SP 500 and NDX Daily Charts

The selling is starting to look a bit overdone to the downside, but GDP on Friday may have some influence on the future direction.

Wall Street Back In Business, Largely Unreformed

“I have seen them, and they are a stiff-necked people. Now leave me alone so that my wrath may burn against them, that I may destroy them. Then I will make you into a great nation.” Ex 32

This brief video below is notable for an appearance by Yves Smith from Naked Capitalism. 

A credibility trap exists when the regulatory, political and/or informational functions of a society have been compromised by a corrupting influence and a fraud, so that they cannot address the situation without hindering and implicating, at least incidentally, a broad swath of the power structure including themselves.

The status quo has at least tolerated the corruption and the fraud, if not profited directly from it, and most likely continues to do so.

The power brokers have become susceptible to various forms of blackmail. And so a failed policy can become almost self-sustaining long after it is seen to have failed, and even become counterproductive, because admitting failure is not an option for those in power.

The financiers will attempt to make the people an 'offer which they cannot refuse' again, as they did on the occasion of TARP, when they threatened to crash the economy.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustained growth and recovery.

I do not see meaningful reform happening easily, given the intractable hysteria which is gripping those wealthy few who are eager to seize and hold power.  There is a portion of the public who think that whatever they believe must be true, whether the facts support it or not.   And this is a great heresy against reason, and an abuse of faith.  There will be no rapturous escape from judgement for this apostasy and lawlessness, except perhaps into madness.

There is an almost unbelievable tolerance of brazen bullying and deception, a sneering cyncism and disregard of any truth in people who say a thing one day, and then deny it and say a totally different thing on the next, without shame.  Love grows cold even among the faithful, and lies abound. 

This is the very epitome of the will to power. The western world and its leadership are at a crossroads. And the path ahead, if taken, means hardship, sorrow, and blood.

As for Germany's Gold, Things Are What We Say They Are

"Why wasn't the gold counted before this ?

Because it's very complicated and requires a big effort (so the americans say).   In fact the bars are lying around chaotically in the vaults of the US Fed, some of them at the far end of the walls."

Bild.de, Schützen Soldaten den Gold-Transport?


"In reality, it does not matter one bit whether the Federal Reserve Bank of New York actually has the German central bank’s gold, or whether the gold is pure.

As long as the Fed says it is there, it is as good as there for all practical purposes to which it might be put. It can be sold, leased out, used as collateral, employed to extinguish liabilities and counted as bank capital just the same whether it exists or not."

John Carney, CNBC, The Germans Are Coming For Their Gold


"'When I use a word,' Humpty Dumpty said, in rather a scornful tone, `it means just what I choose it to mean -- neither more nor less.'

`The question is,' said Alice, `whether you can make words mean so many different things.'

`The question is,' said Humpty Dumpty, `to be master -- that's all.'"

Lewis Carroll, Through the Looking Glass

The American response is to arrogantly dismiss any concerns that the German people may have for the integrity, and even the existence, of a large portion of their national bullion reserves.

They believe that the German people will forget about this, and turn their minds to something else, and the audit can be explained away, delayed, and never done. It is too difficult, it is too expensive.

And these days, that is all the American financiers have to say to their own people to get anything they wish, to make any sacrifice that they may require of them. 

Oh, you wish to have decent preventitive medicial care?  You wish to have safe banks?  You wish to know what the M3 level of your own money supply may be?   I am sorry, it is too expensive.  Now run along and leave these complicated things to your betters.

If there was an audit done, as some might say, thirty years ago perhaps, then it ought to be easy to do another, if the gold has remained untouched. All one has to do is to verify what has been done.

And if it has not been done, then it is about time one should do it, given the value of the possessions which you are holding in trust for another. Unless of course you follow the modern financial management practices of MFGlobal and PFGBest.

Madness always makes sense,  to the mad.

I do not think that this will go away. When it comes to money, the German people are no fools.

"For decades, the Bundesbank has relied on written confirmation of its gold holdings in London, Paris and New York. According to the report from the German audit court, the last time Bundesbank officials physically inspected the central banks gold holdings was, well, never.

(It should be stated that the folks at FT Alphaville quote a report saying an inspection took place in 1979/1980.)

Interestingly enough, the Bundesbank is apparently quite happy with taking the word of other central bankers about the existence, location and size of its gold reserves. It put out the word that it disagrees with the Audit Court, which only has advisory power and cannot force the Bundesbank to follow its recommendations, about the need for inspections. Nonetheless, the Bundesbank is actually going to follow the recommendation that it verify the gold stocks. It also has plans to ship some 150 tons of gold back to Germany for a more “thorough examination.”

The Bundesbank is, of course, quite right in its opinion of the value of the examinations. In reality, it does not matter one bit whether the Federal Reserve Bank of New York actually has the German central bank’s gold or whether the gold is pure. As long as the Fed says it is there, it is as good as there for all practical purposes to which it might be put. It can be sold, leased out, used as collateral, employed to extinguish liabilities and counted as bank capital just the same whether it exists or not."

John Carney, CNBC, The Germans Are Coming For Their Gold

Who Was 'The Frenchman Who Cried'

Sometimes there are little things in history that pique my interest, and I look into them as time permits. Occasionally I like to put some of that information here in case anyone else might be interested in it.

Here is an iconic photograph that I have seen in any number of documentaries, generally identified as a Frenchman who weeps for his city as the Nazis march into Paris.

I have always been curious about this photo. I wondered where it came from and who this person was.  It has a certain tragic dignity about it.

And not to be too trivial, but I was struck by his suit, shirt and tie which are almost exactly the types of things I would wear to work in my 'corporate days.'  I wonder if he had cuffed trousers and suspenders.  Well I doubt I shall ever find out. He looks like a businessman certainly.

Here is what I have been able to discover.

It first appeared in print in Life Magazine in their 3 March 1941 issue on page 29.   This is the photo which I show above and not the more tightly cropped versions that are often used in documentaries.

The caption on the photo.  identifies it as "a Frenchman sheds tears of patriotic grief as the flags of his country's last regiments are exiled to Africa."

So obviously this is not a phot taken in 1940 in Paris, as the French regimental flags had been moved into the south of France in order to preserve them from the surrender.  The flags themselves were not taken to Africa until 1941.

Here is a more commonly available photograph of the same scene.  It is a moment frozen in time.

Marseille sous l'occupation by Lucien Gaillard says that this is a photo of Monsieur Jerôme Barzetti, taken in Marseilles on February 20, 1941.  This is quite some time after the Nazi entrance into Paris in June, 1940.

I have not been able to find out anything else about him and do not have a hard copy of this book.  He does look old enough to have fought in The Great War.  Is he even French, or an Italian émigré who had fled the tyranny of Mussolini?  Perhaps he was part of the Barzetti industrial family from Italy, and related to Federico who later founded Barzetti Pastries?  I cannot say.

I wonder how he fared, and if he was able to see the restoration of France and the end of the war.

The still photo itself is actually taken from newsreel footage that was much later used in a US war film directed by Frank Capra as Chapter III - Divide and Conquer of his series, "Why We Fight." This film was produced in 1943 and begins after the conquest of Poland, and includes the fall of Benelux and France.

Here is the relevant clip from this US War Department film.  Monsieur Barzetti makes his appearance at 54:50 in the film.  It is a war film after all so you might excuse the somewhat florid rhetoric at the end.

Some have speculated that Capra may have staged portions of his series and I would certainly allow for that.  But since the photo of our 'Frenchman who cried' appeared in 1941 in Life magazine,  it is almost certain that had been taken from the newsreel footage of the day, which was sold to various outlets and used to create informative 'short subjects' to be shown at movie theatres.

Capra must have used that same footage in the creation of his own war film two years later.



So now we know something about 'The Frenchman Who Cried."

Why should we even care about him, his risings and fallings, his perplexity and concerns, his fears and sorrows?

Because when the ocean's dry up, and the earth grows cold and dies, as the stars flicker and grow dim in the sky, and creation turns back into dust, Monsieur Barzetti's soul will continue on, vibrantly alive, and his tears will have long been wiped away, by kindly hands.