In our hotel room, three bright, red apples were available to us. Firm, well shaped...returning late from our trip to Switzerland, they looked like the perfect substitute for dinner.
We took a bite of one. And what's this? What a disappointment! The thing was foul...mealy...with a peel that could have passed for plastic.
Apple growers seemed to have succeeded in creating the perfect hotel apple. It looked delicious...but tasted like cardboard.
Nikita Khrushchev was ahead of his time. Do you remember, dear reader, on his famous visit to New York, he went to an American supermarket. "The Americans have 246 different variety of apple," he remarked, or words to that effect, "and they all taste terrible. It's enough to make a stone weep."
He should have bitten into a few more. In the Union of Soviet Socialist Republics, on the other hand, you would have had a hard time finding an apple at all.
But he had a point. How much of progress is a fraud, we wonder? One man's great innovation is another's great pain in the neck. Cars are better...but the highways are so crowded that speeds have fallen. Communications are better...but now people with nothing to say walk around talk, talk, talking all day. You can get a credit card more easily...but so can you more easily get stuck deep in debt.
A man, who must have mistaken us for someone else, asked: "How do you account for your success?"
"Television," we replied. "We don't watch it."
For every mind that is better informed and better entertained by TV, there must be 100 that have been turned to mush.
But enough about apples and TV...down to business.
We checked the financial pages this morning...and we are pleased to report:
It's all good again.
Yes, remember that correction at the end of February? You've probably forgotten, just like everyone else - because there wasn't much to it...a spasm of doubt, more than a correction. Speculators got worried about problems in U.S. subprime lending...and sold off China!
That's the official explanation. So far, it seems to be holding up.
Most of the world's stock markets are already back in the black figures for the year. And get this...as expected, Ben Bernanke is now hinting that rates might fall. That was all U.S. investors seemed to need to hear - another big wave of rate cuts!
"For the sixth straight month, the Fed did nothing," writes our old friend Rick Ackerman, "but we'll take Bill Gross's word for it that this particular instance of nothingness signifies easing just ahead.
"With Helicopter Ben talking incessantly about the supposed 'threat' of 'inflation,' it didn't take a rocket scientist to figure out that inflation was the least of his concerns. Like the rest of us, the Fed chairman has known all along that the 'good' kind of inflation - the kind that pumps up everybody's assets so that those assets can be hocked to the moon - is all that stands between our spectacularly over-leveraged economy and a Second Great Depression."
Still worried about subprime? Don't be. It's a relatively small, containable problem, says the U.S. Treasury Secretary. And if it isn't, the Fed is going to make sure there's enough cheap credit around to keep the bubble inflated.
Worried about trade deficits, federal deficits, learning deficits, attention deficits? Whatever kind of deficit has you squirming...you can stop. It's all good. All good.
Even the financial companies - such as Goldman Sachs - are coming back. They're not yet back to their highs, but they're headed in that direction.
Oh, and don't worry about derivatives gone wild. Relax; the Fed says derivatives are good things. They help spread the risk around.
In that, they are undoubtedly right. The risk that was previously identifiable and controllable (a small bank wouldn't lend its money to a man who couldn't pay it back) is now everywhere. And it's all good. All good.
Forget trying to find the single rotten apple that will spoil the barrel. The whole lot of them have gone good.
At least, that's the theory.
Bill Bonner
The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
