Garden Of Evil

There was evil afoot…or perhaps awheel — even among the springtime beauty of rural Poitou.

Mr. DesHaies’s battle with alcohol is not going well. It ended in a draw this past weekend, at best. By late Sunday, it seemed that the demon spirits were ahead on points.

Mr. DesHaies hailed me from across the yard Sunday afternoon. I noticed a certain fluidity of motion — like a small boat on choppy seas. He rolled and pitched as he made his way towards me — tilting to his lee side by nearly 45% before righting himself.

But he looked better up close. He had shaved. His eyes were clear. Saturday he told me that his children and his mother-in-law had thrown him out of the house. He looked it, too.

“What, are you sleeping in the fields?” I asked.

“Ahh…” he said, rolled his eyes with a you-know-how- it-is look. But I didn’t really know how it was at all. I’ve never been thrown out. I have a hard time imagining what it must be like.

My instinct was to offer to put him up in one of the farmhouses. But Elizabeth was adamant.

“If his own family put him out,” she reasoned, “there must be a good cause. We don’t want to have to put him out. He’s doing a good job in the garden.”

He was doing an excellent job. It seems as if all his sense of order and propriety are focused on the rows of lettuce, tomato and asparagus. It is neat as a Dutch kitchen. Every line is impeccably straight. There are no weeds. There is nothing to suggest that the gardener himself is as loosely wrapped as he is.

Meanwhile, Ms. Smith invited us to a party. She is the woman who worries about the presence of witches in little Montmorillon. If I were a witch, I would choose a bigger metropolis where there would be more distractions. Besides, I find Ms. Smith hard to read — her tight lips hide more than they reveal. I do not know when she is being serious and when she is not.

No matter, I was happy to be able to raise a glass or two in celebration of her husband’s 40th birthday. Besides, I would use the occasion to continue my research into the habits of France’s very selective people — its old-money families.

To this end, I engaged Dominique, an attractive woman familiar with the moneyed classes in France, in conversation. Or rather…I let her talk about a subject of great interest to her.

“You never talk about money in France,” she explained, “and the richer you are — the more taboo the subject is.”

Then, with almost Sicilian gravity, “The family is the source of wealth in France. You have to do your part, and play your role, within the family.”

“Each of the Grande Familles,” she went on, “has its own source of wealth — maybe a factory…maybe a few restaurants…but it is usually some business. No one ever talks about money — but they talk about business all the time.

“And each family has a head — usually the oldest male who has not disgraced himself. I don’t mean by taking up with a young woman. Nothing like you do in America. Men do that kind of thing all the time. It is shocking. But it is not disgraceful.

“You should see the cars that come and park in our driveway. [Dominique and her husband, Yves, live on a farm, with a very private entry, near town.] They park, the car rocks for about five minutes. And then they drive off.

“But Yves noticed one couple…it was two people who both work for the police department.”

[This information proved useful later on, when Yves was arrested. But I will tell that story another time.]

I steered Dominique back towards my subject…

“Well, bringing disgrace on the family is about the worse thing you can do. Cheating on your partners. Stealing money. But even pursuing money too openly and aggressively is considered disgraceful — but not as much as it used to be.

“In the old days it was a disgrace, for example, to marry into a Jewish family. This was not because there was anything wrong with the Jews. Lots of the most prominent families in France are Jewish. But the Jews do talk about money. And marrying into a Jewish family meant that you were too eager for money.

“Also, you have to be careful about how you spend money. You don’t want to spend too aggressively either. There’s a certain look…a certain old-money style you need to cultivate. Nice clothes — but not too expensive. And, when you’re in the country, they should be a little worn. Even worn-out. That’s true for the furniture, too — you want good pieces, but it’s better if they are a little shabby. And it’s nice to use valuable antiques in a way that shows you don’t really care about them. Take a Restoration chair, for example. Put it in the kitchen and put a saddle on it.”

I realized that Dominique had shifted from describing the genre to advising me on how to achieve it. Maybe she had figured out that this old-money style was just what Elizabeth aspires to. Elizabeth grew up among the drafty, decrepit houses of America’s own old-money families — the Hudson River aristocracy. She’s no stranger to shabby elegance and down-at-the-heels grandeur.

I suppose it is no surprise that she takes to it so readily here in France. She is comfortable with genteel poverty. Her ambition seems to be to go directly from No Money to Old Money — without ever passing the New Money stage. Fine with me; I remember a different kind of poverty. The genteel variety has to be an improvement.

But the most devilish event of the weekend occurred at its debut. Elizabeth got an anonymous letter from someone who said he would kill our son, mentioning Edward by name.

At first, I paid little attention. A disgruntled employee? A DR reader with a complaint? An addled Anglican minister? I had never received such a threat. I didn’t know what to think about it or how to act. Was it a joke?

Who would be mad enough to come all the way out to the middle of nowhere to murder a child? And for what purpose?

But as I thought about it, I realized that only an insane person would have written such a letter. No amount of reason would make sense out of it. I kept Edward close…and watched for strange cars…and called the police.

Your correspondent,

Bill Bonner

Brussels, Belgium March 20, 2000

*** I’m on the train from Paris to Bonn. We just stopped in Brussels, where the conductor made an announcement in Flemish, English, French and German — but it was incomprehensible in every one of them.

*** I did not get a chance to connect to the Internet this morning. So I picked up a copy of the “Financial Times” in order to find out what is going on in the markets. For a financial paper, the “FT” has precious little on actual market conditions. All I know is that the Dow went down on Friday. But you already knew that anyway.

*** Hanging over the markets today will be two things:

*** First, Taiwan elected its most pro-independence candidate. China Premier Zhu Rongji, warned that Taiwan voters would “get an opportunity to regret” their action. He also said China would “willingly shed blood” to recover Taiwan. We don’t know whether that included his own blood. But in any case, the threat of nuclear war could exert some slight negative pressure on Bubble-minded investors.

*** Second, Alan Greenspan is expected to announce another rate increase tomorrow. Commentators think he’ll raise rates by a quarter of a point. But if I were Greenspan, I’d be getting a little tired of doing the expected thing. He’s seen how these small rate increases are received — almost with ridicule — in the market. He may get it into his head to raise rates by half a point instead.

*** What’s wrong with just letting the markets run…? Why can’t Greenspan just relax…and be happy? The trouble is that stocks represent wealth. They are a type of currency which can be traded for real goods and services. But the growth in stock prices has far outstripped the growth in the GDP. Last Thursday alone the stock market produced about $750 billion worth of nominal value. But the economy didn’t produce $750 billion worth of new goods and services. I don’t have the figures at hand. But when the stock market went from under 100% of GDP to more than 150% of GDP — it added about $6 trillion of supposed purchasing power. That’s money people think they have, represented by the nominal value of their stock holdings for which there is no corresponding wealth in the real economy. There are only so many houses, so many boats…and so many Blancpain watches…to go around. Thus, the wealth “on paper” represented by today’s stock prices can never be transformed to the other kind of wealth. Either the price of the stocks has to go way down. Or the prices of goods and services in the real economy have to go way up. Neither event is much fun. Both of these things have the potential to get worse, in other words.

*** There is no precedent for a bubble ending in inflation. They all tend to implode in a deflationary collapse. So that’s what we expect this time, too — but you never know.

*** My friend Joe Bradley warns that a new bill in Congress would allow the Post Office to make money by doing what it does best — not delivering the mail. Bill 602-P permits the Post Office to assess an “alternate postage fee” of 5 cents on every e-mail message.

*** A poll in Korea tells us that 46% of Koreans believe that money can buy happiness.

*** I went on Friday to a meeting with an Internet entrepreneur. The young man explained the idea of building virtual communities online and told about his venture publishing e-books. He’s trying to steal a march on Amazon by offering books either on paper, in the old-fashioned way, or electronically. The e- versions can be provided for pennies — unless there are author’s royalties to pay.

*** “Is it profitable?” I asked. “No,” he replied, “it is healthily unprofitable. The business plan calls for making money in 2002.” I did not say so, but I wondered if the business would be around in 2002. But I was there to talk about another venture. A partner and I believe we could make money with a website for a local English-language newspaper in Paris. With very little investment, we believe we could be in the black reasonably soon. The trouble is, there are already several other projects starting up — and some of them are rumored to have access to almost unlimited pools of venture capital financing. Thus the currency of the Internet bubble flows so freely that it is actually drowning good businesses. This is an extension of Gresham’s law. The Internet currency is driving out good currency (it’s cheaper to pay in stock options than in cash)…and it’s driving out good business, too. Who can compete with a company that is over- capitalized and willing to waste shareholders’ money in pursuit of its business goal? Hmmm…

The Daily Reckoning