At Doolan's Bar

“I only understand half of what they’re saying,” Eric said. “But that’s enough.”

His companion, a short, bald man in a green sweater with the smile of a geo-physicist too deep in his cups, had just fallen down at my feet. It was the second time he had crashed to the floor that evening. And he was applauded. It is not every man who can fall down drunk without spilling his beer.

Eric and the geophysicist are doing an underwater survey for a new communications cable between Ireland and England. In the course of their work, they inadvertently discovered a cable that they believe is used to monitor submarine activity in the Irish Sea. Their ship was ordered to leave the area by the Royal Navy.

Eric is English, not a popular thing to be at Doolan’s bar. “But I don’t take it personally,” he said.

The drunken scientist is Irish, and Gaelic-speaking at that. They were at Doolan’s bar because it had such provisions as keep sailors on shore leave occupied. Not just alcohol, but women… and what passes for lively entertainment in small Irish towns in mid-winter.

If I spoke Gaelic, for the singer mixed Gaelic expressions into his songs, or even understood the Irish accent better, I could have understood more of what was said amid the sloppy, besotted din of Doolan’s bar last night. But, like Eric, I probably understood enough.

The music style might be best described as Irish self- pity. The songs were political. Sentimental. Maudlin. When they weren’t describing some guy who had to leave Ireland to find work in Florida, poor fellow, they expressed the familiar Irish themes: irredentism, patriotism and pathetic proletarianism. They were sung in that whiney Irish tenor voice that brings a mist to your eyes — if you are in a particularly lugubrious mood or an alcoholic stupor.

“The English horse they were so rude… They bathed their hooves in healing blood” he sang.

The great battles against the English, Parnell, the Great Hunger, the Irish Diaspora, the Easter Uprising, the cruel landlords… bosses… the IRA…

“Monday marning… why do you haunt me? Wi’ yer bells and factory whistles all around… Monday marning… why do you taunt me? And I’m so tired I could sleep here on the ground”

Waterford is a working class town, in which there wasn’t much work available — from the Famine to the European Union. But the place is booming now. You can borrow mortgage money at 3.5% — an artificially low rate, thanks to German’s need for low interest rates to reduce unemployment. Here in Ireland, what are needed are higher rates, to dampen down some of the mania in real estate.

Property prices are soaring. It’s hard to find an apartment. And if you set out to buy a house, the seller may double the price before you get to settlement.

But the place is still a little depressing. The Irish say they saved civilization. During the Dark Ages, monks labored in Irish monasteries to preserve the writings of antiquity. But having nursed civilization through its illness, it is too bad the Irish sent it on its way. At least they could have stayed in touch.

While Vienna, Rome, Paris, and London flourished, Ireland became a backwater. So while Mozart, Beethoven, Dvorak and Tchaikovsky were developing the music of the Western World, the Irish were singing their ballads — complaining about this or that… in a manner only a notch above the lame drivel of American pick-up truck laments of the hick genre. Even a place as remote as Finland has produced at least one world-class composer – – Sibelius. Has Ireland?

And while Housmann was turning Paris into the most beautiful city in the world — Irish architects, if you can call them that, were perfecting the modern factory- worker hovel. Even now, they’re still building boxy, charmless accomodations of steel and cement, which seem like little more than weak imitations of London’s worse neighborhoods. Where are the quaint cottages, whose images grace the walls of Boston’s IRA supporters? I don’t know, but they’re not in Waterford.

And the people didn’t look much better. The best looking people seem to find their ways to bigger cities I guess. Or maybe it’s the potatoes and beer. Once, in Paris, I approached the subject scientifically. On a long walk through the 7th and 16th arrondissements I studied the women I passed on the street. Surprisingly, I found one out of 5 to be rather attractive. I tried the same exercise on the streets of Waterford, but gave up — only one or two seemed attractive at all.

But back in Doolan’s I tried once again to understand the peculiar psychology of mass delusion. The crowd sang the songs. They rose and raised their hands when the Irish anthem was sung. They locked arms and swayed back and forth — having a grand time.

They were like the soccer fans, who suspend all judgement, reason, or sense of dignity. They paint their bellies blue and yell at the top of their voices. Even when watching the game on television, where they couldn’t possibly affect its outcome, they will get together with friends and make complete fools of themselves. And on Monday morning they retake their places in society as sober and sensible people.

The same group sentiment infects a manic market — a point I have made many times. Individuals give up their own critical faculties to the emotional power of the crowd… the home team… the army… the group.

On TV, the CNBC cheerleaders sing the praises of this stock or that. Investors sway with the markets. They are confident… bold to the point of being reckless. And yet, they are always in danger of getting spooked too… being demoralized and panicking. Routed, like an army that has lost its will to fight.

As the evening wore on at Doolan’s and more pints were poured, the raucous bar scene and hard-edged music seemed to soften. It was like a photo that was airbrushed… almost gauzy in the smoke-filled haze.

The singer’s voice had become more raw as the evening advanced — thanks to tobacco, beer and the hard kvetching it had to do. But even the voice took on a sweet tone as his ballad told a particularly sappy tale. I felt for a moment that feeling that you get when you are connected to a group. No longer standing alone as an observer, you surrender and become part of the scene yourself. I felt a sentimental mist arising in my eye… and even the fat girls looked fetching.

Bill Bonner

Waterford, Ireland January 20, 2000

*** “We’ll have fun, fun, fun ’til Daddy takes the T- Bird away.” The Beach Boy’s spirit seems to have infected all of America in the last 6 weeks. The Financial Times reports that US consumers spent at an unexpectedly strong pace over the Christmas holidays.

*** Where’d they get the money? Not from wage increases… nor from profits, both of which are weaker than they were in the 60s. The money is coming in from refinancing the family home and from overseas investors.

*** But the spending spree increases the likelihood that big Daddy Al Greenspan will take the keys away. Look for a rate hike on Feb. 2nd.

*** The Dow fell 71 points. Microsoft’s earnings report was blamed. The closer you look at these earnings, the worse they are. Two-thirds of the profits came from investments, not operations.

*** Meanwhile, Bill King reports that IBM is spending more to repurchase its shares than it earns. Since shares are handed out to employees in place of increased salaries, this spending should be regarded as a labor cost.

*** The S&P was flat yesterday, but the Nasdaq continued to rise. It was up 20 to another new high.

*** The IIX, the Internet index, rose too… proving that the “moment of truth” has not quite caught up with Internet investors. Most are still enjoying the financial effects of lies and misapprehensions in a manic market.

*** I’m going to stop waiting for the party to end… and go join it. No, not as an investor — that would be suicidal. You’ve got to be a seller at these prices, not a buyer. I’m going to try to get out my own before the magic disappears. But watch out, my attempts to profit from the mania are sure to trigger a huge crash.

*** The Russell 2000 small cap index has been rising. This is a trend I would expect to continue — the small caps have done relatively poorly over the last few years. They should do better now — as long as the market holds up.

*** AOL beat earnings estimates and the stock bounced up $3.25 yesterday. I still think the trend is down, however.

*** Oil is getting pumped up too. It’s up to $29.54. Oil rising. Fed raising rates. Ding, ding, ding.

*** But investors aren’t concerned with traditional warning bells. They think they’re like old lighthouses that can be safely ignored, thanks to modern electronic navigational instruments. The overvaluation of the techs and nets, for example, was dismissed by money manager Walter Weil in Barron’s, who wrote that “massive net inflows of money into mutual funds are overwhelming the old valuation model.”

*** Massive inflows? Investors are moving money from home equity into stocks. But there’s only so much of that money available. And even so, it isn’t all that much. Net inflows into stock mutual funds, reports Fortune, come to only about $180 billion per year… or about 2 and a half days’ trading volume.

*** That is known as the “big flow” theory. A lot of money moving into the market will boost prices — no matter what else is happening. Forget it. The big money flows only so long as investors believe it will pay off. Once the moment of truth arrives, the taps are turned off and the plug is pulled.

*** The other favorite theory is the “network effect.” As more and more people get connected, the profit and growth potential soars — almost infinitely. But the Internet has already been in business for a few years. And investors are beginning to realize that making money on it is harder than they first thought. As Fortune put it, “Most likely, the Web will generate huge wealth, but the payoff will flow mostly to consumers in the form of lower prices.”

*** The Irish Independent reports on page 3 that a “Doctor in Grope Case Says Nurse Wanted to Be Kissed.” Groping must be popular in Ireland. Another article tells us about a Kerry Co. farmer who admitted that he groped a woman on a plane to Spain.

The Daily Reckoning