Arithmetic Of Democracy

Daily Reckoning

Weekend Edition

July 8-9, 2000

Paris, France

by Addison Wiggin

MARKET REVIEW: ECONOMY SLOWS, MARKET CELBRATES

Friday, the market welcomed a Labor Department report indicating fewer American businesses added jobs than expected in June. Stocks rose strongly. The Dow finished up 154 for the day to close at 10,635 – an overall advance of 188 for the week. The Nasdaq also rejoiced – up 62 to 4023.20, recovering from losses earlier in the week. The S&P 500 was up 22 to close at 1478. Advancing stocks outnumbered declining ones by a 9-to-5 margin on the NYSE.

Pundits believe the Labor Dept. report is the clearest evidence yet that the Federal Reserve is succeeding in its efforts to help the market settle down. But is this a ‘synthetic’ soft landing? See below. The unemployment rate is reported to have fallen to a near 30-year low of 4%.

Russell 2000: 528.22 up 4.90

Gold: $284.70 up $0.10

Crude Oil: $30.25, up $0.26

Natural Gas: $4.25, up $0.184

CRB Futures Index: 219.33, up 1.45 points

MARKET COMMENT

“The CRB began a recovery late Friday, after getting crushed on Saudi news and Independence Day holiday weakness. The Saudis unexpectedly said they’d increase production another 500,000 barrels a day, about one-thirty- eighth of U.S. crude oil demand at 19 million barrels a day, sending the bull market in commodities on a two-day vacation. Wednesday’s rout tanked the whole energy complex, and took precious metals along for the ride. But for the week the CRB finished up 0.66%, with gains in grains, cotton, hogs and palladium.”

– Dan Ferris, Real Asset Investor

HEADLINES, INSIGHTS and NEWS

A Synthetic Soft Landing?

by Michael Belkin

Given the choice between an imaginary soft landing and a real world crash, 95% of Wall Street would choose to applaud phony government stats that reinforce their fantasy. What happens when the truth comes to light?

Don’t Worry, Mr. Greenspan Will Fix Everything

by Dr. Kurt Richebacher

Judging by what is offered up by the media, it is safe to conclude that elementary macroeconomic insights, such as the essence and function of savings, are unknown to most American economists.

The Internet’s Dirty Secret

by Dan Ferris

It’s the biggest commodity market in the biggest economy on the globe… and most investor’s are looking the other way. Huge Internet profits from the most unlikely Old Economy stocks. The right one could build you a personal fortune.

Value Vindication in Asia

by Dr. Marc Faber

The crack in TMT stocks has made a lot of old uglies look pretty again. Here are 5 Asian values poised for strong profits.

Irrational Exuberance: Shiller’s Chilling Tale

by Lord William Rees-Mogg

The 18-year bull market has made the investing public – almost to a man – long-term bulls. Yet, three 20-year stretches in the last century saw near zero growth. All followed periods of irrational exuberance.

And in case you missed it…

THIS WEEK in the THE DAILY RECKONING…

By Bill Bonner

07/07/00 DEMOCRACY

“…the history of the last two hundred years in America is a history of the spread of democracy. The first people to vote were the rich landowners. But as the franchise broadened, the fatal flaw in the system, logical consequences of democratic arithmetic, began to assert themselves. As more and more people voted, the bigger and more oppressive government power became…”

07/06/00 ARITHMETIC OF DEMOCRACY

“…politics resembles markets. Politicians exploit low motives and character weaknesses just as stockbrokers do. They promise something for nothing. They count on the herd instinct and the fear of missing out or being left behind. They use the same empty blather…and hollow slogans….but politics is fundamentally different from markets in that it reinforces sin, rather than punishes it…”

07/05/00 WHAT SO PROUDLY WE HAILED, Part II

“…what makes America special is the idea of independence and liberty. The Declaration of Independence established America as the first and only country in which the individual was free and sovereign – free to go where he chose and do as he pleased…without having to get the permission of the ruling class. And the new country was open to anyone and everyone who liked that idea…”

07/04/00 WHAT SO PROUDLY WE HAILED

“…the Truths that were self-evident two centuries ago – are now threats to the republic. People who believe in the rights that were inalienable in the time of Jefferson – such as the right to liberty and the right to bare arms to maintain it – are seen as dangerous cultists. Try to assert your right to ‘dissolve the bonds’ that tie you to Janet Reno and the Clinton Administration and she will have you shot in the back…”

07/03/00 QUE SERA SERA

“…emotions interfere with investment judgment (not to mention everything else in life). Would we be better off without them? Would the purely rational man be a superior man? Maybe even the ‘new man’ of the Marxist imagination?…”

FLOTSAM AND JETSAM

from Investor Intelligence Briefings,

Strategic Investment

“Oil riding high again. As you’ve no doubt noticed at the gas pump, oil prices have risen dramatically in the past six months. Many of the oil-rich central Asian countries, which have huge untapped deposits, saw multinational oil companies disinterested in their capacity when oil prices were lower. Now, however, plans are under way to increase production. Nowhere is that more apparent than in Kazakhstan. The country plans to quadruple its oil output over the next decade and to increase that output by 10% this year to 33 million tons. Tengizchevroil, the joint venture between Kazakhstan and Chevron, intends to raise daily production at its huge Tengiz oilfield to 700,000 barrels per day by 2010.”