Pomp And Circumstance

I could not resist, dear reader.

“How does it feel,” I asked, “to be partisans of such a thoroughly discredited idea?”

I might have gone further. I might have pointed out that the Nazis disappeared within hours after the Third Reich collapsed. Even before Hitler’s body was cold, almost no one would admit to ever having had the slightest sympathy for National Socialism. How was it that Communists still showed themselves in polite company?

The question has been hotly debated in Paris intellectual circles. A book recently appeared in which the author described how communists have tried to re-invent themselves. So I was curious.

If you are searching today’s letter for an insight into the world of investments, I am afraid you will be disappointed. Instead, I give you this gratuitous memoir of my son’s graduation.

Standing before me at the cocktail reception were two communists – parents of one of Will’s classmates. They earned their livings as labor lawyers in Milwaukee. In cocktail conversation, I discovered that they were, or had been, Marxists. “Subversives,” was how they described themselves.

They were an attractive couple. Lively, witty, charming. And they had just come back from a trip to the Holy Land of Collectivism – Cuba.

“I’d say,” the woman explained, “that what we believe in is `sharing.’ Cuba is a very sharing place.”

So you see, dear reader, there is hope for humankind after all. The heirs of Lenin, Stalin and Pol Pot have become sharing and caring people. If only they had learned that `sharing’ at the point of a gun is not sharing – but robbery.

St. John’s is an unusual college. It has only one curriculum – the Great Books Program. Students read the classics – beginning with the ancient Greeks and working their way forward in history. Even the study of mathematics and science is undertaken in the same way. They read Euclid…Newton…Einstein…learning the great ideas rather than their application.

The commencement itself took place the next day. Each student’s name was listed, along with the title of his senior essay, which give you a sense of the place. Kathryn Loyce Andrews wrote about “Self-Consciousness and Spirit.” Matthew Burritt described “The Eye and the Imagination: Johann Wolfgang von Goethe’s Artistic Approach to Scientific Inquiry.”

What’s this? Amid the comments on Wittgenstein and Dostoevsky is this rather anti-intellectual title, “How to be a Real Man,” by William Wesley Bonner. No further comment.

I took my place in the audience, along with hundreds of other parents and relatives. Cameras flashed as the graduates made their way to their seats. Mothers beamed with pride. Fathers sighed with relief…it costs $25,000 per year to send a child to the college.

But what caught my eye on the speakers stand was the sight of a familiar black face. Yes, it was Cornel West, who would give the commencement address. West is a professor of Afro-American Studies, at Harvard. But the effect of affirmative action makes you suspicious of the black bourgeoisie’s credentials. I wondered about Mr. West. Stepping up to the podium, the professor got off to a rousing start – like a preacher with a microphone in his hand. Within 2 minutes he had quoted T.S. Eliot, W.B. Yeats, Malcolm X, and Nietzsche.

And he, too, seems to be a believer in sharing: “Don’t ever forget…don’t ever lose your passion,” said he to the class of 2001, “for helping to make sure that all people get to share in those great traditions of Athens and Jerusalem.”

At the end of the short speech, the audience rose to its feet in enthusiastic approval. But, as usual, your reporter takes a contrary view.

West’s speech was full of emotional appeal. But it made no sense. It was nothing more than a string of delightful quotations, but with no direction or apparent point. “The unexamined life is not worth living,” said West, quoting Malcolm X who was in turn putting his own twist on Socrates, “but the examined life is painful.”

“Traditions cannot be inherited,” said West, quoting T.S. Eliot, “they must be earned by hard labor and sacrifice.”

After the event, I walked over to the student bookstore and bought a copy of West’s book, “Race Matters.” Surely, the man could not write a whole book without saying something interesting, I thought. And the jacket promises that “West’s thinking consistently challenges the conventional wisdom…”

Alas, the book does no such thing. It is nothing but conventional wisdom. So, I will save you another $12, dear reader.

West’s complaint is revealed in his foreword. Taxis in New York won’t pick him up. I will take his word for this, but not his explanation. He maintains that the cab drivers are racists – reflecting the imbedded racism in American society. Perhaps so, but many cab drivers in New York are black themselves. It is more likely that the cab drivers look for the passengers who will give them the biggest tips with the least hassle.

Coming back to Baltimore I got into a cab with a black driver. He turned out to be a recent immigrant from the Sudan, a man with very black skin, but with a thin face and long narrow nose. He told me he attends community college during the day and drives a cab at night. When he has established himself, he said, he will bring his family over.

“How do you like driving a cab,” I asked.

“Well, it’s okay. But I only work from the airport. I don’t like to pick people up in town. It’s too dangerous.”

The obvious solution to Mr. West’s problem is for blacks to give bigger tips and stop trying to share taxi drivers’ money. But you don’t get to be professors of Afro-American Studies at Harvard with that kind of thinking. Instead, West maintains that there is something wrong with the white soul. “The unique combination of American terrorism,” he writes, “bears witness to the distinctive American assault on black humanity…the fundamental litmus test for American democracy…remains: how broad and intense are the arbitrary powers used and deployed against black people.”

Mr. West offers no evidence for this…nor any logic that makes any sense. But he offers a solution: share out the whites’ money – by force. Rob honest citizens as if they were taxi drivers…and redistribute the loot.

The white soul is surely corrupt…but there is no reason to think it is more so than the black one. West has made a good living for himself with this kind of claptrap. And he has white audiences all over the country applauding him.

Your correspondent, caring and sharing…

Bill Bonner
Baltimore, Maryland
May 21, 2001

P.S. My son is not sure what he will do after graduation. I wondered what the Marxists’ son would do. “He has decided to follow the way of the samurai,” said his mother. “What’s that?” I asked. “I have no idea,” came the reply.

*** Forget tech stocks. The hottest action these days is in the gold market. Gold spiked $13.80 per ounce last Friday – or about 5 percent. This surprisingly strong advance was the long-slumbering precious metal’s biggest gain in 15 months.

*** Gold mining shares, likewise, posted very strong gains on the day – with the HUI (an index of pure gold miners) up 10%. On two of the three day’s following Greenspan’s latest rate cut, gold stocks have been the best performers. What is that telling us?

*** We’re `great and sublime fools’ to use Mark Twain’s words… We have an opinion, but we’re not fool enough to think we know what Mr. Market is planning. The money supply is soaring…consumer prices are rising…and the Fed is cutting rates. Could these conditions be good for gold?

*** “No mater how you slice it or dice it, inflation is on the ascent,” says Northern Trust economist, Paul Kasriel.

*** But despite the prevailing inflationary breeze, there are noticeable gusts of deflation from time to time. Weldon’s Money Monitor detected “deflationary undercurrents” in Wednesday’s CPI report. In particular, “the simple 3-month DEFLATION in computers is 9.7%.” Dell, admitted that sales and profits were hurting… the stock price fell 4% on Friday.

*** Otherwise, not much activity on Wall Street on Friday. The Dow surged just before the close to finish up 53 points. The Nasdaq advanced 5 points. For the week, the Dow climbed 4.4%, the Nasdaq rose 4.3% and the S&P 500 added 3.7%.

*** “The still prevailing optimism about the U.S. economy rests on three assumptions,” writes Dr. Kurt Richebacher: “first, that the downturn is being driven by the technology industry…; second, that consumer spending, accounting for 75% of GDP growth, will prove resilient and thus prevent recession; and third, that prompt and aggressive monetary easy by the Fed cannot fail to work its magic on the markets and the economy.”

*** We’ve seen what has happened in the technology sector. The promises of the Information Age – that new tech is immune to the business cycle, that it is smart enough to avoid excess inventories through real-time monitoring, that it boosts productivity faster than the Fed can debase the currency – have all proved hollow. But can the Fed still work its magic…and keep consumers spending?

*** Consumers are still buying imported goods. March’s trade deficit rose to $31.2 billion. “Consumption and housing expenditures have held up reasonably well,” said the Federal Reserve upon lowering rates Tuesday, ” though activity in these areas has flattened recently.”

*** The strong housing and refinance market has been the economy’s lone pocket of significant strength. If it fades, no other consumer spending sector appears to be standing at the ready to pick up the slack. Cutting short rates 5 times in 5 months seems to have stirred up the gold bugs and bond vigilantes. While Greenspan knocks down short term lending rates, both gold and long term interest rates are rising

*** Rising long rates is bad news for the housing/mortgage industry. Building permits, a gauge of builders’ plans for upcoming months, dropped 2.5% in April, after falling 2.2% in March. The rate on a 30-year mortgage has climbed to 7.14% after bottoming at 6.89% a few weeks ago.

*** Bloomberg writes, “From Greenwich, Connecticut, to Jackson, Wyoming, [real estate] brokers said that both prices and transactions are on the decline. The number of U.S. homes selling for $1 million or more fell 29% in the first quarter from the fourth quarter of 2000, according to DataQuick Information Systems, a housing research firm.”

*** Doug Noland, a DR Blue Team associate, suggests that rising long-term rates will actually choke off consumer spending. As a “for instance,” Noland observes, “the April data from the Mortgage Bankers Association shows, that the average fixed mortgage was for $156,600, while the averaged adjustable-rate mortgage was more than double the amount at $323,500.” Higher long-term interest rates will increase these homeowners’ monthly payments – leaving less money for spending on other things.

*** Santa Fe is a unique place. The city fathers passed an ordinance requiring all homes to look as though they were made of adobe. So, the whole city is brown. If you don’t like the color of mud, you won’t like Santa Fe.

*** My purpose in visiting Santa Fe was not to grow a pony tail or take up yoga. Instead, I was attending my son’s graduation from St. John’s college. More below…

*** I can recommend two restaurants for you: The Compound and Ristra’s. Both are good. Up-market Santa Fe restaurants seem to be competing with each other to see which one can come up with the most absurd combinations and most obscure ingredients. Sometimes the experiments work; sometimes they don’t.

The Daily Reckoning