Sunday, April 29, 2012

The Daily Bell: End of an Era

It has been more than two months since I have posted anything at The Daily Bell website.  During this time, I have rarely visited the site even to read an article; however I would occasionally check on a Saturday to see what Anthony Wile has written, or on a Sunday to see if there is an interview of note. 

Yesterday, I did just this. 

Imagine my surprise when I noticed the following statement in place of the comments section:

Effective April 25, 2012, the Daily Bell will discontinue allowing feedback comments. We have left in place the large body of responses posted in the past, as we appreciate the valuable contributions made by some of our readers.

This is an end of an era…at least for me.  It is significant enough that I feel I should memorialize it in some manner.

I don’t remember how I first came across the site – likely it was from a posting at  I remember enjoying the first post I read, and regularly made it a habit to read the daily articles.  Fairly quickly, I began to post comments – many of my more substantial comments are also posted here at this site.  The board was wide open, at the time not even requiring a registration to post a comment.  I found the dialogue in the comments to be as worthwhile as the articles.  This is rare in any such community, and likely unheard of in an open site.  Many participants felt the same. 

In this community, I learned a great deal: from what I read, in thinking through what I wanted to write, and in defending what I had written.  Through the generosity of Anthony Wile, I had found a platform with reasoned and intelligent dialogue, and where I could stretch my ability to reason and communicate.

The host had a very difficult job – to try to find a path that allowed the most free-flowing conversation while still maintaining some sense of integrity in the community.  Certainly, there was the occasional bad apple posting to the board – there was even one full-time troll!  However, there were many wonderful, regular contributors: John Danforth, Lila Rajiva, Leonardo Pisano, NAPpy, and many others.  There was more pleasure in the interaction and feeling of community than in the reading.

I mentioned earlier that I stopped posting over two months ago, and irregularly visited the site in that time.  I cite April 25 as the end of an era at The Daily Bell, but it strikes me as just the concrete date to an abstract idea (at least for me).   I had occasionally stopped interacting in the community before.  Usually it was for the reason that the interaction was difficult in some manner.  Once in a while, I found myself getting too engrossed in some issue, and I felt a break was necessary.  More often it was because of my views about the dialogue, that it had become too abusive in some manner.  This was certainly true two months ago.

Throughout this time I reflected on the likelihood of my continued participation.  I would occasionally read the comments.  While there was still the occasional great post, the discussion was nothing like what it had been in the past.  In fact, many of the participants that made the site a worthwhile visit had long since disappeared.

This is why I view April 25 as the concrete date to an abstract idea.  The comments section some time ago ceased providing the enjoyment to me that it did in the past – not that anyone owed me anything, however the flip side is I didn’t have to participate where I didn’t find the same value, either.  But as of April 25, the comments section has gone away altogether.  While I have no idea why Anthony Wile has made this decision, it seems a fitting end to an era that in some ways passed a long time ago for me.

Although I have not participated in some time, it still is a sad occasion for me.  The Daily Bell offered to me, in some ways, a place for me to cut my teeth.  If not for The Daily Bell, I likely would not have started this blog. There truly was an environment in which ideas outside of the mainstream could be discussed openly, within a community that was willing to explore. 

For this reason, I feel its passing should not go unnoticed by me.

Sunday, April 22, 2012

Backing Japan Into a Corner

Freedom Betrayed, by Herbert Hoover

…as Japan was the direct route by which the United States entered the war it is necessary to examine the major actions during this period which brought about the Japanese attack on Pearl Harbor.  This is the more necessary since not only were the actions of our government not disclosed to the American people at the time, but a generation of school children have grown up who never knew the truth of these actions.

This is how Hoover begins this section covering the time leading up to the Japanese attack on Pearl Harbor.  I would only add that not only were the actions of the government not told to the people at the time, but much of the official government statements regarding this subject was misleading at best and lies at worst.  Additionally, it isn’t just that the school children didn’t know the truth of these actions, but that they were purposely told an inaccurate story.  Sadly, more than one generation of children have been told this story, and believe it with a faith stronger than religion.

Hoover recounts many episodes of Japanese attempts to secure peace or at least a truce, including the replacement of the anti-American Foreign Minister Yosuke Matsuoka with Admiral Teijiro Toyoda, who was pro Anglo Saxon.  Hoover counts this as a signal to Roosevelt and Secretary Hull that more liberal elements in Japan had now come into ascendency.  However, this was lost on the American administration:

…on July 25, 1941, a month after Hitler’s attack upon Stalin, President Roosevelt, suddenly ignoring the Japanese proposals, announced further economic sanctions upon them.

I have previously written about the myth of Pearl Harbor here:

It is a review of the book by George Victor, The Pearl Harbor Myth: Rethinking the Unthinkable.  I will refer to this book further while discussing this section of Freedom Betrayed.

Victor believes a significant change came to Roosevelt regarding his view toward Japan in the summer of 1941.  Roosevelt became suddenly much more aggressive and provocative toward the Japanese.  Victor believes this change was prompted by the German invasion of Russia, and Roosevelt’s desire to draw Japanese attention away from Asia and the Russians and toward the Pacific and Americans.  Whereas prior to the German invasion Russia faced little in terms of risk in the war to date, post the German invasion Russia was fighting a fierce and able enemy.  Why Roosevelt had this concern for Russia’s fate is unknown, at least to me.  Hoover’s statement above is consistent with this idea that Roosevelt suddenly took a different approach during that summer.

Hoover recounts multiple and continual efforts by the Japanese to meet and negotiate with the Americans:

On August 8, 1941, Ambassador Nomura, on instructions from Tokyo, formally proposed to Secretary Hull a meeting of Prime Minister Konoye with President Roosevelt at some place on the American side of the Pacific.  Secretary of War Stimson was against the meeting.

An entry in Ambassador Grew’s diary…dated August 18, 1941, summarized a long discussion between Ambassador Grew and Foreign Minister Toyoda.  As to Konoye’s visit, Toyoda commented that:

…the Premier’s going abroad would have no precedent in Japanese history.

On August 18, Grew telegraphed Washington his recommendation:

The opportunity is here presented…for an act of the highest statesmanship with the possible overcoming thereby of apparently insurmountable obstacles to peace hereafter in the Pacific.

It seems “statesmanship” was not on the minds of the statesmen in Washington.
On August 28, Nomura presented a personal letter from Prime Minister Konoye to President Roosevelt….This communication again urged the President to agree to a meeting….

After a meeting between Ambassador Grew and the Japanese Prime Minister on September 6, Grew informed the Prime Minister that his report to the President on this conversation would be the most important cable of his diplomatic career:

…Prince Konoye, and consequently the Government of Japan, conclusively and wholeheartedly agree with the four principles enunciated by the Secretary of State as a basis for the rehabilitation of relations between the United States and Japan.

The “four principles” touched upon in this proposal, also known as the “four Hull principles", are the four points below:

·         Respect for the territorial integrity and the sovereignty of each and all nations.

·         Support of the principle of non-interference in the internal affairs of other countries.

·         Support of the principle of equality, including equality of commercial opportunity.

·         Non-disturbance of the status quo in the Pacific, however the status quo may be altered by peaceful means.

That Japan agreed “wholeheartedly” with these four principles would have seemed like a strong basis by which to discuss peace, if peace was the desired objective.

In a further report to Hull, Grew reported…

…Prince Konoye feels confident that all problems and questions at issue can be disposed of to our mutual satisfaction during the meeting with the President….

On September 29, Grew sent a dispatch to Roosevelt and Hull.  This was supported by a dispatch from British Ambassador Craigie in Japan.  Hoover describes these dispatches as “a sort of prayer for peace….”

…I earnestly hope that we shall not allow this favorable period to pass….

…Japan is now endeavoring to get out of a very dangerous position in which it has enmeshed itself by pure miscalculation.

…I firmly believe…that if our exploratory conversations can be brought to a head by the proposed meeting between the President and the Prime Minister, substantial hope will be held out…of preventing the Far Eastern situation from moving from bad to worse….

…We are informed…that in the proposed direct negotiations Prince Konoye is in a position to offer to the President far-reaching assurances which could not fail to satisfy us.

British Ambassador to Japan, Robert Craigie, sent a message to Foreign Secretary Eden and Ambassador Halifax, with comments similar to those made by Grew:

…My United States colleague and I consider that Prince Konoye is…sincere in his desire to avert the dangers towards which he now sees the Tripartite Pact and the Axis connection…are rapidly leading Japan. United States colleague and I are firmly of the opinion that on balance this is a chance which it would be…folly to let slip.

In footnotes to this section regarding Japanese attempts at negotiation and reconciliation, Hoover notes:

After the war, records disclosed that the Japanese Navy had urged peace.  In the latter part of July, Admiral Osami Nagano, Chief of Naval General Staff, advised the Emperor that the Japanese must try hard to make peace with the United States, even abandoning the alliance with Germany if necessary.

Postwar documents…show clearly that Konoye had commitments from the Emperor and the Navy that they would back him in any terms he might make to get peace, even to defiance of the Army.

Ambassador Grew made strong statements in regards to the notion that Japan could be brought to her knees via economic sanctions. Grew repudiated this notion:

Grew warned against the illusion in some sectors of the Washington Administration that Japan would not fight:

…even if Japan were faced with an economic catastrophe of the first magnitude, there is no reason whatever to doubt that the Government however reluctantly would with resolution confront such a catastrophe rather than yield to pressure from a foreign country.

By early October, the Japanese were coming to the conclusion that the United States never had any intention of coming to an agreement with Japan.  Hoover states the Japanese were right!  He cites a Stimson note from this time:

I greatly fear that such a conference if actually held would produce concessions which would be highly dangerous to our vitally important relations with China.

By this time, the Japanese government was almost pleading for a meeting, or for a more specific set of conditions under which the Americans might come to terms.  Toyoda had instructed Nomura to ask Hull:

…whether the United States Government would set forth in precise terms the obligations which the United States Government wished the Japanese Government to undertake….

In the subsequent days, Toyoda made further such statements to Grew.  Hull, in his “Memoirs” give little credence to this Japanese overtures, stating “Japan was not prepared to make a general renunciation of aggression.”  Hoover states: “This statement was scarcely the truth in the face of the record of Konoye’s proposals….In any event no harm could come to the United States by exploring their proposals.”  It also flies in the face of the statement that “…Prince Konoye, and consequently the Government of Japan, conclusively and wholeheartedly agree with the four principles enunciated by the Secretary of State as a basis for the rehabilitation of relations between the United States and Japan.”

Once it was clear that Konoye’s efforts failed and there was to be no direct meeting with Roosevelt, the Konoye Cabinet fell.  Hoover describes this as “one of the tragedies of the twentieth century….he was a man dedicated to peace, at any personal sacrifice.”  In a footnote, Hoover comments:

Konoye’s subsequent life was a confirmation of this.  He refused to take part in the war but did agree to undertake a special mission to Moscow in an effort to seek peace….After the war Konoye offered his services in the problems of reconstruction.  But he was accused of being part of the war conspiracy.  He committed suicide rather than bear the humiliation of a trial as a war criminal.

The peacemaker is the one accused of war crimes.  This is the way the peacemaker was treated after the war.

In 1952, Grew reflected on this summer of 1941:

…we believed that Prince Konoye was in a position to carry the country with him in a program of peace….

…Our telegrams seldom brought responses…reporting to our government was like throwing pebbles into a lake at night; we were not permitted to see even the ripples….Obviously I could only assume that our recommendations were not welcome.

Grew’s recommendations likely would have been welcome is some form of peace was desired.  That there was not even one attempt by the administration to secure the high level meeting indicates that peace was not an option for the administration.  Hoover indicates that no word of these negotiations or cables was revealed to the Congress or the American people until years later.

Hoover further outlines steps taken by Japan after the fall of Konoye’s cabinet.  After this, Japan formed a cabinet under General Hideki Tojo as Prime Minister, a cabinet described as composed of militarists with one exception, Foreign Minister Shigenori Togo.  Further attempts at negotiations were made, and rebuffed.  Grew again warned that the Japanese would not be stopped via the sanctions, that “war would not be averted by such a course….”

At this time, the U. S. military leaders also stressed the desire that the Washington Administration exert a restraining hand.  In the conclusion of a memorandum sent to President Roosevelt on November 5, Chief of Staff General Marshall and Chief of Naval Operations Admiral Stark stressed that “No ultimatum be delivered to Japan.”

On November 4 and 5, Washington intercepted secret dispatches from Tokyo to ambassador Nomura.  Japan was proposing new terms to avoid war, in two parts.  In case Proposal “A” was not accepted, Proposal “B” should be presented. 

Proposal “A” was rejected.   In Proposal “B”, Japan offered to agree with the United States not to make any armed advances into regions of Southeastern Asia and the Southern Pacific.  Japan would withdraw its troops from French Indo-China.  Additionally, Japan looked to normalize trade relations with the United States.

Hull found the conditions wholly unacceptable, despite seeming to be not too distant from the “four Hull principles" discussed above .  Certainly these would be unacceptable if war was the desired objective.  These proposals otherwise would seem a basis for discussion if peace was desired.

On November 25, President Roosevelt held a meeting of the War Council. From this meeting came the infamous notes from Secretary Stimson, as submitted to the Pearl Harbor inquiry:

…The question was how we should maneuver them into the position of firing the first shot without allowing too much damage to ourselves….

On November 26, Hull presented a ten-point proposal to the Japanese.  The Japanese considered this an ultimatum.  American military leaders felt the same, as General Marshall notified his area commanders on November 27 that negotiations “appear to be terminated.”

Secretary Hull recalls:

Australian Minister Casey also came to me on November 29 and suggested that Australia would be glad to act as a mediator between the United States and Japan.  I answered that the diplomatic stage was over, and that nothing would come of a move of that kind.

In a stunning (or not) coincidence of timing, on December 6 President Roosevelt sent a telegram to the Emperor asking for peace.  After all of the diplomatic attempts outlined by Hoover in this section, it truly seems a cynical gesture on Roosevelt’s part.  Secretary Hull seems to have agreed:

Hull commented in drafting the President’s message that “its sending will be of doubtful efficacy, except for the purpose of making a record.”

Yes, and an amazingly timely record at that.

Ambassador Grew’s repeated warning that Japan would rather fight against all odds than submit came true on December 7.  Roosevelt asked Congress for a declaration of war with Japan on December 8.

Stimson noted in his diary that “a crisis had come which would unite all our people….”  Just as had been planned and desired, it seems.

Hoover goes in to discuss the Congressional Pearl Harbor inquiries conducted after the war’s conclusion.  The majority opinion basically followed what is commonly held wisdom: the Japanese attack was unprovoked; the Administration did everything possible to avert war with Japan; everyone was surprised that the Japanese struck when they did; the fault was primarily with the local command in Hawaii.

The minority members objected.  Some witnesses were examined under oath, others were not; permission to search files was denied, even if accompanied by Committee counsel; permission to search for missing records was denied – it was denied that any records were missing, although this was subsequently demonstrated not to be the case.

Other revisionist opinions and analysis followed. For example, Admiral Robert Theobald, Commander of the Destroyer Division at Pearl Harbor, later concluded:

Diplomatically, President Roosevelt’s strategy of forcing Japan to war by unremitting…pressure, and by simultaneously holding our fleet in Hawaii as an invitation to a surprise attack, was a complete success.

In 1947, George Morgenstern published an exhaustive study of the attack:

…given the benefit of every doubt…all of these men [the high authorities in Washington] still must answer for much.  With absolute knowledge of war, they refused to communicate that knowledge, clearly, unequivocally, and in time, to the men in the field upon whom the blow would fall….

Pearl Harbor was the first action of the acknowledged war, and the last battle of a secret war upon which the administration had long since embarked….Constitutional processes existed only to be circumvented, until finally, the war making power of Congress was reduced to the act of ratifying an accomplished fact.

Morgenstern brings us back full circle; to the truth that U.S. entrance into World War II might have been technically declared by Congress, but not prior to entry into the war by the U.S.  War was not declared prior to the military and war-like actions taken by the administration prior to the declaration.  The vote by Congress was simply an after-the-fact rubber stamp approval, a certainty to occur once the administration set their plan in motion.

William Chamberlin concludes:

It is scarcely possible, in light of this [Admiral Stark’s testimony regarding President Roosevelt’s October 8, 1941 order to American warships to fire on German ships] and many other known facts, to avoid the conclusion that the Roosevelt Administration sought the war which began at Pearl Harbor.  The steps which made armed conflict inevitable were taken months before the conflict broke out.

George Kennan, a lifelong diplomat, summarizes:

…a policy carefully and realistically aimed at the avoidance of a war with Japan…would certainly have produced a line of action considerably different from that which we actually pursued and would presumably have led to quite different results.

Yes, for instance one of the many Japanese overtures toward peace might have been honestly acted upon.

British historian Captain Russell Grenfell, in his study of the war, concludes:

No reasonably informed person can now believe that Japan made a villainous, unexpected attack on the United States.  An attack was not only fully expected but was actually desired.  It is beyond doubt that President Roosevelt wanted to get his country into war….Japan was meant by the American President to attack the United States.  As Mr. Oliver Lyttelton, then British Minister of Production, said in 1944, “Japan was provoked into attacking America at Pearl Harbour.  It is a travesty of history to say that America was forced into the war.

Finally, I will conclude with a passage from The Pearl Harbor Myth: Rethinking the Unthinkable.  The author, George Victor comes to a conclusion similar to those outlined above.  It should be noted, Victor is a self-described admirer of President Roosevelt: he accepts that this type of behavior is what leaders do.  He is also realistic: we shouldn’t believe that the only manipulative political leaders in the world are someone other than “our” political leaders.  He also doesn’t take the easy path of concluding Roosevelt just made a mistake or was somehow misled.

For Victor, there is little doubt that the administration took steps to provoke Japan and knew when and where Japan would attack. These leaders knew what they were doing and achieved the result that was desired. 

Events are poorly explained by making assumptions that crucial acts by competent, conscientious leaders were capricious, careless, or negligent. And U.S. leaders who figured in the Pearl Harbor disaster were highly competent and conscientious.

After Roosevelt stationed the fleet at Pearl Harbor, Commander McCollum wrote a memo for him, recommending its use as a lure. Roosevelt implemented the recommendation. Admiral Richardson concluded the administration use of the fleet endangered it gravely, and he argued the point over and over with his superiors. When he took measures to protect his fleet, Roosevelt relieved him. Stark then kept Kimmel uninformed of Japan’s plans to attack it at Pearl Harbor. And Marshall kept Short uninformed.

To most Americans, manipulating one’s nation into war is something done by foreign tyrants – not our own leaders. Since 1942 U.S. history has been distorted by the idea that presidents simply do not do what Roosevelt’s enemies said he did.

But of course presidents do, and Roosevelt did.

Friday, April 20, 2012

Did Bernanke Prevent Another Depression?

Did Bernanke Prevent Another Depression?

Yes, likely.  But one that would have run its course within 12- 18 months if left alone to clear by market forces.

He also acknowledged that the supervision by the Fed was inadequate.

Why wasn’t he fired for this?  Perhaps because those he “supervised inadequately” pay him for exactly this level of supervision.

Once the pool of real savings starts stagnating, or worse, declining, the illusory nature of the Fed's policy will be revealed — note that the economy follows the state of the pool of real savings.

This is where we are headed under current central banking and fiscal policies.  Then the real depression will then appear in all of its force.

The actions of Bernanke to revive the economy run contrary to the basic principles of running a company. For instance, in a company of 10 departments, 8 departments are making profits and the other 2 losses. A responsible CEO will shut down or restructure the 2 departments that make losses…

Bernanke’s job is to save the banks.  His job is to save the two departments that are losing money regardless of the cost to the eight departments that are profitable.

The financial sector does not have a life of its own; its only role is to facilitate the real wealth that was generated by the wealth producers.

This was true once upon a time.  It is no longer true.  This truth has gradually eroded with the last remnant disappearing in August 1971.  The financial sector DOES have a life of its own, and it is only for illusion that the premise that banking exists to support the economy still is maintained.  I have commented on this previously here:

For those who don’t want to click through, a brief snippet:

Imagine an industry where raw materials can be produced for free by the producer, cost almost nothing for the middleman to acquire, who can also get his hands on as much of the raw commodity as desired.

Further, there are no physical limitations on the throughput of said raw materials: one worker can process 1,000,000,000 units just as easily as 1,000,000. No physical, mechanical, computing, or energy differences regardless of throughput.

Finally, the members of this industry can exist solely by trading by and between each other. While they also go outside of the industry for revenue streams, this is not necessary. Swaps, derivatives, etc., all are created and can be traded, if not solely within the cartel, certainly primarily within the cartel.