A Night At The Opera

“Excusez-moi…pardon…pardon…excusez- moi…pardon…pardon…”

We had arrived at the Chatelet theatre late. An entire row of opera fans needed to be disturbed before we arrived at our seats – mine, mercifully it turned out, behind a post.

Having taken my seat, I expected to be entertained… amused…distracted…moved in some way, emotional or intellectual. But here, in the second balcony, we were far above the common clouds of operetta, such as Offenbach or Gilbert & Sullivan. We were even above the thick, rich thunderheads of Wagner. Or the cirrus clouds of Mozart, Johann Strauss or Rameau.

There is low culture and there is high culture, dear reader. But on Monday night, Elizabeth took me to see a contemporary opera, Amour de Loin, a work of such high culture I almost got a nosebleed.

“This may be experimental or avant garde,” Elizabeth warned. She knows the director, a friend from college days. “So don’t write anything nasty about the play,” she warned me.

Okay. I will not. I know nothing about opera…and less than nothing about modern opera. So, I will not attempt to criticize, but merely report to you what I saw and heard. You may draw your own conclusions.

The piece opened to a full house. And a rich house. My tickets were $80 a piece. Surely seats without a post in front of them were more expensive – unless people had seen the opera before. The curtain rose to reveal a stage, empty except for a shallow pool of water. It looked as though they had intended to make an ice skating arena and couldn’t get the water to freeze. Then, the music began.

I use the word “music” generously. There was an orchestra. And there were many fine musicians in it… Even on a bad day, every one of them could hit all 12 notes on the chromatic scale – including the sharps and flats. And on Monday night, they must have hit every one of them at least several times – but never in an order you could recall nor would want to repeat. None of the spectators left the theatre humming a memorable tune, in other words.

Puzzled by the music, I turned to the program for elucidation.

“Music for the ears,” explained the description. Ah ha! Now, we are getting somewhere. I thought the odd, directionless composition of Finnish composer Kaija Saariaho might have been intended for the liver or some other less demanding organ. Perhaps she should have aimed for the gall bladder or the large intestine which don’t seem to care about melody or rhythm.

But Ms. Saariaho is ambitious.

“The music of Kaija Saariaho,” the program tells us, “is based on a rich experience of sound and form. Fascinated by the so-called spectral music of Gerard Grisey and Tristan Murail from the early ’80s, she undertook to discover the components of sound in various research centers and became interested in the possibilities of combining harmony and tone with the aid of computer programs.”

Ah ha! A person can make mistakes with a pen and pencil, but to really mess things up, as they say, you need a computer.

“Kaija often shows herself to be frustrated by the limits of commentary or analysis when brought to bear on the music itself,” says the program. “After all, everyone has his own work to do.”

But I am just reporting…not criticizing.

After the curtain rose, two strange lighting fixtures began to descend. This took at least 10 minutes. And finally, the opera singers began their work. Their voices were strong and exact. They were real pros – capable of following music without the normal syntax of melody and syncopation.

For the next two hours, they sloshed about in their puddle…working on a story as soggy and stagnant as the water itself. Nothing much happened. There was little scenery. The story was spare. Even the “fat lady” seemed to have been on a diet.

This was the kind of art that the public would not willingly support, I guessed. It must rely on the larceny of government grants. But not only was the theatre full, the spectators were happy. Even as nothing happened on stage, they leaned forward in their seats to see what was not going on more clearly. Except for Elizabeth, who slept comfortably, the audience watched carefully…as if there was something to see. And at the end, they rose from their seats to give the production an ovation.

Elizabeth and I rose too. We went backstage to say hello to the director.

What could I say, without being impolite?

“Gee…I didn’t know the ‘fat lady’ could sing so well while lying in 6 inches of water…”

“Was this meant to be a comedy or tragedy…?”

Unable to think of anything better, I fell back on hydraulics.

“Do you have to drain the set every night?” I asked.

“No, the water just circulates,” he said. And then, he gave me a hug.

Your theatre critic, not criticizing…

Bill Bonner
November 29, 2001

P.S. Elizabeth claims she loved it.

The chips were down again yesterday. Has the rally fizzled out? I don’t know, but I’m going to let Eric do the guessing and reporting. I’ve got to rush out to a meeting.



Eric Fry in New York…

– Look there! What’s that flotsam there…washing up in the surf? Why, it’s the wreckage of the “S.S. Enron” – once believed to be the mightiest of all the vessels in the ill-fated New Economy Armada.

– Aye, but she’s mighty no longer. She’s not even seaworthy. Enron, the old-line-energy-company-turned- gun-slinging-“bandwidth-trader” faces almost certain bankruptcy.

– Yesterday, Enron shares coughed up 85% of their remaining value to close the day at 61 cents. That’s right: Two quarters, one dime and one penny per share. As Enron imploded yesterday, so did the entire stock market.

– The Dow fell 161 points to 9,712 – its second consecutive triple digit loss. The Nasdaq dropped 2.5% to 1,888. Dow 10,000 and NASDAQ 2,000 will have to wait.

– As noted in yesterday’s Daily Reckoning, several short-term sentiment indicators were warning of an imminent sell-off. Voila! It arrived.

– The sell-off itself was not very remarkable, given the fact that Mr. Market has been making hay for weeks. (The old man deserves a little rest after all). But the climactic death spiral of Enron was remarkable indeed.

– Who was it that said, “The bigger they are, the harder they fall?” It was probably not NYSE Chairman, Dick Grasso…but it could have been. Enron was once one of the biggest issues on Grasso’s exchange. But this company that a little more than one year ago boasted a titanic $66 billion market capitalization, collapsed into a grotesque heap of gnarled liabilities and derivatives contracts.

– Somebody owns all those loans and derivatives that Enron will never make good on. One of those somebodys is JP Morgan Chase, as Grantsinvestor.com deftly observed three weeks ago.

– “The banking behemoth J.P. Morgan Chase may be too big to fail, but it’s not too big to get a little smaller,” wrote Grant’s Investor’s Andrew Kashdan. “Last spring, we were more than a bit skeptical about the future fortunes of J.P. Morgan Chase…JPM there upon proceeded to drop 36.7% to its low on September 21. “Butthestock bounced a bit from that level, leading Kashdan to assert, “It’s gotten ahead of itself again…”

– Kashdan buttressed his negative call on JPM by citing the analysis of Charlie Peabody, the gimlet-eyed banking analyst at Ventana Capital. Peabody warned that JP Morgan Chase faces “the likelihood of further write- downs of its MSRs [mortgage servicing rights], its syndicated loan portfolio, its CLO [collateralized debt obligation] exposure, its multiple relationships with Enron and its subprime auto and mortgage businesses.”

– Goldman Sachs estimates that JPM and Citigroup together extended about $270 million in unsecured loans to Enron. A default would cost J.P. Morgan about a dime a share and Citigroup about a nickel a share. The shares of both money center banks fell more than 5% yesterday.

– We will not join the legions of market observers who are offering Enron postmortems. Instead, allow us to present a Daily Reckoning “ante-mortem.”

– On November 11th we wrote the following:

“I’d like to take time out to give a great big Daily Reckoning round of applause to Enron, rated the number one e-commerce vendor by Interactive Week magazine. Yes, it’s true, according to the magazine, Enron racked up an astounding $97.5 billion dollars of online sales for the 12 months ending June 30, 2001 – ‘three times more online revenue than IBM, its closest competitor in the Interactive 500,’ the magazine reports. But what does this all this e- selling beget? The short answer is, a collapsing share price. ‘Enron has a Texas-size helping of attitude,’ writes Interactive Week’s Robert Bryce. ‘The Houston energy and trading giant believes it can trade any commodity, any time, and make money doing it.’ If only attitude were profits! According to the company’s SEC filings, it almost never makes money trading energy or any other commodity…at any time.”

– Hmmm…profits…I remember hearing about those somewhere. The Enron debacle reminds us that profits matter – not the “pro-forma” variety, but the real kind of profits that cause actual cash to actually arrive in company bank accounts. Companies without profits tend to fare poorly over time. Similarly, investors who overpay for profits tend to fare poorly over time. And yet, few investors seem able to resist the temptation to overpay, especially when stocks are going up every day. Resist, my friend. Resist.


Back in Paris…

*** And so the great comedy continues. Investors are still bullish…economists are still “optimistic’ – and the market continues to give way beneath the feet of all of them.

*** Not that we know beyond a shadow of a doubt that it will continue. But we see no hard evidence that the worst is over…and plenty of reasons why it might not be.

*** “According to our friends at ISI Group,” writes Allan Abelson of Barrons’, “not only is consumer debt as a percentage of personal income just about at an all- time peak, but, at over 21%, the ratio is strikingly, even ominously, higher than its reading of under 16% at previous recession bottoms. John and Jane Q. are plumb borrowed up, not an ideal precondition for a spending binge.”

*** The Fed has cut rates 10 times already, trying to stimulate a spending binge. There are still 200 basis points to go. We expect the Fed will use every one of them before the economy turns up.

The Daily Reckoning