| ALL SOULS' DAY THE DAILY RECKONING OUZILLY, FRANCE
TUESDAY, 2 NOVEMBER 1999 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *
In Today's Daily Reckoning: *** Dow retreats
*** Gods fall
*** Wit Capital soars * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *** Reader Kathryn George straightened me out. All Saints' Day was first
celebrated in 607 by Pope Boniface IV, when he converted the Pantheon Temple to
Christian use. It was a day to remember the Christian martyrs persecuted by the
Romans. Pope Gregory II proclaimed the following day, Nov. 2, All Souls' Day, to
remember all dead Christians. The French, always torn between Catholicism and
rationalism, compromised…rolling them both together into a national holiday on
the 1st. *** Halloween, on the other hand, is a pagan Celtic ritual…imported to America
from Ireland. Some Christians are appalled at the rise of Halloween over All
Saints', on this, the 2000th year since the birth of Christ. They believe
Halloween honors Satan, and marks a return to paganism by modern society. *** But the truth is, the rise of Festivus means that all the gods…even pagan
gods…are dead or dying. Is there a day set aside to honor dead gods? Who
gathers at their gravesites to remember them? How about Huitzilopochtli? It is
said that as many as 50,000 maidens were sacrificed to him in what is today the
capital city of Mexico. Surely, that deserves a moment of reflection. See my
Contrarian Glossary addition…below… *** The Dow fell 81 points yesterday. The Nasdaq was up slightly…on the rather
ghoulish delight the market took in news that Taiwan had suffered another
earthquake. This boosted the chip makers…which brought the whole tech sector
up. *** Philip Morris, that maker of coffin nails, was struck down 6%. The cause of
its suffering is an upcoming judgement in the Great State of Florida. Unbidden by
PM, Florida seems to have taken on itself the job of caring for the sick within
its borders. And come to find out, a lot of the sick were made sick by smoking
too many of PM's products! Sacre dieux…that deserves a few billion in
compensation…even if it is to be paid by the smokers themselves.
*** At the end of last week, the Dow had gained 16% for the year. The Nasdaq was
up 35.2%.
***The Transportation stocks dropped solidly yesterday. The transports typically
lead the larger market…but the lag time can be long. Richard Russell thinks it
may be that the Dow could continue its indecisive moves until next year…and
then begin to decline with greater conviction. http://www.dowtheoryletters.com *** Real Asset Investor editor Dan Ferris has pulled out of oil. He believes oil
has entered a trading range -- $20 - $25 a barrel. So he took profits: Global
Marine +70%, Diamond Offshore +47%, Baker Hughes +57%, Haliburton +30% and
Schlumberger +35%. Not bad. http://www.realasset.com *** Jim Davidson's Internet age pick -- Wit Capital --soared yesterday. It rose
30% on news that it was buying SoundView Technology Group.
http://www.strategicinvestment.com *** The housing sector in Britain is as hot as a vicar in Hades…prices are
rising at their fastest rate since the 1980s. Look for an interest rate increase
to slow things down. *** I've been trying to keep up with the Indian market. It could be near the
beginning of a major multiyear rise. Stocks hit a high following elections a
couple weeks ago…but then fell. No one knows why. The fundamentals are
unchanged. Analysts believe it is a victim of Y2K fears among foreign investors.
I'm still watching. *** I dillied and dallied…finally, Elizabeth made up my mind for me. We decided
to bid on a little house near the entrance to our property. It is to be auctioned
today…minimum bid $8,000. But to get our bid in before the deadline…we had to
drive down to Bordeaux yesterday…which occasioned some thoughts about the fate
of civilizations…
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THE FATE OF SOCIETIES
Bordeaux sits on a river delta at the mouth of the Garonne River. Though
ancient…a Celtic settlement, a Roman city, a Frankish enclave and finally, a
major French port…the city has been graced by neither nature nor man. It is not
a place you'd want to visit. The wrought iron balconies remind you a little of
New Orleans…another delta city. And, like New Orleans, it is dirty, sun-
bleached and fetid. Some of the buildings are attractive…but they seem unkempt.
Pity the poor man who sells paint in Bordeaux. Spiders can build their webs in
his doorway without fear of being disturbed. Even before France was France…French wine from the Bordeaux region was exported
all over Europe. It was a favorite in Britain…and, via Britain, the colonies. I
have heard, however, that Jefferson did not drink it as the French do, with the
meal, but before and after. It was the Garonne River that made this possible. Vineyards up the river were
able to ship their produce down to Bordeaux…and thence to the rest of the
world. And it was the Garonne, and other rivers, that allowed Europeans to gain a
decisive lead on the rest of the world. This is the hypothesis, or part of it, of
Jared Diamond in his bestselling book, "Guns, Germs and Steel." In fact, Diamond
won a Pulitzer Prize for his book. Not surprising. The book is politically correct. Diamond tells us that native
tribesmen of New Guinea, for example, are smarter than Europeans. He offers no
evidence for this, except the provocative reasoning that murder is so common in
New Guinea that you have to be pretty smart to avoid getting killed. If that were
correct, Baltimore would have the smartest people in the nation! Diamond dismisses any suggestion that IQ may play a role in comparative
development. I listened to a lecture a couple of years ago by a Canadian
professor who had studied intelligence rates throughout the world. I do not
recall his name. But I do remember that his book did not win a Pulitzer. Instead,
he was nearly fired from his job. Frankly, I'm suspicious of the IQ research…but I don't think it can be
dismissed out of hand as Diamond does. The Canadian professor maintained that IQ
studies were remarkably consistent and reliable. They showed that some groups of
people were smarter than others. Nothing very surprising about that…it might be
more surprising if we were all the same. Specifically, if you take Europeans as
an average…two groups were smarter - Ashkenazic (Northern European) Jews and
East Asians. On average they have about 10 to 15 point IQ advantage. If you
wonder why the children of immigrants from East Asia do so well in the California
school system…this is, arguably, part of the reason. They are now over-
represented in all the universities…especially in graduate programs. In Harvard and the other elite East Coast schools, it is the Jews who are
disproportionately represented. How much of that is innate intelligence…and how
much is culture…no one knows. But it probably some combination of the two that
has yet to be deciphered. Smart people probably do smart things…like study for
their tests. But it is not nearly that simple…culture is not the product of
rational thought…but of spontaneous evolution…weeding out the genes of those
who do not measure up. While the people of East Asia and Ashkenazic Jews are smarter than those of us of
common European heritage, the people of Africa are less smart. This is the part
that is really politically incorrect. There are some things nice people don't
want to believe. And one of them is the idea that Africans are not as smart as
Europeans. The Canadian academic was branded a racist for his work. He defended
himself by pointing out that his research showed that his own race was, in fact,
inferior in intelligence…or second rate…compared to the Chinese, Japanese and
other East Asians. But this did not defuse the racism issue. People are perfectly
willing to believe that a billion Chinese people are 10 IQ points smarter than
you and I…no offense taken. But the suggestion that Africans are 10 IQ points
dumber is taboo. The Canadian offered a hypothesis to explain why Europeans and Asians were
smarter than Africans. Accepting the African Genesis idea, he argued that the
trek from the warm savannahs of Africa into the harsher climates of Europe and
Central Asia was not accomplished without loss. Probably, he said, a lot of the
pioneering groups did what pioneers frequently do -- they died. The few who
survived did so because they were smarter. But why are the Jews smarter? Probably some conspiracy by the Elders of Zion. Everything happens at the margin, say economists. And at the margin, a little
extra brainpower probably proved more useful in dealing with
winters…pogroms…and deserts…than speed. Brainpower is not always an
evolutionary advantage. Brains consume a lot of calories. And they are heavy. So
what you gain in brainpower, you lose in speed. The smart human might have been
the leopard's favorite dinner on the open savannah. On average, the Japanese have
bigger heads, proportionate to their body size, than Europeans or Africans. I
don't know what the significance of this is…but I do note that the Chicago
Bulls rarely recruit players in Tokyo. Diamond says this is rubbish. When my grandfather arrived in Pittsburgh towards
the close of the last century, he would have believed it was rubbish, too. The
Irish were then considered to be inferior in intelligence…and culture. Test
scores of the time seemed to confirm it. But after a few decades, the Irish were
absorbed, and their IQ scores rose to the national averages. Now…the Irish are
just as dumb as everybody else. Diamond offers an alternative explanation for why dominant civilizations arose in
Europe…and East Asia…but not Africa, Australia or the Americas. It was, he
says, a combination of lucky coincidences. The Near East was blessed with native
plants and animals that could be domesticated. Few species lend themselves to
domestication, he points out. The zebra, for example, has never been successfully
domesticated, though it is a near relative of the European horse. The rise of
animal husbandry and agriculture led to the rise of civilization. Navigable
rivers, like the Garonne, allow the spread of trade, ideas and learning.
Civilization spread…and flourished.
By the advent of the 19th century…Europeans and Chinese already had as many as
6,000 years of civilization under their belts. The Blackfeet Tribe in North
America, by contrast, were still living in the stone age…as humans in Europe
had done 20,000 years ago. And John Kennedy's ancestors, and mine, were probably
living barefoot in hovels, eating boiled potatoes and drinking whiskey whenever
they could get ahold of it.
Regards,
Bill Bonner
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CONTRARIAN'S GLOSSARY
Festivus -- Festivus is the name given by Philippe Muray to the latest phase in
European (including American) civilization. The gods are all dead. So are the
politicians. Who would die for his religion today? Who would die for his
politics? Or for matters of principle? Serious ideas, holidays, ideologies,
virtues, religions, cultures and convictions have all benn hollowed out. They are
no longer honored. They are merely celebrated.
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