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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  The Worst Is Over

*** The worst is over! But the Big Bottom may be a long way 

*** Dell, Amazon...up...GE up...what's up?

*** The mighty fallen...Austin Powers...uranium...and more!

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*** Investors are still groping for the "Big Bottom." They 
know it can't be far away. 

*** "The worst is over," said several commentators 
yesterday. And Morgan Stanley opined that stocks are now 
10% undervalued.

*** Few customers reached out to grab the bottoming stocks. 
Volume was light, which was blamed on an approaching 
blizzard. Still, there was enough activity to drive the Dow 
up 95 and the Nasdaq up 25.

*** Dell added $1.37 to its stock price. Amazon rose 26% 
after a report in the Sunday Times of London said the e-
tailer was in talks with Wal-Mart. AMZN climbed all the way 
to $12.63...

*** GE rose 2%.

*** Gold got in the spirit of the day, up 40 cents. Gold 
mining stocks rose 2% on average. 

*** But "beware of false starts, false bottoms, and false 
prophets," wrote Fred Barbash in the Washington Post. He 
noted that there is "a tendency among experts and amateurs 
to prematurely interpret short-term movements as either the 
beginning or the end of bad news."

*** "It's time to call the bear market what it is," suggests 
Mr. Barbash. He continues ominously: "Never before have 
Americans' spending habits - personal and corporate - been 
so tied to stock-market performance."

*** Taking $4.1 trillion out of stocks' value has to leave 
a big hole somewhere. But so far, there has been no 
panic selling of stocks. People seem to have resigned 
themselves to the bear market. Have they any idea of how 
bad it might be? Probably not. Instead, they are still 
"looking across the valley" to the rich pastures and rising 
slopes on the far side. 

*** In the meantime, they're beginning to take revenge on 
the prophets whom they believe led them into this 
wilderness. The "holier-than-thou," New York Times, says 
Bethany McLean of, "happily broadcasted [Henry] 
Blodget's insane predictions to millions of readers (who 
would otherwise have remained blissfully ignorant)." But on 
Sunday, the NY Times criticized poor "King Henry" in a 
front page article.

*** Likewise, yesterday's Wall Street Journal, which for 
the last several years has reported Abby Cohen's 
predictions as if they mattered, took her to task in an 
article headlined "How Could They Have Gone So Wrong?"

*** The mighty fallen. Sic Transit Gloria Mundus.

*** "The US dollar is now undergoing a stealth decline," 
writes the Oxford Club's C.A. Green. "While the US 
experiences negligible GDP growth, European economies are 
expected to grow an average of 3.4% this year... which 
means, the euro and the dollar are headed for parity. 
Goldman Sachs is forecasting the euro will hit $1.20 in the 
next 12 months. If that happens, euro-denominated stocks 
would be worth 31% more - even if the stocks went nowhere."

*** "The global demand for oil is 75.5 million barrels a 
day," says John Myers, "China consumes over 6% of the 
total. Even today, as prices retreat amid a global 
slowdown, China's demand for oil remains 'the wild card, if 
not the trump card,' in determining the direction of oil 
prices. What we're seeing is... natural resources are being 
re-valued as demand from a progressive third world 
continues to grow."

*** "By the way," Dan Ferris reminds us, "longtime Daily 
Reckoning readers may remember we said that 'before the 
lights go out around the world' uranium was a good play. 
Well, since April 2000, just before the lights started 
going out in California, Cameco (CCJ), the largest uranium 
producer in the world, is up 190%. But the penny shares-the 
wildcatters-have gone nowhere."

*** "The private sector hasn't been too bad for Robert 
Rubin," notes Chris Matthai of the Fleet Street Letter. 
Former member of the "Committee To Save The World" and now 
chairman of Citigroup's executive committee, Rubin received 
$16.5 million in salary, bonus and "other compensation" in 
his first year at the company. By comparison... Mike Myers 
(no relation to our John) who, as special agent Austin 
Powers, saves the world in every film, signed a $25 million 
deal to star in the third installment of the movie series. 
Saving the world isn't cheap...

*** I have to leave in a few minutes to go to 
you will get a little holiday from the Daily Reckoning 
today. You will find it shorter than usual. Still...more 

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"In the day of prosperity there is a forgetfulness of 
affliction: and in the day of affliction there is no more 
remembrance of prosperity."

Ecclesiastes 11:25

"Memories are about to get jogged."

Dan Ferris, 3:5

Thank God it is over.

The mania, that is. The Clinton boom...the credit and stock 
market bubbles...have not yet been corrected. But at least 
the frenzy over new technology, IPOs, dot.coms, the 
Internet, and the most preposterous excesses of the 
Gildered Age are behind us. 

The worst is over.

From the Atlantic coast to the Pacific, the nation breathes 
a sigh of relief. 

Not that it wasn't fun for some people - the overnight 
billionaires...the day traders...the celebrity analysts and 
the techno-so-very-superiors...

But for most people, the tech mania was like a loud party 
to which they had not been invited. "The financial asset 
inflation of the last 20 years, with the proliferation of 
generous option packages for executives and the 'new 
economy,'" explains Marc Faber, "has produced an 
unprecedented wealth and income inequity."

In 1982, he points out, "it took a worker around 100 hours 
to buy one Dow Jones; it now takes more than 800 hours of 
work." Real estate, too, has become less affordable. "In 
other words," he continues, "today's unskilled laborer has 
to work far longer than he did 20 years ago to afford a 
house, or to invest his savings in equities in order to 
secure his retirement nest egg."

Much of what passes for progress, (I paraphrase a point 
made by my gardener), is made under false pretenses. I find 
that I live at least as well in Paris, without an 
automobile, as I did in Baltimore with several of them. I 
eat at least as well from the small table that Mr. Deshais 
ladens with his fresh vegetables and dead I 
could from all the bins and shelves at the super market. 

And, often, a misunderstanding built up in an hour of email 
exchanges can be cleared up in a 15-minute conversation, in 
person, over a cup of coffee.

It is rare, though, that an innovation turns out to be such 
a complete and unadulterated imposter as the "New Era." 

But finally, the music has died down and we can go on with 
out lives free from the jealousy and resentment which 
always threatened to overshadow our nicer qualities.

Now the partyers are getting their comeuppance. Henry and 
Abby....Bezos and Ellison - they've all been humbled. The 
day traders have gone back to their day jobs. No one - 
other than the Fed chairman, whose birthday we celebrate 
today, and a few diehards - still believes in the 
transforming power of the new technology. And even the 
press has finally caught on: 'It is a bear market' after 
all, says the Washington Post. 

"How could they have gone so wrong?" asks the Wall Street 

"The 90s boom left me both financially battered and 
psychologically troubled, " says David Callahan, writing in 
the International Herald Tribune, last month. "As the 
economy has slowed, I'll confess that my main reaction has 
been relief." 

Mr. Callahan's beef with the mania was that it drove up the 
cost of living in Manhattan, where "total wages and 
salaries for workers in the city increased by only 19% 
between 1989 and 1998" while the average price of a co-op 
or condo below 96th Street rose from $395,035 in 1990 to 

"To be sure," says he, on a point of which the reader is 
less than sure, "I feel bad for the swelling ranks of 
people who had been laid off. But until Americans find a way to 
share the country's wealth more equitably during boom times 
and make sure that income gains aren't wiped out by rising 
costs in housing and health care, it's hard to get too 
excited about surges in national prosperity."

The boom, he continues, "inevitably brought out the worst 
in people. Materialistic values came to pervade U.S. 
culture. The ideal of working hard over many years to 
achieve wealth lost traction. The pressure to pursue wealth 
instead of other goals grew enormously as the media focused 
on those winning big in the new economy. It became easy to 
feel that missing the gold rush was plain stupid."

From the other coast, much the same sentiment was voiced by 
David Coursey on ZDNetnews, last summer: 

"In the past couple of weeks, community resentment of the 
'dot-commies' or 'e-holes,' as we're being referred to in 
some circles, has reached a new high. No, we're not being 
assaulted on the way to our cars - quite yet - although in 
some San Francisco neighborhoods, emotion is running pretty 

"Silicon Valley used to exist in the old fruit orchards 
down near San Jose, about 40 miles south of the Golden 
Gate. It had expanded over the years, but nothing like 
we've seen in the past half-decade. Now everything between 
San Francisco and San Jose is ripe for tech companies on 
the prowl. And the East Bay - Oakland and environs - is 
getting annexed as well.

"And this is pissing the hell out of local residents, who 
are beginning to root for a big economic downturn as a 
means of getting back some control of their communities. 
And giving the rich kids their comeuppance.

"Apartments that were $1,100 a month four years ago are now 
impossible to find at $1,750. And the low-income 
neighborhoods of East Palo Alto - and low-cost housing 
generally - are being gentrified right out of existence. 

"Last week there was a story about two houses - three 
bedrooms, nice but not swank by Palo Alto standards - going 
on the rental market. They were priced at a bargain-
basement $10,000 and $12,000 each - and that's per month.

"Rather own than rent? $3.3 million is the opening bid. Oh, 
yes, for $12K-a-month you get a pool.

"Another story that caught my eye was about a neighborhood 
bakery not far from my office. The bakery is facing a 
quadrupling of its monthly rent - from $1,500 now to $6,000 
come Jan. 1. The baker was talking about the likelihood of 
going out of business..."

But that was 6 months ago. Since then, the rich kids have 
been getting a least a little of what they've had coming. 
The fraud has been exposed. The worst is over. Prices are 
coming down. The gap between the techno-wunderkind and 
everyone else is narrowing. 

"Sooner or later," said Mr. Deshais this weekend (or words 
to that effect)..."they're going to wish they planted 

Your correspondent,

Bill Bonner
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: April 01, 2001

Published By Tulips and Bears LLC