04 February 2012

On the 70th Anniversary of the Munich Students Movement - The War is Lost - The Future of Europe



It is interesting to read this now, when Europe once again considers what its shape and its future will be. And the rest of the world as well.

This leaflet was written and distributed in January, 1943. Intelligent and open minded Germans could see the decline and fall coming, even while the Reich was intensifying its efforts to feed the hatred and delusion with its lies.

I was always struck by the fact that even while the Russians were shelling Berlin, there were gangs of Nazi thugs roaming the streets, hanging old men and even boys who were not in uniform, labeling them as slackers. The will to power calls out the madness. Always. If men who would be gods cannot create and sustain life as God does, then they must ravage and destroy life, and the creative impulse and diversity of art, and finally themselves in their delusion.

As Charles Upton said, "This is why true evil always exhibits a tell-tale mixture of diabolical cunning and immense stupidity." It only imitates and steals its forms from true being, but remains a souless and non-productive aberration of genuine life.


The White Rose
Fifth Leaflet
Munich, 1943

We will not be silent.

The war is approaching its destined end. As in the year 1918, the German government is trying to focus attention exclusively on the growing might of our submarine warfare, while in the East the armies are constantly in retreat and invasion in imminent in the West. Mobilisation in the United States has not yet reached its climax, but already it exceeds anything that the world has ever seen. It has become a mathematical certainty that Hitler is leading the German people into the abyss. Hitler cannot win the war; he can only prolong it. The guilt of Hitler and his minions goes beyond all measure. Retribution comes closer and closer.

But what are the German people doing? They will not see and will not listen. Blindly they follow their seducers into ruin. Victory at any price! is inscribed on their banner. "I will fight to the last man," says Hitler-but in the meantime the war has already been lost...

What can we learn from the outcome of this war-this war that never really was our own national war?

The imperialist ideology of force, from whatever side it comes, must be shattered for all time. A one sided Prussian militarism must never again be allowed to assume power. Only in large-scale cooperation among the nations of Europe can the ground be prepared for reconstruction.

Centralized hegemony, such as the Prussian state has tried to exercise in Germany and in Europe, must be cut down at its inception. The Germany of the future must be a federal state.

At this juncture only a sound federal system can imbue a weakened Europe with a new life. The workers must be liberated from their condition of down trodden slavery under National Socialism. The illusory structure of autonomous national industry must disappear. Every nation and each man have the right to the goods of the whole world!

Freedom of speech, freedom of religion, the protection of individual citizens from the arbitrary will of criminal regimes of violence-these will be the bases of the New Europe.

Please make as many copies of this leaflet as you can and distribute them.

03 February 2012

Gold Daily and Silver Weekly Charts



Bear raid on the metals intraday, with the message that piling into 'risk assets' like stocks and junk bonds was the thing to do because of the wonderful economic recovery.

Nothing has changed. The band just played a lively polka, and Josef and Magda led a cheer on the financial networks.

Keep an eye on Europe. That is where the rubber meets the road, or the truncheon meets the jaw, as they say.

Can the triple A's bring Greece and the other prodigals under control? Will they submit as meekly as the Irish? Stay tuned.



SP 500 and NDX Futures Daily Charts - Flashbangs, Smoke and Mirrors



The markets took off after the 'great' Jobs Number came out.

I provided some significant intraday commentary here, and have added to it at the end of day as well, including a response to the Labor Participation Rate issue and an actual comparison of the pre and post revision numbers.

The bottom line is that looking at month over month changes like this is ludicrous, and almost always in support of some PR or Sales campaign. And in this case it was both: PR for Obama and Sales for the paper pushers. 

Only the trends matter, and certain key data like the median wage, because there is so much 'noise' in the data, much of it self-induced. But you will rarely hear a serious discussion about this from the spokesmodels and the used car salesmen that appear on their shows.  In this at least the financial media in the UK is head and shoulders above the extended infomercials in the States.

The more serious issue is the lack of thoughtful policy discussion that occurs in the US and the way in which the statistics are abused. No wonder the problems linger on and fester.





Another Look at What 'Worked' in the Great Depression


Here is a fairly simple picture of some of the major metrics during the Great Depression.  Too simple yes, but it tracks most of the major indicators.

Hoover followed a policy of 'deleveraging,' that is, allowing for the economy to liquidate its prior excesses without changing much else. The Fed did respond to this crisis by expanding the monetary base fairly significantly as you can see.

The recovery began under Roosevelt, who declared a 'bank holidy' and struck at the heart of the problem, clearing the banking system. But he also followed through with a major currency devaluation, stimulus programs, and significant financial reform.

And that last point is the most important. Hoover's Fed supplied stimulus, but there was really nothing done to fix the system that had caused the Great Crash of 1929 in the first place. And I suspect that if Roosevelt had not taken strong steps to clean up the fraud in the stock market and the banking system, his own stimulus would have fluttered and failed.

Now the common knee jerk reaction to this from those who study the schoolbook given by the monied interests is twofold.

First, that Hoover simply did not go far enough, and if they had only allowed the Depression to continue to deepen, eventually it would have bottomed and things would have improved. I think the answer is clear, in the examples of Italy, Germany and Japan. When an economy is tortured to that extent, the people do not continue to endlessly suffer in silence. They react, badly, and take matters into hand one way or the other.

They say you cannot fix debt with debt. And I say that like most simplistic slogans it is intended to mislead. The real issue is reform and how the debt is used and the gains distributed.

Secondly, they say that the Roosevelt recovery did not last. And it did not continue on a steady trajectory. The Fed engaged in some policy errors and caused a secondary slump in the late 1930s. And the world economy remained troubled. Roosevelt also faced an obstructionist Congress, and a Supreme Court that overturned many of his New Deal programs.

He also faced an attempted military coup d'etat funded by a few of the monied interests who also busy doing business with Mussolini and Hitler, as testified by one of its more decorated war heroes, but the history books don't like to talk about that.  Just another nut job.

Globally, the monied interests seemed to have choose amongst three options: 1.  Go along grudgingly with reform and accept a smaller percentage of the overall economy (Roosevelt), 2. Fund an oligarchic takeover of the government and seek to control it (Hitler), 3.  Sew your wealth into the dresses of your children, and die with them in a basement (Russia).

The US, like all other nations, has plenty of its own dirty little secrets that no one likes to talk about.

The point of this is that austerity following a financial collapse based on fraudulent imbalances does not work and almost always leads to civil disorder. And that stimulus alone does not heal the damage, although it does help to ease the pain if applied correctly.

No, the most important ingredient for a sustained recovery is to reform the abuses that allowed for such a spectacular bubble of excess to exist in the first place. It was all about the misallocation of productive capital and the negative effects of monopolies and financial frauds on the real economy.

At some point this lesson will be burned into our minds by the continuing stagnation of the unreformed economy, even if it is sold as 'the new normal' and not so bad on paper.  It will be a living hell for many, and they will eventually push back, and then things will be resolved, one way or the other.

I hope that the new school of economic thought that rises out of the ashes of what we have now is more serious and mature and thoughtful, if not wise.  But I have not found many economists capable of such original thinking, even among those who claim to carry the progressive banner.  

And certainly not among the ideological schools, who start with an a priori set of premises and then beat reality and torture the market participants to death with them and their supporting statistical and logical fallacies.  Since these schools are based on top down principles and assumptions, they are notoriously slow to change and adapt, but often most vociferous and extreme in their arguments, with adherents whose allegiance is less informed by the intellect and an actual understanding of things, and more like a belief system based on stubbornly held slogans and prejudices.