 The Money
Pit
Bill Bonner
The
Daily Reckoning
January 17, 2005
The Daily Reckoning PRESENTS:
Our editor has bought he and his family another home in France...
actually, he purchased a grand and imposing 18th century chateau.
Although it sounds romantic, the estate is not all that it's
cracked up to be. Read on...
A real alternative: Investing in a
chateau in Normandy
The financial media is full
of bores and quacks - just like Congress. But all the hacks share
a common and vulgar hustle: They all promise you more money.
There is something unbalanced about it. Only half a man's life
is passed in trying to make money, and not necessarily the better
half. The other half is spent trying to get rid of it. The following
little letter is designed to help.
Last week, we drove out to
a small town in Normandy. There, we spent two hours in a grim
office signing papers. From that day forward, we would be responsible
for the town's most remarkable building - the former seat of
the local marquis... an 18th century chateau. The place had been
on the market for more than a year. Since no buyers who knew
anything about it could be found, nor any who hailed from anyplace
within 4,000 miles of it, your editor became its "chatelain."
It was a moving occasion. The
seller had owned the place for many, many years. There were so
many family memories attached to it, she said. The poor woman
had a small tear in her eye at the end; we barely noticed her
winking at the notary when the deal was done.
There is something timeless
and dignified about owning a magnificent pile of stones. It makes
you think of the next generation... of eternity - that is, of
blowing your brains out.
A man buys a house to live
in. He keeps an apartment as a convenience. He has a beach house
for fun. But he buys a chateau to inflict pain - either on himself
or his family.
We bought our first one ten
years ago. It was an ideal investment, we discovered. Unlike
stocks, or real estate, or gold - a chateau in France is a sure
thing. Your stocks might go up, or down. Real estate, too. And
gold... who knows what the gold price will be a year from now?
But a chateau - a huge, old stone house - is much more reliable.
It is practically guaranteed; there is almost no way you can
win. You see, dear reader, the correct translation of the word
"chateau" is actually "money pit." There
are more enjoyable ways to part with a fortune. There are quicker
ways too. But none is surer.
But even the vast expense does
not fully describe the suffering that a chateau causes. Writing
checks is one thing. But you cannot simply write a check. You
must write it to someone. And therein lies a punishment suitable
for a serial killer. Each check requires a payee as well as a
payer. And the payee of your chateau checks will be the local
artisans, roofers, electricians, merchants, plumbers, cabinet
makers, tax officers, half-wits and miscreants. None will present
himself readily. None will present his bill clearly. Not a single
one will complete the transaction without innumerable meetings,
compromises, delays, mishaps, threats and misunderstandings.
The process will not "stretch out" over years... for
that suggests movement and flexibility. No, it is more like a
long stay in a federal penitentiary, punctuated only by tedious
visits from an incompetent lawyer - who bills by the hour.
Our first chateau fix-up project
stretched out over nearly 10 years. It is still not complete.
Not that there hasn't been any progress. When we arrived, the
chateau was broken down, but at least we were in pretty good
shape to tackle it. Now the chateau is in good condition, but
we are broken down. And is it any wonder? We spent nearly every
weekend and holiday for the last 10 years in a cold, dirty, drafty,
smoky, uncomfortable place - our own chateau. We scraped the
lead paint off the walls; we laid up stone walls in the icy rain;
we choked in front of open fireplaces... .trying desperately
to get warm, we stood so close to the flames that our buttons
melted, while our backs were still cold. We climbed up to the
top of chimneys, 50 feet above the ground - this is a chateau,
remember - to clear out the crows' nests. We slept amid the mould
and mildews and contracted strange and wondrous diseases that
haven't been seen since the 19th century, and excited the curiosity
of medical school students. And we felt lucky; we survived.
But what is the purpose? Why
make such sacrifices? Because, once you get the place fixed up
you can throw a big party, invite your friends and enemies, and
show off. Just don't forget to do it in the summer. In the winter,
the place will still be drafty, cold, and dangerously unhealthy.
Even if you had a nuclear reactor next door, you will never be
able to get the place warm. All the energy in the world is not
enough to warm up these places in January. Which is why your
nose will always run... you will have a lingering cough from
October to May... and your friends - if they ever do come to
your celebration - will look on you with pity and ask if they
can call an ambulance.
All of that, though, is the
good part. The bad part is that after buying this pile of rocks...
and spending a fortune fixing the place up so that you will have
something to leave to your children... the children themselves
will want nothing to do with it. By then, they've spent hundreds
of weekends shivering in front of an open fire, too... being
asked by Dad to help with this or that. Whatever scales Dad still
has over his eyes dropped from theirs years ago. They can barely
wait to get rid of the place so they can return to a tidy apartment
in Paris with a bistro next door. When you tell them that you
intend to leave it them in your will, they will scarcely be able
to wait; they are likely to club you with a fireplace poker right
on the spot, and have the place up for sale before the sun sets.
To make matters worse, even
after enduring the torture of buying and renovating a chateau
(every one of them is apparently in urgent need of repair), the
owner hardly gets the respect he thinks he deserves. The French
look at him in awe; how could anyone be that stupid, they ask
themselves. They've spent years trying to offload their own piles
so they could buy a trouble free place on the Cote d'Azur. Americans,
meanwhile, look at him in shock; why would he want to do such
a thing, they wonder. Even his fellow chateau owners give the
man no more admiration than he would get from a Paris waiter.
In fact, they regard him as pathetically "petit." For
no matter how much you spend, your place will always be small
in comparison with others in the area. Here we enter into the
strange realm of middle-aged male psychology... and the real
reason we get involved with chateaux in the first place. For
no matter how big yours is - viewed from whatever angle - it
is never big enough. There is always someone fifteen minutes
away with a bigger one. And when he gets drunk and flirts with
your wife at cocktail parties, your sense of jealousy and inadequacy
gets the better of you.
Which is why, of course, you
buy your second chateau. It is a bigger money pit than the first.
It requires even more meetings, more checks, more decisions,
more drafty weekends, and more resentment from the family. But
at the end of it you end up with a bigger place - and then you
get drunk and flirt with his wife!
Bill Bonner
for The Daily Reckoning
P.S. Your editor has become
a farmer. Not that he set out to be one. But when he purchased
his place in Normandy, he found himself in possession of 17 cows.
Being as ignorant of cows as of economics, he sent his trusty
friend, Pierre, to survey the situation.
"How are they?" he
asked.
"Appalling," replied
Pierre.
"What do you mean... what's
wrong with them?"
"A good herd of cattle
comes from careful selections," Pierre explained. "Over
time, you end up with a quality herd. For some reason, it looks
like they selected the wrong ones. I think one of the cows only
has three legs."
"Hmmm... that's too bad.
I was hoping to make some money on the farm."
"What?"
"I was hoping to make
money on the farm."
"That's what I thought
you said. But you'll never make any money on that farm."
"Why not? I thought the
European Union gave farmers all sorts of subsidies."
"They do. But this farm
doesn't get any. They just never properly registered. And it's
practically impossible to register now. No, that farm doesn't
make money; it loses it. Probably lots of it."
"Well, let's get rid of
the farmhand and stop farming."
"You can't do that. First,
the farmhand has a contract. You can't just fire him. He's probably
been there forever. It would cost a fortune to get rid of him.
You'll probably have to run him over with the tractor, or something.
And second, you can't not farm the place. You have to farm the
place."
"Why?"
"It's part of the subsidy
system."
"But we don't get any
subsidies."
"Doesn't matter. If you
don't farm the place, they'll let someone else farm it."
"Well, so what?"
"Well, then it's no longer yours."
"Oh, maybe that would
be a blessing."
Bill Bonner
 The Daily Reckoning
Editor's Note:
Bill Bonner is the founder and editor of The Daily Reckoning.
He is also the author, with Addison Wiggin, of The Wall Street
Journal best seller Financial
Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley &
Sons).
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