Could it be that it is not how, but what we use as money that matters when contemplating the root causes of Climate Change and other global problems? This is the question that is at the root of our Economic and Philosophical Treatise which bears the cryptic name:
Our Monetary Magnum Opus is now available in print at the following embedded links on Amazon.com and Createspace.com.
While there seems to be an endless debate as to what humankind should do in order to reduce our impact on the environment, ironically most of this and indeed countless other political debates result in more action being taken, either to cease and desist an activity or mobilize to clean up and reduce future environmental impacts of certain actions.
However, every action brings about some sort of reaction, often in the form of an “unintended consequence” which serves to negate any good that the carrying out of the well intended initial mandate had managed to accomplish.
Despite Al Gore’s call to action, realistic and manageable solutions to Climate Change remain elusive. As such, where Gore and other Climate crusaders have failed, we have been compelled to step in. You see, there is really a quite simple, certain, and palatable solution to Climate Change that could be implemented today.
The solution lies not in well-known solutions such as recycling, Cap and Trade schemes, development restrictions, technological advances, or taxes and other social engineering methods. In fact, it has absolutely nothing to do with what people do or what they or their governments spend their money on.
It lies in What we use as money circa 2013.
What the world uses as money is not really money, but a highly liquid debt instrument. While the difference is imperceptible to most, the accumulation of mistaken incentives and resulting actions on behalf of humankind which are inherent in the insane debt as currency model are beginning to manifest themselves in nature, and nature itself is beginning to bring itself into balance unilaterally.
Where humankind and the land once lived in a peaceful, mutually beneficial balance with one another, the relationship has become antagonistic and will remain so until the defects in the money supply are remedied.
How, then, can these defects be remedied? Ah, fellow taxpayer, it is for this reason that the above mentioned book contains 400 pages, for while the answer is simple, it will require that humankind let go of some deeply ingrained ideas which a vast majority of us do not even know we hold fast to.
The financial world took a big step closer towards a new currency over the past week. First came revelations that the US Treasury increased its net debt by $1 Trillion in ONE MONTH, which, in and of itself is shocking. Perhaps not coincidentally, Bitcoin prices blew through the $200 mark once again. We have written extensively on why Bitcoin is likely to rise, you can purchase a copy of what is now our most popular ebook on a number of ereading platforms here:
Today, we turn our attention to the area of morality here at The Mint. We must warn you, however, that what you are about to read may turn everything that you once understood about ethics and morality on its head. Read on at your own risk.
Do the Right Thing
“Ask not what you are to do, for you are called to do the right thing, not the expedient thing, not the easy thing, but the right thing. You will know what the right thing to do is when you learn to see your neighbor not as a rival, but as a brother.”
From our youth, when we were confronted with a form of temptation or, perhaps more commonly, the opportunity to choose between selfish gain or pursuing the good of others, we were often exhorted by our elders with a phrase that is both etched in our memory and charged with meaning: “Do the right thing.”
The phrase is alive and well today and continues to drip with authority, for it implies that in the situation that is being confronted, there exists a common body of knowledge which, if consulted, would lead the person confronted with the opportunity to “Do the right thing,” with an obvious course of action.
When this phrase is uttered, more often than not it is uttered by a person whose good intentions are matched only by their complete lack of a direct interest in the outcome of whatever is transpiring. It is also often uttered by someone who, if they were to be in your shoes, would more often than not be completely incapable of “doing the right thing” that they benevolently have advised you to do.
Today, we hear the phrase in discourses by those charged with national government. In this context, even the feigned benevolence which is the hallmark of the way the phrase is delivered in political settings is overshadowed by the fact that by “doing the right thing,” the politician invariably means “submit to my will and ask no questions.”
Imperial governance, which is the form that the world labors under today, is paradoxically predicated on categoric refusal to “do the right thing,” as, at its base, modern governance results in the enslavement of men and women via a myriad of rules and threats in order to convince them to render tribute and allegiance. We have explored this phenomenon thoroughly in our volume entitled “What is Truth? On the Nature of Empire.” The inescapable irony which engulfs every utterance of the phrase by a public official means that, at this point, we cannot hold a straight face when we hear it.
To draw on a recent example, when the President states that Congress must “Do the right thing” and fund the government, the statement may have been the most presumptuous ever to escape human lips, for the underlying assumption is that whatever the government does is right, which is, from most rational and religious standpoints, absolutely incorrect.
Politics aside, at its base, even the seemingly disinterested “do the right thing” offered by a friend,a parent, or colleague is a thinly cloaked act of moral superiority on display, for the phrase is all too often offered as thinly veiled advice which, once decrypted, is read to imply “do what I want you to do.”
If the term has indeed been hijacked to lay claim to the moral high ground in a debate, shaky as it may be, humankind must strive to understand the noble origins of this seemingly important and universal saying.
Life is complicated, and, contrary to what many would say, it does not come with an instruction manual which tells humanity what is categorically right and wrong in all situations which we may encounter.
For this reason, the Bible, which we believe to be the closest thing to a users manual, reads not like a how to or self-help book, but a series of events where people, both individually and corporately, are thrown into unimaginably complex and dire situations (once one looks beyond the surface to understand the Biblical settings) ostensibly to see what they will do. The question that is being asked constantly of the Biblical characters as well as each and every human being today is this:
Will we do the right thing?
Doing the right thing is beyond important, it is imperative that anyone who is genuinely seeking God and His Kingdom Do the right Thing at all times that the circumstances demand them to choose a course of action.
However, what constitutes doing the right thing in any given circumstance is not a matter of democratic preference or legislative action, it is purely a mater left to God and the individual of whom the right thing is required, for it is they and they alone to whom the ability and intuition has been given to make these life and death determinations.
The right thing cannot be legislated or encouraged, it can only be done or not done. Each time it is done, the Kingdom of God draws near to us all. Each time it is neglected, we all suffer the consequences.
So Do the right thing and, more importantly, be close to God, for it is He who is the only judge of such matters. The logic can be carried further to imply that everyone who utters the phrase “do the right thing,” to someone who is faced with a difficult situation is, perhaps unknowingly, both usurping God’s role as well as inhibiting that person’s ability to learn for themselves how to choose the right thing, which is an ability that all of mankind must learn deeply and permanently. The right thing is a lesson that can only be learned through personal experience and exercise of one’s own decision-making processes.
This however, does not mean that the right thing must be learned on the field of battle. There are more often than not subtle clues which will guide us as to which situations demand us to respond by doing the right thing as well as what the right thing to do is. For instance, in our observation doing the right thing often involves an initial sacrifice to be made of time or resources. It is often a choice to pay the cost. While it is not universal, this minor detail is often a clue that one is doing the right thing.
Only those with a perfect knowledge of all of the circumstances involved are qualified to ultimately judge what is right or wrong. Even in the hypothetical case that the actors are in a position to understand all of the circumstances involved, the observation is limited by our über short human timelines which ignore the concept of eternal justice.
Doing the right thing is imperative, and all human judgement as to what the right thing is in any specific circumstance is null and void unless it is agreed upon by all parties who are directly (not indirectly) affected by a course of action.
Perhaps the distinction is best illustrated in the Gospels. While the religious leaders were left legislating the right thing, Jesus was doing it. It is a contrast that is emphasized for a reason, for the doing the right thing is deeply personal and immensely powerful.
There is one thing and one thing only that one can be absolutely certain that is always the right thing to do from an eternal perspective: Forgive
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10/15/2013 Portland, Oregon – Pop in your mints…
As the world continues to bite its collective nails while it waits for the US Government to decide whether to punt the ball down the road another stretch or capitulate on its debt in what we have dubbed “The Ultimate Stimulus Measure,” the IMF is busy scolding the US Government and proposing hack solutions which completely miss the point.
The world that the IMF operates in exists only in theory, it is like the perfectly closed system where energy is a constant which is the the basis of many physics theories. On one hand, the assumption of a closed system is the only way to test a hypothesis. On the other, to assume that the closed system is a given in real world situations is folly in the physics profession.
While the physics professor recognizes the limitations of his theory in practice and makes the requisite adjustments, these limitations are all too often lost on the IMF and others in the economics profession. The situation of the latter is dangerous, as for some bizarre reason their theories influence wide-ranging policy decisions which affect the lives of billions based on its closed system fantasy.
Such is the case with the recommendations made in its October 2013 World Economic and Financial Survey which is eerily titled “Taxing Times.”
In the report, the IMF makes two data driven observations: That the national debt load in certain Euro zone countries is excessive and that there is a certain level of net family wealth in these countries.
Fair enough, however, what happens next is disturbing, for it reveals both the closed system fallacy as well as the arrogance of those at the IMF. The IMF takes the above two data points and arrives at the following conclusion:
A one time, 10% tax on net family wealth in certain heavily indebted countries would make the national debt loads once again “manageable.”
If you have yet to laugh, cry, or hurl at what we have just described, you may stop reading as you are unlikely to get what follows and reading it will be a waste of time you can otherwise spend watching CNBC or the teletubbies. Please carry on.
If you are still with us, allow us to heap it on by adding that the IMF believes that this one time family wealth tax would help as it would simply reduce the national debt, specifically in Italy and Spain, who, true to form, have managed to avoid full-scale bailouts suffered by the Irish, Greeks, Portuguese, and Cypriots to this point and gamed the ECB into issuing bonds on their behalf.
This last point should give you, fellow taxpayer, all the information you need to understand why, as ludicrous as a family wealth tax sounds, it becomes even more ludicrous when one thinks that it can be imposed on Spaniard and Italians, who are hands down the world champions in tax avoidance.
The governments of Italy and Spain have managed to have the ECB foot the bill for their respective bailouts to this point. However, the only reason they need a bailout in the first place is because their citizens are experts in tax avoidance (it is a genetic adaptation acquired during Roman times which has grown stronger and more agile over time, that is all you need to know.)
Now, the IMF, in its infinite wisdom, glances at the problem and a dim light bulb goes on! If you just tax 10% of each family’s wealth, you can reduce the national debt to an acceptable level! “Voila,” says Lagarde! “C’est comment son fait!”
“The genius of the tax,” she continues “is that it is one time only, so it won’t have any effect on investment or savings preferences! Its perfect, I tell you, perfect!!!!”
This is why she’s paid 300,000 pounds a year, of course, to put two and two together. At this moment, Christina Lagarde has now transformed into Cruella DeVille, the villainess of Disney fame (a transformation that requires only a slight wardrobe adjustment and a little imagination.)
As word of the IMF’s latest ploy spreads, the few Spaniards who have not opened a Bitcoin wallet called up their grandchildren and asked them to do it for them.
(Wondering what a Bitcoin is? Check out our reasonably priced e book on the subject here)
By the time any sort of 10% one time wealth tax hits the Spanish and Italian Peoples, there won’t be a peseta or lira, er, Euro to be found from the Pyrenees and Alps to the Mediterranean coast, where avoiding the looting hands of emperors has been a national pastime for over 2000 years.
As the political fiasco en Washington continues, it is becoming clear that nearly any asset class that is not the US Dollar stands to benefit were the unthinkable to happen. Here at The Mint, we have been investigating one of the more tasteful alternative investments: Fine Wine.
Today, we continue by presenting to you a man whose nose literally moves the Market, Robert Parker. Enjoy!
ROBERT PARKER “THE WARREN BUFFETT OF WINE”
Robert McDowell Parker Jr. is the world’s most influential wine critic. Born in Baltimore, Maryland (USA) on July 23rd, 1947, he continues to guide the fine wine industry with the tip of his nose, still going strong at the age of 66.
The Robert Parker Wine Rating System
The Robert Parker wine rating system (Parker Points) is a commonly used scoring system to rate fine wines. Although there are various, universally adopted rating methodologies, usually based on 20-point scales, Robert Parker’s 50-100 point scoring method has been very popular in the fine wine industry.
Robert M. Parker Jr. is undoubtedly the world’s most renowned wine critic. Since the late 70’s Robert Parker has been a prominent figure in the world of fine wine; his publication ‘The Wine Advocate’, an independent wine consumer guide, first published in 1979 draws a following of at least 50,000 subscribers to date.
Ever since the relatively new market of fine wine investment has taken off, wine connoisseurs, financial experts and investment brokers have been paying close attention to Robert Parker’s ‘million dollar nose’.
Robert Parker Jr. – the Million Dollar Nose due to the fact that Parker’s ratings have been known to significantly affect the value of wines and cause severe price fluctuations in the market, any investor in the fine wine industry should be well aware of Robert Parker’s opinions.
Robert Parker introduced his own wine rating system because he felt that critics often undervalued or overestimated a fine wine, mainly due to conflict of interest, for example the critic having a financial interest in the wine they are rating. Additionally, Parker felt that the commonly used 20-point system did not offer enough flexibility, and often resulted in unjustified, misaligned ratings. Therefore, Robert Parker’s 50-100 point quality scale (referred to as ‘Parker Points’) offers a widely accepted industry standard by which to gauge fine wine quality.
Robert Parker Wine Rating System
• 96 – 100
An extraordinary wine of profound and complex character displaying all the attributes expected of a classic wine of its variety. Wines of this calibre are worth a special effort to find, purchase, and consume.
• 90 – 95
An outstanding wine of exceptional complexity and character. In short, these are terrific wines.
• 80 – 89
A barely above average to very good wine displaying various degrees of finesse and flavour as well as character with no noticeable flaws.
• 70 – 79
An average wine with little distinction except that it is a soundly made. In essence, a straightforward, innocuous wine.
• 60 – 69
A below average wine containing noticeable deficiencies, such as excessive acidity and/or tannin, an absence of flavour, or possibly dirty aromas or flavours.
• 50 – 59
A wine deemed to be unacceptable.
Strange as it sounds, Mr. Parker’s nose can make or break a vintage in terms of market value. He has risen to this status by breaking the mold in terms of rating Fine Wines. What will be your great contribution to the world? We encourage you to find and pursue it, for every calling, be in sniffing fine wines to pursuing monetary theory down uncharted paths, is a great contribution to the mosaic of life in which we move and breath. Stay tuned for more information on Fine Wine Investing. If you are interested in learning more about this asset class, please email us at the address below.
The current scenario in Congress which has managed to entangle the Federal Budget, the Debt Ceiling, and Obamacare in the same line of debate is quickly reaching a crescendo as the rhetoric in Washington has degenerated into personal attacks and accusations that the other side is unwilling to compromise.
We recently saw reports that a number of Congressmen reeked of alcohol as they exited the chambers the night the Government shut down. Apparently the only thing worse than the pressure of public office is these days is having to face it sober.
As we’ve said before, this type of stalemate in terms of budget matters is absolutely normal and to be expected of technically bankrupt entities. As the US Government is the largest bankrupt entity on the planet, it should come as no surprise that its dramas will dominate the airwaves until they appear to be resolved.
We have been here before, you can read our commentary back when all of this latest round of bickering began back in 2011:
This time, as both sides appear to be playing a dangerous game of chicken, the dire warnings of what will happen should the government default appear to be reaching a deafening crescendo. The Chinese and Japanese governments, both large holders of US Treasury paper, are both pressuring Washington for some sort of assurance on their “Investments.”
US Financial Executives, who find themselves in the shoes of the Chinese, albeit on a smaller scale, are also beginning to sweat. In a recent survey on the perceived effects of the debt ceiling breach, the Association for Financial Professionals summarized their findings in this way:
“Financial executives see dire consequences to prolonged political theater in Washington and a potential U.S. government default, according to a survey released today by the Association for Financial Professionals (AFP).
On October 3-4, AFP surveyed financial executives in the corporate treasury and finance departments of a broad range of U.S. companies across many industries, receiving 964 responses. The survey found that in the near term, finance executives believe political wrangling in Washington will lead to reduced demand for goods and services and that a failure to raise the debt ceiling in time will result in reduced capital expenditures and reduced hiring or layoffs at many companies.
But the damage goes beyond just short-term consequences. Forty percent of organizations report that they are holding back on making growth-oriented investments in the U.S. because they are having difficulty evaluating U.S. investments, due to the recurring battles over budgets and debt limits.”
As for effects on short-term investment preferences, the report goes on to state:
“A default would make U.S. Treasury securities, an investment vehicle used in many companies’ short-term investment portfolios, far less attractive. The survey found that one-sixth of U.S. organizations currently holding U.S. Treasury securities would shift out most or all of those investments if the debt ceiling isn’t raised in time. Another 36 percent of organizations would hold onto their current holdings of Treasuries, but would not purchase these securities going forward.
Meanwhile, half of the respondents say that a government default would harm their organization’s access to, and raise their cost of, capital. An increase in the cost of bank credit and higher cost of debt financing were each cited as possible outcomes by 27 percent of financial professionals.”
Scary stuff, right? A default would cause a nearly instantaneous shift in short-term investment preferences for almost anyone holding US Treasuries. You can read the entire horror story in the report via the following link: AFP Survey: The Federal Budget and Debt Limit.
Joe Weisenthal over at the Business Insider presents a Goldman Sachs chart which refutes the argument floated by some that the US Treasury could continue to pay interest on its debts once it hits the debt ceiling.
The well has been dry for some time now, and while it makes for great theater, it is difficult to see why it is in the interest of the government and its direct dependents to let it play out. If it does, it can only mean that a new monetary system will be imposed, for the Mushroom Shaped Dollar Debt Sponge will have been squeezed.
However, should the US default on its debt, we reiterate our position that it “matters not,” for while the US Government and its dependents will be in a world of hurt, there will be a flood of new money available to private enterprise. For, contrary to popular belief, Federal spending acts as a damper on the Federal Reserve’s loose money policies, and a US default may represent the ultimate in monetary stimulus, if not true economic growth.
It would be a wild and rapid adjustment but, while the numbers of those who depend directly on the US Government have risen steeply in recent years, the increasingly interconnected US and global economies are exponentially larger and the US, sans its government, is in an extremely strong competitive position both demographically and geographically.
A default may be just what the country needs to shake itself free of its economic doldrums.
So relax and choose your Halloween costumes wisely this year, as it could be dangerous to step out as your favorite politician, if indeed you still have one.
A mere 48 hours into the first shutdown of the Federal Government, life in the land of the free appears to be carrying on as normal for most non-Federal employees. Even Federal employees, while technically not getting paid, at least have some measure of certainty that they will get their jobs back and will likely be paid for the time they missed, unlike many unemployed Americans.
Much of the MSM commentary to this point has centered on the current budget standoff being nothing more than a childish spat amongst Congressmen who possess an increasingly common blend of arrogance and ignorance that is almost a prerequisite for public office circa 2013. For the MSM, anything other than business as usual is abnormal. What this analysis fails to recognize is that what is truly abnormal is what passes as business as usual for the Federal Government.
The current shutdown of the Federal Government is revealing on a number of levels. It is an exceptionally bold gambit being played by the faction of the Republican party that has brought the machinations of the Federal government to an unplanned halt. Amongst the revelations that have surfaced are the following:
The Federal government has somewhere on the order of 800,000 “non-essential” employees. The President is the one who decides which classes of employees are essential and non-essential. The President’s choices provide an interesting insight into his priorities. The distinction between essential and non-essential functions should also inform future discussions about austerity.
The President, in delaying the penalties for businesses with regards to the Affordable Care Act for a year, neglected to offer the same treatment for individuals. While on the surface, this appeared to be an administrative move, the faction of Republicans who are blocking a clean continuing resolution have called the President out on this slight of the American Public.
The Affordable Care Act provides for the addition of 16,000 IRS agents and zero doctors via direct funding provisions, a statistic that seems to defy logic and highlight the core function of the government as tax collector. Any increase in the availability and quality of care is left to market forces guided by government policy, a scenario that has failed in the sense that it produces sub-optimal results in every sphere where it has been applied.
Even if there was a clear administrative need to selectively apply the Affordable Care Act’s provisions, the act of selectively applying the laws provisions undermines the credibility of the law itself and in practice gives the President near dictatorial powers. This is a matter of principle that is worth standing up for. The fact that governance in America has degenerated this far and that it takes a budget or other fiscal crisis for it to rise to the surface is a national tragedy in and of itself. Further, this matter of principle, equality before the law, may be the only appeal to reason that the Republican faction has for what is otherwise an indefensible position. Either the Republicans themselves underestimate its importance or the MSM, in bickering about why certain satellites cannot be launched into space, has abandoned all appeals to reason in the discussion and this fine point of governance is lost on most observers.
The American Economy will eventually be much better off were the Government to remain shut down once it is allowed to adjust to the new realities. If the Fiscal crisis facing the government is as dire as advertised, it should be a no brainer for the government to discontinue any non-essential activities until such time that the nation’s finances improve to a point that they can afford to perform them.
It is reported on a number of fronts that the shutdown will shrink GDP by x% (roughly 1.2% by one estimate) and that $60 billion per day is simply disappearing because the government is not spending it on the wages of non-essential employees. This analysis falls into the classic fallacy of failing to see beyond what has disappeared to envision and recognize what will appear in its absence. While a number of non-essential government tasks are not being performed, a window of opportunity exists for enterprising individuals to undertake tasks that society deems essential but were not possible because a heavily subsidized competitor, i.e. Uncle Sam, had claimed a monopoly on activity. The reality is that the economy is likely to grow exponentially under current monetary policy, regardless of what the government does.
There are many more revelations that are bound to appear before the shutdown is resolved. It will take cutting through the MSM’s shallow analysis to parse it out, but if one keeps their eyes open, they will see the underbelly of the amoeba laid bare, and it is not a pretty sight.
We recently came across an article by Diane Brady at Businessweek which touched on a theme that is near and dear to us here at The Mint: The “cost” of money.
The reason that things like this interest us is that we believe the point of something acting as money (more accurately, the monetary premium) is that it has a cost. Not only a cost, but a cost which, if allowed to be set by free market conditions, provides the perfect, tacit governance of the activities of humankind on this earth.
Brady’s article, as you can see, fell short of our high philosophical ideals and, instead of analyzing why cash has a cost, degenerated to the default position held by many that money should be free:
Disappointing but not entirely unexpected from the Senior Editor of a financial publication.
The truest saying in all of economics is that there is no such thing as a free lunch. There may be a lunch that costs you nothing but the time spent to approximate oneself to the plate and consume it, but rest assured that the cost of the ingredients and preparation of the lunch itself have been borne elsewhere.
The same dynamic is at work in the monetary realm. Whether or not one needs to go to an ATM or simply swipe their credit card or tap their mobile phone is of consequence only to that person, but the cost of the production and exchange of money is being borne not by the economy, as Brady suggests, but by the earth itself, which is daily thrown further out of balance by the misguided actions of humankind.
This state of affairs will continue as long as we use debt as money.
Appellations, Banks, Gravel, and Clay all work together in the Southwestern region of France which has become legendary for its wine production: Bordeaux
While the word Bordeaux may ring a bell, many of us would be hard pressed to hone in on specifics when it comes to selecting a fine wine investment from this or any other region for that matter.
Until now.
The following is a synopsis of the Bordeaux region and the fine wines that it produces. Think of it as the Hitch Hiker’s Guide to the Galaxy of fine wines which fall under this prestigious umbrella.
THE BORDEAUX EFFECT AND THE VINTAGES SHE PRODUCES
Red Bordeaux (or “Claret” as the British have always known it) can be the epitome of fine wine. The best wines exhibit a wonderful complexity of aromas and flavours, great elegance and refinement and an ability to age gracefully – some for a hundred years.
Like all of France, quality wine production in Bordeaux is governed by a set of regulations known as “Appellation Contrôlée”, often abbreviated to “AC”. An AC covers a certain geographical district and governs production of wine within the district. The whole of the Bordeaux region is covered by a couple of catch-all, generic ACs: AC Bordeaux and AC Bordeaux Supérieur (the latter is higher in alcohol, but not necessarily better). An enormous quantity of inexpensive, “everyday” wine is made under these ACs. Though this is not the “great” Claret that all the fuss is about, it can provide very attractive, reliable drinking.
There are also many smaller, named areas, each entitled to its own AC: AC Fronsac, or AC Pomerol for example. These more specific ACs are usually superior to generic Bordeaux and have stricter regulations.
To the west of the river Gironde, the vineyards of the Médoc and Graves are based on gravelly soil and are planted mainly with Cabernet Sauvignon vines. To the east lie Pomerol and St-Emilion, two smaller areas of predominantly clay soil, planted with a higher proportion of Merlot. Hence we have “left bank” and “right bank” wines.
The wines from each area can have quite a different character because of the different soils and predominant grape variety. This also means that one is usually more successful than the other in any given year.
Bordeaux Grapes no matter where they are from, almost all red Bordeaux is blended wine: made from two or more grapes. Red wine grape varieties allowed in Bordeaux, in order of importance, are:
Cabernet Sauvignon,
Merlot
Cabernet Franc
Malbec
Petit Verdot
Bordeaux also produces considerable quantities of white wine. Grape varieties permitted are:
Sémillon
Sauvignon Blanc
Muscadelle.
Map of Bordeaux Wine Regions created by Domenico-de-ga
Classic Bordeaux Regions –
The Médoc
The Médoc is home to most of the great, classic Clarets. You will find wines labelled AC Médoc that are usually one step above basic Bordeaux, but the very best wines of the Médoc come from even more tightly defined ACs within the Médoc. The best of these individual ACs include:
AC Margaux,
AC St-Julien,
AC Pauillac
AC St-Estèphe.
This region is dominated by large wine-making estates, known as châteaux. Whilst many of these do indeed have a château as their HQ, others have nothing more than the vineyards and a collection of ordinary working buildings. Unlike many producers from other parts of the world, each château tends to produce only one “grand vin” which carries its name. Some of them also make a white wine, and many make a second wine, from vats not considered good enough for the “grand vin”.
Each of the top ACs of the Médoc has its own character:
Margaux is home to the most perfumed, elegant and “feminine” wines
Pauillac three 1ers Crus. Classic, powerful yet elegant wines
St-Julien the epitome of Claret: savoury, well-balanced and refined
St-Estèphe wines are structured, tannic, long-lasting, “masculine” wines.
In 1855 Médoc wines were classified. From the many thousands of wines produced in the area, just sixty were thought worthy of classification. These sixty were sorted into five ranks or, in French, “Crus” (meaning “growths”), i.e. “Premier Cru” (first growth), “Deuxième Cru” (second growth) and so on.
There are only five top ranking, Premier Cru wines:
Château Lafite-Rothschild
Château Latour
Château Margaux
Château Haut-Brion (actually in Graves)
Château Mouton-Rothschild.
All classed growth wines command very high prices, many of these, particularly the Premiers Crus, are bought by investors all across the world. To this day the classification remains more-or-less unchanged and many of the original classified châteaux are still producing some of the world’s greatest wines. Of course strong arguments could be made for promotions and relegations within the classification. A group of wines known as the “super seconds” are generally acknowledged to be Premiers Crus in all but name, and a few of the original châteaux have either gone or have lost their reputation. However, apart from some obvious anomalies, it is remarkable how the bulk of the classification holds up, even after 150 years.
The Médoc Crus Bourgeois
Just below these classed growth superstars of Bordeaux are a host of wines known as the “Crus Bourgeois”. Many fine wines can be found within this classification – some are worthy of classed growth status, yet are available at a fraction of the price. I have found properties such as Chasse-Spleen, Meyney, Coufran and d’Angludet to be consistently good. However, in 2006 a court case found that the classification of the Crus Bourgeois was illegal, and pending a restructuring which means wines will have to be independently assessed for inclusion each vintage, the whole classification was temporarily suspended.
Graves
Graves lies to the south of the city of Bordeaux. This region produces both red and dry white wines on the very gravelly soils after which the region is named. The red wines tend to express a soft, earthy quality. Like the Médoc this region was also classified, but not until 1959. Only a couple of dozen châteaux are entitled to the words “Grand Cru” on their label. The best vineyard sites of the Graves are clustered in the North of the region. That is where almost all the Grands Crus are situated. In 1987, this area was given a brand new AC of its very own: Pessac-Léognan. Wines bearing these words on their label should be of higher quality than most Graves. The undoubted super-star of the area is Château Haut-Brion. As noted earlier, this property was actually declared a Premier Cru in the 1855 classification of the Médoc due to its exceptional quality. Uniquely, it is allowed to have both classifications on its label: Médoc Premier Cru and Graves Grand Cru. Its sister property, La Mission Haut-Brion, is also capable of the highest quality.
St-Emilion
Although the area is quite large, the properties here tend to be much smaller and less grand, and the wines (exclusively red) are very different. The soil is clay and limestone rather than gravel, and the dominant grape variety is not Cabernet Sauvignon, but the softer Merlot and Cabernet Franc. The wines tend to be approachable at a younger age and to have a warm-blooded fruitiness. It is an area that requires a little bit of caution because of its classification system. St-Emilion wines are divided into 5 classifications. In ascending order, these are:
St-Emilion
St-Emilion Grand Cru
St-Emilion Grand Cru Classé
St-Emilion Premier Grand Cru Classé “B”
St-Emilion Premier Grand Cru Classé “A”.
Pomerol
Pomerol is by far the smallest of the great regions. It has 2 basic constituents that determine the character of its wines: the soil is thick, heavy clay and one grape variety dominates: Merlot. Pomerol wines are extremely soft, seductive and full of spice and vivid fruit. The production tends to be tiny in the area, so the wines are generally expensive. Indeed, Pomerol is home to some of the world’s most expensive wines such as Châteaux Pétrus and Le Pin, the latter producing little more than 500 cases each year. You will rarely see these wines in shops as they are snapped up years in advance of production. Look for more reasonably priced wines such as Petit-Village, Le Bon Pasteur and Clos René. The wines of Pomerol have never been classified.
Sauternes and Barsac
The Bordeaux area also produces world class white wines, though invariably in tiny quantities. The most famous of these are the sweet wines of Sauternes and Barsac, including the almost legendary Château d’Yquem. These luscious wines (also classified in 1855) are created by a particular and unpredictable fungus, called botrytis. Botrytis rots the grapes, leaving them high in sugar and glycerine which leads to their eventual silky, honeyed sweetness. The best dry white wines come from the Graves area. Though often of tremendous quality, these tend to be scarce and the famous names are very expensive.
The minor regions
From the inexpensive, soft, fruity and delicious wines of the Premières Côtes de Blaye in the north of the Bordeaux region, to the moderately-priced structured, tannic and impressive clarets of Fronsac or Lalande de Pomerol, the “lesser” red wines of Bordeaux are not to be despised. Whilst the finesse and breeding of the top classed growths might be missing, the red wines of the region are generally very reliable and well made.
The dry whites of the region, from areas like Entre-Deux-Mers or simple AC Bordeaux can produce refreshing, zippy, occasionally slightly tart wines for drinking young. Areas around Sauternes, like Sainte-Croix-du-Mont or Loupiac which lie just across the Gironde, also produce sweet, sometimes botrytis affected wines that can be very good and are moderately priced. Rosé is also produced in the Bordeaux region, often from the Cabernet Sauvignon. It can be delicious stuff with bright, supple fruit and refreshing acidity.
Indeed, the Bordeaux Region and its Appellations are the epicenter of Fine Wine investment. A basic understanding of the region and the wines that are produced there, which we hope you have gained by reading the above information, is absolutely crucial for anyone who wishes to dabble in fine wine for investment purposes.
If you or any of your clients would like more information on fine wine investments, simply email us at: davidminteconomics@gmail.com with the word “WINE” in the subject line.
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