True Lies

Dear reader,

I will apologize in advance for an over-long and trifling comment today, one that has nothing to do with investing.

What can I say? I couldn’t resist.


“Racial tensions still exist here,” writes Jim Hoagland, of the Washington Post, on the campaign bus with John McCain and reporting from the great state of South Carolina, “And so does bigotry.”

Hoagland believes that South Carolina is different from, say, New Hampshire, because of “one issue – race.” And the John McCain is different from say, George W. Bush, because…well, I can’t tell, but it looks like Hoagland believes that McCain is beyond racism and bigotry.

What makes Hoagland think that McCain is any less susceptible to human weakness than anyone else? Both candidates will deny racial prejudice faster than an alcoholic will hide a bottle. What makes him believe that Bush lies, and McCain tells the truth? Well, “He and his wife adopted a child of color, from Bangladesh,” reports Hoagland.

McCain does speak bluntly, sometimes. Asked what it was like to talk to Mr. Hoagland and the other members of the press, he replied, “I’ve met more communists on the [press] bus than I did in prison [POW camp in Vietnam].

You have to admire him for that. But McCain has pledged to “tell the truth, no matter what.” This worries me.

A politician who claims to tell the truth all the time is clearly the biggest liar in any group – even a group of politicians. What’s worse, he is a danger to everyone – for he believes his lies.

I’d rather have a man with a higher opinion of truth – one who carefully protects it…nurtures it…and holds it in reserve for when he really needs it.

A man who claims to speak the truth all the time is one who can’t tell the difference between champagne and stump whiskey. Whatever comes out of his mouth he thinks is true – no matter how trivial or how unsure he may be of its veracity. Even without trying to do so, a man naturally lies about half the time. The rest of the time, he is just mistaken.

Moreover, a man who speaks the truth all the time is unfit for human company. Imagine being married to such a man. Or having him for a President.

“How do I look, Honey?”

“You look like Barbara Streisand after a long night.

* *

“What do you think of the new Congressional budget proposal?”

“It’s a crock of s***.”

* * *

“How about that columnist for the Washington Post?”

“He’s a ******* moron.” No, it wouldn’t do at all.

Besides, who would want a national leader with such a feeble grasp of his trade? An honest politician could only be elected by accident.or some kind of miracle. He would have to forsake his calling in some surreptitious way. In answer to voters’ pleas for this larcenous treat or that unfair advantage – he’d have to tell the truth and disappoint them all. Perhaps he could say it in such a low voice…or foreign language… so they didn’t notice. Mystified, they might go by the cut of his jaw or his military service record to make their electoral choice.

Stranger things have happened. Against all odds, Dr. Ron Paul still holds office…and sits ignored and forgotten in Washington, unable to curry favor or return it – thanks to the inconvenient principles he hold.

But Paul is an odd-ball. He is a man who serves the ideals of the republic, with no idea of how it really works. He is like a preacher in a casino, out of fashion, and out of his element. Unable to join in the fun, he is a wet blanket and killjoy to the whole democratic process. He has been unable to rise above his principles in the pursuit of politics.

I have been acquainted with a few office holders. They are often men and women of great force of character and charm. I remember having dinner with the U.S. Senator from Maryland, Barbara Mikulksi. Ms. Mikulski, a Polish bulldog of a woman, never met a bad idea she didn’t like…nor a lie she didn’t want to tell. But she was witty and full of good cheer. I couldn’t help but like her.

Senator Harry Byrd of Virginia, not Robert Byrd of West Virginia, was elegant, thoughtful, well-mannered and aristocratic, with a handshake you never forgot. He would pump your arm as though trying to bring up water from a deep well. He seemed sincere and right about a great number of things. But he would have been lost without recourse to the diplomatic lie, the white lie, the little polite lie…and sometimes, the big fat political prevarication. I hope Harry is still alive, I liked him too.

My first political acquaintance was with Joe Alton, the county executive of Anne Arundel County, Maryland. Now, there was a politician. He could lie like nobody I ever met. Too bad they sent him to prison for something or other. He had a marvelous talent of being able to cry on cue. Old Joe would be talking about the county dump or the sewer system or slot machines – and when he felt it appropriate, would draw forth tears as easily as some men reach into the pockets and take out a cigarette lighter. It was a wonder to behold. The tears, were of course, lies. But they were heartfelt lies.

A politician without lies is like a freshly plowed field in spring. All manner of weedy ideas can take root…planted by foolish intellectuals, nurtured by self-seeking special interest groups and fertilized with the voters’ cash. God save us.

The last thing you want is a man who shifts his positions with every passing truth. He would be like a husband who chased every pretty girl who came along. And then couldn’t even lie about it!

In a sense it was his honesty that got Bill Clinton into trouble. Monica Lewinsky reportedly showed him the latest thing in underwear fashion – the thong panties. A little white lie – “No, I’m not interested” – would have spared the nation a lot of agitation.

Lies are much more easily maintained than truth. They don’t depend on hormones or research findings…and cannot be overturned by new facts. A politician with integrity is one who sticks by his lies, like a man who is in love with his wife and believes her to be the prettiest woman in the world, even when any fool can see she reached her “sell-by” date many years ago. In these days of constant change and shifting truth…in this New Era, when it seems you can count on nothing and depend on no one…the man who remains loyal to his lies and his wife is a blessing to everyone.

In short, you want a politician whose lies have had a chance to age a bit, to mature…like broad oaks, whose canopies block the hot sun of controversy and smother the initiatives of incipient mendacity. Lies, like sunsets, wine and women, are most appealing just before they begin to decay.

You may think I am joking about this. But I wouldn’t make fun of such an important thing as lying. A politician who didn’t lie would be like a fish without a fishy smell, or a barnyard without manure, or a tax collector with a sense of pity. It wouldn’t work.

He’d also be at such a disadvantage – like a poker player who revealed his cards…or a parishioner who shows up at a pot-luck supper without a pot. He would be unarmed in the fight for stolen goods. He would be like an illiterate at a bookfair. Who would want such a man for anything, least of all for President?

Imagine the problems of this great nation addressed by honesty:

National health?

“Stop eating so much. Take a walk. Have a drink.”


“Get off your lazy duff and get to work.”

Smoke-related illnesses?

“You should have known’s your own damned fault.”


“Adopt a child of color….

A what?

“… and use her as a campaign prop.” Come to think of it, if it is mendacity that moves the great ship of state forward, not truth, John McCain, the Great Prevaricator, may be just the man for the job.

A bad President stoops to the occasional lie. A better President makes a habit of it. But the great President is the one who wallows in Great Lies, sinking so deep into the muck of falsehood that you can barely see him. Promising to tell the truth all the time, “no matter what” has to rank as a Great Lie, the sort that have been the hallmark of all of America’s great Presidents.

The whole idea of politics is to make promises that no human being could possibly fulfill. Then, back up the lies with brute force.

Except for the ready resort to violence, politics is not too different from marketing other things. Imagine the Wall Street firm whose advertising promised a realistic rate of return more or less equal to GDP growth…or the T-Bond yield? Or the diet ad that offers to help people lose weight by eating less? Or the get-rich-quick opportunity that tells readers they can get rich by working hard for many years and saving their money? Who would pay for these things? Who would want them? Likewise, who would really want an honest politician?

Neither voters nor consumers really want the truth. What they want are convenient, up-lifting lies. It is what gives people the courage to keep going…to buy a new Internet stock, try a new diet, start a new business or marry for the third time. Or kill people.

Any good politician knows this. He rises above principle and offers voters what they really want: lies. But politicians pay a price for their lies. If they fail to win an election they are pathetic losers. If they win, they are worse.


Bill Bonner

Ouzilly, France February 21, 2000

P.S. Seriously, most of the problems with politics could be eliminated by taking up my suggestion to have members of Congress selected on the basis of good luck rather than good lies. Simply institute a national lottery, with 535 winning numbers. And sequester them like a murder jury, for a 3-week Congressional term. Three weeks wouldn’t be enough time for them to do serious damage to the nation…and they couldn’t annoy us while in office.

*** You can’t see it, but I’m writing today’s report in red ink…in solidarity with the people who lost a lot of money last week. The Dow ended down nearly 2% — which represents about $200 billion in losses.

*** The Dow dropped 295 points – as you probably already know. But not even this managed to prompt the commentators to use the word “bear.” And yet, virtually all market sectors seem to be in bear patterns. The Dow is down to 10,219. Utilities, transports, cyclicals, financials, retailers, the S&P – they’re all moving down.

*** There were 151 new highs on the NYSE last week. There were 531 new lows.

*** The only exception to the bearish news? The Nasdaq. But even that may have topped out on Thursday at 4,548. The Nasdaq went down on Friday, falling 136 points.

*** What’s going on? The smart money and the big money are paying attention to Alan Greenspan’s threat to continue raising rates until the foam and froth dissipates in the high interest rate altitude. Smart investors are moving to the sidelines.

*** That’s why bonds rose on Friday; yields fell to 6.16%.

*** But the dumb money – the kind that has been enjoying 4% gains each week – still believes that fairy tales can come true. The Nasdaq ended the week up fractionally.

*** The techs and the `nets both lost ground on Friday. Amazon, our favorite River of No Return, lost $4. Microsoft, a company that pretends to be profitable, lost $4 too. And AOL is down to $51. This is interesting. Time Warner shareholders know they are giving up something valuable in exchange for something whose value is less certain. If AOL’s share price got marked down substantially, the deal no longer makes sense for Time Warner.

*** It will also be interesting to see if the Dow falls below 10,000 soon…and what reaction follows. Will it break the public’s will to invest? I don’t know. But half of American households own stocks. And most of them regard their stockholdings as savings. Maybe they will wait patiently. But maybe they will decide to abandon stocks until prices start moving up again. And maybe…if stocks really fall…they will feel betrayed.

*** Certainly, they will scale back their spending plans. And almost certainly, this will trigger a business slowdown. But this is still in the future…so we will keep our eyes open, without coming to a definite conclusion.

*** A bear market warms my heart. No, I don’t like to see people suffer losses. But as prices fall, attractive investment opportunities develop. One of the stocks bought by Warren Buffett is one we’ve been watching too. Like GM — the entire stock price can be covered by the value of one of its subsidiaries so you get the company for free.!/form1.cfm?pubcode=fsus *** There are oil companies selling below 10 times earnings. And there are unique situations such as Philip Morris. The investment world is a lot more fun when prices are low.

*** Of course…if I’m right about what lies ahead…prices will be lower before they are higher. And I tend to be early in my predictions, so the Nasdaq still may have some rocket fuel left. We’ll know soon.

*** Gold seems to be determined to move up in price. It rose $3.60 on Friday. I have in my hands an intriguing study of the gold price done by analyst Paul van Eeden. More on that later this week…

*** A Stanford survey confirmed what we already knew – the productivity figures lie. A quarter of respondents said they now worked at home via the Internet, without reducing the hours they put in at the office. Americans are working more. Output per hour – if rising at all – is going up more modestly than the New Era statisticians claim.

*** And the headlines: A homeless man in New Delhi amputated his gangrenous foot by putting it under a rolling freight train…a Texas company is offering to clone your pets…and a setback for the man who “will not take the low road to the White House.” Advice to McCain: check your map; it’s the only route.

The Daily Reckoning