Written by The Daily Bell with Anthony Wile
"America is in deep, deep trouble...we have 13 or 14 trillion dollars of balance sheet liabilities and 65 or 70 trillion dollars in unfunded mandates and obligations...We have lived beyond our means. That is going to be a true reckoning..."
Introduction: Rick Rule began his career in the securities business in 1974, and has been principally involved in natural resource security investments ever since. He is a leading investor specializing in mining, energy, water, forest products and agriculture.
A popular public speaker, Mr. Rule is a featured presenter at investment conferences and resource investment forums throughout the world. Rick Rule has originated and/or participated in several hundred transactions over the past 30 years, including both debt and equity in private, pre-public and public companies. These private placement activities have involved companies on six continents.
The Daily Bell is pleased to present an exclusive interview with Rick Rule (left).
Daily Bell: Thank you again for sitting down with us.
Rick Rule: It is a pleasure.
Daily Bell: You indicated back in July that you would have a fairly major transaction in the next 2-3 weeks. What was it?
Rick Rule: We have agreed to sell Global Resource Investments and the affiliated companies to Sprott Inc., who is probably Canada's premier global resource oriented money manager. Eric Sprott is somebody who I have known and admired for many years and everything that I have tried to do, he has managed to do seven or eight years before I did. He made the transition from a big brokerage firm to his own brokerage firm, which I did, followed by a decade. He made the transition from brokerage firm owner to money manager, which I did. But most importantly, Eric succeeded in institutionalizing himself, surrounding himself with a high quality group of people.
So what had been a job became an investment and a business, Sprott Inc. That was the next stage in my career for a bunch of reasons. So we have agreed to a transaction where we are acquired by Sprott in an all stock transaction. I will become the second largest shareholder of Sprott Inc. I will be a director of a public company for the first time in my life and I'll be the second largest client of Sprott. In other words, I will have more of my money managed by Sprott, with the exception of course of Eric himself, who has most of his money managed by the firm.
Daily Bell: Congratulations. Can you expand?
Rick Rule: Sure. If you Google Eric Sprott, you will see by reading some of the posts and references, the extraordinary value of the Sprott brand. It's interesting to note that the Sprott brand was not developed by advertising but by performance. His five-year performance, his ten-year performance, his 15-year performance – all have been excellent. The only resource manager who has spent less money on advertising than Eric, is me because our expansion has been performance based as well, so we are really merging two performance based cultures.
Eric has grown from 40 million dollars of assets under management 10 years ago, to six-and-a-half billion dollars of assets under management today, and as I say, largely through organic growth and performance. We believe that the next major platform for the firm's growth is in the United States.
The US market is about twelve times the size of the Canadian market, in terms of investable funds, including seven trillion dollars in cash and money market fund equivalents. It's a market where the financial services industry is much less concentrated than in Canada, very, very fragmented, lower barriers to entry and in particular it's a market that is under served in the financial community in terms of natural resources investing.
So we think it's an absolutely prime market for Sprott to come into and we think, in all humility, that we are the perfect footprint for it. We are the largest resource oriented brokerage firm in the United States, certainly the largest with regards to micro-cap resources. We have the segregated accounts business, which is not a mutual fund business but rather a business that manages accounts for individuals. It does not co-mingle with part of a pool, which is a form of a management that is increasingly popular among high net worth American individuals. They prefer that method of asset management in increasing measure to the open-ended mutual fund format. We also have permanent assets in the form of capital pools.
An important part of the thing that has set Sprott apart from their competitors and us apart from our competitors, is that the structure of many of our products are permanent or semi-permanent, which enables us to make investments in natural resource companies for the longer term.
Many of our competitors in United States and Canada seem to have trauma holding stock over a long weekend, but in fact value is developed in these companies over time. Both Sprott and Global have proven their ability to invest in young companies, help them grow over time, and as a consequence of that make substantially larger returns than we would have had we been time constrained.
So, I think both firms' orientation and both firms product mixes are uniquely suited to each other. I guess the clincher on the transaction is that I have been attempting for two years to hire Peter Grosskopf from Cormark to come and run my business. Once again Eric beat me to the punch. When Eric hired Peter as CEO, Peter called me up and said, "Can we continue our discussions in a different format?" The answer was yes.
Daily Bell: We will follow your progress with interest. But here is a related question: Is the resource sector headed into a bubble?
Rick Rule: I think the sub-sectors of resources will be headed toward a bubble. One of the interesting things about the micro-cap resource sector is that in good markets, liquid markets, it becomes increasingly story oriented and less reality oriented. So you have these odd sector meters, which often evolve into bubbles very quickly. I think in terms of the lower quality goals we are definitely in a bubble. We are seeing companies with 60 or 70 million dollars of market capitalization that don't have any gold.
The argument of course is that as the price of gold goes up that should have some impact on them. But I also believe that we have 10 years left in the resource super cycle, that isn't to suggest that we won't have some ugly downside volatility, not unlike the volatility we saw in 2008 or the volatility we saw in 1975, when in the midst of the greatest gold bull market of all gold lost 50% of its price over the course of a year. So, I think the secular gold bull market and secular resource bull market is very much intact but I expect that we'll see extraordinary volatility.
Daily Bell: What do you think of the Canadian regulatory outlook?
Rick Rule: Unfortunately, I am from the United States and I would suggest that the Canadian regulatory climate relative to natural resources is much more intelligent than the American regulatory environment. For one thing, Canada is still a resource economy and I can call regulatory authorities in Canada who have more than a passing familiarity with the industries that they are asked to regulate. In the United States, even many of the best intentioned employees of the regulatory agencies don't have any background in resources so it's difficult for them to even know what the words mean, which constrains them in terms of being intelligent regulators. If you compare the Canadian regulatory environment to other natural resources markets in the American environment, I would choose Canada.
Daily Bell: Where is financial regulation headed these days, globally?
Rick Rule: I hope it doesn't go global. I hope investors around the world are allowed to choose between competing regulatory climates. I believe that money will gravitate to freedom and to the extent that freedom is allowed somewhere, some place, I think it will be rewarded. I think the American regulatory climate is particularly troubled because the market breakdown we had in '07 and '08 came to be regarded as a failure of the market, rather than a failure of regulation.
It is my belief that this turndown was really a function of regulatory capture. I think the whole too-big-to-fail concept, the promotion by many arms of the federal government of the mortgage industry and a large number of factors almost all of which were regulatory constrained, were the causes of the '07 and '08 decline. The demands from the public and legislature have been to increase the regulatory arena, which caused the problem.
The most efficient form of banking regulation would have been to abolish federal deposit insurance. If depositors had to do due diligence on the capital adequacy ratios of the people they were depositing their money with, you wouldn't have had a problem. But, the widows and orphans demand protection and there are lots of them. I am not sure ultimately they are being protected as much as swindled.
Daily Bell: Are you a fan of any part of the increased invasiveness?
Rick Rule: [Laughing.] No, I can't elaborate, I lose my sense of humor.
Daily Bell: What is the point of all the harmonizing of regulation now occurring?
Rick Rule: The point of harmonizing at the federal level in the United States and the attempt to harmonize at the federal level in Canada will be to avoid competition between regulators. The regulators would say a race to the bottom and the capitalists will say a race to freedom. I am not for harmonization but I do think it's inevitable. You will notice that harmonization is a key word among the collectives. They would like to harmonize tax rates on a worldwide basis too. I think it's a very disturbing trend.
Daily Bell: Is the stimulus working in America or Europe?
Rick Rule: I don't see any evidence that the stimulus is working. We are having one of these famous jobless recoveries. I think the stimulus may be working for some of the senior executives of some of the bigger investment banks. I think it is certainly working for politically connected construction contractors in terms of infrastructure projects. It certainly worked for the shareholders of major banks, many of which deserve to fail and certainly would have failed without the incredible liquidity they were offered. But succeeded at what cost? It seems to me that the difficulty we are in, in terms of credit markets is that we have lived collectively beyond our means.
Let's use Greece as an example. The idea is that Greece couldn't service its debts at 1 x GDP so you extend them a credit at 1.6 x GDP. It doesn't seem to me to make any sense. I am not picking on the Greeks, I live in California and our financial picture is bleaker than Greece. I am using them as an example. The idea that a group of people who are heavily indebted and don't generate enough economic utility to service their obligations can somehow be benefitted by increasing their obligations does not make sense. People have to invest, people have to produce, people have to save. But instead people would prefer to spend and that math doesn't add up.
Daily Bell: Is austerity going to help Europe?
Rick Rule: What austerity are you referring to? It seems that the people who embrace austerity to some measure are the Germans who are already in fairly good shape. The rest of Europe, I don't think, had any intention of embracing austerity. There's some suggestion that Greece is embracing austerity as a consequence of the increase in the size of their government. The Greek people have greeted this "new reality" by burning police cars and throwing stones. Is that, then, a net benefit?
Daily Bell: War with Iran? On the menu?
Rick Rule: I don't know the answer to that. When last I was in the Persian Gulf, my friends there suggested that Iran and the United States were engaged in a dumb-presidents contest and they were curious to see who was going to win. I think there is a lot of nervousness in the region. I certainly hope that there is no war. I am always nervous about big governments talking to each other but I am more nervous when big governments don't talk to each other.
Daily Bell: Dollar going up or down long term?
Rick Rule: Long term it is hopeless. Hopeless. I think it is going much lower. It is widely reported that what you are seeing now is a race to the bottom. We have talked about this in prior interviews. The world's reserve currency is still the United States dollar and the United States is still, despite the fact that it is weaker, the world's mouth. We are the consumer that everybody looks to and if the Chinese are determined not to let the Renminbi appreciate too much against the dollar, the rest of the world has no choice but to appreciate.
Japan can't lose her competitive position relative to China in the US export market, so they have to devalue. From my point of view, all currencies go lower. I see the only currencies in the world that don't have a domestic political constituency for devaluation being gold and silver.
Daily Bell: Is the EU doomed to break up?
Rick Rule: Doug Casey wrote a good piece on that and I think he gave a good interview with you about this. I think the European Union, much like the euro, as Doug describes it, is a kind of Esperanto currency and an Esperanto Union. I see too many domestic political constituencies that feel themselves ill served. The ones in the EU that feel they have benefitted by the union are the people that are drawing the most from it and contributing the least to it. It has happened in the United States too where the productive classes subsidize the unproductive classes at nauseam.
Daily Bell: Is the West headed toward price inflation now, or hyperinflation or is the risk still deflation?
Rick Rule: I think deflation first, and then inflation. The world-wide numbers seem to indicate that we are in a gradual deleveraging process and deleveraging processes are usually deflationary. I think the political answer to that is to print like mad, which we have seen, and then ultimately face inflation. Deflation would be healthiest. The best way to deal with those debts is to liquidate them.
Daily Bell: You thought America's bailouts were ineffective. Have you changed your mind?
Rick Rule: No, not at all.
Daily Bell: Give us your thoughts on China right now.
Rick Rule: I think China has to slow down. There is no doubt that they are in a real estate bubble and it's liquidity driven. I am very nervous about the opaque nature and the politicized nature of the banking system in China. I have some personal knowledge of that and it's very scary.
Having said that living in Vancouver, one has only to observe the extraordinary success of the Chinese, epic de espera around the world. When people from China are given a measure of freedom anywhere in the world, their work ethic and their intelligence allows them to thrive – to the extent that the communist party continues to permit gradual increases in individual liberty.
I see China overcoming the opaqueness of the banking system and am hopeful that political liberalization in China and India combined will generate enough wealth that they will pull us decadent old Westerners out of the holes we have dug ourselves into.
Daily Bell: Where do you see the natural resource sector headed?
Rick Rule: Further to our discussion earlier, we are in a secular bull market that has room to run in the context of people in the third world rapidly becoming richer as small amounts of political liberalization take over. Those poorer people when they get money spend it differently than we do. When they get money they buy things that are made of stuff.
If they live below the equator, they buy a refrigerator or an air conditioner or a newer more efficient means of transportation than a worn out bicycle. So on the demand side, demand is increasing rapidly per capita. At the same time supplies are constraining as a consequence of a 20-year bear market in resources that began in the early '80s and went until 2000. The situation where you have increases in demand and limited supply is very good for commodity prices and I don't see anything really changing that.
Daily Bell: Are we seeing increased volatility?
Rick Rule: We are, but I don't think we have seen anything yet. We are headed into a period of absolute hyper volatility.
Daily Bell: How long a run will gold and silver have? Another five years? Another ten?
Rick Rule: That is a question I am ill prepared to answer. I don't think it will be as fast as many people think it could be. I forget who said during the 70's run that there's a lot of ruin left in a country the size of the United States. I think we have a slow motion train wreck not a rapid train wreck and I think gold's upward move will be in fits and starts but steady.
Daily Bell: Is silver a better investment than gold?
Rick Rule: I think in the near term, silver probably is. My new nominal boss, Eric Sprott, has done a lot of work on the amount of physical silver that is currently available in the world to meet near term investment demand and the picture that he paints is very bullish for silver.
Daily Bell: Will the historical 15/1 ratio reassert itself?
Rick Rule: I don't really understand those ratios. I think they are irrelevant myself. There are a lot of people who like technical ratios because they need precision in their minds to help make decisions, but I think the world is much more chaotic than anything that would be represented in the context of those ratios. I think some of the things that impact the price of silver and are relative to the price of gold are esoteric, like the price of base metals. When the price of base metals is high, more bi-product silver gets produced. There are many more manufacturing and fabrication uses for silver and those types of variables don't fit neatly into a performance curve that would suggest the ratios are necessarily valid.
Daily Bell: Is oil going to head up in price?
Rick Rule: Yes, longer-term, but maybe lower in the near term. In our last interview we discussed how the supply outlook on oil is positively scary. The big multi-national oil companies don't produce most of the oil in the world, contrary to what the public thinks, rather it's produced by national oil companies – the same people who can't deliver the mail.
We have a situation worldwide where legislatures have diverted free cash flow from their domestic oil industries to subsidize politically expedient domestic programs including, ironically, subsidizing gasoline for the citizenry. This has the odd impact of increasing demand while reducing supply internally. It's my belief that several current oil exporters such as Mexico, Venezuela, Peru, Ecuador, Indonesia and probably Iran, will cease to be exporters of oil in the next five years. If you took those six countries out of the equation, you would reduce world export supplies by 25% at a time when world export demand is increasing on a compounded basis by 1.8%. Those are scary numbers.
Daily Bell: What investment criteria do you use these days?
Rick Rule: Same as always, risk adjusted, net present value. We are fundamental investors. I don't have anything against technical analysis, I just don't understand it. I'm not a creature of markets, I think markets are a facility for buying and selling fractional ownership in businesses represented by shares or fractional participation of debt represented by loans or bonds. We have employed the same discipline for 30 years – nothing changes for us.
Daily Bell: Has your strategy toward identifying promising opportunities changed in any way?
Rick Rule: It has. I am a contrarian so I try to stay out of the main stream. During the 1998-2002 period we had two things we were concentrating on, one was uranium and the other was gold. Both have performed well. Uranium having performed so well it's beginning to be out of favor to be in it again. We are looking at re-entering the uranium market. We are looking at re-entering the North American natural gas market, which is extremely out of favor and we are extremely bullish on certain forms of alternative energy, mainly hydro and geo-thermal. So, yes, we are doing things a bit more differently. There was a book published, not too long ago, saying there is always a bull market somewhere. For me, that's like saying there's always something that is overpriced if you look hard enough. You can always pay too much. Mercifully for me, there is always a bear market somewhere and there is always something that is out of favor that we can buy and hold until it returns to favor.
Daily Bell: The Internet has played an important part in the precious metals resurgence. Is Internet censorship on the way?
Rick Rule: I think that Internet censorship is on the way, but I think they are going to have a hard time implementing it. We had a well-intentioned problem ourselves where the Securities and Exchange Commission said to the industry that our website, and any member firm's website, constituted advertising and that we had to be careful about prosecution if we violated their guidelines. Well, they didn't have guidelines yet and that made it difficult for us. So I think unintentional obstruction of the free exchange of information will be a problem. But I suspect that technology and the user base will continue to outpace people's ability to constrain other people. If I didn't have access myself to some very smart young people who really understand how to navigate the web, it would be fairly easy to restrict my access to it because of my own inefficiencies.
Daily Bell: Last time we spoke you believed Chile was one of the most hospitable countries to mining. Any changes there?
Rick Rule: [Laughing.] Yes. Never have faith in a government. The new conservative guy, Pinera, has ambushed me, just like they did in Alberta. Chile has gone the way of Albertastan. I mean we both agree that the prime function of a government is to steal. There is no industry that's as much fun to steal from as the mining industry because it can't be moved to another location. I guess Senior Pinera looked at the revenue generated by the copper industry and thought, "you know, I would like to dispense that revenue." In a similar move, Alberta just decided to nationalize the oil and gas industry for a while. Chile is still better than the rest, but that's damning it with faint praise.
Daily Bell: Is the recent economic crisis over? Is America on the rebound?
Rick Rule: Absolutely not, America is in deep, deep trouble. I may have this number wrong, but if my memory serves me, we have 13 or 14 trillion dollars of balance sheet liabilities and 65 or 70 trillion dollars in unfunded mandates and obligations. I understand most of those numbers but the last three zeros to the right of the decimal points are numbers I have a very difficult time with. In the United States we have to come to realize for all our greatness, for all the innovation in the country, for all it's spectacular history and for all the incredible infrastructure that we have, we have been living a lie. We have lived beyond our means. That is going to be a true reckoning.
Daily Bell: Any articles or new books you would like to mention?
Rick Rule: I have been working so hard I have had no time for sport reading but I would like to mention a book called Stones for Schools by Greg Mortenson. He also wrote Three Cups of Tea, a spectacular book. These books are about building schools in Pakistan and Afghanistan and the effort to promote education and literacy in rural areas of these countries. Both of these books are a wonderful diversion from the gloomy realities around the world.
Daily Bell: Any closing thoughts for our readers?
Rick Rule: One of the things I touched on is about volatility. You have to prepare for this in a financial sense. It is worth remembering that in the 1970 gold bull market when gold ran from US$35 to over US$800 per ounce, that in 1975 the gold price fell by half and the gold stock index fell by more than that. The sad consequence of that correction was that the people who were right about the trend but didn't have the financial or psychological wear-with-all to stay the trade, lost all their money. They had bet right but couldn't stand tight and lost. I think you will see this same pattern in the future. On the one hand you have to be prepared for one or more 50% declines in the indexes and you have to be prepared for a set of circumstances where 25% increases and decreases are commonplace. Investors and speculators who are psychologically and financially prepared for that will benefit greatly. What volatility means is that goods go on sale frequently instead of occasionally but if you don't have the courage or the financial wear-with-all to stay the trade it can be really terrible.
Daily Bell: Thanks for this opportunity to catch up with you again and hear your well-considered insights.
Rick Rule: Thank you and I look forward to the free market comments. That's my favorite part.
This is another great interview that Rick Rule has given us, and we congratulate him on the sale of his company. His interview speaks for itself (as usual) and thus we want to take some time to explore questions that we had not composed at the time of our chat. We don't know how Rule would have answered (though we can guess) but given the unsettled nature of the global economy and the rising level of paranoia in world markets, we thought this would be an appropriate place to chart some of these perspectives.
Rick Rule says he expects the Golden Bull to run much longer – he estimates another ten years; in fact, we have predicted at least another five. That's at least how long it may take for the world's economy to un-distort from the entirely artificial valuations of resources and industry provided by the Anglo-American fiat-money hustle. Of course, many do not think the system will ever get around to fully unwinding. More and more people, in this nervous environment, are simply predicting a sudden collapse and the implementation of something "new."
This is a bit ironic for us; we're used to being iconoclastic, but everywhere we look these days we find company. Of course we wish we didn't, as for the past two years we've been regularly predicting that there might be, eventually, a collapse of Western economies and a change over to a market driven gold and silver standard within a free-banking context. In other words, no grand Bretton Woods-like scheme; no huddling of major players and the sudden announcement of a new, worldwide gold standard – simply a gradual spiraling out-of-control of the world's fiat money system and dollar reserve currency.
We have predicted this possibility within the larger time-horizon of, say, five years. To be truthful, it never occurred to us that it would happen in November 2010. But as we have long pointed out, understanding broad trends in the market is one thing; timing is another.
So ... is the world going to end next week as some are predicting – even within the feedback threads of the Bell? Again, it does not seem so based on what we understand, but then again anything is possible. Yes, there are signs that have been pointed out to us; some more serious and some less so. One such is based on a Simpson's cartoon, the video of which was kindly sent to us by a concerned (and savvy) feedbacker. The cartoon is supposed to contain various Illuminati symbolism that predicts perhaps a currency meltdown, a nuclear attack or some other false flag event presaging a US state of emergency or even the initiation of world government.
There are other reports of such an event. An anti-NWO gentleman who has developed some sort of event-driven Internet software is claiming that the next week shall be an especially dangerous time for citizens of the world and especially of America. Part of the paranoia stems from Barack Obama's departure from Washington DC with much of his court, er, entourage, er staff. With the President and his retinue out of Washington, the stage is set for almost anything.
Certainly, we have noticed the steady rise of gold and silver as a result of Ben Bernanke's second round of "stimulus." The idea among some (and we have written about it) is that Bernanke is deliberately ruining the dollar in order to force other governments to go along with Western power elite plans for a one-world currency run by the IMF. Bernanke is attending a "party" at Jekyll Island where the Fed was founded and the coincidence of two large-scale gatherings of the elite (Obama in India and Bernanke off the coast of Georgia) has triggered even more musings about what is going on.
We don't discount the speculations swirling around the Internet as idle chatter. The Internet's alternative media has its spooky side but it is also inhabited by some very smart people. On the other hand, we still tend to believe as we wrote recently that the gloomy reports sweeping the 'Net could be part of a kind of promotion to drive up the prices of gold and silver in order to manipulate the market back down, shaking out small, leveraged investors and breaking the momentum of the metals markets for the near term. To summarize:
1. The Chinese and the BRIC countries generally are far from being on board with any global currency, especially an IMF-run bancor as the Anglo-American axis still controls the IMF for all intents and purposes.
2. Given that the BRICs might not agree to any kind of world government or world currency no matter how hard the Anglo-Americans push, the initiation of global governance via some sort of false-flag event doesn't make a lot of sense. There is no consensus for world government so how would an initiating-event help?
3. Why would the Anglo-American elite be intent on ruining the dollar when there is nothing to put in its place? There are no solutions at the ready, and destroying the dollar does not seem to us a course of action that is going to give Western power elites MORE power or leverage. Quite the reverse.
These are our thoughts (absent a war with Iran, anyway). China is not happy with the US; the world generally is pushing back these days when the Anglo-American elite begins to make moves of its own. We tend to believe, as we have written before, that the elite is more likely out of options than pursuing some nefarious plot that will initiate the NWO. Bernanke's "last inflation" like the last gunfight at the OK Corral is simply an indication that he is out of bullets. The upcoming G20 meetings (for the umpteenth time) will result in more arm twisting by the Anglo-American power elite and a vaguely worded communique when the concord dissolves. But we would be most surprised if it yields anything truly concrete. The bancor will have to wait for another day.
Our take for better or worse. Gold and silver – up more (perhaps?) ... before a potential correction. World government or a major false flag even in the US – kind of doubtful in our view.
This is our intelligence. Our gnomes could be wrong.
Many Publications Have Their Swiss Gnome Sources.
Introducing Ours ...
Do you expect a false-flag event?
Are you generally stressed-out?
Here, read on ...
Many of you already know of the nearly 1,000 elves (there are a few humans too) that have congregated in our great (if "close") conference room. We have hired many of them recently from St. Nick's failing and melting operations. What we have not spoken of, however, are Swiss gnomes. In fact, the elves are replacements for many of the gnomes that used to haunt these premises with their flashing axes and swarthy faces – and have now departed for other climes, thank goodness. (Frankly, we kicked them out as soon as we could.)
Swiss gnomes as you may know are very focused on gold and silver. They tend to smell (sorry, it's true), have dirty faces, long, dank, dark hair and beards (even some of the females) and live in malodorous caves squatting near their hordes of precious metals. Sometimes they clean themselves up for extended stays above-ground with the "Big-'uns" when they sense a potential profit. They were instrumental in removing gold-backing from the Swiss franc and then turned a tidy profit on resultant Swiss central bank gold sales. This actually generated a civil war between the French and German gnomes (no love lost there) and the Bell itself received an influx of disgruntled refugees as a result.
Their fixation on precious metals is overwhelming. Many stored their wages in gold in their pointy footwear (not trusting banks of course) and after a while some of them could barely walk. They sat odiferously at our overlarge conference table with their bulging, painful, sweaty boots, grumbling and fingering their axes with sullen looks. They had a predilection toward undercooked sausage sandwiches and tended to leave breadcrumbs spread copiously about after a meal. Post-prandielly, they smoked from foot-long, belching pipes. (The males preferred stogies.) Can you blame us for wanting to us to be rid of them? Thank goodness for the elves (a second stream of problematic refugees, it is true, who come with their own improbable difficulties.)
Some of our dispossessed Swiss gnomes headed toward Brussels or cooler climes such as Sweden or Denmark. Many, it must be said, did not get any farther than EU customs. Three-foot-tall, portly but pure muscle, and dressed in badly-cured fur and ill-tanned leather with greasy, long hair, they were pulled aside and patted down. When searched, they responded relentlessly (and with deadly, violent accuracy) like the miniature sociopaths they are. They refused to go through scanners, of course. Not a one would lay down his or her axe, though requests resulted in a good deal of abruptly decommissioned equipment. An attempt was made to confiscate certain side-horns of Appenzeller ale; the results placed them, instead, in certain non-gnomish bodily orifices. There were unfortunate, even sensationalistic, international news headlines.
Some of the more clever gnomes avoided customs outright. They journeyed slyly to the EU, Asia, Russia or China using underground trails known only to them; they arrived at the outskirts of great cities and small towns and settled in as best they could. These gnomes, in fact now encompass one of the largest and most strategic financial intelligence services on the face of this planet. They are especially adept at using modern electronic communications – cell phones, laptops, ipads, etc. Like impossibly hyperactive slugs, their stubby, smudged fingers flicker across keyboards of all sizes and shapes. They are still on the payroll (though only paid a pittance). If something is going on you can be sure the Bell knows about it. They are an invaluable resource and one reason why the Bell itself increasingly stands head and shoulders above the rest of the media crowd.
Do you see him? The small, mesomorphic creature standing uncomfortably in the shadows of the crowded street, gazing distrustfully upwards at the imposing bank late in the afternoon? It's hard to make out such creatures directly, but ... you do notice him once he's pointed out; his gleaming, malevolently-notched weapon slung over one shoulder; his sullen, greasy-haired, juvenile-delinquent appearance. Yes, the one with the demeanor of an axe murderer; the swarthy, smelly, disreputable "shorty." He is one of ours; large-brained, mercurial and resentful, with a broad, runny nose that can literally sniff out gold and silver from miles away. Such is his dedication, he would chew your arm off to obtain the gold franc clutched in your severed hand.
This is the Daily Bell. This is our network. This is our strategic advantage.
We are professional meme watchers. We watch the power elite – watching us. Intelligence gathering is a dirty business, but we have the toughness, talent and far-flung resources to accomplish it. Buttressed by nearly a thousand workaday elves in our vast conference room, the Bell is equipped to give you literally moment-by-moment updates on the world's continuing financial crisis. Trust the Bell. Believe in the Bell. The mainstream media may make it up. We do not.
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