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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  God, Man, and Alan Greenspan, Part II

*** The rally has become have a lot of other 

*** CD earnings lower than the inflation rate - savers 
losing money... 

*** Techs, wrecks, God, land...what else could 
you want?!

*** "Jeez Bill," writes my friend Francois, "wonder what's 
on your mind...talking abut true love in an investment 
newsletter! This conjures up a warning from the Old Bard
(I quote from memory):

The course of true love never did run smooth ...
... momentary as sound, swift as a shadow, short as any dream,
Brief as the lightning that in the collied night,
Unfolds both heaven and earth,
And ere a man has power to say: behold!
The jaws of darkness do devour it up.
So quick bright things come to confusion!"

(Shakespeare, A Midsummer Night's Dream)

*** The quick, bright rally in the stock market has come to 
confusion already. As Eric reports, below, both Dow and 
Nasdaq fell yesterday. 

*** And with the second half nearly two weeks away - there 
is still no sign of the 'second half recovery.' The Fed's 
'Beige book' of regional figures reports 'decelerating' or 
'little changed' economic conditions. 

*** Confusion everywhere! After hitting the worst 30-day 
delinquency rate ever last year, home mortgage payments 
improved in the first quarter. But the Houston Chronicle 
managed to find the cloud within this silver lining: the 
foreclosure rate increased!

*** "Inflation outpaces savings," says a confusing headline 
from USA Today. What the paper means is that the yield on 
3-mo T-bills, 3.5%, has fallen below the inflation rate of 
3.7%. Savers, putting their money in CDs or money market 
funds, are likely to earn less interest than the inflation 
rate...and thus lose money. 

*** Oh la la...if stocks provide little or no dividend 
yields, (and may suffer capital losses)...and money market 
funds produce negative are baby boomers to save 
for their retirements? 

Well, let's turn to Eric's report from Wall Street:

- It's starting to look a lot like a bear market again on 
Wall Street. The Nasdaq lost 48 points on Wednesday, its 
fifth losing session out of six. The Dow fell 77 points and 
now sits 129 points below the magical 11,000 level.

- Even the IPO launch parties on Broad Street are starting 
to reflect a bear market attitude. Gone is that delightful 
irrational exuberance. 'Tis a pity; they were fun.

- Kraft Foods launched an IPO yesterday. Despite being the 
NYSE's second largest IPO ever, did Kraft sponsor a gala, 
over-the-top launch party? Not even close. The company hung 
a few banners out on the street. It's probably just as 
well. Would you want a festive Velveeta cheese on a Ritz 
cracker at 8:00 AM... even if it were free?

- The life expectancy of a Russian infantryman fighting in 
the Battle of Stalingrad was less than 24 hours. Likewise, 
every 24 hours another "soldier" in the tech stock ranks 
buckles to its knees. Tuesday, the Finnish cell-phone 
company, Nokia, took a mortar round to the chest after 
announcing that its earnings in the current quarter would 
be "less than expected." 

- Lynn Carpenter tells me she was perfectly placed for the 
Nokia announcement in her publication The Contrarian 
Speculator. "Today we made 271% on June Nokia puts and
138% on July Nokia puts... in 10 days," Lynn wrote 
yesterday. Not bad... and just goes to show there is money 
to be made when the bear strikes.

- Also yesterday, telecom companies, Avaya and Lucent found 
bullets with their names on them. Former Lucent subsidiary, 
Avaya, announced that its earnings would fall short of
expectations. Avaya's shares promptly tanked 11%.

- Proud papa, Lucent, had some troubles of its own. Standard & 
Poor's cut its credit rating to junk status. 

- Troubles abound in the technology sector. Dell Computer 
co-president, Kevin Rollins, gripes, "We're not seeing any 
change in the behavior of our corporate customers. We 
haven't yet seen a signal that they're ready to buy."

- "Dell is now the leading PC seller to the world. If Dell 
is not seeing a pickup, then no one is," wrote Fred Hickey 
last week. Hickey's comments proved prescient as Ingram 
Micro, the world's largest wholesale distributor of computer 
products, warned after the close of trading yesterday that its 
earnings would suffer from "the most severe slump in our 
industry's history."

- "Just because the mighty Wall Street Journal thinks the 
bottom may be in - doesn't make it so," writes's Andrew Kashdan. "In fact, having 
recently chronicled the current state of the tech sector, 
the history of bear market rallies and the conditions 
facing the overburdened consumer, we think investors should 
prepare for a different scenario. Nevertheless, a look at a 
few sentiment indicators appears to confirm the resurgence 
of what the Journal called 'a baby bull rather than 
a roaring one'." (see: The Bulls Are Back In Town...But Why?)

- Gasoline inventories posted their eighth straight weekly 
increase, according to yesterday's American Petroleum 
Institute report. The stockpiles are rising because 
gasoline demand is falling. Oh yeah? We'll see what happens 
once Budweiser-laden Winnebagos start to pull out of 
driveways across America.

*** "We are not in a tech slump, or a business-cycle slump, 
but a policy slump," writes George Gilder. He does not 
reveal how he knows these things. But he is sure that the 
policy slump will be overcome by the power of new 
technology. The tech companies, he opines, "are 
reinvigorating the still incalculable riches of the 
computer era with the infinite potential of electro-
magnetic communications, transforming the world economy and 
every existing political and cultural arrangement as 

*** It is hard not to love Gilder. His writing is so 
deliciously loony. More on The Gildered Age...soon.

*** What else? How about some free land? International 
Living's Mike Palmer reports: "The government in the 
Dominican Republic decided they own too much land in the 
western half of the they're giving some of it 
away to aspiring entrepreneurs. And what's better - if they 
like your idea, they'll throw in a 20-year tax holiday." 
(see: Free Land - And No Taxes For 20 Years)

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Life is full of paradoxes and ironies, dear reader. If it 
were not so, simple-minded bureaucrats might be able to 
plan the economy; Alan Greenspan, perhaps the best known 
public servant since Pontius Pilate, might be able to do as 
good a job of setting interest rates as the market.

But life is not simple. It's most important features - 
love, faith, beauty, and stock prices - defy a thinking 
man's efforts and resist his theories; just as a man's wife 
frustrates his efforts at logical persuasion. Truth - such 
as it is - must be coaxed out by poetry...or by suffering. 
There is no other way.

Today's letter examines one smallish question and raises a 
biggish one, in the following order. Why do Americans 
profess a greater admiration for the free market then, say, 
the French? Could it be that by submitting to God, they 
free themselves from the yoke of other men?

A Daily Reckoning reader from Seattle sets the stage for 
today's drama:

"In historically Catholic countries, such as France, the 
'communion of saints' - the idea that we are all in it 
together, spiritually (see 1 John 5:16-21 and Col 1:24) and 
materially (private property ownership was delegated from
God and to be used for the common good) led to what you 
describe. 'Solidarity' is a Catholic virtue which has been 
adopted by the Commies."

Meanwhile, "in historically Protestant countries, such as 
the US and UK," he writes, "spiritual radical individualism 
was introduced by the reformation... That understanding of 
property is deeply Pagan in origin, but taken as Revealed 
Truth by most conservative protestants.

"By and large, Fundamentalists and Evangelicals have a deep 
faith in the infallibility of the market which Catholics 
find incomprehensible..."

"You have to have faith," I recall my friend Mark Skousen 
telling his French audience in May. "Faith in the invisible 
hand of that the market will work things out to 
the benefit of all." It is either faith in the market's 
invisible hand... or faith in the iron fist of government. 
What else is there, dear reader?

A similar question was put to literary critic Harold Bloom 
by that well-known journal of theology, the Harvard 
Business Review. 

"American society is characterized by its devotion both to 
capitalism and to religion," observed HBR. 

"As an acute observer of the human condition," the 
theological journal continued its puff-ball pitch, "you are 
more interested in religion that in business. Why?"

"I believe the ultimate concern of America, for better and 
for worse, is religion," Bloom replied. "I believe that it 
is religion in this country that refutes Marx. As I've said 
so often, religion is not the opiate of the American 
people; it is their poetry."

That was the trouble with the play I saw in London, of 
course. The playwrite had the poetic talents of a tow 
truck. The central character of the play had discovered a 
letter from the 1st century, reporting that the resurrection 
of Christ had been staged by the Romans. (Those wily 

But what is really shocking about the story of the 
resurrection of Christ is not that it might have been faked 
- but that it might not. Any clown can buy a stock 
or pretend to be a dead man. But rising from the dead - 
defying the laws of nature herself - that is a real trick.

"The startling thing about the United States," Bloom 
continues, "is not that 93% of us say that we believe in 
God, which is, in fact, except for the Republic of Ireland, 
the highest percentage in the world. The really shocking 
thing is that 89% of us...say that God loves him or her on 
a personal basis...

"All Americans are poets and mystics," Ralph Waldo Emerson 
once wrote. "I presume that includes capitalists, too," 
added Bloom.

Bill Bonner,
Continuing his magical mystery tour of contemporary 

Tomorrow: "A's Chance In Hell" and other 
darned cheap stocks...

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About The Daily Reckoning:

Daily Reckoning author Bill Bonner

Bill Bonner is, in spite of himself, a natural born contrarian. Early each morning, Bill writes The Daily Reckoning—his take on the financial markets and what’s going on in the world—and sends it off by e-mail before most Americans’ alarm clocks have buzzed. Many readers say it's the first thing they want to read when they get up—not only because it's informative and thought provoking, but also it's inspiring, in its own quirky and provocative way.

Of course, there's much more to Bill than his daily market commentary. He's also the founder and president of Agora Publishing, one of the world's most successful consumer newsletter publishing companies. Bill's passion for international travel and big ideas are reflected in the company he's successfully built. In 1979, he began publishing International Living and Hulbert's Financial Digest . Since then, the company has grown to include dozens of newsletters focusing on health, travel, and finance. Bill has vigorously expanded from Agora's home base in Baltimore, Maryland since the early ’90s—opening offices in Florida, London, Paris, Ireland, and Germany.

Agora's publication subsidiaries include Pickering & Chatto, a prestigious academic press in London and Les Belles Lettres in Paris, best known as a publisher of classical literature in bilingual editions.


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Last modified: June 14, 2001

Published By Tulips and Bears LLC