Repentance

One of our English-speaking residents of nearby Montmorillon raised doubts about the perfectibility of man over the weekend. She seemed troubled when Elizabeth had tea with her on Sunday.

She felt ostracized by the other mothers at the school meetings and get-togethers. She wondered, with no apparent humor in her voice or visage, if there weren’t, perhaps, witches in the town.

Elizabeth, struggling to keep a straight face, replied that the French could be difficult…that you had to make a real effort to get to know them…and besides, witchcraft had been outlawed by Papal Bull several centuries ago.

Ever since then, witches have had a grudge against the Vatican. They’ve nursed an ugly wound that they wear like a badge of honor (to borrow a phrase from a presidential hopeful).

But on Sunday, they must have felt left out. Ignored. Relegated to the closets, basements and forlorn hilltops where they belong.

Homosexuals felt left out on Sunday, too. John Paul II, leader of the Catholic Church, issued his apology and his call for repentance. But he made no mention of homosexuals. Nor did he mention many other categories of the church’s victims over the centuries, including witches, drug addicts, condom manufacturers, devil worshippers, abortionists, pedophiles, necrophiles, sodomists, onanists and a whole range of oddities and curiosities in which the modern world glories.

He did, however, hit the big ones. He regretted the intolerance that Christians had shown towards other religions, races and ethnic groups.

“I hope,” said Haim Korsia, spokesman for France’s Jewish community, “that [the church] will never again need to repent because it will know how to adjust its behavior…”

What a wonderful time to be alive. We are not merely getting rich materially — but morally, too. The errors of the past have been spotted and corrected. We are all so much smarter now. We won’t make those errors again.

This is as true in the financial world as it is in the religious and political ones. It is thought, for example, that recessions will be avoided in the future because the Fed has learned how to better manage the nation’s money. It is thought that stock prices will continue to expand (though they are actually only increasing in a very narrow sector) because now investors know that nothing beats a well-balanced portfolio of stocks over the long haul. Not only that, investors have also learned to “buy the dips” — so there will be no more crashes or bear markets.

Perhaps Alan Greenspan should go on TV and apologize for the Fed’s handling of the post-’29 episode. It would be nice to know he had figured out the mistakes of the past.

Repentance is certainly popular. Joerg Haider apologized, and repented, for his comments on Hitler and the Nazi era. Bill Clinton apologized to Africa when he visited a few months ago — though I can’t recall what for.

And now Aetna Insurance, founded in 1853, is thinking of making an apology for writing policies on slaves, payable, of course, to the owners. But an activist lawyer is demanding not only an apology, but that the company “share that wealth with the heirs of the Africans they helped maintain in slavery.”

Again, looking back from the comfort of a century and a half, it seems obvious that slavery was evil. But writing policies on slaves may not have been such a bad idea. Aetna had a keen interest in the treatment of slaves. When one died, the company had to pay. No doubt the company would have included a clause in the contract that relieved it from liability when the death was the result of the slaveowner’s neglect or mistreatment. Thus, Aetna, if no one else, had an interest in discovering the circumstances surrounding a slave’s death and doing whatever it could to extend the slaves’ life-expectancy and push out the moment when death benefits would be payable.

From the distance of 150 years, of course, it’s easy to miss the small details and nuances in the picture. This is part of a general principle — the less we know about something, the simpler and easier it is to be indignant about it. Information increases complexity and uncertainty.

What’s more, it’s easy to be self-righteous about the activities of others, particularly when they’ve been dead for centuries. Moral courage is cheap when you don’t expect to get the bill.

But the point I am reaching for is that the repenters and apologists may not be as smart as they think they are. This may not be a whole New Era of Truth and Morality after all. Instead, it could be merely a cyclical top. Alan Greenspan, so invincibly smart now, may seem vulnerably less intelligent at the bottom of the next cycle. And Moral Courage — so cheap and abundant today — may eventually become so dear that the world once again cherishes every precious drop.

Even the world of slavery, which was as close to an unqualified evil as you are likely to find, had its ironies and paradoxes. At the loading docks in New Orleans, for example, bales of cotton were pitched down into the holds of cargo ships. Slaves did the pitching. But the catching was done mostly by Irish day laborers. Slaves had capital value. So their owners did not want them doing anything that was too dangerous. The dangerous work was given to Irish immigrants…who died in great numbers, and upon whom Aetna had written no policies. Your recovering correspondent,

Bill Bonner

March 14, 2000 Paris, France

*** Dow up slightly yesterday. S&P down slightly. Breadth gets worse and worse. And new lows on the Big Board continue to outnumber new highs by a startling margin. Yesterday, for example, there were 37 stocks hitting new highs and 226 hitting new lows.

*** Meanwhile, the Nasdaq fell 141 points. So, once again, the question that bubbles to the surface of this broth is, has the Nasdaq finally peaked?

*** It is almost impossible to keep your head about investment matters when so many people in the financial media seem to have lost theirs. But what is really going on is that over the last 22 months we have seen a series of rolling tops. The process began when the A/D ratio topped out in April ’98. Gradually, the number of stocks going up has become smaller and smaller as sector after sector topped out. Financials, retailers, transports — you name it…they’re all in bear markets.

*** The only exception is the techs and Nets, concentrated in the Nasdaq and the Russell. But even here the indexes mask the fact that breadth is poor. Few stocks are actually rising — though some rise so spectacularly that they catch everyone’s attention.

*** Market commentators believe the Fed’s promise of more rate hikes is battering the “Old Economy” companies, which are sensitive to interest rates. But they think the “New Economy” stocks could care less. Investors seem willing to throw money at these companies. So their cost of capital (the effective interest rate) is nearly zero.

*** For now, but not forever. “The poor schmucks,” as Robert Metcalfe called retail Internet investors, are someday going to want a return on their money. Of course, by then it will be too late. They will not even get a return OF their money.

*** Not only is there no law that requires there to be a buyer for every seller, there isn’t any statute that requires the markets to make sense. In fact, they’re not supposed to make sense. If they did make sense, anyone could make sense of them.

*** Realizing, for example, that the techs and Nets were tottering on the edge of a cliff, for example, speculators would switch from buying to selling. The game would be over immediately. Then a new bull phase could begin — also instantly. The whole process would be blasted into warp speed…a blinding flash into the future.

*** But this wouldn’t do at all. It would be like perfect knowledge…the final delusion of the Information Age…the omniscience that leads to total and complete paralysis. Time would stop. Life would stop…as one’s whole life…and afterlife…would be visible, knowable and livable in an instant.

*** Forget it, in other words. Things don’t work that way. Markets need to act in ways that constantly confuse and astonish investors. They need to keep us guessing. They need to punish the weak, the timid, the reckless, the careless, the credulous and the proud. Markets need to grind the bones of genius investors into very fine dust — from whence it is blown away.

*** Why do I like France? Well, consider this: I was on the phone with my tax preparer in Paris on Friday. It was the deadline for filing my French taxes and we were rushing to get the paperwork together. “Don’t worry,” Madame Pasche told me, “the tax collectors went on strike yesterday.” This is not as civilized as Italy or Argentina, where the tax collectors don’t even show up for work…but still, a good sign. The tax collectors in France are protesting the computer processing of tax returns.

*** A headline in the “Financial Times”: “Japanese banks agree merger.” Why have the English dropped the articles from their speech? It should be `Japanese banks agree to merge’ or `Japanese banks agree to a merger’…I notice also that the English will say, `he went to university.’ Or, `he’s in hospital.’ Someone should straighten these people out on the language.

*** And here’s another one of those non-existent clouds on the horizon of the New Era…a headline from the “International Herald Tribune”: “Nuclear War Between India and Pakistan Is a Real Possibility.” Both countries claim a region of Kashmir — which any sensible nation would be happy to get rid of. But India increased its defense budget 28%, and both sides seem to be taking the matter as if it were important. The writer ran a simulation of the situation at the U.S. Naval College and discovered that the risk of “a significant nuclear exchange is frighteningly plausible.”

*** There’s always something new. Yesterday, it was a new bacterium. Remember how NASA announced that it had found traces of a very tiny bacterium on a meteorite from Mars? NASA came under attack from many scientists – – who pointed out that, in the words of one Nobel Prize winner, Christian de Duve, such small bacteria “is simply not compatible with life as we know it.”

Well, another French scientist has confirmed that these nano-bacteria do exist. He found traces of them on another meteorite. And a Finnish researcher found them almost everywhere — including in human blood — 12 years ago. He was dismissed as a kook. But now it appears he was right. There appears to be another level of life — much smaller than anything previously known.

*** I must have been still delusional yesterday — I think I even got the date wrong. But I’m better today…at least I’m sitting up. At my desk.

*** Wouldn’t it be nice to take a long convalescent cure at a Swiss hotel? Sit in the sun beside Lake Geneva. Breathe the clean mountain air. Read, think…shuffle around, coughing occasionally so that people would know you were there for the cure and not just loafing…

*** Those days are over, I guess. Now it’s right back to work. Such is the curious quality of modern progress — the richer we become, the less we are able to afford to relax and enjoy life’s little pleasures.