by
Bill Bonner
We know the price... what we don’t know is the value. Today’s Daily Express, for example, tells us that 25,000 Iraqi civilians have been killed since the United States and Britain invaded the place. We know the financial price too – more than $100 billion. What we don’t know is what it is worth. "We are still at war," says George W. Bush. We don’t have any doubt about that, but we don’t know what good – or evil – the war really accomplishes. What we might have mentioned in our easy reference Value Guide yesterday is that the public seems to get carried away from time to time and greatly overprices things. This is true in the markets. It is true in politics too. Wars, in particular, are usually extremely overbought. When men go off to kill someone, people feel it is unpatriotic not to support them. Yet, when the battlefield grows hush and years pass – it is hard to recall what the fever was all about. The price is still there, written in the history books, but the value of it seems to have disappeared. Of course, that is the whole problem with the deathward-going tribe. Since we all end up in the grave, all that matters is how we get there. So what if 25,000 Iraqis are dead a little sooner than they intended to be? So what if 20 million died in WWI or 2 million in Vietnam? Blood dries quickly, said de Gaulle. That is true of money, too. The idea is to get it... but you know you can’t take it with you. Once it is gotten, it has to go. Since it has to pass out of your hands, the real issue is how (and how quickly) it goes. Money – and life – will disappear eventually. The only things left are questions of value. There may be nothing wrong with bringing a man’s life to a close a bit prematurely, but what is the value in doing so for a phony cause? Nor is there any particular shame in getting rid of money by bad investments; but neither is there any glory. Nor is there anything wrong with "wasting" money. Why not? What were you going to do with it? The real question is: what is the value to you? What is it worth to you? You can’t answer these questions without knowing what you want. The real threat of terrorism, from a military or geo-political standpoint, is insignificant. But if you like the American Empire you will probably like the War Against Terror; it gives the imperium something to do. What is the real value of it? Who knows? At one level, it is just a matter of taste. At another it is a matter of historical necessity; an empire has to figure out a way to exhaust or destroy itself... in order to make room for the next empire. At another level, it is a moral issue. People who kill other people for no apparent reason probably go to Hell. But then... what good would Hell be if no one went there? Hmmm... we seem to be in danger of derailing this morning. • "Our baseline outlook for the U.S. economy is one of sustained economic growth and contained inflation pressures," Greenspan told members of the House Financial Services Committee today, in the first of two days of his semiannual testimony on the economy and monetary policy. We didn’t find any surprises in what could be the last of Big Al’s appearances before Congress... he recommended that the Fed continue to raise interest rates at a "measured" pace. On housing prices, Greenspan had this to say: "If declines were to occur, they likely would be accompanied by some economic stress, though macroeconomic implications need not be substantial," he said. Dear reader, you didn’t really expect him to admit to anything more than "froth" in the housing market – did you? There will be more to come from Greenspan tomorrow... and you know we’ll be on the edge of our collective seats... • Our friends in the Far East are beginning to run out of juice... Heat waves arrived early this throughout China, bringing about power and water shortages across the nation. The State Electricity Dispatch predicts this summer will bring China’s worst energy shortfall in 20 years. United Press International reports, "962 Beijing-based industrial enterprises had started paid leave this week... Altogether 4,689 businesses will have ‘weeklong summer vacations for their employees’ over the next month. "The Beijing government issued a document saying affected businesses are allowed to adopt a temporary six-day week schedule to offset shutdowns and ‘catch up with their original production plans’ this fall." Justice Litle, our resident energy expert, fills us in... "Last year, over 6,400 factories in China had to shut down because they didn’t have enough electricity to run their machinery. "Another 10,000 manufacturers had to ration power. Even big-name companies like Sony and Volkswagen had to cut back production in their Chinese plants. "Demand for electricity is continuing to soar worldwide... in China alone, electricity demand is 150% higher right now than it was when China first started to boom, back in 1980. Worldwide electricity demand is expected to explode by another 85% before the year 2020, faster than demand for any other kind of energy. "You can’t help but wonder what will happen when the rest of China and India hop onto the power grid." • "I’m leaving my husband," said a very attractive friend over dinner last night. "There’s just no value there. Ever since the very beginning, we’ve been at odds. I just have had enough. I can’t take it anymore. I’m 42 years old and I think I should take my chances while I still can. I’m not looking for bliss... I just want some peace." The dinner conversation surprised us. Maybe that is what put us in a reflective mood. Always and everywhere – it is values that count. The rest is moonshine. • Speaking of which... the Wall Street Journal notices that the great consumer economy may not be as sober as it thought: "Thanks to rock-bottom interest rates and easy ways to borrow, consumers have been on an all-out spending spree for several years. Now, though, there are signs that the bills may be piling up too high.
"... Could put a squeeze on many households?" We will take a wild guess: the coming contraction will grab them by the neck. Many will suffocate. We wrote four years ago that Alan Greenspan wanted to avoid a Japan-like slump in the worst possible way. Well, he found the worst possible way – the destruction of America’s middle class homeowners. July 21, 2005 Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century. Copyright © 2005 Bill Bonner |
