Schulen in Germany

Tue, 2016/08/23 - 1:07pm | Your editor


As I am off to Germany next month to visit my father's high school in Bad Hersfeld and the Mikva (ritual bath) in Rottenburg a.d. Fulda, I have mixed feelings about the creation of new Jewish high schools in Germany. The one in Berlin will soon be a model for the new “Albert Einstein Hochschule” in Düsseldorf. Later another Jewish high school will be opened in Munich.


My first objection is to naming the school after Einstein, who was from Ulm and raised in Munich where he initially attended a Catholic high school before transferring to a secular one. Einstein has become respectable now, but he was not a model student. However he also had nothing to do with Düsseldorf, whose most famous Jewish product was the poet Heinrich Heine, a greater iconoclast than Einstein, who mocked both Judaism and Germany.


Religious affiliated schools were maintained in Catholic parts of Germany, like Bavaria, after unification in 1870. The privilege of running schools was granted to the Catholic church during the Wittelsbach reign which also provided for Protestant and Jewish high schools. Such schools also were created in Berlin. But by high school age, most German children attended secular schools between the World Wars.


In some German towns and villages, there were religious schools for Jewish and Huguenot children, usually only to age 14. These were granted by local minor lords to settle their territory during the 17th and 18th centuries by attracting refugees from France after Louis XIV repealed the Edict of Nantes (no longer allowing religious liberty). Then Jewish schools were founded to lure in Jews escaping from big city ghettos which were overcrowded, and where heavy taxes kept people from marrying.


My mother's area (the Sinnthal, near Schlüctern) was settled by Jews and Huguenots attending separate co-ed “Volkschule” founded by the local ruling family. The Huguenot Dominie was the inspector for the Jüdische Volkschule my mother attended well after Germany had been unified and the Hesse-Nassau ruling family deposed. He would set the children to translating parts of the Old Testament from German into Hebrew and visa versa. The Jewish teaching was strictly Orthodox although the teachers were often secular or even sinners. The Jewish teacher in my mother's village was having an affair with one of the local Jewish women, which everyone knew about, including the kids.


Starting in 1933 when Hitler came to power, a quota of only 1.5% of school and university places was imposed on Jews. The Nuremberg laws Hitler passed in 1935 formalized separate but equal schools and universities for Jews, who were ousted from others. Jewish schoolmasters were sent to concentration camps and the schools and synagogues in the villages and many cities were attacked on Kristallnacht, Nov. 9, 1938, along with Jewish homes and businesses. In 1938 Jewish schools stopped after 10 years. In 1942 Germany Jewish schools were shut and any education at all was denied the pupils.


During the Third Reich, the Nazis could prove Jewish ancestry based on ancestral enrollment in Jewish schools. Being an alumnus or descendant of one led to discrimination and ultimately annihilation. Jewish ancestry could also be detected in peoples' old tax returns where they had volunteered for a religious tax deduction for Jewish schools, Kosher certification, and other community needs.


I am a product of the New York City School system. My father was a product of the German state education system, attending what is called a Gymnasium, a secular school focusing on Latin and Greek for male students who might go to university (as my father never did in his youth.) His sisters attended a Lyceum, a high school where girls were taught modern languages rather than classic ones. They all attended schools with non-Jewish children and learned from each other.


The sex discrimination is gone now. But replacing it with religious separatism seems dangerous, given the arrival of so many Muslims in Germany. The teaching of religion should take place away from the public schools. Mixing children up regardless of their race or religion is better than”separate but equal” schools, and will teach Kinder tolerance of differences, keenly needed in Germany today.


More for paid subscribers from Spain, Britain, Canada, Belgium, Brazil, Israel, Australia, Ireland, and The Netherlands.

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Trump Prevents World War III

Mon, 2016/08/22 - 2:03pm | Your editor

The Trump candidacy is preventing World War III. Seriously. I mean it.

As the dog days of summer wind down the thing I am most terrified of is the guns of August, 102 years after the world stumbled into a devastating world war. Then European rulers failed to think through the impact of decisions made almost automatically. Reacting to China's enigmatic Xin and Russia's recklessly ambitious Putin has to be carefully calibrated to not lead to another dreadful war.

Ironically enough, there is one reason for optimism. The Russian president, who has reshuffled his advisory team, may be restrained, not by the risk of western reactions to his interventionism, but by the fact that he has leverage over candidate Trump. The Republican anti-Nato anti-trade anti-immigrant New Yorker, were he to gain the White House, would back a Russian anti-western agenda. So Vladimir Vladimirovich can lighten up on his support for Bashir Assad and the eastern Ukrainian separatists.

The same for China, given that the real estate magnate owes so much money to the Chinese state-owned banking sector that some might count him as “The Manchurian Candidate”.

Why upset the apple cart in eastern Ukraine or snatch a reef in the Pacific Ocean if you just have to wait a few months to have your man running the USA?


Here is some more counter-marketing about our moves following the global financial crisis:

*We sold India's ICICI Bank at $1.70 and it is now $7.35.
*We sold Allied Irish Bank at $2.89 and it is now $7.13 but it required a refinancing at $0.07. Oh, skip that one.

*We sold Barclays at $13.87 and it is currently $8.48. Oh, skip that one.

*We sold Australia's Westpac Bank at $22.19 and it is now $22.97. Oh, skip that one.

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Another Hot Sunday

Sun, 2016/08/21 - 12:34pm | Your editor

Today I was woken in the wee hours by a thunderstorm, a follow-up to the one which flooded the neighborhood yesterday, temporarily took out our Internet-TV connectivity, and brought out the fire engines to try to control the rising waters. So as a result I had time enough to do my tables as the Internet was restored.

Visit to view our tables. Click for printer friendly viewing.

I made a few technical changes in our tables, like moving a REIT to the funds part of the portfolio, and of course adding a pair of new yield plays as well. The fund pays zero yield but it may come right. More for paid subscribers follows. Join them to make money with our picks.

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Fri, 2016/08/19 - 1:43pm | Your editor

Today's newsletter is a counter-marketing report.
Because we tend to boast about how we exited some crashed stocks in time, I decided to tell the world about some upward-rocketing shares we exited too soon. What this shows is that my crystal ball is as cloudy as that of any other stock forecaster—sometimes. But thanks to our focus on individual smaller cap companies from foreign lands, we are more likely to win than to lose. Here are some errors:


*Australian wine-maker Treasury Wine Estates, spun out by by Fosters Brewing in 2011, was sold too soon. It has grown its Asia business which led to doubled net profit for the full year to June 30 (the Oz growing season) and the share popped 10%. We left 3 years too soon. TSRYY was a Martin Ferrera pick along with its former parent. Because wine is fun to drink and write about I was too quick to sell.

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Buybacks vs Dividends

Thu, 2016/08/18 - 11:38am | Your editor

Should shareholders cheer buybacks or insist of dividend increases? This debate, once confined to the USA where buybacks are common, has now spread to Britain. British firms like a bank, HSBC, a telco, BT, luxury fashion-maker Burberry, and retailer Sports Direct have all announced buy-back programs this year, and with Brexit there may well be more. The UK requires firms listed on the London Stock Exchange to announce each purchase, not the case in the US. Moreover, British companies have to pay stamp duty of 0.5% on these share purchases.

There are plenty of reasons to criticize buybacks, starting with the artificial impact a lower number of shares outstanding has on earnings per share. This often favors executives with options linked to EPS. A particular grievance of some analysts is when companies borrow (cheap) money to finance buying back their shares. This boosts prices in the short-term but it is hard to know whether the impact lasts. Raising a dividend, on the other hand, tells the market that business is growing. Once boosted, it is unusual for companies to then turn around and cut the dividend a few quarters later. (To get around this risk, special one-off dividends may be declared. Even they are more transparent than buybacks.)

Now British brokers Beaufort Securities as done a study of buybacks vs dividends, by comparing two exchange-traded funds: ProShares S&P 500 Dividend Aristocrats (NOBL) and SPDR S&P 500 Buyback (SPYB). A dividend aristocrat is a company which has increased its dividends for at least 25 consecutive years. NOBL holds 40 stocks while SPYB owns the 100 with the highest buyback ratio in the prior 12 months. Both funds were available from Feb. 4, 2015, a relatively short period.

Head to head, the two funds tracked each other closely until the autumn of 2015. Then the returns began to diverge, with NOBL taking the lead.

During Q1 this year, as markets became more fragile, the NOBL lead over SPYB began growing sharply. As of August 1, the share price of the buyback fund was down 2.5% while the dividend increasing fund was up 9.6%. (Data from


More from Britain, India, Canada, Hong Kong, Norway, Finland, Mexico, Australia,Holland, Germany, Israel, and Japan, including 2 quarterly reports. For paid subscribers only with stock advice. Join them to grow your portfolio.

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Fed Hawks

Wed, 2016/08/17 - 1:31pm | Your editor

The US stock market is suffering because hawkish Fed officials are reminding the world that another rate hike was planned for this year. The dollar is being boosted thereby and gold is losing its charm. Conditions may soon warrant a rate hike, said the Fed.

Wall Street is over-bullish and underbearish, which contrarians say is a sell signal. The Fed Open Market Committee minutes were breathlessly awaited by the street. There was no surprise.

This Fed threat follows good US manufacturing growth in July and steadily lower unemployment. And no inflationary tendencies except in hourly wages, the worst place for them.

It is a good time to buy gold if you haven't done so already. Or to buy more.

While most readers like to buy the exchange traded funds some of you may prefer physical gold. You can buy bullion legally via our web site by clicking on the ad for This is a site sponsored by the mining industry's World Gold Council, which also sponsors the popular ETF, SPDR Gold, GLD. Accounts at bullionvault, which is in London, can be invested in using a normal US check (and you get another US check if you sell). The process is taxed by Uncle Sam. You can trade gold in dollars in any major market for the yellow metal: Britain, the US, Canada, Switzerland, or Hong Kong, which enables savvy investors to arbitrage between markets.

The main advantage of bullionvault is that its trading and storage fees are ultra-low, in contrast to what hits those using bullion vendors who are not subsidized by the mining industry. Gold coins are heavily marked up as is bullion sold by outfits like Harrod's Bank, a sub of the London department store.


News today from Britain, Denmark, Sweden, Finland, China, Israel, Cyprus, Canada, Spain, Peru, Mexico, Hong Kong, South Africa, and Australia.

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Shock Jocks on Macro-Economics and Diplomacy

Tue, 2016/08/16 - 2:29pm | Your editor

John Llewellyn and Russell Jones, a pair of experienced UK macro-economic experts, just put out a shock-jock paper advocating heresy. They write:

“ Conventional wisdom is that monetary finance is not worth the perceived risks

“ But such fundamental regime change could conceivably be just what is required

“ The 1930s experience with the gold standard offers some salutary lessons

“ Abandoning gold was viewed by most as a recipe for inflationary or other disaster

“ But generally, to the extent that policy retained credibility, it offered a path to salvation.


“Eight years on from the global financial crisis, and despite any number of unorthodox initiatives, governments and central banks struggle to stimulate aggregate demand sufficiently to deliver strong and sustained output growth. In this environment there has been growing discussion of ‘helicopter money’, or ‘monetary finance’.

“The subject excites strong opinions. To many, central bank financing of an expansionary fiscal stance is the ultimate policy taboo. At a stroke it sweeps away constraint on government expenditure, and encourages a large and permanent increase in the monetary base. It thereby risks a loss of control over the public finances, and excessive inflation. Others assert that it would be pointless, given that interest rates are already around the zero bound. If governments can borrow in the capital markets at no cost, orthodox fiscal policy can do everything that monetary finance can do, with fewer risks.

“However, the antagonists on both sides of the argument may be failing to see what could prove to be the real point, the factor that could make a real difference. Arguably, the underlying consequence of such an unorthodox strategy as monetary finance could be, through ushering in a new policy regime, to deliver a significant positive shock to expectations − of both prices and economic growth.

“Monetary finance could be viewed as important as the abandonment of the gold standard in the 1930s. [Then], the gold standard – the link of domestic money supplies to gold reserves – had become an albatross around the neck of the world economy. Rather than a source of confidence, strength, and stability, it had become a major destabilising influence. With the global financial architecture lacking the necessary symmetry, flexibility, and oversight, and international co-operation conspicuous by its absence, the burden of adjustment fell on the economies with the weakest fundamentals, and bad policies in one country were transmitted to others. Financial turmoil and rapid deflation, together with their associated economic, social, and political ills, spread around the world. The net result was the propagation and amplification of the Great Depression.

“Initially, few believed there was any viable alternative. On the contrary. The notion of monetary and fiscal reflation to support domestic activity and prices was anathema. The gold standard was viewed as an indispensable discipline on politicians, whose inclination was to be wasteful and extravagant, and whose unbounded largesse could lead only to uncontrolled inflation.

“In the midst of the Great Depression, when deflation was the clear and present danger, inflation was the dominant fear among politicians and beyond. Given this rigid mindset, for the most part, governments came to abandon the gold standard only under extreme duress.

“Such thinking proved to be flawed. Leaving the gold standard – a regime change of fundamental proportions – in fact promoted recovery. Moreover, which countries escaped from the Great Depression and reversed deflation accords closely with their government’s decision to abandon this once-inviolate system, and thereby progressively tailor monetary conditions to domestic ends.

“Forsaking the gold standard, and thereby changing expectations about inflation, real interest rates, and growth proved to be the path to salvation, rather than the road to perdition.


The Orthodox and The Heretic

“Sir Warren Fisher, Permanent Secretary to HM Treasury, summer 1931: [Leaving gold would result in] 'the evaporation of confidence in money, hyperinflation, strikes, rationing and riots.'

“Clément Moret, Governor of the Bank of France, Summer 1931: 'Hair-brained and irresponsible .... [it] would lead to uncontrolled inflation and complete chaos.'

“James Warburg, Financial Advisor to Pres. Roosevelt in 1933, after the president announced the removal of the dollar from gold: 'This is the end of western civilisation.'


“And so to the heretic, John Maynard Keynes, a week before UK’s departure from gold: 'I have now come quite clearly to the belief that devaluation is the solution for this country . . . I am almost alone in openly saying so. At present there is a vast wave of so-called patriotic propaganda to the contrary, which is trying to frighten the people with most fantastic accounts of what would happen if we slipped our anchor.'

“And a week after the UK left the gold standard: 'We have at last a free hand to do what is sensible...I believe that the great events of the last week will open a new chapter in the world's monetary history.'”

(Reprinted with permission from of London. Asked if they are saying we should think the unthinkable as an intellectual exercise or because it will work, Jones and Llewellyn said “a bit of both and Llewellyn added: “Monetary financing, properly handled, is not the bogeyman some portray it as. Japan, the UK, and even the US could be strong candidates.” )


Putin's Prowess

Lawyer Robert Amsterdam writes in Spears Newsletter, also from Britain:

“The Brexit vote has created division and fraying ties between [the] UK and the continent. Boris Titov, Russia’s commissioner for entrepreneurs’ rights, celebrated by commenting that ‘this is not the independence of Britain from Europe, but the independence of Europe from the USA’. The Kremlin couldn’t be more pleased.

“Then came the attempted military coup in Turkey, a hugely important Nato member. This coup attempt (believed to have been masterminded by the US-resident imam Fethullah Gülen, which my law firm is investigating on behalf of the Republic of Turkey) placed strain on US-Turkey relations, which benefits Moscow.

“Putin’s winning streak wasn’t finished. Before the opening of the Democratic National Convention, a hacker released to WikiLeaks a trove of emails, inciting an internal scandal designed to rip apart the party. The source of the hack was eventually allegedly traced back to Russia.

“There is a temptation to view Putin, now going on sixteen years of de facto rule of Russia, as a strategic mastermind. But no. Donald Trump is a home-grown problem. The Brexit vote was the culmination of legitimate frustrations coupled with an incompetent Remain. As for Turkey, just weeks before the attempted coup, President Recep Tayyip Erdoğan and Putin had mended fences after months of acrimonious exchanges.

“Far from being a chess grandmaster, Putin is playing a game of chance. Russia analyst Mark Galeotti has pointed out that the DNC email hack is likely to backfire with unintended consequences on Russia. Hillary Clinton’s team has pivoted from this to become the ‘anti-Russia party’, while Trump will now be cast as ‘Putin’s man’. Neither is true, but it will not help the Kremlin.

“Putin is largely a distraction from the more difficult questions of what forces have put us in the place we find ourselves. The broad rejection of EU membership and the surge of popularity of Trump are both driven by economic and social conditions. Having failed to make friends or cultivate allies, Russia is depending upon these renewed calls for isolationism. From its point of view, Russia is safest when the West finds itself in chaos.”


More for paid subscribers with scant news from Canada, the Cayman Islands, Britain, India, Hong Kong, South Africa, Colombia, and Brazil, plus a new stock pick and one company reporting.

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Information Gaps

Mon, 2016/08/15 - 12:06pm | Your editor

Your editor, commissioned by an Irish publisher, is working on a commentary on the British referendum vote to leave the European Union. So far, I have gathered together the political and banking sequels of the surprise vote June 24. Now I am working harder on finding ways to play the event in stocks and bonds.

I keep on being surprised by how many reprints this US newsletter has won for its coverage of the Brexit events from places I would consider relatively plugged in to Great Britain: Ireland or Canada. I went to London for the vote because my British husband (who spent years covering the EU from Brussels and later Paris as a foreign correspondent for the Financial Times and then the New York Times) insisted voting. British non-residents can't get an absentee ballot. The US is barely better.

In contrast to our usual policy of sharing special reports with paid subscribers, as this gig is being sponsored by an outside firm, we have to charge for it lest we undermine their marketing, mostly across the pond.

I will, however, share with you any stock or fund picks which emerge from my research. Any new subscribers or renewers at full price will get the referendum report as a bonus after the Irish have published.


I like emerging markets bonds which we own through experienced closed-end funds mostly denominated in dollars rather than local currencies.

But the stock markets of developing countries are a potential quagmire, luring in buyers with little knowledge of the risks, but hungry for growth and income the rest of the world has trouble producing. Do you hold your nose and buy China or Russia, or put on a bulletproof vest to buy Indonesia while smoking a toke? Do you get lured into markets marked by serious risks like corrupt Malaysia or coup-prone Thailand? Do you trust your money to Turkey's Erdogan regime? I keep thinking of all those poor folks who bought into Venezuela...


More for paid subscribers from Australia, Britain, Brazil, Britain, Canada, China, Denmark, Germany, Israel, Japan, Jordan, Mexico, Sweden, and Switzerland. Today's theme is information gaps.

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Tables posted

Sun, 2016/08/14 - 12:33pm | Your editor

We are having such a heat wave that I am not even heading out to the Chinese carry-out. Instead we will gobble up pasta from the freezer. But because I can air condition my office even in 98 degree weather the tables have been posted. Please visit to view the one you are allowed to see and use the printer-friendly button to best view spreadsheets. Everyone can see the closed positions, but only current subscribers get to see our present holdings and advice.

Despite the weather, it has been a good week for us, particularly with foreign fixed income, because of desperate yield-demand from the Anglo-Saxon countries, now including Britain as well as the USA, and also including those from the US who used buy UK bonds.

More for paid subscribers follows.

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Holowach and FATCA

Fri, 2016/08/12 - 1:03pm | Your editor

We are upgrading our beach villa in Portugal, because it doesn't meet current building codes and therefore cannot be sold. We bought the house when we lived in Paris, over 38 years ago, because we couldn't afford the Riviera. We summered there for years with children, dog, and hamsters, driving over 3 days and two nights. We continue to escape to the Algarve annually, usually during the summer when I get to speak to potential subscribers at investor conferences before hitting the beach. But sometimes in the dead of winter when, thanks to the Gulf Stream, we can swim in the sea down 6 flights of stairs from our house.

The next generation of my family, lured in by water-slides and sand sculpting contests, also visit the Algarve, as do relatives and friends who sometimes join us. But airfares are high during school holidays so our kids don't join us often. Hence the work, and the attempt to finance it.

Out of what may be perversity, I opened a new account at a new bank in order to pay for the upgrade work, which includes rewiring the house, and redoing the plumbing, windows, and kitchen. Then I wrote a check on that new account to the architect who will act as general contractor.

I had already warned my US bank that there would be this outflow, and my US$ check was debited July 11. Using my US bank makes sure that the improvement costs can be deducted from the eventual sales price if we sell the house, perhaps to get a more reachable US vacation home. We have owned it too long to owe Portuguese capital gains taxes.

However the funds are still not available in my new Novo Banco account in Portugal and attempts to find out what has happened to the money result in nada. The toll-free international number I was given doesn't work; my code card for using on the Internet is not recognized; and calling the main bank number directly gets me put on hold with no human being picking up. The bank officer who opened our account is on vacation, I hope not in Brazil whence there is no extradition...

I'm kidding. It is just that the Portuguese banking system is backward and any check not in euros can take months to clear, according to a local. She monitors matters for us and uses a different bank. Of course if the money really has disappeared I won't have to file a FATCA report next April for US taxes.


While preparing for a trip down nostalgia lane to Hessen, Germany, in Sept., I stumbled upon a genealogy website which was searching for ancestors for people called Holowach, mostly in Canada. I know what the word means, but not the language it is in. A Holowach, at least among Jews who used to live in the area around Schluechtern, was a baby-naming party for a new-born girl, held in place of a circumcision (Brith Mila) for an 8-day old boy. My mother, the 5th daughter of her parents, was reproached for requiring a 5th Holowach rather than a Brith. Her parents then gave up. My aunt remarked once that the party was to see the newborn and decide if she would be pretty.

The information from my late mother I posted on on the name's meaning. Most Holowachs are in Canada and apparently not Jewish. I cannot tell if it is deformed Hebrew or German. Holo might come from holen, bring, and wach from awake, but it hardly makes sense. I note with glee that there is a famous ice-hockey player called Holowach, good news for my eldest grandson who to the best of my knowledge has no ancestors of that name.


More for paid subscribers follows from Britain, Israel, Sweden, Finland, Brazil, Norway, and China.

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