In Today's Daily Reckoning:
*** Big Techs still have some air...but how long will it
last?
*** 'Prospects for a Soft Landing Strengthened..." Maybe.
*** Bonds fall. Euro and oil hold. Could this be the
'tipping point' for the dollar? The candidates debate...
*** More beating on the hull yesterday. The Big Techs are
still alive...pleading for the oxygen of investment cash.
*** The Nasdaq rose 19 points. Juniper banged up $9, but
when the day was over even it had become faint - ending
up just 25 cents. Cisco went down. Microsoft fell $2.50.
Intel fell below $60.
*** Microsoft's price puts it once again below the strike
price for options handed out a few months before. Will
the capitalists be exploited once more...while the
workers' options are again re-priced? We will see.
*** While the Nasdaq managed a small gain, the Dow sank
further, down 94 points. Why? Well, who knows...
McDonalds stock fell $1.50 - to its lowest level in 2
years. The brand names - Colgate, P&G, and McDonalds -
are major global enterprises. They suffer from a high
dollar. It makes it hard to export, and revenue from
overseas operations goes down...while dollar-based costs
increase.
*** One of the big costs is oil - which has tripled from
its low of less than 24 moths ago. Crude held above $34
yesterday.
*** The Producer Price Index appeared yesterday - showing
that wholesale prices were under control...at least if
you ignore the price of oil and food. Take out inflation,
in other words, and prices don't appear to be rising.
*** "The prospects of a soft landing for the U.S. economy
strengthened," said the Financial Times, "with
publication of figures showing a fall in wholesale prices
and a moderation in consumer demand."
*** The decline in consumer demand, as Dr. Richebacher
has pointed out, is a result of the stagnant 'wealth
effect.' Both the Dow and the Nasdaq are down for the
year. People are not feeling much wealthier this year -
and beginning...barely...to cut back on spending. The
trade deficit, just to remind you, for the first 6 months
of this year is as great as for all of 1998.
*** The CPI comes out today. If it, too, albeit thanks to
the magic fingers of BLS statisticians, shows a
moderation in inflation... "the next rate move might be
downward," according to the FT.
*** The bond market is not happy about something.
Yesterday, the European Central Bank intervened on behalf
of the euro. It was emphatic about not intervening. And
still claims that it did not. Yet, perhaps on a Wim, it
bought $2 billion worth of euros.
*** So, the euro rose slightly against the dollar. And I
can't help but wonder if this might be the 'tipping
point' for the greenback. The Danes are supposed to vote
next week on joining the euro-bloc. The odds are only
50/50 that they will go along. Either way, the news could
have a big effect on the struggling currency. But sooner
or later, something is going to push the dollar into a
downtrend against the euro.
*** You'll recall I reported earlier this week, that
Kevin Klombies had predicted the ECB would make a move
within 5 trading days. Well, he was right. Although "the
2.2 billion 'drop in the bucket'," says Kevin "is
certainly not an intervention...it draws the line in the
sand for the market." (see: A Perfect Financial Storm Is
Gathering http://www.dailyreckoning.com/imra4)
*** Long bonds fell $1.25 per $1,000 of face value
yesterday. Higher oil prices...perhaps a topping out of
the dollar...bond investors are worried.
*** This might be a good time for worrying. Mr. Bear is
capable of doing a lot of damage in a short period of
time, if he set his mind to it. And his summer vacation
is over.
*** "Corporate debt has reached a record 46% of GDP...
and for the first time ever total consumer liabilities
exceed annual disposable income." says Strategic
Investment's David Tice. And "while... businesses have
been piling on debt, banks have been ratcheting up risk
in their loan portfolios. So-called 'leveraged lending'
now represents more than a third of the...loan market, up
from just 7.2% in 1993. Leveraged lending - loans that
are below investment grade - has grown from $20 billion
in 1993 to $391 billion last year." By comparison the Fed
puts the total banking industry at a trillion dollars.
Chase will head south, merger or no.
(see: The Best Days For Big Banks are Behind Them
http://www.dailyreckoning.com/body_headline.cfm?id=496)
*** "Fuel is starting to flow again..." the FT reports,
"as UK counts cost of crisis." New Economy or not,
Britain proved surprisingly vulnerable to an interruption
in the energy supply chain. A report from the scene,
thanks to William Fleckenstein [siliconinvestor.com]:
"It's all dry and NO GAS here...No taxis in London...a
strange sight. I went out in my "Black Limo" mini Morris
(40 mpg) this morning and it's all gone... The M25 and
all other roads were like that scene with Charlton Heston
in "Omega Man" where he was the last man alive. I was
that man!!! The shops are now running out of food...I've
never seen anything like it...As I speak, it's just been
announced that the Army, Navy and Royal Air Force are to
be mobilized to deliver emergency fuel to the hospitals."
*** And on the west side of the Atlantic, Bush and Gore
have agreed to bore the public by throwing slogans and
jingoes at each other in debate format. Wouldn't it be
much better if they faced off in an Ultimate Fighting
Championship...armed with the weapons of their choice? It
would be so much more entertaining. And the winner
wouldn't have to be determined by checking a poll...but
merely by checking a pulse.
*** Seriously, though admittedly gratuitously, it would
be so much better to choose Congress by lottery. It would
be much more representative of the public...and no one
would have a career or financial conflict of interest. No
campaigns. No campaign contributions. And no annoying
elections.
*** Then, let Congress elect a president. And don't even
bother to tell us. The best president will be anonymous
...like the President of Switzerland...whose name we do
not know...nor do we care.
*** Yesterday, after receiving a sentence of 3 months in
prison for blowing up a McDonald's, a sheep farmer from
the Larzac region in Southwest France "vowed to continue
his fight against globalization and what he views as bad
food."
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* * * * * * * * * * * * * * * * * * * * * * * * * * * * *
"There's Adam Clymer, a major league a**hole with the New
York Times."
George W. Bush
In the early days of the century...before everyone seemed
to go daft...journalists were different. Reporting was a
lowly craft, practiced by disreputable, untrained people
who drank too much.
Of course, reporters had bad qualities too. Many were
illiterate and a few were simply insane. But it didn't
matter too much, as people didn't take very seriously
what they wrote anyway.
But since then, reporting the news has gotten its own
'ism' - as in journalism - and the trade has gone
immeasurably downhill.
Instead of reporting what they see and hear, they aim to
contribute to one of the great popular sensations of the
day. Perhaps they are revealing to the world the horrors
of the modern rag trade - with its sweatshop labor in
Malaysia and Thailand. Or, maybe they are uncovering the
evil of 'red-lining' by lending institutions, who hope to
reduce their losses by staying away from areas where they
are most likely to end up with a bad debt. And every
reporter on the campaign bus hopes that he will one day
make it into the major leagues of journalism - and have
his name on the Pulitzer roster next to Woodward and
Bernstein, for bringing down an unpopular leader with the
power of a laptop computer.
Whatever they are covering, they try to work their
stories so they amplify whatever popular hysteria is most
appealing. Had there been modern journalists on the beat
at the time of the Salem witch trials, for example, you
can bet that the Pulitzer hounds would have outdone each
other to uncover every lurid detail of the charges. Would
evidence of the alleged witches' misdeeds have figured in
the reports? Of course not. There was none...and there is
no power, no glory in stifling a popular sensation.
During the 1980s, a similar sensation swept through
America: the mass and grotesque abuse of children at day
care centers. Reporters jumped on the story like a
Congressman on a defense contract, each one hoping that
this would be his big break with the Pulitzer committee.
The charges were trumpeted in huge bold-faced type...and
on the evening news...in the nations' various yellow rags
and news-entertainment shows.
Then, the public prosecutors - spotting an opportunity
for their own 15 minutes of fame - leaped onto the case.
Janet Reno, conspicuously, presided over one of the most
sensational prosecutions in the nation.
And had not the day care centers been such penny ante
enterprises, the tort lawyers also would have shown up.
But it was all hooey - as Dorothy Rabinowitz has
chronicled in the Wall Street Journal. Anyone with half a
wit could have seen it was rubbish - just by looking. The
testimony was generally extracted from pre-schoolers by
quack psychologists. Since the toddlers were asked to
participate in fantasy - they didn't know where to stop.
So they provided prosecutors with incredible stories - of
subterranean rooms, monsters, and sexual violations which
were physically impossible.
It was nonsense. But popular sensations have a mind of
their own. The prosecutors and juries went along with the
hysteria...and reporters amplified it with more charges
...new revelations...and confirmation from various
charlatan 'experts' and public officials.
The whole spectacle was sordid. Only many years later -
after reporters and prosecutors had moved to more
powerful positions - were the convictions quietly over-
turned and the innocent people, one by one, lamely and
pathetically, allowed to take up their own lives.
A reporter's career goal today is make it into the elite
corps that trails along with presidential candidates.
Better yet, perhaps he can get onto the editorial page -
where he no longer has to distort the facts to fit his
sensationalist agenda, but can opine directly on them.
In today's International Herald Tribune, for example,
Flora Lewis tells us that "US Military Policy Ought to be
Getting an Airing." Ms. Lewis seems to have some opinions
on missile treaties, the readiness of U.S. troops and so
forth - which she wants to share. And she seems to think
that strategic planning "should be put before the
public."
The public, of course, has no more idea of strategic
military planning than Flora Lewis does. But the
motivation behind the editorial piece is not to improve
the security of the U.S. - but to make military policy a
matter of crowd thinking and popular sensation.
Likewise, Richard Cohen, tries for a purchase on the same
issue. "Is the U.S. Too Timid to Use Its Forces?", he
asks. The headline is senseless. No one doubts that the
U.S. would use its forces if it were attacked. What Mr.
Cohen is really encouraging is the sensationalism of
foreign military intervention. "Bring in Radovan
Karadzic," he says, coining a catchy phrase, "dead or
alive."
He points to Britain's smooth handling of the 'West Side
Boys' in Sierra Leone and notes that "The West Side Boys,
and other outfits, are much less likely to mess with
Britain again."
Gee, if dealing with gun-toters, assassins and kidnappers
were so easy, how come Britain has been bogged down in
Northern Ireland for a quarter of a century? But you're
not supposed to examine the details of these editorials
closely. This is mob thinking...intended to feed a
popular sensation...not intended to be worthy of real
thought. Entire nations are transformed into the cartoon
characters of professional wrestling - the good, the bad,
and the ugly. We are supposed to root for the good guys,
turn over half our earnings so it can used for various
mob-causes...and never count the cost. Casualties? "We
Americans," says the Washington Post writer beyond the
draft age, generously, "take casualties all the time."
Cohen is the worst kind of editorial writer. Glib.
Foolish. A jingo-monger without a mirror, incapable of
noticing how ridiculous he appears. But Richard Reeves,
over in the far right-hand column, is more clever. He
watches himself.
Reeves reports on Bill Clinton's attitude toward the
press as relayed by his former press secretary, Dee Dee
Myers.
"I've heard him talk about it," she said. "He was out
there taking the risks, putting his a** on the line,
trying to make the world a better place..."
(I am relieved to discover that at least our president,
or Dee Dee Myers has a sense of humor.)
"And they (the press)," Ms. Myers continues, reporting
the president's thoughts, "were sitting on the sidelines
taking potshots..."
But Reeves defends the press corps with at least as much
hilarity as Clinton defends himself:
"That's the way it should be," he writes. "We're there to
shout if the emperor has no clothes."
Shout? Spotting an emperor with no clothes, the typical
journalist is more likely to bend over and kiss his bare
a**.
Your reporter, just telling you what I see and hear,
Bill Bonner
P.S. What effect has the press corps...and the new
worldwide Solomon's Porch of the Internet...had on the
biggest popular sensations of our time - the dollar and
equities? I'll take up those issues next week. Enjoy your
weekend.
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