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Of Market Bondage

Last fall, Yale University Law School Professor Charles A. Reich published an apocalyptic little book entitled, “Opposing the System,” which …

Last fall, Yale University Law School Professor Charles A. Reich published an apocalyptic little book entitled, “Opposing the System,” which argued that Americans were being victimized by “a merger of governmental, corporate, and media power into a managerial entity more powerful by reason of technology, organization, and control of livelihood than any previously known form of rule.”

Reich’s contention that the U.S. was being sucked into a churning oligarchic vortex did not bother me, because this is the sort of thing that Yale University law professors are expected to say. Reich, who in 1970 wrote “The Greening of America,” which predicted a revolution that never took place, has a reputation as a chucklehead, so his addled ramblings about the specter of Big Brother seemed par for the course.

But then Reich took a potshot at the bond market. Seething about the influence that Wall Street exerts over American society, Reich made a couple of catty remarks about the deficiencies of an economic system that cravenly kowtows to the demands of the bond market.

This sent me right around the bend. Here’s why: For as long as I can remember, I have been madly in love with the bond market. When I was a kid, I would run downstairs every morning, feverish to learn about the bond market’s most recent reaction to seasonally adjusted unemployment reports and monthly assessments of price fluctuations among consumer durables. While other kids were out learning to play football or electric guitar, I was at home, locked in my room, eyes glued to the back pages of The Wall Street Journal, desperate to ferret out the latest information about those ever-undulating yield curves.

I like the bond market because I understand how it works. Most journalists in America haven’t the faintest idea that the bond market totally dwarves its more glamorous sibling, the stock market, in size. Most journalists haven’t the faintest idea why the bond market reacts negatively to positive reports about unemployment or wage hikes.

Most journalists simply can’t understand why the bond market always seems to be rooting against the average American, why the bond market is always such a spoilsport.

That’s not the only thing journalists can’t understand. Journalists and, by extension, the general public (whom they are supposed to educate about such things), always act as if the bond market consists of 13 old coots holed up in a private club in Greenwich, CT, who spend their time drinking cognac, playing gin rummy, and cheering the misfortunes of working people. What idiocy. The bond market, far from being an elitist entity like, say, Yale University Law School, is made up of everyone who has a pension fund, and most people who own mutual funds. That includes schoolteachers, firemen, auto workers, cops, ditchdiggers, nurses, oceanographers, used car salesmen, and, yes, even dimwitted Yuppie journalists. The bond market is America.

You’d never know this from the way the general press has written about the bond market. In recent months, we have witnessed a knee-jerk reaction in the press whenever the bond market reacts negatively to what the general public initially perceives as “good” news. President Clinton himself has been pilloried for his attentiveness to the vagaries of the bond market. Why?

Because in the minds of many journalists, it is unthinkable that a Democratic president should understand how the bond market works, much less care about its reaction to economic news. Actually, the very idea of a Democratic president who understands how the bond market works is kind of unthinkable. As best I can recall, this is the first time in history that we’ve had a Democratic president matching that description.

And it’s probably the last.

I realize the bond market is perplex-r r ing and, on occasion, capricious. But the bond market is sane. Unlike the stock market, which goes through protracted periods of lunacy, the bond market never completely slips its rational moorings. It never goes completely bonkers. It’s there when you need it.

Frankly, what this country needs is a National Bond Market Awareness Week or a Bond Mutual Fundholder Appreciation Day. I’d like to see Arbor Day deep-sixed and replaced with Yield Curve Day. Nor would I say no to a Bond Salesman Day, on which investors would show their appreciation for a job well done by taking their bond fund managers out to lunch.

I’d also like to see us start educating our children about the importance of the bond market much earlier. These days, kids learn way too much about ordinary life in pathetic cultures that vanished thousands of years ago, and not enough about the bond market. I say, the heck with the Egyptians, the Hittites, and the Sumerians-let’s get the kids pumped up about the bond market. That way, the next time some chowderhead from Yale University Law School pipes up with some tish-tosh about the iniquities of the bond market, any school kid old enough to tie his own shoelaces will be able to tell him, “Pull up a chair, buster, and let me explain how the bond market works.”

That’ll knock the chip off his shoulder.


Joe Queenan is a regular contributor on business issues, corporate culture, and financial follies to Barron’s and The Wall Street Journal.

About Joe Queenan

Joe Queenan is a regular contributor on business issues, corporate culture, and financial follies to Barron's and The Wall Street Journal.