THE DARK YEARS

THE DAILY RECKONING

PARIS, FRANCE

WEDNESDAY, 12 SEPTEMBER 2001

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THE DARK YEARS
By Bill Bonner

"...behind the doors of this ambitious day
stand shadows with enormous grudges, outside
its chartered ocean of perception
misshapen coastguards drunk with foreboding,

and whispering websters, creeping through this world,
discredit so much literature and praise.
Summer was worse than we expected;
Now an Autumn cold comes on the water..."

The Dark Years
W.H. Auden

Along the rue des Lombards last night, men with
earrings held hands...and prostitutes stood in
doorways - as they always do. You can get any kind of
love you want on the rue des Lombards. Even perverse
love seemed reassuring last night.

We will reckon again today...as we always do. But
today we reckon with a heavy heart. For greed has been
replaced by fear, and the comedy of the financial
market has been replaced by the tragedy of politics.

Most of the people in our office raced home after work
yesterday. The whole world watched television. But I
felt like walking.

So, I made my way down to the Pont des Arts and
crossed over to the left Bank. On the bridge, couples
stood together and stared at the river...the gray
spires and apartment buildings silhouetted against the
last evening light. They held hands too...laughed and
embraced, as the world grew dark.

I had come to see them, of course...to catch a glimpse
of the world as it was yesterday...the bright lights
and gaiety of the cafes, the somber elegance of the
Louvre, the ordinary comings and goings of ordinary
people in the world's most beautiful city. I wanted to
remember it that way - just in case it would never be
that way again.

Surely another bridge has been crossed, I thought, as
I strolled along the rue Jacob, looking in the antique
shop windows. Things have changed. America - almost
untouched by war for 136 years - is suddenly under
attack.

We have been waiting for a defining event to conclude
the 20th century, as the assassination of the Archduke
Ferdinand marked the end of the 19th. What"tipping
point" event would close the book on the long period
of peace and prosperity that America has so recently
enjoyed, we wondered.

Nature was preparing some surprises. Something big was
coming, we guessed. But not even in our gloomiest
moments did we imagine such a bizarre and bloody
trigger event. But now we have it.

"THE NEW WAR!" screams the headline in today's Figaro.
"TERROR STRIKES AMERICA," proclaims a banner on the
International Herald Tribune. All over the world, on
live TV coverage, anyone can see - America is
vulnerable.

The dollar plummeted yesterday. Markets all over the
World collapsed, with the London exchange down
5.7%...Frankfurt off 8.6%...and Paris down 7.4%. The
price of gold soared 5%...and then fell back in this
morning's Asian trading. Crude oil also rose - $6.

In a radio broadcast earlier in the day a French
commentator tried to put the catastrophe in
perspective:

"It is simply unimaginable," he said,"it is as if the
National Assembly had come under attack and the Eiffel
Tower and the Tour Montparnasse had been completely
obliterated."

The National Assembly building was closed. But armed
guards were on alert. Clutching machine guns, they
paced up and down the streets and studied me carefully
as I walked along.

Then, at the base of the Eiffel Tower, everything
seemed normal. It still stood. Tourists, though fewer
in number than usual, milled around. Arab hucksters
sold their trinkets. Life goes on.

In the next few days, weeks, and months...you will be
told that everything is okay. Indeed, many will think
it is better than okay. The Fed has already promised
that it will provide more money. OPEC has pledged to
provide more oil. The government will launch new anti-
terrorist initiatives. Some will say that war is good
for the economy. Defense stocks will rise.

Who knows, maybe markets will rally. But two years
after the Archduke Ferdinand was shot, stocks in
America reached their lowest level in history -
trading for just 4 times earnings.

Nature still has her surprises. But it is likely that
consumers and investors will hold their breath...and
feel a cold new wind blowing. They will be less
confident, less sure of themselves and of the future.
They will tend to hold onto their money a little
longer and worry about their debts a little more. This
alone, as Dr. Richebacher reminds us, means"The End"
of America's greatest boom.

The bells of St. Merry's are tolling this morning.
They ring for the living and the dead, including the
many thousands of brokers, analysts, clerks, firemen,
policemen, and others - people who were in the very
wrong place at a very wrong moment.

They also toll for another reason - heralds of
something else we will all have to reckon with:

A strange darkness has settled over the World...a new
era, finally, has come.

Your correspondent in Paris,

Bill Bonner

P.S."We are all Americans this morning," said Magda,
a French colleague.

P.P.S. We heard from Eric Fry, our correspondent in
Manhattan, by fax this morning. He'll have more to
tell you tomorrow.

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