Land of the Deadheads

Yesterday was the greatest of American holidays, Thanksgiving Day. It is the day we are meant to show appreciation for all the many blessings showered upon us…but as Bill Bonner points out, that tradition seems to have gone by the wayside…

We searched the newspapers on Thursday. We could find hardly a mention of it. Who are we supposed to thank? For what? No one addressed the questions. Perhaps Thanksgiving comes too hard on the heels of Veterans Day. Maybe the gratitude had been all squeezed out. But you’d think a nation as lucky as America would have at least two days’ worth of thanks in it.

But here, we offer not a panegyric to all our dead ancestors but an interrogatory to the living: what will the next generations thank them for?

Pericles: "I Shall Begin With Our Ancestors"

"I shall begin with our ancestors," said Pericles, in his speech for the dead soldiers. This was 431-430BC, the first year of the Peloponnesian War. The custom was to give a public eulogy – a kind of Thanksgiving and Veterans’ Day rolled into one – each year. "They dwelt in the country without break in the succession from generation to generation, and handed it down free to the present time… And if our remote ancestors deserve praise, much more do our own fathers, who added to their inheritance the empire which we now possess, and spared no pains to be able to leave their acquisitions to the present generation."

Pericles begins as George W. Bush might, honoring the achievements of the nation’s fighting men. An unsentimental historian might wonder what those achievements were worth. Athens, like other city-states, seemed prone to go to war with its neighbors for no particular reason and no particular advantage. Athens was more successful than most and was able to build up its own little empire. Then, it was brought low by plague, treachery, and other empire builders; all the sturm and drang seemed to get it nowhere.

Then, Pericles makes equally dubious remarks about Athens itself. These, too, might have come from the mouth of America’s current president, if someone would write them out for him in short words. This little insight should put to rest forever the idea of Athens as a center of serious thinking. Pericles was a better humbugger than Bush, but the flatteries were the same. Athens’ government was better than its rivals, he said. Its people were more courageous and better organized. Even its artists flourished in Athens as nowhere else. With such men as this, Athens couldn’t lose.

"You may reflect that it was by courage, sense of duty and a keen feeling of honor in action that men were enabled to win all this…" he continues, on how the empire was put together.

Pericles had urged Athenians to war, like George W. Bush. But the war did not go well. Twice, the Spartans invaded and laid waste to Athenian lands. A year later, the same people who praised Pericles were at his throat. The great orator held them off – urging them to stay the course. Yes, he pointed out, your lands and houses might have been ruined, but this is a fight for something much more – liberty! "You cannot decline the burdens of empire and still expect to share its honors," he says.

The Athenians did stay the course; it led them to total defeat. Pericles died of plague.

Pericles: What Thanks Did the Next Generation Owe?

We know what thanks Pericles’ generation owed its predecessors. But what thanks did the next generation of Athenians owe to them? Athens was destroyed. Their parents’ empire building had cost them dearly: their wealth, their independence, even the empire itself.

Twenty-five centuries later, Thanksgiving Day went by without much notice. A few people probably did pause before turning to the turkey to thank their dead ancestors. The dead men had worked, and saved, so that their descendants would have life…and have it more abundantly, just like the ‘remote ancestors,’ Pericles recalled. But did anyone stop to wonder about the generation to follow?

We recall Dr. Kurt Richebacher’s comment:

"I grew up in a time when you wanted to save so that your children would have a better life than you had. Now, in all the Anglo-Saxon economies, people don’t seem to want to help the next generation, they want to cheat it, by leaving a legacy of worn-out capital…and debt."

Each year, America’s dollar declines. Each year, Americans own less of their own national debt…less of their own houses…and less of their own future earnings. Little by little the patrimony of future voters slips away, replaced by obligations. So great has the debt load become that it cannot be settled in a single generation – even if that generation were willing. Instead, the blessings that one generation enjoys are passed onto the next generation as a curse. A child born in America in 1900 came into the world naked and free of debt. Today, he pops into the world and is immediately swaddled in chains of debts. All his life he will have to pay them – debts from bonuses paid to government employees in 1986…from bombs dropped in 2003…from boondoggles built in 1995….checks written in 1974…promises made to old people in 2002… the expenses of hurricanes in 2005…and so on. The poor child will have to drag around with him the entire pathetic history of America’s financial decline.

‘Stay the course,’ says Bernanke in 2005. ‘We cannot stop now,’ adds Bush.

"Damned b**tards," the next generation is likely to grumble.

Bill Bonner
The Daily Reckoning

November 25, 2005

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).

Britain’s most famous alcoholic has just died. The papers and newswires are full of farewells. More below…

Meanwhile, our old friend, Jim Rogers was in town last week. What does he think of the new man at the Fed?

"Disaster. Bernanke will probably ensure the demise of the Federal Reserve. It won’t be completely his fault – Greenspan has laid the foundations – but the problem is that Bernanke doesn’t understand currency markets…

"He is the guy who said we control the printing presses and we will run them as fast as we have to. He’s the guy who says it doesn’t matter if the United States has the biggest trade deficit ever. I’m not the only person who’s getting worried about it. The Iranians are going to start trading oil in non-U.S. dollars next year and there are other people starting to try to figure out what in the hell to do about this situation.

"Bernanke does not understand that – on the contrary, he thinks there isn’t a problem. You know we’ve had two Central Banks in the United States before, they both failed and this one looks like it’s going to fail too."

What will happen to the U.S. dollar?

"In 2003 and 2004, everyone was selling the U.S. dollar. It was on the font page of the New York Times for about three days in December 2004. That kind of coverage is always a sure sign that whatever the subject is, it’s about to go the other way. That rally [in the dollar] is continuing partly because the United States has given the multinational corporations these gigantic tax breaks to bring money back into the United States this year, so that is what they are doing.

"I don’t know how much further the rally has to go, but I have a feeling that something may happen to cause the final spike. It could be that Bush is going to pull out of Iraq sooner than expected, or it could be bird flu decimating Europe, but not America. But whenever it is that causes the final spike, I urge you to sell. I am still extremely bearish on the U.S. dollar fundamentally in the long term."

Looking at a chart of the dollar is like looking at an EKG of a dying man. From 1800 until 1935 the lines go up and down. A dollar bought a dollar’s worth of goods and services in 1800…in 1850…in 1900…and up until about 1935. At that point, the line begins to fall. It does not rise again. Instead, each and every year it loses purchasing power, so that by 2005 the 1800 dollar is only worth about 5 cents.

We are not ancient, but even we can recall a much stronger dollar. In the autumn of 1972, we drove across the United States. We remember gasoline stations advertising: 25 cents a gallon!

It seems so long ago…another world…a dream-world. It makes us long for our youth…for our old ’53 Chevy pick-up (we paid $250 for it)…for our old house in New Mexico (we built it ourselves for less than $10,000)…for our old hair! Alas, it is all gone.

But one thing has neither aged, nor evolved, nor corroded, nor lost its value in all that time – gold. It was still illegal to hold gold back then – can you believe it, dear reader…is there any policy so stupid that politicians would declare it the law of the land? But then, an ounce of gold was worth about the same thing as a new suit. Today, you can still get a new suit for an ounce of gold. And even during the time of Julius Caesar, two thousand years ago, an ounce of gold would buy you a toga and a belt.

The last feeble link between gold and paper money was cut by Richard Nixon on August 15, 1971. Since then, the dollar floats on air…like a feather…blown by the winds of the investment world…but gradually and steadily drifting down. Where will it end?

Perhaps a future government will do what de Gaulle did. Maybe they will take off a zero or two and issue a ‘new dollar’. Or maybe they will do what Argentina did – changing the name of currency itself. If so, we have a suggestion. We propose that the new currency be called the ‘Greenpeso’ in honor of America’s most revered Fed chief…

What kind of honor would be more fitting?

More news, from our Editor-in-Chief…


Addison Wiggin, reporting from Boston:

"A year ago, the annual deficits already hit $7 trillion dollars, according to the U.S. Comptroller. That’s roughly $24,000 the government owes for every American man, woman and child. It’s money that’s coming out of your pocket, and I’m not just talking taxes. And be assured, Uncle Sam has no intention of paying you back."


Bill Bonner, with more opinions and thoughts…

*** In these pages, we often talk – a lot – about gold and the opportunities it offers for investors. Today, however, our commodities expert, Kevin Kerr tells us about another precious metal: silver…

"After bottoming out in November 2001 at $4.06, silver woke up – soaring 63% to the $6.60 range. The rise was particularly interesting when compared to gold, which itself has risen 80% from the depths of February 2001. The difference was that gold is a world currency, and silver is not. Gold’s price is influenced by currency markets, while silver’s is driven strictly by supply and demand.

"As a result, there are three primary markets for silver:

* The ornamental market serves jewelry and silverware.

* An investor segment concerns silver bars and coins.

* And the industrial part includes photographic film and paper, computer components, brazing alloys, pharmaceuticals and alternative energy applications.

"What works in your favor is that few people know that the industrial sector is the biggest for sliver, while the investor segment is the smallest."

*** Here at The Daily Reckoning we have never killed anyone. But we read the obituaries with approval. Only when a body comes to rest can we bend down and have a good look at it.

Reading carefully, dodging polite lies and chutzpah, we often learn something. George Best is "coming to the end of the long road of his ill-health," said his doctor last night. He reached it this morning.

Who is George Best? He is a man who was once a talented soccer player, then a talented celebrity, tout de suite a talented womanizer, and when all his other talents seem to have failed him, a talented drinker. His career in soccer even included several stints in America, with the Los Angeles Aztecs, the Fort Lauderdale Strikers and the San Jose Earthquakes.

"The 59-year-old…has struggled with alcoholism," all his life, says the Daily Telegraph. Yet, from the evidence, the man didn’t seem to struggle at all; he gave in without a fight, drinking as many as 9 bottles of white wine per day, even after being diagnosed with cirrhosis of the liver.

"The George Best tragedy," continues the Telegraph, was a "classic…a man brought to ruin by a tragic flaw…Booze blighted everything. It destroyed his career, wrecked his marriages and brought financial ruin.

"It stole his dignity, fuelled his self-loathing and unleashed the violence within him. It ravaged his looks, corroded his liver and finally it is demanding, prematurely, his life…"

Here, too, we take issue with the Telegraph’s sniffy judgment. Best had everything men dream of. By the age of 17 he was earning £1,000 a week – which was a lot of money in those days – and was already a sports hero. He was smart and handsome with a natural Irish charm that was catnip to women. He was surrounded by them…adored by them…the most beautiful women in the world.

"I used to go missing a lot," he explained in his later after-dinner speeches…with Miss Canada…Miss United Kingdom…Miss World." Miss World, 1973, Marjorie Wallace, had her title taken away after romping around publicly and disgracefully with Best.

Best was no Buffett. There was no bad habit he wanted to give up…no extravagance he didn’t want to indulge in…and no imprudence he didn’t want to commit. When it came to money, he didn’t worry about the return on his cash. He didn’t count on it ever returning at all. By middle age he was flat broke.

One of his most famous one-liners was: "I spent a lot of money on booze, birds and fast cars. The rest I just squandered."

Later in life, Best laughed at his own dissolution. He would recount the moment it all went bad: "Tell me, Mr. Best, where did it all go wrong?" asked the waiter as he delivered vintage champagne to the footballer in a luxury hotel suite. At the time £20,000 was scattered on the bed, which also happened to contain Miss Universe.

Whether you take Mr. Best’s life as a cautionary tale, or an inspiring one, is entirely up to you. He could have lived gray and sensibly like the rest of us. Instead, he lived in Technicolor and never seemed to regret any of it.

When liver problems caught up with him, the aging sports star declared: "I’ve stopped drinking, but only while I’m asleep." He got a liver transplant, and briefly went on the wagon, no drinking and no women: "the worst 20 minutes of my life." Soon after, he turned yellow and died in a hospital across town with tubes in his nose.

George Best, RIP.

The Daily Reckoning