Choir Practice At St. Marcel

“Amazing Grace, how sweet the sound

That saves a wretch like me.

I once was lost, but now I’m found.

I was blind, but now I see.”

Amazing Grace

“I know only one American song,” said one of the three Pierre’s in our little ad hoc choir, “Amazing Grace.”

Pierre Augay recently retired as a colonel in the French Army. I know nothing about his service record except that he was in charge of his unit’s choral group. This was another point he had in common with the other Pierre, Pierre de Liniers. The two Pierre’s and I formed the bass section of the choir that gathered at the church in Lathus on Saturday night. Both, it turned out, had been paratroopers. And both had led their respective glee clubs.

We stood in the back of the group and sang “Jubilee Tous Les Peuples” and “Seigneur Prends Pitie” as best we could. With these two strong ex-paratroopers beside me, and the stone walls of the church to echo our basso profundo notes, we made a respectable trio.

“Now, I can get Bill to do things that he was never willing to do before,” said Elizabeth to my mother. “He’s always looking for ‘material’ for the Daily Reckoning.”

And yes, it is true. I bear all sorts of torments on your behalf, dear reader. I might have preferred to walk across the street to the bar at the Petit Auberge. There, a very different crowd had gathered, as it does every Saturday night. But that is another story.

This is the story of the group gathered at St. Marcel’s to prepare four-part harmonies for the All Saints service….

I know, I promised to offer more comments today on gold, inflation…and what to do with your money in a world of ignorance. As you will see, that is exactly what this about.

Money and religion are both, to some extent, ways of addressing life’s uncertainties. Even oil executives, as David Ignatius noticed, cannot tell you whether the price of oil is going up or down. And even the world’s greatest heart specialist cannot tell you whether his own heart will be still beating tomorrow or the next day.

In any case, it’s the surprises that worry people. If you knew oil was going up in price, you could take precautions… fill up the tank… put in a woodstove… go long oil futures. The world quickly adjusts to expectations and everything works itself out.

A man who knows he is going to die in two weeks has time to put his affairs in order, write out a proper will, and say goodbye to his loved ones – with the appropriate sobs and apologies.

But surprises are hard to take. And even with Gilder’s ‘Promethean light’ of bandwidth plenty shining on life’s parking lots and alleyways…the world is still a dangerous place. Maybe paratroopers are more aware of this than most people.

In his book “The Power of Gold,” Peter Bernstein tells the story of Crassus, who lived just a few years before Christ.

Crassus had sought profit from ignorance and uncertainty by organizing a private fire brigade in ancient Rome. He only put out fires if the owner had paid in advance for the service. And when an un-protected building was destroyed by fire, Crassus would buy up the ruin at a fraction of its worth. In this manner, Crassus became very rich and was sought out by Julius Caesar – a little like Hillary Clinton sought out Warren Buffett.

Crassus’s big surprise came when he made the switch from the market to politics:

“Crassus was eager to show that he was more than a moneybags,” writes Bernstein, “and that like Pompey and Caesar, he could successfully command troops in battle. Accordingly, he provoked a war with the Parthians in Mesopotamia and set off on his campaign with 44,000 troops under his command…”

“The Parthians attacked the Romans with ten thousand horse archers and a corps of one thousand Arabian camels, making quick work of the job at hand. Crassus attempted to negotiate his surrender, (he was a businessman, after all) but the Parthians set upon his troops with such ferocity that only 10,000 of the original 40,000 managed to escape. For Crassus, the Parthians reserved a special fate that expressed their disdain for the money-mad Roman civilization that he represented. They finished him off by pouring molten gold down his throat.”

Throughout the centuries, people have sought to protect themselves with gold, paper, yap stones, cattle, slaves, or furs. All have had their usefulness. But there have been many surprises too.

A person who bought gold in 1980 is no-doubt shocked to discover that the bullion coins he bought two decades ago are now worth, in real terms, only about a third of what he paid for them. Not exactly molten gold – but still, losses are always hard to swallow – especially when the gold was bought as a hedge against the risk of inflation. There is a certain level of risk you cannot escape – neither with gold nor with information.

The makeshift choir at St. Marcel would have been an embarrassment to any Baptist church in even a third-rate Texas backwater town. Baptists do not mind belting out ‘Amazing Grace’ and ‘We’re Sinking Deep in Sin’ – and really enjoying it. They put on their robes and practice every week… never revealing a trace of irony or self- doubt. They are convinced that life’s hazards should be approached with religious faith, not with gold or reason.

As my brother-in-law preached to his congregation in Lovingston, VA, “all you have to do is to remember you’re ABC’s – Admit that you need God’s help…Believe in Jesus Christ…and Commit yourself to follow him. And sing out God’s praises with a loud and joyful voice.”

This sort of simple, almost na?ve, attitude barely exists in Europe. It is despised by the NYTimes and the Washington Post, of course, but it is probably the source of America’s most important advantage. Americans are not afraid to do things badly.

Europeans, by contrast, are cautious, circumspect and intellectual.

The bass section did okay, thanks to the two paratroopers. But the altos were pathetic. Half of them were afraid to open their mouths, and the other half were tone deaf. One woman never said, or sung, a word. Maybe this was a product of the new ecumenical spirit of inclusiveness. In addition to welcoming ravers, guitars, agnostics and Protestants into the Catholic Church, they were inviting deaf and dumb people onto the choir.

She was probably an atheist, too.

More to come…

Bill Bonner Paris, France October 23, 2000

P.S. Pierre Augay had a suggestion for next week’s practice session… he will bring some warm whiskey. Thank God, they’re not Baptists.

*** “Fed Chairman Alan Greenspan,” says economist Allen Sinai, “is stuck between a rock and a hard place.”

*** A broker commented Friday that investors had turned gloomy and that only a change of direction by the Fed could break the negative sentiment. He is hoping that the Fed will begin lowering rates, rather than hiking them.

*** But even Harry Potter Greenspan is unlikely to be able to lower rates while oil prices are adding billions in extra costs to American businesses and consumers. The latest monthly inflation report had the CPI rising at a 6% annual rate. And oil rose $1.05 on Friday. The Fed is “on alert,” said the chairman last week, “for oil-driven effects on the economy.”

*** Meanwhile, the stock market seems to be suffering from an Autumn of Anxiety malaise. Volatility is extreme. Stocks that disappoint investors get beaten down 20% to 30% overnight. Volume is huge.

*** Last week, for example, saw one of the biggest declines in the Dow ever…and one of the biggest advances for the Nasdaq. At the end of the week, the Dow was about where it had been on Monday…and the Nasdaq was about 5% higher.

*** There were 1464 stocks advancing on the NYSE over the week, while 1776 fell back. 103 hit new highs; 435 hit new lows.

*** The mood has turned from pure, unadulterated optimism…to adulterated optimism. Investors are still very bullish and willing to believe that they can get rich by buying stock in unfathomable businesses.

*** MicroStrategy, run by the New Era impressario Michael Saylor, who proclaimed that we would all get rich when information “flowed like water,” managed to raise another $53 million in private financing. The shares, which I warned you about in April, were priced as high as $333 a piece on March 10. Now you can buy all you want for about $25.

*** reports that an e-company called Vignette is still selling at 1,789 times forecast earnings.

*** But the thrill is gone. “[R]ed hot buzz generating ideas seem to have taken a vacation,” says the USA today. And investors are beginning to ask why. Almost all the experts on CNBC say we have reached a bottom… but what if they’re as wrong as they were a year ago… or a month ago? What if stocks don’t shoot up again like they did in ’98 and ’99? What should I do?

*** In Asia, poor Ms. Wu is having another bad day. After 3 days of recovery, the S. Korean stocks market headed down again this morning – losing another 3.2%. Falling stock prices have plagued Asia this year, as they did 2 years ago. But in 1998, Alan Greenspan and other central bankers were able to take action – they increased the world’s available liquidity through lower rates and other fiddling. Then, the crisis was quickly brought under control and the Asian markets rebounded. Again, in ’99 – when spirits flagged because of Y2K worries, central bankers brought out the bottle and passed it around…and investors all over the world celebrated one of the best autumns on record.

*** But now stock prices in Indonesia, the Philippines, South Korea, and Thailand are back to where they were near the bottom of the ’98 crisis, reports Floyd Norris in the NY TIMES. And in the New World, too, almost all markets are off about 15% so far this year.

*** A dose of the familiar lubricant – 98-proof liquidity – might be just the thing to loosen the animal spirits again. But alas, Greenspan will have to strap himself to the mast, blindfolded, and instruct his crew to keep a sober hand on the tiller, for they are sailing a treacherous course between Scylla and Charybdis… or to put it as mentioned above, they are between the rock of inflation and the hard place of falling equity prices. And there is little room for error.

*** “We are balanced right at the edge… an inch either way is going to show us how this is going to resolve,” writes our own Kevin Klombies. During Japan’s run-in with ‘the bubble’ a decade ago, “the Japanese bond market peaked 15 months before the Nikkei 500. During those 15 months, the Nikkei 500 Index screamed higher, then popped. What’s happening here? The US treasury market peaked – 15 months ago. A drop to somewhere near 2000 on the Nasdaq is not only possible, but darn likely IF the bond market were to break to the downside.”

*** Last Thursday’s stock run-up was attributed to the announcement by MSFT that the company had beat earnings estimates. 41 cents per share was expected. Bill Gates delivered 46 cents. But, as usual there is more to the story. Bill King reported that operating profits actually fell during the period. Like so many techs, MSFT reported big gains from ‘investments.’ Without the investment income, MSFT would have reported only 33 cents in profits, says King.

*** Richard Russell reports that Warren Buffett lives on a diet of cheeseburgers, French fries, and softee ice cream – accompanied by a lavage of cherry coke. No comment.

*** And Reuters reports that “a California performance artist has launched what she hopes will be a new women’s movement against logging ancient redwoods – baring her breasts and reciting poetry to stunned timber crews.” “They stop their chainsaws and they stop their trucks and they pay attention,” said Dona Nieto, who goes by the name “La Tigresa,” as she prepared another demonstration. “I’ve changed some of these guys’ lives. But I’d like to change the laws, and I’d like to change history.” La Tigresa has brought what she calls “Goddess-based, nude Buddhist guerrilla poetry” to timber and logging sites in an area some 120 miles north of San Francisco that is one of the main battlegrounds in the fight between environmentalists and timber companies.

*** Francois came over on Saturday and brought a basket of mushrooms he had collected in the woods. They’re called ‘sepps’. We ate them for lunch. I made a deal with Francois that probably contravenes at least a dozen French employment rules. But it gets him back on the job…and back on the farm…at least for a couple hours a day.

*** Then, on Sunday, Mr. DesHais came over holding a limp, large pheasant by the neck. The bird was beautiful – with blue, gray, brown, and red feathers. He offered to stuff the bird for us so we could display it on a mantel…and to cook the pheasant meat for lunch next weekend.

*** It is hunting season in Poitou. A couple weeks ago, hunters killed a wild boar in our woods. They drove up with the animal in the back of a pick-up truck. The handsome beast lay with no visible wound…still warm and sweaty from the chase. Later, they came back with a haunch from the boar, as is the custom, giving the landowner some of the fruits of his earth.

*** This Sunday, shots came from the North and the East, as though the Russian Army was advancing on Berlin. There is so much shooting, it is a wonder any wild animal survives.