| PEARL HARBOR DAY by Bill Bonner PARIS, FRANCE
TUESDAY, 7 DECEMBER 1999 * * * * * * * * * * * * * * * * * * * * * * In Today's Daily Reckoning: *** Dollar…Dow…S&P -- all down *** Japan loses ground…gold, too *** Is Thatcher erotic?
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*** The dollar fell back yesterday. The 1-to-1 level
with the euro may be the high for the dollar for this
cycle. Just as 1-to-1 with the pound marked the high 14
years ago. *** The Dow fell, too…down 61 points. In fact, almost
everything fell yesterday. Only the Nasdaq continued to
rise. *** The Nasdaq 100 is up nearly 100% in the last 52
weeks. *** The techs and Nets are all alone.the financial
stocks fell back yesterday. *** An article in the Nov. 15 "Barron's" explains why
even these high prices make sense for Internets. While
the upside is limited only by your imagination, "the
most [you] can lose is the purchase price," said the
writer/portfolio manager. That's a comfort. *** Last week was a great one for the Nasdaq.but most
people are still losing money. One out of every five
stocks on the NYSE hit new lows last week. *** And new lows have beaten new highs in 79 of the last
85 days. *** At the close of WWII, the average person had three
times as much money in cash assets as in stocks. Now he
has only one-third as much. *** The Japanese economy shrank during the last
quarter…after growing for the last six months. But
stocks have risen 33% this year. And the economy will
still probably show about 1.5% growth for the year. *** Wall Street is expected to hand out $13 billion in
bonuses this year -- up from $11 billion last year.
Nearly every broker, analyst and stock touter is
preparing to toast the bull on Dec. 31…and pray for
more. *** Gold…the heartbreaker…is down again. But what
does it mean? Is the dollar becoming more valuable?
Rarer? More in demand? Beats me…but it could be
signaling that the good times are here to stay for a lot
longer. …or that the whole thing is going to turn into a
deflationary debacle. *** If you're not already a subscriber to "Fleet Street
Letter"…I strongly urge you to sign up. It gives you a
way to put the sentiments and ideas you read here into
practical investment positions. Chris Weber, Lynn
Carpenter and Dan Denning do an excellent job, in my
opinion, of finding investments that meet our
contrarian, value-oriented standards. No small task in
this market. *** Dan Denning has even found a way to put some real
excitement into my fuddy-duddy, bury-coins-in-the-ground
approach, by looking for Buffett-style companies in the
small cap/new tech area. Before joining FSL, he
discovered Pokemon…on which investors made 5,000%
profit…and helped launch a successful Internet
software company. Now he's found an anti-virus computer
company which he believes will do as well as Pokemon in
the short run…and better in the long run. And, get
this, it makes a profit. I need to make a profit,
too…so please subscribe to FSL by visiting
http://209.70.9.80/secure/form2.cfm?pubcode=fsus *** The suspense was ended yesterday when the male nurse
tending Edmond Safra admitted that he faked an attack by
assassins…and then set fire to the apartment. It was
not, as many suspected, a Mafia hit against the founder
of Republic National Bank, but a labor dispute. The
nurse was mad about working conditions. *** A British magazine has named Margaret Thatcher as
one of the most erotic people of the century. I had
lunch with her once…alas, the magic wasn't there.
Maybe it was me… *** "Get out of Grozny or die." Ah…those Russians. Not
ones to mince words. Leaving no doubt about their
intentions…Gen. Bugalkov, the Sherman of the Russian
military, said, "We will beat them until the last bandit
is buried under ground." *** Pearl Harbor Day today…the day the Japanese made
their incredible blunder…attacking the U.S. base in
Hawaii. The attack brought the full force of American
industry into the war against the Axis powers. *** "I fear," said Japanese Admiral Yamamoto
prophetically, "we have only awakened a sleeping giant
and filled him with a terrible resolve." *** My father, stationed at Pearl Harbor at the time of
the attack.a 20-year-old army corporal, told me what it
was like -- bombs exploding…planes buzzing
overhead…no one seemed to know what he was supposed to
do. They thought it was a test of some sort. Turned out
they were right. But a much tougher test than they
imagined. *** Bill King reports that the History Channel story of
Pearl Harbor tells views that FDR knew about the
Japanese attack long before the event. Before the
attack, 87% of Americans opposed entry into the
war…which made it impossible for Roosevelt to support
the British as he wanted.
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DECONSTRUCTING YOUR OWN MARRIAGE
I am leading up to a few insights that I believe are
worth passing on -- they may even be profound -- about
the way the world works, about the way humans think and
about how to make good investments. They include some thoughts that I have been trying to
coax out for several years. I woke up this morning and
found them close at hand. But, in the full light of day,
they have shrunk back a bit into the shadows. I will see
if they can be teased out over the next few days. The Japanese attack on Pearl Harbor recalled my father's
hatred of the Japanese. Spending a few years in the
jungle hells of the Pacific, while a whole race of
people is trying to kill you, is bound to have some
effect. My father disapproved of buying Japanese cars, for
example. But he was always polite.even warm-hearted.to
any individual Japanese person he met.at least, after
1945. It was "nothing personal," he said. "I don't take it personally," said my Marxist friend.
"She just hates me." This was how he described the state of his marriage. It
was not a personal hatred. She did not hate him.the
brilliant Marxist, witty conversationalist and darned
good huevos rancheros cook. She hated her oppressors --
men. He was a man. So she hated him.
Both my father and my friend were able to depersonalize
their relationships.my father with the Japanese, my
friend with his wife.
In each case, they turned a personal situation into a
political one. It was of no consequence to my father. He
could buy a Ford. But my friend and his wife
deconstructed their own marriage. She left. Politics depends on stripping away the detailed,
personal, genuine appreciation of other people.and --
turning them into stick figures -- members of a group.
Classes, political parties, races, tribes, religions.you
can use almost any category. Poetry and good literature require that you look at the
actual person.and tell the truth about what you see. All
good literature, said Faulkner, is the story of "the
human heart in conflict with itself." By contrast, all
politics is nothing more than the lies mobs tell
themselves…and the conflicts they provoke with other
mobs. The Japanese used the lies to psych up their soldiers.
Anyone who was not Japanese was considered inferior.
Soldiers were taught that foreigners were little
different from pigs. There was no reason not to kill
them.in fact, the world would be a better place if they
were dead. American soldiers, taken prisoner by the
Japanese, suffered and died cruelly. On the other side of the world, the Germans nursed
similar lies -- identifying their enemies and targets as
subhuman. Subhumans did not have rights. They did not
deserve respect. You could do with them as you pleased.
Individually, in the day, Germans would say "Guten tag"
and "Danke" to the Jews they encountered -- recognizing
them as individuals, too. But at night the trains rolled
in.the mob psychology took over. And the Jews were
shipped off. The Bolsheviks applied the same depersonalizing process
to their "class enemies." They developed a whole new
definition of justice. It was no longer necessary to
determine whether an individual was actually a counter-
revolutionary. It was merely a question of whether he
was a member of the despised class. If so, he was
guilty. Class enemies were described as subhuman, swine,
dogs.and were exterminated.deported.sent to
concentration camps. That, by the way, is the history of
the Chechens. They were identified as class enemies by
Stalin.rounded up and deported to remote, inhospitable
regions. This political, mob thinking has an investment side,
too. Mobs, as I described last week, do not really think
at all. Barely a synapse fires in a group of
millions.when the force of mob thinking is at work.
Japan, in attacking the United States, badly
miscalculated. So did Germany when it attacked Russia.
In both cases, the courage of the crowd did not allow
them to see the dangers ahead. But how do you make money? By "detecting and punishing
the folly of government," said George Soros. Governments
are the institutional force of mob politics. They
function by dividing people into categories.treating
them like morons.and taking their money. But if you can "detect and punish" the foolish notions
of the mob.you can both protect yourself.and make a
profit. I will not elaborate the obvious. The great mob of
investors are convinced that victory.total, ongoing
victory.lies ahead. Investors celebrate each IPO launch
as if they were Japanese pilots returning from the
attack on Pearl Harbor. Anyone who voices doubt is
dismissed as an investment Neanderthal, a stopped clock,
a clueless idiot, a defeatist. (I don't take it personally.) It's a whole lot easier to protect yourself from mob
thinking on Wall Street than it was to dodge bullets in
the South Pacific. But the principal is the same.keep
your head down and your wits about you. Better yet.go somewhere else. I'll give some ideas later
this week. Bill Bonner
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