The Daily Reckoning - World Class Imbeciles (Mogambo Guru)

verfasst von Firmian, 14.06.2004, 23:47

--><font color=#008000>Bitte nicht für Investment-Entscheidungen benutzen, die auf kurzfristigen Gewinn ausgerichtet sind.

But in the long run...</font>

World Class Imbeciles

The Daily Reckoning

Paris, France

Monday, 14 June 2004

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

*** Reagan rid the world of communism - too bad

*** World running out of gas... Indian optimism...

*** Fed prepares for higher rates... Busted... and more!

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

The papers are full of remembrances, eulogies and praise
for Ronald Reagan. Even the liberal press - who thought he
was a simple-minded dummy when he was in office - can't
find anything bad to say about the man now that he is dead.

It is fitting to get a little soft in the heart when a good
man takes his leave of us, but many reporters went mushy in
the wrong place.

Typically, the recollections tell us how the Gipper
restored America's faith in itself with his optimism.
Or, how his uncomplicated sense of purpose helped rid the
world of communism.

But it's a rare silver lining that doesn't have a cloud
wrapped around it. Twenty years later, America's self-
confidence has reached delusional levels. And communism? It
seems a spent force... alas.

The sly and unappealing thought occurred to us while we
were pumping gas at a station along the autoroute on the
way home last night. For $60, we got about half a tank of
diesel fuel.

Soon, prices will probably be as high in the homeland.

On the front page of today's International Herald Tribune
is a story announcing a fall-off in oil production, even
though reserves have increased.

Normally, production rises with the discovery of new
reserves. But lately, reported reserves are still climbing,
but the amount of oil coming out of the ground is dribbling
down.

Readers may recognize this phenomenon as"peak oil," a
hypothesis put forward by a growing number of geologists
who think the world really is running out of oil - at least
at the kind of prices we've been used to paying. It used to
be that new reserves were found at a rate equal to or
greater than current production. Now, major new oil
deposits are harder to find; we've already looked almost
everywhere. At some point... possibly next year... oil
production is expected to peak out; the world will never
again pump so much of the stuff.

"Everybody lies about reserves," said a source quoted in
the IHT article. Apparently, the more reserves a nation
has, the higher its production quota. Knowing that everyone
else lies about it, even honest nations are tempted to
grease the numbers.

Besides, oil is typically regarded as a strategic
commodity. Producers keep the truth to themselves.

So, no one really knows how much ready oil the world really
has. And no one knows when, and how, actual production will
fall off. But however much oil is left, the amount goes
down everyday. And if Americans expect to use it, they're
going to have to bid against Asians for it.

One expert, mentioned here last week, estimates that the
price of oil needs to rise by more than 400% in order to
bring demand in line with real supply.

How fortunate we've all been! The industrial revolution
gave us such a head start on the rest of the world, we were
able to use up much of the world's easily available energy
before the Chinese and Indians ever got into the race.

And thank God for communism! We never understood why Ronald
Reagan was so eager to get rid of it. Instead, we give a
cheer for Lenin... and a loud huzzah for Mao too. As long as
you didn't have to live in a communist country, it was
wonderful. For many decades, it kept millions of people
penniless - unable to compete for the world's oil. And
while the U.S. guzzled cheap oil for half a century,
communism retarded the economic development of its
competitors.

Alas, you can't be lucky forever. Now, every remaining
barrel of oil comes on the market with people bidding for
it from all over the planet... Americans, Europeans,
Russians... and 3 billion Asians too!

Over to Eric, for more news:

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

Eric Fry, from the corner of Wall and Broad...

- Three days have passed since your New York editor
departed from an investment conference in St. Michaels,
Maryland - his head spinning with fresh ideas and aching
from the prior night's libations. When delicious wines are
flowing as freely as interesting investment ideas, it's
easy to imbibe a little too deeply of both.

- The teetotalling Dr. Steve Sjuggerud, editor of True
Wealth, produced the highest insight-to-hangover ratio of
any conference attendee. The good doctor produced a steady
stream of intriguing ideas... without suffering a single
hangover.

-"I call it the 'Sjuggerud Advantage,'" quipped Steve's
publisher, Porter Stansberry."The guy's always clear-eyed,
clear-headed and ready to roll... it's really not fair."

- Most of the conference attendees shied away from macro-
economic predictions; preferring instead to highlight the
virtues of specific stocks. However, a few broad themes
emerged from the two-day ordeal:

- Nearly everyone present admitted to some anxiety about the
frothy housing market, while simultaneously admitting that
they knew of no direct way to protect oneself from a
possible drop in home prices...

-"Let's study the Argentineans," one colleague suggested.
"They've endured more boom/bust cycles in real estate than
anyone. Somebody down there must have figured out how to
hedge against a real estate collapse. Let's find the
'Argentine Solution.'"

-"I'm partial to the 'Brazilian Solution,'" your New York
editor suggested, mindful of his girlfriend's imminent
return from Sao Paulo next week.

- 'Nah, I like Argentina better," countered Steve Sjuggerud,
as he launched into a story about a deeply undervalued
Argentine real estate stock that he had recommended to his
"True Wealth" subscribers a few months back.

-"Hmmm," your editor replied,"wouldn't it be great if you
could lock in the value of your American house and use the
proceeds to buy undervalued real estate elsewhere in the
world?" (We've embarked on a new quest, dear reader - a
quest to find ways to hedge against a possible drop in home
values... details upcoming in the months ahead.)

- Meanwhile, nearly everyone present anticipated renewed
weakness in the U.S. dollar and in the U.S. Treasury
market, but pledged agnosticism about the future direction
of oil and stocks. Your New York editor, despite his devout
agnosticism toward the oil price, believes that the price
of crude is heading inexorably higher - maybe not quickly
and maybe not immediately, but oil prices will definitely
rise... we think.

- Renewed terrorism in Saudi Arabia over the weekend
confirms our suspicions that the global oil supply is
precarious at best."al-Queda terrorists appear to have
unleashed a new tactic in their violent drive against Saudi
Arabia's rulers," the Associated Press reports."A stepped-
up campaign aimed at driving out foreigners and sabotaging
the oil sector." Specifically, al-Queda terrorists killed
one American last weekend and kidnapped another.

-"Saudi Arabia relies heavily on a foreign work force," AP
continues."An estimated 8.8 million foreigners work among
17 million Saudis in the kingdom"... and these foreigners
are getting a little jittery.

-"Now foreigners are barricaded in gated communities,
terrified to venture outside," the Los Angeles Times
reports."Some are abandoning Saudi Arabia altogether.
Workers at Aramco estimate that dozens of employees have
resigned since last weekend. Nervous workers are urging
their spouses and children to leave the country for the
summer, or longer."

- Maybe the exodus of foreign workers explains why the
Saudis just relaxed their laws prohibiting women from
working. Two weeks ago, Saudi Arabia repealed a law that
had prevented women from working in nearly every
profession. According to official figures, only 5.5 percent
out of some 4.7 million Saudi women of working age are
employed.

- But now that the foreigners are fleeing, The Saudis must
look to a new labor force to run its oil operations... let's
get crackin', ladies, there's oil in them sand dunes.

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

Bill Bonner, back in Paris...

*** This just in from our sub-continent correspondent,
James Boric...

"Dan and I have a loaded schedule this week - all the
action starts tomorrow. We are meeting a large proprietary
investor tomorrow morning. I am then taking a ride out to a
major Indian telecom company to talk with the CFO. We also
have several other meetings scheduled with people at
McKinsey, Citigroup, and several other large companies."

"Today I spent 30 minutes talking to the gentleman who
cleans my room here at the Taj Mahal. He was great. I
talked to him about cell phones, the government, soccer,
investing and even my beard!

"From talking to people here in Mumbai, it's immediately
obvious that they are extremely optimistic about the
future.

"'50 years ago we had nothing,' he said. 'Now we have more.
Not a ton more, but more. And we will keep working until we
are like you. Give us 10 years. Then you come back and
visit - and bring your family. You'll see.'

"He went on: '50 years ago no one had a phone. Now, we do.
50 years ago, there were no high-rise buildings in Mumbai.
Look out your window, now there are. And 50 years ago,
Americans did not visit us. Yet, you are here.'

"Of course, he said all of this as he was working - taking
care of my room, changing sheets, vacuuming the floor and
polishing the furniture. That's one thing I've noticed -
the Indians are a hard working group of people. And now
that they are democratic and free, they are optimistic that
they can change from being a poor country to a rich one -
like the U.S.

"I'll leave you with one parting thought... my Indian friend
reminded me that before the Portuguese came to rule India
and before the English came to rule India... India was a
powerful nation... maybe even one of the most powerful
nations in all the world. I wouldn't be surprised if they
get back to that level again. If they do, investors will be
rewarded - big time.

"Of course, it's a risk. But if people can think long-term
- at least 5 to 10 years - it could pay off handsomely."

*** At least 3 Fed governors emerged over the weekend to
warn of impending rate increases. Sandra Pianelto, William
Poole and Jack Guynn all seemed to be preparing the public
for the beginning of the Fed's 'baby steps' to higher rates
- widely thought to begin at the end of this month.

*** Officially, inflation is running at 4.4% over the last
12 months. Take out food and energy and the rate sinks to
only 1.8%. But it is food and energy that are in short
supply in the world, especially in the fast-developing
world. New factories in China can produce all the flip-
flops the world could ever want, at lower and lower prices.
But they can't produce oil... and they can't produce beef.
As the Chinese get richer, they're going to want more of
both.

*** A core inflation rate of 1.8% hardly seems worth
getting too excited about. When Ronald Reagan took office,
the inflation rate was 14%. The Gipper cut taxes, eased
regulations and backed Paul Volcker at the Fed.

What followed was a huge boom. For the next 20 years,
interest rates fell and stocks rose. And today, Americans
are so optimistic that they expect the same results for the
next 20 years - even though initial conditions are
practically the exact opposite of what they were in 1980.
Today, confidence is high and rates are low. Ideal
circumstances for the lumpenproles to lose money.

*** The Fed probably will raise rates by a piddly quarter-
point at the end of the month. That way, it can say it was
acting responsibly to avoid inflation... while continuing to
flood the world with EZ credit. Short-term, adjustable
mortgage rates are less than 5%. Real estate is rising by
at least twice that rate. A quarter-point increase will
make no difference.

*** A friend sends this... a remembrance of Ray Charles.
Perhaps America's householders will find it useful, he
says, as interest rates rise.

Busted
by Ray Charles

My bills are all due and the baby needs shoes and I'm
busted
Cotton is down to a quarter a pound, but I'm busted
I got a cow that went dry and a hen that won't lay
A big stack of bills that gets bigger each day
The county's gonna haul my belongings away 'cause I'm
busted.

I went to my brother to ask for a loan 'cause I was busted
I hate to beg like a dog without his bone, but I'm busted
My brother said there ain't a thing I can do,
My wife and my kids are all down with the flu,
And I was just thinking about calling on you 'cause I'm
busted.

Well, I am no thief, but a man can go wrong when he's
busted
The food that we canned last summer is gone and I'm busted
The fields are all bare and the cotton won't grow,
Me and my family got to pack up and go,
But I'll make a living, just where I don't know cause I'm
busted.

I'm broke, no bread, I mean like nothing,

(Substitute"$200 basketball sneakers" for"shoes,""BMW"
for"belongings," and"swimming pool" for"cow.")

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

The Daily Reckoning PRESENTS: The MoGu has decided to drop
his challenge for the Nobel Prize in Economics. Apparently
he can no longer compete with all those other dimwits. But
don't despair... there's always the Peace Prize.


WORLD CLASS IMBECILES
by The Mogambo Guru

It was a record-setting week in the world of economics, as
the Federal Reserve increased Federal Credit to a new
record of $749.6 billion. A new record! And Foreign
Holdings at the Fed are going parabolic, up another $10.6
billion last week, to $1.220 trillion. Another new record!

This debt is so big, so ingloriously huge, so monstrously
immense, so impossibly gigantic, a debt so humongous that I
am running out of descriptive words to convey its true
size. I am on the verge of lapsing into another long string
of obscenities. My anger can now only be partially
controlled by powerful medications, and it is only the
Supreme Willpower Of The Mogambo (SWOTM) that keeps my rage
under the guise of control.

In a way, incurring such debt actually has a positive side!
I mean, it is one thing to be so abysmally stupid to amass
debts this big in every corner of our financial universe,
but for foreigners to actually lend us this much money, and
just as we are about to start World War III, must mean they
are more stupid than we are! It seems incredible, I know.
But it is true!

And believe me when I say we have got some world-class
imbeciles on our team. I include Mankiw and that unholy
crew on the Council of Economic Advisors, and Greenspan and
Bernanke at the Fed, and all the rest of those bizarre
people, both in and out of the Fed and the government.

And speaking of dimwits, I have officially given up trying
to get a Nobel Prize. I have made this decision because 1)
I am an idiot and admit I can't even impress little
children with my intellectual powers, and 2) the Economist
sent me a copy of the 2004 edition of their"Pocket World
in Figures," and when I was thumbing through the pages
looking for the swimsuit section, I find a table that shows
"Nobel Prize winners 1901-2002." There have been 42 Nobel
Prizes awarded in economics during that time of which the
United States has won 26! The next biggest winner on the
list is United Kingdom with 8. Everybody else has two or
one!

Americans won over half of them? We have Alan Greenspan, a
central bank, a fiat currency, and an economics profession
that has not raised its voice one time in horror, and yet
we won Nobel Prizes in Economics over half of the time? I
am aghast! I spring to my feet and scream, with that
patented Mogambo banshee wail of anger and betrayal,
"Noooooooooo!" Therefore, even if some knucklehead can
recognize my brilliance, there's no way I want to be tarred
with the same brush as those other 42 losers.

But out of the corner of my eye I can see an attendant
turning his back to me and quietly filling a syringe with
tranquilizers. Using the CCTV, they can see me working
myself into a tizzy, and the froth is beginning to collect
on the floor in puddles.

So while we are waiting for things to settle down, let's
move back, for a change of pace, to a topic that doesn't
appear in quite so many court documents, namely currency.
Thus I bring up one of the more surprising statistics from
the week, namely the huge increase in Currency In
Circulation. It suddenly ballooned - boiiinnnngggg - up
thirteen billion smackeroos!

There are many people who maintain, and with good reason,
that actual currency - the kind made of simple ink and
paper - only becomes"money in circulation" when somebody
demands it, either by:

1) Sticking a loaded handgun in the face of a terrified
bank teller and ordering them to load up this bag with
money, and be quick about it, and don't do anything stupid
and nobody will get hurt, and don't touch that alarm,
because bells make me crazy and I already feel like I've
got spiders crawling on my skin, so hurry up, hurry up,
hurry up or...

2) Writing a check against their account, and as the teller
then gives them a fistful of money, the guy turns around
and sticks it up under my nose and riffles through that big
wad of cash and says:"Look what I got! You want some, and
you need some, but you don't have any! But I do!" And then
they laugh at me, and then I chase them out into the
parking lot, crying and screaming at him to act like a man
and strap on some pistols and we'll settle thing this once
and for all, right here in this parking lot, and I keep
yelling at him about how they are yellow-bellied cowards
until they finally start their cars and drive away, and
then I go back into the bank and I have to get at the BACK
of the line because nobody would save my place! I mean - my
pain never stops!

But it isn't so. (In case I distracted you with my rant, I
was talking about how currency becomes"money in
circulation.") I bring this up because money was printed,
and given away, in Iraq. They didn't demand it or borrow
it; we just gave it to them. And as you well know, and as I
know, and as everybody knows, the money soon goes
"sluuurrrpp" into the Global Economic Body, sort of like
the pieces of Terminator 2 when being absorbed back into
the Cyborg, after getting broken off chasing Arnold
Schwartzenegger.

Thus the money supply of the globe is expanded, and thus
the dollar is debased some more, and thus imports cost
more. The only difference is that instead of money being
created by being borrowed, the damn government just gave it
to somebody.

So, take the generous donations together with the Treasury
loans, which, last week, took us to another new record in
ridiculous, bankrupting debt (the number came in at an eye-
popping sum of $7.21 trillion, which is, by sheer
coincidence, the exact same figure as the average number of
insults I get per week, according to recent computer
surveys) and I can only think of one word to conclude this
essay with: Inflation. Inflation, inflation,
inflation... and morons.

Regards,


The Mogambo Guru
for The Daily Reckoning


---Mogambo Sez: Arch Crawford publishes the Crawford
Perspectives, which tracks the astrological influences on
the market. He says"Sometime between mid-August 2004 to
March 23, 2005, we think that the market will crash again"
and that this is due to a Mars-Uranus thing that happens
every two years. The Wall Street Journal reporter, who
wrote this up, notes that"It doesn't guarantee a crash -
but it has been evident during every crash for the last 100
years."

Whether or not you believe that the stars and planets
influence your life doesn't matter. Enough people DO
believe in it, people who will sell on that basis alone,
and then it WILL happen, just like he said. And I note that
there isn't a newspaper on the planet that does not have a
horoscope section - even the home page of my Internet
server has one. And they are there because people want it,
and may even believe in it. So, it ought to be an
interesting time, to say the least.

<font color=#008000>... we're all dead! </font>

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gesamter Thread:

• The Daily Reckoning - World Class Imbeciles (Mogambo Guru) - Firmian, 14.06.2004, 23:47
  • und dazu noch die Deutsche Version vom Daily Reckoning - Sorrento, 15.06.2004, 07:52
    • Re: Ã-limporte - Cosa, 15.06.2004, 08:28
  • Re: Die zugehörige germanische Wiedergabe - Firmian, 15.06.2004, 21:49