Re: which general course in a panic? [was Curtiss on Greenbacks]

Keith Wilde wrote:
> 
> At 09:31 AM 04/16/2004 -0400, W. Curtiss Priest wrote:
> >
> >...  Is Bush
> >and "his company" exceptionally more insightful
> >and brilliant than others before them, facing the
> >same problem, using the same "solution?"
> 
> Dear Curtiss,
> 
> If they are, no one will be more surprised than me. The only caveat would
> concern whether or not they have precisely the same solution in mind. 

1.  there are no true experts in macro-economics -- the
problem is much too large.  I am not saying there aren't
better folk who opine about economies, but, as James
Kenneth Gailbraith once said, you can be mostly right
about predicting a trend, but, the uncertainty is in
all the folk out there with their own senses, and you
have no idea when those senses will become common sense
(I am paraphrasing from memory).

2.  I am currently discussing the issue of whether this
crisis will be deflationary or inflationary with Dr. Batra.
Our phone calls have criss crossed.

In "Crash of the Millenium" it was Ravi (perhaps I
already mentioned) who says we are a 3rd world country
now, and, of the two choices to deal with a monetary
crisis, we will go the route of Brazil and Argentina,
and Germany -- and print money so fast that all dollar-based
monetary assets become worthless.

The two choices in a crisis are:

        1.  austerity, deflation, and working off the debt
                (that was "The Great Depression" of the U.S.
                and many other countries)

        2.  print money, fixed monetary assets become
                worthless, and various forms of fascist
                or military rule become popular (e.g.,
                all this posturing about presidential
                "military experience" is moving in this
                direction)

And, I did not mean to imply that this administration
would choose door number 1.

I saw hints of deflation in our economy, and several
of my newsletters spoke of that -- but -- in hindsight,
I am now, more of the belief that lower prices for
various goods were the product of two activities:

        1.  encouraging low wage countries (China, India,
                etc.) make goods we consume

        2.  vast improvements in reducing the costs
                to retailing -- i.e., the Walmartization
                of shopping

While both activities appear deflationary, they are
actually just true "lower prices" for the reasons I cite.

***

Let me switch to a very specific example.

I have about $25K in a KEOGH.  During the
last few years I made sure the money was NOT
in the stock market.

What conservative position is there?  For a
few years, the Fidelity Spartan fund seemed
reasonable.  Low (dollar) yield, but, relatively
safe.  So, when the market dropped, my KEOGH
slowly and surely "inched up."  (notice the judicious
use of the word "relatively")

But, what happens to those dollars, invested in
various US treasuries, etc., under the case of
hyper-inflation ?

The dollar, with respect to other world currencies,
drops like a stone.  (see, for example, the account
of how the German Mark moved with respect to the
U.S. dollar, in the mid '20s -- article below).

So, yes, I still will have $25,000 dollars, but
they won't buy anything.

Very few in the U.S. understand this mode of trying
to escape from a crisis.  They would have to have
lived through it, either in Brazil, Mexico, etc.,
or, to have experienced it in Germany, they would
be at least 88 years old, presuming a ten year old
"gets it."

Today, I don't want my KEOGH in US dollars.

I have various options -- all quite strange to me.

For example, I have never sold futures in oil.

But, in that oil and natural gas are turning the
corner, and will only become more scarce, and the
demand for them is highly inelastic (yes, to save
on the home oil bill you can run the house at 35
degrees -- just keeping the pipes from freezing --
but that is a tough road).  And over 90% of the nation's
electricity is produced from natural gas.

As for fossil fuel reserves.  See today's Globe article about
the Shell executive who says he's "tired of lying
about oil reserves."  (also below)

So, what am I doing at this moment?  I am self-teaching
myself about commodity futures by visiting:

 http://futures.tradingcharts.com/learning/stocks_to_use.html

I hope to be done in a few days, and I hope I will
have sold some oil futures next week.

As usual, I am always open to comment or criticism,
for, as I said, there are no true experts -- just
better and worse ones.  (and then there is the herd)

Regards,

Curtiss

["fair use," "teachable moment," "archival," Section 107(a), 1976
Copyright Act and 1998 Digital Millennium Act]


Gathering storm

An informative, evenhanded account of the emergence of Nazism and
Adolf Hitler

By John Merriman | April 18, 2004

The Coming of the Third Reich By Richard J. Evans Penguin, 622 pp.,
illustrated, $34.95

Following the end of World War I, parliamentary regimes fell one after
another. Fascist and other authoritarian right-wing states emerged in
Europe, beginning in Italy with the Italian dictator Benito Mussolini
in 1922. In Germany, the fragile Weimar Republic, established in the
war's last days in 1918, suffered assaults first from the far left
but, above all, from the far right. The latter hated parliamentary
regimes and could never forgive Weimar for having agreed to the Treaty
of Versailles, which forced Germany to take full responsibility for
the outbreak of the war. The treaty reduced Germany in size and
imposed enormous war reparations. John Maynard Keynes rightly
predicted the enormous damage the Treaty of Versailles would
ultimately inflict: "Vengeance, I dare predict, will not limp." It did
not. In Germany, Adolf Hitler and the Nazis came to power.

In the first of three planned volumes, Richard Evans, the
distinguished British historian of Germany, offers a narrative account
of the rise of Hitler and the Nazis, carrying the story up through
1933. This is not a work that presents an original interpretation, but
it is an elegant synthesis aimed at the general reading public. Deftly
written, informed, and balanced in interpretation, it explains why so
many Germans looked to Hitler as their savior.

In January 1933, President Paul von Hindenburg named Hitler, an
Austrian by birth who had served in the German Army and been twice
wounded, chancellor of Germany. Franz von Papen, a more traditional
conservative and former chancellor, and enemy of parliamentary
democracy, crowed, "We've engaged him for ourselves." He believed that
Hitler's great popularity would help lead to a military dictatorship,
at which time the "Austrian corporal" could be dismissed. It did not
work out that way. Hitler's Nazis imposed a murderous regime on
Germany, destroying all political parties except theirs, making
strikes illegal, and murdering or imprisoning their opponents,
particularly the Social Democrats, who had supported Weimar; the
Communists, who had not; and Jews. A "cultural revolution" to purge
the arts of Jews began, sending the first wave of talented migrs to
Britain and the United States, in particular. They were the lucky
ones. On March 20, 1933, Heinrich Himmler announced the opening of a
concentration camp in Dachau.

Somewhat oddly, Evans writes that "it seems to me inappropriate for a
work of history to indulge in the luxury of moral judgment. . . . The
purpose of this book is to understand: it is up to the reader to
judge." This judgment comes easily. Descriptions of the horrendous
violence that was an intrinsic part of the Nazis' march to domination
and of the regime until its very end leave the reader with much upon
which to reflect.

Evans nicely captures the adulation of Hitler and support of the
Nazis, which cut across social classes, religions, and regions, even
if it was the middle class that first embraced him. In early February
1933, 20,000 brownshirts marched in Hamburg, screaming against the
republic; a woman "drunk with enthusiasm" recalled: "Next to us a
little boy 3 years of age raised his tiny hand again and again: 'Hail
Hitler, Hail Hitler-man!' 'Death to the Jews' was also sometimes
called out and they sang of the blood of the Jews which would squirt
from their knives. . . . 'We want to die for the flag.' " So many
would do just that.

Why did so many Germans come to embrace the most pernicious of a whole
collection of right-wing dictatorships in Europe during the 1920s and
1930s? The Nazis faced no movement of opposition, in part because they
crushed the Socialists and Communists, but also because most Germans
came to revere Hitler. The Nazis never received more than 37.4 percent
of the vote (July 1932), after which there would be but one more
election in Hitler's Germany, the following year. But far more than
that number wanted the Republic destroyed, as did the powerful Army
generals and big businessmen who strongly preferred a dictatorship,
not a republic, and then embraced Hitler. What was there about
Germany's history before the Great War that could explain the success
of the Nazis?

To be sure, many of the demons of the 20th century emerged out of the
Great War and the economic turmoil that followed. The war seemed to
have legitimized violence, and the paramilitary groups such as the
German Free Corps kept on marching and killing. The great inflation of
1923 (the US dollar bought 4 marks in December 1918, 17,000 in January
1923, 98,860,000 in September, and 4,200,000,000,000 in December)
wiped out pensions first in days and then in hours. Many families had
to pawn items of value that had been in their families for
generations. This they would not forget. The Depression and the threat
of communism increased anxiety, swelling the ranks of people who, even
if they did not support the Nazis, did not want parliamentary
democracy.

Yet Evans convinces us that National Socialism in Germany did not just
emerge out of the mass slaughter of World War I. Germany had been
unified in 1871 around "blood and iron" by Chancellor Otto von
Bismarck, not around liberal auspices. Racial intolerance,
particularly anti-Semitism, abounded in imperial Germany, even if Jews
were proud of their assimilation, but could be found in other
countries as well. Pseudo-scientific ideas about population and
eugenics circulated in Germany, as elsewhere, as did aggressive
nationalism and a revolt against modernism. Evans concludes, "They
came together in Germany in a uniquely poisonous mixture."

As Evans shows, key elements of this pre-World War I mixture would
prove potent in the emergence of Nazism and the rise of Hitler. An
extremist group adopted the swastika as an "Aryan device" in 1912.
More than 30 years later, when Hitler survived a July 1943
assassination attempt, Germans would spontaneously pour into the
streets to thank God for sparing the Fhrer. The swastika flew and was
saluted in Germany until the bitter end.

John Merriman is Charles Seymour Professor of History at Yale
University and the author of "The Stones of Balazuc: A French Village
in Time" and "A History of Modern Europe, From the Renaissance to the
Present." 

c Copyright 2004 The New York Times Company 

************************

["fair use," "teachable moment," "archival," Section 107(a), 1976
Copyright Act and 1998 Digital Millennium Act]


Last update: April 19, 2004 at 9:15 PM

Dutch/Shell Group exec was 'sick and tired' of lying

Beth Gardiner, Associated Press April 20, 2004SHELL0420

LONDON -- A top executive of Royal Dutch/Shell Group of Companies
wrote in an e-mail that he was "sick and tired about lying" about the
company's inflated oil and gas reserves estimates, an investigation
commissioned by Shell reported Monday.

The investigation, whose findings Shell accepted in full, found that
some bosses knew for almost two years that the company had publicly
overstated the size of its reserves. The shaken oil giant also
announced that its chief financial officer had stepped down, the
latest in a string of high-level casualties since Shell's announcement
in January that its confirmed oil and gas holdings were much smaller
than it had claimed.

The company said Monday that it had now downgraded a total of 4.35
billion barrels, or about 22 percent of its reserves, from "proven" to
less-certain categories. That is 200 million barrels more than its
previous estimate.

Shares in Shell Transport & Trading Co. fell 0.76 percent to Monday on
the London Stock Exchange.

"Shell has unquestionably stumbled and has learned a tough lesson,"
said Lord Oxburgh, chairman of Shell Transport and Trading Co. PLC,
the British component of the Anglo-Dutch group, calling the inaccurate
estimates a "major embarrassment."

A summary of an outside investigation into managers' conduct, made
public by Shell, said executives in its exploration and production
division had exaggerated the size of reserves and failed to act when
it became clear the estimates were unrealistic.

Walter van de Vijver complained about the estimates after he took over
as chief of the division in June 2001, replacing Sir Philip Watts, who
had been promoted to Shell chairman, the summary said.

The report said Van de Vijver notified Shell's managing directors in
February 2002 that the company's reserve classification rules did not
match those of the U.S. Securities and Exchange Commission and that
Shell might have overestimated its reserves by 2.3 billion barrels.

"I am becoming sick and tired about lying about the extent of our
reserves issues and the downward revisions that need to be done
because of far too aggressive/optimistic bookings," Van de Vijver
wrote in a November 2003 e-mail to Watts, released in the summary.

When legal advisers sent Van de Vijver a memo a month later saying
Shell should disclose the problems, the report said, he responded by
e-mail: "This is absolute dynamite, not at all what I expected and
needs to be destroyed."

The memo was preserved, the lawyers' report said.

Watts and Van de Vijver resigned last month.

-- 


           W. Curtiss Priest, Director, CITS
   Research Affiliate, Comparative Media Studies, MIT
      Center for Information, Technology & Society
         466 Pleasant St., Melrose, MA  02176
   781-662-4044  BMSLIB@MIT.EDU http://Cybertrails.org