The Dragon's Day

“They just don’t get it.”

Ed Yardeni, speaking of Analog Men

“It is vain and futile to look for logic in the human heart.”

Ulysses Everett McGill, In the film “Oh Brother” The Paradis caf? sits on the corner just opposite my office. The woven plastic chairs and small tables are arranged, row on row, under an awning, in good weather…and retreat to somewhere inside when winter comes.

“It is the time for the destruction of error” begins the fourth section of W.H. Auden’s poem, entitled ‘1929.’

“The chairs are being brought in from the garden, The summer talk stopped on that savage coast Before the storms, after the guests and birds:”

Auden described the way seasons change and life yields… to death. He may have also been describing the way a bull market gives way to a bear. Or, how the confidence of a boom turns into the anxiety and fear of a bust.

Readers of the financial media do not expect to find poetry in their daily reports. But today is not only St. Michael’s day…it is the anniversary of Auden’s death in 1973.

If you join the Boca Raton Racquet Club…or move into a fancy neighborhood in Manhattan – you will find people who made their money in land, in industry…perhaps a few sports heros, rap singers and dot.com millionaires. Few of the people you will meet, and I feel pretty confident of this, will have made their money in poetry.

Poetry has been in a bear market for nearly 100 years. And yet, poetry is interesting to us because, of all the arts, it is perhaps the least susceptible to mob- thinking.

Last night, Elizabeth and I went to a very up-market art and antique show. If you have enough money…and are unsure of your own tastes and judgment…this would be a good place to buy things that wouldn’t embarrass you.

There were some fine paintings – 17th century portraits by Dutch painters…19th century hunt scenes and a few sentimental scenes that must have given Norman Rockwell an inspiration. In one, a young woman sits at a railway station…wide-eyed, and ready to enter the big, wide world.

People might open their own eyes and look to see what they like and what they don’t. They might delight in the fanciful Fragonnard scenes of fluffy romance…they might prefer the heavy, rich family portraits of early 19th century bourgeois artists – or, who knows, they might like one of the color chaos canvases from the splatterer school…or even maggot-filled cow’s head of Damien Hirst.

‘There is no accounting for tastes,’ is the relevant expression. But you can account for a lot of what goes on in the art world by remembering how the “C” spot and the sensation mongers of the media work.

The idea of today’s art merchants is not to appeal, as poetry does, to people one by one…but to turn their art works into subjects of mob interest. In this respect, art is even better than stocks, because a buyer can put his art on display so that everyone knows he ‘gets it.”

You may recall the success of last year’s show at the Brooklyn Museum of Art. It was, appropriately enough, entitled “Sensation.” Also appropriately enough it was backed by former ad man Charles Saatchi, who understands the nature of his business: creating collective hysteria, like the oil crisis or Big Tech stocks.

Imagine, for a moment, that there were no “art market” – and no culture pages in the New York Times…and no “modern artists” who have been turned into celebrities on the society pages and the teen magazines…

Imagine that someone comes to you with a proposition: for a few hundred thousand dollars you can own the following work of art: an unmade bed, with used condoms, dirty underwear and a liquor bottle on it. Left to your own senses what would be your reaction?

And yet, Tracy Emin’s work is on display this week at the Royal Academy of Arts in London. Ms. Emin has achieved minor celebrity status. As far as I know, people may actually buy the stuff she puts together.

Another work shows Pope John Paul II being struck down by a meterorite. Get it? God’s little joke. Oh, if God would only choose his targets better…and send down a shower of stone on these claptrap artists!

St. Michael is said to have fought dragons and chased the devil. Where is he now that we need him?

“This is the dragon’s day,” says Auden, later in his poem.

But God has a sense of humor too. And perhaps nothing is so amusing as collective madness. The sight of people spending fortunes to buy trash – one of the displays at the BAA show is described in the IHT as “a large pile of garbage” – must send a ripple of laughter through the entire assembly of gods, demi-gods, angels and archangels. Perhaps they laugh too at millions of earnest voters lined up at polling places to elect dunderheads whom no one really wants…and at investors who pay 263 times earnings for companies about which they haven’t a clue!

It’s a funny world. As Elizabeth and I made our way around the show, we spotted a pair of 18th century chairs with gilded, curved arms and purple fabric that reminded us of pimp-mobiles in Baltimore’s ghetto neighborhoods.

“They’re hideous,” said Elizabeth. We were just too ignorant to realize how attractive they were – at $10,000 each.

In another room was the work of a master sensationalist – Pablo Picasso. The painter has evidently tossed a greeting to a friend – giving his regards in crayon, with a childish sketch in the corner… which must have taken about 30 seconds of attention. Remarkably, someone had framed this casual scrap and now offered it for sale. I did not ask the price.

But imagine that you had only your own eyes to guide you. Imagine that your C spot had been lobotomized and you were too ignorant to know that this art would make you cool and too dull to care. What would it be worth to you – this piece of paper with a scrawled note and crude drawing?

Poetry is largely immune to collective thinking. It almost never ‘catches on.’ Instead, each reader has to figure it out…alone…one by one.

Your dragon-slayer …still trying to figure it out…

Bill Bonner

Paris, France September 29, 2000

P.S. the last lines of Auden’s poem: “1929”…on how a boom ends…

We know it, know that love Needs more than the admiring excitement of union, More than the abrupt self-confident farewell, The heel on the finishing blade of grass, The self-confidence of the falling root, Needs death, death of the grain, our death, Death of the old gang; would leave them In sullen valley where is made no friend, The old gang to be forgotten in the spring, The hard bitch and the riding-master, Stiff underground; deep in clear lake The lolling bridegroom, beautiful, there.

*** Whoa! The Dow shot up 195 points yesterday. And the Nasdaq rose 122 points. For the moment, anxiety has given way to greed, not fear. How long will it last? Remember the 4 E’s that have been bothering the market – Energy, Earnings, the Economy and Euro? Well let’s look at what happened:

*** Energy – the price of oil fell $1.28 yesterday, following the Saudi announcement that they would pump even more if necessary to stabilize the price. They don’t want the whole world getting worried about oil. People might look for alternatives. They might stop using so much of the black goo. Worse, they might find a substitute! That’s why OPEC has increased production 3 times in the last year.

*** Earnings – The news from P&G was that earnings would be good. P&G stock climbed $5…and led the entire Dow. Bristol Myers also reported good earnings. Later in the day, Apple Computer came out with bad earnings news…but the masters of the universe on Wall Street had already headed home. The stock fell 40% in after hours trading.

*** According to the Wall Street Journal, Apple “abruptly end[ed] an 11-quarter winning streak” yesterday and announced net income “excluding investment gains” would be about $110 million – significantly shy of the $165 million expected by analysts. “We’ve clearly hit a speed bump,” Steve Jobs was reported to have said.

*** Economy – The economic news, too, was almost all good. Surprisingly good. Incredibly good. Fantastically good. Delusionally good. The Bureau of Labor Statistics came out yesterday and announced that the economy grew faster than expected in the last quarter. Instead of getting bigger at a 5.3% annual rate, it grew at 5.6% annualized.

*** The BLS also announced that it had revised the inflation number for the last quarter – down! From 2.3% to 2.1%, annualized.

*** I know what you’re thinking…didn’t I tell you yesterday that they would revise it upwards? Well, yes. But the “Hedonics Brawl,” yesterday, was like a mud wrestling match between two fat women. There was a lot of splashing around, but neither side could get much traction.

Our own Kurt Richebacher wrote a letter to Barron’s in response to Gene Epstein’s column. He got a call from the editor…but his letter was not published.

Meanwhile, the BLS did correct its CPI estimate for the year. It found that it had made an error on “air conditioner quality measures.” Forget hedonics applied to computers. We’re talking the hedonics of air- conditioners. The BLS admits it got the math wrong and adjusted its annual CPI estimate UP from 3.4% to 3.5%.

*** Not that investors were following this battle. Instead, the economic reports from the financial press cited the ‘soft landing’ that most think is almost a sure thing.

*** And finally, there’s the euro. The Danes voted against it. But the damage was moderate. People seemed to take it in stride. And the European Central Bank seemed prepared to defend the euro if the going got tough. So, the euro sank a little – down below 88 cents – and that was all there was to it.

*** Cisco rose $2 – it is still below $60.

*** The advance/decline ratio tilted further towards the positive side yesterday – with twice as many stocks going up as down. There were also almost twice as many hitting new highs as hitting new lows.

*** Gold fell $2.70 after teasing gold bugs with a healthy increase on Wednesday. The metal goes nowhere. It is as inert and lifeless as a sidewalk drunk in an afternoon nap.

*** Utilities hit a new high yesterday. Bonds were up too. These, along with the advance/decline numbers, are bullish signs. The nation’s money supply continues to expand at twice the rate of GDP…and an election is coming. Anything is possible.

*** As I’m sure you know by now Priceline’s shares also fell by 42% in one day this week (they are down by 93% since April 1999). Most analysts say Priceline.com’s stock plummet was caused by the airlines themselves – cutting into the e-tailer’s business, because airfare makes up 85% of Priceline’s revenue. But “that’s bunk,” says Porter Stansberry. “Competing airlines will never effectively compete with Priceline. In fact, their on- line initiative – Hotwire.com – has been delayed until next year. The real problem is Priceline’s website doesn’t tell shoppers how to get a good price. If the range of accepted bids for similar flights were available – they’d be successful.”

*** Canada is in the process of tripling its natural gas exports to the U.S. The NY TIMES: “Canada, which supplies 16 percent of American consumption exports to the United States expects to grow [their exports by] 50 percent this decade.” John Myers recommends a Canadian natural gas producer:(see: Another Way To Play The Natural Gas Sqeeze https://www.dev.dailyreckoning.com/body_headline.cfm?id=556)

*** Today is my friend Michel’s birthday. “Things are as good as they possibly could be,” said Michel the other day, confusing me… “because they can only be as they are.” But what if they were different? “Then, they would not be as they are.” Okay…got it.