May Day, May Day

“It’s the final struggle,” sang the crowd of thousands in unison. The year was 1969…I was a student, exhilarated by the intellectual flora that bloomed in every corner of Paris that year. So rich. So exotic.

I had gone with a friend to a meeting of Trotskyites. At the time, I had only the dimmest idea of what Trotskyism was all about. I was hoping it was a free love group. Imagine my disappointment when I saw the crowd of humorless, earnest would-be Che Guevaras. And then, as the crowd raised its right fists in the traditional revolutionary salute, I knew I wanted no part of it.

These people were like football fans who had read Marx and Engels…hooligans with an exaggerated frontal lobe and an unbounded faith in their own ability to run other people’s lives.

Speaker after speaker exhorted the mob to continue the fight…to sacrifice themselves, like Internet investors, to the cause.

The cause was, of course, foolish. And every one of the millions of people who worked for the cause over the course of the last 10 decades was on a fool’s errand – making the world a worse place to live…both for himself and everyone else.

The Proletariat: A Fraud at Work

But that is more obvious now than it was then. Many still thought communism would work. People still had faith, in other words. The mania was still alive…the fraud was still working. GDP figures from the `60s, as I mentioned in a previous letter, showed the Soviet Union growing at twice the rate of the United States. Who could be sure they were nonsense?

Now we know. We know the whole thing was a fraud from start to finish.

May 1 is the big day for the proletariat.

Back when people still believed Marx’s class theory – that is, back when there was a proletariat – huge parades were organized throughout much of the world. Communist countries used them to show off military hardware. In the West, they were used to demonstrate the voting power of the demented. Both exhibitions were threatening. Either the force of arms, or the power of the ballot, put liberty and property in danger.

It is hard to recall what a threat it was. Communism seems – like modern art – something of a joke today. How could anyone have taken its pretensions seriously, we ask ourselves?

But it was a deadly serious matter. Socialism and its next of kin, Nazism, caused the deaths of about 100 million people – more than the population of France or Britain or Germany. Hundreds of millions had their property and liberty stolen…and even those who had no property and didn’t care about liberty suffered a severe drop in living standards. While the rest of the world got rich, socialist countries got poorer – depending upon the degree to which they put Marx’s ideas into practice.

The Proletariat: Busy Doing Other Things

Nazis, Bolsheviks and other parasites did more damage than any group in any period in history.

May Day no longer brings out the proletariat. They are busy going on picnics or following their stocks on the Internet. Today, the big parade is for the intellectuals. A new book by Jean-Francois Revel, entitled “The Great Parade”, describes the parade of intellectuals who are trying to revive the ideal of 20th century socialism. Picking up the dead ideas from death camps, barbed wire walls and cheerless apartment blocks where they dropped – the Marxist apologists are giving them new life.

Revel, who is said to have been drunk for the last 25 years, is testament to the clarifying power of strong drink. Throughout the Western world, he says, “we are urged to return to the ‘real’ Marx.” Forget about the damage done in Marx’s name, say the resuscitators of Marxism, who, in Revel’s words, “urge a new transition towards a government that is qualitatively new, and towards a new, more human socialism.”

“The more Marxism ceases to be practiced,” writes Revel, “the less it is criticized. The more Liberalism (Western liberal democracy and the free market) is criticized, the more it is practiced.”

This creates, for the Marxist mind, a new sort of dialectic that allows him to envisage the next big inevitable shift, towards a new socialist utopia.

The Proletariat: Pure Nazism

Nazism, a brand of socialism mixed with prehensile tribalism, was thoroughly discredited after WWII. Very few intellectuals openly long for a sort of “pure” Nazism – unblemished by Hitler’s crude attempts to apply it.

Nazism is dead. Stone dead. Because intellectuals cannot traffic in the creed without taking on the responsibility for Hitler’s crimes. Even an unremarkable comment on Hitler’s employment policies was sufficient to get Joerg Haider branded as a Nazi sympathizer. Nazism, the idea, cannot be separated from those who acted in its name.

But Marxist intellectuals, and socialist politicians, have never had to take responsibility for the crimes of communism. In fact, among Marxists, the idea of a “pure”, utopian form of collectivism – completely removed from the imbecilities practiced by socialist governments – is gaining strength, according to Revel.

“They admit the imperfections of applied Marxism,” writes Revel, “but they answer with the hope of an infinitely perfectible revolution that has not yet been achieved… Now that they are rid of the unfortunate reality that was the Soviet Union, for which they deny any responsibility, [Marxist intellectuals] feel finally free to worship socialism as it was meant to be – a utopia.”

Utopia is hard to argue with. It is, by definition, beyond reproach.

Bill Bonner
May 1, 2003


We warned you.

The EOTWAWHKI…remember that? Well, it’s here.

The End-of-the-world-as-we-have-known-it came sometime during the last year or so…and hardly noticed by anyone.

But it is surely a New World now. Never before has American monetary and military policy been so forward-looking, so ‘can-do’ optimistic, so ready to intervene anywhere, anytime.

At the Fed, Ben ‘Printing Press’ Bernanke has promised to destroy the dollar rather than allow it to rise in value. (We can make them at practically zero cost, he reminds the world’s dollar holders.)

And at the White House, George Bush has promised to destroy any country that even thinks about causing us trouble.

As might be expected, foreigners are getting nervous. The International Herald Tribune reports that 4 European nations – including France and Germany – got together to create a joint defense capability, just in case the Americans turn out to be not as friendly as they think they are. Colin Powell dismissed the idea as just another European bureaucracy. But Americans dismissed the euro when it first came out, too. The euro was meant to be an alternative to the dollar; yesterday, it rose to a 4-year high against the greenback.

In related news, both business and consumers seem to be reluctant to borrow or buy. “Mortgage demand down for 6th straight week,” says a Reuters headline. “Lingering business caution could be an impediment to improved economic performance,” Greenspan told Congress yesterday. “Consumers wary,” adds ABC News.

In the past, we could count on Americans to spend money…and count on foreigners to lend it to them. But that was back when Fed governors promised to protect the value of the dollar…and American presidents pledged to preserve the peace.

We don’t know, of course. This New World may be better…or it may be worse. But it is surely different.



Eric Fry in New York…

– The dollar captured top billing on the Wall Street marquis yesterday, as it tumbled nearly 1% to a fresh four-year low of $1.118 per euro. Gold responded to the dollar sell-off by rocketing more than $5.00 to $339.40. By comparison, the stock market action was downright boring. The Dow slipped 22 points to 8,480 and the Nasdaq eased 7 points to 1,464. The dollar also topped the marquis at the annual Grant’s Spring Investment Conference, which your New York-based editor attended yesterday. As usual, the distinguished line- up of speakers – including Grant himself – presented a valuable array of investment insights.

– When Grant addressed the assembly, he apologetically reiterated his long-held bullish view toward gold and his reciprocal bearishness toward the U.S. dollar. He recited the litany of dollar-bearish phenomena that have become the gold bulls’ creed – like the fact that America’s gaping current account deficit now totals more than half a trillion dollars annually. Grant also noted our nation’s ballooning net international investment deficit – that’s the difference between the amount of foreign stuff we own and the amount of U.S. stuff that foreigners own. At last count, foreigners owned $2.3 trillion more of us than we owned of them. (Of course, this figure does not include the imminent annexation of the Iraqi oil fields, the value of which should greatly enhance our net investment position).

– These frightening statistics – which we’ve reckoned with from time to time in this column – are not NEW news. But they are no less frightening for being familiar to us. And certainly, they are reason enough to worry about the greenback’s future value. But that’s not all, says Grant. He also worries that the Federal Reserve’s audacious promise to reflate at all cost is a promise that is likely to be kept…to the chagrin of dollar holders.

– In reference to Fed Governor Ben Bernanke’s remark that the U.S. government could “produce as many U.S. dollars as it wishes at essentially no cost,” Grant flashed a slide showing an artist’s rendering of Bernanke-style reflation: “The Fed’s own squadron of C-130” transport jets are conducting a “monetary sortie” over Brooklyn, dropping dollar bills out of their cargo bays. The point was made loud and clear: the dollar’s value is at risk…

– T. Boone Pickens, the former president of Mesa Oil, kicked off the Grant’s conference with some fascinating observations about the state of the natural gas market. In short, he is bullish…very bullish. The 74-year old oilman declared, “I don’t believe I’ll ever see natural gas below $4.50 again.” Inventories are extremely low, he explained, supply is falling and demand is holding steady – a potentially explosive situation for gas prices. “If we get another cold winter next year,” Pickens predicted, “the gas price could go to $10 an mcf or more…The gas price could do anything, and I mean anything!”

– Unfortunately, Pickens, who runs a couple of hedge fund devoted to the energy sector, did not name any specific stocks that would benefit from the natural gas rally he anticipates…

– But John Myers, our man in the resource sector, has identified a handful of energy stocks that would benefit nicely from soaring natural gas prices. For example, John says that Anadarko Petroleum Corp. expects to earn about $4.00 a share in 2003. But if natural gas price average even $5.50/mcf for the year, Anadarko’s earnings could be closer to $6.00 per shares…At $10.00/mcf, we would imagine, Anadarko shareholders may be wintering in Gstaad.

See alsAfter Iraq…America’s NEXT Crisis


Bill Bonner, back in Paris…

*** It is May Day…the streets are empty this morning. The first of May is a major holiday in most European countries, typically with mass demonstrations by communists, syndicalists, and labor parties, griping about this or that.

Your editor remembers, fondly, the May Pole dance at his local school…the little girls dressed gaily…the bright, sunny weather…

Where has it gone? Does anyone still dance around the May Pole? What has become of it? Is the idea too sexist, too seasonist, too moss-backed and pretty to be on the public school system calendar? Surely, somewhere, perhaps in secret, little girls in white dresses, with ribbons in their hair, still do the forbidden skip…and celebrate the coming of spring.

*** “Bleak outlook for Japanese Economy,” begins a BBC story. Wages are falling on the hopeless island – minus 2.1% year over year. In a poll of business leaders, 73% thought the economy “was at a standstill”. They were the optimists. Twenty percent thought it was “deteriorating gradually”. Five said it was getting worse. What the other 2 thought is not recorded.

*** What do the authorities do in the face of this grim news? The same thing they’ve been doing for the last 14 years, and the same thing the Fed has been doing for the last 2 years – make money easier to get. “Bank of Japan eases monetary policy,” says a Financial Times headline. This article caught our attention. Interest rates in Japan have been at zero for years, we thought…what will they do next? We imagined BOJ employees handing out cash at subway stops…instead, the bank is raising “the target for current accounts”. We don’t know what that means; the article offered no explanation. But we know it won’t work. We’ll explain why…

…Leaving you on the edge of your chair, dear reader…

…until soon

The Daily Reckoning