| IT IS ALL SAINTS' DAY THE DAILY RECKONING OUZILLY, FRANCE
MONDAY, 1 NOVEMBER 1999
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In Today's Daily Reckoning: *** American economic miracle continues...
*** Is it still a bear market?
*** Death in India * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *** "There is still a euphoric feeling on Wall Street," said an analyst for
Prudential Securities on Friday...following another 109 point advance by the Dow. *** The "U.S. economic miracle" continues...at least, that was the verdict of
almost all the world's stock markets. Bourses around the globe rose in admiration
and imitation of Wall Street, where the Nasdaq led the way with a 3% gain. *** It's the techs and Internets...the leading stocks of the New Era...that are
getting the attention (and money). Since August, the S&P 500...heavy with the big
techs...has outperformed the Dow by 5%. The Internet average, the IIX, rose by
11.52 points on Friday. *** As the century nears its end, historians will record that finance replaced
politics and religion as the main concern of Americans. Alan Greenspan...once a
jazz saxaphonist and a disciple of Ayn Rand...has achieved higher status than the
president or the pope. Greenspan is widely regarded as infallible. *** But the "Financial Times" seems to have read my mind with this word of
caution: "It was a boom in just a handful of stocks that figured in the `29 Dow
Index" too. Most stocks, then as now, were falling. *** The "FT" think a small rate increase courtesy of Mr. Greenspan is likely on
Nov. 16. Their analysis: "Higher inflation resulting from the combination of
rising wage costs and a certain amount of imported inflation, through stronger
commodity prices and a fall in the dollar, looks hard to avoid." *** Greenspan, meanwhile, thinks that "imports presumably can continue to expand
for a while since the rising rate of return on U.S. assets has attracted private
capital inflows." That's his way of saying...as long as stocks are rising -- no
problem. But therein lies the rub. *** It is still a bear market. And last week's strength on Wall Street was still
a bear market rally. A nice, healthy bear market rally. The kind that makes you
wonder whether your analysis is right...and whether you should abandon the safety
of the sidelines and buy a few dot-com stocks just in case the New Paradigm turns
out to be the Real Thing. *** Three thousand people were killed in the Indian state of Orissa when a
cyclone with winds in excess of 160 mph roared through. The natural disaster was
followed by a disaster not of nature's making -- widespread looting. *** A small figure stood before the European press yesterday and became the most
despised man in France. Gerard Pascal announced the unanimous decision of the
international group of scientists that examined British beef for health risks.
There was no scientific basis to continue an embargo, he explained. *** Russian soldiers continued to tighten the noose around Mr. Basayev's neck.
Lest this military operation be confused with a peace-keeping mission, a Russian
soldier replied to a question from a Chechen refugee: "We will leave when you are
all dead." *** Today is a holiday in France. It is All Saints' Day. The roads are packed as
people return to their ancestral homes and villages to put flowers on the graves
of dead relatives. The kids have an entire week of vacation, so we are down on
the farm. It is spectacularly beautiful...unseasonably warm...and almost
incomparably idyllic. * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
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ALL SAINTS' DAY "Pumpkins. I'm going to plant pumpkins next year." Pierre has been raising beef -
- big, beautiful Limousin beef -- and sheep for many years. But the European Union is forcing down the subsidies for beef. And sheep are
disappearing from the region altogether...there are no longer any subsidies
available for sheep farmers. French farmers cannot compete with those in New
Zealand and Australia. And wool prices are so low it no longer pays to shear the
sheep. Cereals, on the other hand, are heavily subsidized. The difference, Pierre
explained, came about because the cereal growers could leave their farms in slack
seasons and go to demonstrate in Brussels. Large groups of farmers always strike
fear in what passes for the hearts of politicians, so the cereal farmers
typically get half to two-thirds of their income from the subsidies...not from
selling food. Farmers who raise livestock, on the other hand, cannot get away. They're forced
to stay on the farm day after day to take care of the animals. They pose less of
a threat to the taxpayers' purse. Even with the subsidies still in place, raising
cattle is not a way to get rich. Pierre has suggested that we put our farms
together. Apparently, you need bigger and bigger holdings to make money. And he
needs to build a big new barn to make the operation more efficient. The return on
investment? About 2%. Hmmm... Maybe pumpkins are the answer. The big orange vegetables are new to France. So is
Halloween. All Saints' has been recognized and celebrated for many centuries. But
Halloween is a new import from America, along with the whole shebang of
decorations, customs and commercial opportunities that accompany it. Department
store workers wore costumes in Paris last week -- stimulating interest and sales,
no doubt. Even out here in the middle of nowhere, Halloween is catching on. My children held the first Halloween party in this region three years ago. The
invitees had barely heard the word at the time. The kids took a candlelight tour
of our attic, with staged shows of various spook-house exhibits. In one room,
however, I decided to surprise them. I lay on a bed...in a room with wallpaper
peeling off the walls and creaking floorboards...and put a sheet over me as
though I were a corpse waiting for an undertaker. As the kids came in, I began
making a low growling noise...and then sat up. The kids were so alarmed and
shrieked so loud I was afraid someone would call the police. Then they flew down
the circular steps so fast that their little bodies were still spinning like tops
as they swirled out the front door and into the yard. That was three years ago. Now, Halloween decorations are in many stores. Along with new things to buy and a new opportunity for secular celebration. There is a world of difference between All Saints' and Halloween. The spirits
that one honors on All Saints' were not, after all, all saints. They were real.
They were spirits that might be honored...or feared. (Of course, if you don't
believe in the spirit world...you have no business celebrating All Saints'
anyway.) But regardless of your views on the afterlife, All Saints' requires at least some
reflection...on the lives of our forebears, on the challenges they faced and
perhaps the lessons that could be learned from them. At the very least, you might
stand before the grave of someone you knew...offer flowers...and spend a moment
recalling the person. This is not a ritual that lends itself to the Internet age.
(But who knows...maybe you'll be able to order flowers via Internet...and maybe
the screen will prompt you to think about certain aspects of the deceased. And
maybe AllSaints.com will be a big hit as an IPO, giving people a way to celebrate
the ancient holiday without ever leaving their day-trading terminals.) Halloween, on the other hand, is an example of what Philippe Muray calls
"Festivus." Muray has noticed the way in which the genuine, dark, primeval, wild
and dangerous currents and undercurrents in society have been tamed...and
transformed into harmless celebrations. This applies not merely to the shift from
All Saints' to Halloween, but also the political process, where genuinely
revolutionary parties have been replaced by a token opposition and emasculated
rebels. Last week I noted how you cannot even say what you want about taxes
anymore...without fear of criminal prosecution. Yet, is there any real opposition
-- of a sort that might be described as dangerous to the government? No, we
celebrate the First Amendment now; we do not practice it. Likewise, America celebrates liberty. It is like Halloween...an empty
expression...a hollow festival...something to feel good about. No reflection
required. No risk, either. But what would the ghosts of Jefferson and Adams think
of us? Who cares? As the GDP increases...stocks rise...and the spirits of Liberty remain
in the grave...pumpkins are the business to be in. Bill Bonner
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