Market Precognition

The goal of this blog is to PRE-RECOGNIZE next several moves in the market
I focus on trading the S&P emini futures and T-notes futures.
A loyal reader will begin to understand the themes, memes, and sentiment that leads the market.

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Johnny Hom

Sunday, July 25, 2004

THEME: THE NAZI BUG

"At a mass meeting...thought is eliminated."
--Adolph Hitler


The greatest evil of the 20th Century was Adolph Hitler and the Nazi party. The truth of this statement is its self-evidence in modern dialogue. Hitler's image is used as one hyperbolic extreme in defining "evil." That is why George W. Bush's image can be placed alongside Hitler's in the minds of those that oppose him.

In my mind, the reason why the lessons of the Nazi Menace are so important is not because its effects can be weighed on some objective scale of evil. It is not because the Nazis killed 6 million Jews as opposed to the fewer numbers of Native Americans killed by the US Army, that the Nazi party is then determined to be more evil than the US Army. No, the true evil of the Nazi Party is that they discovered a "bug" in the human genetic code, and they exploited it so effectively and with more devastation than anyone other group to date.

The true fear lies in the fact that the "Nazi Bug" has not been patched. We try to burn the images of Hitler in our collective conscience to remind us never again to commit such atrocities again. However, my fear is that at the minimum this education only ensures the elimination of the possibility that another Nazi party can ever surface and take power and reign destruction on the scale that they did. It will not prevent other parties from exploiting the bug in other ways.

The Nazi Bug in the genetic code is basically that human rationality can be cancelled effectively through mass emotional hysteria. This is a concept that Adolph Hitler understood well and explicitly stated as much. He used the pageantry and mystery of religion to create mass religious fervor to energize his cause.


"What can we do? Just what the Catholic Church did when it forced its beliefs on the heathen: preserve what can be preserved, and change its meaning. We shall take the road back: Easter is no longer resurrection but the eternal renewal of our people. Christmas is the birth of our saviour."
--Adolph Hitler


The Nazi Bug can be used to explain various phenomenon.

We see now that the Bush Administration manipulated our mass hysteria over 9/11 (fear and the desire for vengeance) to have us agree to launch an offensive attack against Iraq. Colin Powell presented the "hard" evidence to the doubting US electorate and the world. The world was so convinced of the hardness of the evidence that one British tabloid called the evidence "dodgy."

So, the question becomes can we rationally analyze this systemic failure and make the logical choice: fire George W. Bush? After all, we fire managers from losing baseball teams? Or will the fear that it will get worse if we fire him drive us to stick with him. As the GOP t-shirt says, "10 out of 10 terrorist agree" that they
want W out of office.

The 9/11 Report derides the "groupthink" in the intelligence community that lead to this failure. That is an interesting choice of words. I think it is more evidence of the Nazi Bug. Groupthink is happening everywhere.

Fortunately, the markets serve as a vehicle to fight and even profit from groupthink.

Recent case in point: the effective blocking of the Wellpoint-Anthem healthcare merger by John Garamendi, the California State Insurance Commissioner. Wall Street being predominantly Republican fell into a groupthink on this one. It gave the merger a nearly 90% probability of completion. Garamendi's recent rants on excess executive pay was seen as nothing more than political posturing. Once he got his "deal," so the line of reasoning ran, he would just beat his chest and the merger would go on. Wellpoint certainly used this as its operating principle and offered up over $400 million to the poor uninsured community of CA. What they didn't realize is that Garamendi objected to the excess pay packages on philosophical ground and was willing to take this case to the edge of the cliff and then push it over to make his point.

Finally, this groupthink is also appearing in the consensus denouncement of Fahrenheit 9/11. Hardcore Republicans either saw it and shut their minds off after first 10 minutes, or the majority refuse to see it at all. This is to their detriment. All across America, this film ends with spontaneous applause. If Republicans and market participants fail to notice this, they will be surprised when they are finally forced to notice.

Please stay in tune for other groupthink opportunities.

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