-->The Daily Reckoning

Ouzilly, France

Friday, 26 December 2003

------------------------

*** No easy 'Way Out'... or is there?

*** What an elegant solution... stick it to the
foreigners...

*** A visit to the doctor...

------------------------

The rest of the world somehow knows.

They know it is all a fraud. The recovery....the consumer
economy... the Bubble Reloaded... something tells them that
it is not going to turn out the way people think.

And so, day after day, they sell the dollar. Every U.S.
company... and every U.S. asset... every paycheck... and every
bottle of booze is calibrated in dollars. Selling the
dollar takes them all down a notch. And people scarcely
notice. At least, not at first.

The dollar is the 'Way Out' for everyone - or so it
appears.

President Bush could do the honest and honorable thing. He
could go on national TV and explain to voters that the
nation is spending more than it can afford."We're all
going to have to cut back," he could say."And we're
setting the example here in Washington by cutting Federal
spending by 15% next year...

"Plus, I'm sorry to have to tell you this, but we're going
to have to raise taxes, too. Otherwise, we're just getting
ourselves further into a hole that our children and
grandchildren will have to deal with."

You have not yet heard George W. Bush say such a thing?

Well, have you heard Alan Greenspan tell Congress that he
has"reluctantly decided to raise interest rates in order
to reduce consumer spending, lower debt levels, and protect
the dollar?" You haven't?

No, and you're not likely to. Voters want lies, not the
truth. They want to believe that they can continue to
borrow, spend, and eat all they want without any ill
effects. They know they cannot eat all they want; they see
the results for themselves. But economics is confusing. If
Alan Greenspan says the economy is in great shape, who are
we to argue with him? If George W. Bush says the nation is
better off with a $500 billion deficit, how could we know
any better?

Bush supporters point out that the extra spending was made
necessary by the War on Terror. But more than half the
additional slop has gone directly into the usual domestic
trough.

The president must know as well as everyone else that
someone, somewhere, somehow will have to make up these
deficits. Just so long as it's not his problem, now! And
Alan Greenspan knows perfectly well that someday this whole
consumer debt/paper money economy will blow sky high. He
just wants to be sure it's not while he's on the job... or
not in any way that people notice.

The charming thing about the dollar is that it can
fall... and the voters don't seem to mind. In fact, they
rather like it. For while all America's assets have dollar
signs in front of them... so do America's debts. A 50%
decline in the greenback, for example, wipes out more than
$4 trillion worth of foreigners' claims on U.S.
assets... while Americans think they are still whole!

Voilà! There goes a big slice of America's debt
problem... stuffed down the gullet of foreigners. What an
elegant solution! What a delightful outcome! The foreigners
don't vote. They can't even complain - for it's clearly
their own damned fault. Fed governor Ben Bernanke said
right out loud that we would destroy the dollar rather than
allow the consumer economy to slow down. We reported it
right here in the Daily Reckoning. Weren't they paying
attention?

But wait. Is it really that simple? That easy? The
foreigners are wising up already. Day by day, the value of
everything American goes down - its houses, its stocks and
bonds, its hourly earnings and dividends. How can Americans
continue living in the style to which they have become
accustomed? Without foreign lending... where will they get
the money? Where will the federal government get the
wherewithal to continue squandering cash at the present
rate? How will consumers go further into debt when no one
will lend them money? What will the consumer's house be
worth when neither he nor many of his neighbors can afford
to make the monthly payments?"

We cannot wait to turn the page and find out.

All the markets of Christendom were closed yesterday in
celebration of the birth of the Prince of Peace... but here
at Ouzilly, there's nothing much to report. Your editor is
still suffering from some ailment, which he believes is a
form of pneumonia. He cuts this letter a little short so he
can go over to visit the local doctor...

.."Wow," he says 20 minutes later."That was such a
pleasant health care experience, I think I'll get sick more
often."

In the space of 20 minutes, your editor drove into the
village, appeared before the doctor, was examined and
prescribed... walked next door to the pharmacy... got 4
different medicines... then stopped at the bakery on the way
out of town to get bread... and returned home. He waited
nowhere. And the whole thing cost less than 50 euros -
including the bread.

Doctor Resner looked like he had just come in from treating
a cow. He was dressed in a sweatshirt and chewing gum. It
was hard to believe he was a doctor at all. But there on
his wall was a certificate to prove that he was at least a
graduate of the Poitiers medical school.

Nor were there any clerks, assistants, nurses or other
professionals in attendance. The man was on his own and
ready for lunch.

"What's the matter," he wanted to know. We explained that
we thought we had a touch of pneumonia. He wasted no time
asking about medical history, drugs, health problems,
insurance or anything else. Instead, he got right down to
business:

"Ah, no problem. Let's have a look at you."

We sat down on the examining table in a his dingy,
depressing office. The table was just like those you see in
America, with the paper rolled out on top, except for one
detail... the paper looked as though it hadn't been changed
in weeks. It was creased, wrinkled and not particularly
clean.

He listened our lungs... then checked our blood pressure.
Finding nothing of interest, he went immediately to his
desk and wrote out a prescription.

"How much do I owe you?"

"Twenty-euros..."

We gave him 2 10-euro notes, said 'merci' and left.

---------------------

The Daily Reckoning PRESENTS: A Boxing Day DR Classique,
first published three years ago today.


A CHRISTMAS LETTER
By Bill Bonner

We enjoyed a very quiet, and unseasonably warm, Christmas
here in Poitou. The festivities began with a party for the
English speakers in the area. We invited the five or six
families we know - English, South African, Scottish - and,
of course, our own American bunch. Among them was a doctor
and her husband... and a farmer whose wife is named Looney.
I am not making this up - just reporting it to you. Looney
is an avid horsewoman, like my wife, Elizabeth. Eventually,
every serious rider is kicked in the head, trampled, or
thrown from his horse onto his head. So, I assume that the
name is descriptive... or perhaps predictive.

Kurt, meanwhile, does underwater construction work. It is a
difficult career, but he seems to enjoy it. He is leaving
today for 6 weeks in Iraq - where I presume he is working
on oil equipment. Richard manages a local Bed-and-
Breakfast, frequented by English tourists. And Kim is
restoring a château in an even more remote little hamlet.

Of course, there is no reason why you should be interested
in our Christmas - especially since nothing out of the
ordinary happened. But the Daily Reckoning is a free
service, and I feel entitled to bore you from time to time.
Plus, it is the day after Christmas and I am not ready to
address trivial matters.

The purpose of our get-together at the house was to sing
Christmas carols in English. Caroling has been a family
tradition for many years - it is something we miss out here
in the French countryside.

The tradition began in Baltimore more than 15 years ago. We
lived in a formerly Jewish neighborhood of elegant houses
built in the last century. But the Jews had moved out... all
that is left is the synagogue on Eutaw Street - which is
still in use. By the time we arrived, in the mid-80s, it
looked as though the area might be ready for an urban
renaissance. So we bought a house for $27,000 - and joined
a small group of white homesteaders in a predominately
black ghetto.

It was an uphill battle, and ultimately, a complete defeat
for the forces of gentrification. But it had its comic
moments. Among them was our futile attempt to bring
American bourgeois culture to the ghetto. One effort was
the annual caroling - in which a little band of earnest
homeowners would parade up and down the inner city
sidewalks singing Christmas carols.

The spectacle was almost as foreign and absurd to the local
drug dealers and welfare addicts as if aliens had landed in
front of the corner liquor store. But at least one woman
tried to make sense of it:

"What's this?" she asked the carolers, rolling one white
tradition in with another,"Chantikah?"

After giving up on the city, we moved out to the country,
near Annapolis. There, our caroling took on a new
dimension. Along with other members of the church group, we
would drive around to `shut-ins.' It was fun for the
carolers, but the shut-ins were - in some cases - so
tightly shut-in, and deaf to boot, that they didn't hear a
note or a word... and actually slept right through the whole
show while we shivered in their front yards.

But here we were on this Christmas Eve, drawn up around the
fire... a small outpost of Anglo-Saxon Christendom in remote
Poitou.

Elizabeth had made fruitcake, cookies and homemade eggnog -
to which we added rum or whiskey depending upon our tastes.
The eggnog was so frothy that by the time we began singing,
we all had traces of white mustaches. Now, it turned out
that while we all knew the same carols, the English had
different melodies. That is the way with the English... they
can never quite get in tune with the rest of the English-
speaking world. But it didn't seem to matter anyway. After
a few rounds of eggnog, we were surprised at how good we
sounded.

The party ended in the early evening. But there was more
singing ahead. Elizabeth, Maria and I rushed over to the
church - where we had been welcomed into the choir in the
spirit with which a fat girl might be invited to enter a
beauty pageant... it is always nice to have someone around
to whom you can feel superior.

The little church at Bourg Archambault was packed on
Christmas eve. We were late getting there, but fortunately
Pierre had saved a seat for me and had begun to worry that
I wouldn't show up. We are the only two basso profundo
voices in the choir. We don't sing very well, but when we
feel sure of ourselves we really belt it out and chuckle to
ourselves after the fact. But we drown out the rest of the
choir on these occasions... and Pierre's two daughters -
Anne Sophie and Elisabeth - turn around and frown at us. My
own daughter, meanwhile, took a seat on the other side of
the church. At 14, she fears embarrassment more than death.
And I'm afraid I give her plenty of cause for
mortification.

But Anne Sophie and Elisabeth are both in their early 20s -
and beautifully turned out. Pierre seems to find it a
pleasure to catch their eyes, as I do - even if it is to
draw a look of disapproval.

Then, after church - at about 11pm - we returned home and
gathered around the fire again, partly for intimacy... but
largely just for heat. The fireplace is the only source of
heat out in that wing of the of the house. The children
were soon sent off to bed so that Mr. And Mrs. Santa could
fill the stockings hung by the chimney with care... and
finish wrapping a few presents. Actually, Mrs. Santa did
the work... while Mr. Santa helped himself to what remained
of the eggnog and put on a CD of holiday music.

And so, our Christmas eve came to a close much as it
began... with carols. I dozed in my chair in front of the
fire... perhaps dreaming of the Depression of 2001... as
Tammy Wynnette sang `Silent Night'.


In the holiday spirit,

Bill Bonner

-->Der Rest der Welt weiß es

von unserem Korrespondenten Bill Bonner

Der Rest der Welt weiß es irgendwie.

Sie wissen, dass das alles ein Betrug ist. Die amerikanische
Wirtschaftserholung... die amerikanische
Konsumentenvolkswirtschaft... das Wiederauferstehen der
Spekulationsblase... irgendetwas sagt ihnen, dass das alles nicht so
enden wird, wie sich das die Amerikaner derzeit vorstellen.

Und so verkauft der Rest der Welt Tag für Tag seine Dollarbestände.
Und jede US-Aktie... jede amerikanische Lohnzahlung... und jede
Flasche Schnaps wird in Dollar abgerechnet.

Präsident Bush könnte das tun, was am ehrlichsten und am ehrwürdigsten
wäre. Er könnte den Wählern in einer öffentlichen TV-Ansprache
erklären, dass die Nation derzeit mehr konsumiert, als sie sich
leisten kann."Wir werden alle zurückstecken müssen", könnte er sagen.
"Und wir in Washington setzen ein Beispiel, indem wir unsere Ausgaben
im nächsten Jahr um 15 % senken werden..."

"Und ich bin traurig, Ihnen das mitteilen zu müssen, aber wir müssen
auch die Steuern erhöhen. Andererseits werden wir einen immer größeren
Schuldenberg auftürmen, mit dem dann unsere Kinder und Enkel
klarkommen müssen."

Sie haben das noch nicht gehört? Und Sie haben auch noch nicht gehört,
dass Alan Greenspan die Zinsen erhöhen will, um den Dollar zu
schützen?

Nun, das werden Sie wahrscheinlich auch nicht hören. Die
amerikanischen Wähler wollen Lügen, keine Wahrheit. Und diese
Einschätzung beschränkt sich nicht nur auf die amerikanischen Wähler.
Die Amerikaner wollen glauben, dass sie weiterhin Schuldenmachen und
Konsumieren können, ohne negativen Folgen. Sie wissen, dass sie nicht
alles essen können, was sie wollen; das Ergebnis davon sehen sie im
Spiegel. Aber bei der Wirtschaft ist es verwirrend. Wenn Alan
Greenspan sagt, dass die US-Wirtschaft in großartiger Verfassung sei -
warum sollte man da mit ihm streiten? Und wenn George W. Bush sagt,
dass es der Nation mit einem Haushaltsdefizit von 500 Milliarden
Dollar besser geht - wer würde das schon besser wissen?



Die Unterstützer von Bush sagen, dass die zusätzlichen Staatsausgaben
durch den Krieg gegen den Terror notwendig gemacht worden seien. Aber
mehr als die Hälfte der zusätzlichen Staatsausgaben ging in andere
Bereiche.

Der US-Präsident muss genauso gut wie alle anderen wissen, dass für
diese Schulden irgendwann irgendwie eingestanden werden muss. Nur bis
dahin ist es nicht sein Problem! Und Alan Greenspan weiß, dass
irgendwann der gesamte Berg aus Papiergeld und Schulden den Himmel
sprengen wird. Er will nur sicherstellen, dass dies nicht während
seiner Amtszeit geschieht.

Und das Gute beim Verfall des Dollarkurses ist die Tatsache, dass
dadurch auch die amerikanischen Schulden entwertet werden.

Die Ausländer haben gegenüber den USA Netto-Forderungen im
Billionenbereich. Voilà! Der Rückgang des Dollarkurses löst einen
großen Teil des amerikanischen Schuldenproblems. Was für eine elegante
Lösung! Was für ein erfreulicher Ausgang! Und die Ausländer können
auch nicht den US-Präsidenten wählen. Sie können sich noch nicht
einmal beschweren - denn es ist ihr eigener verdammter Fehler.

Aber Moment. Ist es wirklich so einfach? Die Ausländer werden bereits
weiser. Tag für Tag verringert sich gleichzeitig mit dem fallenden
Dollarkurs der Wert von allem in Amerika. Der Wert der Häuser, Aktien
und Anleihen und Dividenden. Wie können die Amerikaner weiterhin ihren
Lebensstil halten? Ohne neue Kredite aus dem Ausland... woher werden
sie da das Geld erhalten?

Ich kann es kaum erwarten, zu erfahren, wie diese Geschichte
weitergeht!

----------------------------------------------------------------------

Montag, 29. Dezember 2003

Krank in Frankreich

von unserem Korrespondenten Bill Bonner

Ich habe Weihnachten mit meiner Familie auf unserem Landsitz in
Ouzilly, Frankreich, verbracht. Was ich dazu zu berichten habe - siehe
nächster Artikel. Ich leide derzeit unter einer schweren Erkältung,
die ich für eine Lungenentzündung halte. Deshalb schreibe ich heute
weniger, um noch zum Doktor zu fahren...

.. und 20 Minuten später bin ich schon wieder zurück. Das ging ja so
schnell - ich denke, dass ich da öfters krank werden kann.

Denn innerhalb von nur 20 Minuten ging ich zum Doktor, wurde
untersucht und erhielt ein Rezept... dann ging ich in die Apotheke
direkt neben der Praxis... erhielt 4 verschiedene Medikamente...
dann ging ich noch schnell in die Bäckerei, um Brot zu kaufen... und
ab zurück nach Hause. Nirgendwo musste ich warten. Und das alles
kostete mich weniger als 50 Euro - inklusive Brot.

----------------------------------------------------------------------

Montag, 29. Dezember 2003

Ein verspäteter Weihnachtsbrief

von unserem Korrespondenten Bill Bonner

Unser Weihnachtsfest in Frankreich war sehr ruhig und angenehm. Die
Festlichkeiten begannen damit, dass wir 5 oder 6 Familien der Umgebung
eingeladen hatten. Darunter waren eine Ärztin und ihr Ehemann... und
ein Bauer, dessen Frau genau wie meine Frau Elizabeth in Pferde
vernarrt ist.

Und Kurt, ein anderer Nachbar, ist Unterwasser-Konstrukteur. Das ist
eine anstrengende Arbeit, aber sie scheint ihm zu fallen. Er war 6
Wochen im Irak, wo er an Ã-lanlagen gearbeitet hatte. Dann war da noch
Richard, der in seinem Haus"Bed and Breakfast" für englische
Touristen anbietet. Und dann war da Kim, die ein altes französisches
Schloss restauriert.

Natürlich gibt es keinen Grund dafür, dass sie sich für unser
Weihnachtsfest interessieren sollten - und es ist noch nicht einmal
etwas Außergewöhnliches passiert. Aber da der Investor's Daily ein
kostenloses Angebot ist, fühle ich mich berechtigt, Sie von Zeit zu
Zeit zu langweilen. Und da wir gerade Weihnachten hinter uns haben,
bin ich ohnehin noch nicht dazu bereit, mich wieder zu intensive mit
wirtschaftlichen Themen zu beschäftigen.

Elizabeth hatte Früchtekuchen gemacht, Kekse und hausgemachte Bowle -
zu der wir je nach Geschmack Rum oder Whiskey hinzufügten. Und nach
einigen Gläsern waren wir beim gemeinsamen Weihnachtslieder-Singen
alle überrascht, wie gut wir singen konnten.

Die Party endete am frühen Abend. Aber mir stand noch mehr Singen
bevor. Elizabeth, meine Tochter Maria und ich eilten zur Kirche.

Diese kleine Kirche in Bourg Archambault war zu Weihnachten natürlich
überfüllt. Ich singe im Chor mit, auch wenn ich den Eindruck habe,
dass ich nur zugelassen worden bin, damit sich die anderen überlegen
fühlen können.

Diesmal war ich so selbstsicher, dass ich besonders laut sang. Die
zwei Töchter meines Freundes Pierre - Sophie und Elisabeth -, die vor
mir standen, drehten sich zu mir um. Die Stirn in Falten gelegt.

Meine eigene Tochter hatte sich so weit wie möglich von mir
weggesetzt. Sie ist 14, und für sie ist fürchtet Peinlichkeiten mehr
als den Tod. Und ich fürchte, ich gebe ihr viele Gründe dafür.

Nach der Kirche - um ungefähr 23 Uhr - gingen wir nach Hause und
versammelten uns vor dem Kamin. Der Kamin ist übrigens die einzige
Wärmequelle in unserem Haus. Die Kinder gingen bald ins Bett...
während ich mich dem Rest der Bowle widmete und eine Weihnachts-CD
auflegte.

Und so endete mein Weihnachten so, wie es begann - mit
Weihnachtsliedern. Ich döste im Sessel vor dem Kamin... während
gerade"Silent Night" von Tammy Wynnette lief.