Papa Trapp's Tears

"We cannot possibly kill terrorists as fast as the State Department can create them."

Rick Maybury

"The Polish town of Bilgoraj, at dawn on the 13th of July, 1942." Thus begins Christopher Browning’s book, "Ordinary Men," illustrating the extraordinary things an ordinary man might do, if nothing stops him. That morning, the men of Germany’s 101st battalion of police reserves had a strange job to do. Their commander, a man affectionately known to the troops as "Papa Trapp," was so disturbed by the nature of their assignment that he stood before his men with tears in his eyes. His choked up and could barely control his voice as he explained to the troops that they were supposed to eliminate the entire Jewish population of the city. Able-bodied men were to be shipped off to labor camps. Women, children and old men… were to be shot.

What a world we live in! Ordinary people do extraordinarily bad things… when they think they have a good reason. Then again, even geniuses and heroes can roast in hell.

Terrorists killed around 3,000 people in their September 11 attack.

The U.S. military has killed about the same number in its counterattack.

Of course, hardly a single one of those killed by U.S. bombs and allies’ bullets had anything to do with the attack on the WTC or Pentagon. A few might have been involved; reports of their deaths were never confirmed. After the bombing, "they were in little pieces," said a military spokesman. But that’s the sort of pantywaist detail that you’re not supposed to worry about… remember, inappropriate comments can get you put in jail. You’re either with us or your against us, says Bush. And any criticism of George W. Bush or his War Against Terrorism (WAT) only aids the enemy, says Ashcroft.

And so, we end the week, where we began it – far from home… writing about things about which we know nothing and care even less: foreign policy. It’s not that we aren’t interested in killing people. There are people we’d like to be rid of from time to time. But even though they may get even more disagreeable every day… not once have we regretted not killing them when we had the chance. Some things are just not worth doing – even when it seems like a good idea.

Besides, here at the Daily Reckoning, we have very tender feelings for our fellow man… and an overwhelming eagerness to avoid unnecessary suffering – especially our own.

We just can’t seem to get worked up by the language of foreign policy. The WAT, for example, makes no sense to us. What’s wrong with terror? It depends on who’s using it… and for what. Wouldn’t it be nice, for example, if some terror had been used against the people who put together the WTC attack? Instead, they seem to have lived to strike another day!

But America’s geopolitical genius, George W. Bush, knows what he’s doing… at least according to Jack Wheeler. "His foreign policy goes far beyond waging a War on Terrorism," writes Wheeler, "and foresees a wholesale Global Realignment to protect America’s interests."

Again, the language stumps us. We can imagine the interests of Americans… but America’s interests are a mystery. Americans just want to be left alone to go about their business without worrying about their safety. Does the WAT help them? We don’t know.

And a ‘global realignment?’ The advantages of a front-tire realignment are obvious… but realigning the globe sounds like a project for God almighty. Who but a genius or a hero would undertake it?

We may not know anything about foreign policy, but we have a well-developed sense of absurdity. The WAT has been such a big hit with the public, the patsies want more of it. When will they have enough? Only when they’ve had too much, is our guess. Bull markets and geopolitical geniuses – if they are not checked by circumstances – become more and more absurd… until they end in ruin.

The soldiers of the 101st police battalion, were not impressionable young fools nor Nazi zealots, Browning explains, they were older men, with families of their own. The police battalions were not front-line fighters. They were made up of mature men – often made up of men who enlisted in the police brigades so that they might do the work of homeland security and avoid combat far from their homes.

Delivering their orders, Papa Trapp "then made his men an extraordinary proposition," Browning reports, "if there were any of the older men who didn’t feel that they were capable of taking part in the mission… they could be excused from duty."

Trapp then resorted to reason. He reminded himself and his soldiers of the logic of their mission. The Jews represented a threat to German troops. They had pillaged. They supported terrorists!

Hitler had promised to turn his conquests in the East into a "Garden of Eden." He was happy, he explained, that Stalin had begun a terrorist campaign against German forces… using partisans fighters to cause trouble behind the lines. "That gives us a reason to exterminate all those who are hostile to us," said the Fuhrer. "Naturally, this vast country must be pacified as soon as possible, which is what we are doing by shooting anyone who dares even to look at us the wrong way."

This was a war against bolshevism, the Nazis explained. Jews were to be liquidated, not merely because they were Jews, but because they were Bolsheviks.

It all must have made sense to the ordinary men who carried out the systematic murders.

But not everyone went along. At least one man did refuse to take part. A lieutenant from Hamburg, Heinz Bachmann, said he would have nothing to do with murdering women and children. He was re-assigned.

Trapp, himself, did what he considered his duty. But he was shaken by it, and avoided the scene of the killing. Witnesses reported seeing him crying like a child. One heard him remark to himself: "Oh, God, why was I given this dirty assignment." Another heard him say: "If this isn’t avenged on Earth… may God have pity on us Germans."

The killing of the Polish Jews was partially avenged on Earth. What torment God will add is up to Him.

Your humble correspondent…

Bill Bonner
March 22, 2002 — Paris, France

What is not to like about this economy? Alan Greenspan says the recession is over – the mildest recession since they began carefully watching these things. In the last quarter, productivity jumped 5.2% – according to the number crunchers at the Department of Labored Statistics. And now the strategists are calling for 5% GDP growth in this quarter. Homes are selling like hot cakes. Cars are zipping off the lots so fast – it is as if the security guards had all walked out! And so… maybe it is time to pull our chair up to the table and eat a big piece of humble pie.


Who knows what direction this economy will go? But there’s no point in worrying about it. What we do know is that profits have collapsed, savings have disappeared, consumers and businesses are deeply in debt and stocks are at higher prices than they’ve ever been. A new boom? Maybe. But it could only happen by piling on yet more debt… and taking stocks to even more dangerous levels. Like a Pakistani ferry… crowded with sweaty passengers and leaking like the State Department. It may make it out of the harbor… but you don’t want to be aboard.

But what if it makes it to the opposite shore? What if the Dow goes up 1,000 points? Oh… the regrets; you missed the boat! Forget about it. Some risks are not worth taking…

This market has been a heartbreaker for the last five years. Alan Newman calculated the effect of ‘dollar cost averaging’ on Dow stocks at the rate of $500 per month since January 1, 1997. Guess how much profit you would have made?

"Come on… guess," writes Gary North, mischievously, citing Newman’s numbers. "If you have invested $30,000 – $500 a month, from 1/1/97 to 2/27/2002… 62 months – your portfolio would be up a grand total of … … $162.28. Don’t spend it all in one place."

So far, like battered wives, long-suffering investors just keep coming back for more. Many more hearts will be broken, we predict, before they finally give up.

Eric, what did Wall Street do yesterday? Were hearts broken?


Eric Fry on Wall Street…

– The stock market survived a couple of wicked body blows yesterday, but still managed to stay on its feet. The Dow stumbled 147 points around midday and looked very much in need of a standing eight-count. But by the end of the contest, the market managed a split decision: the Dow fell 21 points to 10,479, while the Nasdaq rallied about 2% to 1,868.

– The one-two punch that rocked the market began with the continuing sell-off in General Electric shares (I hope it wasn’t something WE said). Our unflattering remarks about the industrial powerhouse in Wednesday’s edition of the Daily Reckoning probably can’t claim ALL the credit for the sell-off. Rather, as widely reported, fund manager Bill Gross’ harsh comments about GE sent the stock spiraling lower on Wednesday. The selling continued on Thursday, as GE shares tumbled 6% over the two-day stretch. That may not seem like much, but it’s equal to about $24 billion.

– Next up, the Philadelphia Fed dealt the market another blow by announcing that its business index slid to 11.4 in March from 16 in February. Naturally, most economists were expecting a gain. The forward-looking new orders sub-index also declined.

– This market is showing that it can "take a punch." Even so, corporate insiders aren’t waiting around to see how much longer it can remain standing. The insiders are selling.

– "Corporate investors remain extremely bearish," reports Liquidity Trim Tabs. "At the same time, virtually all sell- side stock market strategists have become aggressively bullish." Trim Tabs estimates that insider selling soared to $12 billion in February from an already-substantial $7.6 billion in January.

– Isn’t it interesting that corporate insiders have become increasingly bearish, even as the economy is theoretically recovering? Aren’t these the same folks who occupy a front row seat from which to observe the robust recovery that Wall Street analysts keep telling us about.

– Certainly, we at the Daily Reckoning would not blame the insiders for salting away some cash while they can. Stocks are hardly cheap, even if one assumes that reported earnings are the real deal. (For the record, we don’t).

– "Complete obfuscation and chaos is the new reality in corporate profit reporting in the United States," says Dr. Kurt Richebacher. "Putting it bluntly, the trumpeted ‘profit miracle’ of the New Economy was a mirage… It was a hoax in which the whole system participated: corporate management, auditors, market analysts and the media. Failure of the predicted profit miracle to materialize led to using every dirty accounting device at their disposal to boost reported profits and equity value.

– "What actually happened," Richebacher continues, "was that corporations and investors simply became addicted to ridiculous, unattainable profit forecasts and expectations, and by no means only in the high-tech sector. It spread across the corporate landscape to the firms of the Old Economy, all of them desperate for the valuable Wall Street emblem of ‘growth stock,’ qualifying them for sky-high market valuation."

– Somewhat incredibly, no matter how many skeptical market observers highlight corporate America’s creative – or disingenuous – accounting practices, investors continue to accept as gospel truth whatever earnings number a company chooses to report. These same gullible folks continue diving into the stock market as if it were a clear-blue glacial lake, instead of a murky, two-foot-deep mud-hole.

– "It is said," Richebacher continues, "that millions of investors are angry and disillusioned about the financial community that has so grossly defrauded them. [But] looking at sky-high P/E ratios, we have the impression that complacency and hope still grossly outweigh worry. Considering the vast scale of profit cheating," Richebacher winds up, "the reaction of the markets has been amazingly docile."

– Investors are like parents who, upon learning that their son has shot the neighbor’s dog, respond by denying Junior ice cream for an evening… unless, that is, he promises not to do it again.

– "My fear," writes Bill Gross in his now-infamous column, "is that this newborn faux hostility in the investment attitudes of lenders and stockholders will go the way of many other short-term jiggles in the inevitable march of capitalistic excess. I sense we are not yet ‘mad as hell’ nor are we to the point of ‘not taking it anymore.’ But we should be. It’s our money."


Back in Paris… in the springtime…

*** A "new coup for Lou"… the coup de grace. Rukeyser has been taken off Maryland Public Television’s Wall Street Week… so the show can be "retooled" following a deal with FORTUNE magazine.

*** Since I’m in the publishing business, I got an invitation to the opening night at the Paris Book Show. What a spectacle! Tout Paris was there – the ‘beau monde’ dressed in evening gowns. Thousands of people crowded into one of the vast exhibition halls at the Porte de Versailles… champagne flowed like bilge water… but… what’s this? In the middle of the hall a group of people dressed in garbage bags were blowing whistles… drowning out the string quartet, playing by the bar. They were employees of one of the city’s major booksellers – demonstrating for higher wages. Not enough that they work only 35 hours per week; they still want more money.

"Firing them would be too generous," said Elizabeth, anticipating the Easter season. "Crucifixion would be more appropriate."

But in France, firing is as unlikely as crucifying. And in the socialist milieu of the publishing world… even ejecting the demonstrators would have been a no-no. The whistling continued all night long.

*** Earlier in the week, we went to see another Feydeau play, "The Turkey." I had not read the play… but I could have guessed the theme – infidelity. There seems to be no other motif. In America, too, adultery offers plenty of theatrical possibilities – usually dark and repulsive psychological dramas. But here in Paris, unfaithful wives and cuckold husbands are subjects of light-hearted farce… with doors opening suddenly and couples discovered in flagrante delicto – to the great amusement of the audience.

*** Tonight is Edward’s turn to take center stage. The 8-year-old is supposed to recite a poem before an audience of parents and teachers. This morning, he did not seem particularly concerned about his stage debut. But as he hemmed and hawed and stared at his shoes in this morning’s practice session… his parents began to get nervous.