Edward stretched out his arms and ran down the hill on the public square. Heading for an old man with a cane, he raised one wing and soared off in another direction. He seemed to run so fast we thought he might lift off at any moment.

You couldn’t have asked for a more perfect day. Not a single cloud stained the bright blue skies of Limousin for the Ostensions. Le Dorat brings out its religious relics only once every 7 years. Heaven forbid that it should rain.

Edward was uninterested in the proceedings. But at least he amused himself, without annoying his parents or knocking over aged celebrants.

"Can we go now?," asked his older sister. "When is this going to be over," his older brother wanted to know.

But neither speed nor efficiency concerned the old men who organized this year’s Ostensions. They had been planning the event since 1995, and practicing it for most of their lives. Tottering along at the end of the parade, each one dressed in a dark business suit with a green and red sash…or as a Musqueteer in a bright white tunic over scarlet stockings. Many of these guys will not live to see the next Ostensions; they were in no hurry to see the festivities come to a close.

I bring you an account of the 49th Ostensions of Le Dorat, dear reader, simply because I said I would. And I have nothing else to report to you anyway. I do my serious thinking in the bar at the Paradis. Outside of Paris, I rarely think at all, and certainly not on public holidays.

So this little memoir of pomp and curious circumstance will have to do.

Among the town’s elders were a couple of friends of ours. One was Mr. de Parvillier. You may remember him, dear reader. He has a nearby chateau that is falling into ruin…and twin daughters, now in their early 20s, who seem to be falling into disgrace. In church, standing side by side, there was something slatternly about them.

Even our gardener rises on tiptoes to look down his nose at Mr. de Parvillier.

"He never does anything," he complained. Among the things Mr. de Parvillier doesn’t do is employ a gardener. And among a certain segment of traditional, rural France, failing to employ a gardener is nearly a sin. A man’s place in society brings with it certain duties, they believe. A man with a chateau, for example, has the duty of hiring gardeners to look out for it properly.

But poor Mr. de Parvillier probably can’t afford a gardener. And he doesn’t seem to care. He always has a cheerful demeanor, and the rosy cheeks of a small-town bon vivant. And now, marching along with the other elders, he was as happy with himself as a man who gets convicted of littering after having been accused of murder.

And there, at the end of the procession, was our friend Loic. But Loic is still a young man…how did he get there?

"His father died," Elizabeth reminded me. "Money isn’t everything," she continued. "You can’t buy your way into the Ostensions…still, as Madame Ducellier explained to me, ‘it comes at great cost…in blood.’"

"What did she mean by that," I wondered.

"Each of these groups [referring to the squads of Musqueteers or the 18th-century troops in their bearskin hats] has its own rules and rites. But most of these people have inherited their outfits…and the right to wear them…from their fathers."

But this was the tail end of the parade. At its head was the bishop…marching along with his crozier before a whole troop of priests and monks…the mayor…and several military officers. They were coming out of the huge collegiale (a large church that served as training school for ecclesiastics) row after row, rank upon rank…each group with its own motifs, diadems and scepters.

Neighboring towns sported their own costumes…some ancient, some modern. There were soldiers dressed as they might have been in the 1730s…and others as they might have appeared in the 1830s. Minor parishes often carried their own sacred bones.

"The Ostensions of Le Dorat have been celebrated for hundreds of years," explained the priest in his sermon. The ceremony had begun with a mass, at which the priest had a rare opportunity. French clerics rarely get a chance to speak to more than a handful of gray-haired old ladies. Few others people go to church on a regular basis.

But, here was an entire town of sinners…including the mayor himself! A captive audience…the priest intended to hold them in bondage for as long as possible.

The building was so packed that there were no seats left by the time we arrived. So, we took what places were available to us – on the steps at the back of the church, sitting on stone as cold as a gypsy’s heart.

In front of us was the entire group of celebrants…the soldiers, the boy scouts…the peasants and nuns… Some people were dressed in simple work smocks…others in elaborate uniforms with polished brass buttons and gold braid. There were weapons too – with hunting rifles, shotguns and swords.

"We are here to remember all those who have done God’s work here on Earth," the priest continued, "but especially our own two saints from Le Dorat – Saint Israel and Saint Theobald."

Both saints had the good fortune to be in the right place at the right time. Like buyers of Microsoft in ’86, they got in early…just after the collegiale was built, but before places in the crypt and canon began to get crowded. Both were around in the 11th century, if I heard him correctly. One was called upon to put down a rebellion by monks at a neighboring monastery. (What means did he use? No details were provided.) The other got his sainthood thanks to his work with the poor and downtrodden of the Limousin area.

And now, the saints’ bones are lodged beneath the nave…in gilded boxes. Every 7 years for centuries – interrupted only by the plague – the boxes have been brought out and paraded around town. That is the ceremony that we were about to witness.

The service continued…with chants and homilies. Time passed. Children fidgeted. A fat woman threatened to smack one of her children, a brown-haired girl of 8 or so dressed in a medieval get-up. People came and went at the back of the church…and a low buzz of conversation threatened to overwhelm the solemn proceedings at the other end. Just about that time, a hard voice was heard over the public address system.

Everyone fell silent as if the voice of a vengeful God had taken over the microphone. All of the soldiers of every rank and every epoch stood up suddenly. As the priests held up the bread and wine of communion, the soldiers presented arms to the host.

Not long after, priests bearing the blessed bread made their way to the back of the church and began handing it out as if it were chocolate to Afghan refugees. There was no order to it…instead, the crowd surrounded the priests in a melee until, at last, all the Christians were fed.

Then, the grand defile began…as Edward swooped around the less populated areas of the town square. And when all the soldiers, and all the peasants, and all the costumed and liveried extras had finally left the church…then, the ornate, golden reliquaries appeared…like arks of the covenant, carried by four stout 17th-century soldiers each.

Again, a command was barked into the microphone and the crowd feel as silent as a mute Quakers at vespers. All that was heard was the tromping of boots…as the cortege and its guard made their way down the street and around the corner. Saints Israel and Theobald were hardly out of sight before the crowd took up its murmur again.

"Can we leave now," asked Jules.

Your editor,

Bill Bonner
April 02, 2002 — Paris, France

Well, once again, it’s all up to the U.S. consumer. The U.S. economy depended on him to do his duty after the 9/11 attacks. Now the whole world turns a wistful face in his direction.

"The global economy is desperate for another fix from the great American growth machine," writes Stephen Roach.

World trade grew at an average of 8% per year during the ’90s. But last year saw only a 1% increase.

Over the last five years, the U.S. has accounted for an astounding 40% of the increase in world trade, Roach notes, even though it has only 20% of world GDP.

No doubt, as a species, consumeris americanus is perfectly adapted to his economic niche. The world’s spender-of-last-resort not only spends what he doesn’t have; he also buys what he doesn’t need.

"Millions of Americans who once made up the vast middle of the nation’s $7 trillion consumer market are migrating upscale toward premium and luxury goods," reports the Wall Street Journal. The middle-market is disappearing say retail analysts. It’s either Wal-Mart or Neiman Marcus. If they can afford it, people want the top brands.

Personal savings rates are at their lowest level since the Great Depression while luxury brands – such as BMW and Mercedes – are hitting sales records. Where’s the money coming for all this heavy spending?

Another WSJ article gives a hint: "Is Housing Becoming a Bubble?" a headline asks. As reported here last week, in 2001 alone consumers added took out another $130 billion from their mortgage ‘equity’. Where did the money go? Well, some of it is now taking up space on America’s highways. Some of it was spent on vacations. Some on big-screen TVs and other time- wasters.

We don’t doubt the consumer’s will to spend. What concerns us is his ability. Already, long term rates are up…and refinancing applications have dropped. Sooner or later, the housing bubble will pop…or simply deflate softly. Either way, consumeris americanus could soon find his watering holes drying up.

Yo, Eric…over to you:


Eric Fry in New York…

– April Fools Day kicked off the second quarter yesterday, with the Nasdaq playing a clever little joke on the short-sellers. The struggling index pretended to be falling early in the trading day, and then reversed course to gain 17 points to 1,863.

– The Dow wasn’t quite so clever. Although the blue chips managed to rebound from their worst levels of the session, they still fell 41 points to 10,363. Ah well, there will probably be many more opportunities this quarter to make fools out of investors.

– "The kids on Wall Street wonder what kind of eggs they can expect in their second-quarter Easter baskets." Stuart Crampton writes in the Daily Reckoning’s Weekend Edition. While the mostly bullish analysts on Wall Street "are expecting the fattening, cream-filled Cadbury kind," says Stuart, "a quick recovery for corporate profits is a hair too much to expect." His skepticism is clearly the minority opinion. Bullish forecasts are multiplying like bunnies.

– The first quarter is in the record books, and although it did not set any records for growth, it has been a record-setter for producing bullish economic growth forecasts. Investor attitudes about the economy changed dramatically during the first three months of 2002. The pervasive Sturm und Drang at the beginning of the quarter became unbridled joie de vivre by the end.

– Most Wall Street economists now predict one of the most bountiful economic spring times ever. But we would offer a word of caution: Don’t venture too far from home without a winter jacket!

– The Japan Meteorological Agency recently reported that balmy weather in the Land of the Rising Sun brought the flowering cherry trees in Tokyo into full-bloom in mid- March, the earliest on record.

– In the same way, our economy – fertilized by Greenspan’s lavish money supply growth and watered by 11 consecutive rate cuts – blossomed unseasonably soon after recession. But some of the blooms may be fading already.

– "There are a few signs the economy has slowed a touch," says ISI, "most notably unemployment claims have been unchanged for six weeks. Others include the leading economic indicators being unchanged in February, DRAM prices declining 22% over the past two weeks, and our company surveys declining the past two weeks."

– The possibility that consumer spending might wither quickly is so obvious that even Wall Street brokerage firms are discussing the idea. A recent report from Goldman Sachs entitled "Consumer Spending: Three Cushions Now Set to Deflate," presents a very compelling argument that consumer spending may soon run out of steam.

– The three "cushions" Goldman discusses are lower taxes, lower energy prices, and mortgage refinancing. "Although consumers’ staying power has surprised everyone," the Goldman economists write, "its financial basis is not hard to discern. Spending found support from three cushions which inflated consumers’ spending power at time when the determinants of real disposable income had weakened."

– Examining each of these one-time fillips in turn, Goldman asserts that the beneficial effects of both last year’s tax rebate and the various other tax cuts have largely run their course.

– Next up, as anyone can easily observe, last year’s steadily declining energy prices have given way to this year’s steadily rising energy prices. "Consumers’ energy bills tumbled more than $50 billion over the past year," says Goldman. But the recent rallies in crude oil and unleaded gasoline have more than erased last year’s benefit. If anything, soaring energy prices will amount to a brand-new tax on the consumer this year.

– Crude oil ended last week at $26.31 a barrel, the highest price in more than six months. Meanwhile, gasoline prices surged an astonishing 44% during the first quarter of 2002.

– Lastly, says Goldman "Households are widely presumed to have liquefied scads of home equity via ‘cash out’ refinancing and used the money to boost spending." But this manna from heaven is drying up as "applications for refinancing have plummeted in recent weeks."

– "The loss of these cushions would not be too worrisome," Goldman winds up, "if real disposable income – the main driver of real spending – was otherwise set to accelerate. However, this does not appear to be the case."

– Indeed, there is ample evidence that companies continue to focus on containing costs, rather than on beefing up their payrolls in anticipation of resurgent demand.

– The reliably spendthrift American consumer that Greenspan & Co. believe will lead the economy to recovery might instead be leading it down Double-Dip Recession Avenue.


Back in Paris…

*** One of the things that makes Paris such a nice place to live is the advertising. Lingerie billboard ads, for example, often provide passers-by with an eyeful. In America, you’d have to pay good money for that kind of thing.

*** And now the student magazines have gotten into, how shall I put it, ‘the act’. The cover of a local school magazine, for example features a photo of some of the students – nude. "The photo of the five teenaged girls and boys at the prestigious Henri-IV Lycee caused a stir that extended beyond the 200-year-old school," reports the Liberation. "Many of France’s elite, including former President Georges Pompidou as a teacher, passed through the prestigious institution’s doors."

*** But out in the countryside, people tend to be much more conservative. A report on the 49th Ostensions of Le Dorat…below…

*** Maria’s face is all over Paris…on the cover of a beauty magazine. She stopped by the office at lunch time so we went out to Le Drapeau for lunch. I felt so lucky. My daughter…my favorite restaurant…and my favorite hardware store right across the road…

*** Having a daughter of Maria’s age is marvelous. It is like having a beautiful young mistress to squire about town…just as expensive, I might add…but without the complications. Daily Reckoning readers without daughters should consider renting one for special occasions.

The Daily Reckoning