Accidental Immigrants

The winds of March that made my heart a dancer

A telephone that rings but who’s to answer?

Oh how the ghost of you clings

These foolish things, remind me of you

(I can’t remember the title, or the author of

this song…but it was sung by Frank Sinatra)

The winds of March blew up on Saturday. It is a period marked by ‘les giboulees’ – where the weather changes from one moment to the next, like Maria’s moods. Teenage girls are reliable – like stock markets… You can count on them to be adorable one moment and insufferable the next.

Mr. Deshais was moody too.

“Farming is finished in France,” he said, exaggerating for emphasis. The chart of beef prices resembles the Nasdaq. The wholesale price of beef in France has dropped from 1.6 euros per kilogram a year ago to less than 1.2 euros in January.

Now, with a single recorded case of hoof and mouth disease in France, exports of meat products from the European Union have collapsed. The U.S. banned European meat last week. More countries have followed suit since then.

But later in the day, our gardener was beaming again. It is springtime, after all. I fixed the cold frames – replacing the glass in the lids – for him. He was happily planting lettuce and contemplating the collapse of western civilization when I left him.

I should stop here and warn you, dear reader, today’s letter has little helpful financial advice or insight. I didn’t think about financial matters over the weekend. So I have nothing to say on the subject. Having nothing to write about…I will write about nothing.

“The weather was just like this,” Elizabeth reminded me, “when we first got here. We just drove up, in rented car…and thought we would move right in, as though we were staying at a Holiday Inn.”

“We were so naive,” she went on, describing our arrival at the Chateau d’Ouzilly, “we had no idea of what we were getting into.”

“The weather was beautiful when we arrived. The sun was shining. The sky was blue. The grass was green. The birds were singing and the jonquils and Japanese redbud were already in bloom…it was gorgeous. And then, of course, the weather changed. Then we discovered that the furnace did not work. Of course, neither did the plumbing.”

My wife might have continued: there was no heat, no useable kitchen stove, no bathroom that you wouldn’t be embarrassed to have a heart attack in, the fireplaces smoked so badly that you had a choice: you could have warmth…or you could breathe, but not both. And the roof leaked so badly in the first rainstorm, we thought it might have blown off in the night.

“The roof is okay,” the previous owner had told us. This was the same person who told us that the furnace “worked fine.” It was not so much that he was lying as that his frame of reference was different from ours. The furnace did work fine, as long as you didn’t mind living in a house with no detectable warmth. That sentiment might carry over to the bathrooms too – they were fine, unless you wanted real plumbing. And the roof was perfectly adequate, unless you wanted one that didn’t leak.

That is, of course, what makes living in France – or anywhere overseas, I suppose – so interesting. Things look familiar. But they are never quite what you think. Even the words often mislead you – French has many words that look for all the world like those of English, yet with very different meanings.

For example, “Are there are lot of ‘preservatifs’ in the food in France?” asked our new intern, Vanessa. The word sounds like something you might find in food. But what it means is ‘condoms.’

What triggered these remembrances of things past was the sight of the moving van at our front door. We were not moving out. Instead, we had rented a van to move some things from the country to our new apartment in Paris. This apartment is much larger than the last one – so it needs more ‘things’ to fill it up.

Not only do things have to be designed, built and sold – they also have to be moved around from time to time. In our case, they had to be carried from various rooms of the chateau, loaded into the van, driven the 350 kilometers to Paris and then carried up 6 long flights of stairs to our apartment. The elevator is so tiny that most of the furniture could not be shoehorned in. It had to be schlepped up the stairs, in the old fashioned way, just as it would have been 100, 200, or even 500 years ago.

Was there no help that could be had from the “Information Economy?” I sought in vain for an IT solution – for some way that the ‘information’ that is supposed to transform our lives could make this task easier.

The only improvement information technology offered was in the Avis rental office in Poitiers.

“Where would you like to return the van?” asked the clerk.

I gave her our address in Paris, which was followed by a few clicks and clacks on her computer terminal. Thus, we agreed upon an Avis office not too far away – at the Ecole Militaire – and were on our way.

And so, amid the ‘giboulees,’ the van was loaded with rugs, tables, lamps, chairs and other ‘things.’ And taking a couple of the children with me in the cab – Sophia, because she’s the oldest and strongest and could help me unload…and Edward, because he’s the youngest and wanted to ride in the ‘big truck’ – I set off for Paris.

It is a long, slow drive from Poitou to Paris at 110 kmh. Edward fell asleep within minutes. Sophia plugged in her earphones and opened her schoolbooks. I was left alone.

So, my thoughts drifted to experiences of the last 6 years – since we moved to France…and how, little by little, without ever really thinking about it, we became something we never intended. You’ve heard of the accidental tourist. Somehow, we became accidental immigrants.

But that is how things actually happen in life, dear reader. Things happen that we intend to happen…and try to make happen…and other things just happen.

“When you set something in motion,” Elizabeth warned me, “you never know exactly where it is going to end up.”

Big, stone houses in France are relatively cheap. We had planned to use our French house as a summer residence – a place we could turn into a seminar center and visit with the family in the summer.

But we never imagined the amount of time, money, energy and emotional commitment that was required. Once the investment was made, we didn’t want to leave. While my back was turned, Elizabeth put down roots. I don’t dare try to pull them out.

Ignorance is a fact of life – in France as in America. You never know exactly what people mean. Nor can you know where things will end up once they are set in motion – even in the Information Age.

Your very ignorant correspondent,

Bill Bonner Paris, France March 19, 2001

P.S. Once we got back to Paris, Sophia and I unloaded the van. Edward helped too, by holding doors open. And we found that we could fill the elevator with small items and still have room for Edward, who would then push the proper buttons to set the elevator in motion, while Sophia and I climbed the stairs with chairs or tables in our hands.

This morning, I took the van back to the nearest Avis office, as organized by the Avis computer.

“Uh oh,” said the clerk, “they must have made a mistake in Poitiers. We don’t take trucks back at this office. You have to go to the Bois de Boulogne.”

*** What a week! The Dow shed 821 points – the largest drop in percentage terms in 11 years. The Winter of Woe continues…

*** The Dow fell 201 points on Friday and is now down almost 9% for the year…and more than 16% from its high a year ago.

*** The Nasdaq fell 49 on Friday and 8% for the week. But people have come to expect that from the Nasdaq. It’s the Dow’s action that is disturbing.

*** The Dow’s disturbing week shows that the bear market has moved into a new, third phase. At first, investors do not believe prices can fall. Regardless of what they’ve read or been told, they come to believe that stock prices only go in one direction – up.

*** In the next phase, the ‘group feel’ sentiment of investors remains steadfastly positive. At the same time, investors begin to have doubts. A few investors defect from the group. Prices fall in fits and spurts…and then bounce back.

*** In the third phase, investors come to realize that bear markets happen. More investors defect…as stocks fall to new lows. They become resigned to the fact that prices are going down. But they have not yet given up on the stock market as the route the wealth. They grope for the big bottom…and think they have found it every time stocks rally.

*** Two stocks declined for every one that rose on Friday. Volume was neither heavy nor light. There was no sign of panic, even as the Dow finished one of its worst weeks in history.

*** The buzzword du jour is ‘capitulation’. Every big drop in the indexes is thought to be a ‘capitulation’ – the moment when investors have finally given up, sold out and surrendered. This selling frenzy is supposed to be what gets us to the big bottom we’ve been looking for.

*** “When Will Tech Stocks Bounce Back?” asks the cover of Barron’s. It is not a question of ‘if’…but only ‘when’.

*** While the Dow fell as expected, the dollar did not. Instead, the dollar index rose last week. And the euro dropped below 90 cents.

*** How could this be? The dollar’s value rests upon the willingness of foreign investors to buy U.S. dollar assets. Why would foreigners want to put their hard-earned money into U.S. stocks and bonds – when they seem to be declining in value?

*** The explanation, dear reader, is that foreign assets are collapsing in value at about the same rate. To many people, America…and the U.S. dollar…still look relatively safe.

*** The Prudent Bear: “One can certainly get a feel for the global nature of the current crisis by scanning today’s headlines from Bloomberg News: ‘Canadian Dollar Drops Near Record Amid Concern about Stocks and Economy’; ‘Australian Dollar Falls on Concern Government Set to Lose Parliament Seat’; ‘Korean Won, Taiwan Dollar Decline as Weak Yen Curbs Demand for Exports’; ‘Thai Baht Falls to Three-Month Low as Central Bank Says It’s Not Worried’; ‘Venezuela Unemployment Rate Surges to 15.8% in January From December’s 10%’; ‘Philippine Unemployment Rate Rises in January to 11.4%, a Nine-Month High’ ‘Argentine Bonds Plunge on Concern Economy Plan Won’t Get Political Support’; ‘Turkish Economic Program Hinges on Lenders Providing Up to $25 Billion’; and ‘Euro Suffers Worst Weekly Drop Against the Dollar’.”

*** Speaking of Prudent Bears, I notice that Saturday’s International Herald Tribune turned its attention in our direction. Two of our contributing editors – David Tice and Marc Faber – were featured. More tomorrow…

*** Adjacent to the article on David Tice is a Bloomberg News piece explaining why the dollar has not yet fallen. “U.S. monetary officials would be able to move more rapidly to stimulate growth than their European counterparts,” it says. “The Federal Reserve board is seen as being more active” than the ECB.

*** The FOMC meets tomorrow and is expected to cut rates by at least 50 basis points. The latest figures show it has nothing to fear from inflation. Producer prices, less energy and food, fell in February by 0.3% – the biggest drop in 7 and a half years. Even with food and energy, prices rose only 0.1% for the month.

*** The Mortgage Bankers Association says mortgage delinquencies are rising sharply. In the 4th quarter, GDP increased only at a 1.1% annual rate – not enough to cover rising energy costs. Plus, investment portfolios fell in value – reducing the net worth of many households and making it tougher to pay the bills.

*** The American Bankers Association tells us that credit card delinquencies are also rising. And business debt defaults are an even bigger worry. Prominent defaults in February included Globalstar, Chiquita, and So. Cal. Edison.

*** But Colin Powell says he is “concerned about the Japanese economy.” Inflation is not a problem in Japan either. And, as in America, Japan seems headed into a recession with collapsing stock prices. Japan will most likely do what the Fed will do: cut rates. But in Japan the rate cut will be from a miniscule 0.15% down to zero.

*** U.S. rates may reach zero, too, before the present downturn is over. And stock prices – including the Dow – are likely to decline as much as the Nikkei has declined – about 75% from the peak. Then, and only then, will we find the Big Bottom.

*** Gold fell $13 last week. Gold mining companies got clobbered. Gold will eventually rise – I say with conviction – but only after the dollar has run its course.

*** “The Socialist candidate for the mayor of Paris, Bertrand Delanoe, beat the incumbent Phillipe Seguin in Sunday’s elections,” reports Daily Reckoning eyewitness, Thom “Bomb” Hickling. “For hours outside our office window in Paris just a couple of blocks from the Hotel de Ville (Paris City Hall) car horns have been honking, drums beating, crowds cheering. I’d say at least 10,000 people were on the square in front of the grand city monument.

“TV crews from around the world were there, so was a rock band and 50 piece steel drum band… and lots of shouting, hugging, arms thrust in the air cheering…”

Thom took some pictures – click here to see how Paris celebrates its ‘deviation’ – or its ‘turn to the left.’

*** This day marks the anniversary of two interesting events from WWII. In 1945, Japanese kamikaze planes attacked the U.S. carrier Franklin, killing 800 sailors. Also in 1945, Hitler, faced with defeat, issued his ‘Nero Decree’. He knew his bubble had burst…his ‘Nero Decree’ imagined that he could take all of Germany down with him.