A Long Day

Note, this is one of our ‘Daily Reckoning Classiques’ that Bill wrote during his visit to Omaha Beach last April. Paris, France March 30, 2001

I thought of the famous painting by Norman Rockwell. A deeply furrowed and weathered farmer from out on the plains sits on the runner of his pickup truck, while his son awaits the train. The son is going off to college and is full of the bright expectations of youth. The father is more concerned with how he will get the next crop in without his son’s help. The picture appeared to be from the late `30s.

There, in section D of the American cemetery, on the bluff overlooking the English Channel, was the simple cross that marked the grave of Nils Wennberg, private first class, from South Dakota. Is that what happened to the boy? I wondered.

The 6th and 7th of June, 1944, were black days for the Nindel family of Indiana. The crosses at Omaha Beach record that two Nindel boys, Preston and Robert, died within 24 hours of each other on those two days – two of the nearly 10,000 American casualties.

Also of interest was the grave of Jimmie Montcrieth – whose heroism on the 6th of June was so remarkable that he was awarded a Medal of Honor – posthumously. Montcrieth ran from position to position, exposing himself to enemy fire, rallying his troops and managing somehow to advance against the German bunkers. He was killed – but the bunkers were taken.

“All I remember,” said Stanley, a stout oysterman and carpenter, and D-Day veteran, whom I worked with back in the `60s, “was jumping in the water and running up to the beach. I had never been shot at before. I didn’t care for it. Guys were getting shot all around me. And I had so much sh…[gear] hanging off me, I could barely move. But I made it to the beach and crouched behind the dunes and started shooting back. I didn’t know what I was shooting at. But I hoped to hell I hit some son of a bitch in a German uniform.”

“Stanley,” I once asked during the terminal phase of the Vietnam War…when the draft lottery numbers were being handed out, “couldn’t you have gotten out of it? Didn’t you have polio or something?” Stanley had had polio as a child and walked with a limp.

“Hell no. I didn’t tell them about the polio. Besides I didn’t want to be sitting around here with my thumbs up my [bleep] while everybody else was getting their [themselves] shot up. Of course, it was different back then….”

I walked along the beach where Stanley must have come ashore. I tried to imagine what it was like. The German’s reinforced concrete bunkers are still there. They still look massive, impregnable and unassailable.

How could anyone have gotten to safety across the open beach and up the sandy bluff? And yet, they did. By the end of the day on June 6, there were 150,000 troops on the continent. As Hitler remarked, “The God of War has gone over to the other side.”

The God of War had indeed changed allegiance. Rommel, in charge of the German defense west of the Seine, committed suicide. His successor, Kluge, followed in his footsteps – shooting himself a few months later.

Less obedient to the God of War was von Choltitz, in charge of the German garrison in Paris. Hitler ordered him to destroy the city. But von Choltitz may have been in Paris too long. He disobeyed orders. He surrendered Paris, intact.

The American cemetery at Omaha Beach is the setting of the first and last scenes of “Saving Private Ryan.” As in the film, there were a number of WWII vets wandering among the crosses and stars of David. Like the father in the Rockwell painting, they wore baseball caps – often with indicators of their military affiliations – and bore the creases of age and hardship. Accompanied by younger relatives, they walked slowly, reverentially.

Most were very friendly and open – relaxed, as Americans tend to be. One older guy seemed to be stunned, though. It was as though he was trying so hard to recall something, that he had forgotten where he was and what he was doing.

I wondered what they were thinking…and what memories they brought with them. And how things could have changed so much…so that even though these events happened during their lifetimes – it is as if they happened a thousand years ago.

I thought, too, about how all the great changes and challenges of our century were over before I was born. The baby boomers have faced nothing like the Depression, or Electrification, or Automobilization, or National Socialism, or WWII. We have had an easy time of it. Let’s hope it stays that way.

Your very humble correspondent,

Bill Bonner

*** I’m on my way to Philadelphia to attend a wedding. I only have time to dash off a few notes.

*** More recriminations. Not everyone lost out in the Great Tech Bubble. In fact, the Washington Post says of the episode: it was not the greatest period of wealth creation ever…it was the greatest wealth transfer ever – from ordinary investors to insiders.

*** “One of the lucky people was the founder of Scient Corp,” reports Barron’s Alan Abelson, “a chap named Eric Greenberg. The stock came public at an adjusted $30 a share in ’99, topped $338 at the peak of the lunacy in March of 2000. In five quarters through last December Mr. Greenberg sold $225 million of Scient stock.” The whole company is only worth $130 million today. See, ‘late, degenerate capitalism’ isn’t so bad – if you’re one of the late, degenerate capitalists!

*** Another very lucky insider was Marc H. Bell, CEO of Globix Corp. Abelson reports that Bell “sold a third of his holdings for roughly $129 million, mostly in February 2000 – within a week of the stock’s peak of $67 and change.” The stock can be bought today for just $3.25 – giving the entire company a market value of only $136 million.

*** I mentioned yesterday that ‘fighting the Fed’ has been profitable this year. Fred Hickey adds that it has been profitable since April 1999. That was when the Fed started raising rates – which it did six times until it finally began lowering them. Between April ’99 and March 2000, while the Fed was signaling to investors to get out, the Nasdaq rose more than 100%.

*** The markets barely moved yesterday. The Dow picked up 13; the S&P lost five…and the Nasdaq was down a piddly 33.5 – although these days that’s a loss of nearly 2%.

*** The Nasdaq 100 – home to the hopes and dreams of so many late degenerates – dropped another two and a half percent yesterday… it’s now off 33% for the year.

*** “The bigger, the longer, the more speculative the bull market,” says Richard Russell, “the more severe the bear market that follows. This is logical, because the bigger, the longer and the more speculative the bull market the MORE THERE IS TO CORRECT. It’s as simple as that.”

*** How low will it go? Russell reminds us of the “Q” ratio – which I wrote about a few months ago. The ratio marks the relationship between stock prices and the underlying value of the businesses they represent (roughly, book or replacement value): “Currently, the Q ratio runs about 150% of replacement values. This is 2 1/2 times the average level of the Q ratio over the last century. As a comparison, in the late 1920s and in 1966 and in the early 1970s the ratio was a little better than 120%.”

*** “To get the Q ration back to real value,” says Russell, “the stock market could fall as much as 50-60% or the Dow could drop back to the 4,000 area.”

*** GM spinoff and autoparts maker Delphi announced they will add 11,500 to the growing list of corporate pink slips. And according to Laura Washington at Money.com, the Conference Board announced help-wanted advertising is off 20 percent from this time last year…meaning, there will be fewer places for the recently disposed to find new work.

*** Gold shed a buck ten, yesterday. It’s now down $13 for the year. The euro slipped a little too, on an ECB decision NOT to cut rates.

*** The dollar – defying the laws of gravity, and the good sense of Daily Reckoning readers – remains strong…the dollar index closed at 116 – up 6.7% for the year.

*** That’s bound to change. The economy grew slower than expected – about 1% – in the first quarter of 2001…corporate profits dropped 4.3%. Sooner or later falling stocks, shareholder recrimination, dismal corporate earnings, layoffs, and negative personal savings will catch up with the dollar.

*** “US private debt is…shameful,” writes Harry Schultz. “6% of GDP, an historic high. So the public is no better at budgets than govt, and has no savings, in fact -2% average. High debt is dangerous; it means even a tiny recession could cripple the U.S.”

*** Harry, one of the oldest newsletter gurus still compus mentis continues: “One of the reasons most civilizations have traditionally revered the old wise men is because they’ve been around long enough to witness the longer term cycles of human psychology/behavior…the BB’s (Baby Boomers) today, who dominate world politics, film-making, finance, military, etc., provide 90% of the talking heads on TV…are embarrassingly self-confident, a common flaw in the age-stage.” Harry has been writing his letter since 1964.

*** Here’s a “prelude to the bubble” milestone. On this day in 1951, the UNIVAC computer passed 17 hours of “rigorous” tests by the Census Bureau. The government subsequently ordered 5 more… and put the Electronic Control Company on the map as the producer of the first commercial computer. Fittingly, the $300k price tag they put on UNIVAC wasn’t enough to pay for production. ECC, one of the first two computer start-ups in history, ran out of money before the trial was completed and was forced to sell-out to a larger concern.