The Point of No Return

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Barely two months before the opening of the Nuremberg trials, British prime minister Clement Attlee wrote to President Truman about the “displaced persons”—the DPs—of numerous nationalities stranded in the fallen Reich. Attlee explained that British forces would continue to “avoid treating [the Jewish DPs] on a racial basis. . . . One must remember that within these camps were people from almost every race in Europe and there appears to have been very little difference in the amount of torture and treatment they had to undergo.”

As David Nasaw devastatingly illustrates in “The Last Million,” there was widespread reluctance among the victorious Allies to confront the true nature of the Holocaust, so it’s just possible that Attlee (no anti-Semite but no Zionist either) believed what he wrote. Whatever his motive, he undoubtedly didn’t want to see “the Jews [placed] in a special racial category at the head of the queue.” Much of the reason was Palestine, then under British control: “We have the Arabs to consider as well.” Attlee’s worry, evident in the letter if never explicitly spelled out, was that defining the Jewish DPs as a distinct group, unable to return “home,” would bolster the argument that they be permitted to immigrate to Palestine, in which, and about which, tensions were running dangerously high. Attlee warned that “the whole Middle East” could be “set aflame.”

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Lockdown Lunacies

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COVID-19 is again advancing in Europe, “despite” (I will get to those scare quotes later) earlier lockdowns.

CNBC (from Monday):

European countries are likely to impose more restrictions on public life in the coming days as the number of daily coronavirus infections rises rapidly, analysts said.

France reported 10,569 new cases Sunday (down from more than 13,000 new cases reported the day before), Reuters reported, while the U.K. reported almost 4,000 new cases on Sunday. Italy saw close to 1,000 new infections and Germany reported 1,345 new cases Sunday, and a further 922 cases Monday. Spain has yet to post its weekend case tallies, but reported almost 4,700 new cases Friday.

On Monday, German Health Minister Jens Spahn said rising coronavirus infection numbers in countries like France, Austria and the Netherlands were “worrying” and that Germany would sooner or later import cases from there, Reuters reported. He added that countries like Spain had infection dynamics “that are likely out of control.”

“Despite” because the initial lockdowns were never going to suppress the virus, not in the longer term.

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Markets: Remember, Remember the Third of November

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Writing in the Financial Times on September 1, Robin Wrigglesworth reported that markets are signaling unease about what may lie ahead in the first week of November. It is not so much the election that’s causing agita as the fear that Election Night might not resolve the result. Investors do not appreciate uncertainty, and if everything is still unresolved by, say, late the next day, the only certainty will be uncertainty.

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True lies

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Curzio Malaparte, born Kurt Erich Suckert (1898–1957), was a fabulist, a trickster, and a master of obfuscation, talents that served him well on the page and, as he slid away from his fascist past, in later life too. It is thus not inappropriate that the first English-language edition of the “diary”—I’ll get to those scare quotes in due course—of his time in early post-war Paris draws on two differing predecessors.1 The first (Diario di uno straniero a Parigi) came out in Italy in 1966, the second in France the following year. Stephen Twilley, who has now translated the Diary into English, notes that the typewritten manuscript delivered to the Italian publisher by Malaparte’s family was in chaos. The French editors complemented chaos with carelessness and—when Malaparte was less than respectful about some members of France’s cultural establishment—censorship.

Twilley thinks that “there must be at least two versions of more than half of the Diary.” With no access to primary sources, his version is a “sort of hybrid.” It involved reconciling (and sometimes supplementing or correcting) the two earlier editions, neither of which is “particularly authoritative.”

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The Dangers of ‘Stakeholder Capitalism’

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Writing in the Wall Street Journal last week, Andy Puzder took aim at Joe Biden’s embrace of “stakeholder capitalism,” the doctrine now being touted as a replacement for the quaint notion that a company should be run for the benefit of those — the shareholders — who own it. Stakeholder capitalism is a modish name for what is just another expression of corporatism, an old ideology with a sometimes sinister past that, because of the power it gives to the unelected and the unaccountable, will never fall far out of style. That, in this case, it involves playing around with other people’s money only adds to its sleazy appeal.

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Good Fences, Bad Neighbor

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In the aftermath of Russia’s takeover of Crimea, there were widespread fears that the Baltic states, notwithstanding their membership in NATO, might be next. As Aliide Naylor relates in The Shadow in the East, those fears have since eased, but extreme vulnerability (Latvia, Lithuania, and Estonia could be overrun in days) and constant low- and not-so-low-level Russian aggression against the Baltic trio continue to keep nerves on edge.

Russia’s assault on Ukraine has forced NATO to relearn the power of symbolism. Several thousand troops from other NATO allies are now present in the Baltic states at any time, a reminder that the guarantee contained in Article 5 of the NATO treaty (an attack on one NATO country is to be treated as an attack on all) also extends to the alliance’s northeastern marches. Their numbers are tiny: no more, Naylor explains, than “a tripwire, unable to resist Russia’s military might in the event of a full-scale invasion — but thus far they have served as an effective deterrent.”

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The EU’s Slow, Sneaky Attempt to Engineer a Fiscal Union

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There is a certain disreputable genius to how EU summits (or, more accurately, meetings of the EU’s Council, the body made up of the leaders of each member-state, the EU’s president, and its top bureaucrat) are organized. Typically arranged to last just a day or two, the tight timing ensures that talks will run late — so late, in fact, that those participating might agree to anything to grab some sleep. As the EU’s overall direction is, with pauses, forever forward, these long nights can have a way of ending up with another step or more being taken on the path to ever closer union.

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A Benefit Worth (Largely) Preserving

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From CNBC:

Republicans are considering extending the enhanced unemployment insurance benefit at a dramatically reduced level of $400 per month, or $100 a week, through the rest of the year, sources told CNBC.

Congress passed a $600 per week, or $2,400 a month, boost to jobless benefits in March to deal with a wave of unemployment unseen in decades as states shut down their economies to combat the coronavirus pandemic. The policy expires at the end of July as the U.S. unemployment rate stands above 11%, despite two strong months of job growth.

The GOP, which has not made a final decision on how it will craft unemployment insurance in a bill set to be released this week, previously discussed extending the benefit at an additional $200 per week instead of $600. Democrats want to make the $600 per week sum available at least until next year.

There are good arguments to be made for reducing the enhanced benefit from its current level, but a reduction to $100 (or even $200) seems to me like too great a cut too soon.

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High Stakes

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In a CNBC interview, former Goldman Sachs Asset Management Chairman Jim O’Neill became the latest figure to use COVID-19 as a recruiting sergeant for a preferred cause — in O’Neill’s case, “stakeholder capitalism.”

CNBC:

“People that run really successful businesses have to be thinking about something a bit more than just an outright obsession with maximization of profit and playing their own role in trying to deal with some societal challenges,” he said.

O’Neill, who is currently Chair of Chatham House, said companies could be moving into a new era of “stakeholder capitalism,” where they must act beyond the interests of their shareholders.

O’Neill [also] said politicians could find “huge political appeal” among younger voters by requiring companies to emphasize environmental issues.

O’Neill is hardly the only person to embrace stakeholder capitalism. To take just a few examples, it has been touted with dreary predictability by the Davos crowd but also by the Business Roundtable, an organization that should know better. Making matters even worse, the businesspeople pushing the stakeholder agenda include not only corporate managers (increasingly indifferent to the obligation they owe the shareholders of the companies for which they work), but investment managers, who once believed that it was their duty to grow the money entrusted to them.

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Sweet on Short

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Selling a security short has rarely been a way to make friends, whether with investors, companies, regulators, or even governments. If the Fed’s job included (in more disciplined times) taking “away the punch bowl just as the party gets going,” the short seller was and is the person who tells partygoers that the punch they are so enjoying is, in fact, poison. No one wants to hear that.

Bubbles, on the other hand, whether in a stock, sector or market, are popular. And the bigger the bubble, the more popular it becomes: “Everyone” is making money, “everyone” is spending money, and governments take their slice. The boost to revenues that comes from taxing the higher salaries, the higher capital gains and the higher profits that a bubble generates can make a spendthrift government look frugal, and a careless government look wise. To be told that all this is based on a mirage, well . . .

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