FTR #671 Update on the Meltdown, Part 4: Germany, the Underground Reich and the Global Financial Crisis
Davy Emory
Comparing German economic policy in the immediate pre-Hitler period with that pursued by Germany during the first decade of the European Monetary Union, author Sara Moore sees parallel and deliberate deflationary stances as central to both the onset of the Great Depression and the 2008 global financial collapse. Moore’s thesis maintains that deliberately low ECB interest rates instituted after the inception of the Euro led to a global capital flow to the U.S. Following the ECB’s multiple rate increases in the middle of this decade, Moore sees that capital flow reversing, helping to precipitate the current debacle.
After analysis of parallels between 1930 Germany and the contemporary Federal Republic, we review the continuity between the economic policy advocated by Pan-German theoretician Friedrich List and those pursued by the Third Reich and the contemporary Federal Republic. Specifically, the program notes that List’s theory for a German-dominated central European economic union was implemented by the Third Reich and then institutionalized by the Federal Republic in the form of the European Monetary Union.
After noting journalist Dorothy Thompson’s 1940 account of Germany’s plans for a Nazi-controlled U.S. featuring liaisons with key U.S. industrial figures, the broadcast reviews the Nazis 1944 planning for the postwar, including their high regard for Bush family-controlled businesses.
Of particular interest for readers of this description is an article not included in the original program. A recent Daily Mail story chronicles the August 10, 1944 meeting at which Third Reich industrialists and SS officers set forth the Nazi plans to go underground and perpetuate their empire through economic, not military, dominance. Noting the political continuity between the Third Reich and the “new” Federal Republic, the article supplements For The Record’s analysis that the EMU and the EU are the actual realization of the Third Reich’s postwar contingency planning.
The program concludes by noting the role that key personnel from major German corporations played in advocating the bailout programs that the Obama administration has implemented. This should be understood in the context of the Bormann capital network’s control of corporate Germany. Significantly, many of AIG’s bailout payments went to financial institutions controlled by the Underground Reich and the Bormann network.
Program Highlights Include: Similarity between the taxation, wage regulation and industrial export policy pursued by German Chancellor Bruning in the immediate pre-Hitler period and those instituted by the Federal Republic in the early part of this decade; review of the links between the SS and Ludwig Erhard (who became Economics Minister and then Chancellor–widely credited as the author of the “German economic miracle”); AIG’s bailout payments to Deutsche Bank and UBS (both key Bormann capital network affiliates).
NOTE: A respected source attributes the crisis to the flow of capital from commercial banks to investment banks.
1. The program begins with an article noting German foreshadowing of the present global financial crisis more than 60 years ago. Note that the Trumpet is a Christian magazine that [among other things] references biblical prophesy. The analysis presented here is solid, prescient and should not be dismissed because of the peripheral theological references, neither used nor endorsed in For The Record.
“The Trumpet keeps a keen eye on Germany. For nearly two decades, the Trumpet staff has waited, watched and written about the emergence of a globally dominant, German-led bloc of European states. We have warned specifically that a spectacular global financial crisis, centered in the United States, will likely bring this event to fruition.
We are not entirely alone in this expectation.
The following is a snippet from a secret memorandum written by high-ranking German officers and distributed among an elite group of German leaders in Bonn and other parts of the world. It is an electrifying picture of current events.
Economic difficulties will one day plunge the United States down from its present dizzy heights. Such a catastrophe can be brought about through crafty manipulations and through artificially engendered crises. Such maneuvers are routine measures which have already been employed in international power struggle and will be used again and again as long as economic rivals fight for power positions and markets in the world.
It is quite conceivable that America, weakened by a depression, will one day seek support from a resurrected Germany. Such a prospect would open tremendous possibilities for the future power position of a bloc introducing a new order in the world.
That was written in 1950. It can be found in T.H. Tetens’ 1953 book, Germany Plots With the Kremlin.
Its prescience is chilling.
Survey the current global financial crisis and the changes it is precipitating. Economic difficulties [have] plunge[d] the United States down from its present dizzy heights. Check. Such a catastrophe [was] brought about through crafty manipulations and through artificially engendered crises. Check. America, weakened by a depression, [is seeking] support from a resurrected Germany. Check. Such a prospect [is] open[ing] tremendous possibilities for the future power position of a bloc introducing a new order in the world. Check.
With its economic landscape strewn with surging unemployment lines, writhing stocks, and rotting corpses of banks, financial institutions and businesses, it’s hard to deny “economic difficulties” have brought America down from its dizzying heights. Similarly, piles of evidence-think Bernie Madoff, Lehman Brothers and liberal bank lending standards-testify to “crafty manipulation” as a root cause of this crisis.
What about the notion that “artificially engendered crises” precipitated by foreign forces are also partly to blame for the collapse of the American financial system?
British author and historian Sara Moore recently delved into this historically significant, eerily familiar trend. Armed with facts and historical precedent, Moore details in the European Journal how Germany, employing a similar formula to what it used in the 1930s, is craftily manipulating EU economic policy in an effort to undermine the U.S.
One fundamental cause of the credit crisis in America, Moore suggests, was Germany’s exploitation of the euro (May 2008).
This interesting argument deserves close scrutiny (January/February 2009). When the euro first came online in January 1999, the European Central Bank (ecb)-headquartered in Frankfurt, patterned after Germany’s Bundesbank and heavily influenced by Germans-ensured interest rates remained at or around 2 percent. This was done, in part, to help stabilize and promote the growth of the German economy. By maintaining low interest rates, Moore says, the German-led ecb caused global investors to flock to higher-yielding U.S. treasuries, distorting money markets and facilitating easy credit in America.
The ecb’s policy, Moore says, helped prime American credit markets for rupture.
This became inevitable after December 2005, when the ecb, having maintained low interest rates for years, raised interest rates seven times in a row. By late 2007, with Europe offering higher, increasingly attractive interest rates, cash was flowing briskly into Europe, and less briskly into America. Together with the housing crisis, the ecb’s calculated diversion of money away from America and into Europe was at least partly responsible for the American credit crisis. According to Moore, it was when the ecb raised its interest rates for the eighth consecutive time in July 2008, that “stock markets round the world collapsed.”
The idea that Germany precipitated the current global economic crisis is intriguing. It’s an argument that grows stronger if you factor in the documented proof showing German leaders planned 60 years ago that an “artificially [German-]engendered” crisis would one day bring the U.S. economy down, and send America scrambling to Germany for assistance.
Barely a day passes without a chorus of American voices-journalists, economists, business leaders, politicians and even the American president-requesting Europe, particularly Germany, to do more to rescue Europe and the rest of the world from the economic chaos. The latest brouhaha between America and Europe, for example, was sparked by President Barack Obama’s most recent request that Europe, and especially Germany, lighten the burden of the global economic crisis by enacting larger stimulus packages for flailing European economies. Lamenting in the New York Times on Monday, prominent economist Paul Krugman said he feels Europe is not doing near enough to combat the global economic downturn. It is not uncommon to hear world leaders talking about the need for a new world order-one, many agree, that needs to be centered in Europe.
America’s plea to Europe, and Germany in particular, is desperate and definitive: The world needs you to do more to rescue it from economic calamity!
As this predicament intensifies, it will continue to create “tremendous possibilities” for Germany. Watch Germany intently. We don’t know if the men who wrote that secret memorandum in 1950 are still alive today. That is inconsequential. The more important question is: Is their strategy for a German new world order still being pursued?
It is becoming harder to deny that it is!
There will be some who will look at the global economic meltdown and the fact that it is causing both Europe and America to rely more on Germany, admit that this aligns perfectly with documented Germanic designs, and consider it an unusual coincidence. But doesn’t Germany’s age-old penchant for global dominion, its provocative role in the two largest wars in history, the fact that it is documented that after World War ii Nazis planned to do it again, the current explosive and uncertain world conditions, and the nightmare scenario of another holocaust, make this a subject worthy of deep investigation?. . . ”
2. The MacDonald piece draws on information from an article by author Sara Moore, the author of two books. Specifically, she compares the deflationary policy followed by Germany under Chancellor Bruning in the pre-Hitler period with the deflationary policy pursued by the [German controlled] European Central Bank in the middle of this decade. Moore feels that it was the sharp increases (in the middle of this decade) from the relatively low interest rates the bank instituted after the inception of the Euro that helped produce the current crisis.
“A reassessment of how Germany’s deflationary policies contributed to the Great Depression in the 1930s and to her rise to power is overdue. When in 1930 Heinrich Brüning
became Chancellor of Germany he told his friends in the unions that his chief aim was to liberate Germany from paying war reparations and foreign debt. He felt that if he diverted all Germany’s efforts into exports it would weaken the ability of America and the Allies to force
Germany to pay her IOUs if she chose not to. The German unions therefore agreed to Brüning
reducing wages, raising taxes and diverting all industrial activity into exports so as to bring pressure on the Western powers, not realizing to what extent this would mean misery,
unemployment and a diminution of power for the workers. Brüning’s initiative was successful. Millions of people abroad were fooled into believing that Germany herself was really poor not just her hapless citizens, even though Germany was the greatest exporter in the world,
with a mountain of cash in the bank.
Seventy years after the Treaty of Versailles consensus has at last been reached that the legend of the ‘vindictive’ Treaty was a fable. Yet historians have hesitated to draw new conclusions about the Great Depression, namely if German politicians escape censure for their actions in the twentieth Century will they be tempted to use deflation for political purposes in the twenty-first
Century?. . . .”
3. Moore feels that the initially low interest rates initiated by the ECB after the Euro’s creation led to a cash flow to America, where relatively high interest rates were attractive to investors.
“. . . The world economy is huge compared to the 1930s but if Germany imposes a deflationary policy on Europe it can have an effect worldwide because the European Union comprises nearly 500 million people with money to save or spend.
The European Central Bank (ECB) is located in Frankfurt and modeled on the German Bundesbank. When the euro was first introduced interest rates were kept at 2 per cent, causing a slump in the value of the euro and a mass exodus of surplus funds. However since 2005 European interest rates have risen 8 times, causing the euro to rise over 50 per cent against the dollar by 2007, both because of the dollar’s weakness and to the rise in Europe’s interest rates.
Foreigners’ faith in the euro rests primarily with Germany. Other euroland countries economies are not so strong. Indeed Germany’s European neighbors have suddenly discovered that Germany effectively imposed a ‘wage freeze’ on its workers after the adoption of the euro in 1999, clawing back 40 per cent in labour competitiveness against Italy, 30 per cent against Spain and 20 per cent against France by 2007. Britain’s bankers shed few tears over France and Italy when they complained of the ECB interest rate rises making their businesses uncompetitive, or even Spain, hit by ‘an ECB-created property bubble.’ Britain’s pound was strong in the spring of 2007. It had moved ‘tightly with the euro’ for the last three years but as it always paid a little more in interest than the euro many European countries held their balances in pounds. However, in July 2007 the Bank of England decided, in view of Britain’s rising inflation, that it would raise British interest rates too, one month after the ECB. Unfortunately the combination of the American sub-prime crisis, an over-leveraged home market and the final European interest rate rise, was too much to bear — the mortgage lender Northern Rock cracked and Britain itself suddenly seemed fragile too. . . .”
4. More of Sara Moore’s analysis, noting her emphasis on initially low ECB interest rates:
“. . . . In a way one could say that the present credit crisis is the delayed result of the euro’s arrival. Germany was the strongest country in euroland at its inception but outsiders worried that she was still nursing a hangover from her reunification party in 1990. She was allowed to breach EU rules that stipulated that annual government deficits must not exceed 3 per cent of GDP and the ECB also promised to keep European interest rates at 2 per cent to help the German economy. This encouraged the world’s spare cash to avoid the euro and seek higher returns in the US. The Asian economies accumulated vast sums from exports and piled them into dollars. So the bankers had the bright idea of lending money to the underprivileged so they too could share in the American dream. . . The trouble was that the subprime mortgages started with low interest rates, which soon became higher. Money began to ebb away from the US attracted by rising interest rates in Europe. In 2008 the subprime mortgage crisis threatens to be one of the largest losses of American wealth ever seen, wiping out a generation of home wealth building.”
5. Continuing her comparison of 1930’s Germany under Bruning with the Federal Republic today, Moore notes that analysis of that country as economically weak [in the late ’90’s] was premature, as was the 1930 assessment of Germany as economically weak.
“Despite Germany’s impressive export performance in 1930/31 most people believed her protestations of poverty in the Great Depression because of the misery and unemployment of the German people. When the euro was introduced in 1999 the German economy’s health was also in question. Yet in 2003 Katinka Barysch of the Centre for European Reform wrote an article called ‘Germany — the sick man of Europe?’ which asserted that Germany with its flourishing hightech sector was not as infirm as many made out. Once more the world’s largest exporter she was also the principal trading partner for most Eastern European countries joining the EU.
Katinka Barysch declared that what distinguished Germany — ‘from most of its peers’ — was the weakness of domestic demand. Indeed after the arrival of the euro German workers suffered years of stagnant or declining wages. Then the German government, in an admittedly pale comparison with 1930, decided to cut corporation tax and give other advantages to industry, and to raise VAT, bringing pain to the workers, in order to pay for it. Naturally, in January 2007, the German unions asked for more money to compensate them for the increase in taxes. Yet after wage increases of 4.1 per cent were agreed with Germany’s most powerful union I G Metall, the head of the German Bundesbank Axel Weber declared that wage inflation was getting out of control, there was a growth in the money supply, and the ECB needed to raise interest rates to curb it. On 18 May 2007, France’s bank chief, Christian Noyer, flatly contradicted Weber’s comments on inflation. Yet euroland interest rates were still raised to 4 per cent — with the expectation of more — causing money to pour out of the dollar into the euro and an escalation of the American sub-prime crisis. The ECB has since flooded markets with short-term money but despite the rules being bent when the euro was first introduced to aid the German economy, Bundesbank chief Axel Weber and ECB chief economist Jurgen Stark have remained deaf to pleas, which would really help the world in 2008, to bend the rules and allow ECB interest rates to fall.”
6. After discussion of the effect of ECB rate increases on the U.S. subprime holders, Moore compares trans-Atlantic capital flows with those in the 1929–1930 period.
“If one is looking at pre-war parallels one could chart the ebb and flow of money across the Atlantic Ocean. In the late 1920s because of her strident propaganda Germany was viewed as poor and less guilty of the war in 1914, but modern historians and economists now believe her to have been primarily responsible for the Great War and by 1928 more powerful than in 1914. European money, including an unspecified amount of German cash, flowed into Wall Street in 1928/29. At the end of April 1929, with a new deal beckoning over the payment of war reparations, Germany put her interest rates up by a full 1 per cent to 7 per cent, prompting interest rate rises in Austria, Poland and Hungary. From June 1929 Germany was reported purchasing substantial quantities of gold, an alarmed France following one month later. Germany and France’s gold purchases were so large that they eventually prompted expectations of a rise in the British bank rate as all the major countries were on the Gold Standard. Money
became tight and in that environment financial scandals happen. Clarence Hatry’s fraudulent empire collapsed. Soon afterward Wall Street crashed. In essence the Wall Street crash was a political event, caused by worries whether German war reparations and debt would ever get repaid, but tight money market conditions also helped. In 2007 money in Britain and the US also suddenly became scarce. One hopes that the final parallel with the Great Depression — a stock market crash — is averted. . . Germany’s deflation so far is only a faint shadow of her deflation in the 1930s but we can surmise that she has aspirations.”
7. Moore concludes her argument with a look at the history of imperial Pan-Germanism. Obviously, she sees the EU and the European Monetary Union as a potential fulfillment of Pan-Germanic aspirations.
“In 1994 President Clinton prophesied that Germany would be Europe’s future leader. In the Middle Ages she had been leader of the Holy Roman Empire, which encompassed much of Europe. Later, before the First World War, the Pan German League aimed at creating an empire of all the Germanic peoples under Prussian leadership, which would include all the nations in the Austro-Hungarian Empire, also Switzerland, Holland and Belgium and Romania because of her strategic position at the mouth of the Danube. The empire would be bound together first by a customs union, which would prepare the way for the creation of community-wide legal and political institutions. Eventually a Nationalstaat would come into being ‘impelled by the logic
of ethnic solidarity, economic pressure, and should it prove necessary, military force’.
In the First and Second World Wars Germany became Europe’s master by driving tanks into Europe’s cities. However after the Second World War she turned into a very different country, a bastion of democracy. Later the European Union evolved but it was not viewed as Germany’s empire, either within Germany or in the rest of Europe. Although France and Germany were original members, the EU is formally run by the Council of Ministers, the European Parliament and by bureaucrats in Brussels, rather than by a single state. Democracy is enshrined in the EU and the voice of each tiny country carries weight. Yet it is becoming increasingly clear that it has a dominant Franco-German axis and that Germany is the principal paymaster. So the old adage — he who pays the piper calls the tune — may eventually be appropriate even in the European Union.
Angela Merkel, declared that the time of reflection about anew form of government was over. By March 2007 the Berlin Declaration was adopted which declared the intention of all member states to have ratified a new Treaty for the government of the enlarged European Union by the 2009 elections. Beyond the Treaty, Germany, who stayed firmly in the driving seat during the discussions leading up to the Lisbon Treaty, is now alleged to have ambitions to create a
superpower in Europe, with military power and control over taxation. One worries that if things do not go her way she could revert to her old idea of a Germanic empire, which would divide Europe and fragment nations.
One also frets about the future economic outlook of the European Union. . . With the help of the
European Union and its most powerful provider of funds, Germany, the countries of the former Soviet Union in Eastern Europe are becoming richer, democratic and self-confident. Germany has a right to have an important say in the ECB to ensure that her money is well spent. Yet we
live in a global economy. Power must be used with care. We must not underestimate Germany’s strength because of her citizens’ poverty or unemployment. Her deflation, and push for the ECB to adopt a high interest rate policy, besides affecting Britain and America, will slow growth for the whole of the European Union and create problems for the weakest states, whilst strengthening her relative position. How Germany will use this position is of fundamental interest and the parallels up to the present time with the 1930s experience raises cause for concern.”
8. Reviewing the template for the European Monetary Union, the program recapitulates the plans formulated by Friedrich List for German world domination. Writing in 1943, Winkler foresaw that the Prusso-Teutonics would realize their goals through the creation of a German-dominated central European economic union (bearing a striking resemblance to today’s European Monetary Union.) One of the principal influences on List’s thinking was the “continental” concept of Napoleon, who attempted to economically unite Europe under French influence.
“Charles Andler, a French author, summed up certain ideas of List in his work, The Origins of Pan-Germanism, (published in 1915.) ‘It is necessary to organize continental Europe against England. Napoleon I, a great strategist, also knew the methods of economic hegemony. His continental system, which met with opposition even from countries which might have profited from such an arrangement should be revived, but, this time, not as an instrument of Napoleonic domination. The idea of united Europe in a closed trade bloc is no longer shocking if Germany assumes domination over such a bloc-and not France. [Italics are Mr. Emory’s.] Belgium, Holland, Switzerland, willingly or by force, will enter this ‘Customs Federation.’ Austria is assumed to be won over at the outset. Even France, if she gets rid of her notions of military conquest, will not be excluded. The first steps the Confederation would take to assure unity of thought and action would be to establish a joint representative body, as well as to organize a common fleet. But of course, both the headquarters of the Federation and its parliamentary seat would be in Germany. [Italics mine–D.E.]”
The Thousand-Year Conspiracy; by Paul Winkler; Charles Scribner’s Sons [HC]; 1943; pp. 15–16.
4. Dorothy Thompson noted that the Third Reich’s plans for German-dominated Europe entailed a realization of the List blueprint. A stunning measure of the success of the Underground Reich and German Ostpolitik can be obtained by reading Dorothy Thompson’s analysis of Germany’s plans for world domination by a centralized European economic union. (In this, we can see the plans of pan-German theoretician Friedrich List, as realized by the European Monetary Union.) Ms. Thompson was writing in The New York Herald Tribune on May 31, 1940! Her comments are reproduced by Tetens on page 92. Check out the current European Monetary Union and the “borderless” EU against the background of what Ms. Thompson forecast in 1940 and Mr. Tetens reproduced in 1953.
“The Germans have a clear plan of what they intend to do in case of victory. I believe that I know the essential details of that plan. I have heard it from a sufficient number of important Germans to credit its authenticity . . . Germany’s plan is to make a customs union of Europe, with complete financial and economic control centered in Berlin. This will create at once the largest free trade area and the largest planned economy in the world. In Western Europe alone . . . there will be an economic unity of 400 million persons . . . To these will be added the resources of the British, French, Dutch and Belgian empires. These will be pooled in the name of Europa Germanica . . .”
“The Germans count upon political power following economic power, and not vice versa. Territorial changes do not concern them, because there will be no ‘France’ or ‘England,’ except as language groups. Little immediate concern is felt regarding political organizations . . . . No nation will have the control of its own financial or economic system or of its customs. The Nazification of all countries will be accomplished by economic pressure. In all countries, contacts have been established long ago with sympathetic businessmen and industrialists . . . . As far as the United States is concerned, the planners of the World Germanica laugh off the idea of any armed invasion. They say that it will be completely unnecessary to take military action against the United States to force it to play ball with this system. . . . Here, as in every other country, they have established relations with numerous industries and commercial organizations, to whom they will offer advantages in co-operation with Germany. . . .”
Germany Plots with the Kremlin; T.H. Tetens; Henry Schuman [HC]; 1953; p. 92.
5. In order to enhance understanding of the continuity between the Third Reich and the “economic miracle” of the “New” Germany, the program reviews the genesis of the Bormann flight capital network. On August 10, 1944, SS general Dr. Scheid chaired a secret meeting of key industrialists and financiers at which he laid out the blueprint for the Nazi flight capital program that matured into the Bormann capital network. The purpose of the Bormann flight capital program was set forth by Paul Manning, the heroic author who wrote the story of the Bormann organization.
“Martin Bormann, forty-one at the fall of Berlin, and strong as a bull, was at all times at Hitler’s side, impassive and cool. His be-all and end-all was to guide Hitler, and now to make the decisions that would lead to the eventual rebirth of his country. Hitler; his intuitions at peak level despite his crumbling physical and mental health in the last year of the Third Reich, realized this and approved of it. ‘Bury your treasure,’ he advised Bormann, ‘for you will need it to begin a Fourth Reich.’ [Emphasis added.] That is precisely what Bormann was about when he set in motion the ‘flight capital’ scheme August 10, 1944, in Strasbourg. The treasure, the golden ring, he envisioned for the new Germany was the sophisticated distribution of national and corporate assets to safe havens throughout the neutral nations of the rest of the world.”
6. Held in Strasbourg, France, the meeting is described in detail:
“The Staff car had left Colmar at first light for Strasbourg, carrying SS Obergruppenfueherer Scheid, who held the rank of lieutenant general in the Waffen SS, as well as the title of Dr. Scheid, director of the industrial firm of Hermadorff & Schenburg Company. While the beauty of the rolling countryside was not lost on Dr. Scheid, his thoughts were on the meeting of important German businessmen to take place on his arrival at the Hotel Maison Rouge in Strasbourg. Reichsleiter Martin Bormann himself had ordered the conference, and although he would not physically be present he had confided to Dr. Scheid, who was to preside, ‘The steps to be taken as a result of this meeting will determine the postwar future of Germany.’ The Reishsleiter had added, ‘German industry must realize that the war cannot now be won, and must take steps to prepare for a postwar commercial campaign which will in time insure the economic resurgence of Germany.’ It was August 10, 1944. The Mercedes-Benz bearing SS Obergruppenfuerher Scheid moved slowly now through the narrow streets of Strasbourg. Dr. Scheid noticed that this was a most agreeable city, one to return to after the war.”
6. Scheid briefed the leaders of German industry on Bormann’s plan, and gave them contacts-many of them in New York.
“Dr. Scheid, papers from his briefcase arranged neatly on the table before him, stated that all industrial materiel in France was to be evacuated to Germany immediately. ‘The battle of France is lost to Germany,’ he admitted, quoting Reichsleiter Bormann as his authority, ‘and now the defense of the Siegfried Line (and Germany itself) is the main problem. . . . From now on, Germany industry must take steps in preparation for a postwar commercial campaign, with each industrial firm making new contacts and alliances with foreign firms. This must be done individually and without attracting any suspicion. However, the party and the Third Reich will stand behind every firm with permissive and financial support.’ He assured those present that the frightening law of 1933 known as Treason Against the Nation, which mandated the death penalty for violation of foreign exchange regulations or concealing of foreign currency, was now null and void, on direct order of Reichsleiter Bormann.”
7. The program notes that the Bush family were among the collaborationist industrialists referred to by Ms. Thompson in the Herald Tribune article mentioned in paragraph 4. Hamburg-Amerika Line’s operations in the U.S. were controlled by the grandfather and great grandfather of George W. Bush.
“Dr. Scheid also affirmed, ‘The ground must now be laid on the financial level for borrowing considerable sums from foreign countries after the war.’ As an example of the kind of support that had been most useful to Germany in the past, Dr. Scheid cited the fact that ‘patents for stainless steel belonged to the Chemical Foundation, Inc. New York, and the Krupp Company of Germany, jointly, and that of the United States Steel Corporation, Carnegie, Illinois, American Steel & Wire, National Tube, etc., were thereby under an obligation to work with the Krupp concern.’ He also cited the Zeiss Company, the Leica Company, and the Hamburg-Amerika line as typical firms that had been especially effective in protecting German interests abroad. He gave New York addresses to the twelve men.”
8. An article not included in the original broadcast supplements Manning’s writing and also reinforces the thesis that, in many ways, the EU and the European Monetary Union represent the partial fulfillment of the Nazi plans for domination of postwar Europe.
“The paper is aged and fragile, the typewritten letters slowly fading. But US Military Intelligence report EW-Pa 128 is as chilling now as the day it was written in November 1944.
The document, also known as the Red House Report, is a detailed account of a secret meeting at the Maison Rouge Hotel in Strasbourg on August 10, 1944. There, Nazi officials ordered an elite group of German industrialists to plan for Germany’s post-war recovery, prepare for the Nazis’ return to power and work for a ‘strong German empire’. In other words: the Fourth Reich.
The three-page, closely typed report, marked ‘Secret’, copied to British officials and sent by air pouch to Cordell Hull, the US Secretary of State, detailed how the industrialists were to work with the Nazi Party to rebuild Germany’s economy by sending money through Switzerland.
They would set up a network of secret front companies abroad. They would wait until conditions were right. And then they would take over Germany again.
The industrialists included representatives of Volkswagen, Krupp and Messerschmitt. Officials from the Navy and Ministry of Armaments were also at the meeting and, with incredible foresight, they decided together that the Fourth German Reich, unlike its predecessor, would be an economic rather than a military empire — but not just German.
The Red House Report, which was unearthed from US intelligence files, was the inspiration for my thriller The Budapest Protocol.
The book opens in 1944 as the Red Army advances on the besieged city, then jumps to the present day, during the election campaign for the first president of Europe. The European Union superstate is revealed as a front for a sinister conspiracy, one rooted in the last days of the Second World War.
But as I researched and wrote the novel, I realised that some of the Red House Report had become fact.
Nazi Germany did export massive amounts of capital through neutral countries. German businesses did set up a network of front companies abroad. The German economy did soon recover after 1945.
The Third Reich was defeated militarily, but powerful Nazi-era bankers, industrialists and civil servants, reborn as democrats, soon prospered in the new West Germany. There they worked for a new cause: European economic and political integration.
Is it possible that the Fourth Reich those Nazi industrialists foresaw has, in some part at least, come to pass?
The Red House Report was written by a French spy who was at the meeting in Strasbourg in 1944 — and it paints an extraordinary picture.
The industrialists gathered at the Maison Rouge Hotel waited expectantly as SS Obergruppenfuhrer Dr Scheid began the meeting. Scheid held one of the highest ranks in the SS, equivalent to Lieutenant General. He cut an imposing figure in his tailored grey-green uniform and high, peaked cap with silver braiding. Guards were posted outside and the room had been searched for microphones.
There was a sharp intake of breath as he began to speak. German industry must realise that the war cannot be won, he declared. ‘It must take steps in preparation for a post-war commercial campaign.’ Such defeatist talk was treasonous — enough to earn a visit to the Gestapo’s cellars, followed by a one-way trip to a concentration camp.
But Scheid had been given special licence to speak the truth — the future of the Reich was at stake. He ordered the industrialists to ‘make contacts and alliances with foreign firms, but this must be done individually and without attracting any suspicion’.
The industrialists were to borrow substantial sums from foreign countries after the war.
They were especially to exploit the finances of those German firms that had already been used as fronts for economic penetration abroad, said Scheid, citing the American partners of the steel giant Krupp as well as Zeiss, Leica and the Hamburg-America Line shipping company.
But as most of the industrialists left the meeting, a handful were beckoned into another smaller gathering, presided over by Dr Bosse of the Armaments Ministry. There were secrets to be shared with the elite of the elite.
Bosse explained how, even though the Nazi Party had informed the industrialists that the war was lost, resistance against the Allies would continue until a guarantee of German unity could be obtained. He then laid out the secret three-stage strategy for the Fourth Reich.
In stage one, the industrialists were to ‘prepare themselves to finance the Nazi Party, which would be forced to go underground as a Maquis’, using the term for the French resistance.
Stage two would see the government allocating large sums to German industrialists to establish a ‘secure post-war foundation in foreign countries’, while ‘existing financial reserves must be placed at the disposal of the party so that a strong German empire can be created after the defeat’.
In stage three, German businesses would set up a ‘sleeper’ network of agents abroad through front companies, which were to be covers for military research and intelligence, until the Nazis returned to power.
‘The existence of these is to be known only by very few people in each industry and by chiefs of the Nazi Party,’ Bosse announced.
‘Each office will have a liaison agent with the party. As soon as the party becomes strong enough to re-establish its control over Germany, the industrialists will be paid for their effort and co-operation by concessions and orders.’
The exported funds were to be channelled through two banks in Zurich, or via agencies in Switzerland which bought property in Switzerland for German concerns, for a five per cent commission.
The Nazis had been covertly sending funds through neutral countries for years.
Swiss banks, in particular the Swiss National Bank, accepted gold looted from the treasuries of Nazi-occupied countries. They accepted assets and property titles taken from Jewish businessmen in Germany and occupied countries, and supplied the foreign currency that the Nazis needed to buy vital war materials.
Swiss economic collaboration with the Nazis had been closely monitored by Allied intelligence.
The Red House Report’s author notes: ‘Previously, exports of capital by German industrialists to neutral countries had to be accomplished rather surreptitiously and by means of special influence.
‘Now the Nazi Party stands behind the industrialists and urges them to save themselves by getting funds outside Germany and at the same time advance the party’s plans for its post-war operations.’
The order to export foreign capital was technically illegal in Nazi Germany, but by the summer of 1944 the law did not matter.
More than two months after D-Day, the Nazis were being squeezed by the Allies from the west and the Soviets from the east. Hitler had been badly wounded in an assassination attempt. The Nazi leadership was nervous, fractious and quarrelling.
During the war years the SS had built up a gigantic economic empire, based on plunder and murder, and they planned to keep it.
A meeting such as that at the Maison Rouge would need the protection of the SS, according to Dr Adam Tooze of Cambridge University, author of Wages of Destruction: The Making And Breaking Of The Nazi Economy.
He says: ‘By 1944 any discussion of post-war planning was banned. It was extremely dangerous to do that in public. But the SS was thinking in the long-term. If you are trying to establish a workable coalition after the war, the only safe place to do it is under the auspices of the apparatus of terror.’
Shrewd SS leaders such as Otto Ohlendorf were already thinking ahead.
As commander of Einsatzgruppe D, which operated on the Eastern Front between 1941 and 1942, Ohlendorf was responsible for the murder of 90,000 men, women and children.
A highly educated, intelligent lawyer and economist, Ohlendorf showed great concern for the psychological welfare of his extermination squad’s gunmen: he ordered that several of them should fire simultaneously at their victims, so as to avoid any feelings of personal responsibility.
By the winter of 1943 he was transferred to the Ministry of Economics. Ohlendorf’s ostensible job was focusing on export trade, but his real priority was preserving the SS’s massive pan-European economic empire after Germany’s defeat.
Ohlendorf, who was later hanged at Nuremberg, took particular interest in the work of a German economist called Ludwig Erhard. Erhard had written a lengthy manuscript on the transition to a post-war economy after Germany’s defeat. This was dangerous, especially as his name had been mentioned in connection with resistance groups.
But Ohlendorf, who was also chief of the SD, the Nazi domestic security service, protected Erhard as he agreed with his views on stabilising the post-war German economy. Ohlendorf himself was protected by Heinrich Himmler, the chief of the SS.
Ohlendorf and Erhard feared a bout of hyper-inflation, such as the one that had destroyed the German economy in the Twenties. Such a catastrophe would render the SS’s economic empire almost worthless.
The two men agreed that the post-war priority was rapid monetary stabilisation through a stable currency unit, but they realised this would have to be enforced by a friendly occupying power, as no post-war German state would have enough legitimacy to introduce a currency that would have any value.
That unit would become the Deutschmark, which was introduced in 1948. It was an astonishing success and it kick-started the German economy. With a stable currency, Germany was once again an attractive trading partner.
The German industrial conglomerates could rapidly rebuild their economic empires across Europe.
War had been extraordinarily profitable for the German economy. By 1948 — despite six years of conflict, Allied bombing and post-war reparations payments — the capital stock of assets such as equipment and buildings was larger than in 1936, thanks mainly to the armaments boom.
Erhard pondered how German industry could expand its reach across the shattered European continent. The answer was through supranationalism — the voluntary surrender of national sovereignty to an international body.
Germany and France were the drivers behind the European Coal and Steel Community (ECSC), the precursor to the European Union. The ECSC was the first supranational organisation, established in April 1951 by six European states. It created a common market for coal and steel which it regulated. This set a vital precedent for the steady erosion of national sovereignty, a process that continues today.
But before the common market could be set up, the Nazi industrialists had to be pardoned, and Nazi bankers and officials reintegrated. In 1957, John J. McCloy, the American High Commissioner for Germany, issued an amnesty for industrialists convicted of war crimes.
The two most powerful Nazi industrialists, Alfried Krupp of Krupp Industries and Friedrich Flick, whose Flick Group eventually owned a 40 per cent stake in Daimler-Benz, were released from prison after serving barely three years.
Krupp and Flick had been central figures in the Nazi economy. Their companies used slave labourers like cattle, to be worked to death.
The Krupp company soon became one of Europe’s leading industrial combines.
The Flick Group also quickly built up a new pan-European business empire. Friedrich Flick remained unrepentant about his wartime record and refused to pay a single Deutschmark in compensation until his death in July 1972 at the age of 90, when he left a fortune of more than $1billion, the equivalent of £400million at the time.
‘For many leading industrial figures close to the Nazi regime, Europe became a cover for pursuing German national interests after the defeat of Hitler,’ says historian Dr Michael Pinto-Duschinsky, an adviser to Jewish former slave labourers.
‘The continuity of the economy of Germany and the economies of post-war Europe is striking. Some of the leading figures in the Nazi economy became leading builders of the European Union.’
Numerous household names had exploited slave and forced labourers including BMW, Siemens and Volkswagen, which produced munitions and the V1 rocket.
Slave labour was an integral part of the Nazi war machine. Many concentration camps were attached to dedicated factories where company officials worked hand-in-hand with the SS officers overseeing the camps.
Like Krupp and Flick, Hermann Abs, post-war Germany’s most powerful banker, had prospered in the Third Reich. Dapper, elegant and diplomatic, Abs joined the board of Deutsche Bank, Germany’s biggest bank, in 1937. As the Nazi empire expanded, Deutsche Bank enthusiastically ‘Aryanised’ Austrian and Czechoslovak banks that were owned by Jews.
By 1942, Abs held 40 directorships, a quarter of which were in countries occupied by the Nazis. Many of these Aryanised companies used slave labour and by 1943 Deutsche Bank’s wealth had quadrupled.
Abs also sat on the supervisory board of I.G. Farben, as Deutsche Bank’s representative. I.G. Farben was one of Nazi Germany’s most powerful companies, formed out of a union of BASF, Bayer, Hoechst and subsidiaries in the Twenties.
It was so deeply entwined with the SS and the Nazis that it ran its own slave labour camp at Auschwitz, known as Auschwitz III, where tens of thousands of Jews and other prisoners died producing artificial rubber.
When they could work no longer, or were verbraucht (used up) in the Nazis’ chilling term, they were moved to Birkenau. There they were gassed using Zyklon B, the patent for which was owned by I.G. Farben.
But like all good businessmen, I.G. Farben’s bosses hedged their bets.
During the war the company had financed Ludwig Erhard’s research. After the war, 24 I.G. Farben executives were indicted for war crimes over Auschwitz III — but only twelve of the 24 were found guilty and sentenced to prison terms ranging from one-and-a-half to eight years. I.G. Farben got away with mass murder.
Abs was one of the most important figures in Germany’s post-war reconstruction. It was largely thanks to him that, just as the Red House Report exhorted, a ‘strong German empire’ was indeed rebuilt, one which formed the basis of today’s European Union.
Abs was put in charge of allocating Marshall Aid — reconstruction funds — to German industry. By 1948 he was effectively managing Germany’s economic recovery.
Crucially, Abs was also a member of the European League for Economic Co-operation, an elite intellectual pressure group set up in 1946. The league was dedicated to the establishment of a common market, the precursor of the European Union.
Its members included industrialists and financiers and it developed policies that are strikingly familiar today — on monetary integration and common transport, energy and welfare systems.
When Konrad Adenauer, the first Chancellor of West Germany, took power in 1949, Abs was his most important financial adviser.
Behind the scenes Abs was working hard for Deutsche Bank to be allowed to reconstitute itself after decentralisation. In 1957 he succeeded and he returned to his former employer.
That same year the six members of the ECSC signed the Treaty of Rome, which set up the European Economic Community. The treaty further liberalised trade and established increasingly powerful supranational institutions including the European Parliament and European Commission.
Like Abs, Ludwig Erhard flourished in post-war Germany. Adenauer made Erhard Germany’s first post-war economics minister. In 1963 Erhard succeeded Adenauer as Chancellor for three years.
But the German economic miracle — so vital to the idea of a new Europe — was built on mass murder. The number of slave and forced labourers who died while employed by German companies in the Nazi era was 2,700,000.
Some sporadic compensation payments were made but German industry agreed a conclusive, global settlement only in 2000, with a £3billion compensation fund. There was no admission of legal liability and the individual compensation was paltry.
A slave labourer would receive 15,000 Deutschmarks (about £5,000), a forced labourer 5,000 (about £1,600). Any claimant accepting the deal had to undertake not to launch any further legal action.
To put this sum of money into perspective, in 2001 Volkswagen alone made profits of £1.8billion.
Next month, 27 European Union member states vote in the biggest transnational election in history. Europe now enjoys peace and stability. Germany is a democracy, once again home to a substantial Jewish community. The Holocaust is seared into national memory.
But the Red House Report is a bridge from a sunny present to a dark past. Joseph Goebbels, Hitler’s propaganda chief, once said: ‘In 50 years’ time nobody will think of nation states.’
For now, the nation state endures. But these three typewritten pages are a reminder that today’s drive towards a European federal state is inexorably tangled up with the plans of the SS and German industrialists for a Fourth Reich — an economic rather than military imperium.”
9. Deutsche Bank’s chief economist foreshadowed and perhaps helped precipitate the administration’s plan to buy up banks’ bad debt. Note that Deutsche Bank is a key element of the Bormann network.
“Joe LaVorgna, Chief US Economist at Deutsche Bank Securities has written a research note as part of the U.S. Daily Economic Notes titled “Falling Short : The government needs to buy toxic assets”. It says that ultimately the taxpayer will pay, one way or another, either through greatly diminished job prospects and / or significantly higher taxes down the line. We think the government should do the following — Estimate the highest price it can pay for the various toxic assets residing on financial institution balance sheets, which would still return the principle to the taxpayers. So, it’s basically saying — either you’ll have 20% unemployment, unless you buy toxic assets, not for what they are worth, not for what their market value is, but as much as you can pay.
Joe LaVorgna, who wrote the note talked to Simon Johnson and Adam Davidson, reporters from NPR and said that the bottomline is that someone has to pay for the mess created and there’s no escaping that the taxpayer is on the hook.
The government and the banks have been saying that there’s some magical recipe where the government bails out the banks , the banks do better and the taxpayers end up making money. Everyone wins.
Simon Johnson posted the note on his blog and one the readers on his blog paraphrased the note saying, “that sure is a nice global economy you’ve got there. Be a shame if anything were to happen to it.”
Joe LaVorgna has called it a reality check and said that the approach has not been aggressive enough. That there’s no point in delaying the pain. He says, “let’s just get to it.”
Why though can’t the taxpayer be made shareholders in the banks? Why weren’t the taxpayers made stakeholders in TARP1 and TARP2? This is the nationalization option. Under this option, the government has to tell the banks to recognize their losses and then the government covers the losses and liabilities of the banks. But the government now owns the bank. As much as this option seems like socialism, in this option, the taxpayer has an ownership stake in the banks (instead of an ownership stake in toxic assets) and once the government cleans up the bank and sells it off down the road, the taxpayers will get some of their money back. Besides, this is the traditional way that governments usually fix banks.
Simon Johnson, formerly Chief Economist at the International Monetary Fund and he warns that there are many practical challenges related to nationalisation of banks and that’s why the government doesn’t want to talk about this.When Adam Davidson interviewed the Secretary of the Treasury, Timothy Geithner, Geithner refused to use the word “nationalization”. In TARP1 and TARP2, the government is not forcing the banks to sell their assets or mark-it-to-market and it has gone out of its way to give banks bailout money without taking control. They’ve given banks over $240 billion (including $45 billion to Citibank alone) and structured the deal in a special way, specifically designed so it was not a nationalization and when Citibank’s troubles got worse, the government had to go through these amazing contortions to help the bank without becoming the owner.
However, Nouriel Roubini, Professor of Economics at NYU tells CNBC that AIG is already nationalized and it is not a question of whether banks should be nationalized but if the banks should be partially or wholly nationalized. It remains to be seen how the political theater surrounding the economic issues plays out. But the fact that the major banks, including Bank of America and Citibank, are insolvent, is utterly obvious.”
“Nationalization of U.S. Banks is Imminent”; www.nowpublic.com; 3/3/2009.
10. Among the apparent prime movers for Obama’s bailout plan for the major banks was Bill Gross, managing director of PIMCO, a subsidiary of Allianz and, as one of the German core corporations, part of the Bormann capital network (Like Deutsche Bank.)
“In today’s flurry of positive press about the stock market’s 7% uptick in response to Treasury Secretary Tim Geithner’s bank rescue plan, one name stands out: Bill Gross, chairman of the vast PIMCO bond fund.
Bloomberg, Time magazine, the Financial Times, and other outlets all picked up Gross’ punchy declaration that the Geithner plan is “win-win-win.” Reuters even touted as an “exclusive” its report that Pimco would be participating in Geithner’s public-private initiative to buy up toxic mortgage-backed assets.
There’s only one problem with this: Gross is practically duty-bound to love the plan, since it was partly his idea. As the WaPo reported on Sunday: (emphasis mine)
Last fall, billionaire investor Warren E. Buffett, Goldman Sachs chief executive Lloyd Blankfein and William H. Gross, the managing director of PIMCO, the largest bond fund in the world, approached Treasury officials about an idea to create investment funds, using public and private money, to buy toxic assets from banks, according to former senior Treasury officials. Buffett is a director of The Washington Post Co.The Obama administration further developed that proposal to address the two main problems banks are facing: troubled debt such as mortgages that institutions are holding until the loans are paid off, plus the complex securities and derivatives that were invented to finance those loans.
Why is Gross allowed to be quoted waxing rhapsodic about the Geithner public-private partnership, without any added context to illuminate his role in the plan’s development? One possible answer: it’s no longer considered newsy that the Treasury is openly craving Wall Street’s approval of its moves. Josh posted on this truism last night.
Late Update: Some commenters suggest that I’m unfairly maligning Gross, who offered to manage the government’s bailout for free and delivered cogent early warnings last year on the growing risk of mortgage-backed securities.
Let me be clear: Gross’ praise for the plan he helped develop is all well and good. It would just be nice if mainstream outlets provided context to help understand the central role that Gross, Goldman CEO Lloyd Blankfein, and other investment chiefs are playing in Geithner’s plan. . . .”
“Shocker: Media Let Wall Street Chieftain Praise His Own Idea” by Elana Schor; Talking Points Memo; 3/24/2009
11. Large European banks–many of them also part of the Bormann capital network–received billions of dollars in payouts as part of the rescue of A.I.G. In the Manning text, the Bormann network links to UBS and Deutsche Bank are set forth at length. Manning also discusses the continued postwar control of the French economy by the German economic power structure and the Bormann network. It is in that context that the U.S. bailout (through A.I.G.) of Societe Generale should be understood.
“. . . Big foreign banks also received large sums from the rescue, including Société Générale of France and Deutsche Bank of Germany, which each received nearly $12 billion; Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion). . . .”
“A.I.G. Lists Banks It Paid with U.S. Bailout Funds” by Mary Williams Walsh; New York Times; 3/15/2009.
August 12, 2010