*** Nasdaq below 3,000. But investors are calm. It's the
election, stupid.
*** What's the matter with the euro? It should be going
up...is the dollar invincible?
*** World economic slowdown... "imposter" financial
analysts...Death Watch for dot.coms...and more...
*** Mr. Bear is every bit as cagey as I suspected. Tech
stocks - led by Oracle and Cisco - came back to life
yesterday. The Nasdaq index rose 171 points - or more than
5%.
*** The Dow rose, too - up 163 points.
*** What caused the rise? Well, the election uncertainty is
losing its unsettling edge. Investors looked into the abyss
of political turmoil... saw the bridge of gridlock in
Washington... and were pretty happy.
*** What’s more, there were no disappointing earnings
announcements. So Mr. Bear saw his opportunity. He took a
break. His whereabouts, as well as his next move, are
unknown... but he is likely to be back soon.
*** In today’s paper, "NY Times" columnist Thomas Friedman
provides an inadvertent explanation for Al Gore’s
remarkable intelligence. Referring to the film, "Being John
Malkovich," Gore said: "That’s what I feel like... A guy
whose head is occupied by all these people telling me what
to do."
*** The Internet craze seems to have peaked out. A Price
Waterhouse study determined that people are spending less
time on the World Wide Web - just 4.2 hours per week this
year, down from 5.3 hours in 1999 and 4.8 hours in 1998.
The report, cited by Alan Abelson in "Barron’s" says that
"fewer Americans are sending and receiving emails this
year." "And fewer," Abelson continues, "are reading
publications online, watching live events and participating
in chat-room chatter."
*** Addison and I are on our way to London - taking the
Eurostar under the English Channel. So, we’re cut off from
our traditional sources. We may even be tempted to make up
the news, since no one really cares anyway. What difference
does it make? But I’m just kidding. The real news is more
entertaining than anything we could invent.
*** I searched "The Times" of London in vain this morning.
I was looking for the usual story of "the naughty vicar."
Normally, U.K. newspapers can be counted on for a story
about a preacher gone bad - preferably in the company of a
Sunday school teacher or Bishop’s wife. Alas, either the
vicars have straightened their laces or the press is
getting tired of the story.
*** Take this item from the British press, for example:
Professor Mo Malek, a health economist, has called on the
U.K. government to tax fatty hamburgers as a deterrent to
public obesity. He envisions a type of sliding tax on
burgers, based on the fatty content thereof. The more fat,
the higher the tax. Professor Malek blames the recent
obesity epidemic that the United Kingdom is experiencing on
a more sedentary lifestyle and the availability of fast
food. Once you accept the proposition that the majority, or
their agents, have the right to tell the rest of us what to
do, it is only a matter of time before they boss us around
in ways we never thought possible. But what the heck; I
don’t eat fast food. So what do I care? Go ahead, tax the
McDonald’s customers.
*** "Nasdaq intent on exploring London exchange alliance,"
reads a "Financial Times" headline. "It makes profound
business logic for the LSE and Nasdaq to do a deal," says
John Hilley, chairman of Nasdaq International. "There is a
revolution in securities trading that is about to explode
in Europe and it's based on IPOs and retail trading."
*** Meanwhile, Playboy Enterprises has postponed their IPO
for Playboy.com scheduled for this week. "We do not
believe," Christie Hefner, Hugh's right-hand woman, told
the "Financial Times," "that under the current market
conditions we would receive a valuation that reflects the
extraordinary potential of this business." And pornography
is said to be one of the most profitable Net businesses. If
Playboy can't raise the money they need from the market...
who is likely to?
*** Mega-retailers Wal-mart and Home Depot, the two most
closely watched retail chains, both report a "slowing in
consumer traffic." Best Buy, too, is feeling the heat.
Grant's Investor Eric Fry: "Best Buy's same-store sales
growth has begun to stall and management predicts that it
will continue to slow. In an aggressive bid to counteract
these adverse trends, BBY has launched an expensive bricks-
and-mortar build-out that will increase its retail store
count by 73% over four years. But the attempted cure may be
worse than the disease. Certainly, more retail stores will
produce more sales. But bottom-line improvement is far from
assured. The company's ambitious 25% earnings growth
targets rely upon maintaining ultra-high gross margins,
which reached a record 20.4% in the latest quarter." (see: Still Not A Best Buy)
*** Technology companies, too, are hanging their hats on a
near perfect future. "[T]he future of all this technology
[is pinned] on wireless and wireless being the 'killer
app,’" writes Bill Fleckenstein. "My observation is that
one of the main uses of all wireless doo-dads is to further
the exploitation of the national pastime, which I long ago
stated stock speculation has become, although it may be
losing some of its panache as folks lose money.
"The way I see it, hand-helds of all flavors are mainly
used so people can ascertain their stock prices and trade
on-line. That's not to say it wouldn't be useful for e-mail
if you are traveling, but let's face it, a lot of things
that wireless phones and things are supposed to be able to
do can't be done easily when one is on the move. The real
killer app, in my view, is the stock market. So if one
thinks the trading mania prospectively will diminish, that
speaks volumes about how fast folks will lust after the new
toys."
*** Sitting on the train this morning, I am prompted to
read Eurostar magazine by an alluring photograph of the
Italian actress Monica Bellucci. Really, how can I resist?
The headline calls her: "The Brunette Tornado." I will take
a look inside.... on your behalf, of course.
*** That's too bad. Other than these exceptionally sassy
photos, Eurostar magazine offers very little of interest.
Wait, what's this? Another headline asks: "Is Science Going
Mad?" Give me a moment... I'll tell you the answer.
*** Unbelievable. After reviewing the piece which covers
topics as rich and deep as genetically modified foods,
degenerative disorders and human gene-mapping... I am left
only with the writer's awe that this author managed to
assemble words together for three pages... and say
absolutely nothing.
*** On this day in 1923 it cost 200 billion German marks to
buy a loaf of bread. In 1918, while the guns were still
rumbling in WWI, a loaf of bread cost two-thirds of a mark.
Get Rich Buying THE NEXT BULL PHASE At The Bottom:
FORECAST #1: The NASDAQ and S&P 500 will decline by half. Signal: The
NASDAQ's 200-day MA crashes...the S&P breaks support...
FORECAST #2: The Dollar will fall - hard! Signal: Two major European
currencies not in the euro - break through the top "channel." When they
do... watch out!
FORECAST #3: Stocks will begin a new bull cycle in 2001. Signal: Bonds
and equities bottom together.
Until then - declines will be punishing... current losses will look
like a walk in the park. Click here to find out how and when to get in
at bargain basement prices
* * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
As a sequel to yesterday’s Palm Beach story, perhaps it
would be worth leaving you in suspense about the relative
merits of value investing as opposed to trend following...
and reflect on the nature of our democracy.
Normally, you and I have better things to do than think
about our form of government - such as wash the car or take
the dog for a walk. But since the presidential election is
on the tip of everyone’s tongue, like the taste of stale
Gaulloise cigarettes and last night’s andouillette sausage,
this seems like a good time to get out the mouthwash, rinse
it around and spit.
The international papers are full of attacks on the
American elections and its quaint "college" of electors, as
well as chauvinistic apologia for the U.S. system of
government.
But the foreigners miss the point, as they always do. They
do not understand that democracy in America is not merely,
nor even principally, a system of government - it is a
system of mass entertainment. Wall Street and Main Street
provide the bread. Washington and Hollywood supply the
circuses.
That is why the contenders for the nation’s highest office
are judged, not on their policies, (which largely make no
sense and are understood to be nothing but lies, like the
"Contract with America," anyway) but on their
personalities. Bush is perhaps too dumb and too
inexperienced to be president, said the media analysts
early in the campaign. Gore is, well, a bore. So the
candidates spent the whole election not trying to come up
with more attractive policies, but trying to prove that
they could overcome their personal failings.
You have to admire the president of the Philippines, Joseph
Estrada. According to the "International Herald Tribune",
he refused "to hold regular cabinet meetings... to read
government reports, newspapers or magazines." Instead, he
spent his time - and I am not making this up - eating,
gambling, drinking ...and/or spending time with his several
mistresses. Now there is a man worthy of a great republic!
Instead of cravenly pretending to do the people’s business,
as Bill Clinton has these many years, Estrada minded his
own business - rather well, it would appear. But instead of
receiving the thanks of the many millions of people upon
whose lives he did not intrude, nor whose domestic harmony
or economic well-being he did not endanger, Estrada has
been impeached. Yesterday, said the IHT, mobs - no doubt
including many who voted for him - "Burned Estrada in
Effigy"... which is probably some little town near Manila.
Surely some better form of government could be found - one
that would allow a rascal like Estrada or Clinton to enjoy
themselves in public office and still give the people the
entertainment they pay for.
Democracy, like other forms of entertainment, requires "a
willing suspension of disbelief." And like most modern
movies and stage productions, lots of make-up and special
effects make up for a very weak plot.
In fact, the story line is as improbable as "Mission
Impossible II." To be more specific, the system rests on
two big frauds and one grand illusion.
The first fraud is that democracy is a less murderous form
of government than the alternatives, and hence preferable
to all others. And yet, of the millions of people killed in
all the world’s wars, most would have been eligible voters.
The most deadly wars - by far - occurred after voting boxes
had been installed in public buildings all over Europe and
North America in the early 20th century. Almost all the
combatants in WWII had some form of voting to justify their
regimes. Both Hitler and Mussolini were elected - as were
Roosevelt and Churchill, though I am not sure in what
manner or when the English leader was selected. Stalin was
also elected, more or less, receiving by far the strongest
popular mandate of any of them, since few people dared to
vote against him. And America’s most deadly war was fought
between two of the world’s most Democratic governments of
the time - the South and the North.
By contrast, the death toll in pre-Democracy centuries was
comparatively light.
The second fraud is that the will of the majority is the
closest we humans can come to a just order of society. But
what majority? By what justice or logic does a tiny
majority of barely compos mentis voters in Palm Beach,
Fla., get to tell all the citizens of Texas how to run
their lives? And yet, their ballots will decide how much of
their own money Texans will be allowed to keep, what
medicines they can put into their bodies, how their
children will be taught and how many gallons of water will
be used to flush their toilets.
It is also presumed that whatever the majority wants sits
on some high moral ground, like the gods on Mount Olympus.
But in fact, anyone with eyes can see that the mob acts
more like swine than gods -- sloughing around in turpitude,
fantasy and self-seeking like pigs in a trough of swill.
Why should a majority of voters in urban areas get to boss
around those in rural areas? Why should a majority of
protestants get to tell a minority of Catholics, Jews and
Rosicrucians what to do? Why should the plumbers and TV
repairmen - voting with the majority - get to lord it over
the framing carpenters? How come the teetotalers of one
county get to force the drinkers into the next state to
quench their thirst? The majority voter gets to demonstrate
his compassion at someone else’s expense. He gets to tell
others what to do, based on his own shabby principles. And
he gets to profit from the efforts of others like an
atheistic bum at a church supper.
It is all nonsense, of course. But democracy is supposed to
be the best form of government by default; all other forms
are even worse. Whether that is true or not, I cannot say.
I have not lived under other forms. And the evidence is
mixed. Certainly, taxes and the death toll were lower under
the Hohenzollerns, Hanovers, Capetians and Hapsburgs.
Whether they were as entertaining or not, I cannot say. But
the uniforms and headdresses provided a relief from the
plainness of modern rulers. Before democracy, rulers
pretended to be superior to the great mass of mankind. Now
they pretend to be the same.
But the monarchs deprived people of the electoral
process... the entertaining illusion of choosing the man or
woman who will be our national ringmaster for the next four
years. And what a spectacle that is.
"Based on the results of the 2000 election," says an e-mail
message attributed to the "Jewish World Review," "it's
clear many voters are so deeply disturbed that -- for their
own good as well as the national welfare -- they should be
confined to an institution."
"Missouri voters elected a corpse -- Gov. Mel Carnahan, who
died in a plane crash weeks before the balloting." The
funny thing about this was that prior to his death,
Carnahan was trailing Sen. John Ashcroft. Voters seemed to
like him better dead than alive. Dying turned out to be
good for his career.
The "Jewish World Review" also cited the New Jersey race,
where voters who say they don’t want money involved in
politics elected the biggest candidate ever - Jon Corzine,
who spent $50 million of his own money to win a seat in the
Senate.
Among the other peculiar trends mentioned were the votes
for Ralph Nader, which should be grounds for
institutionalization on its own, and Hillary Clinton’s win
in New York.
Hillary Clinton deserves a special mention in the history
of mass illusion. Here is a woman whose democratic
pretenses do seem to reach almost Olympian levels. As she
put it in her ode to democratic folderol, "It Takes a
Village,"... "the government is all of us."
Unlike monarchs or their subjects, democrats are prone to
mass murder, mass suicide, mass larceny and mass fantasy.
Trapped by the theory of Democracy, they must suspend their
disbelief of the most preposterous and most easily
disproven propositions, but are unable to open their eyes
and see what actually goes on around them. Thus they are
encouraged to think that they play an important role in
guiding the ship of state and doing something really
important with their lives. Just by reading the editorial
pages, watching boring political talk shows and casting a
ballot once every two years qualifies Democratic Man for a
kind of good citizenship award which he grants to himself.
This alone makes him feel very superior to all the rest of
us who just want to be left alone.
But what is most appealing about American democracy is
simply the baroque exuberance of it all, like the rest of
American culture. The candidates are often idiotic, deadly
boring or sometimes merely dead. The voters are foolish or
apathetic. And the whole process can be as puzzling as the
stock market... or as exciting as a street fight between
two fat women. Either way, you want to stick around just to
see what happens next.
Writing to you from the Eurostar, and returning to
financial topics tomorrow (I promise!)...
Bill Bonner
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