"Stay the course."
<<...The President's plan for America in Iraq is America's plan
for everything.
The consumer intends to stay the course - spending more
than he can afford for as long as he can get away with it.
The investor plans to remain in stocks - keeping his eye on
the north star of 'stocks for the long haul' - until he
finally crashes into the rocks of a bear market.
Alan Greenspan and his merry band of central bankers have
no intention of changing course. Greenspan has just been
reappointed for a 4-year term... with the tacit
understanding that he keep his hand on the tiller, as blank
and unyielding as a dead man.
And so, the whole nation stays the course. Too bad. For
"the course is headed over Niagara Falls," said Gen.
Anthony Zinni, USMC ret.
Gen. Zinni was speaking about the administration's war
efforts in Iraq. In the general's view, Bush ought simply
to admit the truth: that he made one of the biggest
blunders in American military history... and move on.
We do not expect it.
Nor do we expect consumers suddenly to wake up and realize
that they are ruining themselves; or investors suddenly to
realize that they have been deceived; or Alan Greenspan to
stand before Congress and tell the drooling solons that he
regrets creating the biggest bubbles in history.
On the evidence, the present course has not been a good
one. Americans are further in debt than ever before -
financed at the lowest rates of interest in 2 generations.
Nor are they especially well equipped to carry this debt.
We keep pointing out that the modern consumer economy is a
fraud. Here's our proof: real wages of the average man have
actually gone down for the last quarter of a century. In
the year 2002, the typical American man earned 6% less than
he earned in 1977. He could only make ends meet by
resorting to two desperate measures: he sent his wife,
girlfriend and daughters to work... and he went into debt.
Americans believe they are getting richer because their
assets rise in value. But stocks are no higher today than
they were 6 years ago. And houses? House prices are
rising... but this is a curse, not a blessing. It only
encourages homeowners to go further into debt, by tapping
the 'equity' in their houses as collateral.
But there is little chance they will wise up.
Error is rarely cast out. More often, it must be crushed
out. That is the majesty and symmetry of nature, dear
reader. It is what makes our daily reckoning so beguiling:
for every bit of truth and justice... a thousand hearts are
broken.
We approach the 60th anniversary of D-Day. Old men are
already gathering in Normandy. In England, the TV specials
have already begun. We are meant to remember the heroism
and glory of it all... the sacrifice... and the victory. Even
on the German side, the old men are interviewed and tell
their tales. They do not mention that they were on a fool's
errand that would likely get them killed. They seem to have
forgotten that they were the fools. Instead, they recall
that they were engaged in some great battle... that they
were participants in something magnificent... some episode
in history that we can all look back upon in shock, awe and
wonder.
Here at the Daily Reckoning, what we wonder is why they did
it. What possessed the poor grunts on either side to want
to do something so grandly mad?
On this day, 60 years ago, 150,000 men... 6,000 ships... and
untold numbers of planes, tanks, guns and other materiel
mobilized for an assault on France.
On the continent, the Germans could not mistake the
movement in Southwest England. The roads were full of
troops... the ships were gathering and loading... already,
there was a buzz in the air. An attack was coming, there
was no doubt about it.
But here, again, we pause to wonder at it all. Why did not
the Germans recognize their error? On the eastern front,
they were already being rolled back by the Russians. On the
Italian front, the Americans were kicking their behinds.
Wasn't it obvious that they could not withstand another
major front? Wasn't it obvious that they should admit their
error, retreat to their own borders and renounce their plan
of global domination?
And what was it to the poor German soldier, anyway? What
did he care if Germany controlled France? What did it
matter to him whether the Third Reich was in power, or the
fourth? Would his beer and sausages taste any different?
Would his frau be more fetching one way or the other?
And yet, the Germans stayed the course. They stood their
ground... and fought a losing battle for a sordid reason.
Today, we marvel at their bravery... and their stupidity.
---------------------
Eric Fry, reporting from The Big Apple...
- Up here in New York, most of us care more about finance
than politics. Our voting record proves the point (with all
due respect to Senator Clinton). But sometimes, a political
headline catches our attention.
- For example, we couldn't help but notice that the
President's popularity is tumbling almost as rapidly as the
bond market's. According to a recent CBS News poll, 52% of
Americans disapprove of the way President Bush is doing his
job - the lowest approval rating of his term... so far.
Sixty-five percent of respondents also believe the United
States is on the "wrong track," up sharply from 55 percent
in April and 36 percent a year earlier.
- The declining approval numbers aren't hard to figure; the
Iraqi conflict-cum-public-relations-debacle is undermining
the public's confidence in their Commander-in-Chief. If
Bush had halted his militaristic adventures in Afghanistan
- and not proceeded through the alphabet of Middle Eastern
nations - the Republicans would have already locked up four
more years in the White House by now.
- But who knew? Invading Iraq seemed like a good idea to
our Secretary of Defense... So what the heck. Perhaps, in
the fullness of time, the Bush-Rumsfeld doctrine of pre-
emptive anti-terrorism will prove its wisdom. But said
wisdom might not become evident to the masses by Election
Day.
- The surging oil price might also be eroding the
president's popularity. Voters don't know for certain if
the rising price of oil is his fault, but they know for
darn sure that they don't like spending $50 to fill up
their cars... And didn't that nice man John Kerry promise to
help lower oil prices?
- Truth be told, Bush probably doesn't have any more
control over the oil price than he does over the share
price of Halliburton, but voters might hold him accountable
anyway. Yesterday, crude oil and gasoline futures both
soared to new all-time highs on the New York Mercantile
exchange. Oil for July delivery jumped $1.79, or 4.5
percent, to $41.72 a barrel. Likewise, gasoline gained 4.1
cents, or 2.9 percent, to an all-time high of $1.458 a
gallon...>>
- dailyreckoning.com |
