The Editorial Pages

I read the editorial pages like some people read Stephen King novels. I want to be shocked and horrified. I’m rarely disappointed.

The editorial page is like an abandoned house on a moonlit night — it is where the monsters come out. Headlines in the "International Herald Tribune" reveal the fads and feeblemindedness that troubles these writers’ sleep.

Ellen Goodman frets that men are getting all the attention from the "Man of the Year/Century/Millennium" committees. She wants to recognize the anonymous woman, Anonyma, for her contributions, whatever they may be.

Nearby, Jerome Groopman is disturbed that the fruits of scientific advances may not be equally distributed. He warns that "inequalities of the past" may threaten the realization of greater longevity. Unlike Goodman, whose point is silly, but obvious…Groopman’s point is so obscure I could not find it.

Here’s another: "Defense Dreams Create Mistrust" — in which Jim Hoagland tells us that U.S. defense policy has to be better explained to the allies. Why is he telling me this, I wonder. I have nothing to do with it and no capacity to influence it. It means absolutely nothing to me.

Or how about this — "Indonesia’s New Regime Faces Economic and Political Tests." Now there’s a headline that is bound to square with the future. I have little doubt that Indonesia faces tests. But the punch line comes when the writer, a minister of finance, explains how the country will embrace every moronic policy ever devised by the Western democracies. This is, of course, what the IMF and World Bank want to hear. But it takes some of the suspense out of the "test" metaphor. We already know the outcome — Indonesia will fail.

"Looking Back at Rwanda" is surely the best way to look at it. One would not look forward to it. But the burden of the piece is a familiar theme — "the lack of political will," which supposedly contributed to the Rwandan massacres. On the contrary, it seems to me that those doing the massacring suffered from no lack of political willpower. In fact, a little less of it would have been a good thing.

But my favorite is "Nourish Democracy to Restore Faith in Its Institutions" — in which a former nuclear arms negotiator for the United States tells us that "the democracies can create a moral authority, that, with any hope, can prevent conflicts before they turn violent." I can only suppose that he does not include Nazi Germany or Fascist Italy on his list of democracies, though they elected Hitler and Mussolini respectively.

The writer, Max Kampelman, sets a low hurdle for himself in the article — and then fails to clear it. Apparently, restoring faith in democratic government is a good thing. Why…he doesn’t say. He questions nothing. And answers nothing. He builds his argument as if with Styrofoam. Nearly as light as air, with no strength whatever, but well-insulated from the heat of real controversy and the cold truth of real life.

The common denominator of these pieces — and virtually everything you read on the editorial pages, as well as the other pages — is the faith in and total absorption by politics. Every problem is a political problem…and every solution requires police power. Someone must be told to do something.

And, without exception, it is something stupid.

Bill Bonner
December 21, 1999

In Today’s Daily Reckoning:

*** Nasdaq hits new record…so what’s new?

*** Many stocks become bargains

*** Teenagers game the Internet

*** I’m not even going to give you the Advance/Decline or New High/New Low numbers today. They have become tediously familiar.

*** Day after day, the market gets mauled — and the techs and Nets go higher. The Dow fell 113 points yesterday — along with every major market from Manhattan to Tokyo Bay. But the Nasdaq rose to a new record.

*** Yahoo rose 19 points. CMGI added 10 points. AMZN rose $2.

*** Of course, everyone now knows that AMZN’s founder, Jeff Bezos, is "Time’s" Man of the Year. The "king of cybercommerce" had this to say about Internet investors: "People believe passionately in the future of the Internet, so they’re investing sort of commensurate with that belief." AMZN will lose $350 million this year. But Bezos says it will sort of be profitable in 2002.

*** Today is a big day for the markets. The Fed is having a big powwow. Analysts expect the Fed to shift to a "tightening bias" but leave rates unchanged.

*** Richard Russell calculates that the fall in the Advance/Decline ratio implies a Dow of 6,500. If the Dow had fallen proportionately, that’s where it would be.

*** The bear market has been a fact of life for 20 months. Which means that a lot of stocks have been driven down to the point that they are now good bargains. These are not, typically, companies with famous websites. A simple formula for contrarian investing suggests itself — look for companies that have what most popular stocks have not; and lack what the high-flyers have in abundance.

*** I’ve mentioned several in these pages. Here’s another one proposed by Jim Grant: The Genessee & Wyoming railroad is about as far away from the net bubble as you can imagine. Rather than shoot light or electrons through tiny filaments, the GNWR hauls salt and other pre-Internet materials in heavy steel cars over heavy steel rails. But what it lacks in Internet pretensions, it makes up for in value. You can buy the whole railroad for less than $55 million. Or 4.8 times trailing earnings. And .66 times book value. Could it be that the best investment of the beginning of the century is also the best for the end of it?

*** Internet companies are spending billions on advertising — half their revenues, in fact. Since they’re losing money, what they’re really doing is spending capital raised from investors. Better hope the advertising works…because investors won’t have much else to show for their money.

*** Teenagers are finding ways to game the system. Advertisers on the Internet will sometimes pay "per click" — that is, each person who visits the site. So, to encourage people to visit the site, they’ve developed software that allows visitors to share the revenue. Kids set up their computers to automatically visit the sites…and get a monthly check. Is this too insane to be true?

*** Bill King reports that the First Family’s annual Christmas photo op was accompanied by a politicized version of the "12 Days of Christmas," sung by a group of 50 kids. Replacing milkmaids and leaping lords were organic produce, solar power "and a world where people are free."

*** Bill also tells us that Al Gore named Benjamin Franklin as one of America’s greatest presidents.

*** And from Zimbabwe comes this little tidbit: Zimbabwean police on Monday assured the nation there was no need to panic because it was not true that women had died or vanished after being forced to breastfeed a large frog. Rumors circulated that a man in a Mercedes offered women lifts. As soon as the women were in the car, he would pull a frog out of his briefcase and force the women to breast-feed it. One victim, interviewed by police, said she had suspected the driver had a frog in his briefcase, but had not actually seen it.

*** I drove down to St. Mary’s County before leaving Maryland. The Amish down there go about their business pretty much as they have done since they got stuck in time a couple centuries ago. They make great tourist props, dressed in their funny get-ups and driving their buggies along the side of the road. They’ve missed the biggest wealth explosion of all time…but do they care? Who knows, maybe they’re day trading Internet IPOs after they come home from the farmers’ markets.

*** My brother used to shoe horses in Charlottesville, Va., where he still lives. He mentioned that William Faulkner’s daughter lives there. In fact, she got kicked in the head by a horse when my brother was visiting. Brother Jimmy saved her life; he found her on the ground unconscious and suffocating in her own blood.

*** It’s good to be back at home. I’m referring to the farm at Ouzilly, France, which is home to us now. With Elizabeth and me, five children, my mother and my aunt dozing in front of the fire — the house is alive with family cheer. It is probably more convivial because we are a bit isolated out here. We went out into the woods and chopped down a Christmas tree yesterday. But it gets dark so early…we brought it back by moonlight.

*** Speaking of which…look at the moon tomorrow night. It’s supposed to be brighter than it’s been in 100 years because of a coincidence of proximity to both the earth and sun. Irrational behavior is said to increase under a full moon…so this should be a doozy. This is not a prediction, but wouldn’t it be neat if the Internet mania reached its lunatic zenith tomorrow?

The Daily Reckoning