When people think of Thanksgiving, they think of Pilgrims and Indians, sitting down at the same table to give thanks…but in this DR Classique, first run on Thanksgiving Day, 1999, Bill Bonner gives us a lesson in the real history behind the holiday…

I turned to my trusty assistant…Beirne White…this morning.

"Beirne," I said gravely, "tell me about Thanksgiving in Mississippi."

Beirne proceeded to tell me about a Mississippi bluesman named "Son" House, who lived to be 102 by doing what bluesmen tended to do…chasing bad luck, bad liquor and bad women.

"What has that to do with Thanksgiving?"

"Nothing," he replied…whereupon he drew on the resources generously provided by, formerly of Chicago, lately of cyber space, to get me the research I requested.

Beirne hails from Mississippi. And while Mississippians will sit down with the rest of the nation…and tuck into their turkeys with equal relish…perhaps only substituting Bourbon Pecan pie for the sweet potato or pumpkin pie enjoyed in Maryland…it was not always so. Somewhere deep in the most primitive part of his medulla oblongata, the part of the brain where race memories are stored, Beirne resists Thanksgiving. It is, after all, a Yankee holiday.

Thanksgiving in France: Commemorating the Northern Victory

In the middle of the War Between the States, both sides would proclaim days of "thanksgiving," following the progress of the war as we now follow the progress of the stock market. After each of the first and second battles of Bull Run – which sent the Yankees fleeing back to Washington – the Confederates proclaimed days of thanksgiving. But it was Lincoln’s day that stuck. Declared after the battle of Gettysburg – the last great Napoleonic charge of military history – Thanksgiving was set for the third Thursday in the month of November, commemorating the Northern victory.

Beirne doesn’t say so…but this fact must stick in his craw. It doesn’t help that the original celebration took place in Massachusetts. And that it was hosted by a dour bunch of Puritans, who probably wouldn’t have been able to enjoy a good dinner if their lives depended on it. But they certainly had a lot to be thankful for.

As the Wall Street Journal reminds us annually, they nearly exterminated themselves in typical Yankee fashion – by wanting to boss each other around. They had arrived in Massachusetts by accident and bad seamanship, intending to settle in the more hospitable climate of Virginia, which had been colonized more than 10 years before. Once in Massachusetts, they proceeded to set up such a miserable community that surely most of them, had they lived, would have longed to return to England. The Soviets could have learned from their example and spared themselves 70 years of misery. Only after the "witch-burners and infant-damners" abandoned their communal form of organization, and allowed people to work for themselves, did the colony have a prayer of survival.

But victors write the history books. And now this precarious celebration by a feeble group of religious zealots has turned into the most American holiday. After Appomattox, the South was helpless. Its natural leaders, the plantation aristocrats, were either dead, bankrupted and/or discredited.

Many of them went to Northern cities, like New York or Baltimore, where, Mencken tells us, they "arrived with no baggage, save good manners and empty bellies." They enriched the North. But back home, they were sorely missed. "First the carpetbaggers," says Mencken, "ravaged the land…and then it fell into the hands of the native white trash…" Scars of war can take a long time to heal. But 130 years later, the South is the most economically and culturally robust part of the nation.

Thanksgiving was declared a national holiday in 1931. Through the Depression, and then WWII, Thanksgiving grew in importance. In a country where roots meant almost nothing, where people were ready to pick up and move at the drop of a hat, where there were huge differences in what people thought and how they lived, Thanksgiving served to provide a unified, national myth… most popularly expressed in Norman Rockwell’s Thanksgiving cover for the Saturday Evening Post. Roots mean more in Mississippi than they do in California.

Thanksgiving in France: A Unified, National Myth

"No man is himself," said Oxford, Mississippi’s most celebrated alcoholic, "he is the sum of his past." Unlike so many other American writers of the 20th century, Faulkner stayed home. The forward to the Encyclopedia of Southern Culture has a passage from Faulkner, saying: "Tell about the South. What’s it like there. What do they do there? Why do they live there? Why do they live at all?"

Even in Faulkner’s Mississippi…Thanksgiving is now part of everyone. Where Beirne goes…it goes too. And so, all over the world, Americans, gathering in small groups, like pilgrims on distant shores, celebrate the holiday (if not on the actual day…perhaps the weekend following…as we will do.) This can require a little ingenuity. Americans in France have to search for the ingredients. Pumpkins are hard to pronounce-citrouilles-and hard to find. Cranberry sauce is unknown.

But my mother discovered a store in Paris specializing in American groceries, named "the Real McCoy." She hastened thither yesterday, and brought back canned pumpkin, cranberry sauce and peanut butter. Thanks to this outpost of American culinary supplies, we will be able to have a very typical Thanksgiving dinner went we slide our chairs up to the table on Sunday. Art Buchwald has translated the Thanksgiving story for the French, deftly turning Captain Miles Standish into Le Capitaine Kilometre Deboutish. But no one has refashioned American Thanksgiving recipes for the metric measuring cups here in France. My wife, Elizabeth, descendant of the Puritan fathers…former resident of New York…a Yankee, in other words…and my mother – issuing from Southern Maryland tobacco farmers and the French bourgeoisie – will do their best.

And we will be thankful.


Bill Bonner
The Daily Reckoning
November 25, 2004

Yesterday, the dollar fell to a new record low against the euro and the pound.  A single euro will cost you nearly $1.32.  Meanwhile, gold nearly touched $450.

While Americans snoozed in anticipation of their Thanksgiving feast, central bankers all over the world began to sweat.

"When you owe a banker $100,000," says the old adage, "it troubles your sleep.  But when you owe $1 million dollars, it’s the banker who cannot sleep."

Last night, central bankers of Japan, China, and the rest of developing Asia, must have tossed and turned.  Since 2000, world foreign exchange reserves – most of it in dollars and most of it in Asia – have increased from $2 trillion to $3.5 trillion.

The increase in central bank foreign exchange reserves is about the same as America’s trade deficits during the same period.

A hundred years earlier, a nation had to settle up in gold.  If its citizens spent more than they took in (running a current account deficit) the difference would be made up in gold.  As gold supplies fell, finance ministers were forced to devalue their currencies in terms of gold.  And as the currency fell, the purchasing power of the people who held it fell too – thus bringing the balance of payments back into whack.

During WWI, Britain spent so much money trying to kill Germans, she bankrupted herself.  So heavily in debt was she (mostly to U.S. creditors), she had to go off the gold standard – effectively ending a financial system that had served the world for 100 years.

Half a century later, America found itself in a similar situation.  This time it was the Vietnam War and the Great Society that had done the damage.  America could no longer afford to honor its promises.  So Richard Nixon "closed the gold window" at the U.S. Treasury and ended another financial system – Bretton Woods.

Since then, the world has operated on a Dollar System.  Central banks hold dollars in their vaults and count on the U.S. Fed to keep its currency from going bad.  But now the dollar is going bad…and the bankers don’t know what to do.  For the moment, they are frozen between two awful choices.  He can continue lending; or he can stop.

Central bankers have trillions of dollars in their vaults.  And their economies depend upon the U.S. consumer.  In order to spend, the U.S. consumer must have access to EZ credit – for he has no savings and his income barely increases.  In order to keep the U.S. consumer consuming, central bankers must lend him money.  Indeed, a study by the New York Fed showed that it takes more than the entire world’s savings to keep Americans living in the style to which they’ve become accustomed.   Private investors have already withdrawn much of their support for the dollar and the U.S. consumer.  If central bankers pull out too – the jig is up.  The entire world economy will have to face the consequences of a collapse in consumer demand, a collapsing dollar…and the end of the Dollar System.

But if he continues to lend he will have to add billions more – maybe trillions more – dollars to his vault.  What will he do with them?  Why would he want to increase his exposure to an asset this is already losing value…one that everyone knows is not solid…and one that everyone expects to fall at least another 20%?  He would have to be mad to buy more dollars.  And mad not to.

Japan alone has $820 billion of foreign currency reserves.  A 20% drop in the dollar’s value would reduce the value of this asset by $164 billion.  What banker will want to be the one to report that loss to his shareholders?  To his nation?  In Japan, they are likely to hand him a hara-kiri knife…and stay for the show.

For the moment, dollar holders don’t seem to believe their own eyes.  They have been told the dollar is falling.  They have seen it fall.  They have every reason to believe it will fall more.  They are trapped…stunned…and desperate.

What can they do?  We wait to find out.


Tom Dyson, from a deserted corner of Mount Vernon…

Markets are closed…and the dollar lives to fight another day. Instead of your regular edition of the Rude Awakening, we offer you an unusual analysis of Thanksgiving Day by our friend, Gary North.

"Modern economic theory discounts the past to zero. The past is gone; it is not a matter of human action. Whatever you spent to achieve your present condition in life is no longer a matter of human action. The economist calls this lost world ‘sunk costs.’"

"There is a major problem in thinking this way. It is the problem of saying ‘thank you.’"


Bill Bonner, back in London:

*** It is Thanksgiving Day in America.  But here in London, we reckon today as every other day.  We will have to eat our turkey on the weekend.

*** We must have left readers on the edge of their seats with yesterday’s naughty vicar story.  You recall, dear reader, that the village undertaker and her ‘partner,’ the village doctor, were out to destroy the village vicar – accusing him of all sorts of things, including most prominently having an affair with the undertaker.

Well, today’s TIMES brings an update.  The doctor "planned to kill vicar with an overdose of V…..," says the headline.  What a hard way to go.

*** Middle age is an awkward time for many men.  They are too old to rock and roll, but too young to die.  They look fondly back at the past, when they were young men with energy, ambition and girlfriends.  And they look calmly towards the future, when they will be grumpy old men with a know-it-all attitude about everything.  But in the present, they have no role, no place, and no hope.  Probably the best thing to do is simply to go abroad for a few years. Drink too much, out of sight of friends and family.  Get a mail-order girlfriend half your age. Come back when you have settled down, and are ready to collect social security without making a fool of yourself.

*** "According to a recent issue of Fortune magazine," writes our friend Dan Ferris, "eBay is ‘the fastest growing company in history.’"

"That’s more growth than anyone’s ever seen.  I wonder how much that’s worth? Surely, the online mega-company of the century, the fastest growing company in history, is worth more than any other company in the world…

"Starting with $865 million of trailing 12 months free cash flow, using a growth rate of 12% – twice the long term growth rate of S&P 500 profits – I get a discounted cash flow value of $28 billion.

"Today eBay’s market cap is about $73 billion.

"Diluted EPS is $1.056.  Share price is $111.  That’s an earnings yield of 0.95%.  No dividend.  24 times sales.  12-times book value.

"One way I could justify eBay’s current market value was to assume that its cost of capital was zero and that it would grow at least 20% a year for the next 15 or 16 years.  The way people throw money at its shares, the former assumption might be true someday.  The way they gather on its website to buy and sell every piece of junk under the sun, the latter might turn out to be true as well!

"There are endless ways to play with the numbers to arrive at a theoretical fair value of $73 billion for eBay, but I don’t know if I could ever believe any of the necessary assumptions underlying those numbers.

"Part of the reason value investing works is because the multiples that most people work with are based our ability to apply common sense and realize that we can’t see the future.  Ten times earnings suggests you’ll have to wait 10 years to get your money back.  Ten years is a long time for most people to tie money up.

"But eBay’s valuation is like saying, "I see the next 100 years, and it’s all good for eBay." [Ed. Note: If they handed out a prize for absurd valuations, Google would take the trophy. But in reality, the whole stock market is overvalued on a historical real earnings basis, while commodity prices – having been adjusted for inflation – are still not far from their lowest ever levels.

A recent study by Baltimore-based financial service company Legg-Mason concludes "stocks and commodities have alternated leadership in regular cycles averaging 18 years."

Where would you rather park your money?

The Daily Reckoning