Yesterday was a holiday in France — Toussaint, or All Saints Day. It also marks the 50th anniversary of the beginning of France’s war against terror in Algeria. On this day in 1954, terrorist groups attacked 70 targets throughout Algeria. (More on this tomorrow… )
But here the beat goes on. Our beat is the markets. But what moves the markets? Is it not the people who buy and sell? What moves them to do so? Is it the brain or the heart? One day they are willing to pay $20 for one dollar’s worth of earnings. Six months later, they think $10 is a little pricey — for the very same company.
An ounce of gold may be worth $800 one year. Twenty years later, people pay no more than $400. Has the gold been turned to base metal? Is the world a different place? Has the dollar, in which gold is measured, really worth twice as much?
People move markets. Here we wonder what moves people. We especially wonder what moves groups of people. Because the markets are not lonely, individual pursuits, and investors are not like Michelangelo lying on his back painting a ceiling. Instead, they are more like infantrymen marching along as part of a great army… or voters on their way to the polls after soaking up weeks of party propaganda… or members of a lynch mob after soaking up hours of whiskey.
A man on his own is a tolerable fellow. He usually does his work passably well, knows right from wrong, says hello to his neighbors, and has his moments of triumph and courage.
Yet, the same man — jacked up by politics or CNBC — will put his hand on the Bible and swear to the most preposterous things.
***We have never met Rod Martin; we presume he is an honest and decent man. Yet in his ode to Ronald Reagan and George W. Bush, that takes the form of a book called Thank You, President Bush, the man seems to have taken leave of his senses all together. Freedom, he says, making no attempt to explain what he means by the word, is the key to peace and prosperity. This insight, he maintains, is what made both Reagan and Bush such great presidents; they "got it."
And yet, the insight is absurd. America’s most costly war — the war between the states — was fought between two groups of people, both of whom were far freer than Americans today. Freedom didn’t stop them from killing each other.
It’s not that we don’t care about freedom. We just don’t like anyone telling us what to do… and we’re partial to not being killed.
*** The trouble with trying to work in rural France is that there are too many interruptions. Yesterday, a neighbor came to the door, with two bottles of "pineau" — a local aperitif — that he had made himself. It is amazing anything gets done in autumn. The grapes have been pressed. The wines, and various derivative drinks, have been bottled. Now it is time to uncork them.
Serge is a farmer… and a good, hearty chap. He was dressed in a pair of corduroy pants, a wool cap, and a hunting jacket, with torn pockets. He was also dripping wet; it was raining outside, but the local men hardly notice; they go about their business rain or shine.
Like so many men who work the soil, conversation does not come easily to Serge. He always seems to be on the verge of saying something. But the words never quite get out. He begins to purse his lips as though to form a word. Then, we have to guess what it is he wants to say.
"The hypotenuse of a triangle is equal to… " we were about to suggest… when, suddenly and unexpectedly…
"Let’s have a drink," he said.
One led to two… even though the conversation barely budged an inch… and by the time he left we were incapacitated.
The next day, another neighbor came over. He too, had brought drinkables…
"Here is some wine I made," said Clement… "It’s called u2018gray wine.’"
"What’s gray about it? It looks red."
"Well, I don’t know… they just call it gray wine… would you like to try some?"
How could we refuse?
The first drinks made us think of a word: rotgut. We could barely gulp it down; it was like medicine.
"Hmm… a very interesting taste," we said diplomatically.
"Not like any wine we’ve ever tasted."
"Glad you like it," came the reply. "Here have another drink."
By the time this session was over, the wine didn’t take so bad. We were afraid we were acquiring a taste for it… which would prejudice us against every bottle of decent wine we drink from now ’til our drinking days are over.
"Not bad… " We finally rendered judgment… after several glasses.
"Great… I made 635 bottles this year. I’ll bring you a few dozen."
"Thanks, that’s great… "
Hardly had our head cleared than another friend appeared in his hunting outfit. Good old Franois. He used to work on the farm, taking care of the cattle. Since he has been retired he still comes over to hunt. But he needs a written authorization from the owner… which we gladly supply. In return, he gives us wild game… and…
"Here," he began, carrying what looked like a 10-gallon jerry can. "We had good grape harvest this year. So I made you some pineau. If you’ll get out some glasses… we’ll try it."
Dear reader, we don’t know what lies ahead for the world economy. But whatever it is, it is a great relief to know that we will not have to bear it sober.
Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.
