The New Roman Empire: Bread and Circus

• If You Are Buying Stocks at these Prices, You Shouldn’t Be Reading This

 

• Dollar Continues to Flop as Gold Rises

 

• Have You Checked the Price of Beef Lately?  Maybe You Should Start Thinking Commodities

 

• US Spends a $Billion a Day More than it Takes In.  Does the Bush administration have the guts to put on the breaks before it is too late?  Read below for this writer’s opinion.

 

• The Fed will Get its Inflation Even if it Kills Us

 

Someone I read today posited that the only way US consumers can get out of their overwhelming debt ($600 billion in new mortgages this year not to mention car payments, credit cards, etc.) is to start receiving rapidly rising wages in a cheaper currency.  So the dollar continues to fall like a coin in a fountain against the Euro and Pound and sooner or later either the Chinese will bail out of the Faustian bargain that keeps them buying our ever depreciating T-Bills (at interest rates that don’t even come close to cover the depreciating value) or the OPECkers will stop pricing petroleum in dollars which they may not soon be accepted even by a street merchant hawking ripped off Gucci handbags.

 

• Italy’s La Repubblica headlines: “The Super-euro flies above $1.22: Never has it been so strong

 

• Just try giving a Roman taxi driver a dollar and see if he takes it!  Two for a euro, he says. 

 

 

 

The New Roman Empire:  Bread and Circus

 

Italian television ran an Italian produced show starring Peter O’Toole and Charlotte Rampling on the first Roman Emperor, Augustus and his wife, Livia.  The emperors, of course, didn’t need to please the voters directly, since from Augustus on out the dream of returning to a republic faded into the mists of history.  But the emperors did know that in order to keep their hold on power they did have to control the streets of Rome.  The people, after all, could vote en masse by turning over the city in an uprising.  And so they came up with a very particular political strategy that came to be called “bread and circus”.

 

If you saw the movie, “Gladiator”, you might remember that Marcus Aurelius’ son Commodus declared 123 days of games in honor of his assuming his father’s throne.  What this meant is that not only would nobody have to go to work for the next third of a year but they would be entertained by some gory spectacle being held in the Coliseum every day.  Quite a good deal, you might say, so no wonder the plot to get rid of the despotic son went nowhere with the people.  They liked the spectacle!

 

I say this as I hear the first word of US jobs report for the month of November.  After all the spectacle that has been going on for the last month is that the heavily sugared bread of the last 3 years diet was finally having the stimulus it was supposed to have.  First we heard that the economy grew at the fastest pace in 20 years and that was quickly followed by the productivity report, which came in at an unbelievable 9.2%

 

So?  Well, of course, the paid shills all started the pump noise going.  Up with the price of everything, they shouted!  Amazon at 93 times earnings! Just watch it really grow as sales begin to take off.  In the White House the corks were popping.  They didn’t care that the price of champagne had gone up against the weak dollar.  Why should they, it looked like 4 more years were in the bag!

 

The whole thing is so easy.  Give them the spectacle of the president standing in front of a huge American flag a la George Scott in Patton –too bad Bush couldn’t have a pearl handled revolver tucked in his belt—then go out and print some more money.  It’s great to be king!  And even greater to control the world’s only “Reserve Currency”.  We print it and they take it.  It reminds me almost of that sign over the bridge in Trenton, NJ.  “Trenton makes and the Whole World Takes.”  Only, what is it that we make in Trenton these days that can’t be made cheaper some where in Asia?

 

It’s good to print money.  It stimulates the economy like sugar does to the appetite.  Low interest rates make it easy to borrow more to buy more.  Nothing to worry about, we can practically order the Chinese and Japanese to buy our bonds at low interest rates denominated in a currency that loses value now on a daily basis.

 

So how come, no job growth?  All the stimulus in the world didn’t help Japan.  Of course they couldn’t just print their money and they still sell more goods to the world than they buy from abroad.  Not quite the same, one would say.  Both the US and Japan depend upon their technical mastery, their advanced electronic communications systems and their headstart as centers for the global economy to have a natural advantage over the rest of the world.

 

But no amount of stimulus could jumpstart the Japanese economy and pretty soon prices (and the Yen) just started to fall, and fall, and fall.

 

Can the fall of the dollar be stopped or are we in for a long decline?  As an investor, when you see a true imbalance between what is evident and what is being portrayed on the electronic circus, therein lies true opportunity.

 

 

 

 

 

 

 

 

 

 

 

Regards,

 

rmb

 

dymaxionweb@verizon.net

 

Copyright 2003 Richard Mendel-Black All Rights Reserved

 

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