A Year In the Daily Reckoning, 2002


  • Not the end of the world…but the end of 2002…
  • Happy New Year. And best wishes to you, dear reader.


“Addison, what happened in 2002,” your editor asked.

He was happy that the year was over. Good riddance, he felt…but couldn’t remember why.

“Piece of crap,” Addison replied.


“You remember, Henry Blodget…May of 2002…”

“Oh yes, it was a year for recriminations and show trials… Enron, Tyco, Kozlowski…Spitzer.”

“Anything good happen?”

“Gold went up…the dollar went down…our forecasts were right…”

“Anything else…?”

“The wines from 2002 are supposed to be pretty good…at least the ones I drank were good.”

“If you’re already drinking the 2002s, they can’t be very good…”

“Tasted good to me…”

“What else?”

“Well, so far, no EOTWAWHKI…you know, the end of the world hasn’t come yet…”


“And Lisa Marie Presley got married…of course, then she got a divorce…

“I guess that means she’s available…”


“And some fat people sued McDonalds for turning them into slobs…”

And so, the year ends. Good riddance.


The Daily Reckoning PRESENTS: The Daily Reckoning’s Top 12 Essays for the Year…well, maybe not the TOP 12, but some reasonably entertaining ones we hope you’ll enjoy…


01/18/02 GERMINAL

Early in the year, and your editor was already celebrating the genius of central bankers everywhere (and exploring the history of the Bank of France… and managed currencies…)


“…What are the ties that bind America together? Neither blood, history, religion, or language…but only an idea: that you could come to America and be whatever you wanted to be. You might have been a bog-trotter in Ireland or a baron in Silesia; in America you were free to become whatever you could make of yourself…”


“…We may not know anything about foreign policy, but we have a well-developed sense of absurdity. The WAT has been such a big hit with the public, the patsies want more of it. When will they haveenough?…”


“…What is unique about man is his ability to reason. Unlike the tse-tse fly or the wallabee, man can put 2 and 2 together. Working with things that make sense to him, he comes up with 4 more often than not. But, when he applies these same reasoning talents…collectively…using compound abstractions…to other people’s business – 2 somehow becomes 5.245 or a swamp inIndonesia…”


“…A great empire is to the world of geopolitics what a great bubble is to the world of economics. It is attractive at the outset…but a catastrophe eventually. We know of no exceptions…”

06/27/02 THE AGE OF CHIC

“…What is this strange intersection we’ve come to? All major governments seem to have come together in some unholy socialism…but where are the socialists? Few politicians will even admit to the creed they all share. And what voter really cares?…”


“…The European thought he had placed his money in the strongest, most flexible, and most dynamic economy on the globe…and then he discovered that the U.S. companies he bought had cooked their books and went bankrupt…and that the U.S. federal budget surpluses that were supposed to be “as far as the eye can see” disappeared overnight…and that G.W.B. had gone a little mad in his War AgainstTerror…”


“…And what of Mr. Greenspan; can he not save the situation…by lowering the fed funds rate again….loosening credit even more…or maybe even printing more dollars? He can do nothing else. Raising rates would kill the mortgage refinance business – and stop consumer spending abruptly. The consumer is the last man standing in the U.S. economy. Greenspan must do all he can to hold him upright – even if he is already dead…”


“…The problem with theory, outside of mathematics and the ‘hard’ sciences, is that nature is very much alive. She won’t stand still. Trying to force a theory upon her is like trying to argue with a smart woman…she squirms, feints, and distracts you from your point so thoroughly that, after a few minutes, you have forgotten what you were talking about…”

10/16/02 VALE OF TEARS

“…Instead of coming up with innovative new ways to make people rich, America’s financial intermediaries – notably Wall Street and Fannie Mae – came up with ways to make them poor…”


“…what if the Boomers have already become ‘deflationary people’? What if the largest group of Americans cease in their desire for the goods and services they have built up a reputation for desiring? After all, isn’t this the group that once traded in their Doors albums and dayglo t-shirts for Donna Summer and sequins? Worse… what if all that exploding credit is being used to – heaven forbid – service existing debt?!?…”


“…Manias are nothing new and have occurred regularly. However, the one that popped on March 10, 2000 (Nasdaq Composite 5048), others that may be hssssing now, and the housing bubble to deflate some time in the future, in combination, may constitute the largest financial mania in history. A new investor reading Charles P. Kindleberger’s “Manias, Panics, and Crashes” would be alerted to the fact that no mania goes on forever – that some have panics, some have crashes – and others can be followed by years, sometimes decades of shares going nowhere…”

Happy New Year!

January 1, 2003