Cyber-Colt .45

We have a real treat in store for you today, dear reader. An exclusive! An alternative- media revolution has transformed America in the last half century…Washington insider Richard Viguerie explores a menage a trois with Mike Drudge, Hillary Clinton and Monica Lewinsky as the principals…

On January 17, 1998, the Internet made its debut as a world-shaking tool of political communication. That was the day Matt Drudge used his Web site to introduce Monica Lewinsky to the world as the White House lover of President Bill Clinton. Drudge’s expose started a chain of events that culminated in the president’s impeachment, and in the process, he placed the spotlight on an irrevocable change in the balance of power between the ordinary citizen and the political establishment.

Monica wasn’t the beginning of the Internet’s involvement in politics, by any means. Drudge himself had been covering all the Clinton scandals for four years. Jim Robinson’s was the leading right-wing political site on the Web, and in 1997, Joseph and Elizabeth Farah started WorldNetDaily, the first independent newspaper on the Web. But in 1998, the Internet was just beginning to penetrate mainstream America, and print media – notably The American Spectator – had been getting most of the spotlight for Clinton exposes. Monica changed all that.

Drudge grew up in Takoma Park, Md., a politically far-left suburb of Washington, D.C., also known as "the People’s Republic of Takoma Park." He graduated 325th in his high school class of 350, but loved current events and was hooked on talk radio. "What a great place, Washington, D.C., to grow up in," he later reminisced. "I used to walk these streets as an aimless teen, young adult, walk by ABC News over on DeSales, daydream; stare up at The Washington Post newsroom over on 15th Street, look up longingly, knowing I’d never get in…"

Matt Drudge: Paydirt

Instead, he headed west to Hollywood and became manager of the gift shop at CBS Studios. He volunteered in the mailroom from time to time. "I hit pay dirt when I discovered that the trash cans in the Xerox room at Television City were stuffed each morning with overnight Nielsen ratings, information gold." He sensed the thrill of a scoop, but didn’t know what to do with his inside knowledge.

Then his father bought him a computer, hoping it might spark a desire for a more promising career. Matt was a quick learn, and within two months he was posting his gossipy scoops on Usenet and AOL and doing some writing for Wired magazine. "I collected a few e-mail addresses of interest," he later recalled. "People had suggested I start a mailing list, so I collected the e-mails and set up a list called ‘The Drudge Report.’ One reader turned into five, then turned into 100. And faster than you could say ‘I never had sex with that woman’ it was 1,000 – 5,000 – 100,000 people. The ensuing Web site practically launched itself."

"Lewinsky almost fell through the cracks," says Drudge. "It was a stray e-mail that came in. You just go for it." The results were far beyond anything he expected. "I had something like 400,000 visits that Saturday when that thing broke." For three days he had the story to himself, and the whole world was clicking in. "I barricaded myself in the apartment. I was terrified, because from my Hollywood apartment, a story of this magnitude was being born. I remember I teared up when I hit the ‘Enter’ button on that one that night, because I said, ‘My life won’t be the same after this.’ And it turned out to be right." Then Rush Limbaugh read his entire reports over the air; and then finally the establishment media acknowledged the story, which they had known about for weeks but had hushed up.

Speaking at the National Press Club a few months later, Drudge asked both himself and all those credentialed reporters listening to him, "How did a story like Monica Lewinsky break out of a Hollywood apartment? What does that say about the Washington press corps? It just baffles me. I haven’t come up with answers on that."

Throughout this book, we have shown how the new and alternative media empower the individual citizen by bypassing the gatekeepers of the media establishment, those editors and news anchors who want to decide exactly what news you should be allowed to read or hear or see. Direct mail, the fax machine, talk radio, cable television – each has given you stories and viewpoints you never would have gotten from Dan Rather or The New York Times.

Matt Drudge:  Gatekeepers

These new and alternative media have also given you new ways to communicate your wishes directly to other citizens and the politicians who are supposed to represent you, again by bypassing the gatekeepers. In this case, the gatekeeper may be a union chief who wants Congress to believe all union members think alike on a piece of legislation, when you know it isn’t true. Or a Republican lobbyist who wants the Congress to cave in on an issue you consider critical. Thanks to the new and alternative media, you now have ways to be heard.

None of these new and alternative media, however, empower you directly, as an individual, quite as effectively and forcefully as the Internet does. Your modem is your equalizer, your cyber-Colt .45. You have a direct line, with no intermediaries or filters, to any publication or Web site around the world, to other citizens who share your interests and viewpoints, to government bureaucrats, to your political representatives, to the stores you want to do business with, to people who want to buy something you’re trying to unload – you name it.

It is to Matt Drudge’s credit that he fully understands all this – the Big Picture beyond his own Web site. He probably sensed it from the moment he sat down in front of that keyboard and monitor his dad bought him. To see how fully he comprehends this, take a look at his address before the National Press Club on June 2, 1998, and his sharp answers to the contemptuous questions presented to him afterward.

"What’s going on here?" he asked rhetorically. "Well, clearly there is a hunger for unedited information, absent corporate considerations." Zap! Right off the top he slams the ball back at all those reporters facing him, who, with all their credentials and college degrees and corporate conglomerate bosses, let this gift shop clerk in Hollywood scoop them on the biggest story of the decade.

"We have entered an era vibrating with the din of small voices," he continued. "Every citizen can be a reporter, can take on the powers that be. The difference between the Internet [and] television and radio, magazines, newspapers is the two-way communication. The Net gives as much voice to a 31-year-old computer geek like me as to a CEO or speaker of the house. We all become equal."

"And you would be amazed what the ordinary guy knows," he added.

Then he rubbed their noses in it, citing major stories other than Monica that he broke in The Drudge Report. And all the links on his Web site – another great innovation of the Internet era: "This marks the first time that an individual has access to the news wires outside of the newsroom. You get to read all the news from The Associated Press, UPI, Reuters, to the more arcane Agence France- Presse and the Xinhua. I’m a personal fan of the Xinhua."

Matt Drudge: Saving News

Drudge continued:

"And time was only newsrooms had access to the full pictures of the day’s events, but now any citizen does. We get to see the kinds of cuts that are made for all kinds of reasons, endless layers of editors with endless agendas changing bits and pieces, so by the time the newspaper hits your welcome mat, it had no meaning. Now, with a modem, anyone can follow the world and report on the world – no middle man, no big brother."

(Later interviewed by WorldNetDaily’s Geoff Metcalf, Drudge asserted, "We don’t need the gatekeepers: the Ted Koppels, the Peter Jennings, the Dan Rathers, Tom Brokaw. They’re all the same anyway…you don’t need these gatekeepers in Washington, who are basically just feeding off each other and bouncing things off of each other.")

Drudge acknowledges that each new medium scares the devil out of the old media. But, he assured his National Press Club audience, "The Internet is going to save the news business. I envision a future where there’ll be 300 million reporters, where anyone from anywhere can report for any reason. It’s freedom of participation absolutely realized."

It’s not just the media-establishment types who worry about the lack of gatekeepers in the new media. That worries members of the political establishment, too. The new media jeopardize their cozy arrangement with reporters who know their place.

Speaking to the Wednesday Morning Club in Los Angeles, a series of talks arranged by David Horowitz, Drudge told how he tried to remain civil with first lady Hillary Clinton, to no avail: "I tipped my hat to her at the White House Correspondents Dinner a couple of months ago and got quite a dirty look."

Matt drudge: The Millennium Project

One of Hillary Clinton’s functions as co-president was to handle the White House Millennium Project. At a press briefing on the Millennium Project, she was asked her opinions about the Internet, and she came across as far less enthusiastic than, say, the vice president at that time.

Stumbling for words at times, she rambled on about how "We are all going to have to rethink how we deal with this," whatever that means. "As exciting as these new developments [the Internet] are…there are a number of serious issues without any kind of editing function or gate keeping function…[‘I wonder who she was referring to,’ Drudge quipped.] I mean, it is just beyond imagination what can be disseminated. So I think we’re going to have to really worry about this…"

"Sounds like you favor regulation," someone asked.

"I don’t know what I’m in favor of," she replied. (Actually, her actions as first lady tell us a lot about what she’d like to do with the Internet.)

The first lady continued: "I don’t have any idea what we’re going to do legally, regulatorily, technologically – I don’t have a clue. But I do think we always have to keep competing interests in balance…anytime an individual or an institution or an invention leaps so far out ahead of that balance and throws a system, whatever it might be – political, economic, technological – out of balance, you’ve got a problem…[and] it can lead to all kinds of bad outcomes…"

To this amazing example of Ludditism, Matt Drudge responded: "Would she have said the same thing about Ben Franklin or Thomas Edison or Henry Ford or Einstein? They all leapt so far ahead out that they shook the balance. No, I say to these people, faster, not slower. Create. Let your mind flow. Let the imagination take over. And if technology has finally caught up with individual liberty, why would anyone who loves freedom want to rethink that?"

Summing up their opposite reactions to the Internet, Drudge avowed: "The first lady says we need to rethink it. I say we need to embrace it."


Richard A. Viguerie
for The Daily Reckoning
August 26, 2004

We take it back: Maybe the Chinese aren’t so dumb, after all.

"Reversion to the mean," our friend Tim Price reminded us earlier this week, is the fundamental rule of all investing. When things get out of whack, they tend to go back to where they tend to be, in other words.

Never before have trade deficits been more out of balance than they are now. The difference between what America imports and what the rest of the world – notably Asia – exports to her equals 2.5% of the entire world’s GDP. America imports; Asia exports. America buys; Asia sells. America consumes; Asia produces. America spends money; Asia makes it. America squanders her fortune; Asia takes it up.

Never before has any major nation been willing to ruin itself at such a rapid rate. This year alone, approximately $600 billion in U.S. assets will be transferred to foreign hands – mostly Asian. The most important of those assets are U.S. Treasury notes and bonds, which represent a claim against the nation.

Treasurys are denominated in U.S. dollars – over which no one has more control than the United States itself. Since the custodians of the currency seemed hellbent on destroying the dollar, we naturally assumed that anyone who would take an IOU from the U.S. government, denominated in U.S. dollars…paying interest at a rate scarcely above the inflation rate…was a fool.

Of course, we always thought that the people issuing the Treasurys – thus squandering the wealth built up by generations of Americans – were even bigger fools.

Now we revise our opinion of the foreigners…and redouble our bad opinion of ourselves. This year, for example, nearly a quarter of a trillion dollars worth of U.S. assets leaves America and finds a new home in China. Mostly U.S. Treasurys. If the dollar were to plummet or inflation rates to soar, the Chinese would be chagrined and annoyed.

But the dollar shows few signs of imminent decline. What’s more, instead of heading into an inflationary period, the entire world economy seems to be sinking. Growth rates are falling. The price of oil, after scaring everyone, is now dropping. Bonds are holding up quite well. Gold is stuck at $400.

What if the world economy – led by the U.S. – really were slipping into a long, slow, soft decline, as Addison and I guessed in our (best-selling, riveting, delightful, insightful…choose your own adjective) book? Well, it would mean that the Chinese would have an opportunity to redeem their U.S. Treasurys at high prices…against more tangible U.S. assets – factories, buildings, land, gold, resources, farms – at low ones!

Oh, those wily, inscrutable Asians! Soon they will own a big part of the United States. Warren Buffett complains about it already. "Squanderville," he calls us. At the present rate…it won’t take many years before the Asians own more of America than we own…

But we Americans aren’t so stupid. In exchange for our factories, companies, businesses, land, buildings and other productive assets, we will have gotten nifty DVD players…and those thin-screened TVs…and nice automobiles…

What delicious irony…what a marvelous comeuppance…what fitter "reversion" to a mean, mean world?! After buying Manhattan from the savages for trinkets…we now sell it to Asians – and get trinkets in return! Oh…we feel Nature’s dagger deep in our own soft flesh.

Dear reader…we have some advice. Learn to say "please" and "thank you" in Chinese. You may need it. [Ed. Note: See the irony for yourself. Come to China with Addison Wiggin! He’s decided to take a select group of investors to meet with some of China’s most innovative business leaders in November.

And now, the U.S.-based crew with more news:


Eric Fry, reporting from the land of surf dudes and volleyball babes….

– Here in Laguna Beach, Calif., the brilliant sunshine glistens all day long off of the exotic cars that roll like glossy waves along Pacific Coast Highway. The same brilliant sunshine also illumines a postcard-perfect array of beach town scenes – tanned 20-something females playing volleyball, as well as swarthy 40-something males driving Ferrari convertibles. Laguna Beach is prosperity incarnate. No sign of economic distress is evident anywhere.

– But we would imagine that the folks here in this pretty Pacific hamlet are living just as far above their means – if not farther – than folks in Lubbock, Texas. And we would also imagine that Laguna residents are just as certain as Lubbock residents – if not more so – that home prices will continue rising. Lastly, we would imagine that folks here in the Golden State believe in "stocks for the long haul." In other words, if you strip away their perfect tans, flawless bodies and vegan diets, Laguna Beach residents are no different from most Americans.

– For the moment, the nation’s universal faith in stocks for the long haul seems like a worthwhile belief. The stock market has bounced back very nicely from its midsummer swoon and seems ready and able to continue moving higher. The Dow Jones Industrial Average jumped 83 points yesterday, to 10,182, while the Nasdaq Composite rose 1.3%, to 1,861. We wouldn’t want to quarrel with the stock market’s recent success, but we suspect that the current rally is little more than an "oversold bounce." After a punishing July and early August, the stock market was more deserving of a break than a browbeaten husband.

– The stock market’s newfound vitality is no mystery; one need look no further than the oil market, where the price of crude oil is slumping. Falling oil prices mean falling price pressures throughout the economy, which mean strong stock prices…more or less.

– Yesterday, crude for October delivery tumbled $1.66, to $43.55, while gasoline prices fell as much as 6% on the New York Mercantile Exchange. And once again, Wall Street analysts were falling all over one another to proclaim the end of the oil bull market. Maybe so; but we’re still inclined to trust the oil market more than Wall Street analysts.

– In other words, the price of crude oil may well drop below $40 a barrel, but we suspect that it will not stay down there for long…so we should not be surprised if crude oil resumes its stunning advance, nor should we be surprised if stock prices resume their decline if/as/when oil mounts a new charge toward $50 a barrel.

– The stock market cannot always be as agreeable as a Laguna Beach day, especially not when the dark clouds of rising oil prices gather overhead.


Bill Bonner, back in Ouzilly…

*** Herb Greenberg:

"Yes, the market could very well go higher in coming weeks, especially if there’s any relief with oil prices.

"But it’s just as likely to go lower – not just in coming weeks, but after the election, as well.

"Interest rates aren’t going lower. (And if they are, we’re really screwed.) They’re going higher, but the same talking heads who reminded investors to follow the Fed when rates were falling are now finding every reason known to man to ignore their very own advice as rates are rising.

"Inflation isn’t going away, and it’s worse than the government says. For example, the Bureau of Labor Statistics said that for the quarter ended in July, prices of food and beverages rose at a compounded annual rate of around 5- 5.5%. Yet Sysco, the big food distributor, says that inflation last quarter, "as measured by the rise in our cost of goods," was 8%.

"Here in San Diego, as housing prices continue to rise, the affordability index on housing is now at an all-time low of 11%; that means only 11% of households here can afford to pay the $565,030 for a median-priced home. (This is going to end badly, I tell ya, badly! The house next door to me just sold for 20% more than I paid a year ago. But don’t worry, it’s not a bubble.)

"Then there’s oil.

"It’s really that simple."

*** And a Daily Reckoning reader:

"Regarding your theory about the stock market [that, over time, Wall Street is a capital destroyer…that the typical investor loses money, rather than make it], you perhaps have heard the story about Lucky Luciano (Richard Ney recounts one version of it in his book on the specialist). "Around the time of his deportation to Italy, Lucky Luciano granted an interview in which he described a visit to the floor of the New York Stock Exchange. When the operations of floor specialists had been explained to him, he said he suddenly realized ‘I’d joined the wrong mob.’ (Other versions have it as ‘I got into the wrong racket.’) *** And another reader:

"Your ranting and raving about our ‘pre-emptive’ war in Iraq is rather small minded. Yes, ostensibly we invaded Iraq under the guise of this policy but Wahhabism is the real threat to America’s physical security, as well as to the oil supply of the region, and thus the world. We just can’t say that directly without upsetting the billion or so Muslims in the world. We all must remember that the United States of America did not attack first. If South African criminals backed by an elaborate mafia came to Germany and murdered 3,000 people and the South African government did not cooperate to put a stop to the mafia, then I would say let the South Africans have at it. Your argument is weak and stupid.

"Most people know that our real intention is to secure bases in the Middle East to protect the world oil supplies as well as to pressure the Saudis to do something about the troublemakers in their kingdom. I have no problem with the USMC using radical Arabs for target practice. Besides, several justifications already existed before the invasion. First, Saddam violated every single UN resolution that came out of Gulf War I. Second, Saddam deserved what he got. Last, you could use the excuse of WMDs (which were probably transported to Syria and sit there now). The United States of America acted. That is something that would never happen under the auspices of the UN.

"Furthermore, the French, Germans and Russians were too worried about losing out economically should the United States take over Iraq. That is the ONLY reason that we did not get NATO backing on this. Politics is a dirty game filled with chicanery on all sides. I was against what G.W. did at first, but now I have come to the conclusion to support his action in Iraq. My only concern is that it will probably bankrupt us."

*** And yet another reader:

"You’re snobs, the whole bunch of you," Jules had charged.

Well, Jules, I couldn’t agree with you more.

Wow, how has America survived all this time without the comments and helpful criticisms of the Bonner family?

I was in Paris years ago on tour, and we were at a restaurant. One of the ladies in our group ordered water, and she was brought bottled water. She slammed the bottle down on the table and yelled, "I wanted WAAATER." I almost slid under the table in embarrassment and was truly ashamed at that moment to be an American. This was the way water was served in Paris, and I thought she had damned well better get used to it and keep her mouth shut. It is downright RUDE to question the culture of others. I was there to observe European culture and embrace the differences, not ridicule them. And even though I would have loved a Denny’s breakfast, I made do with my croissant and coffee and kept MY mouth shut.

The Daily Reckoning