimeball question is not hypothetical. The candidates for U.S. Congress (new district, so no incumbent) are two – one rightwing Republican and one Democratic doofus with an interesting arrest record who would not even be in the race except that his father is the ethically challenged leader of the Georgia Senate. I will vote for the doofus. P.S. It was about 10 years ago that Edwin Edwards, now in federal prison, made his last run for governor of Louisiana, versus David Duke, former Grand Whatsis of the Ku Klux Klan. Edwards, ever the rake, gloried in the support he received from the good government groups that had always opposed him in earlier races. He had bumper stickers that read, “Vote for the Crook – It’s Important.’

A CONTRARIAN TRAVEL STRATEGY

Jim D: ‘Stephen and I are in Bali and we have refused to leave. It is a catastrophe. There are only 10 of us left in the Four Seasons resort. The staff has been told to come in only every other day. Hotels are closing. The taxi driver told us that we were his first fare in two days and he was not sure he would be able to feed his family. At the large, fabulous restaurant last night, we were the second table served all day. Forty-three dancers pretending everything is ok, dancing before four of us. Our gay waiter said that he was going to lose everything he had worked so hard for. His motorcycle and his small house.

‘The people here are by nature so happy, warm and smiling, it is breaking our hearts to see the suffering. The Balinese are so proud that they have been an island of peace and beauty, despite all the turmoil of Indonesia. Now, it is all shattered. We spoke to some farmers yesterday. They are greatly affected as their crops are normally sold to the now empty hotels. There are vegetables and fruits rotting in the fields.

‘So, come to Bali. You can get a $730 Four Seasons beachfront room (with a personal Olympic sized swimming pool, since you’ll be the only one at it) for $80 a night!’

☞ It’s not a bad idea. You get to take a rich man’s vacation on a Courtyard By Marriott budget – all the while feeling you’re helping some folks. As for safety, my guess is that an all-but-empty hotel will not be the next target. Don’t forget to send a postcard from the pool.

 

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