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Contributed by Bill Bonner
Publisher of: The Fleet Street Letter




*** Fed increases rates -- whoopee
*** Money supply increases
*** The fastest shrinking economy...

*** As expected, the Fed bumped up rates by 50 basis 
points...or one-half a percent.

*** And as expected, Wall Street celebrated. The Dow rose 
126 points. The Nasdaq shot up 109 points -- or more than 

*** Not only did the Fed increase rates, it also said it 
would continue to increase rates. Now analysts expect yet 
another rate hike in June.

*** So why the joy on the street? Well, as one analyst 
quoted in the Reuters report put it, "Now a lot of the 
bad news is out of the way." There may be another hike 
coming, he said, "but that will be it."

*** Of course, the explanation makes no sense. But the 
most recent inflation numbers are soothing. And a lot of 
people don't believe the Fed will be able to increase 
rates in June -- or anytime soon, for that matter. It's 
getting close to a presidential election. The Fed won't 
want to be accused of throwing its weight towards one 
camp or the other. 

*** What is really going on, however, is that while the 
Fed talks about tightening and raises rates marginally, 
it is not really stifling the flow of money and credit. 
Cash, as measured by M2, increased at a rate of 10.7% in 
April. All the money supply measures are showing 
increases roughly twice as large as those of output.

*** And the stock market doesn't seem to know what to do 
with the mixed signals. It's been in a bear market. But 
there's no guarantee that it will stay in one. A few more 
days of rising prices and I'll have to come up with a new 
explanation. But for now: sell the rallies. 

*** Prime lending rates have been boosted to 9.5%.

*** The euro has fallen again. Year to date, the euro has 
gone down more than the Russian ruble. How's that for 
protecting the value of a currency? 

*** It is surprising that gold does not react. The euro, 
the dollar and the yen -- none of them has the integrity 
of even a tort lawyer. And yet gold, which should be 
giving them competition, acts like a depressed 
vegetarian. What gives?

*** Andrew Palmer, writing from the Bay Area, passes 
along the latest real estate news: In Palo Alto, a grand 
neighborhood, on an "inviting tree-lined street," a house 
damaged by fire and uninhabitable...sold for $1.5 
million. An 11-acre property, no house, listed for $35 
million, sold for $53 million. A 3-bedroom cottage, in 
the sleepy village of San Mateo. "Modest, humble, small." 
List price: $900,000.

*** According to the "San Francisco Chronicle," 10 homes 
in San Jose sold last week at an average of $53,000 above 
list price. 

*** By contrast, you can still get eight acres on Roatan 
Island, Honduras, with a 3,000 foot strip of sandy white 
beach for just US$5,000 an acre. Or, as I reported here 
last week, a 3-bedroom cottage in a sleepy village in 
Ecuador. Modest, humble, small. List price: US$9,000. 

*** The "Financial Times" reports that Zimbabwe, where 
the president's supporters have been going around 
murdering and intimidating opponents, has "one of the 
world's fastest shrinking economies, with gross domestic 
product falling between 5% and 10% this year."

*** London is a lot livelier than Paris. At midnight, 
restaurants and bars are crowded. Streets are full. You 
can barely walk through Leicester Square. Like Paris, 
there are American tourists everywhere. 

*** Let's take a look at the papers: Elizabeth Taylor was 
at Buckingham Palace yesterday, where she was made a 
"Dame Commander of the Most Excellent Order of the 
British Empire." Dame Elizabeth regretted that the "love 
of her life," fellow boozer and two-time husband, Richard 
Burton, could not be there to see it. Ms. Taylor is, by 
the way, a British citizen.

*** I see they still have no cash in the cash machines in 
France. Hmmm...this could pose a problem... 

*** And there are fewer "old maids" in Britain...the 
spinsters are marrying later and later, according to "The 
Times" report. 

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"Where do you think you are?" the old woman challenged 
me. She had opened her shutters and stuck out her gray 
head across the road as I stood next to my little car in 
the driveway of one of Mr. DesHais's friends. I had 
driven Mr. Deshais to the small village to pick up his 

I tell you that because the question I had just been 
posed requires context. The same interrogative in a Paris 
cafe might be an invitation to discuss existentialism. 
Or, driving along with Elizabeth, it might be an 
invitation to an argument. (Elizabeth knows I am 
reluctant to ask directions or even look at a map.)

But here, on the proletarian side of the little village 
of Azat-le-Riz, it was a rather rude way of greeting a 

I didn't know how to answer. 

"Why...where am I?... Is this Planet Earth?"

She made no response. 

"Ah..." I continued, "yes, it must be. Well, I guess I've 
come to the right place..."

At about that moment, Mr. DesHais emerged from the 

"Bonjour Madame," he called to the woman who, with a sort 
of grunt of recognition, withdrew her head from the 

Mr. DesHais is not concerned with money or his neighbors. 
He has more important things to think about -- like 
drinking. And asparagus. Both need careful attention, 
leaving no time to worry about money. Mr. DesHais, as 
near as I can tell, is a happy man.

I followed him into the garage, ducking down through the 
low door, but hitting my head anyway. On the left were a 
group of very smelly rabbit cages with enough animals for 
about a dozen meals. 

We passed through the garage and emerged at a vegetable 
garden. Like all of Mr. DesHais' garden work, this one 
was impeccable. Everything was in perfect order. No 
weeds. Nothing was left untouched. Every square meter had 
been worked and tended. All of his sense of order and 
rectitude seems to be focused within garden walls. 
Outside of them, his life is a mess.

The gardener pulled out some salad plants and gave them 
to me to carry. Then we made our way back to the car and 
drove around a series of very tiny roads to another of 
his hangouts.

The place was dilapidated. You could barely tell that 
someone lived in the stone building. Smoke was coming 
from the chimney and there was a dented car in the 
driveway. Had it not been for those signs, the place 
might have been mistaken for a sheep barn. There were 
sheep around. And chickens. And a dog, which barked as we 
drove up.

I was backing up towards the rototiller when a hulking 
figure slowly drifted out of the door, like a rusty 
freighter passing under a bridge. The man was dressed in 
workclothes. He looked about 50 -- except that he had the 
most remarkable hair. It was black and shiny -- like the 
hair on a newborn baby. It was thick, too. 

While I was admiring his hair, I noticed that he leaned 
to the left. If he was a freighter, he had been loaded 
improperly and was listing to starboard.

His starboard eye barely opened, too. 

"That's Andre," explained Mr. DesHais. "He's a little 

If Mr. DesHais thought he was strange, the man must be a 
certifiable lunatic. Our gardener lives in a world 
peopled by colorful drunks and half-wits. As I have told 
you, his driver's license was taken the 
interest of the safety of the rest of commune. So I 
chauffeur him around on errands.

Elizabeth and I visited the chateau in Azat-le-Riz just a 
little over a week ago. We had coffee in those polite, 
but unsatisfying, demi-tasse cups amid the ancestral 
portraits and peeling wallpaper. Now Mr. DesHais was 
showing me the other side of the village.

I write like I drive. In today's letter I have a rough 
idea of where I am going, but I'm open to surprises. 
Every road takes you somewhere -- though not necessarily 
where you intended to go.

Wealth is, of course, relative. I exhibit my own 
relatives as proof. My daughter, Maria, says she is 
embarrassed to bring her friends over to our apartment. 
We live in a modest flat on the ground floor. I would not 
have chosen a street-level apartment, but we were in a 
hurry to rent something...and it wasn't easy to find an 
apartment big enough for our large family. Besides, the 
place was a bargain.

But ground floor apartments in Paris are very unstylish. 
They are often lived in by the "concierge," who looks 
after the apartment building.

To make matters worse, the children are all going to 
schools in a rich part of the city -- the 16th 
arrondissement. Maria reported that one of her friends 
had invited her to lunch. The two girls lunched with her 
friend's mother in their apartment, where they were 
attended by a maid in uniform.

Jules, meanwhile, went to a party at a friend's apartment 
and reported that the child lived in an apartment that 
resembled the palace of Versailles. The apartment was on 
two floors and had a reception room big enough for 32 12-
year-olds to run around.

My mother, meanwhile, who lives with us, affects an 
"innocents abroad" attitude. "From shirtsleeves to 
shirtsleeves in three generations," is the French 
expression. Money comes and goes. My mother has seen all 
three of the generations in a single lifetime. She has 
been rich and poor. She can recall, fondly (I believe she 
recalls everything fondly), living in a house without 
indoor plumbing or central heating. A contrarian like her 
son, she was rich during the Depression, but flat broke 
during the boom of the `50s.

I recall being broke in the `50s. And the `60s. And the 
`70s, for that matter. But not fondly.

On the other hand, were it not for the family, I would 
have a much different attitude towards money. Left to my 
own devices, I am as happy hobnobbing with Mr. DesHais's 
alcoholic n'er-do-wells as I am with Elizabeth's more 
upmarket friends.

Which brings me to the point of this little letter (I 
imagine you are relieved to discover that it has a 

I find that I am happiest when I am working outside. As a 
hobby, Churchill laid up brick walls during WWII. Masonry 
attracts me, too. Imagine what fun it would have been to 
work on a wall with Winston!

Ah...but the pursuit of pleasure is one thing. Making 
money is another. If money could make people happy, there 
should be a lot more happy people in America today than 
there were 40 years ago. 

"According to a Federal Reserve report," writes Shlomo 
Maital in a recent issue of "Barron's," "between 1992 and 
1998 net household wealth rose to $70,000 from $55,000." 
Are people nearly 30% happier? Mr. Maital answers the 
question: "Despite this," he says, "the percentage of 
Americans who state they are `very happy' has actually 
declined slightly since the mid-1960s from 40% to just 
over 30%. And studies of self-reported subjective well-
being show only a weak link, or no link at all, between 
happiness and wealth."

But so what? If money is not worth pursuing...happiness 
is an even less worthy goal. At least the pursuit of 
money is much less selfish.

"Greed is good," said Gordon Gekko, who went on to 
explain why. People make money, not for themselves, but 
for others. In making money, people render a service to 
others and are rewarded for doing so. The more service 
they give -- whether it is by making a software program 
available to the world or by making capital available to 
the businesses that need it -- the more money they get in 

At least, that is how it is supposed to work. But this is 
Planet Earth...where nothing is ever as simple or as 
straightforward as it seems. And none of life's roads 
leads exactly where you expect. 

Bill Bonner

* * * * * * * * * * * * * * * * * * * * * * * * * * * * *

The Daily Reckoning is a FREE e-mail service of The Fleet 
Street Letter -- If you'd like practical advice about 
profiting based on the ideas in this e-mail, then simply 
subscribe to my monthly financial communique, "The Fleet 
Street Letter." Right now you can save up to 50% off the 
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About The Daily Reckoning:
The Daily Reckoning... "more sense in one e-mail than a month of CNBC."  That's what readers are saying about The Daily Reckoning.

Bill Bonner, recognized internationally as a brilliant writer, entrepreneur
and publisher of The Fleet Street Letter, offers you his daily market
commentary absolutely FREE. For the first time, outsiders are getting a peek into his powerful and profitable investment insights. Bill's practical contrarian advice empowers even average investors to protect their hard-earned wealth and achieve amazing gains.

Bonner writes his email letter from Paris, France, each morning --
describing the wacky, wonderful world of investment, politics and everything remotely related. Irreverent. Sharp. Honest. Thoroughly, unabashedly contrarian. It's also among the fastest growing e-letter on the Internet.  It's a brand new service... but it has a distinguished history..

For nearly 62 year, The Fleet Street Letter, the oldest investment
advisory letter in the English language has consistently delivered
invaluable economic and political foresights to savvy investors. Current readers regularly enjoy impressive investment gains even as the market falters. Here's more from his online readers...

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Last modified: April 02, 2001

Published By Tulips and Bears LLC