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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter

FRIDAY, 30 MARCH 2001 


Today:  The Mighty Fallen

*** Boring day in the markets...Dow headed for

*** Shareholder recriminations...'old economy'
sheds another 11,500 workers...more on 'Q'...

*** Baby Boomers, "confidence men," revere the old
and the wise? Don't bet on it...the UNIVAC turns
50...and more!

*** I'm on my way to Philadelphia to attend a
wedding. I only have time to dash off a few notes.

*** More recriminations. Not everyone lost out in
the Great Tech Bubble. In fact, the Washington Post
says of the episode: it was not the greatest period
of wealth creation was the greatest
wealth transfer ever - from ordinary investors to

*** "One of the lucky people was the founder of
Scient Corp," reports Barron's Alan Abelson, "a
chap named Eric Greenberg. The stock came public at
an adjusted $30 a share in '99, topped $338 at the
peak of the lunacy in March of 2000. In five
quarters through last December Mr. Greenberg sold
$225 million of Scient stock." The whole company is
only worth $130 million today. See, 'late,
degenerate capitalism' isn't so bad - if you're one
of the late, degenerate capitalists!

*** Another very lucky insider was Marc H. Bell,
CEO of Globix Corp. Abelson reports that Bell "sold
a third of his holdings for roughly $129 million,
mostly in February 2000 - within a week of the
stock's peak of $67 and change." The stock can be
bought today for just $3.25 - giving the entire
company a market value of only $136 million.

*** I mentioned yesterday that 'fighting the Fed'
has been profitable this year. Fred Hickey adds
that it has been profitable since April 1999. That
was when the Fed started raising rates - which it
did six times until it finally began lowering them.
Between April '99 and March 2000, while the Fed was
signaling to investors to get out, the Nasdaq rose
more than 100%.

*** The markets barely moved yesterday. The Dow
picked up 13; the S&P lost five...and the Nasdaq
was down a piddly 33.5 - although these days that's
a loss of nearly 2%.

*** The Nasdaq 100 - home to the hopes and dreams
of so many late degenerates - dropped another two
and a half percent yesterday... it's now off 33%
for the year.

*** "The bigger, the longer, the more speculative
the bull market," says Richard Russell, "the more
severe the bear market that follows. This is
logical, because the bigger, the longer and the
more speculative the bull market the MORE THERE IS
TO CORRECT. It's as simple as that."

*** How low will it go? Russell reminds us of the
"Q" ratio - which I wrote about a few months ago.
The ratio marks the relationship between stock
prices and the underlying value of the businesses
they represent (roughly, book or replacement
value): "Currently, the Q ratio runs about 150% of
replacement values. This is 2 1/2 times the average
level of the Q ratio over the last century. As a
comparison, in the late 1920s and in 1966 and in
the early 1970s the ratio was a little better than

*** "To get the Q ration back to real value," says
Russell, "the stock market could fall as much as
50-60% or the Dow could drop back to the 4,000

*** GM spinoff and autoparts maker Delphi announced
they will add 11,500 to the growing list of
corporate pink slips. And according to Laura
Washington at, the Conference Board
announced help-wanted advertising is off 20 percent
from this time last year...meaning, there will be
fewer places for the recently disposed to find new

*** Gold shed a buck ten, yesterday. It's now down
$13 for the year. The euro slipped a little too, on
an ECB decision NOT to cut rates.

*** The dollar - defying the laws of gravity, and
the good sense of Daily Reckoning readers - remains
strong...the dollar index closed at 116 - up 6.7%
for the year.

*** That's bound to change. The economy grew slower
than expected - about 1% - in the first quarter of
2001...corporate profits dropped 4.3%. Sooner or
later falling stocks, shareholder recrimination,
dismal corporate earnings, layoffs, and negative
personal savings will catch up with the dollar.

*** "US private debt is...shameful," writes Harry
Schultz. "6% of GDP, an historic high. So the
public is no better at budgets than govt, and has
no savings, in fact -2% average. High debt is
dangerous; it means even a tiny recession could
cripple the U.S."

*** Harry, one of the oldest newsletter gurus still
compus mentis continues: "One of the reasons most
civilizations have traditionally revered the old
wise men is because they've been around long enough
to witness the longer term cycles of human
psychology/behavior...the BB's (Baby Boomers)
today, who dominate world politics, film-making,
finance, military, etc., provide 90% of the talking
heads on TV...are embarrassingly self-confident, a
common flaw in the age-stage." Harry has been
writing his letter since 1964.

*** Here's a "prelude to the bubble" milestone. On
this day in 1951, the UNIVAC computer passed 17
hours of "rigorous" tests by the Census Bureau. The
government subsequently ordered 5 more... and put
the Electronic Control Company on the map as the
producer of the first commercial computer.
Fittingly, the $300k price tag they put on UNIVAC
wasn't enough to pay for production. ECC, one of
the first two computer start-ups in history, ran
out of money before the trial was completed and was
forced to sell-out to a larger concern.

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Note, this is one of our 'Daily Reckoning
Classiques' that Bill wrote during his visit to
Omaha Beach last April.


I thought of the famous painting by Norman
Rockwell. A deeply furrowed and weathered farmer
from out on the plains sits on the runner of his
pickup truck, while his son awaits the train. The
son is going off to college and is full of the
bright expectations of youth. The father is more
concerned with how he will get the next crop in
without his son's help. The picture appeared to be
from the late `30s.

There, in section D of the American cemetery, on
the bluff overlooking the English Channel, was the
simple cross that marked the grave of Nils
Wennberg, private first class, from South Dakota.
Is that what happened to the boy? I wondered.

The 6th and 7th of June, 1944, were black days for
the Nindel family of Indiana. The crosses at Omaha
Beach record that two Nindel boys, Preston and
Robert, died within 24 hours of each other on those
two days - two of the nearly 10,000 American

Also of interest was the grave of Jimmie Montcrieth
- whose heroism on the 6th of June was so
remarkable that he was awarded a Medal of Honor -
posthumously. Montcrieth ran from position to
position, exposing himself to enemy fire, rallying
his troops and managing somehow to advance against
the German bunkers. He was killed - but the bunkers
were taken.

"All I remember," said Stanley, a stout oysterman
and carpenter, and D-Day veteran, whom I worked
with back in the `60s, "was jumping in the water
and running up to the beach. I had never been shot
at before. I didn't care for it. Guys were getting
shot all around me. And I had so much sh...[gear]
hanging off me, I could barely move. But I made it
to the beach and crouched behind the dunes and
started shooting back. I didn't know what I was
shooting at. But I hoped to hell I hit some son of
a bitch in a German uniform."

"Stanley," I once asked during the terminal phase
of the Vietnam War...when the draft lottery numbers
were being handed out, "couldn't you have gotten
out of it? Didn't you have polio or something?"
Stanley had had polio as a child and walked with a

"Hell no. I didn't tell them about the polio.
Besides I didn't want to be sitting around here
with my thumbs up my [bleep] while everybody else
was getting their [themselves] shot up. Of course,
it was different back then...."

I walked along the beach where Stanley must have
come ashore. I tried to imagine what it was like.
The German's reinforced concrete bunkers are still
there. They still look massive, impregnable and

How could anyone have gotten to safety across the
open beach and up the sandy bluff? And yet, they
did. By the end of the day on June 6, there were
150,000 troops on the continent. As Hitler
remarked, "The God of War has gone over to the
other side."

The God of War had indeed changed allegiance.
Rommel, in charge of the German defense west of the
Seine, committed suicide. His successor, Kluge,
followed in his footsteps - shooting himself a few
months later.

Less obedient to the God of War was von Choltitz,
in charge of the German garrison in Paris. Hitler
ordered him to destroy the city. But von Choltitz
may have been in Paris too long. He disobeyed
orders. He surrendered Paris, intact.

The American cemetery at Omaha Beach is the setting
of the first and last scenes of "Saving Private
Ryan." As in the film, there were a number of WWII
vets wandering among the crosses and stars of
David. Like the father in the Rockwell painting,
they wore baseball caps - often with indicators of
their military affiliations - and bore the creases
of age and hardship. Accompanied by younger
relatives, they walked slowly, reverentially.

Most were very friendly and open - relaxed, as
Americans tend to be. One older guy seemed to be
stunned, though. It was as though he was trying so
hard to recall something, that he had forgotten
where he was and what he was doing.

I wondered what they were thinking...and what
memories they brought with them. And how things
could have changed so that even though
these events happened during their lifetimes - it
is as if they happened a thousand years ago.

I thought, too, about how all the great changes and
challenges of our century were over before I was
born. The baby boomers have faced nothing like the
Depression, or Electrification, or Automobilization,
or National Socialism, or WWII. We have had an easy
time of it. Let's hope it stays that way.

Your very humble correspondent,

Bill Bonner

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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: April 01, 2001

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