Short Articles

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" height=35 BGCOLOR="#000099" TEXT="#F7F7FF"> <div> <B>Short Finance/Economic/History Articles</B></div> <div>                                                   </div> <div> </div> </td> </tr><tr> <td valign="top" height=445 BGCOLOR="#FFFFFF" TEXT="#080000"> <bR> <div> <B>Articles:</B></div> <bR> <bR> <div> <A HREF="#pittsburgh_steelers" TITLE="Short Articles"><B>Recession, Pittsburgh Steelers and Recovery</B></A></div> <bR> <div> <A HREF="#1960s1970s1980s_and_1990s2000s2010s" TITLE="Short Articles"><B>1960s/1970s/1980s and 1990s/2000s/2010s</B></A></div> <bR> <bR> <div>  <A NAME="pittsburgh_steelers"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></div> <div> <B>Recession, </B><B>Pittsburgh Steelers</B><B> and Recovery</B></div> <bR> <div> <B>This article was written before the March 2009 American recovery.</B></div> <bR> <div> "Elliott Wave International Inc.'s Robert Prechter, who advised shorting U.S. stocks three months before the bear market began, said investors should end that bet after the Standard & Poor's 500 Index tumbled to a 12-year low.</div> <bR> <div> "He warned of a "sharp and scary" rebound for anyone still wagering on a retreat, according to this month's "Elliott Wave Theorist"...</div> <bR> <div> ""The market is compressed," Prechter said in the note published yesterday. "<FONT SIZE="2" COLOR="#0000FF" FACE="Verdana" ><B>When it finds a bottom and rallies, it will be sharp and scary for anyone who is short</B></FONT>. I would rather be early than late" (Sarah Jones, <I>Prechter Advises Closing Short Positions on Stocks</I>, bloomberg.com, February 24, 2009).</div> <bR> <div> History suggests that the Dow Jones Industrial Average is on the cusp of a 70%+ rally over the next couple of years. It may even pass the 2007 high.</div> <bR> <div> Two examples from history are 1974 for the 70%+ rally and 1927 for the new Dow Jones high.</div> <bR> <div> "<FONT SIZE="2" COLOR="#FF0000" FACE="Verdana" ><B>Pittsburgh won an unprecedented sixth Super Bowl title</B></FONT> with a late touchdown in a thrilling 27-23 win over Arizona.. <FONT SIZE="2" COLOR="#6600FF" FACE="Verdana" ><B>The Steelers</B></FONT>, who <FONT SIZE="2" COLOR="#6600FF" FACE="Verdana" ><B>won four titles in six years in the 1970s</B></FONT> and triumphed again in 2006, moved ahead of five-time champions San Francisco and Dallas (Martin Gough, <I>Super Bowl XLIII - Arizona v Pittsburgh</I>,  bbc.co.uk, February 2, 2009).</div> <bR> <div> "<FONT SIZE="2" COLOR="#006600" FACE="Verdana" ><B>Since the first Super Bowl was contested in 1967, the average annual return for the S&P 500 index has been 25 percent in the six years the Steelers competed, regardless of whether the team won or lost, according to Capital IQ, a division of Standard & Poor's</B></FONT>" (Ros Krasny,<I> Steelers in Super Bowl may bring luck to investors</I>, reuters.com, January 30, 2009).</div> <bR> <div> <B>Note: The S&P 500 was up 23.5% for 2009. </B></div> <bR> <div> The Pittsburgh Steelers won the super-bowl in 1975 after the Dow made its recession low in December 1974. From the December 6 low the Dow rallied 75.69% to top on September 21, 1976.</div> <bR> <div> The recesion low in this 'rhyme' occurred after the Steeler's won in 2009.</div> <bR> <div> "<FONT SIZE="2" COLOR="#FF6600" FACE="Verdana" ><B>President George W. Bush is the first president since Richard Nixon to preside over two recessions</B></FONT>" (Emily Kaiser, <I>Recession started in December 2007: panel</I>, reuters.com, December 1, 2008).</div> <bR> <div> [The recession of 1973-75 was the severest of the two that occurred in Nixon/Ford Republican Administrations just as the present recession is the severest for the former Republican George W. Bush and the present Democrat President Obama].</div> <bR> <div> The Dow high in 1976 was 1,014.79 - only 36.91 points below the nominal high of 1,051.70, set in 1973, of the previous longwave P/E ratio cycle.</div> <bR> <div> The present nominal high of this cycle is 14,164.53, set in 2007; another rally peak in 201?</div> <bR> <div> In this scenario history suggests that a yet future recession, leading to depression, will have its severest impact in a Republican administration to follow the Obama admin., in 4 years time.</div> <bR> <div> The second example is based on that historic precedent that a 'global' crisis often precedes the final rally of a sharemarket bull run.</div> <bR> <div> The Central Bankers' intervention in December 2007, as a result of the latest financial crisis, had echos of 1927 and 1997-98. This suggested then that the present crisis was not going to be the crisis that tipped the world into depression.</div> <bR> <div> This also implies that we are not yet at the debt-saturation point of the upwave of the present debt/credit cycle, just as 1927 was two years away from the debt-saturation point of the 1920s' sharemarket bull run.</div> <bR> <div> (The debt-saturation point of the "upwave" was in 1929 when total credit market debt as a percentage of GDP was 176%. In 1933 it was at 287%. It was not till January 1953 when this debt, at 129%, was down to manageable levels, which then began the present "longwave" credit/debt cycle).</div> <bR> <div> History suggests that the present Central Bankers' intervention will not only lead to recovery but will propel the global economy to the next "upwave" debt-saturation point of the latest long-run credit/debt cycle.</div> <bR> <div> This then implies that the Central Bankers will be basically powerless, when the next serious crisis occurs in the rally ahead, to prevent a debt-deflation depression, which is needed to help bring debt down to manageable levels.</div> <bR> <div> "... current dynamics have some similarities to the post-tech Bubble period. Granted, the collapse of Wall Street finance is of much greater scope and consequence than the bursting of the tech Bubble. Yet I would counter that <B>the Burgeoning Bubble in Government Finance is poised to make the Mortgage Finance Bubble appear tiny in comparison</B>.</div> <bR> <div> "The Government Finance Bubble is enormous and powerful - and should be anything but underestimated. Akin to the previous Bubble in Wall Street finance, the epicenter of this Bubble is here in the U.S. But I would argue that <FONT SIZE="2" COLOR="#FF0000" FACE="Verdana" ><B>t</B><B>his unfolding Bubble dynamic has greater potential to engulf the entire world than even U.S.-style mortgages and derivatives did starting back around 2002</B></FONT>" (Doug Noland, <I>The Government Finance Bubble</I>, prudentbear.com, February 6, 2009).</div> <bR> <div> <B>1927-1929 for the future</B></div> <bR> <div> [Recession: October 1926 to November 1927].</div> <bR> <div> "Had the situation continued, most European nations would have had to leave the gold standard. <B>Given the complexities of the reparations situation, the United States would be dragged down with them in a major financial crisis</B>" (Robert Sobel, <I>Panic on Wall Street</I>, (New York: Macmillan, 1968), p.360).</div> <bR> <div> "... the Federal Reserve promptly began its great burst of expansion and cheap credit in the second half of 1927. This period saw the largest rate of increase of bank reserves during the 1920s, mainly due to massive purchases of U.S. government securities and of bankers' acceptances, totalling $445 million in the latter half of 1927..." (Kevin Dowd & Richard H. Timberlake, <I>Money and the Nation State</I>, (Edison, Transaction Publications, 1998), p.144).</div> <bR> <div> "Wall Street greeted the lowered [discount] rate [of August 5, 1927]. It meant businesses could borrow funds more easily, and so expand operations and profits. More important, it assured a continual flow of cheap credit for the call-money market. Member banks were able to borrow money from the Federal Reserve at 3.5 percent and then lend it as call money at 5 percent, making an easy profit of 1.5 percent. <B>Thus, the international situation was resolved in such a way as to encourage speculation on Wall Street</B>" (Sobel, p.361).</div> <bR> <div> "The major stock market boom on Wall Street coincided with a virtual suspension of new international lending and a retreat of capital. New money from America stopped going to Germany, Latin America, or Central Europe in June 1928. All the hot money went to Wall Street instead. And much more foreign money, especially English money, was also attracted by high returns as compared to bleak prospects elsewhere" (James Dale Davidson & William Rees-Mogg, <I>The Great Reckoning</I>, Revised Edition, London: Sidgwick & Jackson, 1992, p.207).</div> <bR> <div> "Adolph C. Millar, a dissenting member of the Federal Reserve Board, subsequently described this as 'the greatest and boldest operation ever undertaken by the Federal Reserve System, and...[it] resulted in one of the most costly errors committed by it or any other banking system in the last 75 years'. The funds that the Federal Reserve made available were either invested in common stocks or (and more important) they came available to help finance the purchase of common stocks by others. So provided with funds, people rushed into the market. Perhaps the most widely read of all the interpretations of the period, that of Professor Lionel Robbins of the London School of Economics, concludes: 'From that date, according to all the evidence, the situation got completely out of control'" (John Kenneth Galbraith, <I>The Great Crash 1929</I>, (London: Penguin Books, 1992), pp.38-39).</div> <bR> <div> "Indeed the temporary breaks in the market which preceded the crash [of October 1929] were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and <B>in February and March of 1929 it seemed the end had come</B>" (Galbraith, p.98).</div> <bR> <div> History then suggests for stockmarket gamblers that they are on the cusp of one of those 'best-buy' opportunities (eg. 1927, 1974, 1982 and 2002) which will eventually end similar to 1930-32 - when the Dow declined 86%.</div> <div>  <A NAME="1960s1970s1980s_and_1990s2000s2010s"><IMG BORDER="0" SRC="1x1.gif" HEIGHT="1" ALIGN="bottom" WIDTH="1" HSPACE="0" VSPACE="0" ></A></div> <div> <B>1960s/1970s/1980s and 1990s/2000s/2010s</B></div> <bR> <div> "We are entering an era where it is now politically acceptable to avoid recessions and higher unemployment by doing the exact things that created these economic problems to begin with" (Kenneth J. Gerbino, <I>Coconuts and Gold</I>, 321gold.com, January 26, 2009).</div> <bR> <div> To see how this latest new era is likely to play out, comments from a research paper form the foundation of a template to view the future:</div> <bR> <div> "It is common to associate the origins of the Great Stagflation of the 1970s with the two major oil price increases of 1973/74 and 1979/80. This paper argues that oil price increases were not nearly as essential a part of the causal mechanism generating stagflation as is often thought. We provide a model that can explain the bulk of stagflation by monetary expansions and contractions without reference to supply shocks... The oil supply shock view also fails to explain the dramatic surge in the price of other industrial commodities that preceded the 1973/74 oil price increase and the fact that increases in industrial commodity prices lead oil price increases in the OPEC period. (Abstract).</div> <bR> <div> "The two most prominent increases in the price of oil in 1973/74 and 1979/80 were both preceded by periods of unusually low real interest rates ... and economic expansion. (p.26).</div> <bR> <div> "The monetary model of stagflation ... relies on some initial monetary expansion to induce the countercyclical movements in output and inflation. A first test of the model is to verify that the two main episodes of global "stagflation" in 1973/74 and 1979/80 were indeed <FONT SIZE="2" COLOR="#0000FF" FACE="Verdana" ><B>preceded by unusually large increases in world excess money supply</B></FONT>...<FONT SIZE="2" COLOR="#FF0000" FACE="Verdana" ><B>One indicator of liquidity is world money growth</B></FONT>...</div> <bR> <div> "Figure 2a shows a sharp increase in world money growth in 1971-72 and in 1977-78 preceding the two primary stagflationary episodes... The increase in world money growth is followed by an unprecedented rise in world price inflation in 1973-74 and in 1979-80...</div> <bR> <div> "We now turn to the United States where the monetary expansions of the 1970s originated. Figure 3 shows that U.S. liquidity followed a pattern similar to that of other industrial countries.</div> <bR> <div> "Figure 3a shows two unprecedented spikes in money growth in 1971-1972 and in 1975-1977 that preceded two episodes of unusually high deflator inflation in 1974 and in 1980 ... and that coincided with two episodes of significantly negative growth in real money balances in 1973-74 and 1978-1980...</div> <bR> <div> "Additional evidence of excess liquidity in the 1970s is provided by the U.S. real interest rate. Figure 3d shows that 1972-76 and 1976-80 were periods of abnormally low real interest rates... the timing of the 1973/74 and 1979/80 oil price increases coincided with a sharp rise in real interest rates. For that reason we conclude that the likely source of the low real interest rates observed in the 1970s is the preceding monetary expansion...</div> <bR> <div> "The Bernanke-Blinder index based on the Federal Funds rate shows a strongly expansionary stance from mid-1970 to the end of 1972... The contractionary response of the Fed in 1973 to the inflationary pressures set in motion by earlier Fed policy is a key element of our monetary explanation of stagflation...</div> <bR> <div> "<FONT SIZE="2" COLOR="#6600FF" FACE="Verdana" ><B>As the U.S. economy slid into recession in 1974, the Fed again reversed course to ward off an even deeper recession</B></FONT>. Indicators show a renewed monetary expansion that lasted into the late 1970s. The Bernanke-Blinder index from late 1974 into 1977 indicates that monetary policy was strongly expansionary. This expansion was not reflected in high inflation initially, consistent with a partial rebuilding of real balances ... and the well-documented fact that inflation only occurs with a delay (see Nelson 1998)... Around 1978, the monetary stance turned slightly contractionary, becoming strongly contractionary in late 1979 and early 1980 under Paul Volcker, as inflation continued to worsen. Once again, the monetary policy stance provides an alternative explanation for the genesis of stagflation" (Robert B. Barsky, University of Michigan, NBER, and Lutz Kilian, University of Michigan CEPR, <I>A Monetary Explanation of the Great Stagflation of the 1970s</I>, fordschool.umich.edu/rsie/workingpapers/Papers451-475/r452.pdf, January 27, 2000).</div> <bR> <div> Mark Twain, it is said, noted that history rhymes. So when comparing rhymes, where they occur in the inflation/deflation longwave cycle needs to be taken into consideration.</div> <bR> <div> So in this war/peace influenced cycle, in the Cold War period consumer price inflation is primary and asset price inflation is secondary while in the post-Cold War period asset price inflation is primary and consumer price is secondary. In the former the crisis concerns inflation; and in the latter the crisis concerns deflation - credit crunch/decrease in money supply leading to asset price deflation.</div> <bR> <div> This article argues that the pattern of events of the 1970s/80s, informed by the above consideration, provides a template to view the 2000s/2010s.</div> <bR> <div> Trade provides a starting comparison.</div> <bR> <div> <B>Trade - early-1970 & mid-2000s</B></div> <bR> <div> "After<FONT SIZE="2" COLOR="#0000FF" FACE="Verdana" ><B> four years of 4.9% average growth in world GDP over the 2003-06 interval</B></FONT>, the IMF is projecting two more years of the same...</div> <bR> <div> "The IMF has calculated its official estimates of world GDP as measured on a purchasing power parity basis back to 1970. Over this 37-year history, <FONT SIZE="2" COLOR="#FF0000" FACE="Verdana" ><B>there is only one four-year growth spurt that is stronger than that of 2003-06 - the 5.4% average annual growth outcome for 1970-73</B></FONT>. Unlike the current IMF forecast, which calls for another two years of boom-like conditions, <FONT SIZE="2" COLOR="#6000C0" FACE="Verdana" ><B>the four-year growth surge of the early 1970s was followed by a sharp recession in the global economy</B></FONT>, with average gains of just 2.3% over the 1974-75 period" (Stephen Roach, <I>Rosy Goes Global</I>, morganstanley.com, April 13, 2007).</div> <bR> <div> Australia benefited from trade in the early 1970s and followed the pattern of the research paper.</div> <bR> <div> "Australia's position in the global economy appeared to improve significantly in the early 1970s. Strong economic growth in the industrial nations drove up international demand for primary products, pushing their prices to record levels and Australia's exports boomed. The world economy was shaken by the dramatic oil price rises in 1972 and 1973, but Australia seemed better placed than most of the OECD in that it was ... and its coal exports made it a net energy exporter. Australia's exports earnings were so great in 1972 and 1973 that they produced an overall current account balance of payments surplus, a rare occurrence...</div> <bR> <div> "The Long Boom came to an end in 1974 when the industrial economies entered a severe recession that impacted one on the other. The economic indicators of the period were reversed: ... economic growth declined and unemployment increased...</div> <bR> <div> "Weak recovery from the 1974-75 world recession occurred from 1976 and continued to 1980...</div> <bR> <div> "There was a brief upswing in the world economy at the end of the 1970s as the industrial countries expanded output. Demand for primary products recovered and Australia's terms of trade improved..."  (David Meredith & Barrie Dyster, <I>Australia in the Global Economy</I>, (Cambridge, CUP, 1999), pp.225-26, 231, 247).</div> <bR> <div> ("<FONT SIZE="2" COLOR="#006600" FACE="Verdana" ><B>Sydney had never experienced a property boom on the scale of that between 1969 and 1974</B></FONT>. It involved a frenzy of buying, selling and building which reshaped the central business district, greatly increased the supply of industrial and retailing space, and accelerated the expansion of the city's fringe. Its visible legacy of empty offices and stunted subdivisions was matched by a host of financial casualties which incorporated an unknown, but very large, contingent of small investors, together with the spectacular demise of a number of development and construction companies and financial institutions. The boom was the most significant happening of the 1970s and the shock waves from the inevitable crash were felt right up to 1980. It was an extraordinary event for Sydney and Australia..." (M.T. Daly, <I>Sydney Boom Sydney Bust</I>, (Sydney, George Allen & Unwin, 1982), p.1).</div> <bR> <div> <B>America key to the future</B></div> <bR> <div> Now that the argument that the world could decouple from America's problems has been discredited, a theory that history did not support, at this stage of the hegemonic cycle, America in the 1960s/1970s/1980s provides a good guide to observing the 1990s/2000s/2010s.</div> <bR> <div> "<FONT SIZE="2" COLOR="#0000FF" FACE="Verdana" ><B>During Bill Clinton's administration</B></FONT>, the number of new jobs created was greater than the growth in the population of working-age Americans, <FONT SIZE="2" COLOR="#FF0000" FACE="Verdana" ><B>something that had happened in only one previous administration since World War II, that of Lyndon B. Johnson</B></FONT>" (Floyd Norris, <I>Economic S</I><I>etbacks That Define the Bush Years</I>, nytimes.com, January 24, 2008). </div> <bR> <div> In both 'rhymes' - 1960s/1970s and 1990s/2000s - we have had two Democrat Administrations followed by two Republican Administrations followed by a Democrat administration.</div> <bR> <div> The 1970s may said to have two expansions separated by a severe recession. The first expansion of the 1970s during the Nixon years rhymes with the first expansion of the 2000s during the Bush years.</div> <bR> <div> Both these expansions occurred after mild recessions that started in the first year of both Nixon's and Bush's first terms in office.</div> <bR> <div> "<FONT SIZE="2" COLOR="#6600FF" FACE="Verdana" ><B>President George W. Bush is the first president since Richard Nixon to preside over two recessions</B></FONT>" (Emily Kaiser, <I>Recession started in D</I><I>ecember 2007: panel</I>, reuters.com, December 1, 2008).</div> <bR> <div> The mild Nixon recession from December 1968 to November 1970 is rhymed with the mild Bush recession of March 2001 to November 2001.</div> <bR> <div> The monetary and fiscal response to mild recession was followed by economic expansion, which ended after the Dow Jones topping in 1973 and 2007 respectively.</div> <bR> <div> (The Dow peaked five weeks after the Australian Labor took office in 1972; and 8 weeks before Labor took office in 2007).</div> <bR> <div> The severe recession of November 1973 to March 1975 is rhymed with the severe Bush recession beginning December 2007.</div> <bR> <div> The monetary response to the earlier period of severe recession contributed to the sharemarket rally of 1974-76.</div> <bR> <div> The present monetary response also suggest a major sharemarket rally.</div> <bR> <div> But the sharemarket peak in the boom following the mild Nixon recession occurred in the last year of Nixon's first term, whereas the sharemarket peak in the boom following the mild Bush recession occurred in the third year of Bush's second term.</div> <bR> <div> With the peak in the stockmarket occurring late in Bush's second term it suggests that the sharemarket rally, following the severe Bush recession, will occur in the Obama administration.</div> <bR> <div> "As the U.S. economy slid into recession in 1974, the Fed again reversed course to ward off an even deeper recession. Indicators show a renewed monetary expansion that lasted into the late 1970s. The Bernanke-Blinder index from late 1974 into 1977 indicates that monetary policy was strongly expansionary. This expansion was not reflected in high inflation initially, consistent with a partial rebuilding of real balances ... Around 1978, the monetary stance turned slightly contractionary, becoming strongly contractionary in late 1979 and early 1980 under Paul Volcker, as inflation continued to worsen" (Barsky & Kilian).</div> <bR> <div> The Fed is now engaged in a monetary expansionary to ward off an even deeper Bush recession, just as the Fed responded to the severe Nixon recession.</div> <bR> <div> "Based on the market's history of anticipating economic recoveries, the S&P 500 may embark on its next bull market in February, about a month after Obama's inauguration on Jan. 20" (Elizabeth Stanton, <I>U.S. Stocks Post Biggest Post-Election Drop on Economic Concern</I>, bloomberg.com, November 5, 2008).</div> <bR> <div> The rally began just over a month and a half after the inauguration.</div> <bR> <div> "The brutal 1981-82 recession ended the high inflation" (Robert J. Samuelson,<I> A 'Wealth Effect' in Reverse</I>, washingtonpost.com, November 25, 2008).</div> <bR> <div> Inflation will once again raises its ugly head and the Fed will have to raise interest rates precipitating severe recession - a far deeper recession than if the 2007 recession allowed the market to fix the problem, which eventually it will.</div> <bR> <div> The recession of January 1980 to July 1980 occurred in the last year of Jimmy Carter's administration which suggest a recession could occur towards the end of the Obama administration.</div> <bR> <div> In the sharemarket after the nominal high in 1973 the highest cyclical peak was on April 27, 1981 which preceded the closing recession of the 1966-1982 secular bear-market.</div> <bR> <div> History suggests that another Dow cyclical peak will occur before the coming Great Depression.</div> <bR> <div> The Carter recession was followed by the Reagan recession from July 1981 to November 1982.</div> <bR> <div> Severe recessions occur more often in Republican administrations suggesting that Obama may only be a one term president.</div> <bR> <div> The recession/s following a future sharemarket bust will lead not to Carter/Reagan type recessions but to Hoover/Roosevelt type depressions.</div> <bR> <div> The 2010s will be a time of severe deflation, instead of the dis-inflation of the 1980s.</div> <bR> <div> The end of the recovery of the 1980s coincided with the end of the Soviet Union. This also suggest that the end of a comparable recovery will coincide with the end of the United States.</div> <bR> <div> The military build-up under Reagan in the arms race with the Soviet Union has a rhyme with the Anglo-German naval race after the Great Depression of the Nineteenth Century. (Hitler followed in the footsteps of the Kaiser with a military build-up after the Great Depression in Germany in the Twentieth Century).</div> <bR> <div> But this time around the United States, after its invasion of Afghanistan, will find itself in the position of the Soviet Union in the 1980s, after its invasion of Afghanistan, but with a German-dominated Europe winning the arms race and then unleashing its fire-power on America.</div> <bR> <div> "Battleships were a potent symbol of naval dominance and national might, and for decades the battleship was a major factor in both diplomacy and military strategy. The global arms race in battleship construction in the early 20th century was one of the causes of World War I, which saw a clash of huge battle fleets at the battle of Jutland..." (Wikipedia, <I>Battleship</I>).</div> <bR> <div> Just as the Germans built up a fleet of Dreadnoughts to take on the might of the British navy so the Europeans, after the Great Depression of the Twenty-first Century, will build up a fleet of aircraft-carriers to take on the might of the American navy.</div> <bR> <div> (A German-dominated Europe will come up with an aircraft-carrier to compete with the new Ford-class carriers). </div> <bR> <div> "Germany under Kaiser Wilhelm had drawn up detailed plans in 1900 for an invasion of the United States centered on attacks on New York City and Boston... One plan foresaw a force of 100,000 soldiers transported across the Atlantic on 60 ships.</div> <bR> <div> ""Wilhelm II wanted colonies and military bases around the world," author Henning Sietz wrote in Die Zeit. "<B>The United States was increasingly getting in the Kaiser's way</B>."</div> <bR> <div> "Beginning in 1897, a German navy lieutenant named Eberhard von Mantey was assigned the task of preparing an invasion of the United States after German and American interests had collided in the Pacific.</div> <bR> <div> "Von Mantey's aim was to find a way to force the United States to sign a treaty giving Germany free reign in the Pacific and Atlantic. He rejected ideas of a naval blockade or a naval battle and <B>made plans for an invasion of the northeast</B> instead" (<I>Kaiser Wilhelm's Germany Had Plan to Take New York</I>, reuters.com, May 8, 2002).</div> <bR> <div> While WWI was an anticlimax for the dreadnoughts it will not be so with the aircraft-carriers which will play a significant part in the invasion of America.</div> <bR> <div> "Gorbachev was especially anxious to reduce military expenditure, which he new was bleeding his country. It was obvious, however, that Reagan was not only building up America's conventional weaponry; he was also calling for the extraordinarily ambitious Strategic Defense Initiative. Gorbachev believed that if the Soviet Union was forced to engage in astronomically expensive spending for defensive weapons, it might never remedy its internal weaknesses. He concluded that he had to try to reach an arms reduction agreement with the United States. Nothing else would enable him to advance the <I>perestroika</I> that would rescue the Soviet economy" (James T. Patterson, <I>Restless Giant</I>, (New York, OUP, 2005), p.214).</div> <bR> <div> "... Roosevelt himself stood before the world in 1938 [the year of the Munich Agreement] as a badly weakened leader, unable to summon the imagination or to secure the political strength to cure his own country's apparently endless economic crisis. In the ninth year of the Great Depression and the sixth year of Roosevelt's New Deal, with more than ten million workers still unemployed, America had still not found a formula for economic recovery. From such a leader, what could the democracies hope? From such a troubled nation, what did the dictators have to fear" (David M. Kennedy, <I>Freedom from fear</I>, (New York: OUP, 1999), p.362).</div> <bR> <div> A future American leader will find himself in a position which rhymes with Neville Chamberlain and Mikhail Gorbachev.</div> <bR> <div> "The Soviet Union, he [Gorbachev] said, would except "without delay" the elimination within five years of Soviet and American intermediate-range missiles in Europe. This was a major break through, enabling Reagan and Gorbachev to agree to a intermediate nuclear forces (INF) treaty, which the two leaders signed with great fanfare in Washington in December 1987... </div> <bR> <div> "Reagan then had to convince Cold War hard-liners to accept the treaty. This proved problematic at first; some foes of the treaty likened him to Britain's Neville Chamberlain, who had appeased Hitler in the 1930s. But Gorbachev soon announced that the USSR would begin to pull its troops out of Afghanistan and complete the process by February 1989" (Patterson, p.216).</div> <bR> <div> A future American 'appeasement' treaty with Europe will not bode well for America as the British 'appeasement' treaty with Germany in the 1930s did not abode well for Britain.</div> <bR> <div> Winston Churchill's denouncement of the Munich Agreement in the House of Commons is a warning from history for America when she, in weakness, commits to a yet future treaty:</div> <bR> <div> "We have suffered a total and unmitigated defeat...you will find that in a period of time which may be measured by years, but may be measured by months, Czechoslovakia will be engulfed in the Nazi regime. We are in the presence of a disaster of the first magnitude...we have sustained a defeat without a war, the consequences of which will travel far with us along our road...we have passed an awful milestone in our history, when the whole equilibrium of Europe has been deranged, and that the terrible words have for the time being been pronounced against the Western democracies: "Thou art weighed in the balance and found wanting". And do not suppose that this is the end. This is only the beginning of the reckoning. This is only the first sip, the first foretaste of a bitter cup which will be proffered to us year by year unless by a supreme recovery of moral health and martial vigour, we arise again and take our stand for freedom as in the olden time" (Wikipedia, <I>Munich Agreement</I>).</div> <bR> <div> "In his book <I>Collapse</I>, American scientist and author Jared Diamond shows how <FONT SIZE="2" COLOR="#0000FF" FACE="Verdana" ><B>societies destroy themselves from within long before external invaders hasten their collapse</B></FONT>" (Charles Purcell, <I>Wall Street's snake oil salesmen are at it again</I>, smh.com.au, October 13, 2010).</div> <bR> <div> Unfortunately America will not genuinely repent leading to a supreme recovery of moral health. The Anglo-Celtic component of the United States, left alive after the conquest of the north America - a 'turkey shoot' - estimated at around 25 million, will begin their enforced removal from the land of the now unfree, by Europe and her allies, probably still incensed by Anglo-Saxon 'casino' capitalism's depression.</div> <bR> <div> The defeat of the United States will be facilitated if she tears herself apart in the coming Great Depression and its aftermath, which is highly likely. [Multi-ethnic states will experience severe strain and/or breakup in this second or greater depression].</div> <bR> <div> "The Nazi German invasion of Britain would have not been a gentle affair. The captured German papers leave no doubt of that. On September 9 [1940] Brauchitsch, the Commander in chief of the Army, signed a directive providing that "the able-bodied male population between the ages of seventeen and forty-five [in Britain] will, unless the local situation calls for an exceptional ruling, be interned and dispatched to the Continent... In no other conquered country, not even in Poland, had the Germans begun with such a drastic step ... [the plans]... seem designed to ensure the systematic plunder of the island and the terrorization of its inhabitants... Everything but normal household stocks were to be confiscated at once" (William L. Shirer, <I>The Rise and Fall of the Third Reich</I>, (Sydney: Random House Australia, 1998), p.782).</div> <bR> <div> Just as the 'experts' were shocked by the unexpected fall of the Berlin Wall and the Soviet Union the world will be shocked by the end of America; and of course Anglo-Celtic Australia.</div> <bR> <div> The three words "it won't happen" rhymes with its four word counterpart - "it's a new era". There is nothing new under the sun. Defeat and deportation has been the pattern of the past and will be of the future.</div> <bR> <DIV ALIGN="LEFT"></DIV> <div> <A HREF="id81_m.htm" TITLE="Short Articles">Top of Page</A>                       <A HREF="index.htm" TARGET="_top" TITLE="Future Watch">Home Page</A></div> <bR> </td> </tr></table></body>