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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  God Only Knows

*** Mr. Market takes a breather... But from what? Bull 
market? Or bear market rally? Does it matter? 

*** Pound drops to 15 year low against dollar - thank 

*** Japan still world's largest creditor... bad caviar, sad 
burgundy! and more...

*** What to make of it all? "The evidence is growing that 
the bear market is over," writes my friend Mark Skousen. 
"It's time to buy again." The Wall Street Journal reports 
that people are buying equity mutual funds again. Investors 
are overwhelmingly bullish. And even Amazon said it would 
make money - next year, of course! 

*** But a look at yesterday's headlines makes one wonder. 
"Productivity drop biggest in 8 years," says the Milwaukee 
paper. "Retail sales rise 2%, less than expected," reports 
the LA Times. "Raft of data show weak U.S. economy," 
declares a Reuters story. And with admirably able 
alliteration, USA Today says "Service sector sinks for 2nd 
straight month." 

*** Is it really a new bull market...or just a bear market 
rally - a trap for unwary investors? Or does it matter? 
Here at the Daily Reckoning we aim to buy low and sell 
high. We look for bargains. The S&P today, selling for 
nearly 28 times earnings - twice its normal level, is no 

*** Ending a four-day winning streak, the Dow lost 105 
points and the Nasdaq yielded 16 points.

*** Despite a decade-long economic malaise, Japan remains 
the world's largest creditor nation for the 10th 
consecutive year, its Ministry of Finance reported. 

*** Meanwhile, Japan's outstanding liabilities - i.e. money 
it owes to someone else - declined 4.6% last year. In all, 
an impressive performance for an economy that most consider 
to be struggling.

*** Mysteriously, the currency of the world's largest 
debtor nation - the USA - remains the envy of the currency 
world. So certain is its strength that investors seem 
fearful of holding anything else.

*** Distressing news is pouring in from the culinary 
world... literally. It seems that some high-end French 
Burgundy wines are no better than screw-cap jug wines. In 
fact, the jug wines may be better. Mon Dieu! Have the 
French lost their touch?

*** Not exactly. USA Today reports that certain 
unscrupulous wine purveyors "mixed cheap swill with generic 
wine and poured it into bottles bearing the labels of top-
quality vintages. In some cases, old wine set to be made 
into vinegar was mixed with other lesser-quality vintages 
and passed off as medium-quality wine. To people in Beaune, 
Burgundy's wine capital, these alleged acts bordered on 

*** Why such behavior should be considered heresy might 
mystify a few Wall Street types. On Wall Street, packaging 
low-quality "swill" and selling it as something of great 
value is called launching an IPO. The practice is legal and 
it happens every day.

*** In other distressing culinary news, we may be on the 
verge of an international caviar crisis! 33 tons of the 
world's finest caviar from the Caspian Sea sits in cold 
storage somewhere in Kazakstan, prevented from leaving the 
country by a United Nations body that believes caviar-
producing sturgeon are being recklessly exploited.

*** Without a trustworthy Burgundy to drink and no fresh 
Beluga caviar to eat, how does one celebrate occasional 
joys like a rising stock market? Since stocks fell 
yesterday, we may hold off answering this vexing question, 
at least until tomorrow. In the meantime, a very cold beer 
and a big bag of potato chips is not a bad alternative.

*** "With prices back at $30 a barrel," writes John Myers 
"...and North American oil reserves standing at 60% of 
where they stood in 1970, everyone is beginning to 
acknowledge the crisis in energy. What they don't know... 
the same is happening with world supplies of iron, nickel, 
aluminum, copper, chromium, lumber - even our soil. In the 
end they will run down just like petroleum. Petroleum is 
just the first and most noticeable." (see: These ARE The 
Good Old Days

*** Last Tuesday's Daily Reckoning highlighted J.P. Morgan 
Chase's vulnerability "to a weakening economy and 
struggling capital markets." Citing a story that appeared 
on, we noted that the firm's investment 
banking revenues fell 22% year-over-year in the first-

*** Yesterday, J.P. Morgan admitted publicly that it is 
experiencing tough times. The company warned that its 
venture capital operation faces large losses and its 
investment banking operations will yield disappointing 
results this year. Hmmm.I guess the folks at J.P. Morgan 
read the Daily Reckoning.

Eric Fry

And from Bill... in London...

*** The Times reports, barely concealing its contempt for 
American juries, that a California man who smoked two packs 
of Marlboros a day for 40 years has won a $3 billion 
judgment from Philip Morris. But the man - who says he 
didn't realize until the 1990s that smoking can be 
dangerous to your health - is either a liar or an imbecile. 
PM did the world a favor. The jury gave the award to the 
wrong party.

*** Also on page one of the Times, we find that "tea cosies 
are posing a growing threat to human health; the toll of 
accidents caused by humble teapot-warmers almost doubled in 
a single year." Mark Henderson, Science Correspondent for 
the Times, reports that "Britons also need to be much more 
careful when getting dressed.trouser accidents accounted 
for five times as many serious injuries as were caused by 
chainsaws." It can't be long before the tort vultures are 
on the case. Short the Gap and Levy Straus? 

*** What would the papers do without tort lawyers? Another 
report tells of two detectives posing as undercover 
criminals making a big drug purchase. The two reached into 
their bags to hand over the money and discovered that the 
cash was stamped "West Midlands Police." Well, you can 
imagine the looks on their faces as their cover was blown. 
The two were shot in the legs by the drug dealers.and now 
seek damages from the police department.

*** But at least my luck held up pretty well yesterday. 
"The pound sank to its lowest level against the dollar for 
15 years," reports the Times as my wife, Elizabeth, heads 
out on the town with my credit card.

* * * * * * * * * Advertisement * * * * * * * * *

You Can't Afford to Ignore the Energy Crisis... Or Profits 
of 276%... 390%... 1,955% 

We are on the verge of the most serious energy crisis ever, 
and there's nothing George W. Bush, Alan Greenspan or even 
OPEC can do about it. Learn the truth they're not telling 
you, as well as the little-known companies set to make 
money hand over fist. Click here to read your free report.
* * * * * * * * * * * * * * * * * * * * * * * * * 


To the question, 'why must stock prices fall?' comes the 
answer: 'Because they went up.'

The reply is not my own, but comes from Jeremy Grantham, 
chief investment strategist from Grantham Mayo Van Oterloo 
with $21 billion under management.

"Stock prices tend to return to average," he says. "What's 
driving stock prices down is that they went up."

What could be simpler to understand or more elegantly 
stated? And yet, dear reader, that is how the world works - 
simply, elegantly, and incomprehensibly.

As inferred from my notes above, Elizabeth has joined me on 
this trip to London. What a rare delight to have my wife at 
my side on a business trip! What couple ever divided its 
labor more exquisitely. I work; she rides. I earn, she 
spends. I write; she reads. I worry about the important 
things: money, politics, global warming, war; and she 
thinks about the trivial problems of everyday life - what 
we eat, where we live, how we spend our money, the 
children, the drapes, culture and beauty.

We make such a perfect if designed to fit 
together by nature.or God himself.

Elizabeth chose a play for us last night: 'God Only Knows' 
written by a fellow named Whitemore, which promised 
cultural and intellectual enrichment.

The play opens with a discussion of the LTCM hedge fund 
debacle of the late 90s. 

You will recall that LTCM blew up after its Nobel prize 
winners miscalculated the odds on certain very risky 
investment strategies. Things that were supposed to 'once-
in-a-billion-years' events actually happened within a 
couple years after the hedge fund began operating.

"People just want to believe that they can do the 
impossible," explains one of the characters on stage. "They 
want to feel they can do what you're not supposed to be 
able to do."

The two couples, relaxing one evening while on vacation in 
Italy, are interrupted by the arrival of another 
Englishman...a man on the run. Who is he? What is he 
running from? What has he done?

It develops that the man is a scholar, Humphry Biddulph, 
who has been working on some old documents in Rome. Into 
his hands has come a particularly explosive piece of paper 
- a letter from a Roman senator, written 110 years A.D. The 
letter, whose authenticity is uncertain, reveals that the 
Senator's grandfather had participated in what - if true - 
would have been the biggest con of all time. He claims that 
the Romans staged the resurrection of Jesus, by getting a 
lookalike to pose as the Nazarene after the crucifixion. 

Why would the Romans do such a thing? Because they found it 
difficult to keep their subject populations - Jews, Gauls, 
Britons, Levantines, Aramatheans - under control. To a 
group of people who were the enemy of so many other groups, 
"Love Thine Enemy," had an appealing ring.

And so, according to the letter writer, the Romans 
conspired to pull off the greatest scam in history, 
creating a phony resurrection for the man who preached 
turning the other cheek. 

And what a spectacular success! The martyred Jesus was a 
big hit - bigger than Che or Abraham Lincoln. Within a few 
centuries, Constantine made Christianity the religion of 
the Empire. Now the sandal was on the other foot. For the 
Holy Roman Catholic church, to which your editor pretends 
membership, then began to persecute non-believers and 
suppress contrary opinion.

"But what does this have to do with you...what are you 
afraid of," asks one of the vacationers?

Ah, glad you asked. I made the nearly fatal mistake, 
explained the man on the run, of revealing the letter to a 
Roman Catholic priest. 

"Don't you see?" he continues, "If the letter is authentic, 
no resurrection. No resurrection, and the whole of 
Christianity rests on a lie."

The owner of the letter died in a mysterious car crash days 
later. And now, 'they' are out to get our hero, Humphry 
Biddulph.. Don't you see, dear reader? 

Whitmore spends the second half of the play telling us that 
Christianity is all a big lie. And that the Roman Catholic 
church has been ruthlessly suppressing the truth for 2,000 

"Jesus could not have been born when they say he was 
born...," explains Biddulp, "and there is no historical 
evidence for the 'massacre of the innocents.' Besides, 
Herod was dead 4 years before Jesus was supposedly born. 
And the Virgin Birth? Completely made up. The word used in 
the original testaments meant 'young woman,' which was 
mistranslated into Greek as 'virgin.' And the doctrine of 
transubstantiation, and the Holy Trinity, celibacy, and 
Papal Infallibility - all of it invented by the Roman 
Catholic Church...and all of it nonsense."

"Faith," he continues, spitting out the words, "is just an 
excuse for cowardice and irresponsibility. People don't 
want to face up to the truth."

If only The Truth were so easily faced. Blabbery 
Trotskyites and self-assured playwrites could produce reams 
of it - enough to overwhelm whatever secrets might be 
hidden in Vatican vaults. 

But truth is as hard to suppress as it is to disclose. Even 
in the 21st Century truth does not expose herself readily. 
She hides as easily in a mountain of information as a 
desert of ignorance. Even in this Information Age, dear 
reader, there are questions for which the World Wide Web 
hath no answers, and problems for which not even the 
world's best known public servant since Pilate hath no 

And for every tiny fragment of truth some bloody fool went 
bankrupt and mad...was crucified by his own hand and now 
rants in some particularly sweaty corner of Hell.

The vacationers offer only token resistance. "Religion is 
very useful," says one, "without it there would be moral 

"I don't care what you say," says another. "I still 

What a pity. It would have been such a better play if the 
others had put up a good fight. Catholic scholars and bible 
thumpers alike have been arguing with these points for 
centuries. They've become very good at it.

"What that play needs is a good Jesuit," Elizabeth 

More tomorrow...on God, Man and Greenspan...

Bill Bonner

* * * * * * * * * Advertisement * * * * * * * * *

The landing approach has begun. The flaps are down. A 
moderate slowdown has hit the U.S. economy. Yet, investors 
are still optimistic. 

It seems that everyone believes that Alan Greenspan has 
engineered a soft landing for the formerly high-flying tech 
bubble. But according to one of the world's leading 
economists, it's worse than blind faith. It's "high-octane 
'new paradigm' propaganda." Here's what you need to do - 
right now - to prepare yourself for the current crisis:
* * * * * * * * * * * * * * * * * * * * * * * * * 

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 07, 2001

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