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.

Gold Daily and Silver Weekly Charts - Hunger Games

FOMC announcement today was a big nothing as expected.

GDP is out on Friday.

Trump's "October Surprise" came out today, and was a delusional farce.

SP 500 and NDX Futures Daily Charts - FOMC A Big Nothing

The FOMC announcement was nothing new as expected.

If the Fed acts again I think it will be as a result of some crisis or event, and will be done with a better rationale. Bernanke is primarily supporting the big banks with the Fed's activities, and not much of his balance sheet expansion is flowing through to the real economy for a number of reasons, and I think by intent.

This is how the Fed is avoiding the problem of a general monetary inflation. The inflation the US is seeing is largely secular and structural.

Greg Smith of Goldman Fame Walks Into the Wall Street Lion's Den

Stephanie Ruhle keeps stepping on the interview, often changing direction and hijacking the discussion, peppering Smith with multiple questions, but it is interesting nonetheless. And she does manage to ask some good questions, often which she attempts to answer herself.  But that is the state of corporate advocacy journalism today.

As you watch this bear in mind that Goldman and other Wall Street firms have been acquiring mathematicians and physicists to concoct customised derivatives and algorithms that few others outside of a select group of quants can fully understand.

And remember the damage that Wall Street CDO's, that were specifically rigged against customers, had done to some of the major banks in Europe, who are not particularly unsophisticated although were perhaps too unsuspected of blatant fraud from name firms. And also let us not forget the cases of bribery of public officials and fund managers with money, sex, and drugs that have been disclosed, such we have seen in the case of Jefferson County, Alabama.

And then there is the ongoing front-running frauds that are the US equity and commodity markets with lax regulation, insider trading, and exchange enabled HFT computerized skimming and spoofing.

What I find almost astounding is that after one of the worst financial frauds in US history, Wall Street and its supporters are able to blithely act as though nothing had happened.   And that is because there has been no real reform and no one has been prosecuted.  That is what is known as 'moral hazard.' 

I found Naked Capitalism's take on this to be very interesting.  What Greg Smith Did Not Say and Some Guesses Why

I do think there is a point to be made in not doing business with Goldman at all.  But as Greg points out, if one wishes access to certain types of products and the broader financial markets, there is much less choice now than there was even four years ago.   And Wall Street has its hands in everyone's pockets, whether you do business with them or not, in this financialised economy. 

I don't think Greg Smith is a whistleblower per se, or even puts himself out there as such in the manner of revealing the details of some very specific illegal act.

At the end of the day, Greg Smith is raising the same category of concerns about the financial system as Occupy Wall Street has done, the same alarm and even revulsion with a culture that has turned predatory rather than constructive, about organizations and a society that are losing their moral bearings to the point of undermining their own rational self-interest with short-term greed.

And Mr. Smith is being derided and dismissed in much the same manner as many of the same people dismissed OWS.

The problem with Wall Street is the essential conflicts that were created by merging the functions of customer-serving banks, which are essentially utilities, with the most aggressive and even abusive of investment banks acting as hedge funds for their own books.  The repeal of Glass-Steagall was the watershed event, and it was the result of a massive lobbying effort that corrupted Washington with Wall Street money.

And when a speculative firm like the pre-IPO Goldman moved from a true partnership model, to publicly traded firms using other people's money and shifting liability to the corporation, Pandora's box was opened.  And this is a despicable lapse in stewardship by the intellectual, financial, and political leadership of the country for which they should be ashamed.

Gold Daily and Silver Weekly Charts

"After we came out of the church, we stood talking for some time together of Bishop Berkeley's ingenious sophistry to prove the nonexistence of matter, and that every thing in the universe is merely ideal.

I observed, that though we are satisfied his doctrine is not true, it is impossible to refute it.

I never shall forget the alacrity with which Johnson answered, striking his foot with mighty force against a large stone, till he rebounded from it--

"I refute it thus!"

Boswell, Life of Samuel Johnson

I have read all of Boswell's works about Samuel Johnson in my day.  I have visited a number of places which the famous pair of Boswell and Johnson frequented in London, and even in Edinburgh, during their trip to Scotland.   It was a multipurpose trip, since I visited the grave of Adam Smith and the Scotch whiskey museum there as well.  No sense limiting oneself.  Even the haggis and haddie were good.

Although Johnson's famous Mitre Tavern is no longer standing in London, the place where it had been is marked with a plaque, as these things there often are. 

Even mythical places like 221B Baker Street are marked with a plaque,  or at least it had been on some grotesque commercial building, until an enterprising fellow built a small Sherlock Holmes museum across the street and had the address moved.  I was there when the actor Jeremy Brett, or someone who could have been his twin, was there in his Holmesian gear to hand out his card as a consulting detective.  Now that's show business. There are often underemployed actors conducting marvelous themed walking tours around the town that I highly recommend. In terms of depth and quality of acting talent, London is to Hollywood what Maxim's is to McDonalds.

In addition to theatre, much of which seems to emanate from Parliament, I think plaques, pints, and dodgy financial instruments are the cottage industries that sustain the place. I used to buy my pocket calendar at The Economist every year. Do they even make such things these days? As Johnson said, "A man who is tired of London is tired of life."

And one can get a sense of Johnson's London by visiting Ye Olde Cheshire Cheese, rebuilt after the great fire of 1666. And I believe that it has remained largely untouched since then by the looks of it, except for electrification.  It is a nice place for a pint and steak and kidney pie, ever bangers and mash.  It's the pint really.  I remember going there with a friend from Philadelphia and at the bar he ordered a bottle of Rolling Rock. And at an outrageous price to boot. Really, there is no punishment worthy.

Although I have to admit, nothing can compare with a hand drawn stout in Dublin.  They serve it with a certain reverence.

One can still visit Johnson's house on Gough Square, and see where he compiled his famous dictonary.

And there is a statue of Johnson on the Strand near Fleet Street, outside of St. Clement Danes church. I recall walking down that way, showing some co-workers from tech support around.

A young American lady engineer went up and read the placard and remarked, "Oh he was a proctologist." I tried to maintain my composure, not very well I have to admit, and said, "Leslie, I believe it says that Dr. Johnson was a philologist."

She was not pleased with my amusement. But a year or two afterwards she married an extremely wealthy Silicon Valley entrepreneur, and sent us pictures of her home on some island.  And I went on to do this sort of thing, so who was the better off for all their classical education? (This is a true story, on my honor.)

Gold and silver were under pressure all day as Wall Street started gearing up for this weeks Treasury auctions, and the FOMC rate decision tomorrow at 2:15.

There is some speculation that the Bernank may increase the monthly buying of mortgage debt to 85 billion but I am not so confident about that, but it is possible.

Advance GDP for the Q3 is due out on Friday.

Don't take these jokers too seriously this week in other words.  As my old grade school teacher used to say,  'Babies must play.'

Oranges and lemons,
Say the bells of St. Clement's.

You owe me five farthings,
Say the bells of St. Martin's.

When will you pay me?
Say the bells of Old Bailey.

When I grow rich,
Say the bells of Shoreditch.

When will that be?
Say the bells of Stepney.

I do not know,
Says the great bell of Bow.

Here comes a candle to light you to bed,
And here comes a chopper to chop off your head!

And I'm surrounded by cement,
Say the bells of St. Clement.

SP 500 and NDX Futures Daily Charts - Winner Steal All Economics

Stocks took a bit of a dive today. That must mean that Obama did well in the debates last night.

FOMC tomorrow at 2:15.

Perhaps the wiseguys were just freeing up some cash to front run the Fed for the Treasury auctions this week.

Advance GDP for Q3 on Friday.