Think Global, Act Loco
Thom ‘Bomb’ Hickling is staying out at Ouzilly. He’s a writer who is helping me with a couple of projects.
As I’ve told you, he’s also a musician whom we exploit mercilessly. Jules, Sophia and I get out our guitars at every opportunity and ask his assistance. (Getting in tune with the high-tech times, we’ve pasted a picture of the Thom Bomb here. If you know him, you’ll notice he’s lost the beard.)
But Thom has another feature – he comes from the Christian fundamentalist subculture that seems to have its roots in the American southwest. So, rather than go to church on Sunday, we gathered together in His name for our own little celebration on the veranda.
Thom’s bible reading described how one of the world’s first, and still very popular, sensations got started. On the site of the ruined Temple of Solomon, described as ‘Solomon’s Porch,’ people gathered to exchange ideas and information. This was the media of the day. It was slow. Sensations took longer to develop. And they tended to be very localized.
Still, a few years after Jesus had been crucified, he was already on his way to becoming a major cult figure. Thom’s reading from Acts of the Apostles described how sick people gathered on Solomon’s Porch hoping the shadow of Peter would fall upon them and they would be cured. No mention is made of FDA control panel or double blind studies. In those days, being blind just once was enough.
Christianity gathered supporters very slowly at first. It spread like a virus. From person to person, group to group. Finally, in about the year 321 it reached a kind of ‘tipping point,’ when Emperor Constantine converted. Soon after, almost everyone wanted to be a Christian.
I have been puzzling over the role of the media in propagating investment bubbles. Before the invention of the printing press, popular sensations were rare and small.
People went about their business, relying on direct, immediate and personal knowledge. Nietzsche refers to this as one of two types of knowledge. The other is indirect, abstract knowledge – the sort you might get from a newspaper, where you don’t really know anything first-hand, and what you think you ‘know’ may have no meaning to it.
“Globablization, Yes,” affirms a headline in today’s IHT, “but Be Sure to Focus on People.” The article begins with this statement: “Either the 21st century will continue to produce increasingly divided societies or we can make concerted decisions to ensure that economies serve communities.”
Your guess is as good as mine as to what the sentence means. What’s a ‘society?’ What’s a divided one? Who’s ‘we?’ What’s an ‘economy?’ How does it serve a ‘community?’ What is a ‘community’? How is it different from a ‘society?’
The problem is not just bad writing. The problem is that the sentence rests on a whole wobbly structure of abstract ideas. The reader is supposed to know what a divided society is. He’s also supposed to have an attitude towards the divided societies: they are bad.
Yet, if you look carefully at the component ideas you find that each of them turns out to be wobbly…remote from anything you could prove or disprove, or even have an intelligent opinion about. All societies are divided. They are collections of individuals and organizations with different interests. If a society were not divided, it wouldn’t be a society; it would be a unity.
And if you look at the news carefully, you discover that it represents a whole alternative universe of abstract, obscure, wobbly ideas.
“The UN Should Not Forget Its Original Peace Mission” says another sensation monger in the IHT. In this article I am asked to have an opinion not about my own local politicians – whom I know to be corrupt half-wits – nor even about state-level mountebanks…nor even about the chiefs of chicanery in Washington…but about the hacks gathered in the Olympus of globalism, the UN.
The purpose of the article seems to be convince me that I should support UN intervention in war. Hmmm…but if you dismantle the argument, you find that it rests on an accumulation of abstractions so thick and so slippery that it would take a patient Eskimo with a blubber knife to get through it.
And once you get beyond the greasy jingos…there is usually nothing there.
The mass media invites you to join in mass thinking. It increases the scope and speed of crowd thinking. In this sense, all media is state media. For it encourages collective, political thinking and focuses your attention and emotions on ‘problems’ which the state offers to solve.
Left alone, people develop their own ideas about how things work. But with the help of a mass media, thinking is standardized, like the products of an assembly line. Political ‘solutions’ to problems you might not otherwise know existed are popularized…and sensations are born.
This was hard to do before the mass media existed. Lunacy was more isolated, more quirky and less infectious.
The crusades, for example, took hundreds of years to get underway…and then hundreds of years to work themselves out. People who had never been South of the Loire river…and had no idea of how anyone’s life would be improved by waging war against the Muslims…nevertheless signed up for a fool’s errand – to conquer the Holy Lands.
The whole series of 8 crusades floated over the rough waters of compound abstraction…to the unforgiving terror of 13th century combat. Hundreds of thousands of people died – many from disease and hunger.
Perhaps the most lunatic of the crusades were the children’s crusades. As many as 20,000 children from the Rhineland made their way into Italy. Like na?ve investors buying up the Big Techs at preposterous prices…they believed a fantasy: that they would take the Holy Lands from the Muslims by love instead of force. Instead, the children were dispersed among the Lombard towns…or sold into slavery to Muslims.
Paris, France September 13, 2000
*** “Euro…Oil: Europe Trapped” proclaimed yesterday’s headline in Le Figaro. “Britain Nearly Dry” says the headline in today’s IHT.
*** All over Euroland, the top story is the same: strikes, chaos – caused by high oil prices. “This is the worst crisis by far in 25 years,” said a spokesman for the Royal Automobile Club. “The government has to step in immediately,” he urged. Tony Blair, Britain’s Prime Minister lost no time raising his right foot. Fuel supplies will be back to normal in 24 hours, he promises.
*** Wow, what a difference a year makes. Last year on this date, I reported a rise in the price of oil to $24. But the press reports of the time dismissed it. The economy was much less dependent on oil, said the papers, than it had been in the 1970s; there would be no crisis. After all, the New Economy ran on electrons, not fossil fuel. Didn’t it?
*** I hope you will forgive me, dear reader, for quoting myself. But it is not often I get to reprise my own words without embarrassment: “People entertain [an] illusion,” I wrote on September 14, 1999, “that oil will never be in short supply. They think it will be cheap forever. But what, really, are the odds that the dollar will stay strong and the price of oil will stay weak over, say, a 10-year period?”
*** We are now near 1 year and counting. Oil has risen against the dollar by about 40%. Truckers, taxi drivers and others who depend on stable oil prices are up in arms. Parts of Europe are nearly paralyzed. The American Petroleum Institute says crude inventories are at 24-year lows. President Clinton has pledged to take action – though he did not say what. And the nattering nabobs are revving up their laptop computers to turn oil into a popular sensation once more.
*** “An extraordinary windfall in the form of cheap oil fueled unprecedented prosperity in the United States,” writes William Drozniak for the Washington Post, in a piece labeled, the “Reckoning.” But now, “the good times may be lurching toward a demise that could profoundly reshape the nature and contours of the global economy.”
*** But oil lacks the intangibility necessary for a real runaway popular sensation. Too many people are too close to it. Unlike a dot.com, a Big Tech, or a tulip bulb – oil gets bought at market every day by millions of actual consumers. Like bread, it can sell at high prices – but not fantastic ones.
*** Still, as I wrote a year ago, “this trend has the potential to be extremely profitable…as the price of oil rises, more capital will be put to the service of the oil industry. But it will take years before it delivers more oil. In the meantime, the markets will anticipate a shortage and bid up oil prices in a dramatic way.” Since then, oil-drilling stocks have risen more than 76%.
*** How much of that trend has already run its course, I do not know. But I do know that the amount of dollars in circulation is still rising at a reckless pace. M2 rose at an 8% annual rate since July. M3 and MZM, measures of cash, are rising at 10% year to year. This liquidity has to go somewhere.
*** And it does not seem to be going into Wall Street. The Dow rose just 37 points yesterday – largely on the strength of J.P. Morgan’s potential buyout by Chase. JPM rose $16.
*** The Nasdaq, meanwhile, attempted a rally…but ended the day 46 points lower. Mr. Bear, still maintaining a low profile, has nevertheless brought the Nasdaq down almost 10% so far in September.
*** The Big Techs are probably caught in a crippled sub from which they will never escape. Cisco, the stock that was supposed to grow forever, shrank yesterday. It fell to $58 and change. Oracle dropped more than $4. And PRI Automation fell more than a third following its confession of lower earnings to come.
*** Perhaps as the ultimate bull market signal for the gold market, Homestake announced that its miners hit bottom at the old mine in Lead, Montana. They’ve been digging for 124 years. But at today’s gold price, it just doesn’t make sense to keep chipping away at the hard rock.
*** The euro managed to hold its own against the dollar – rising 41 mills. Perhaps it too has bottomed. You can buy a euro today for 86.68 cents. A dollar will also get you 7.60 French francs.
*** “The Trouble with Europe” begins the headline on the editorial page of today’s IHT. This is a popular topic among analysts, strategists and American triumphalists. It is also an illusion…but more on that in the days to come.
*** “Is buying the euro a smart contrarian play?” asks the Fleet Street Letter’s Brian Durrant. “…the answer is not yet.” Durrant explains:
“Throughout the euro’s decline ‘currency experts’ have been trying to pick the bottom in the euro. It was once $1.06, then parity, then 90 cents etc. So the big problem is now that global investors are long. Some are Japanese investors who bought into the hype and are now sitting on catastrophic losses – and too scared to cut them. What’s more, the ECB have been reacting to euro weakness by raising rates, deflating the economy and making a less attractive investment target. As is so often the case raising interest rates to defend a currency only makes matters worse.”
*** Durrant also points out the Merrill Lynch survey of market sentiment has an excellent record of being a contrary indicator of currency movements. When the investors net exposure index to euros is above 50 it tends to foreshadow further euro weakness. The only time this figure has been below 50 was in May ’99 and it foreshadowed a summer bounce in the euro. The latest reading in August 2000 was 60 which points to the further weakness we have been seeing. There will be a time when the euro is a raging buy against the dollar but not yet, dear reader, not yet.
*** Besides, “…if the European Central Bank has a mandate to keep inflation below 2%,” asks our own Kevin Klombies “…and inflation is closing in on 3% AND the euro is acting like the Thai baht AND crude oil prices continue to rise… how long do you think it will be until the ECB either intervenes through direct purchase of euros, raises interest rates dramatically, or both? Our guess is – within the next 5 trading sessions.”
*** Naughty, naughty. German competition regulators accused Wal-Mart Stores of being too competitive last Friday. They ordered the giant retailer to raise its prices for household staples like milk, flour, butter, rice and cooking oil.
*** The Internet’s global population is approaching 300 million people. This according to a Neilsen/Net Ratings report. The US has, by far, the highest number of at-home computers users with 136 million. Japan, interestingly enough, is a distant second with 26 million… ahead of Germany, Great Britain, Italy and France. So the question remains… why haven’t the Japanese benefited from the New Era? More on that, too, please stay tuned.
*** I’m getting back in the swing of life in Paris. Elizabeth is back in the U.S., at another Baptist wedding. So, I’m a single parent, with five children at home and a full-time job. It’s not easy. But I brought Nadiege, our part-time housekeeper out in Ouzilly, with me back to Paris. She takes care of the kids, the cooking, the cleaning… I just read the bedtime stories. And guess what, I’ve noticed that a lot of these stories don’t make sense. Still, Henry and Edward don’t seem to mind.
*** Little routines, like reading bed-time stories, seem to bring order, balance and harmony to your life. I’ve been enjoying getting to the office early and having a cup of coffee at the Caf? St. Merry next door, while catching up on my reading. “Genius is habit,” said Aristotle.