Corporate Heights

Today’s guest essay is taken from our latest book, Mobs, Messiahs and Markets, written with co-author Lila Rajiva.

“Top business leaders have become like sports heroes, but without the talent. You need not have any real knowledge of the business you are getting into, or, as Bernie Ebbers demonstrated, any real knowledge about business of any sort. What will get you a job as a leader in the corporate world is the same thing that will get you a woman in the mating game-outsize confidence.

“Human life-apart from the obvious physical aspects-is largely about what scientists call ‘impression management.’ A man with a good line of talk and a confident air about him gets almost anything he wants, and that includes the CEO job at a major U.S. corporation.”

Bill Bonner
September 3, 2007

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Corporate Heights

And now, we would usually turn to Short Fuse to comment on the happenings in the markets, but alas, the markets are closed today, so you are stuck with our ramblings for a bit longer than usual, dear reader…


Last Thursday, we journeyed to the west coast of Scotland…to a wedding. Once you are in Europe everything is pretty close, so it took us no time at all to get up to Edinburgh. From there, we rented a car and drove on the wrong side of the road up to an inn called Cromlix House. The place was made of dark granite and set in amongst the trees. From the outside, it looked like most other great Scottish houses – grim. It would have made a good reform school…or a place to keep the criminally insane. On the inside, it brightened up with Scottish tartans on the chairs…and tartan patterns on the carpet…and tartan skirts on the young girls who served dinner. There were so many conflicting tartans, it put us on edge. Each clan, of course, is supposed to have its own tartan…each with different colors and patterns. The Mackenzies, the MacDonalds, the Munros, the MacLoughlins…all in one room. If a MacFarlane had showed up in a plaid, we might have gone criminally insane too.

But the place was warm, the girls were delightful, and the food was hearty.

The next day, we drove for another three hours across Scotland until we saw the shimmering, shiny sea off the west coast, beyond Fort William. Our road wandered uphill and down…and followed the contours of the coast until we came upon the church – a Scottish Episcopal church, hidden in a glen. The church was also built of grey stone…but the dark stone was relieved by the uplifted roof and arched windows.

Most of the guests were already there when we arrived. About half the men wore kilts. A few wore them with sweaters or ordinary jackets. The others had short, ornate jackets of dark blue, with gold buttons…often with medals or other insignia on them. Women wore the same kind of dresses you’d find in any other part of the civilized world.

We sat down. A minute later, the bagpipes, played by two burly Scots, announced the arrival of the bride.

The priest wore a kilt too…hidden beneath his robe. He had an accent, but not a Scottish one. Instead, he had a London accent…a cockney accent. Later we discovered that he had come up from London to marry a Scottish woman and had lived in the area for 20 years. Now in his late 50s or 60s…he had worked at a number of occupations – including the military – before entering the clergy.

The church service was followed by a reception at another great house in the Scottish style – severe on the outside, warm and inviting in the interior. The house had once been a hunting lodge; it was recently renovated and is now available for rent. Antlers on the walls…paneled dining rooms and salons…overstuffed chairs around a large fireplace…more Scottish tartans…it would be a delightful place to take afternoon tea or murder someone.

The other guests were an interesting mix of old Scottish families and Americans. A mutual friend from Latin America was there; we discovered that his wife is related to other friends in Paris. It is a small world, sometimes. A couple from New Jersey…the bride’s family from Michigan…people up from London…the groom’s family from Aberdeenshire – it was a charming mix.

Dinner was served in a big tent. Speeches were made…toasts were offered…wedding cake was passed around.

“You can’t talk about it in this group,” said a Scot, now living in Italy, “but a lot of this Scottish stuff is not as ancient and venerable as we make out. A lot of it was invented in the 19th century. The tartans, for example. Yes, the Scots world colorful plaids…but they were rough fabrics colored by natural dyes. The intricately-colored plaids you see today – each one different for each different clan – were created, probably for tourists, in the Victorian era.

“And I’ll tell you something else…around here they will all talk about ‘going back to ’45’…they mean going back to the way things were in 1745, before the Scots were conquered by the English. But thank God Bonny Prince Charlie was beaten…or Scotland would be even more backward that it is now…”

And then, the band came in. A tall boy brought out chairs and began attaching electronic cables. Then, a short boy, who looked as though he couldn’t be more than 15, brought a bagpipe. And another boy, plump, round-faced, with straight black hair and a look of Fatty Arbuckle about him, carried in an accordion.

The tables were cleared away…the band started up…and the bride and groom took the floor. The band played traditional Scottish music. We might have expected it from a group of geezers, preserving the old ways. But this was a group of young lads – playing remarkably well.

“Oh…he’s a Macaulay,” explained a man in a kilt, talking about the bagpipe player. “The Macaulays have been playing the pipes for 600 years. That’s why he plays so well.”

“Now we must organize some reels…” said an attractive woman with dark hair and an English accent.

Your author has never been much of a dancer. But if he has one good quality, it is that he does not embarrass easily. He has danced the tango, the bosa nova, the hully gully, the twist, the funky chicken and the waltz. But until last week, he had never danced a Scottish reel.

A man in a kilt and a brown sweater took a young blond woman by the hand and showed us how to do it. They faced one another…swirled around, arm in arm…then, each turned to the next person in line….saluted with a quick jerk of the feet and hips…and then swirled them around too…and so on up the line…whirling around with hands in the air and arms locked together.

It looked easy enough. But when the couple from New Jersey and the couple from Ouzilly set to it, the whole group soon fell into confusion.

We left the party after midnight. In the morning, we came down to breakfast and found a man in a kilt on the pool table. We took his pulse to make sure he was still alive. Another was taking his rest under the dining room table. Two feet poked out from under the table cloth.

“Make sure he’s still breathing,” said the woman who organized the dancing. A mischievous child kicked his foot. He groaned.

“Oh…it’s okay…let him sleep,” she said.

“After you left, the party really got going,” she explained.


Bill Bonner
The Daily Reckoning

Houses, horses, and husbands rarely get better with age. People often marry with the hope that time will improve their spouse. “When he matures,” the poor girl thinks to herself, “he won’t be such an oaf. He’ll acquire money and manners as he grows up.”

The horse buyer, too, hopes that his horse can be trained…refined


And the homeowner is often sure his house will become an object of greater pride and joy as others come to appreciate it more and its price rises.

Alas…all are usually disappointed.

Reluctantly, we’ve come back to London…and back to reckoning.

The summer is over.

And what do we have to reckon with today? Several things.

We check the latest market information. What has happened since we were gone? Not much. Stocks seem to have come back a bit. Confidence has been restored. All it took was a cut in the discount rate…and a few hundred billion of extra liquidity. See how easy it is!

“What impressed me,” said Elizabeth over the weekend, “was how fast I changed my own opinion about owning property. When I bought that lot in Canada, I don’t know what I was thinking…but it never occurred to me that I might lose money. That’s the thing; I didn’t think about it…I just knew property was a good deal. But when I realized that I couldn’t sell it, it was as if the sky fell down on me. Maybe I will be able to sell it eventually, but now I just have to pay property taxes on it. It went from being a plus to a minus in my mind almost overnight…

“And I wonder how much of our lives are like that…we make assumptions about things without realizing we’re making them. And right now, we’re all assuming things will continue more or less in the same direction…with no serious problems to worry about. We assume we’ll have money to spend. And we assume we’ll have the liberty to spend it. We can travel almost anywhere. Our assets are generally becoming more valuable. But I wonder if we aren’t living through a rare stage in history…and whether…one day…we’re going to wake up and see things entirely differently…and all of a sudden things we thought were assets – like that lot in Canada – turn out to be liabilities.

“I’m reading a biography of Madame de Pompadour. In a way, the 18th century must have been a lot like our time. People moved around a lot. Not the poor people, but the rich. And they enjoyed a remarkable quality of life…for a while. But then came the French Revolution…and then the Napoleonic wars. Life was not so agreeable. And then, after Waterloo, Europe was at peace for a long time again…and it was very prosperous. And then came WWI and the Russian revolution…and then the stock market crash and the Great Depression. I guess what I am saying is that these episodes of peace and prosperity don’t last indefinitely…but when they are here…we take it for granted that they will continue…”

Most of the time, they do continue. And the longer they continue…the longer the bailouts and baling twine hold things together…the more confident people become.

The perverse work of the financial markets is to set up investors so they lose as much money as possible. That requires confidence.

In this, of course, they are aided and abetted by the usual assortment of conmen, Congressmen and incompetents. George W. Bush announced last week that the Federal Housing Administration would come to the aid of distressed mortgage payers. The Federal Reserve, of course, recently flew to the aid of distressed speculators. And the financial industry has bent over backwards for the last ten years – helping investors get themselves into positions from which it will be hard to get out without great losses. During this entire period, it was hard to get through a single day without someone offering to lend you money. Pity the poor people who took the bait.

We don’t know anymore about what will happen than we did before our vacation began. We spent the time in contemplation and meditation, of course. But, generally, we were contemplating how to paint a shutter or meditating on how to build a stone archway. Neither the contemplating nor the meditating took us any closer to solving the mysteries of markets…but at least our shutters aren’t rusting…

The Daily Reckoning