Vile Bodies

An autopsy, a heart like any other…and an elusive soul…

Today, we return to the morgue. For among the thousands the heat carried away was the woman who married Oswald Mosley – a woman about whom we wrote last year. At her wedding, in 1936, were some of the most important people of the age, notably Adolf Hitler and Josef Goebbels.

Of all the stupidities into which a man can fall, Oswald Mosley launched himself into one that was especially vile. With money supplied by Benito Mussolini, he organized Britain’s ‘black shirts,’ a national socialist organization much like the Nazis in Germany.

National socialism was supposed to be the wave of the future, but Mosley’s group couldn’t seem to think up anything more original than going into London’s East End and beating up Jews.

Most Englishmen were appalled. The Duke and Duchess of Windsor, on the other hand, thought they should do more of it. When WWII broke out, the Mosleys were locked up as security risks. They were set free after the war was over, but told to get out of town. They joined their best friends, the Duke and Duchess in France, and have lived here ever since. Diana died on a hot day in Paris, at the age of 93, last week.

Diana Mosely: Heart and Soul

And now we approach the corpse. We can’t help but wonder how it works, beneath this human shell. The obituaries have revealed little…only the public facts. What we want to know is why people do such things. So, we’ve come with a scalpel; we want to see what is in there.

Don’t worry, squeamish dear reader. The only organs we will look at are the heart and the soul. The brain is not worth looking at in our opinion; it is nothing more, as La Rochfoucauld put it, than "the heart’s dupe." People can take a set of ‘facts’ and think what they want, we noted yesterday. The heart drives them to it. The brain, on the other hand, is no better than a congressman – it will go along with anything.

It seems as though a person will do anything, too, no matter how preposterous. For here before us is a woman who was among the world’s great beauties. She was said to be the prettiest of the Mitford sisters, which was tough competition. Even in her 90s, she posed for Vogue Magazine and looked good.

She was a beautiful blonde, "the most divine adolescent I have ever beheld: a goddess, more immaculate, more perfect, more celestial than Botticelli’s sea-borne Venus," wrote a friend. It is almost too bad she wasn’t dumb. She might have glided through life and been a joy to all who saw her.

Diana Mosley: The Mitford Sisters

Instead, she married badly…which is to say, she fell in love with Mosley, who was an idiot, and threw in her lot with him. Later, British counter-espionage agents came to see her as the greater threat: "The real public danger is her," said a report, "she is much more intelligent and more dangerous than her husband."

Of course, she was not the only one of the Mitford sisters to go bad. They were almost all too smart for their own good. Their synapses fired right, left and overtime…and took them in strange directions. Sister Unity, like Diana, took up with the Nazis. Sister Jessica took an equally moronic course, but in a different direction; she became a Marxist.

"I don’t understand," said Lord Redesdale, father of the Mitford girls. "I am normal. My wife is normal. And all our girls are crazy."

While Hitler was praising Diana and Unity as "perfect specimens of Aryan womanhood," the other sister, Jessica, called ‘Decca’ in the family, was plotting to buy a handgun with which to kill the Fuhrer. But it was Unity who actually used a pistol – on herself. She shot herself in the head and died in 1948. What had become of the sweet little girls raised in Swinbrook? How could normal people produce such extraordinary characters…how could such divine little angels turn mad?

We have no ready answer. But a friend tells us of a book by Riccardo Orizio, an Italian journalist, who interviewed former dictators. The dead ones do not talk, but there are a surprising number still among the quick. His book, "Talk of the Devil: Encounters with Seven Dictators" includes conversations with Idi Amin, Jean-Bedel Bokassa, Wojciech Jaruzelski, and Nexhmije Hoxha – who (with, until his death, her husband, Enver) ruled Albania for nearly fifty years; Jean-Claude (Baby Doc) Duvalier, and Mengitsu Haile Mariam, the Marxist-Leninist dictator of Ethiopia.

Diana Mosley: Always a Good Reason for Evil

They are all as mad as Diana and Mosley. But they all insist that whatever evil they may have done – mass murder, starvation, grand-scale larceny – they always had a good reason for it. In fact, each thought he or she was making the world a better place. And none of them regretted or repented anything they did – except for tactical ‘mistakes’ that got them booted out of the country.

At least Diana Mitford Mosley had no blood on her hands. And, after 4 decades of peer pressure, she finally admitted that her wedding guests were not the nicest folks you could have to a party.

"We all know he was a monster, that he was very cruel and did terrible things," she said of Hitler in 1994. "But that doesn’t alter the fact that he was obviously an interesting figure. No torture on Earth would get me to say anything different."

We have not come to the morgue to torture. We just want to know. How does it work?

And so we have plunged our scalpel into the cadaver. And what have we? A heart like any other. Red. Round. It could be yours, dear reader. What then accounts for this madness?

Perhaps the fault lies not in our hearts at all, but in our souls. We cut around to see if we can find it…but it must have got away.

Diana Mitford Mosley…may she RIP…

Bill Bonner

August 15, 2003 — Paris, France

Bill Bonner is the founder and editor of The Daily Reckoning. He is also the author, with Addison Wiggin, of "Financial Reckoning Day: Surviving The Soft Depression of The 21st Century" (John Wiley & Sons) due out in September.

"Germany falls into recession," says yesterday’s BBC headline.

A week or so ago, "Italy falls into recession," was the news.

Britain and America, on the other hand, are believed to be in recovery mode. So, "get your chips into play," said one of our favorite economists, Larry Kudlow.

We like Kudlow for the same reason we like Abby Cohen and Ed Yardeni – and especially NY Times columnist Thomas Friedman – we get a chuckle out of them all.

Occasionally we feel the desire to make a critical remark about their oeuvres, but each time we stop short. They seem to deserve not scorn, but pity…the kind of pity you would feel for a jackass who wandered onto the freeway. The poor beast has no idea where he is or what he is doing there; he just waits for a delivery van to put him out of his misery.

"Power always thinks it has a great soul," said John Adams. Friedman, riding into Iraq on the back of the U.S. military, like a tickbird on the back of a rhino, imagines that he is helping to bring enlightened democracy to Mesopotamia. He thinks he is doing the whole world a favor; for surely it would be a better place if the desert tribes did what he told them to do.

Reading Friedman’s dispatches in the Times, we have wanted to challenge his ideas, but we’ve never figured out how to do so. Calling them stupid would be flattery. One day he scolds the Arabs for not turning themselves into liberal democrats…the next day, he takes the U.S. Army to task for not keeping the water and electricity flowing. And practically every day, he hallucinates about the great model society he is helping to create – if only everyone would cooperate!

But occasionally, by accident, these fellows say something that makes sense. Kudlow is right; if you want to play this market, get your chips ready…because it is pure gambling, not investing. Investing requires values. You need to be able to put your money in something with a reasonable hope of earning a decent return. At the stock market bottom in 1982, for example, an investor could get a 5% yield and pay only 6 to 8 times earnings for a stock. It might have gone down from there…but a reasonable investor would expect that it wouldn’t go down much.

Today, after a boom that has approximately doubled debt levels – aggregate debt/income was at about 160% in 1982, it is 296% today – stocks trade at average prices over 30 times earnings. Yes, they could go up. But no reasonable investor would bet on it.

Readers will recall that Kudlow always urges investors to get in on the game. He saw no reason to fold – even at the height of the bubble in 2000. In fact, he expected it to keep expanding – maybe forever. The Dow, he predicted, would rise to 20,000…30,000…50,000!

So, reach for your chips, dear reader. Your stock market chips will buy a lot of gold – 26 ounces for every complete set of Dow stocks. Sell the stocks, buy the gold.

Then what do you do? Nothing. Take a vacation from investing. Concentrate on your business, your job, children, your wife and your mistress. You’ve already enjoyed the Great Boom. Now get ready to enjoy the Great Bust. Italy and Germany are leading the way. We won’t be long behind them.

And now for a breath of fresh air from our editor, sittin’ on the dock of the bay…Eric Fry in San Francisc


Eric Fry in sunny California…

– The economy continued showing fresh signs of life yesterday, while the bond market continued writhing in the throes of death…and in keeping with recent financial market trends, stock market investors celebrated the former while ignoring the latter. The unnervingly volatile bond market did not dissuade stock-buyers from bidding the Dow to a 39-point advance at 9,310 and the Nasdaq to a 14-point gain to 1,700.

– Meanwhile, the gold market dazzled its admirers again yesterday, as the precious metal jumped $3.80 to $367.50 an ounce. The yellow metal has climbed in eight of the previous nine sessions.

– Just below your New York correspondent’s hotel window here at the Fairmont Hotel in San Francisco, the Powell Street cable cars clang their distinctive bells all day long…and all morning long and all evening long. One ancient cable car after another inches its way up Powell Street from Union Square. Each car seems to breathe a sigh of relief as it finally reaches the top of the hill at California Street, then clang-clang-clangs its bell before beginning its steep descent toward Fisherman’s Wharf.

– "How unlike the stock market," your New York editor thought to himself. "Cable cars DO ring a bell at the top." Indeed, the brakeman also rings a bell as the car lumbers to a stop, and rings the bell twice quickly just before it lurches into motion again. The signals are clear and predictable.

– Unfortunately, no financial market ‘brakeman’ rings a bell when the stock market is about to screech to a halt, or when it is about to start rolling again. But there are signals nonetheless.

– For example, the cautious investor recognizes a P/E ratio of 50 times earnings as a signal to run in the other direction. The cautious investor also understands that a ‘buy’ recommendation from a Wall Street analyst is sure- fire signal to sell. Conversely, when the cautious investor’s next-door neighbor swears never to buy another tech stock again in his life, he recognizes this as a sure- fire signal to buy. And when the cautious investor’s same neighbor boasts that he is buying a second home for ‘investment purposes,’ the cautious investor will recognize this as a signal to sell his house immediately and rent an apartment until home prices collapse.

– The bond market thrashed around again yesterday, before closing with a slight gain. Early in the trading session, the yield on 10-year Treasurys jumped above 4.62%, before rallying briskly to end the day at a yield of 4.45%. But yesterday’s acute volatility in the bond market gives us cause once again to worry aloud about Fannie Mae and Freddie Mac, the nation’s two largest mortgage lenders.

– We’ve been observing of late that soaring interest rates are a bad thing for mortgage lenders, especially Fannie and Freddie. The only thing that is as threatening to these highly leveraged ‘closet hedge funds’ as rapidly rising interest rates is extremely volatile interest rates – yesterday’s action being a case in point.

– Volatile interest rates make for tricky trading on derivatives desks. And trying to hedge away hundreds of billions worth of mortgage securities is not a simple matter, even during the most tranquil of times. Throw some volatility into the mix, and suddenly, the life of a leveraged mortgage lender can become very complicated very quickly.

– "Fannie and Freddie now carry and astronomical $1.6 trillion in assets on their balance sheets, up from $962 billion in 1999," Business Week notes. So massive have these two mortgage lenders become, that their hedging activities in the bond market have been contributing to – if not directly causing – the heightened volatility in the bond market…which, in turn, creates the need to conduct additional hedging activity, which contributes to heightened volatility, etc.

– Fannie and Freddie hate volatility for another reason as well: volatile financial markets tend to create a volatile earnings trend, which tends to create a volatile stock, which tends to frighten away investors. And if the shares of Freddie and Fannie should begin to frighten away investors, how will their option-laden managements ever hope to cash in?


Bill Bonner, back in Paris…

*** It was a marvy week. We read two insipid editorials by Thomas Friedman this week (we are on vacation)…and Diana Mitford Mosley died. We read the obituaries before we read the news…and found her story recounted in several papers. But none seemed to do justice to the imbecility of the woman. Below, we conduct an autopsy…

*** We have come back to the city after the heat wave broke. The air is fresh this morning. The city is quiet. It is the Feast of the Assumption today, a holiday in Catholic countries, recalling the day when the virgin Mary was welcomed into heaven. For the first time in weeks, people enjoyed a good night’s sleep. Even at 10 AM…they must still be at it, for there is scarcely a soul in the street.

*** It was the worst heat ever recorded in France, say the meteorologists. It lasted for weeks; the world has not seen so much sweating since the pyramids were built. The heat carried people off like fever. During the worst of it, we read in the paper that some towns had had to set up refrigerated tents to hold the bodies. Now that it is over, the dead are being gathered up and counted. Three thousand is the latest tally…

*** We were recently introduced in London as "perhaps the most irritating writer in the English language." So irritating are we to the West Virginians that a posse of them showed up one day with a rope. In Ireland, a photo on the wall is used as a target for dart-throwers; even after 3 years they have not forgiven comments made in this space. And during the war against Iraq, at least one reader suggested that U.S. bombers detour over Europe so they could drop a bomb on our headquarters!

What is so irritating? "You don’t seem to take anything seriously," writes a DR reader. "Even the End-of-the- World…you treat it like a lark…"

But, thank God and thank you, dear reader, for the readers keep reading…

And here cometh another reader to explain why:

"Perhaps one day E Lilly & Co. will manufacture a patch to ease the transition to a DR-free life, but until that happens I have no alternative but to keep posting the money to AGORA and laughing at Bill’s jokes. "OK, you say that I am pathetic and that reading the DR will break up my marriage and lose the roof over my head. Maybe you’re right. But what about you? I ask. You are no better than I. You all keep reading the f*****g thing, even though you might deny it to your friends and to the police."