 The Day
The Earth Stood Still
Bill Bonner
The
Daily Reckoning
August 21, 2004
The Daily Reckoning PRESENTS: Here's a cleaned-up and improved version
of the speech Bill gave last Saturday at the Agora Wealth Symposium
in Vancouver... enjoy!
What you see depends on what
you have seen. And breathed.
You may want to write that
down. Just remember us when you quote it.
We say that after spending
a few weeks driving across the country... and giving an interview
to a local financial show. The reporter had set up a camera on
the steps of the Art Museum across the street and asked us what
we thought was happening in the economy. We began by describing
all the terrible things that we see heading towards us... and
explaining how the end of the world is coming. But behind us,
a group of bums had lit up. Soon, great clouds of marijuana smoke
billowed over us. We continued to explain the many terrors of
the dark night ahead. The debt bubble. The trade deficit. Federal
liabilities. The rise of China. Peak oil, and so forth. The smoke
thickened.
And by the time we finished
the interview, things didn't seem nearly as bad as they had at
the beginning.
As for our drive across the
country... by the time we reached the Western states, Elizabeth
had read a book on geology - The Roadside Geology. She saw precambrian,
Cambrian, Paleozoic, Mesozoic, Cenozoic, Triassic, Jurassic,
Cretaceous and various other geological formations that we can't
remember. In the back seat, the boys saw only rocks. And by the
time we had reached Arizona, they had seen enough of them, they
thought, to last a lifetime. Henry could barely be persuaded
to look up from his Isaac Asimov books. For his part, Jules had
draped a towel over his head so he could watch reruns of Seinfeld
shows on his portable computer without the interference of the
bright sun.
Our speech topic - America's
Revolt Against Fate - requires a little introduction. Because
Americans no longer believe in Fate. They believe in themselves
- at least they have since the Reagan revolution helped them
out of their Carter-era funk. They believe that they are the
captains of their own fates. "Everything is getting better,"
wrote Michael A. Ledeen, a neo-conservative dreamer at the American
Enterprise Institute. "And if not, we'll fix it."
There are some things beyond
fixing, we note. Precambrian, Cambrian, Paleozoic, Mesozoic,
Cenozoic... all the great epochs of the Planet Earth knew no
fixing. There were no votes taken. No opinions asked. They just
happened.
Many things just happen, without
anyone's say-so. A man gets struck by lightning crossing a field...
or by a crosstown bus while making his way to the other side
of the street - accidents happen.
As do major events of history,
largely beyond anyone's comprehension, let alone anyone's control.
Who wanted World War I? Who gained from it? Whose fault was it?
Looking back, the answer is no one. And yet, it was the most
costly war in human history. After a couple of years, it was
plain to everyone that nothing would be gained... that it was
a lose-lose proposition. Newspapers spoke of peace. Soldiers
on all sides threatened to take matters into their own hands
and lay down their arms. And then, Woodrow Wilson stepped into
the breach to "fix" it. He managed to prolong the war...
add millions of names to the casualty list... practically destroy
Western civilization. Every major government of Europe fell in
the aftermath. In their place came the ugly "isms"
of the 20th century - communism, Bolshevism, fascism, syndicalism,
modernism, abstract expressionism - and the world was a different
place.
Who wanted the Great Depression?
Who made it? Who gained from it? Whose fault was it? We do not
know the answer. But we know it got worse after Franklin Roosevelt
stepped in to "fix" it.
Not only are events largely
beyond your control, but Fate has a way of bringing you what
you least want, least expect and most deserve. There are patterns
to life, some of them inescapable... some of them inexorable.
Every man born is fated to
die. Every breath inhaled is fated to come out. And even the
brightest day that dawns is fated to end in a dark night.
So, too, does Fate decree that
acts have consequences. Invite the wrath of the gods... and you
will regret it. Sow the wind, says the Bible, and you will reap
the whirlwind. Give and ye shall receive.
There seem to be certain natural
laws that govern life. What goes up must come down. What goes
wrong must be set right.
The last time "natural
law" was discussed in public was during the confirmation
hearings for Supreme Court Justice Clarence Thomas. In an unguarded
moment, Thomas had made approving remarks about natural law.
The politicians recoiled in mock horror - as if they had found
a moth in their soup. The idea that there could be any authority
higher than the U.S. Congress was as abhorrent to the politicos
as term limits.
But natural law used to be
something people believed in. The old English common law had
no lobbyists' fingerprints on it... no congressional sponsors...
no pork-barrel amendments. Instead, judges and juries merely
tried to "find" the law. They assisted Fate, rather
than trying to straighten it out. They saw it as their duty to
make sure that what ought to happen did happen. People ought
to get what's coming to them; a common-law jury of 12 men "good
and stout" helped make sure they did.
But it is a new world, we keep
saying. Now a congress of men - neither good nor stout, but conniving
and willowy, grasping... whose convictions rarely go beyond drunk
driving or sodomy - make all the laws. And a whole nation is
convinced that there is no gravity. We can get not what we have
coming - they say - but what we want.
Fate... ?
"The best news about our
future," says the neo-con scholar, "is that it's still
in our own strong hands."
The U.S. economy - and by derivation,
the economy of the entire world - is thought to be in the strong,
bony grasp of Alan Greenspan and the Federal Reserve. This too
is a departure from former times - back in some paleo-time before
the earth cooled... before there was rap music... before even
central bank of the United States was formed - under the selfsame
President Woodrow Wilson who almost single-handedly derailed
Western civilization... and even before there was a United States
of America - the two Adams... Adam Smith and Adam Ferguson...
began what was to become the study of modern macroeconomics.
But the two men were hardly economists of the modern stripe.
They called themselves "moral philosophers." They believed
that their mission was to study economies as naturalists studied
birds and bees - and to discover the laws by which they operated.
The two ur-economists believed in fate... that an "invisible
hand" - which they took to be the extended hand of God himself
- made sure that things worked as they should.
But in this new world, it is
the hand of Alan Greenspan that is supposed to make sure things
work out - not as they should, but as they wish.
Markets make opinions, as they
say. Markets, for the last quarter of a century, have been so
delightful that they have encouraged in Americans a delightful
opinion of themselves. They believe themselves capable of just
about anything - including controlling their own fates. What
they have seen over the past 24 years leads them to see a future
as rosy as daybreak. The "new dawn" that the Reagan
era began, they believe, will last forever.
As markets make opinions, it
should not surprise us that opinions are as cyclical as markets
themselves. Technological progress is cumulative and universal.
An internal combustion engine
is the result of many generations of accumulated progress in
metallurgy, chemistry, mechanics and so forth. It will work as
well in Vancouver as in Calcutta.
But in other things - love,
war, markets and central banking, for example - there is little
real progress. Instead, we merely repeat the same mistakes, over
and over again, in patterns that are cyclical and local.
The internal combustion engine
works as well in Paris, France, as it does in Paris, Texas. But
war is far more popular in the hollows of West Virginia and the
plains of West Texas than it is in France. This was not always
so. Napoleon Bonaparte had led the most expansionist, action-oriented,
pre-emptive-attacking foreign policy in history. His large, enthusiastic
armies - often coalitions with his allies - had beaten every
enemy in Europe. Finally, all Europe made common cause against
him, rallied by France's hereditary enemy - England. Americans,
whose cause of independence had been won with French help only
36 years before, did not come to his aid.
Then, France began a long,
bad experience with war. The French were beaten in 1870 by the
Prussians. Then, in World War I, no nation suffered more - except
perhaps the Russians. In World War II, France had the biggest
army in Europe, yet it surrendered in six weeks. Then France
was booted out of Vietnam... followed by Algeria. Americans were
puzzled and indignant that the French did not follow them into
Iraq. But given what the French have seen of war, it is hardly
surprising that they were not eager to see more.
Meanwhile, Americans have a
taste for expansion... for war... for debt. We are "conquerors,"
says Ledeen. We can't imagine that the wheel still turns, that
Fate still waits for us as it has for so many before us.
"Remember the vogue of
Japanese-style capitalism in the '80s, which, according to a
bevy of fashionable intellectuals, was destined to buy America
and leave us in the dust?" writes Ledeen, triumphantly.
"Remember the oil sheiks
of the '70s who, according to the usual suspects, were going
to by America with the petrodollars?" he continues.
"Remember the fanciful
European expectations of dominating the world market with the
euro"? he went on in 1999.
Ledeen was able to see the
blockheadedness of others, but not of himself. He was unable
to imagine history would continue grinding down the ambitions
and pretenses of the world's success stories... and that Americans
would be next on the list of those brought low by Fate.
Precambrian, Cambrian, Paleozoic,
Mesozoic, Cenozoic...
Tribe... monarchy... empire...
democracy...
Americans seem to think that
history has come to a dead stop - with them on top of the world.
To be continued...
Regards,
 Aug 21, 2004
Bill Bonner
The
Daily Reckoning
Editor's Note:
Bill Bonner is the founder and editor of The Daily Reckoning.
He is also the author, with Addison Wiggin, of the NY Times,
Wall Street Journal and international bestseller: "Financial
Reckoning Day:
Surviving The Soft Depression of The 21st Century" (John
Wiley & Sons).
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Inc Miami USA
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