Running for the Door … German Giants Flee Wall Street … With expensive accounting rules, an increased threat of litigation and hundreds of millions of dollars in fines for some firms, the once prestigious New York Stock Exchange and other American markets have become unattractive to Germany's biggest companies. Daimler and Deutsche Telekom have fled this year and the few remaining are likely to follow. On June 18, the symbol of the German company Deutsche Telekom, DT, made its last run across the ticker at the New York Stock Exchange. Europe's largest telecom company left the world's biggest and most recognizable exchange after nearly 14 years of trading. The company is currently in the process of delisting from all foreign exchanges and will soon only be traded on its home stock market in Frankfurt. Deutsche Telekom is just the latest German blue chip to say goodbye to the American capital market. In an emblematic departure, Daimler, the first German firm to be listed in New York in 1993, officially quit trading on the NYSE on June 4, saying that it no longer needed a presence in New York to attract international investors. And Munich-based insurance and financial services giant Allianz abandoned the NYSE last fall. – Der Spiegel
Dominant Social Theme: The American system of capitalism is failing.
Free-Market Analysis: When is a meme not a meme? Maybe when it is true. The power elite creates memes – global warming is an example – that are untrue but nonetheless are intended to generate fear and confusion. It is the construction of this emotion that results in people giving up additional wealth and power to the elite's increasingly global authoritarian architecture. But sometimes the dominant social themes of the elite correspond to reality. The difference has to do with what is manmade and what is market-based.
Global warming, asteroid strikes, even flu scares are not the best kind of promotions from a power elite standpoint. The very best promotions are those that are entirely manmade or at least subject to human intervention. The dominant social theme we are examining today is a case in point. From our humble perspective the Anglo-American elite has been engaged in ruining domestic American and British markets for years. The idea is apparently to locate global markets in Europe as part of a larger internationalism.
To do this, a meme has been introduced that has been amplified, of course, by the mainstream media. The theme is basically that both America and Britain are over-regulated and that neither Wall Street nor the City are good places to transact business anymore. The beauty of this theme, in fact, is that it is entirely manufactured and thus controllable.
There is nothing much the powers-that-be can do about the weather other than to create phony statistics to "prove" that the world is warming. But when it comes to certain themes, the elite is in control of the process. In this case, if the idea is to insist that America and Britain – the US especially – are over-regulated, it is not hard to provide the prescribed reality. The legislative process simply has to be pointed in that direction. And that is what is currently happening.
Of course, just because a dominant social theme happens to be "real" does not mean that it is either efficient or true in a deeper sense. If we peel back the promotion we are examining here, today, we find the underlying theme goes something like this: "Regulation is good but too much of a good thing is bad. We need to find a balance between regulation and the free-market."
This is very clever. In creating a new reality, the powers-that-be have also managed to reinforce an old one. Libertarians will argue that regulation itself is never effective for it cannot lead to anything other than a distortion of the market, which is a price fix. And price fixes don't work. They create queues, scarcity or both. And in doing so, they introduce a range of other factors and other sorts of supplies. Often they create gray or black markets that are less efficient than unregulated markets.
Ultimately, as we have written in the past, regulation, were it to be ever effective, would follow along the lines of natural law. It would reinforce, therefore, people's natural inclinations and desires. The laws or regs would still be price-fixes and thus ultimately destructive to civil society. But perhaps the effects would not be quite so harmful or at least immediately pernicious.
While it is clear that regulations and laws, logically, cannot work as planned, the powers-that-be are addicted to regulatory democracy for purposes of control. The arc of American markets in this regard is a cautionary tale. It begins after the Civil War when modern markets began to take root. The New York Stock exchange inexplicably went on a centralizing spree, buying up perhaps a dozen stock-exchanges in New York City and merging them into one exchange. This allowed efficiencies of scale and further centralization of order flow that helped result in the great railroad stock euphorias of the late 1800s. These euphorias saw the advent of widespread stock manipulation, etc. that continues to this day.
The panic of 1907 in our view was a manipulated one, intended to generate public support for an American central bank that duly arrived in 1913. The Federal Reserve promptly conspired with Britain to raise the pound back to its rightful place after the devaluation of the First World War. To do this, American central bankers began to debase the currency, printing far more money than was actually allowable, given the agreed-upon ratio between the dollar and US gold supplies. After the crash, President Franklin Delano Roosevelt passed laws enabling the confiscation of gold and initiated bank holidays to ensure that people did not trade their dollars for gold and discover the subterfuge. All this is secret history.
The great crash of 1929 created the pretext to begin to regulate and nationalize securities markets. "Public" markets were now created that were different from "private" unregulated markets. One of the hallmarks of public markets was public reporting. Previously, if a company sought out a public accounting from a respected accounting firm, the very act of providing financial documents to the general public was an admirable and trustworthy one. But once such an element became part of law and was enshrined as a regulatory element, the trust factor was abrogated and "public reporting" became commoditized. The game changed. Reports were written to be purposefully obfuscatory.
We could go on but it should be obvious to anyone who cares to look: Regulatory democracy does not work. Markets are not one wit more honest or less prone to failure today than 100 year ago when the power elite began its latest campaign of regulatory depredation. The constant piling on of regulation on regulation merely drives businesspeople to dissemble as much as possible within the ambit of what is allowable. And finally, as nothing is really allowable, the law (and its regulation) becomes what the regulators say that it is.
The necessity of regulation is a powerful dominant social theme. The conversation as manipulated by the power elite is always one of "how much regulation" is necessary. Additionally, control of the regulatory element allows the power elite to manipulate business flows on behalf of greater global reach. Make business intolerable in America or Britain and that business ends up in Europe where it can be further centralized and globalized.
In fact, centralization is the real goal of all of this. A single centralized market will offer the elite undreamt opportunities for manipulation and control. Meanwhile the regulatory conversation will continue in all its earnestness and politicians who manage to get larger packages of Draconian regulations passed will be hailed for their "historical" programs. These programs are only historical in the sense that they are signposts on the disheartening path to global control and international securities manipulation by the elite itself. Hardly a development worth celebrating.