Bill Bonner on the rise and fall of Amazon.com (2003)

[Jeff Bezos] was 35 when Time magazine awarded him its "Person of the Year" title in January 2001.  When the going was good, Time gushed, "Jeffrey Preston Bezos... peered into the maze of connected computers called the World Wide Web and realized that the future of retailing was glowing back at him... Every time a seismic shift takes place in our economy, there are people who feel the vibrations long before the rest of us do," rattled Time, "vibrations so strong they demand action - actions that can seem rash, even stupid."  Well, yes.  Very stupid.

[...]

Some people get rich in a revolution.  Some people get killed.  By October 2001, it was becoming clear who would be the victims - those who believed in Amazon.com and the Information Revolution.

Bezos was of course one of the victims.  In 2001, he was awarded the "Fame is Fleeting Award," by Gretchen Morgenson in the New York Times, "for one of the fastest falls from grace in recent history."  She considered it sadly ironic that he was facing irate shareholders only a year after being honored as Time's Person of the Year.

For at the end of 2000, Amazon's stock prices showed a decline of 89 percent to the $7 to $10 range (from its December 1999 high of $113).  Thus, a pin had pierced the bubble in high technology, and those who "got it" were getting it good and hard.  Their day of reckoning had come.

~ Bill Bonner, Financial Reckoning Day, pp. 23-24

Bill Bonner on the crowd and the Big Lie

Crowds need lies, not truths; they are incapable of living with the infinite complexity, paradoxes, nuances, and gray areas of the truth.  Mobs belittle the truth to the point that it no longer resembles itself.

From the truth that stocks can rise for long periods of time came the lie that they will always do so.

From the truth that consumer spending can boost an economy became the lie that consumer spending is all an economy needs.

From the truth that consumer credit can boost consumer spending became the lie that credit can replace actual savings.

From the truth that the Fed can manipulate the economy in the short run became the truth that the Fed could control it over the long run.

From the truth that foreigners are generally willing to accept U.S. dollars in exchange for valuable goods and services came the lie that they must always do so.

And from the observation that the American economy - with its emphasis on debt, consumer spending, and stock market investing by the lumeninvestoriat - was a great success in the 1990s, came the fantasy that it represented the end of history.

Taken together, blended and simplified, these notions came to produce a sentiment that was completely at odds with the wisdom of previous generations and contrary to economic reality.

~ Bill Bonner, Financial Reckoning Day (2003), pp. 240-241

Bill Bonner on how baby boomers transformed the economy

A healthy economy needs forbearance, thrift, savings, patience, discipline - the very characteristics the boomers never had.  Soon, the economy began to reflect the boomer personality: cocksure, short-sighted, in need of immediate gratification, reckless, and self-indulgent.

~ Bill Bonner, Financial Reckoning Day (2003)

Bill Bonner on crowd behavior and simple narratives

The world never works the way people think it does.  That is not to say that every idea about how the world works is wrong, but that often particular ideas about how it works will prove to be wrong if they are held in common.  For only simple ideas can be held by large groups of people.  Commonly held ideas are almost always dumbed down until they are practically lies... and often dangerous ones.  Once vast numbers of people have come to believe the lie, they adjust their own behavior to bring themselves in sync with it, and thereby change the world itself.  The world, then, no longer resembles the one that gave rise to the original insight.  Soon, a person's situation is so at odds with the world as it really is that a crisis develops, and he or she must seek a new metaphor for explanation and guidance.

~ Bill Bonner, Financial Reckoning Day, p. 3

Bill Bonner: "investment markets reward virtue and punish sin"

We are, frankly, in far too much awe of the world, and too deeply entertained by it, to think that we can understand it today or foretell tomorrow.  Life's most attractive components - love and money - are far too complex for reliable soothsaying.  Still, we can't resist taking a guess.

We may not know how the world works, but we are immodest enough to think we can know how it does not work.  The stock market is not, for example, a simple mechanism like an ATM machine, where you merely tap in the right numbers to get cash out when you need it.  Instead, the investment markets - like life itself - are always complicated, often perverse, and occasionally absurd.  But that does not mean that they are completely random; though unexpected, life's surprises may not always be undeserved.  Delusions have consequences.  And, sooner or later, the reckoning day comes and the bills must be paid.

In this sense, the investment markets are not mechanistic at all, but judgmental.  As we will see, they reward virtue and punish sin.

~ Bill Bonner, Financial Reckoning Day (2006), p. 2