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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Interview With A Day Trader

*** What happened to the Pink Slip parties?... Annus 
Horribilis takes a breather... Dow up big on feeble news...

*** 3 cheers for the American consumer... Greenspan puts 
the pedal to the metal...

*** Wall Street's new "Honor Code" - ummm, okay...Congress 
wants a piece of the action... and more.

*** "Wasn't it just yesterday we were celebrating the 
arrival of the Pink Slip Party as a new rite of passage?" 
asks's Ilan Polyak. Regardless, Americans' 
spending outpaced their personal income in June, according 
to a Commerce Dept. report.

*** "Hooray!" shouted investors on the news. "Long live the 
American consumer!" The Dow jumped 121 to 10,522... and 
Annus Horribilis took a short break from knocking the wind 
out of the Fed's reflation attempt.

*** Less ebullient, the S&P 500 and Nasdaq each meandered 
into positive space... up 7 points to 1,211 for the S&P; 
the Nasdaq finished nearly 10 points higher at 2,027.

*** I have seen neither hide nor hair from Bill. As you 
know, he left Sunday for a vacation with his family in 
Nicaragua. I had expected him to check in by now, but he 
hasn't...hmnnn...I hope he didn't try to go for another 
early morning swim...

*** Eric too, is putting the final touches on his summer 
soiree, we'll hear from him tomorrow. For now, back to the 

*** "The consumer is key if there is to be a recovery," 
Polyak reminds us, "things could go from bad to worse very 
quickly if we were to become a nation of tightwads." 

*** "Ordinary Americans are expected to ride to the rescue 
of the economy," writes's Andrew 
Kashdan. But weighted down with record debt... and 
burdensome mortgage levels, "it's getting harder and harder 
for them to get a leg up on the horse." 

*** The Federal Reserve reported last week that debt 
service payments, measured as a percentage of disposable 
income, reached 14.35% in the first three months of this 
year... just shy of the 1986 record. At this pace, a 
passive observer might ask, just how exactly is the 
consumer going to save the economy? (See: The Consumers' Albatross)

*** Of course, those figures have left the Fed Chair 
feeling as bereft of despair as a jockey on the finish line 
of his first Triple Crown win. "Greenspan waved his little 
hand in the air and another $4 billion of magical dollars 
appeared in banks last week," the Mogambo Guru tells me.

*** "For much of the '80s and '90s, the Fed created money 
far in excess of GDP," says Bill King. "The excess 
liquidity flowed into financial assets. Now, M3 growth is 
greater than 14% year over year, but stock returns are 
negative and the economy is receding." Still, analysts 
predict, you can expect another 50-point cut when the Fed 
meets again next month.

*** "Monetary policy has been so promiscuous the past 
decade and a half that we are now at a rare point in 
history," says Dr. Kurt Richebacher. "The '30s [were] the 
last time that monetary policy was futile in stimulating 
stocks or the economy." 

*** And what of real estate? "Since it has historically 
been a significant percentage of household savings," said 
Indiana Senator Evan Vayh to Chairman Greenspan on July 
24th, "is this a worrisome long-term trend, people drawing 
down their home equity substantially?"

*** Greenspan: "Despite...the significant extraction of 
home equity gains, the level of unrealized capital gains in 
homes continues to rise apace. So it's not a depleting 
asset, if I may put it that way. It could be, but 
fortunately it is not."

*** "Here we go again," says Doug Noland of the Prudent 
Bear, "another dangerous Bubble and another pathetic 
example of either flawed analysis or obfuscation from our 
Federal Reserve Chairman. With the Fed having for years 
studied asset Bubbles, and especially after the bursting of 
the technology Bubble, there is today absolutely no excuse 
for misreading the expanding real estate Bubble."

*** The Mogambo Guru: "Consumer debt has risen beyond 100% 
of income. Layoffs are everywhere. Bankruptcies are rising 
fast. Consumers are seriously tapping into their home 
equity. The derivatives markets are already 300% of total 
global GDP... In short, the excesses of financial stupidity 
that plagued the world in 1929 are beginning to look like 
sobriety in comparison."

*** Annus Horribilis may have taken a short break 
yesterday, but it's a safe bet he'll be back... very soon.

*** Another form of financial stupidity is about to be 
reckoned with as well... or not. "Wall Street's New Honor 
Code," says a TIME headline. "Analysts got rich promoting 
bubble stocks and IPOs," says the article. "Now they say 
they'll come clean." Uh huh.

*** The article also says Congress has kicked off hearings 
to investigate many analysts' conflicts of interest... 
let's see, politicians accusing stock brokers of fleecing 
the public... hmmnn... something funny with this picture?

*** The SEC, too, is getting serious. According to, Laura Unger - the SEC's acting chief - told 
Congress, "[some analysts] sold stocks in their personal 
accounts that they had 'buy' ratings on at the investment 
bank." Now... how can that be? That would be dishonest, 
wouldn't it?

*** Even individual investors are getting snippy about this 
post-bubble mess. Thadeus Wong, a 32-year-old real estate 
broker in Chicago, told the Chicago Tribune he opened a 
million-dollar investment account with Morgan Stanley, 
because they were a reputable company... within 8 months, 
the entire account was wiped out "through buying tech 
stocks, options and shorting securities." Wong filed an 
arbitration claim on July 12th against Morgan Stanley and 
the broker he used there.

*** Boy, what a summer... an epic battle taking shape - 
American Consumer v. The Global Economy... post-bubble 
investor recriminations heating up... Congress getting in 
on the action... the ever-stoic Greenspan pumping away, 
trying to reflate global passion for stocks... quel 
drame... whoever called this the "dismal science" just 
didn't know how to have fun.


P.S. Okay, we're all fans of free speech. While the 
censorship of a few Wall Street analysts probably wouldn't 
inflict any damage on the moral fiber of the nation, for 
the most part, we don't condone the act.

Still, one of the most eloquent and prolific contributors 
to the DR website discussion board has inexplicably begun 
hurling obscenities about like they were candy. To wit, we 
simply ask, please exercise some discretion when using our 
forum. Thank you.

P.P.S. Below... a memorable cab ride during the height of 
the tech bubble...

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The Daily Reckoning Presents: A DR Classique originally 
broadcast on October 15, 1999

By Bill Bonner

I left Baltimore last night and took a cab down to Dulles 
Airport in Virginia. The following is the actual 
conversation with the cabdriver. It began as the cab 
crossed the Baltimore beltway, and the driver suddenly 

"There are a lot of Russians out here."

Yes, I replied.

"I can spot them."

You mean, you can tell if they are Russian?

"Yeah...I can tell. It's a gift I have. "I had two of them 
in the cab yesterday. They were Russians all right. I 
tagged them right away."

I guess you can recognize their accents.

"No...I can tell right away. They don't have to say a 


"They were agents. Russian intelligence."

How did you know that?

"It's a gift."


"A lot of them out here. One of them was a double agent. 
Russian intelligence and 
CIA. Or maybe NSA. I wasn't sure.

"There are so many...I get confused sometimes. I see them 
all the time."

You mean, you take them to the airport?

"Sometimes. But I see a lot of them in the mall. A lot of 
double agents too. Whew...a lot of them. Sometimes triple 
agents. I had one guy in the car the other day who was CIA, 
Russian Intelligence and British intelligence.

"He said he was English...but I could tell. They're pretty 
good. All kinds of disguises. No way to tell, unless you 
can tell...heh heh.

"I had one woman on Tuesday. Nice green eyes. Reddish hair. 
And a thick Irish accent. She said she had lived in Ireland 
all her life. Even had an Irish passport. But I could tell-
Russian Intelligence.

"I haven't had sex in 12 years. Not with woman, child, man 
or beast..."

[I decided to let that pass...]

"Another guy with a southern accent...great accent. Said he 
was from Georgia. Russian intelligence."

Hmmm...there are more than I thought. You can tell just by 

"Yeah...sometimes I can tell from a picture. I saw a 
picture of Al Gore in `The Washington Post' yesterday. 
British Intelligence. It really struck me. No doubt 
about it."

I would have guessed it. How about Bill Clinton?

"British Intelligence."

And Hillary?

"Ah...British Intelligence. But you see a lot more in her. 
Wiccan. Satanist. Some Muslim. Some Buddhist. She gives off 
a lot."


"Yeah...she's a witch. Lot of them around too. Especially 
in the suburbs. 

"I call them Satanists in suits. Not the same as black 
witchcraft. They're all over the place. Especially in 
Silver Spring [A suburb north of the city]."

[I'm not making this up...honest...]

"I was a Christian. I put leaflets under windshield wipers 
for Operation Rescue [an anti-abortion project]. But I 
didn't want to kill anybody. Went to church every day. 
That's when I got the gift. 

"Yesterday they wanted me to train a new driver. He sat in 
the cab with me for five hours while I showed him the 
ropes, you know. Well, I knew. I could just tell. So I 
said, `Okay...I know you're a Satanist. And Russian 
Intelligence.' He said, `'d you know?' It's a 

What do you think of Jesse Ventura, I asked. [I couldn't 

"Don't get me started...The guy is really bad news. I saw 
him on TV. 

"Russian Intelligence. How do you like that? And a 
governor! Wiccan. French Intelligence. And military 
intelligence. A little bit of Satanism, too."

I figured as much. What do you think of the stock market? 
[What the heck...maybe Alan Greenspan is a double agent. I 
had to know...]

"Oh...I don't do that any more. I used to be a day trader. 
But I kept losing my money. Then I got compulsive about it. 
I'd stay up every night until 3 a.m. studying the stock 
market. I guess some guys are good at it. Not me. I still 
owe money."

It's a gift, I said.

Bill Bonner
Russian Intelligence

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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: August 01, 2001

Published By Tulips and Bears LLC