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Tom Au, CFA
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In the early 1990s, during the middle of a secular bull market, I began work on "A Modern Approach To Graham and Dodd Investing," that was not particularly suited for the decade of the 1990s, but was ideally suited for the following "Lost Decade" of the 2000s.
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A Modern Approach to Graham and Dodd Investing
  • A Lesson to Obama From Germany's Kurt Schleicher 13 comments
    Jan 6, 2010 9:04 AM
    Memo to the Left: Be careful what you wish for. And this is from someone who is decidedly right of center.

    If America descends into a totalitarian form of government, the origins may well be traced to the current health bill. It is a draconian piece of legislation that FORCES people to buy health insurance, whether they want to or not. As such, it is backed by some pretty strict enforcement measures. To be clear, it is the ENFORCEMENT, rather than the bill itself that we are wary of. Its arrogance is in a (Senate) draft that says that it "can't be changed or repealed." As if this (unwise) Congress knew what we needed for all time.

    A German Chancellor named Kurt Schleicher once thought that the way to govern was through interest group politics, playing one interest group against another within his center-left coalition (sound familiar)? He went from center, to left, and back to center, pleasing no one (except possibly his enemies on the right). In the process, he created a national consensus for concentration of power, and strong government, which he hoped (vainly) to benefit from.

    The year was 1932, about where we are in the modern economic cycle. Schleicher was faced by a severe problem that neither he, nor others, could solve, except by the most drastic methods. But the consensus for "concentration" (of power) he created  was used to great effect by his immediate successor, who "did the job," albeit in the worst way, including doing in Schleicher himself.

    ADOLF HITLER

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  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    Let's not forget that the Fascists in Germany, led by Hitler, fought pitched street battles with the Marxists before defeating the communists in Germany. The Fascists (Nazis) supported the Old Money of Germany (minus the Jewish old money component), traditionalism, white supremacy, the ruling business oligarchy -- in fact supported State Capitalism; the Nazis hated Jews, blacks, Marxists, the ideas of equality, giving power to the proletariat.

     

    It's really very hard to link Hitler with the communists, since he was an avowed hater of communism and put many German communists in concentration camps.

     

    Communists have many totalitarian monsters -- Stalin, Pol Pot, Mao, Fidel -- but Hitler and Obama don't compute as accurate historical references.

     

    If America goes fascist it will be AFTER Obama, when the Roman Empire enthusiasts on the right come back in to power.
    6 Jan 2010, 09:40 AM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6774) | Send Message
     
    Author’s reply » I was not saying that Hitler had anything to do with the Communists.

     

    The point was that the Left had created an environment for concentration of power. Which their enemies used to maximum effect when the pendulum swung the other way, as it inevitably does.

     

    So the operative part of your post was "If America goes fascist it will be AFTER Obama, when the Roman Empire enthusiasts on the right come back in to power. " It's like the kid I knew in high school that tried to curry favor with a teacher by giving him a paddle. And was the first to feel that paddle.

     

    One test for the robustness of Constitutional government is whether or not it can survive the election of "Adolf Hitler." Because one day, such a person WILL get democratically elected, as the original was.

     

    He became dictator afterwards.
    6 Jan 2010, 10:08 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    I agree. I think if Hitler does come to America he will be elected. Probably AFTER a period of Winter and national loss of self-esteem and shame, as Hitler was. Not after a period of business inflation, wealth and male ego expansion.

     

    If our system works correctly, we'll have 2 decades of relatively dogmatic democratic rule followed by 2 decades of relatively dogmatic republican rule...with neither side winning an outright victory.

     

    We need the democrats now because the republicans destroyed the world with their unbalanced 'free market' illusion and criminal corruption...and we will need the republicans again in the future because the democrats will not be able to grow the economy again without the solar power of the male ego.
    6 Jan 2010, 10:14 AM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6774) | Send Message
     
    Author’s reply » I have a theory about a "center of aggreesion" that moves eastward.

     

    In the 18th and 19th century, the center of aggression was France. In the early 20th century, it was Germany. In the late 20th century, it was Russia.

     

    The next center of aggression will be China. After America wages (and wins) a war against China on behalf of the world, then it becomes the new center of aggression.
    6 Jan 2010, 11:09 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    Interesting theory. I just posted an Evans-Pritchard article on the new friendships/political alliance between China and Arabia. This would make a very interesting military alliance as well, with Europe and America declining in power.

     

    I don't know if you read Nostradamus (and/or give him any credence). But some of his interpreters speak of World War III as being started by an alliance of China/Arabia invading Europe. I think America has withdrawn from the world -- and this helps to allow this to happen.

     

    I'm not sure this is any more than a poetic phantasm. But it is an interesting phantasm at least.
    6 Jan 2010, 11:25 AM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6774) | Send Message
     
    Author’s reply » That might be true this "winter." But longer term, China and the Arabs have more to fear from each other (since they are adjacent) than either from Europe or the United States.

     

    In the "New Year" (century, after 2020), I'm looking for a reversal of alliances. The Americas (North and South), will pose as the protectors of "downtrodden" parts of the world like Africa, the Middle East and Russia. The ulterior motive will be to suppress other advanced nations in western Europe and East Asia, which will counterally to form a balance of power.
    6 Jan 2010, 12:25 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    China is in a funny place geographically. Russia can never be her ally. India can't trust her. Southeast Asia is afraid of her.

     

    The only problem for China, in terms of Arabia, is that China has a problem of her own with Muslim fundamentalists in the west. I think any political alliance China creates will be pragmatic and useful to them, but not a long-term marriage.

     

    I agree we're headed in to a period of political re-alliignment on a large scale.
    6 Jan 2010, 12:42 PM Reply Like
  • Tom Au, CFA
    , contributor
    Comments (6774) | Send Message
     
    Author’s reply » "China is in a funny place geographically. Russia can never be her ally. India can't trust her. Southeast Asia is afraid of her. "

     

    That's why China, though a great power, will eventually be isolated, like Wilhelmine Germany during World War I.

     

    But not until everyone wakes up to the above.
    6 Jan 2010, 01:05 PM Reply Like
  • GotLife
    , contributor
    Comments (1336) | Send Message
     
    I consider myself a fiscally conservative independent voter. Hard to be other after growing up in the Democratic controlled city of Chicago where that party has messed up famously for over 70 years without a Republican to be seen. Elsewhere, the state of Illinois is Republican and they have given us the former Republican governor who sits in jail. Now, the former Democrat Guv waits his turn in line...

     

    I usually refrain on commenting on the delusions of both sides since it only gets me negative ratings to from both parties. However, It strains credibility to suggest that the power Democrats, Shumer, Clinton, Paulsen, Geithner, along with their many Democrat contributing Wall Street friends, were begging Congress for more regulation and oversight.
    6 Jan 2010, 02:55 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    I agree. China is surrounded, as Russia and Germany are surrounded. China and Russia at least have big bodies, to absorb potential enemies. I think Germany's small body helps explain the nervousness Germany always exhibits in foreign relations.

     

    I'm not as afraid of China's global ambitions as some on this board. I think they'd love to own the world. I'm not sure they're really eager to extend themselves militarily around the globe. But it's funny how nations respond to political and military voids they discover.
    7 Jan 2010, 04:55 AM Reply Like
  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    I'm quite a bit like you, I think. I'm a Catholic school boy, so I have a moral and fiscal deep-streak of conservatism -- believing that self-denial is not the worst of all possible worlds -- but the son of a socially liberal mother. I tend to be conservative on monetary and foreign policy issues, and liberal on social issues. Sometimes it's like having on foot in the boat and one on the dock.

     

    Perhaps seeing both sides of the equation is what makes the world a mathematical wonder.
    7 Jan 2010, 04:58 AM Reply Like
  • enigmaman
    , contributor
    Comments (2686) | Send Message
     
    "Our strategy is to destroy the enemy from within, to conquer him through himself." - Adolf Hitler
    6 Jan 2010, 01:40 PM Reply Like
  • Michael Clark
    , contributor
    Comments (8858) | Send Message
     
    Good thing it didn't work. Hitler made the enemy stronger. He thought democracies would destroy themselves through their own self-indulgence, but discovered they were capable of self-denial and discipline when their existence was being threatened. That's what makes democracies superior to most systems of tyranny -- having both suppleness and strength. But democracies wear out, and disappear, if they lose their capacity to change and to greet change with a certain form of optimism (rigidity is a sign of death in a society).
    7 Jan 2010, 05:03 AM Reply Like
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