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Co-brand
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Contributed by Bill
Bonner
Publisher of: The
Fleet Street Letter |
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BALTIMORE, MARYLAND
WEDNESDAY, 1 AUGUST 2001 |
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Today:
Interview
With A Day Trader
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*** What happened to the Pink Slip parties?... Annus
Horribilis takes a breather... Dow up big on feeble news...
*** 3 cheers for the American consumer... Greenspan puts
the pedal to the metal...
*** Wall Street's new "Honor Code" - ummm, okay...Congress
wants a piece of the action... and more.
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*** "Wasn't it just yesterday we were celebrating the
arrival of the Pink Slip Party as a new rite of passage?"
asks Money.com's Ilan Polyak. Regardless, Americans'
spending outpaced their personal income in June, according
to a Commerce Dept. report.
*** "Hooray!" shouted investors on the news. "Long live the
American consumer!" The Dow jumped 121 to 10,522... and
Annus Horribilis took a short break from knocking the wind
out of the Fed's reflation attempt.
*** Less ebullient, the S&P 500 and Nasdaq each meandered
into positive space... up 7 points to 1,211 for the S&P;
the Nasdaq finished nearly 10 points higher at 2,027.
*** I have seen neither hide nor hair from Bill. As you
know, he left Sunday for a vacation with his family in
Nicaragua. I had expected him to check in by now, but he
hasn't...hmnnn...I hope he didn't try to go for another
early morning swim...
*** Eric too, is putting the final touches on his summer
soiree, we'll hear from him tomorrow. For now, back to the
markets...
*** "The consumer is key if there is to be a recovery,"
Polyak reminds us, "things could go from bad to worse very
quickly if we were to become a nation of tightwads."
*** "Ordinary Americans are expected to ride to the rescue
of the economy," writes grantsinvestor.com's Andrew
Kashdan. But weighted down with record debt... and
burdensome mortgage levels, "it's getting harder and harder
for them to get a leg up on the horse."
*** The Federal Reserve reported last week that debt
service payments, measured as a percentage of disposable
income, reached 14.35% in the first three months of this
year... just shy of the 1986 record. At this pace, a
passive observer might ask, just how exactly is the
consumer going to save the economy? (See: The
Consumers' Albatross)
*** Of course, those figures have left the Fed Chair
feeling as bereft of despair as a jockey on the finish line
of his first Triple Crown win. "Greenspan waved his little
hand in the air and another $4 billion of magical dollars
appeared in banks last week," the Mogambo Guru tells me.
*** "For much of the '80s and '90s, the Fed created money
far in excess of GDP," says Bill King. "The excess
liquidity flowed into financial assets. Now, M3 growth is
greater than 14% year over year, but stock returns are
negative and the economy is receding." Still, analysts
predict, you can expect another 50-point cut when the Fed
meets again next month.
*** "Monetary policy has been so promiscuous the past
decade and a half that we are now at a rare point in
history," says Dr. Kurt Richebacher. "The '30s [were] the
last time that monetary policy was futile in stimulating
stocks or the economy."
*** And what of real estate? "Since it has historically
been a significant percentage of household savings," said
Indiana Senator Evan Vayh to Chairman Greenspan on July
24th, "is this a worrisome long-term trend, people drawing
down their home equity substantially?"
*** Greenspan: "Despite...the significant extraction of
home equity gains, the level of unrealized capital gains in
homes continues to rise apace. So it's not a depleting
asset, if I may put it that way. It could be, but
fortunately it is not."
*** "Here we go again," says Doug Noland of the Prudent
Bear, "another dangerous Bubble and another pathetic
example of either flawed analysis or obfuscation from our
Federal Reserve Chairman. With the Fed having for years
studied asset Bubbles, and especially after the bursting of
the technology Bubble, there is today absolutely no excuse
for misreading the expanding real estate Bubble."
*** The Mogambo Guru: "Consumer debt has risen beyond 100%
of income. Layoffs are everywhere. Bankruptcies are rising
fast. Consumers are seriously tapping into their home
equity. The derivatives markets are already 300% of total
global GDP... In short, the excesses of financial stupidity
that plagued the world in 1929 are beginning to look like
sobriety in comparison."
*** Annus Horribilis may have taken a short break
yesterday, but it's a safe bet he'll be back... very soon.
*** Another form of financial stupidity is about to be
reckoned with as well... or not. "Wall Street's New Honor
Code," says a TIME headline. "Analysts got rich promoting
bubble stocks and IPOs," says the article. "Now they say
they'll come clean." Uh huh.
*** The article also says Congress has kicked off hearings
to investigate many analysts' conflicts of interest...
let's see, politicians accusing stock brokers of fleecing
the public... hmmnn... something funny with this picture?
*** The SEC, too, is getting serious. According to
Money.com, Laura Unger - the SEC's acting chief - told
Congress, "[some analysts] sold stocks in their personal
accounts that they had 'buy' ratings on at the investment
bank." Now... how can that be? That would be dishonest,
wouldn't it?
*** Even individual investors are getting snippy about this
post-bubble mess. Thadeus Wong, a 32-year-old real estate
broker in Chicago, told the Chicago Tribune he opened a
million-dollar investment account with Morgan Stanley,
because they were a reputable company... within 8 months,
the entire account was wiped out "through buying tech
stocks, options and shorting securities." Wong filed an
arbitration claim on July 12th against Morgan Stanley and
the broker he used there.
*** Boy, what a summer... an epic battle taking shape -
American Consumer v. The Global Economy... post-bubble
investor recriminations heating up... Congress getting in
on the action... the ever-stoic Greenspan pumping away,
trying to reflate global passion for stocks... quel
drame... whoever called this the "dismal science" just
didn't know how to have fun.
Addison
P.S. Okay, we're all fans of free speech. While the
censorship of a few Wall Street analysts probably wouldn't
inflict any damage on the moral fiber of the nation, for
the most part, we don't condone the act.
Still, one of the most eloquent and prolific contributors
to the DR website discussion board has inexplicably begun
hurling obscenities about like they were candy. To wit, we
simply ask, please exercise some discretion when using our
forum. Thank you.
P.P.S. Below... a memorable cab ride during the height of
the tech bubble...
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The Daily Reckoning Presents: A DR Classique originally
broadcast on October 15, 1999
INTERVIEW WITH A DAY TRADER
By Bill Bonner
I left Baltimore last night and took a cab down to Dulles
Airport in Virginia. The following is the actual
conversation with the cabdriver. It began as the cab
crossed the Baltimore beltway, and the driver suddenly
remarked:
"There are a lot of Russians out here."
Yes, I replied.
"I can spot them."
You mean, you can tell if they are Russian?
"Yeah...I can tell. It's a gift I have. "I had two of them
in the cab yesterday. They were Russians all right. I
tagged them right away."
I guess you can recognize their accents.
"No...I can tell right away. They don't have to say a
word."
Hmmm?
"They were agents. Russian intelligence."
How did you know that?
"It's a gift."
Hmmm...
"A lot of them out here. One of them was a double agent.
Russian intelligence and
CIA. Or maybe NSA. I wasn't sure.
"There are so many...I get confused sometimes. I see them
all the time."
You mean, you take them to the airport?
"Sometimes. But I see a lot of them in the mall. A lot of
double agents too. Whew...a lot of them. Sometimes triple
agents. I had one guy in the car the other day who was CIA,
Russian Intelligence and British intelligence.
"He said he was English...but I could tell. They're pretty
good. All kinds of disguises. No way to tell, unless you
can tell...heh heh.
"I had one woman on Tuesday. Nice green eyes. Reddish hair.
And a thick Irish accent. She said she had lived in Ireland
all her life. Even had an Irish passport. But I could tell-
Russian Intelligence.
"I haven't had sex in 12 years. Not with woman, child, man
or beast..."
[I decided to let that pass...]
"Another guy with a southern accent...great accent. Said he
was from Georgia. Russian intelligence."
Hmmm...there are more than I thought. You can tell just by
looking?
"Yeah...sometimes I can tell from a picture. I saw a
picture of Al Gore in `The Washington Post' yesterday.
British Intelligence. It really struck me. No doubt
about it."
I would have guessed it. How about Bill Clinton?
"British Intelligence."
And Hillary?
"Ah...British Intelligence. But you see a lot more in her.
Wiccan. Satanist. Some Muslim. Some Buddhist. She gives off
a lot."
Wiccan?
"Yeah...she's a witch. Lot of them around too. Especially
in the suburbs.
"I call them Satanists in suits. Not the same as black
witchcraft. They're all over the place. Especially in
Silver Spring [A suburb north of the city]."
[I'm not making this up...honest...]
"I was a Christian. I put leaflets under windshield wipers
for Operation Rescue [an anti-abortion project]. But I
didn't want to kill anybody. Went to church every day.
That's when I got the gift.
"Yesterday they wanted me to train a new driver. He sat in
the cab with me for five hours while I showed him the
ropes, you know. Well, I knew. I could just tell. So I
said, `Okay...I know you're a Satanist. And Russian
Intelligence.' He said, `Yeah...how'd you know?' It's a
gift."
What do you think of Jesse Ventura, I asked. [I couldn't
resist.]
"Don't get me started...The guy is really bad news. I saw
him on TV.
"Russian Intelligence. How do you like that? And a
governor! Wiccan. French Intelligence. And military
intelligence. A little bit of Satanism, too."
I figured as much. What do you think of the stock market?
[What the heck...maybe Alan Greenspan is a double agent. I
had to know...]
"Oh...I don't do that any more. I used to be a day trader.
But I kept losing my money. Then I got compulsive about it.
I'd stay up every night until 3 a.m. studying the stock
market. I guess some guys are good at it. Not me. I still
owe money."
It's a gift, I said.
Bill Bonner
Russian Intelligence
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| About
The Daily Reckoning: |
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Daily Reckoning
author Bill Bonner
Bill Bonner is,
in spite of himself, a natural born contrarian. Early each morning, Bill
writes The Daily
Reckoning—his take on the financial markets and what’s going
on in the world—and sends it off by e-mail before most Americans’
alarm clocks have buzzed. Many readers say it's the first thing they want
to read when they get up—not only because it's informative and thought
provoking, but also it's inspiring, in its own quirky and provocative way.
Of course, there's
much more to Bill than his daily market commentary. He's also the founder
and president of Agora Publishing, one of the world's most successful
consumer newsletter publishing companies. Bill's passion for international
travel and big ideas are reflected in the company he's successfully built.
In 1979, he began publishing International Living and Hulbert's
Financial Digest . Since then, the company has grown to include
dozens of newsletters focusing on health, travel, and finance. Bill has
vigorously expanded from Agora's home base in Baltimore, Maryland since
the early ’90s—opening offices in Florida, London, Paris, Ireland, and
Germany.
Agora's publication
subsidiaries include Pickering
& Chatto, a prestigious academic press in London and Les
Belles Lettres in Paris, best known as a publisher of classical
literature in bilingual editions.
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