Completely Opposed to Something or Other

Stupidity, like poverty, is relative.

The sentiments expressed by London’s May Day protesters ranged from the pathetic to the sublime. “I’ve spent a lot of time in India,” said one. “A lot of people are living a good life in the West and don’t need these luxuries.”

“Capitalism commits atrocities and illegal acts and hides behind a corporate whitewash,” noted Adam, 30, who described himself to Daily Telegraph reporters as an ‘anarchist.’

“Women do most of the world’s unwaged work,” said Liz, a member of the Global Women’s Strike. “We want wages for all caring work to establish women’s entitlement to the wealth and resources we have produced. We want wages for housework.”

“We are sick of big companies making money just for greed,” added another woman.

Another protester, describing the people around her: “This is the cream of society with intelligent people who have a passion for life.” Cream rises to the top of a fluid society. But so does scum. Sometimes, it is hard to tell the difference between the two.

None of these comments made much sense. So, I listened carefully to a talk show, on which the guests represented various factions of the anti- capitalist crusade. Would they have a new critique of modern society…a new crackpot theory…? Would there be a new Marx or Engels among them?

Alas, not a sentence…not a word…not even a half- formed syllable that might be mistaken for an original thought.

“Everything is being privatized,” an environmental activist observed. “Big corporations are taking over. We are losing control over our own lives. That’s the real problem with globalization. The companies have become more powerful than government. We vote, but it doesn’t make any difference. We still get the same products shoved down our throats…while corporations make obscene profits for the benefit of their shareholders, not the public.”

I was hoping he would name names. Daily Reckoning readers would be delighted to invest in a company making obscene profits for the benefit of shareholders. Even mildly titillating profits would be nice. But as soon as a company makes enough money to get investors excited, competition and share prices increase and the big profits quickly disappear. In a matter of months, profits are merely respectable.

Also in the Telegraph was an article about author Naomi Klein. The daughter of Vietnam War protesters who fled to Canada, she spent her early years, she says, wanting to play with Barbies, eat at McDonalds and hang around shopping malls. But as she grew older her radical genes seem to have asserted themselves. In fact, her book, “No Logo,” published by the capitalist enterprise, Harper Collins, owned by Rupert Murdoch, provided both inspiration and rationale for the rioters. The Financial Times, which ought to know better, called it “a manifesto and call to arms that sometimes reads like an Orwellian nightmare.”

I picked up the book at Heathrow Airport on my way to Madrid last night. I thought I would save you the trouble of reading it.

Ms. Klein’s kvetch is that corporate branding is taking over her “space.” Her space is radical politics.

Have you noticed that corporate advertising seems to celebrate vulgar, depressing, corrupt, stupid or perverted culture? Ghetto life, AIDS, Che, identity politics – the causes that Ms. Klein and other activists labored over for so long have been taken up into corporate advertising themes.

Tommy Hilfiger, for example, used to be a brand of “Young Republican clothing.” But Hilfiger found he could sell more pants by “selling white youth on their fetishization of black style, and black youth on their fetishization of white wealth.” So powerful was the allure of the ghetto and the process of borrowing the trash styles of urban black youth that Nike had a word for it: ‘bro-ing.’

Ghetto cool… then gay cool… AIDS cool… revolutionary cool… Diesel had an ad showing two sailors kissing. A soda company uses a photo of Che to sell its “Revolution” brand drink. How could the real radicals keep up?

“Let’s face it,” said an AIDS activist, “when you’re a story line on Friends, it’s hard to keep thinking you’re radical.”

But Ms. Klein has a suggestion fighting back against the brands. She calls it ‘culture jamming.’ Like painting mustaches on billboard figures, culture jamming – with ironical comment, ridicule and parody – gives radicals a way to take back the initiative. “This generation wants their brains back,” is how one activist put it.

But culture jamming works in both directions. One man in London’s crowd of revolutionaries wore a T- shirt with the following statement: “Completely Opposed to Something or Other.”

Your correspondent, in Madrid…

Bill Bonner
Madrid, Spain
May 4, 2001

*** “First-day pop” makes a triumphant return to the Wall Street lexicon, thanks to yesterday’s IPO of Simplex Solutions Inc. Shares of the software and consulting services company “popped” 77% on their first day of trading – to $21.20 from the offer price of $12.00. It sure feels nice to know that the bear market is over for good.

*** Stocks took an overdue breather yesterday. The Nasdaq lost 74 points, and the Dow ended the day down 80 points.

*** Notwithstanding yesterday’s modest setback, stocks have been on a tear. The Nasdaq has tacked on more than 35% percent in less than one month.

*** Barron’s: “The public preference for stock is not only as marked as ever, but also the will to speculate is still a speculative factor not to be overlooked. The prompt return of huge speculation and the liberal manner in which earnings are again being discounted indicate that it will be difficult to quench the fires of stock market enthusiasm for long.”

*** Wait…dear reader, I’m misleading you…Barron’s did, in fact, write the preceding quote – but it did so on March 24, 1930, in response to the dramatic rally that ensued shortly after the 1929 crash. But that classic “sucker’s rally” ended just weeks after this quote appeared in Barron’s. And it was from that point that the long, devastating bear market in stocks actually began.

*** So now the question before us, as always, is whether yesterday’s modest retrenchment is merely the pause that refreshes – or the beginning of a fresh decline.

*** Certainly the stock market did not lack for reasons to sell off. First-time unemployment claims climbed to 421,000 in the week ended April 28 – the highest level in five years. And the National Association of Purchasing Management index fell to 47.1 in April, down from 50.3 in March – its first decline since being created in 1997.

*** “While businesses have been promptly responding to the earnings implosion,” writes Kurt Richebacher in his May report, “so far the consumer remains in denial.”

*** “The US consumer has not slowed any,” notes the Prudent Bear’s Chad Hudson. “Consumer spending rose 0.3% in March, and increased at an annualized rate of 3.1% for the first quarter, up from 2.8% in the fourth quarter. At least during March incomes rose 0.5% so the savings rate increased to -0.8%.”

*** Dr. Richebacher: “A resilient consumer is the great hope of those who are still venturing that a U.S. recession may be avoided. Don’t bet on it. Due to the inordinate availability of consumer credit since the 1920s, the American consumer plays a major role in the U.S. business cycle. He essentially makes booms bigger and longer, but also makes busts deeper and more pervasive. In the aftermath of the 1929 crash, debt-laden consumers sharply pulled back on spending. Far from offsetting any drop-off in business investment, the steep declines of both cumulated. We have no doubt that today’s consumer, who has negative savings and is far more debt-laden than his ancestor in the 1930s, has no choice financially but to follow suit in due time.”

*** Gold barely moved yesterday. The dollar hardly budged… and the euro held steady.

*** The Financial Times reports, “the Euro-zone’s manufacturing sector shrank in April for the first time in two years…but the ECB remained reluctant to make an early cut in interest rates.”

*** The Prudent Bear: A “lack of concern about inflation clearly separates the Federal Reserve and the ECB. Most of the world is siding with the Federal Reserve, including the majority of the members at the G7 Meeting. Just a day after the official statement said the world economic outlook was sound, Canada, France & Japan ganged up and called for a ‘timely monetary measure if necessary’ and that ‘waiting too long to ease could prove costly.’ The G7 also called for the US and Japan to utilize monetary policy to stimulate growth.

*** “The ECB has left rates at 4.75% for two years, while the rest of the world has cut rates, and some quite aggressively. The comparison between the ECB and the Fed has already begun. But, actually the two banks have very different economic conditions to manage. [Europe] has money supply growth of 5% and inflation running around 2.6%. The [US] has money supply growing at 11% and inflation of 3.5%.”

*** “I think you could make a case that inflation has accelerated,” says Fed Governor Robert Perry. But “is [it] a major concern for the future? I don’t think so.”

*** “Gold is the ancient store value,” Jim Grant told the Grant’s Spring Conference in Manhattan, again by way of Eric Fry. “But for the last 20 years, it’s been a wretched store of value. I remain an optimist nonetheless.” While stopping short of pronouncing “the bottom” in the gold market, Mr. Grant reportedly had a few kind words for mining company Franco Nevada.

*** Picking up the theme, Wayne Murdy, CEO of Newmont Mining, informed shareholders this week that his company remains an unabashed gold company – i.e., that he has no intention of increasing Newmont’s forward gold sales.

*** Fraud charges are making a comeback. A federal grand jury in New York indicted former Sotheby’s Holdings chairman, Alfred Taubman, for “international conspiracy.” Allegedly, Mr. Taubman’s auction house was in cahoots with Christie’s to fix auction prices. On Wall Street this practice is known as launching an IPO – alas, there it is legal.

*** Today is the 115-year anniversary of the Haymarket Square riots in Chicago. The riots began as a “labor demonstration” for the 8-hour workday – until someone exploded a bomb. Then, as now, ‘culture jamming’ has its methods, more below…

*** I’m in Madrid today, back in Paris this evening and the country over the weekend. Until Monday.

The Daily Reckoning