Scientists report finding a big hole in the universe. We're not surprised; we thought something was wrong.

"You don't want to spend the evening alone, do you?"

The question was put to us by a blond woman, attractive, about 35-years old. The honest answer was 'no, we'd prefer some company.' But there are times for truth…and times when lies pay off.

"You are very kind," we replied, "but no thank you."

We knew what she was selling. She was standing on the south side of the Arc de Triomphe at 10 PM…waiting for a customer. The companionship she offered would have been very welcome. So would the carnal intimacy, for that matter. But we have our principles.

Yesterday, the Dow fell 280 points and we went to visit our old friend in the Hospital Pitie-Salpetriere. "Mercy Saltpeter" seems like a strange name for a hospital, but that is the fact. The place is a city within the city of Paris, with streets, buildings, parks, courtyards, parking garages and so forth. It is also a very quiet and very pretty place, as there is no traffic to speak of.

"Bill, how are you doing?" said our friend.

"Better than you," was our reply.

He had lost 20 pounds in the last two weeks…since the cancer was discovered. He looked cadaverous. But he was in a good mood.

"Yes, cancer has been very good for my marriage," he explained. More tomorrow…

These thoughts and remembrances all flashed through our mind this morning…as we sat in a café near the office.

Reading the paper, we discovered that the Dow has taken a biggish hit yesterday. It is still not clear what the stock market intends to do. We'll just have to wait to find out.

But anyone who would put money into U.S. stocks, generally, deserves what he gets. Stocks have gone nowhere for the last seven years. That means they are still expensive. The correction that is coming hasn't yet come. Which means, it hasn't yet gone either. Our guess is that the next seven years will be even worse than the last seven…as the correction finally does its work.

Our money is still on gold to save the day…at least for those who have turned to the precious metal as a form of wealth insurance. Remember, gold can't be printed out of thin air - and it will always hold value. And what's this…the yellow metal is up on weaker dollar sentiment today? Seems like now is as good a time as any to pad your portfolio with gold…

Oh…and here's an interesting item. Remember, the present economic system is not capitalism…it's a kind of Marxism for rich people…in which the elite make the profits while the losses are redistributed, shared throughout the entire population like Mao jackets and influenza. The genius of the present system is that it dupes the masses into thinking they are capitalists, making it possible for the speculators and hustlers to offload their risks onto them.

You can see how it works by looking at the mortgage industry. Lenders make a profit by writing mortgages…the mortgages get sold on, repackaged, and bought up by hedge funds, insurance companies, and even pension plans. There are more than a trillion dollars worth of CDOs around and about. No one knows exactly who loses money when they go bust because the downside has been socialized…spread to the masses. In the old days, the banker who provided the mortgage loan would have taken the loss when it went bad. Not today. Now, it's likely to be a retired teacher in Anaheim…and millions of other make-believe 'investors' just like him.

Likewise, the LBO mavens make a fortune in fees. Ultimately, their creations are taken up by the lumpeninvestoriat. Again, the dealmakers and speculators take their profits…and then the risk of inevitable loss - when the stock goes down - is borne by average investors.

And when the speculators get in trouble, the feds rush to their aid with liquidity - more cheap money.

But wait, the problem at the heart of the economic system is not a lack of credit…it's that too much easy credit has loaded too many people and too many deals with too much debt. More credit just postpones the inevitable loss…which, as we've been saying, will not be suffered by the capitalists who caused it…but by the masses.

Barack Obama wrote in the Financial Times recently that it's time to rescue the masses from their mortgages. He's got a plan worthy of a leading presidential contender. He says he'll impose fines on the bad lenders…and give the money to the good voters (oops…we mean, the good homeowners). Just what you'd expect. A safety net for everyone.

The ratio of houses-to-be-sold to those sold, rose to its highest level in 16 years. Foreclosures continue to rise. And now credit card defaults are rising too.

But here's some good news:

"WASHINGTON (AP) - Five years into a national economic recovery, the share of Americans living in poverty finally dropped.

"The nation's poverty rate was 12.3 percent in 2006, down from 12.6 percent a year before, the Census Bureau reported Tuesday. Median household income increased slightly, to $48,200."

Hey, wait a minute. We've been reporting that Americans are getting poorer. How could there be fewer poor people? Something is wrong here.

And here it is, in the next paragraph:

"Individual earnings dropped for both men and women in 2006, but more members of each household worked, resulting in the overall increase in household income, said David Johnson, chief of the Census Bureau's Housing and Household Economic Statistics Division.

"The numbers provided some good economic news at a time when financial markets have been rattled by a slumping housing market. But they were tempered by an increase in the number of Americans without health insurance, from 44.8 million in 2005 to 47 million last year."

Wait a minute again…how is it good news that people are earning less money…but working harder and longer in order to keep up household income? Here's a suggestion that will double household income - the Joneses can move in with the Smiths…the Newtons and Smallskys can combine households too. Hey…presto…greater household incomes.

What nonsense…

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.