Market Review: Le plus ça change…
The more things change, the saying goes… the more they stay the same.
You may be happy to know that the lesser of two evils from the Daily Reckoning Paris office (that would be me) managed to escape the Great French Heat Wave of 2003 by sneaking off with his wife and two sons to Belle-Ile-en-Mer, an island off the south coast of Brittany.
Not only was “Belle île” a full 20 degrees centigrade cooler than the City of Lights, but it is remote enough that we were thankfully denied an e-mail connection for six days.
Imagine our surprise when we returned, then, that half of the Eastern Seaboard in North America was cast into darkness… and the stock market all but shut down. We’d heard nary a whisper about the disaster while building sand castles and nursing sunburns on the beach. And yet the entire world’s financial system lay in the balance…
Of course, we need not ever have feared. No sooner had we heard the news, than we were reassured by a tidy soundbyte on LCI, the euronews channel, from the 43rd president of the people’s republic of America. “The blackout only served as a wake up call,” said George Bush the Younger, “the nation’s power grid simply needs to be updated…” and with the omni-confidence of a Chinese dam builder Mr. Bush promised: “And we will respond.”
Thank God for the president, huh?
Not only can the world’s most famous cowboy hand-cuff and drag terrorists from the Hindi Kush to Guantanamo Bay… topple dictators along the Euphrates and prop them up in the Western Sahara… sack bad guys and clean up the scum along the banks of the Hudson… but he can don a hard hat and reboot the nation’s power supply somewhere out in the headwaters of the Mississippi, too. What a well-rounded, multi-talented and ubiquitous man the president is. Apparently, there’s no challenge too big (or too small) for the Federal government. He’s even promised to keep the airways safe from the knitting-needle mafia.
You’ll forgive us if we snort a little and follow it up with a brief, but heart-felt, guffaw.
The whole farcical episode, reminded us of a Far-side cartoon… perhaps you’ve seen it? Two old duffers are sitting in a canoe with fishing lines; a mushroom cloud is rising over a hill in the distance. “You know what this means, don’t you?” one fisherman says to the other “Screw the limit.”
One shouldn’t worry, after all, that the national balance sheet undefined the one currently being ignored by anyone with a pulse inside the beltway undefined reads: “bankrupt”. Screw the limit. Heck, we might as well build some more nukes while we’re at it, too… oh wait, we’re doing that, too. Hmmmnnn…
Mr. Market for his part, appears to have borne the outage with at least as much courage and confidence as the president. The Dow was up 130 for the week, finishing Friday afternoon’s session at 9,321. Markets across the board are, in fact, powering ahead oblivious to any clouds on the horizon. Year-to-date the Nasdaq and the Russell 2000 are both up over 25%! The S&P 500 is up 11% and the Dow 12%… oh, la, la.
Hope you’re enjoying your Sunday, tomorrow is another day. Au boulot…
The Daily Reckoning
August 17, 2003 — Paris, France
P.S. “Bankrupt”, that is, if you listen to another, (admittedly less-well-known) Texan, the honorable Ron Paul undefined the only cowboy in Washington who seems concerned that the Fed’s have gone a little overboard with this “centralized planning” bit.
P.P.S. And, as always, for your viewing pleasure you will find “This Week in The Daily Reckoning” below…
THIS WEEK in THE DAILY RECKONING
VILE BODIES 08/15/03
by Bill Bonner
“…Today, we return to the morgue. For among the thousands the heat carried away was Diana Mitford, the woman who married Oswald Mosley – a woman about whom we wrote last year. And now we approach the corpse. We can’t help but wonder how it works, beneath this human shell. What we want to know is why people do such things. So, we’ve come with a scalpel; we want to see what is in there…”
BUYING TOKYO 08/14/03
by C. Alexander Green
“…Over the past decade and a half, Japan has seen the bursting of an investment bubble…a sickening deflationary crisis…a market index that has plummeted 82%…and the emergence of a very black mood among consumers and investors. Yet for contrarian investors, now – when abject pessimism about the country’s future is at its zenith undefined may actually be an historic buying opportunity…”
POLICY SLIPPAGE 08/13/03
by Andrew Kashdan
“…The so-called ‘recession’ – hampered, eased and spread thin at every turn by Greenspan’s Fed – was not allowed to run its course; it remained incomplete. no matter what policymakers say or do – and no matter if or when deflation and inflation strike the global economy – if U.S. asset markets continue to rely heavily on foreign funds, the adjustment will be painful…”
FAT CATS 08/12/03
by Lynn Carpenter
“…There are two problems we investors suffer at CEOs’ hands today: excessive salaries for mediocre performance…and the real booby trap, the golden parachute payoffs failing CEOs get when they leave. Thanks to Jack Welch, former and famous head of GE, we have entered the age of shareholder value and CEO as superstar. Shareholder value, Jack’s mantra, translates to ‘make the stock price go up, no matter how you do it.’…”
GOVERNMENT ECONOMIC MALFEASANCE 08/11/03
by the Mogambo Guru
“…All this at the same time as a coordinated global expansion of budget deficits, printing of excess money, granting of excess credit, bank reserves being lowered to insignificance, blatant lying and deceit on a monumental scale, selling of gold by central banks, and just about every other government economic malfeasance you can name. So why not be bullish, too? It we don’t borrow and expand, we go bankrupt. If we DO borrow and expand, we will still go bankrupt. So what’s to lose? Which alternative course of action is more fun and more popular?…”