Extraordinarily Popular Headlines

In school, we remember being encouraged to watch the news on television so we’d be able to discuss current events. Our teachers were doing their jobs, indoctrinating another crop of world improvers. Today’s issue finds Bill Bonner exploring whether the news sells papers, or if the papers sell news. Enjoy…

"In America," said Gore Vidal, "half the population doesn’t read the paper. Clearly, they are the intelligent half."

Here in London, the newspapers are robust and shameless. We recall the greatest headline ever written in the tabloid press, after a minor figure in the Tory Party, Boris Johnson, was caught in a lurid peccadillo. The headline – over a photo of the woman – ran:

"Bonking Boris Made Me Pregnant."

Bonking Boris is still around, and still editing the influential "Spectator," which, in the interests of full disclosure and partial disparagement, recently published an article by your editor. Still around too, are the newspaper headlines that shout the latest "news" as though they were announcing the next match at a World Wide Wrasslin’ hoedown. We look through yesterday’s newspaper headlines at random to share them with you:

"NHS CUTS PUT YOUR CHILDREN IN DANGER," says the front page of the Daily Express.

"Why, why, why does Sir [Sex Bomb] Tom [Jones] have darker hair than his son?" readers apparently want to know on page three.

Turn the page – and read about the "Bully chef [who] ran around the kitchen in his underpants." Accompanying the headline is not only a photo of the chef with his pants on, but the waitress who got 124,000 pounds in a sexual harassment settlement.

The Sun, meanwhile, takes the high road, with its lead: "NO PEACE…" Child killers Ian Huntley and Roy Whiting were quizzed in jail yesterday after sick ‘sorry’ notes and roses were left on their victims’ graves. The stunt brought new torment to the families…etc.

"What sick individual would want to desecrate the graves of our girls?"

We turn the page and…whoa! Nicola, 22, from Croydon, seems to have lost her shirt…and her mind. She likes to go to Madame Tussaud’s new wax museum, we are told, because there’s a statue of Prince Harry there "and now I can go and see him whenever I like," she says. Lucky Prince Harry.

Further on in the paper, we find this jewel: "I SHOT HUBBY DEAD IN SEXY SHANIA DANCE."

The Sun felt it was important to tell readers about the bully chef too, but took a different angle: "124,000 Pounds for Bar Girl’s Sex Hell."

Over at the Daily Mirror is the tale of the "SCHOOLBOY VICTIM OF SICK CYBERBULLIES." "A heartbroken schoolboy told last night of the misery he endured as cruel yobs [English for hoodlums] taunted and insulted him on a vile website."

Then, on page seven, is timely and important news: "Victoria [formerly Posh Spice] to reveal her fashion secrets in glossy beauty bible."

Of course, you say…this is just the scurrilous tabloid press. What about the serious papers? So, we pick up the Times and find bigger words, true, but also the front-page story "Betrayal of justice," as rapists walk free. Hundreds of rapists are escaping justice because of the continuing confusion over the issue of consent and a court environment hostile to victims."

The story continues on page seven with: "What I went through in court was worse than the crime itself."

And on page 11, the venerable Times took up the same sorry story of the bully cook. The Times thinks the important detail is not that he ran around in his underwear, but the clientele for whom he baked his soufflés: "Chef to the stars unmasked as sex-obsessed bully."

Even in the responsible English press, the reader gets a heavy wallop of sex, class envy, celebrities, and murder, which is why the English have so many newspapers. They are entertaining. "It’s show business," says an English journalist friend.

But in the United States, France, and Spain, journalists guard their estate more carefully and take their trade more pretentiously. Every one of them believes himself practically a public servant, helping to inform the citizenry on the important matters that affect their lives. What they are really doing, of course, is little different from what the protesting, middle-class French students are doing – trying to inflate and protect their own status. But self-awareness is not a trait taught in journalism school.

People feel the need to be "informed." They read the paper as if it were a kind of daily hygiene – like brushing their teeth or dumping out the ashtray. Good citizens must keep up with things, they tell themselves. In school, we remember being encouraged to watch the news on television so we’d be able to discuss current events. Our teachers were doing their jobs, indoctrinating another crop of world improvers.

Even the word "newspaper" is a conceit, if not a fraud. It pretends that the news industry is a clean pane of glass through which we look out at the spectacle of the world’s events. But it is not a pane of glass at all; it is a microscope in which particular events are magnified and distorted. "News" that neither encourages journalistic prejudices nor inflates the journal’s profits, is invisible.

The British press focuses on "events" that are tawdry and puerile. The press lords must think the typical reader is a lout – if not before he begins reading the newspapers, soon after.

The American press, alas, is more earnest. That is why hardly a day passes without a story about Israel on the front page of the International Herald Tribune, no matter how trivial or irrelevant. "Israelis fail to find strong center," was the International Herald Tribune’s front-page news yesterday. We have no reason to think that events in Israel are always more important than those in Indonesia or Argentina. But, the paper seems to have a rule: Israel gets a cover story almost each and every day.

We are not so naïve as to fail to understand why: the New York Times, owner of the International Herald Tribune, knows its market. They are in showbiz, too. In their theatre, Israel plays a central role. Maybe what happens to Israel is important to New Yorkers, as say, what happens to Ireland might be important to Bostonians. We don’t know, but news, like sausage, is not news until it is run through the grinder and is mixed with the media’s magical herbs, preservatives, and special seasonings. Like sausages, you can only take the papers seriously when you don’t know what is in them.

This story from the London Times was nowhere to be found in the International Herald Tribune:"Expose on Jewish role in US policy is disowned."

"After a furious outcry from prominent American Jews," the report tells us, Harvard has withdrawn its support from a study done by one of its own professors showing how Jews affect U.S. foreign policy. The poor man who wrote the report, Professor Stephen Walt, must feel like he’s picked up a hand grenade. He was carefully examining the U.S. political scene to see how it worked, when the thing went off in his face. According to the Times report, he’s been kicked off the job as academic dean of the John F. Kennedy School of Government as a result:

"No one disputes that the Jewish lobby is an influential force in U.S. politics and that the American Israel Public Affairs Committee (AIPAC) is one of the most powerful organizations in Washington. AIPAC is described in the report as ‘a de factor agent of a foreign government [that] has a stranglehold on the U.S. Congress.’

"Pressure from Israel and the [Jewish] lobby," the report continues, "was not only a factor behind the decision to attack Iraq in March 2003, but it was critical…the war was motivated in good part by a desire to make Israel more secure."

At any given moment, people are committing murder, mayhem, and elections all over the globe, but it is the "news" from Israel that is the news that counts – in the New York Times and the International Herald Tribune at any rate. After a lifetime of reading about it, even non-Jews begin to care – which is fine by us. We only point it out to mock the "news" itself. It is not "news" that sells papers, but papers that sell news. Every headline is written by a hack with his own dog in the fight.

Sometimes the papers sell news that is so far removed from the actual events that even they are eventually embarrassed.

"Network of pedophiles: Searchers at Outreau look for the body of a little girl," was the headline in Le Monde. "The police began searching, Thursday, the 10th of January, in the gardens of the working class section of Outreau, near Boulogne-sur-Mer, for the body of a young victim of a Franco-Belgian pedophile network."

At least Le Monde was fairly reserved about it. The rest of the press was howling in all caps about the gruesome details. Not only was the poor little girl tortured, raped, and murdered, it seemed like half the town was in on it.

Sexual orgies…bizarre rituals…confessions…breakdowns…first there are a couple of adults charged and then, the papers and the local prosecutor got their blood up. Then, a taxi driver…a baker and his wife…a priest! Boy have we got a story now.Five, 10 – the list of pedophiles was beginning to look like the phonebook.

And why not? The child shrinks were on the case, too. They couldn’t believe the kids didn’t know or wouldn’t say what was really going on. They encouraged the kids to rat out their parents, their neighbors, their priests, and their guardians. They cajoled them. They pressured them. They wanted them to remember – to think hard. "Is it possible that someone put his hand on you? Wouldn’t you like to tell us something? No? Try harder…"

Finally, the kids played along.

"You say a ‘grand’ [tall] man did something to you?" Believe it or not, the investigators went to the phone book, found a man whose name was "LeGrand" and had him arrested.

The prosecutor was a fool. But behind him was such a strong, foul wind from the news media, he could barely keep his feet on the ground. Every day brought fresh gusts:"Pedophile Films Found in Belgium," "Pedophile Ring Arrested," "New Arrests of Leading Citizens." The headlines alone practically had the accused dangling from the gallows, even before any formal charges were filed.

The media wallowed on with new, dazzling details: "18 children…now it is certain…have been the victims of sexual abuse, by their parents, by their neighbors, and by their friends…The children’s testimony was sufficiently precise and detailed as to sweep away all doubt and eliminate any possibility of manipulation." Prominent figures were "recognized in the photos," averred the scribes confidently.

Over and over again, the press referred to the "pedophile ring" as if it were a fact as established as gravity. The pedophiles raped and murdered. Hadn’t practically every paper in the country said so? Pretty soon, people began to believe that not only it was true…it was ubiquitous. "Things like that, it happens all the time," said a lawyer to the TV cameras, gravely.

In fact, it never happened…even once.

That didn’t stop the criminal justice system. Like Janet Reno, the prosecutor became a stooge for the press – and the mob. Someone – anyone – had to go to jail for such a crime. In this case, 18 people did. Many of them served years in jail; three of them attempted suicide…one succeeded.

And then, the entire Affaire Outreau imploded: the main accusers recanted. They admitted that they had made the whole thing up. There was no pedophile ring. There was no little girl who had been murdered. There was no orgy of rape and murder. It was all a lie. The accused were innocent.

The government opened the cells, apologized, and gave each of the wrongly accused inmates over $1 million in indemnity.

But the hacks? From them, hardly a word of contrition or regret was heard. As far as their own role was concerned, they seemed to have been afflicted suddenly with a case of collective amnesia. Instead, out came new headlines: "Judicial Scandal," announced Le Monde. "Lives Ruined," pronounced another. And then, Le Monde deigned to bend its head: "A Media Tempest Turns into a Judicial Shipwreck," it noted.

The gusts keep coming…

Bill Bonner
The Daily Reckoning
March 31, 2006

Editor’s Note: Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of The Wall Street Journal best seller Financial Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley & Sons).

In Bonner and Wiggin’s follow-up book, Empire of Debt: The Rise of an Epic Financial Crisis, they wield their sardonic brand of humor to expose the nation for what it really is – an empire built on delusions. Daily Reckoning readers can buy their copy of Empire of Debt at a discount – just click on the link below:

"Now Perhaps Someone Will Listen!"

Dark matters…

Today, we have some advice. It is no different from the advice we have given many times before, but today we give it with special urgency.

We have been reading reports of "Dark Matter" in the world economy. We ignore them; Dark Matter seems to us to be just another goofball effort to disguise the facts, like coming into the office without shaving so the boss will think you’ve been at work all night. That is what happens when people get desperate; they invent fantastic stories and far-fetched explanations.

"Dark Matter" comes from the hypothesis of astronomer Kristian Birkeland, who, in 1913, noticed that there seemed to be a gravitational pull exerted by objects he couldn’t detect. He called it "dark matter." Now, the expression is being used to label various intangible assets – Yankee ingenuity, American brands, management skills – that are said to bring the U.S. investment income from overseas, even while the assets held by Americans overseas, compared to those held in the U.S. by foreigners, continue to go down.

In other words, while the net international investment position of the United States slipped to $2.5 trillion, for a while at least, the income derived from its foreign investments was greater than the money it was paying out to foreigners. It didn’t seem to make sense. Investment income should have turned negative, too.

Economists scanned the heavens to try to make sense of it, but they couldn’t see anything that would readily explain this investment inflow. Even in the areas where the United States might have had a big and growing intangible advantage – technology, for example – the evidence showed the opposite. The United States was number one in broadband access in 2000; now it is 16th. In 2000, the United States made 40% of world’s telecom equipment, now it makes only 21%. And, the United States has fewer people with cellular phones – in percentage terms – than 41 other countries.

Nevertheless, in 2004, in the accounts of international investment income, the United States registered a $30.4 billion surplus. The Wall Street Journal, among others, pounced on "Dark Matter" as the explanation; we were making money on things of intangible value that didn’t show up on list of externally held assets.

Since this is so, deduced the Wall Street Journal, when you take dark matter into account, "America is a net creditor, not a net debtor."

Gosh and golly! But, now cometh the tally for 2005, and all that dark matter has suddenly gone dark! Gone is the massive gravitational pull of $30.4 billion surplus – in its place is a paltry little refrigerator magnet of $1.6 billion.

Willem Buiter, a monetary astronomer at Goldman Sachs, comments:

"I expect that in the years to come, the paradox of the US being both a net debtor and a recipient of positive net foreign investment income, will be resolved by net foreign investment income turning negative.

"With the US trade gap in October 2005 widening to a new record US$68.9bn, the US current account deficit is unsustainable. Its correction will require a large depreciation of the real effective US Dollar exchange rate, on reasonable estimates by no less than 30%, and quite possibly by more."

The Asian Development Bank warned readers last week to "prepare for a collapse of the dollar."

Yesterday, the dollar fell. We suspect that more is coming. Sell the dollar; buy gold.

More news from The Rude Awakening…


Justice Litle reporting from Colorado:

"If Paul Revere were living today, and if he were a passionate investor, he might well ride through the corridors of Wall Street, shouting: ‘The ETFs are Coming! The ETFs are Coming!’"

Read today’s Rude Awakening for more on the ETFs and what’s going down on Wall Street.


Back with Bill Bonner for more views…

*** Everything decays, degenerates, grows old and dies. History grinds us all down. We wish it weren’t so – suppose you could stay young forever, dear reader? But what kind of world would that be?We don’t know, but we’d be willing to give it a try.

A democracy…an economy…an institution…a bull market – everything crumbles, breaks up, and goes away.

Think of it as a tree. In its sapling years, it is young, fresh, and supple. Then it matures. As it grows old, a lot of things begin to take advantage of it. Moss grows on the north side, balls of mistletoe lodge in its branches. Worms and bugs eat away at its insides, and squirrels, birds, mice, and snakes burrow into its cracks and crevices.

As a democracy ages, likewise, a burgeoning world of parasites comes to depend on it. The leeches get bids, jobs, checks, subsidies, power, housing, drugs, status, free parking, no-bid contracts, and wars to order. This gives more and more people an interest in preserving the old thing…resisting change…propping up its withering limbs. But, like an old tree shading the ground around it, the longer it stays up – the longer new saplings are prevented from growing.

That is what is happing in the United States and in France. On both sides of the Atlantic people know they have major problems. Decadent governments have made promises that can’t be kept. In France, the young resist any change to their cushy employment laws. In the United States, the old resist any change to their cushy retirement benefits.

Democracy is supposed to make change easy, but history didn’t stop when democracy was invented. Instead, as time goes by, more and more parasites find ways to take advantage of the old institutions – eating away at the heartwood, nesting in the little nooks, sapping the strength of the society through subsidies, sinecures, and swindles.Finally, what can the thing do but come crashing down?

*** You may recall, the day we sent 537 copies of our book to Washington, David Walker, the comptroller general of the United States gave a press conference in which he likened the finances of the U.S. to Rome right before the fall of the Empire. At best, the timing was fortuitous. We captured it all in this article/promotion for the book:

"The Most Feared Book in Washington"

Today we have a treat: video of Walker, said numbers wonk, uttering similar disparaging remarks about the finances of the empire…this time to a BBC program called Hard Talk.

*** And speaking of Empire of Debt, a dear reader asks a very good question:

"I found reading ‘Empire of Debt’ fascinating! I had not considered the United States of America in that light, even though I was aware of some of the alarming statistics quoted.You have significantly added to my knowledge of history and raised my concerns considerably – I thank you!

"I have one question, which has haunted me throughout the book and I fear your cutting, sarcastic response will not satisfy me. So, please – would you consider my question seriously?

"Accepting your theory of ‘it’s not my business’ and ‘why get involved, it’s not our fight’ – do not leading countries (empires or not) have some responsibility to mankind in a general sense? You said frequently throughout the book that we don’t know the outcome and invariably America’s (imperial) interference may have made the situation worse.Was it really wrong to stop Hitler? Was it really wrong to try and contain the tyranny and bloodshed that Iraq, under Saddam Hussein, was displaying?"

Here is our non-cutting, non-sarcastic, and probably nonetheless unsatisfying reply.

We read in the paper about a do-gooder who is apparently actually doing good – Jimmy Carter. According to the press reports, Carter’s efforts are eliminating a nasty worm that lives in drinking water and then becomes a parasite in the body, from many parts of Africa. Bravo for him. If he didn’t rob anyone to do it, more power to him.

But there’s a big difference between trying to exterminate a harmful worm and trying to build a democracy in Mesopotamia. One is an example of an ambitious, but sensible, effort to do good; the other is an arrogant, vain and foolhardy effort to remake the world, in one’s own image, of course.

The gods do not smile on such efforts. They didn’t smile on Napoleon when he invaded Spain and Russia. They didn’t smile on Hitler when he invaded Russia. They didn’t smile on Japan when it bombed Pearl Harbor. The lesson:If you are going to try to do good, you are best advised to be careful and modest about it. Don’t attack anybody. Don’t steal anyone’s money. Say ‘please’ and ‘thank you.’ Remember that you are a fool, too – along with everyone else.

Try to stop Hitler? No one tried to stop Hitler in World War II. Hitler attacked, forcing them to fight back. Should they have "tried to stop him?" We cannot know, neither the future, nor what the present would be like if the past was different.

***"It was pleasant to wake up in Florence," wrote E.M. Forster of his room with a view, "to open the eyes upon a bright bare room, with a floor of red tiles which look clean though they are not; with a painted ceiling whereon pink griffins and blue amorini sport in a forest of yellow violins and bassoons."

The Daily Reckoning