Daily Investment Interpretations

May 14, 2009

2009-5-14 (Mid-Afternoon):  The markets gradually worked their way higher all day, with a buying spree in the closing minutes. The gains ranged from 1½ % for the NASDAQ Composite to roughly ½ % for the Dow. The NASDAQ Composite moved up 25.02 points (1.5%), the Dow advanced 46.43 points (0.56%) to 8,331.32, and the S&P 500 gained 9.13 points (1.03%) to close at 883.92. Oil dropped $0.60 to $58.51. Gold added $3 to close at $928, while the VIX dropped 2.29 to 31.4.
    'Sell in May' reveals flipside, Stocks may be losing steam
    In the meantime, the financial news has suddenly gone from bubbly to dire. If I didn't know better, I might think that billionaire newsmen like Rupert Murdoch, who now owns the Wall Street Journal and Marketwatch, are manipulating the stock market by manipulating the news.... which brings me to the subject of conspiracy theories. (There's a large contingent of savvy investors who believe that the U. S. government is manipulating the U. S. stock market as part of our government's efforts to re-inflate the economy.)
Conspiracy Theories
    In my view, politics is one big stew-kettle of what you might call "conspiracies". Back-room deals and trades would seem to me to be necessary to reconcile local needs with national needs. Also, compromises and tit-for-tat deals are the very currency of Congressional politics. And in a sense, I suppose you could call these everyday realities of political life "conspiracies". However, I've come across several publicly apparent "conspiracies" that are easily verified with searches, and yet, are unknown to virtually to everyone I've asked about them. I've put quotes around "conspiracies" because I'm not sure that you can properly call activities by organized lobbies "conspiracies", especially when the news is published if you know where to look. Still, some of the most crucial happenings since World War II seem to me to have taken place below the U. S. public's radar.
    As a physicist, I subscribe to Carl Sagan's dictum that "Extraordinary claims require extraordinary proofs." My purpose in presenting what follows is to support the idea that "conspiracies" do happen, although from my perspective, the evidence for stock market manipulation is nebulous.
    At the beginning of World War II, Stalin thought that the U. S. S. R. should stay out of the war and let the Western powers eat each other up, but Germany's unprovoked invasion of the U. S. S. R. became Stalin's rude awakening. After the war, the U. S. S. R. grabbed off and colonized Eastern Europe. Then China, North Korea, and Cuba went communist, with France and Italy teetering on the edge. The long-awaited revolution of the proletariat seemed to be coming to fruition. Europe was in rags and tatters, and vulnerable to communist ideology, or communist political and military muscle. The poverty-stricken countries of South America seemed a tinderbox waiting only for a spark. The United States became the one remaining major power qualified to stem the tide.
    Thus began the Cold war. 
    Throughout the Cold War, there were über-hawks such as General Curtis Lemay, who advocated a pre-emptive nuclear war... a sneak attack... against the Soviet Union. 
    Several of our presidents, such as JFK and Richard Nixon, took hair-raising gambles, risking an all-out nuclear exchange in secret moves of which we, the public, were unaware. (These maneuvers were top-secret until the 1995 Freedom of Information Act forced their declassification and release.) For example, a year before the Cuban Missile Crisis (Cuban Missile Crisis - Wikipedia, the free encyclopedia), President Kennedy authorized the top secret installation of 15 thermonuclear Intermediate-Range Ballistic Missiles on Turkish soil with the capability of hitting Moscow, Stalingrad, and other Soviet cities. Kruschchev's attempt to place Soviet IRBM's in Cuba was a direct response to President Kennedy's gambit of locating thermonuclear missiles in Turkey. Officially, Kruschchev blinked, but unofficially, Kennedy agreed to withdraw the U. S. Thor missiles from Turkey... i. e., it was we who blinked.
    Fidel Castro wanted the U. S. S. R. to engage in an all-out nuclear war with the U. S. even though he must have known that Cuba would be fried. (Of course, these top dogs could be confidant of being safely in the air, or dug into deep bunkers when the balloon went up.)
    For President Nixon, run a search on "Operation Giant Lance". The Wired news article, Wired: The Nukes of October, gives a readable presentation of this "highly secretive military operation by the United States during the Cold War."
    With the internal collapse of the Soviet Union in 1989, the United States emerged as the sole remaining superpower. A gradual military drawdown began, leading to a budgetary "peace dividend". However, not everyone was happy with the United States beating its swords into plowshares. If you were the president of a major U.S. military corporation and your multi-million dollar annual bonus depended upon your bringing in ever more money for the company, you might have some incentives for keeping the money flowing. Furthermore, if your business were military weapons, you might honestly see everything in terms of military solutions. ("If your only tool is a hammer, everything looks like a nail.")
    In the meantime, a group of hawkish ex-liberals who called themselves "neo-conservatives" had gained influence in the Department of Defense and in other branches of government. "As they did in the 1970s, the neoconservatives were instrumental in the late 1990s in helping to fuse diverse elements of the right into a unified force based on a new agenda of U.S. supremacy." They included Paul Wolfowitz, I. Lewis ("Scooter") Libby, Norman Podhoretz, Richard Perle, William Kristol, Elliot Abrams (Norman Podhoretz son-in-law), and Douglas Feith, Rupert Murdoch, Karl Rove, and Jeanne Kirkpatrick
    This neo-conservative agenda is embodied in Paul Wolfowitz' and I. Lewis "Scooter" Libby's Defense Policy Guidance draft prepared in 1992 for Defense Secretary Dick Cheney. (I have just read that other members of the first Bush administration nicknamed Defense Secretary Dick Cheney "Genghis Khan".) This document set forth a plan for imposing a "Pax Americana" for the 21st century in which U. S. world dominance would be institutionalized. The wording in the plan that raised the hackles of leading Bush, the Elder, Republicans was phraseology that the U. S. would never again permit any other country or group of countries (viz.: the European Union?) to challenge the U. S. politically, economically, or militarily. We would knock them down before they got too big. A copy of this draft plan was leaked to the New York Times (probably by an appalled staffer). When Senator Joe Biden heard about it, he apparently  joined forces with National Security Advisor Brent Scowcroft and White House Chief of Staff James Baker in persuading Secretary Cheney to withdraw the plan. Their concern was apparently the same as mine: this document would openly and brazenly throw down the gauntlet to the other nations of the world, including the other nuclear superpower, Russia. Even if the U. S. privately endorsed such a policy, it seemed highly hubristic and imprudent to me to announce to the world that we're morally superior, and that we intend to control the world (not to mention being hugely out of touch with reality). Apparently, his fellow administrators saw it in a similar light.
The Babylonian captivity of the Republican Party?
    Nevertheless, by 2000, the neo-conservatives had gained a controlling influence within the Republican party. In the fall of 2000, they released a plan that is available on the web under the auspices of the Project for the New American Century. It endorses pre-emptive wars like the Roman policy of "divisa et impera" and the British doctrine of "balance of powers". The United States would adopt the strategies of the Roman and British Empires, and would function as a de facto empire... something we'd more or less been doing throughout the Cold War.
    "Nebraska Republican U.S. Senator Chuck Hagel, who has been critical of the Bush Administration's adoption of neoconservative ideology in his book America: Our Next Chapter, writes, 'So why did we invade Iraq? I believe it was the triumph of the so-called neo-conservative ideology, as well as Bush administration arrogance and incompetence that took America into this war of choice ... They obviously made a convincing case to a president with very limited national security and foreign policy experience, who keenly felt the burden of leading the nation in the wake of the deadliest terrorist attack ever on American soil.'"
    The point I'm trying to make isn't whether or not the neo-conservative agenda is right or wrong, but the fact that most Americans don't know what's happened. And yet, this idea of invading countries because we think they might pose a threat was the basis for the Bush Doctrine, enunciated in President Bush' 2002 State-of-the- Union address to Congress. and it lay behind our invasion of Iraq and our war-like stance vis-a-vis Iran and Syria. 
    How much else is being done in our names of which we're unaware? And why  haven't U. S. media made everyone aware of what has been happening behind the scenes?
    
The North American Forums
    There have been several North American Forums attended by leading officials from the United States, Canada, and Mexico. What's noteworthy about them is (1) the political celebrities who have attended them and (2) the fact that efforts have been made to keep everything about them secret. The keynote speaker at the September 12 to September 14, 2006, Second North American Forum held at the Banff Springs Hotel was the commanding general in Baghdad at the time, General Peter Pace, replacing Defense Secretary Donald Rumsfeld. Defense Secretary Robert Gates was a speaker at the 2008 North American Forum held in Washington, D. C., June 16, 2008.
    These North American Forums may be the greatest thing since fuzzy tennis balls. The problem is that it's happening in secrecy and below the public radar, and it again raises questions, at least in my mind, about the media.
    Another blatantly obvious happening is the way U. S. children are being taught Spanish on the sly. Since the entire Western hemisphere south of the Rio Grande is Spanish-speaking, this may be another good idea. The problem is that I've arrived at this through observation. I've never seen it mentioned in print.
    I think one has to be very careful with conspiracy theories. I know only one side of these questions. It may be that if I knew the other side, I would think differently about them. Still, I do have questions regarding the lack of publicity and public attention they've received.

2009-5-14 (Mid-Afternoon):  The markets seem to want to go up, but I think more time is required to determine whether this is a trend or just a bounce on the way down. If the indices rise 2% or more, then maybe it will be time to buy on this dip, but if not, it's probably smart to wait to see what tomorrow brings.
    Although Todd Harrison has predicted a "W-shaped market for 2009, I incorrectly described it as an "M"-shaped profile last night, thinking that an "M"-shaped market pattern better fit the case. But it doesn't. Todd has been interviewed on TV this morning (Toddo On TV: The Storm Before a Calm?) and is calling for a decline from the current "widow's peak" to a retest of the March lows, followed by a year-end rally. (What happens after the rally isn't mentioned.) He has updated his views in The Moment of Truth. and Randoms: Respect, Don't Defer.
    Paul Krugman has been traveling in Asia for the past week and hasn't posted anything since May 5th. 
    This article, "The End of American Financial Dominance?", discusses, among other things, American economist Mancur Olson's speculation (The Rise and Decline of Nations) that over time, a "waxy buildup" of special interest groups in Western nations (U. S., U. K., etc.) gain the influence necessary to feather their own nests at the expense of their electorates. In the United States, this includes the military-industrial complex, and the "finance-government complex" (dubbed "Government Sachs" by its critics). The author speculates that this might well unhorse the dollar as the world's reserve currency and United States as the world's most influential neighbor.