Sensation Mongers

“As the Earth’s Ice Cover Melts” warns the headline in Friday’s International Herald Tribune, “It Brings Floods and Famine.” Lester Brown, a man who never met a crisis he didn’t like (assuming he could use it as a pretext to tell people what to do) goes on to explain all the bad things that might happen if the earth continues to warm up.

Lester Brown is a professional fear-monger, and a darling of the media. He helps focus attention on the crisis-du- jour.

I have been mercifully free from the IHT for the last few weeks. It seems to arrive sporadically out in the country. Here in Paris, on the other hand, it is as inescapable as dog poop.

It is also ‘sticky.’

Stickiness, as Malcolm Gladwell, explains in his book on “The Tipping Point” is one of the things that creates a popular sensation. Reading a copy of the IHT, for example, one might get the idea that Lester Brown’s thoughts on global warming are important. One might discuss the subject at a cocktail party. Or even write about it oneself. TV stations might find it suitable for news stories. Soon – one might begin to care.

Thus does the major media take possession of your mind and emotions.

From your personal experience – that is, the things you know from direct, immediate, first-hand contact – would it make any different if temperatures were a couple of degrees warmer? It might actually be a nice thing. And what if it rained more? Well, it might be a good thing or it might not. A little global warming might help my figs ripen. As it is, in central France, they almost never reach maturity.

No one really knows if the earth is warming. Or, if it is…no one knows why. Nor can anyone tell you if it would be a good thing or not. If you live in a high, cold area – a little global warming might be great. But if you live only a couple of feet above sea level – where it is already too hot – well, move.

But when the chattering classes get hold of a subject – about which they know absolutely nothing – it threatens to turn into a popular sensation, barging into your attention like a wet Labrador in the family station wagon.

Cheek by jowl with Lester Brown on page 7 of the IHT is an article by Washington Post columnist Richard Cohen. Cohen takes on the almost impossible task of trying to be more moronic than the presidential candidates themselves – and succeeds.

Speaking of Senator Lieberman, he writes, “I still admire the man, but fidelity to my own values compels me to say…”

Does editorial writing get any worse than this? What pompous drivel! He then crosses swords with Lieberman over the following statement by the Senator: “Our nation is chosen by God and commissioned by history to be a model to the world.”

“Mr. Lieberman’s statement is preposterously false,” says Cohen, who must have interviewed The Almighty himself to get the story straight. “The United States is a fortunate and exceptional nation which I love dearly, but it is no more divine than any other.”

Of course, neither man has the slightest idea where God stands on the issue. But Cohen’s ‘values’ insist that he let us know that he doesn’t think America is all that great:

“Did God choose slavery,” he asks, not expecting an answer. “And what about crime?” Why would America have such a high crime rate, he wonders, while Sweden (where only 4% attend church regularly) has a much lower rate? It is simply unfathomable that God could work in ways that Richard Cohen could not immediately grasp. Yet, if God imposed such a restraint on himself, he would be a strange and pathetic deity.

Cohen comes to the amazing conclusion that Lieberman’s views are ‘repugnant.’ The English language gives Mr. Cohen thousands of adjectives from which to choose, yet the wordsmith seemed to get one of the very worse ones. Lieberman’s fatuous claim to know the mind of God may be ill advised…stupid, ridiculous, impolitic, inane, silly, and many other things. But, ‘repugnant’?

And even if it is repugnant, how could Cohen’s complaint – based on his claim to know God’s mind even better – be anything different?

Ah…once again, more brain time taken up with puerile malarkey. And yet, this is the way herd thinking works. If you pay attention to the popular media, you begin to think that these issues are important. Then, they become important.

Meanwhile, on the facing page, there is something more interesting. Richard Halloran notes that the Chinese military believes the U.S. “has become casualty shy.”

There is “a perception that Americans are no longer willing to spill blood to defend their national interests,” he writes. Yet, he continues, “a careful reading of American history in the 20th century show, however, that Americans will fight in causes which they understand to be vital to their principles or national interests.”

Halloran must have been reading different history from ones I’ve read. What vital cause was involved in WWI? Or Korea? How was the Vietnam War related to America’s national interest? What history shows is that war – like tech stocks – can become a popular sensation. The chattering classes can turn a remote, obscure and absurd war into a fashion statement. Soon, everyone wants a piece of it…and will go to the other side of the world and risk getting killed for it.

Slogans such as “make the world safe for democracy,” or “freedom,” or the “Domino Effect,” help to rationalize their actions. But what drives them forward is a kind of mass psychology – the same kind of herd thinking (but enforced by much stronger taboo against defection) that creates market bubbles and Pokemon fads.

More on this…maybe tomorrow.

Bill Bonner,

back on the job in Paris… September 11, 2000

*** The big news today is oil. Clinton went to the Saudis and asked for help getting his man, Gore, elected…I mean…er…easing the burden on American consumers. The Saudis, who depend on the U.S. for their weapons of mass destruction, said: ‘whatever you want.’

*** Following the Saudi lead, OPEC announced it would increase production 3% – by 800,000 bls/day. The Saudis say they want oil between $22 and $28 dollars. So oil fell $1.76.

*** But don’t look for an immediate drop in gas or heating oil prices. Inventories of heating oil, for example, are 40% below those of last year. And oil has to be refined and shipped.

*** Plus, the world is catching on to the fact that the New Economy uses a lot more energy than people thought. Our own Dan Ferris, an analog, Old Economy kinda guy, was way ahead on this story. “The Internet’s Dirty Little Secret” he called it.

*** The Dow has lost 2.4% so far this year. The Nasdaq has lost almost the same amount. But global energy stocks have returned 11%. Coal stocks, such as the one Dan recommended, are up 37%. And oil-drilling companies are up 76%.

*** Counter-intuitively, utilities – which are energy consumers – are also up about 36%. But the utilities pay decent dividends. And the smart money is moving towards the fixed returns of bonds and utilities.

*** Friday was another bad day for the Big Techs. The Nasdaq dropped 119 points. (The Dow was down too, but only 38). One out of every three Nasdaq stocks fell by at least 5%. Cisco dropped about $2.40. JNPR was down $17.25. That brought the Nasdaq to a 6% loss for the week.

*** The Nasdaq, by the way, had a good month in August. It rose 12%. The S&P 500 and the Dow each rose about half that amount.

*** But even this gain still left the Nasdaq 750 points below its March top. And, with last week’s action, it looks as though the index has just completed another bear market rally. Now that the summer is over, Mr. Bear might be ready to get to work.

*** Yet, investors are taking few precautions. “The numbers just keep getting better,” says a remarkable piece in Reuters today, illustrating how bullish, complacent and confident the market has become. Citing recent productivity numbers, the author proclaims that computers “turned US companies into the world’s most efficient machines in history.”

*** As Dr. Richebacher has demonstrated, however, what the numbers really show is that the manufacture of computer power is taking place at the most efficient pace in history. How that helps burger flippers, pest exterminators and the rest of the real economy become more efficient is another question.

*** Bullish sentiment is as murky as the Amazon…but it is deep and wide too. The Fed is thought to be out of the picture at least until after the election. A poll by the American Association of Individual Investors reveals that 63% are bullish…and only 8% are bearish.

*** The Reuters piece suggests that investors should get ready for “a grand finale” to the year. Says Martin Pring: “The next important market move is likely to be up, rather than down.” But Mr. Bear loves disappointing people…and may be planning a ‘grand finale’ of his own.

*** For example, “there was a whopping backlog of 416 IPOs as of August 27th,” reports news.excite.com. “That’s about double the number of deals in the pipe as of the same time for the past two years – in 1999, there was a backlog of 225, and in 1998, the backlog was 222.” Ye t, before the end of the year 287 of the backlogged – “networking, telecom and anything wireless” – are expected by underwriters to draw $36 billion from the market.

*** Tokyo stocks fell 2% this morning. Computers must not work among raw fish eaters. How else can you explain it? Why aren’t Japanese companies becoming ‘the most efficient machines in history’?

*** Jorg Haider is getting his revenge. You may recall that Haider’s remarks about Hitler were judged politically incorrect. France led Europe in sanctimonious rhetoric and reaction – imposing sanctions on Austria. But now, a report by Euroland’s ‘wise men’ came out this weekend and said the obvious – Haider is no worse than any other politician in Europe.

*** What made this entertaining was the Everest of hypocrisy involved. French governments are run by collections of socialists and communists – whose creeds and deeds were every bit as nasty as the Nazis with whom Haider never had any association. Haider, in a gesture roughly equivalent to the one Mr. DesHais presented to the local gendarmes, described the “wise men” report as a ‘Waterloo’ for the French.

*** And what’s this? Professional racist Al Sharpton is threatening a boycott of Burger King. Al is, of course, the original, ‘home of the whopper.’

*** If I am not mistaken…today is Harry Schultz’s birthday. Harry is one of the Grand Old Men of the guru trade, whoseletter, “for thinking humanoids,” has been published since 1964.

*** The French franc has fallen to 7.6 to the dollar. Addison reports that he can buy a bottle of decent table wine for one buck. It’s almost as cheap as water.

*** And the truckers’ strike ended yesterday. I had filled up the tank before driving back to the city last night…but the stations once again have fuel. Things are returning to normal.