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Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
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  • Media Cover-UP By Charles Payne 0 comments
    Jan 16, 2013 9:33 AM

    (click to enlarge)

    Known as the most famous sea disaster of the nineteenth century, The Wreck of Medusa was captured by Theodore Gericault in 1819. The story of the painting, and the actual event, serve as a cautionary tale for all mankind and, with numerous parables, should resonate loudly with Americans and our current political and economic climate.

    In June 1816, the French ship Medusa set sail with three other ships for the Senegalese port of Saint-Louis. Following the defeat of Napoleon by the Sixth Coalition, France adopted a new constitution that called for a constitutional monarchy and reinstated Louis XVIII after 23 years in exile. After Napoleon's escape from the island of Elba and defeat at Waterloo, the royalists were eager to bring France back to glory, and of course, get credit in the process.

    Imperialism still coursed through the veins of the nation, so the King was eager to take advantage of the offer from Britain, in a show of good faith, to take control of Senegal.

    Louis XVIII dispatched the caravan of ships, including the Medusa, which carried the new governor, politicians, scientists, and settlers. At the helm was 53 year old Captain Hugues Duroy de Chaumereys whose last trip at sea was 25 years earlier-he never commanded a ship. The captain was given the post mostly because he remained loyal to the royalty during Napoleon's rule. In "Wreck of the Medusa" author Jonathon Miles writes of resentment toward the captain:

    "moth-eaten monarchist who should have been put out to pasture long ago"

    In an effort to reach Senegal, First Capitan Chaumereys ignored basic navigational rules, the fears of more experienced sailors and even a passenger who ran aground on the Arguin bank eight years earlier. The Medusa stayed too close to the coastline and wrecked. There may have still been a chance to save the ship through quick action and repair, but instead its weight pulled it deeper into the muck, and as the tide picked up, the ship was doomed. The main reason the ship was too heavy was the refusal of the captain to dump its cannons overboard for fear of angering constituents back in France.

    The captain, politicians, favored passengers, and officers boarded the five life boats.

    17 crew members chose to stay on the ship (only three survived).

    149 crew members, sailors, soldiers, settlers, and out of favor officers were on a make-shift raft.

    As the convoy of lifeboats moved out to sea, the raft was immediately cut from the rope that attached it to the governor's boat. The raft was set adrift in the Atlantic with a few barrels of wine and soggy biscuits. The intense tensions felt on the Medusa between royalists and Bonapartists was magnified with typical fear and angst of the occasion. On the second night, all hell broke out as "professional killers" went on a rampage. By morning, 60 people were dead and only one barrel of wine remained.

    For twelve days the raft became home to murders, suicides, famine, sickness, brutality, and cannibalism.

    Finally on the twelfth day, the Argus, sister ship to Medusa, was seen from the raft. It soon vanished, however, only to be sighted two hours later because of a shift in the current. There were only 15 survivors, and five of them died within days of rescue.

    Media Cover-UP

    The embarrassment from this episode was almost wiped away from history, but two survivors resisted bullying and intimidation to tell the world the truth. The ship's doctor and Alexandre Correard wrote a book that became a best seller in France and England. Moreover, their testimony helped to court marshal the ship's captain who received lenient punishment. While testifying, Correard talked of how he hung human flesh on lines to dry, making it easier to consume. He also admitted to helping toss weaker survivors overboard in an effort to conserve the wine.

    Taken by the book and story, Theodore Gericault went to visit Correard. The artist was the epitome of a tortured soul, which made him perfectly suited to recreate the agony of the wreck and that killing field that was the raft.

    The artist and survivor were both abolitionists (they believed the new governor, Julien Schmaltz, was profiting from illegal slave trading) and hated the monarchy. The painting was never sold, but instead taken throughout France where it was used in rallies and other gatherings. Historians say it played a pivotal role in political thinking assisting with:

    > Abolition of slavery
    > Dissolution of the Monarchy
    > Resistance to Restoration Politics

    The Wreck of America

    Two hundred years after the Medusa ran aground, there are so many parables for America: the political fighting that ripped apart a nation, the elitism that always saves the favored over the masses, and the leadership placement based on connections and loyalty rather than experience and ability. Of course there are even deeper issues mirrored in this story. At the moment, I feel as if America is drifting and the survivors have been set up to destroy each other in the name of survival.

    Our leadership is cruising through it all in sturdy lifeboats.

    A wave of executive orders could move the nation closer to a constitutional monarchy. In the meantime, the economy is weighed down to preserve a welfare society and corporate benefactors. While the weak aren't psychically tossed overboard, their hopes and futures are drowning under waves of fading opportunities and policies that make it more difficult for self-improvement. If not for a fluke shift in the direction of wind, everyone in the raft would have perished. I'm not sure the wind will be so kind as to come to America.

    But humans in general do what they must to survive. The nation is a long way from perishing and has time to toss the cannons of bad politics and fading determination overboard to lift our boat and spread our sails once again. It helps, however, if we all remember the Wreck of the Medusa.
    (click to enlarge)
    The Market

    I like the way stocks finished the day with a minor flourish. There still isn't a clear cut leader but in many ways that's actually good news. The market isn't tied to the fortunes of a single name but instead seems to be benefiting from the "Great Rotation" out of bonds and into stocks. Actually, bond inflows are still positive money coming into the market, and seem to be some of that $3.5 trillion sideline money heretofore cemented for years. Inflows into equities reflect something of a general epiphany.

    The market actually looks like it has the ability to even trade higher despite what happens in Washington. In fact at this point it doesn't even matter if solutions from lawmakers are economically flawed just as long as it puts political showdowns in the rearview mirror. In fact the only thing I'm worried about is a tidal wave of executive orders. The branches of government already belie the wishes of the Founders and it could get worse if President Obama goes through with belligerent suggestions of people like Nancy Pelosi.

    In the meantime the Dow Jones Transportation Average closed at an all-time high yesterday which is tremendous news. As part of the Dow Theory this kind of close gives the broader rally credibility and also hints at more upside.

    (click to enlarge)

    As for this morning, major indices will open lower even though Goldman Sachs GS knocked the cover off the ball. The smart thing has been to be cool, pay attention and then make your move. Let's do that this morning - be cool and wait.
    https://www.wstreet.com/user/register.asp?source=3

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