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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter



Today:  Palm Beach Story

*** Nasdaq below 3,000. But investors are calm. It's the 
election, stupid.

*** What's the matter with the euro? It should be going the dollar invincible?

*** World economic slowdown... "imposter" financial 
analysts...Death Watch for dot.coms...and more...

*** Mr. Bear is every bit as cagey as I suspected. Tech 
stocks - led by Oracle and Cisco - came back to life 
yesterday. The Nasdaq index rose 171 points - or more than 

*** The Dow rose, too - up 163 points. 

*** What caused the rise? Well, the election uncertainty is 
losing its unsettling edge. Investors looked into the abyss 
of political turmoil... saw the bridge of gridlock in 
Washington... and were pretty happy.

*** What’s more, there were no disappointing earnings 
announcements. So Mr. Bear saw his opportunity. He took a 
break. His whereabouts, as well as his next move, are 
unknown... but he is likely to be back soon.

*** In today’s paper, "NY Times" columnist Thomas Friedman 
provides an inadvertent explanation for Al Gore’s 
remarkable intelligence. Referring to the film, "Being John 
Malkovich," Gore said: "That’s what I feel like... A guy 
whose head is occupied by all these people telling me what 
to do."

*** The Internet craze seems to have peaked out. A Price 
Waterhouse study determined that people are spending less 
time on the World Wide Web - just 4.2 hours per week this 
year, down from 5.3 hours in 1999 and 4.8 hours in 1998.

The report, cited by Alan Abelson in "Barron’s" says that 
"fewer Americans are sending and receiving emails this 
year." "And fewer," Abelson continues, "are reading 
publications online, watching live events and participating 
in chat-room chatter." 

*** Addison and I are on our way to London - taking the 
Eurostar under the English Channel. So, we’re cut off from 
our traditional sources. We may even be tempted to make up 
the news, since no one really cares anyway. What difference 
does it make? But I’m just kidding. The real news is more 
entertaining than anything we could invent.

*** I searched "The Times" of London in vain this morning. 
I was looking for the usual story of "the naughty vicar." 
Normally, U.K. newspapers can be counted on for a story 
about a preacher gone bad - preferably in the company of a 
Sunday school teacher or Bishop’s wife. Alas, either the 
vicars have straightened their laces or the press is 
getting tired of the story.

*** Take this item from the British press, for example: 
Professor Mo Malek, a health economist, has called on the 
U.K. government to tax fatty hamburgers as a deterrent to 
public obesity. He envisions a type of sliding tax on 
burgers, based on the fatty content thereof. The more fat, 
the higher the tax. Professor Malek blames the recent 
obesity epidemic that the United Kingdom is experiencing on 
a more sedentary lifestyle and the availability of fast 
food. Once you accept the proposition that the majority, or 
their agents, have the right to tell the rest of us what to 
do, it is only a matter of time before they boss us around 
in ways we never thought possible. But what the heck; I 
don’t eat fast food. So what do I care? Go ahead, tax the 
McDonald’s customers. 

*** "Nasdaq intent on exploring London exchange alliance," 
reads a "Financial Times" headline. "It makes profound 
business logic for the LSE and Nasdaq to do a deal," says 
John Hilley, chairman of Nasdaq International. "There is a 
revolution in securities trading that is about to explode 
in Europe and it's based on IPOs and retail trading." 

*** Meanwhile, Playboy Enterprises has postponed their IPO 
for scheduled for this week. "We do not 
believe," Christie Hefner, Hugh's right-hand woman, told 
the "Financial Times," "that under the current market 
conditions we would receive a valuation that reflects the 
extraordinary potential of this business." And pornography 
is said to be one of the most profitable Net businesses. If 
Playboy can't raise the money they need from the market... 
who is likely to?

*** Mega-retailers Wal-mart and Home Depot, the two most 
closely watched retail chains, both report a "slowing in 
consumer traffic." Best Buy, too, is feeling the heat. 
Grant's Investor Eric Fry: "Best Buy's same-store sales 
growth has begun to stall and management predicts that it 
will continue to slow. In an aggressive bid to counteract 
these adverse trends, BBY has launched an expensive bricks-
and-mortar build-out that will increase its retail store 
count by 73% over four years. But the attempted cure may be 
worse than the disease. Certainly, more retail stores will 
produce more sales. But bottom-line improvement is far from 
assured. The company's ambitious 25% earnings growth 
targets rely upon maintaining ultra-high gross margins, 
which reached a record 20.4% in the latest quarter." (see: 
Still Not A Best Buy)

*** Technology companies, too, are hanging their hats on a 
near perfect future. "[T]he future of all this technology 
[is pinned] on wireless and wireless being the 'killer 
app,’" writes Bill Fleckenstein. "My observation is that 
one of the main uses of all wireless doo-dads is to further 
the exploitation of the national pastime, which I long ago 
stated stock speculation has become, although it may be 
losing some of its panache as folks lose money. 

"The way I see it, hand-helds of all flavors are mainly 
used so people can ascertain their stock prices and trade 
on-line. That's not to say it wouldn't be useful for e-mail 
if you are traveling, but let's face it, a lot of things 
that wireless phones and things are supposed to be able to 
do can't be done easily when one is on the move. The real 
killer app, in my view, is the stock market. So if one 
thinks the trading mania prospectively will diminish, that 
speaks volumes about how fast folks will lust after the new 

*** Sitting on the train this morning, I am prompted to 
read Eurostar magazine by an alluring photograph of the 
Italian actress Monica Bellucci. Really, how can I resist? 
The headline calls her: "The Brunette Tornado." I will take 
a look inside.... on your behalf, of course.

*** That's too bad. Other than these exceptionally sassy 
photos, Eurostar magazine offers very little of interest. 
Wait, what's this? Another headline asks: "Is Science Going 
Mad?" Give me a moment... I'll tell you the answer. 

*** Unbelievable. After reviewing the piece which covers 
topics as rich and deep as genetically modified foods, 
degenerative disorders and human gene-mapping... I am left 
only with the writer's awe that this author managed to 
assemble words together for three pages... and say 
absolutely nothing. 

*** On this day in 1923 it cost 200 billion German marks to 
buy a loaf of bread. In 1918, while the guns were still 
rumbling in WWI, a loaf of bread cost two-thirds of a mark. 

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As a sequel to yesterday’s Palm Beach story, perhaps it 
would be worth leaving you in suspense about the relative 
merits of value investing as opposed to trend following... 
and reflect on the nature of our democracy.

Normally, you and I have better things to do than think 
about our form of government - such as wash the car or take 
the dog for a walk. But since the presidential election is 
on the tip of everyone’s tongue, like the taste of stale 
Gaulloise cigarettes and last night’s andouillette sausage, 
this seems like a good time to get out the mouthwash, rinse 
it around and spit.

The international papers are full of attacks on the 
American elections and its quaint "college" of electors, as 
well as chauvinistic apologia for the U.S. system of 

But the foreigners miss the point, as they always do. They 
do not understand that democracy in America is not merely, 
nor even principally, a system of government - it is a 
system of mass entertainment. Wall Street and Main Street 
provide the bread. Washington and Hollywood supply the 

That is why the contenders for the nation’s highest office 
are judged, not on their policies, (which largely make no 
sense and are understood to be nothing but lies, like the 
"Contract with America," anyway) but on their 
personalities. Bush is perhaps too dumb and too 
inexperienced to be president, said the media analysts 
early in the campaign. Gore is, well, a bore. So the 
candidates spent the whole election not trying to come up 
with more attractive policies, but trying to prove that 
they could overcome their personal failings.

You have to admire the president of the Philippines, Joseph 
Estrada. According to the "International Herald Tribune", 
he refused "to hold regular cabinet meetings... to read 
government reports, newspapers or magazines." Instead, he 
spent his time - and I am not making this up - eating, 
gambling, drinking ...and/or spending time with his several 
mistresses. Now there is a man worthy of a great republic! 

Instead of cravenly pretending to do the people’s business, 
as Bill Clinton has these many years, Estrada minded his 
own business - rather well, it would appear. But instead of 
receiving the thanks of the many millions of people upon 
whose lives he did not intrude, nor whose domestic harmony 
or economic well-being he did not endanger, Estrada has 
been impeached. Yesterday, said the IHT, mobs - no doubt 
including many who voted for him - "Burned Estrada in 
Effigy"... which is probably some little town near Manila.

Surely some better form of government could be found - one 
that would allow a rascal like Estrada or Clinton to enjoy 
themselves in public office and still give the people the 
entertainment they pay for.

Democracy, like other forms of entertainment, requires "a 
willing suspension of disbelief." And like most modern 
movies and stage productions, lots of make-up and special 
effects make up for a very weak plot. 

In fact, the story line is as improbable as "Mission 
Impossible II." To be more specific, the system rests on 
two big frauds and one grand illusion.

The first fraud is that democracy is a less murderous form 
of government than the alternatives, and hence preferable 
to all others. And yet, of the millions of people killed in 
all the world’s wars, most would have been eligible voters. 
The most deadly wars - by far - occurred after voting boxes 
had been installed in public buildings all over Europe and 
North America in the early 20th century. Almost all the 
combatants in WWII had some form of voting to justify their 
regimes. Both Hitler and Mussolini were elected - as were 
Roosevelt and Churchill, though I am not sure in what 
manner or when the English leader was selected. Stalin was 
also elected, more or less, receiving by far the strongest 
popular mandate of any of them, since few people dared to 
vote against him. And America’s most deadly war was fought 
between two of the world’s most Democratic governments of 
the time - the South and the North.

By contrast, the death toll in pre-Democracy centuries was 
comparatively light. 

The second fraud is that the will of the majority is the 
closest we humans can come to a just order of society. But 
what majority? By what justice or logic does a tiny 
majority of barely compos mentis voters in Palm Beach, 
Fla., get to tell all the citizens of Texas how to run 
their lives? And yet, their ballots will decide how much of 
their own money Texans will be allowed to keep, what 
medicines they can put into their bodies, how their 
children will be taught and how many gallons of water will 
be used to flush their toilets.

It is also presumed that whatever the majority wants sits 
on some high moral ground, like the gods on Mount Olympus. 
But in fact, anyone with eyes can see that the mob acts 
more like swine than gods -- sloughing around in turpitude, 
fantasy and self-seeking like pigs in a trough of swill.

Why should a majority of voters in urban areas get to boss 
around those in rural areas? Why should a majority of 
protestants get to tell a minority of Catholics, Jews and 
Rosicrucians what to do? Why should the plumbers and TV 
repairmen - voting with the majority - get to lord it over 
the framing carpenters? How come the teetotalers of one 
county get to force the drinkers into the next state to 
quench their thirst? The majority voter gets to demonstrate 
his compassion at someone else’s expense. He gets to tell 
others what to do, based on his own shabby principles. And 
he gets to profit from the efforts of others like an 
atheistic bum at a church supper.

It is all nonsense, of course. But democracy is supposed to 
be the best form of government by default; all other forms 
are even worse. Whether that is true or not, I cannot say. 
I have not lived under other forms. And the evidence is 
mixed. Certainly, taxes and the death toll were lower under 
the Hohenzollerns, Hanovers, Capetians and Hapsburgs. 
Whether they were as entertaining or not, I cannot say. But 
the uniforms and headdresses provided a relief from the 
plainness of modern rulers. Before democracy, rulers 
pretended to be superior to the great mass of mankind. Now 
they pretend to be the same.

But the monarchs deprived people of the electoral 
process... the entertaining illusion of choosing the man or 
woman who will be our national ringmaster for the next four 
years. And what a spectacle that is.

"Based on the results of the 2000 election," says an e-mail 
message attributed to the "Jewish World Review," "it's 
clear many voters are so deeply disturbed that -- for their 
own good as well as the national welfare -- they should be 
confined to an institution."

"Missouri voters elected a corpse -- Gov. Mel Carnahan, who 
died in a plane crash weeks before the balloting." The 
funny thing about this was that prior to his death, 
Carnahan was trailing Sen. John Ashcroft. Voters seemed to 
like him better dead than alive. Dying turned out to be 
good for his career.

The "Jewish World Review" also cited the New Jersey race, 
where voters who say they don’t want money involved in 
politics elected the biggest candidate ever - Jon Corzine, 
who spent $50 million of his own money to win a seat in the 

Among the other peculiar trends mentioned were the votes 
for Ralph Nader, which should be grounds for 
institutionalization on its own, and Hillary Clinton’s win 
in New York. 

Hillary Clinton deserves a special mention in the history 
of mass illusion. Here is a woman whose democratic 
pretenses do seem to reach almost Olympian levels. As she 
put it in her ode to democratic folderol, "It Takes a 
Village,"... "the government is all of us."

Unlike monarchs or their subjects, democrats are prone to 
mass murder, mass suicide, mass larceny and mass fantasy. 
Trapped by the theory of Democracy, they must suspend their 
disbelief of the most preposterous and most easily 
disproven propositions, but are unable to open their eyes 
and see what actually goes on around them. Thus they are 
encouraged to think that they play an important role in 
guiding the ship of state and doing something really 
important with their lives. Just by reading the editorial 
pages, watching boring political talk shows and casting a 
ballot once every two years qualifies Democratic Man for a 
kind of good citizenship award which he grants to himself. 
This alone makes him feel very superior to all the rest of 
us who just want to be left alone.

But what is most appealing about American democracy is 
simply the baroque exuberance of it all, like the rest of 
American culture. The candidates are often idiotic, deadly 
boring or sometimes merely dead. The voters are foolish or 
apathetic. And the whole process can be as puzzling as the 
stock market... or as exciting as a street fight between 
two fat women. Either way, you want to stick around just to 
see what happens next.

Writing to you from the Eurostar, and returning to 
financial topics tomorrow (I promise!)...

Bill Bonner
About The Daily Reckoning:
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Last modified: April 01, 2001

Published By Tulips and Bears LLC