The Dow rose again yesterday – up 44 points. Gold went up too – to a new record of $1,114.

Can anything stop stocks and gold?

Trees do not grow to the sky, dear reader. And for every bounce there is a bust.

“It’s amazing, the US is doing everything that Japan did wrong,” said a friend yesterday.

Let’s see… in the 1980s Japan’s corporate leaders thought they were going to take over the world. Investors thought so too. They expanded. They wheeled. They dealed. Prices shot up and they all thought they were geniuses.

In the ‘80s, everyone wanted to be Japanese. Management consultants used Japanese words to describe commonplace insights.

For example, instead of saying that businesses always need to try to do things better, they referred to “kaizen” as if it were the secret of success.

And US economists urged the Reagan Administration to have an “industrial policy” – because that was what Japan had.

Japanese businesses were the envy of the world. Japan was the world’s second largest economy. But in growth and stock prices it was Numero Uno.

It turned out, as it always does, that Japan did not have the secret to everlasting success. Instead, what it had was what comes before a fall.

Click here to read the rest of Mr. Bonner’s article.

Declassified US government documents show that in the 1980s while Iraq’s Saddam Hussein was involved in the genocide against his country’s Kurdish population (using poison gas), the US opposed punishing Iraq with a trade embargo.

The reason was simple. It was cultivating Iraq as an ally against Iran and as a market for US farm exports.

According to the documents, the Reagan administration “got carried away with their own propaganda. They began to believe that Saddam Hussein could be a reliable partner.”

Kinda makes you wonder if Osama bin Laden were to come out of hiding and start his own country if the US wouldn’t try to, once again, be his friend… make him a trading partner.

Source: Be Careful What You Export