Week of November 8th, 2009
Today the world celebrates the 20th anniversary of the collapse of the Berlin Wall. Actually that sounds like there was an earthquake or something, and the wall came a tumbling down. What actually happened on November 9, 1989 was that the Communist East German government succumbed to the inevitable and announced that East Germans were free to cross the border into West Germany without being shot in the back; "Honest, ve vont shootz you, really"
The Berlin Wall - November 9, 1989
In August of 1989, the first crack in the Iron Curtain appeared in Hungary, which had opened its border with Austria. East Germans suddenly realized that they could travel freely to Communist Hungary, then to Austria and eventually to family, friends, and freedom in West Germany. This was all made possible when everyone realized that the Soviet Union was not going to roll in with tanks like they had in Hungary in 1956 and Czechoslovakia in 1968. This avenue of escape, though, was soon closed when Hungary, Austria and West Germany soon found themselves overwhelmed with East German refugees packed in their dilapidated, oil-leaking Soviet cars (The Volga). Those who weren't able to get out through Hungary then found the same open border between Czechoslovakia and Austria and the flood started again until the East Germans closed all their borders. Demonstrations within East Berlin grew daily until the East German government announced on November 9th that they would begin to ease border restrictions.
When a government official mistakenly said that the new rules went into effect immediately, thousands (if not millions) of Germans on both sides went to the wall. When overwhelmed border guards did nothing, the celebration began. Thousands danced on top of the wall that at least 171 people had been killed trying to climb. People brought hammers and chisels and began to disassemble the Berlin Wall itself. Within weeks, the remnants of the wall were taken down, Germany began to re-unify, and one Warsaw Pact nation after the other overthrew their Communist governments. Eventually the Soviet Union itself crumbled and forty-four years of totalitarian regimes and cold war ended.
What I find most ironic is the growth of capitalism in these nations where it used to be a dirty word. When I was a young trader, the CME had an advertising campaign emphasizing their motto "Free Markets for Free Men". The campaign consisted of three very funny posters asking the questions "How come there's no Moscow Mercantile Exchange?", "How come there's no Havana Cigar Exchange?", and my personal favorite, ""How come there No Peking Duck Exchange?"
CME Propaganda from thirty years ago (more below)
Today there is a Moscow Securities Exchange that freely trades equities as well as futures. There are also several exchanges in China which is, ostensibly still a Communist nation. There is still no Havana Exchange and I doubt they will do much celebrating this week. More's the pity, as Havana was once a thriving center of business and gambling, probably a natural breeding ground for traders. Well there's always hope that twenty years after Fidel Castro's death, traders at the Havana Cigar Exchange will be celebrating that anniversary.