| …Politics Ebbs… THE DAILY RECKONING OUZILLY, FRANCE WEDNESDAY, 29 December 1999
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In Today's Daily Reckoning:
*** Rocket Chips stalled… Nasdaq off… internets down *** Is time running out…? *** Vladimir the Terrible -- on the internet! * * * * * * * * * * * * * * * * * * * * * * * * * * * * *** Eventually it will be over. I'm referring to the
Great Bubble in the Nasdaq. Just look at a chart of the
Nasdaq this decade. The line rises steadily, until late
fall of '98 -- then it goes vertical. *** It will almost certainly go back the way it came --
vertically. In the mean time, we watch and wait… Like
a worried father who sits up waiting for his overdue
teenage daughter (I have experience at this)… every
little sound in the hallway is mistaken for her return. *** And so, I note that the Nasdaq once-again tested the
4,000 barrier yesterday… but ended the day down. *** The internets, too… primo inter pares among the
Rocket Chips… were down a little too. AOL is now 18%
below its high. Yahoo fell $24 yesterday. *** If you like a little excitement in your life, you
should consider shorting the Nasdaaq 100 -- QQQ. Sooner
or later, you will make a lot of money -- if you haven't
lost all of your money first. *** While the Rocket Chips stalled yesterday, the Dow
was up 85 -- and that's what made the news. "US
Consumers Spirits Soar" said the headline in the Herald
Tribune. *** If their spirits are soaring, it's because they're
not paying attention. The latest news is that house
prices are rising… which caused bonds to fall. And oil
is at $26.82. *** Gold was up too -- $1.70. *** Bill King cites a report saying that the number of
billionaires in America has grown from 66 in '89 to 268
now. But with paycheck increases averaging 4%… most
people are not getting rich. This, too, is part of the
illusion that drives the Nasdaq bubble. The premise is
that "Everyone is Getting Rich." But it just ain't so.
"Identify the trend whose premise is false," said Soros,
and you can make a lot of money. *** Of course, he said to ride the trend until it is
discredited. I never even bought a ticket. But those who
are aboard now should be collecting their luggage and
putting on their coats. *** Because time must be running out. "If Mr. Greenspan
does not take action," warns British economist Tim
Congdon, "soon international investors will do it for
him." He refers to the way in which America's huge trade
deficit is financed by foreign investors -- to the tune
of almost $1 billion a day.
*** China opened its own high tech stock market. *** And Vladimir the Terrible has gone on the internet
to tell the world about his vision for Russia. He seeks
"the restoration of a guiding and regulatory role for
the state." *** While Vladimir chats with the world on the 'net, his
troops are facing tough resistance in Grozny. They're
fighting just the kind of war they tried to avoid…
house to house, against a very tough opponent. *** For a risk-free world, the death toll in Venezuela
has mounted beyond belief. The Financial Times reports
that it may reach 50,000 -- the worst natural disaster
in Latin America this century. *** Against the backdrop of so many deaths, the minor
hardships we suffered in France recently barely deserve
mention. The Figaro headlined the hurricane-force storm
as an "Ecological and Cultural Disaster." Trees are down
everywhere. 68 people died in France. *** Our power was restored by evening. But it will take
100 years to replace the Atlas cedar in the yard.
*** By the way, it was on this date that Germany began
dropping incendiary bombs on London in 1940. * * * * * * * * * * * * * * * * * * * * * * * * * * * *
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* * * * * * * * * * * * * * * * * * * * * * * * * * * A Prediction for the next 100 years We're only two days from the end of the 1900s. It is not
technically the end of the century or the millenium…
but who cares. It's a milestone. Besides, centuries are given definition by what happens,
not by the passage of time alone. Thus, the 20th century
began not on the 1st of January, 1901… but 13 years
later, when a Serbian anarchist, G. Princip, shot the
archduke Franz Ferdinand, a member in good standing of
the House of Hapsburg. The Hapsburgs were the titular rulers of the Austro-
Hungarian empire, when the anarchist decided to take
politics in his own hands. He thought he might deliver a
decisive blow to the Hapsburgs, and thus bring about
independence for Serbia. If ever we were moved to think about what has happened
during this century, the next 48 hours might be a good
time to do it. In these letters to you, I have been
exploring the similarity between political thinking and
the kind of mob-thinking you get in a market mania. George Soro's remark, that market trends are based on
falsehoods and lies… and that manias collapse when the
false premise is discredited… invites another
discussion. The burden of today's letter is that most of the popular
discussions of politics -- as discovered on the
editorial pages of the Herald Tribune -- are as full of
falsehoods and lies as the Nasdaq 100. Eventually, these
falsehoods, too, will be discredited. And when they are,
the democratic nation states, which are believed to be
the crown of political creation, will either collapse…
or at least downsize. Which brings me to my Major Prediction for the Next 100
Years: Politics -- which has flowed so bountifully these last
80 years -- will begin to ebb. (I will leave it to you to figure out the investment
possibilities. Personally, I would not be loading up on
suburban Washington, DC, property. That was a great
investment in 1950 -- a half a century ago.) Princip was right. More or less. His blow was decisive;
more than he had imagined. He began the process of
snuffing out the dynastic empires that had been a
feature of Europe for centuries. This marked the
frontier between the 19th century and the 20th. The Hapsburgs fell. Soon, the best families in Europe
were in trouble. The Hohenzollerns, the Prussian-based
family that ruled Germany, were booted out. And were the
Ottomans of Turkey. Most spectacularly, the Romanovs --
Sovereigns of Great Russia and most of what was to
become the Soviet Union, and first cousins of Britain's
royal family -- collapsed. The whole first family was
taken prisoner by Bolshevik mobs, shot, thrown down a
well, and doused with acid to destroy the bodies. Princip was wrong too. He thought knocking down the
Hapsburgs would be a good thing for Serbia. Not so. The
Hapsburg yoke had been light. Taxes were negligible.
You could say pretty much anything you wanted -- the
Hapsburgs wouldn't understand. They didn't speak the
language. Most people in Serbia were only dimly aware
that they were part of the Hapsburg's empire anyway.
Austria was a long way away in more ways than one. Life
in Serbia went on without much interference from Vienna. But the world changed a lot since Princip pulled the
trigger on the archduke. Serbia got caught up in two
world wars… then was incorporated in the Yugoslav
empire. About 10 years ago, Yugoslavia broke up -- and
Serbia has been fighting with its neighbors ever since. Instead of being free to do what they wanted under the
Hapsburgs, the Serbs managed to bring almost every
aspect of their lives under the control of their own
despots and incompetents. Serbia went from being a place
where politics was a minor nuisance… to one where it
was life threatening. The New York Times ought to give Princip a medal.
Richard Cohen calls him a "terrorist." But it was he who
began the work of the century… the work the TIMES so
admires -- politicizing the whole world. Every problem
is a political problem to the TIMES. Every solution is a
political solution. The TIMES thinks the destruction of empires was a good
thing. "For all the strife at the dawn of the new
millenium," states an editorial from last week, "one
enduring source of conflict may be receding… the
earth's empires have disappeared." Princip, after all, just wanted what Americans already
had -- the right to be misgovered by people who spoke
the same language. Jefferson had described it as a
"self-evident" right -- the right to determine who your
rulers are to be. Woodrow Wilson attempted to make it a
cornerstone of the new world order. He and Ambassador
Marburg envisioned following the war -- the right to
self-determination. Wilson's secretary of state, Robert Lansing, was
shrewder. "It will raise hopes which can never be
realized," said he. Not only that, they were hopes that
rulers -- no matter what language they spoke -- had no
interest in fulfilling… not even America's rulers, as
Jefferson Davis discovered. The whole idea of government is not to allow self-
government. If people were self-governing, there would
be no role for government. You or I might decide to
govern ourselves -- levy our own taxes, figure out our
own foreign policy, provide our own health insurance.
Self-determination means you get to decide what
government is to boss you around. Voting is the means by
which you are supposed to decide -- in the ideal world
as imagined by the New York Times -- who runs the
government. Both are frauds.
People are not better off when select their own tyrants.
They're better off under a benign, neglectful empire.
That was true of the Serbians before Princip wasted an
archduke. It was still true 70 years later for the
people who lived in Hong Kong, so long and fruitfully
ignored by the British. Princip blew a hole in the Imperial dike… and politics
flooded the century. It crested in the early 60s… when
half the world was under the thumb of communism and the
other half under the thumb of liberal democracy. John
Kennedy told listeners at his inauguration that they
should ask what they could do for the government, not
what it could do for them. The government was not a
provider of services -- but a master to be served. Thankfully, the crest of politics has passed. The Soviet
Empire -- which replaced, but did not improve, the
Romanov one -- has gone. People are more cynical about
government and what it can do. But discrediting the
falsehoods and lies of liberal democracy is still in the
future. My guess is that it will be one of the major
projects of the 21st century. Bill Bonner * * * * * * * * * * * * * * * * * * * * * * * * * * * * The Daily Reckoning is a FREE e-mail service of Agora
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