Cairo Speech, Treaty of Rapallo, German-Soviet Non-Aggression Pact, and Operation Barbarossa

Posted by PITHOCRATES - January 14th, 2014

History 101

President Obama’s Cairo Speech of Islamist Appeasement Emboldened our Enemies

Candidate Barack Obama said during the 2008 presidential campaign that he would talk to our enemies.  Without preconditions.  He would discontinue the gunboat diplomacy of George W. Bush.  Instead he would open a dialogue with the people who wanted to kill us.  Find out why they wanted to kill us. And then resolve those issues that caused our enemies to want to kill us.  Which was the core of his foreign policy.  Being nice to our enemies to get them to like us.  And once they did they would stop killing us.

Some say this started with the Obama apology tour.  With his message of appeasement in Cairo in June 2009.  Where he told our militant Islamist foes, those people who have a tendency to kill Americans, we only want to live together in peace.  And that there is a level of conservative Islamism that was acceptable to the United States.  When the Arab Spring began in Iran (a sponsor of anti-American/Western terrorism) in June of 2009 (after Mahmoud Ahmadinejad had won reelection despite reported irregularities) President Obama did nothing to support the Iranian protestors.  And the enemies of the United States took notice.  The Cairo speech of appeasement.  Not condemning the Iranian election results and telling Mahmoud Ahmadinejad that he had to go (as he would tell Egyptian president Hosni Mubarak).  The message was clear.  America’s enemies could do whatever they wanted.  Even become a rogue nuclear power (see Iran: US and others ‘surrendered before the great Iranian nation’ in nuclear deal by Alexander Smith posted 1/14/2014 on NBC News).

Iranian President Hassan Rouhani said world powers including the United States “surrendered before the great Iranian nation” in agreeing an interim nuclear deal with his country, state media reported Tuesday.

Iran reached the deal with the five permanent members of the United Nations Security Council — the U.S., Canada, Britain, China, and Russia– and non-member Germany…

Speaking to a crowd gathered in the oil-rich province of Khuzestan on Tuesday, Rouhani said: “Do you know what the Geneva agreement means? It means the big powers have surrendered before the great Iranian nation.”

Apparently appeasing our enemies only makes our enemies bolder.  And stronger.  Which is probably not a good thing.  North Korea is a rogue nuclear state.  But their need for food and energy make it unlikely that they will launch a nuclear weapon.  They have so far used the threat of doing so just to get what they desperately needed.  Food and energy.  Militant Islamists, though, want to rid the world of anyone who is not a militant Islamist.  Even if they have to die in the process.  Which they don’t mind.  Because for them this world is only the prelude for the far better afterworld.  Whereas the regime running North Korea has no desire to die.  They enjoy living in the here and now.  And know that won’t continue if they launch a nuclear weapon.

Neville Chamberlain opened a Dialogue with a Lying Adolf Hitler who lied to Chamberlain

The Allies blamed Germany for World War I.  And the Versailles Treaty made the peace following the war a difficult one for Germany.  Blame for the war, war reparations, loss of territories, emasculation (severe limits on Germany’s military strength), etc.  It did a number to German esteem.  Especially when they didn’t technically lose World War I.  The war ended in an armistice.  Where the combatants agreed to a cease fire as they were all exhausted by war.  Of course, America’s entry into the war would have most likely led to a German surrender.  For they were not yet exhausted by years of war.  And could extend the conflict indefinitely until Germany did surrender.  But that didn’t happen.  Which made for a lot of angry Germans when the Allies treated them as if they had surrendered unconditionally.  Setting the stage for an Adolf Hitler to come to power.  Which is what happened.

The war left the Germans isolated.   Russia pulled out of World War I before its completion and devolved into revolution.  Bringing the communists to power.  Replacing Russia with the Soviet Union.  These developments left them, too, isolated in the post-war world.  And then these two isolated nations found each other.  Signing the Treaty of Rapallo in 1922.  Renouncing any territorial or financial claims between them from the war.  And becoming trading partners.  Among other things.  Such as using Soviet soil to rebuild German armed forces in direct violation of the Versailles Treaty.  Where they trained for armor warfare.  Built an air force.  And even developed chemical weapons.  This new eastern friendship had another shared interest.  Poland.

 

Germany and Russia lost portions of Poland following World War I.  And they wanted them back.  But Hitler tested the waters first.  To see how the war-weary allies would react.  He marched troops into the demilitarized Rhineland in violation of the Versailles Treaty.  And the Allies did nothing.  Hitler sent an ultimatum to the Austrian chancellor to hand over power to the Austrian NSDAP (i.e., Austrian Nazi Party) or he would invade Austria.  The Austrian chancellor did.  And Hitler’s Wehrmacht marched triumphantly into Austria the following day.  And the Allies did nothing.  Then Hitler turned his eyes to Czechoslovakia.  And the Sudetenland.  Which he wanted to annex into the Third Reich.  And he was willing to do this with an armed invasion.  Something that got the war-weary Allies’ attention.  For the last thing they wanted in Europe was another war.  British Prime Minister Neville Chamberlain met with Hitler.  And opened a dialogue with him.  Finding Hitler to be a reasonable man.  And the Allies agreed to give Czechoslovakia’s Sudetenland to Hitler.  With Czechoslovakia having little say in the matter.  But it was for the greater good.  “Peace in our time.”  And it was the last territorial acquisition he wanted.  He promised.  So Hitler got the Sudetenland.  And within 6 months Hitler took the rest of Czechoslovakia.  Without firing a single shot.  Because the Allies were so eager to appease Hitler that they never considered that he was lying to them.  Which he was.

The Treaty of Rapallo allowed the Nazis to build the War Machine they eventually Unleashed on the Soviet Union

With the southern border of Poland secured thanks to the Allies giving Czechoslovakia to Germany it was time to recover their lost territory in Poland.  All they needed was a little help from their new best friend.  The Soviet Union.  And it came in the form of a non-aggression pact with the Soviet Union.  The Treaty of Non-aggression between Germany and the Union of Soviet Socialist Republics signed August 23, 1939.  Promising that neither would go to war with the other.  Or ally with a nation that does.  As well as the secret agreement to invade and divide Poland.  As well as dividing up Bessarabia, Estonia, Finland, Latvia, Lithuania, Romania, etc.  Then, on September 1, 1939, Hitler invaded Poland.  Launching World War II.  Something they couldn’t have done if it weren’t for their new best friend.  The Soviet Union.

After Poland came Norway.  Then France and the Low Countries.  The British held the Nazis off in the Battle of Britain.  Then came North Africa.  Yugoslavia.  And Greece.  Then came Operation Barbarossa.  Starting on June 22, 1941.  Something Hitler thought about since writing about it in Mein Kampf back in 1925.  Finding Lebensraum (i.e., living space) for the German people.  In particular the Bread Basket of Europe.  The Ukraine.  Which if you know your history, and your geography, was part of the Soviet Union.  Yes, that’s right.  Hitler lied to Joseph Stalin to get what he wanted.  Launching off points for the conquest of the Soviet Union.  A land he viewed as filled with sub-humans he would kill off with famine after taking their food.

The Soviet people paid a dear price for their leader’s treachery.  Enduring hell on earth on the Eastern Front.  With some 20 million dead by the time it was over.  It was these innocent Soviets who won World War II.  Who wore down the Germans with their wholesale dying.  At times 10 Soviets dying for every one German.  None of which would have happened if Stalin had read Mein Kampf.  Or if he didn’t make a pact with the Devil that led to World War II.  The secret agreements in the Treaty of Rapallo.  Letting the Nazis develop the war machine they eventually unleashed on the Soviet Union.  Which just goes to show you that you need to understand who your enemies are.  And once you do you cannot try to make nice with them.  For they will turn on you once you’ve served your useful purpose.  Just like Hitler turned on Stalin.  As Iran will turn on the United States after they served their useful purpose in getting them their nuclear weapons.  And when that time comes the cost of that war will be far greater than it would have been if it was fought before they had nuclear weapons.  With scenes from that war looking more like Hiroshima and Nagasaki than the hell on earth of the Eastern Front

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Versailles Treaty, Marshall Plan, Post-War Japan, MITI, Asian Tigers, Japan Inc., Asset Bubbles, Deflationary Spiral and Lost Decade

Posted by PITHOCRATES - February 21st, 2012

History 101

Douglas MacArthur brought some American Institutions into Japan and unleashed a lot of Human Capital

At the end of World War I the allies really screwed the Germans.  The Treaty of Versailles made for an impossible peace.  In a war that had no innocents the Allies heaped all blame onto Germany in the end.  And the bankrupt Allies wanted Germany to pay.  Placing impossible demands on the Germans.  Which could do nothing but bankrupt Germany.  Because, of course, to the victors go the spoils.  But such a policy doesn’t necessarily lead to a lasting peace.  And the peace following the war to end all wars wasn’t all that long lasting.  Worse, the peace was ended by a war that was worse than the war to end all wars.  World War II.  All because some corporal with delusions of grandeur held a grudge.

The Americans wouldn’t repeat the same mistake the Allies made after World War II.  Instead of another Versailles Treaty there was the Marshal Plan.  Instead of punishing the vanquished the Americans helped rebuild them.  The peace was so easy in Japan that the Japanese grew to admire their conqueror.  General Douglas MacArthur.  The easy peace proved to be a long lasting peace.  In fact the two big enemies of World War II became good friends and allies of the United States.  And strong industrial powers.  Their resulting economic prosperity fostered peace and stability in their countries.  And their surrounding regions.

MacArthur changed Japan.  Where once the people served the military the nation now served the people.  With a strong emphasis on education.  And not just for the boys.  For girls, too.  And men AND women got the right to vote in a representative government.   This was new.  It unleashed a lot of human capital.  Throw in a disciplined work force, low wages and a high domestic savings rate and this country was going places.  It quickly rebuilt its war-torn industries.  And produced a booming export market.  Helped in part by some protectionist policies.  And a lot of U.S. investment.  Especially during the Korean War.  Japan was back.  The Fifties were good.  And the Sixties were even better. 

By the End of the Seventies the Miracle was Over and Japan was just another First World Economy 

Helping along the way was the Ministry of International Trade and Industry (MITI).  The government agency that partnered with business.  Shut out imports.  Except the high-tech stuff.  Played with exchange rates.  Built up the old heavy industries (shipbuilding, electric power, coal, steel, chemicals, etc.).  And built a lot of infrastructure.  Sound familiar?  It’s very similar to the Chinese economic explosion.  All made possible by, of course, a disciplined workforce and low wages.

Things went very well in Japan (and in China) during this emerging-economy phase.  But it is always easy to play catch-up.  For crony capitalism can work when playing catch-up.  When you’re not trying to reinvent the wheel.  But just trying to duplicate what others have already proven to work.  You can post remarkable GDP growth.  Especially when you have low wages for a strong export market.  But wages don’t always stay low, do they?  Because there is always another economy to emerge.  First it was the Japanese who worked for less than American workers.  Then it was the Mexicans.  Then the South Koreans.  The three other Asian Tigers (Hong Kong, Singapore and Taiwan).  China.  India.  Brazil.  Vietnam.  It just doesn’t end.  Which proves to be a problem for crony capitalism.  Which can work when economic systems are frozen in time.  But fails miserably in a dynamic economy.

But, alas, all emerging economies eventually emerge.  And mature.  By the end of the Seventies Japan had added automobiles and electronics to the mix.  But it couldn’t prevent the inevitable.  The miracle was over.  It was just another first world economy.  Competing with other first world economies.  Number two behind the Americans.  Very impressive.  But being more like the Americans meant the record growth days were over.  And it was time to settle for okay growth instead of fantastic growth.  But the Japanese government was tighter with business than it ever was.  In fact, corporate Japan was rather incestuous.  Corporations invested in other corporations.  Creating large vertical and horizontal conglomerates.  And the banks were right there, too.  Making questionable loans to corporations.  To feed Japan Inc.  To prop up this vast government/business machine.  With the government right behind the banks to bail them out if anyone got in trouble.    

Low Interest Rates caused Irrational Exuberance in the Stock and Real Estate Markets

As the Eighties dawned the service-oriented sector (wholesaling, retailing, finance, insurance, real estate, transportation, communications, etc.) grew.  As did government.  With a mature economy and loads of new jobs for highly educated college graduates consumption took off.  And led the economy in the Eighties.  Everyone was buying.  And investing.  Businesses were borrowing money at cheap rates and expanding capacity.  And buying stocks.  As was everyone.  Banks were approving just about any loan regardless of risk.  All that cheap money led to a boom in housing.  Stock and house prices soared.  As did debt.  It was Keynesian economics at its best.  Low interest rates encouraged massive consumption (which Keynesians absolutely love) and high investment.  Government was partnering with business and produced the best of all possible worlds.

But those stock prices were getting way too high.  As were those real estate prices.  And it was all financed with massive amounts of debt.  Massive bubbles financed by massive debt.  A big problem.  For those high prices weren’t based on value.  It was inflation.  Too much money in the economy.  Which raised prices.  And created a lot of irrational exuberance.  Causing people to bid up prices for stocks and real estate into the stratosphere.  Something Alan Greenspan would be saying a decade later during the dot-com boom in the United States.  Bubbles are bombs just waiting to go off.  And this one was a big one.  Before it got too big the government tried to disarm it.  By increasing interest rates. But it was too late.

We call it the business cycle.  The boom-bust cycle between good times and bad.  During the good times prices go up and supply rushes in to fill that demand.  Eventually too many people rush in and supply exceeds demand.  And prices then fall.  The recession part of the business cycle.  All normal and necessary in economics.  And the quicker this happens the less painful the recession will be.  But the higher you inflate prices the farther they must fall.  And the Japanese really inflated those prices.  So they had a long way to fall.  And fall they did.  For a decade.  And counting.  What the Japanese call their Lost Decade.  A deflationary spiral that may still be continuing to this day.

As asset prices fell out of the stratosphere they became worth less than the debt used to buy them.  (Sound familiar?  This is what happened in the Subprime Mortgage Crisis.)  Played hell with balance sheets throughout Japan Inc.  A lot of debt went bad.  And unpaid.  Causing a lot problems for banks.  As they injected capital into businesses too big to fail.  To help them service the debt used for their bad investments.  To keep them from defaulting on their loans.  Consumption fell, too.  Making all that corporate investment nothing but idle excess capacity.  The government tried to stop the deflation by lowering interest rates.  To stimulate some economic activity.  And a lot of inflation.  But the economy was in full freefall.  (Albeit a slow freefall.  Taking two decades and counting.)  Bringing supply and prices back in line with real demand.  Which no amount of cheap money was going to change.  Even loans at zero percent.

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LESSONS LEARNED #15: “Most people would rather hear a pleasant lie than an unpleasant truth.” -Old Pithy.

Posted by PITHOCRATES - May 27th, 2010

NO ONE LIKES bad news.  That’s why when someone says, “I’ve got good news and bad news, which do you want to hear first?” most people want to hear the bad news first.  Get the sting over.  Then hear the good news to help get over the sting of the bad.

People are so adverse to bad news they’ll even look for ways to ignore it as long as they can.  They’ll believe lies if the lies keep their pleasant little world pleasant.  Almost to any cost.  In 1944, the Germans were beaten.  There was a chance some soldiers would be home before Christmas.  So when some scattered reports came of movements on the German front towards the Eifel Region just east of the Ardennes, SHAEF (Supreme Headquarters Allied Expeditionary Force) discounted them.  Explained them away as nothing.  Because the Germans didn’t launch winter offensives.

Until 1944, that is.  The Schnee Eifel battle, at the beginning of the center prong of a 3-prong attack, was the greatest American defeat in 1944/1945 Europe.  But this was only one of many battles known as the Battle of the Bulge.  This German winter offensive through the Ardennes was the biggest American battle of World War II.  And bloodiest.  In all, the Germans killed about 20,000 American soldiers.  Some after they surrendered.  Kampfgruppe Peiper spearheaded the Sixth SS Panzer Division.  Joachim Peiper would eventually lead this force through the Baugnez crossroads near Malmedy.  And into infamy.  The Malmedy Massacre wasn’t the only war crime, though.  There were others.

In the movie Patton, General Patton predicted this German offensive.  And there was some truth in that.  Third Army DID predict this.  But it was his chief of intelligence, Colonel Oscar Koch, who figured this out.  Patton’s battlefield successes were the result of strong intelligence.  And Colonel Koch gave him some of the best intelligence available on the Western Front.  In November 1944, he gathered the intelligence, analyzed it and predicted a time and place.  Of course, SHAEF discounted his findings.  They were sure the Germans were beaten.  Besides, the Germans didn’t launch winter offensives.

THE BATTLE OF the Bulge was only a small part of World War II, the biggest and meanest war in the history of mankind.  Nations mobilized their military, economic, industrial, and scientific forces to wage total war.  Civilians died, too.  En masse.  Whether by bombing of enemy cities or by organized genocide in occupied lands, civilians felt the horrors of war as they never had before.

So how did such a horrific war come to be?  It’s complicated.  Did it have to be as bad as it was?  No.  At least, France could have stopped Hitler earlier.  Before his military buildup.  But to understand this story, you have to go back in time. 

THE GREAT WAR, World War I, was the culmination of a series of disputes over European power and control of the Balkans.

The Crimean War of 1853–1856, the Austro-Sardinian War of 1859 and the Austro-Prussian War of 1866 stirred the pot up in the Balkans.  The Franco-Prussian War of 1870-1871 established a new unified Germany as the dominant power of Europe as Great Britain and France were in decline (and ceded the Loraine-Alsace region from France to Germany).  And the Russo-Turkish War of 1877–1878 exploited the Balkan tempest.

Weaker nations formed treaties with stronger nations.  Entangling treaties.  Imperial interests in the Balkans of both the great and not so great powers further fermented the Balkan tempest.  Minority rule of the majority led to nationalist rebellion.  To quench this rebellion, the Austro-Hungarian Empire annexed Serbia.

This is a very cursory history but you get the picture.  There was a lot of anger.  And a lot of wrongs to right.  And territory to regain.  Or to simply gain.  And then on Sunday, the 28th of June 1914, Archduke Franz Ferdinand of Austria visited Sarajevo.  There a Yugoslav nationalist, Gavrilo Princip, assassinated him.  And then all of those entangling treaties kicked in and a world was at war.

IT WAS THE bloodiest and costliest war to date.  No one thought it would be, though.  You see, they learned a lot from the Prussians during the Franco-Prussian War of 1870-1871.  Which was swift and conclusive.  Unfortunately, they learned little from the American Civil War (1861-1865).  For 4 bloody years the Americans demonstrated warfare where technology was ahead of military tactics.  And World War I was to look more like the American Civil War than the Franco-Prussian War of 1870-1871.  Long.  And bloody.  A war of attrition where you don’t necessarily win a decisive battle.  The other side just runs out of soldiers to kill.

World War I (1914 to 1918) saw horrific killing fields.  Artillery bombardments that would last for days.  Attacks through barbed wire into raking machine-gun fire.  Poison gas.  The death toll was staggering.  Great Britain and her Imperial forces lost over a million killed, over 2 million maimed and wounded.  France lost slightly more killed and almost twice in maimed and wounded.  Civilians were not untouched by war, either.  Blockade starved civilian populations.

The War devastated and impoverished these two countries.  They won the war, but only barely.  The entry of America was just too much.  More soldiers and material.  The killing could go on indefinitely.  So all sides sued for peace.  With the Americans on the Allied side, though, they were in a position to dictate the terms of the peace.  And boy did they.

THE TREATY OF VERSAILLES was punitive.  In the run up to war, there were really no innocents.  But to the victors go the spoils.  Official blame for the war fell on Germany.  She lost territory (France got back the Loraine-Alsace region) and all her colonies.  And she had to pay reparations.  The Germans were pissed. 

The Allies hoped to mitigate their war losses by German tribute.  But it was too much.  Even a member of the British delegation at Versailles, economist John Maynard Keynes, thought so.  In an effort to restore Great Britain and France as the dominant European powers, the allies probably went too far.  The economic burdens on Germany were too great.  Then hyper-inflation met Great Depression.  Angry socialists, communists and nationalists tore the nation asunder.  Until a uniter came along.  Adolf Hitler.

HITLER ROSE TO power legally.  Then he consolidated his power ruthlessly.  He renounced the Versailles Treaty.  And did a lot of things that showed his ultimate intentions.  Including writing a book years earlier about his ultimate intentions.  Mein Kampf.  Which was pretty detailed.  To anyone who read it. 

One of his first provocative acts was to place a negligible military force into the Rhineland in 1936.  The German High Command was a little skittish about this idea for they did not believe they had sufficient strength to successfully fight off a French response.  The French had superior numbers in military power.  But they were financially weak.  They had poured a fortune into the line of fortresses known as the Maginot Line.  They could not afford all out war with Germany, too, and they thought a military conflict in the Rhineland may lead to that.  And after going through the horrors of the Great War, they had no desire to do it again.  Whether it was a question of could or would is still debated.  But had they, one wonders how such action would have altered the course of history.

Hitler continued in a string of actions, explaining away each as harmless with no higher purpose.  Great Britain and France were growing uneasy but accepted his statements.  They wanted to believe.  They would do just about anything to avoid a return to war.  Even give away another sovereign nation’s land.

THE SUDETENLAND WAS an area along the Czechoslovakia side of their border with Germany with German inhabitants.  Hitler wanted to reincorporate them into the German state.  He promised this would be his last territorial acquisition.  And, at Munich in September of 1938, Great Britain and France took him at his word.  With Czechoslovakia not even present at this conference, they concluded the pact that ceded the Sudetenland to Germany.  All’s well that ends well.

British Prime Minister Neville Chamberlain returned to London with a copy of the Munich Pact.  He would give a speech declaring they got “peace for our time.”  But they didn’t.  Hitler soon took the rest of Czechoslovakia.  With his two flanks protected, Hitler invaded Poland in 1939 and launched the world into war.  Again.  Only this time, it would be worse.

IT IS HARD to blame France and Great Britain’s reluctance to return to war with Germany after the devastation of World War I.  And those who do usually do so with the advantage of hindsight.  However, we know what the costs added up to in stopping Adolf Hitler in 1945.  And few would say that all out war with Germany in 1936 would have cost more.

Here’s the ugly truth.  The truth can be ugly.  And we hide from it at our own peril.

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