*** 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
3%.
*** 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. http://www.internationalliving.com
*** 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
rototiller.
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
stranger.
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
garage.
"Bonjour Madame," he called to the woman who, with a sort
of grunt of recognition, withdrew her head from the
window.
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
strange."
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 away...in 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
point).
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
return.
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.
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Last modified: April 02, 2001
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