Monthly Archives: September 2017

Sep 26 2017

UK Pension Fund Insolvency Soars by 30% in a Single Year


Armstrong Economics Blog/Pension Crisis

Re-Posted Sep 26, 2017 by Martin Armstrong

The London Sunday Times business section headline demonstrates what is really facing us and governments implode. Public sector pensions liability surged 30% in a single year due to low bond yields. It is not possible for the UK to fund £1.8 trillion. The first course of action will be, as always, raise taxes. That is the path California has taken. Government only looks to solve a problem for the immediate day. They will NEVER look forward because a politician is EXCLUSIVELY concerned with the next election.

Something must give. How long until pensioners receive notices advising them that their pension can no longer be paid? We are facing rising civil unrest because government will not act in the best interest for the nation. Watch how fast taxes now start to rise in Germany after the election.

Sep 26 2017

Ice Core Samples Prove CO2 Levels Lag Behind Temperature Increases


Armstrong Economics Blog/Nature

Re-Posted Sep 26, 2017 by Martin Armstrong

QUESTION: Are you saying there is no direct correlation between CO2 and a rise in temperature?

ANSWER: Correct. We have data going back 800,000 years that was gathered from drilling core samples from deep underneath the ice sheets of Greenland and Antarctica. Detailed information on air temperature and CO2 levels disproves that a rise in CO2 will cause a rise in temperature. The core samples from EPICA Dome C ice core on the Antarctic Plateau establish that temperature rises first and CO2 level follow in a lagging manner. All of this was well before human kind (see ScientifAmerican). So is it the chicken or the egg? Which comes first?

Data has also established that the cooling of the Earth seemingly begun 200 years ago in the North before it spread to the South. Changes in the ocean currents appear to have been the catalyst for the major ice ages.

Sep 26 2017

Has Merkel Been Undermined in Germany?


Armstrong Economics Blog/European Union

Re-Posted Sep 26, 2017 by Martin Armstrong

 

There German election was on par with the global trend that is rising up against the establishment as we have known it. Angela Merkel has been accused of weakening her respective coalition partner. The election result of the Bundestag election shows that not only the SPD has to worry about losing ground, but the Union of the CDU and the CSU in Bavaria has been substantially weakened.

Merkel has always created a coalition by incorporating the key program points of the other parties into the Union. However, the election saw the Union lost nearly 9%, which is a historic defeat. In addition, there is a real rift emerging now with the CSU in Bavaria, where the CSU fell below 40% for the first time. In both cases, this has been caused by the refugee issue Merkel has tried to pretend is not a crisis.

Merkel has drastically underestimated the AfD and the refugee crisis. She concentrated on the Greens and the SPD and tried to bury the other parties with extremist labels. The AfD Merkel tried desperately to paint into the Nazi corner. She has failed to understand that the refugee crisis is a real crisis and it has undermined the people’s feeling of security.

The Union and the SPD wanted to negotiate the issue of refugees and migration. The SPD under Martin Schulz even was proposing that they should be allowed to vote. Without any comprehension of how serious the refugee crisis has been, Merkel attacked even the German-Turks in the TV duel as Turkey told Turks not to vote for Merkel. Schulz raged against the German-Turks despite the fact that the Turks in Germany were not refugees and had been there for decades.  Merkel positioned the CDU to the left of the center with the SPD in her entire term of office and wanted to put the key to their long-term strategy in this election of socialism.

Merkel’s Grand Coalition has seem a significant vote amounting to 46.8% voting against everything she stands for. The people have elected the FDP, the Greens, or the Left Party, while the bourgeois-conservative voters have moved to AfD. The union lost a million voters to the AfD, which was remarkable. This goes to the substance of the refugee crisis.

Merkel and her Grand Coalition have tried to downplay this political disaster. While Merkel has clung to power, the CSU is demanding concessions how in light of its loss to the AfD in Bavaria. Merkel may still be in office, but she suffered a defeat that was morally decisive as was the case with Hillary Clinton.

Merkel’s CDU has been unable to prevent voters from abandoning her Grand Coalition. She has indeed not strengthen the Grand Coalition, but weakened it. With the economy turn down and the inability of the ECB to cope with the deflation, the prospects moving forward for the Grand Coalition appear to be headed for a major political collapse.

Merkel’s failed strategy of setting up a left-green-conservative Volksspartei in the center for the CDU has meant that Germany is currently almost unregulated as Merkel has tried to be the Chancellor embracing all points of view except the AfD.

Germany’s Social Democrats (SPD) were hoping to at last oppose Merkel. However, they lost 5% from the 2013 election which has reduced them to a diminish socialist party. The SPD won just 20.5% of the vote, which was the party’s worst result in the 19 general elections since the creation of the federal republic. This demonstrates what our model has been forecasting that we are in the collapsing stages of socialism.  Martin Schulz his SPD party had no choice but to go into opposition “to defend democracy against those who question it and attack it,” after dropping to a post-war low.

Talk of the SPD abandoning Merkel and joining a black-yellow-green coalition with the FDP and Greens, does not look to be promising. The opinion makers in both parties are radical opportunists but not really team players. This would produce a coalition of just 40.1% against the CDU’s 32.5%.

Merkel has clearly abandoned the conservatives, which puts tremendous pressure on the CSU in Bavria. The CSU has made it clear that they must position themselves to the AfD given the attitude in Bavaria. This position is completely incompatible in a coalition with the Greens. It is as good as incompatible with a FDP. The CSU could not possibly align with the Greens without being in complete opposition with the AfD.

Merkel’s previous political strategy has called into question coalition politics. Yet after 12 years in power, many say that Merkel would have to be dragged out by the hair. The see the CDU as too corrupted by holding power too long. The CDU has lost all vision of where the people really stand. The AfD has offered these “deplorables” as Merkel called them an alternative, because the CSU was not able to penetrate the Union.

Merkel has won the first place and she has become a chancellor for a 4th term. But because the German political parties are in ruins, the question arises whether being chancellor even matters in this environment within Germany. Some fear that Germany will go the way of the Netherlands or Spain and muddle along temporarily governed by provisional rule until a new election is unavoidable in the end. Merkel’s underestimating the Refugee Crisis may seal the fate of Germany moving forward. An those who saw the Euro defeating the dollar; well good luck. The rend is down long-term.

Sep 25 2017

Supreme Court Cancels Travel Ban Arguments…


RE-Posted from The Conservative Tree House on September 25, 2017 by

Against the backdrop of a revised set of administration rules on visa issuance and restricted nationalities; and considering the previously argued ‘Trump travel ban’ guidelines expired Sunday; the Supreme Court has cancelled their hearing of arguments in opposition to the former travel restrictions and visa guidance.

(Via Associated Press) – 1:40 p.m. – The Supreme Court has canceled arguments set for Oct. 10 in the dispute over President Donald Trump’s travel ban, after Trump rolled out a new policy Sunday.

The unsigned order from the justices Monday asks both sides to weigh in by Oct. 5 about what to do with the case.

The court had been ready to hear argument about the legality of a 90-day ban on travelers from six mostly Muslim countries and a 120-day ban on refugees from around the world.

The ban expired Sunday and was replaced by a new policy that affects eight counties and has no expiration date.  Those countries are Chad, Iran, Libya, North Korea, Somalia, Syria, Venezuela and Yemen.  Chad, North Korea and Venezuela were not covered by the earlier ban. (link)

In addition both Chad and Venezuela are pushing back against Homeland Security guidance that led to their inclusion on the revised travel restrictions:

♦Chad’s government says it learned “with astonishment” of the decision by the U.S. government that its country is on a list whose nationals will be prohibited from entering the United States.

A government statement Monday said the government expresses its incomprehension about the “official reasons for this decision; which contrasts with Chad’s constant efforts and commitments in the fight against terrorism at regional and global levels.”

Chad’s government called for a better appreciation of the situation and for Trump to reconsider the decision which it says “undermines the image of Chad and the good relations between the two countries.” (LINK)

♦Venezuelan President Nicolas Maduro (nee-koh-LAHS’ mah-DOO’-roh) says the Trump administration’s decision to include Venezuelan officials on a travel ban is a form of “political and psychological terrorism.”

His foreign ministry issued a statement Monday saying that the travel restrictions violate the values of the United Nations charter and international law and are part of a continuing effort by the U.S. to oust Maduro from power.

The ministry said it is considering “all necessary measures” to defend Venezuela’s sovereignty and national interest. (LINK)

Sep 25 2017

Government Confusion = Incompetence (Politics v Bankers)


Armstrong Economics Blog/Gov’t Incompetence

Re-Posted Sep 25, 2017 by Martin Armstrong

QUESTION: Dear Martin Armstrong

About The post, “Is There a Way Out of This Financial Mess? “
In the second last paragraph you write, “Taxes have risen as deficits expand because government thinks inflation is the danger.” Link:
Shouldn’t that be Deflation?
Thank you for doing what you do.
U

 

ANSWER: No. I agree it makes no sense but logic is not a talent of government. You have central banks trying to stimulate by increasing the supply of money, but then you have politicians worried about their deficits and being criticized so the they raise taxes. The two placed in the same room could never have a true dialog of any meaning.

The bankers are worried about deflation and the politicians, like Merkel, are worried about inflation. It is confusing, but hey, anyone who actually thinks electing people without trading experience is the way to run an economy should ask the parking attendant who parks a car if they are free to fix a cavity in your tooth.

Sep 25 2017

Identifying Complexity


Armstrong Economics Blog/Understanding Cycles

Re-Posted Sep 25, 2017 by Martin Armstrong

QUESTION: Marty, I have followed your Global Market Watch and it is really amazing. I notice on IPE gas it came up and warned it was about to breakout to the upside. You said this is purely a pattern recognition system. Are there patterns that precede events and this is what your model is picking up on?

great-waveANSWER: In many fields there are these sudden Phase Transitions which are extreme events. I have explained that sailors always told of rogue waves that rise up from calm waters and sink ships. The rogue wave appears out of nowhere in the eternal sea of global economics just as it does the oceans of the world. They are caused by the synchronization of many trends suddenly coming together to produce a giant wave.

There is an instability inside a gas turbine that suddenly appears, or a sudden extinction of a previous ecosystems – mass extinctions of which there have been five so far with another one due probably at the end of the next 309.6 year cycle in the 2300-2400 time period.

These extreme Phase Transitions or extreme events occur without warning to the untrained eye. It’s often impossible to predict when such bursts of instability will strike in markets where there are a huge amount of variables from news to players from a human perspective. The GMW identifies key patterns that precede an extreme event. The framework is being applied to all markets and economies and allows us to see things through complexity that the human eye will never see.

Sep 25 2017

Climate Change & Economic Activity


Armstrong Economics Blog/Nature

Re-Posted Sep 25, 2017 by Martin Armstrong

QUESTION: Hi Martin,

I was wondering why a cold period would result in a commodity rise?
Thank you in advance for your time.
MG

ANSWER: When the climate turns cold, that is when food shortages takes place. When the climate turns warm, that is when economic activity starts and empires expand. The cold period we are entering will be on time for the shift in empires going forward.

global-warming-cyclical

All the great empires expanded during warming periods – not cold.

Sep 25 2017

Is There a Way Out of This Financial Mess?


Armstrong Economics Blog/Economics

Re-Posted Sep 25, 2017 by Martin Armstrong

We need to open the door to the future but that is only possible by understanding the past. Paul Volcker back in 1979 in his Rediscovery of the Business Cycle “Not much more than a decade ago, in what now seems a more innocent age, the ‘New Economics’ had become orthodoxy. Its basic tenet, repeated in similar words in speech after speech, in article after article, was described by one of its leaders as ‘the conviction that business cycles were not inevitable, that government policy could and should keep the economy close to a path of steady real growth at a constant target rate of unemployment. … But it was not until the events of 1974 and 1975, when a recession sprung on an unsuspecting world with an intensity unmatched in the post-World War II period, that the lessons of the ‘New Economics’ were seriously challenged.”

It gives me no please to point out all out problems. My objective is straight forward. If we understand what is unfolding and why, then we can apply the correct solutions rather than turn toward more government authoritarian control. Make no mistake about this, we are in a battle for our freedom. This era of “New Economics” was set in motion by Karl Marx who advocated that government could control the economy and thus create Utopia. While Russia embraced the Communism of Marx, the West adopted his position trying to be just a little bit pregnant. We rejected everything that Adam Smith discovered and the Invisible Hand, rushing into Socialism for it empowered government rather than the private sector and Laissez–faire.

Our crisis therefore originates with government. Of course we need government which provides a stable rule of law and is benevolent rather than authoritarian. This is a battle to the death of Marxism which in all its various flavors empowers government which seeks to turn people against one another in order to retain power. Because government just keeps growing consuming an ever larger portion of GDP, it has sharply reduced economic growth which is now colliding with the new age of technology reducing employment. Constantly arguing class warfare and pretending that they can raise the minimum wage as if this will somehow benefit society, only furthers the dangers we face ahead. The rising taxation upon labor creates the incentive to replace workers with robots. Even the government is trying to replace soldiers with robots. This is a trend that is on all sides. Russia has its robot soldiers, and the USA has been following suit. Using drones carrying machine guns is a dangerous development for they can be turned against the people in civil unrest. Those who think that would never happen need only look at Barcelona where the Madrid government just sent in 16,500 soldier to invade Catalonia  and stop any Independence Referendum.

Unfortunately, we are in a battle for our freedom and that of our posterity. Governments are broke. Everything is moving against them from every possible angle. They borrow with no intentional of paying anything off and are blind to the trend they have been caught up in. How can we make them see that this is not going to work nor will it end nicely?

We need to stop the borrowing, we need to drastically reduce the size of government and various departments should be PRIVATIZED because government is incapable of managing anything. At least then any pensions offered would actually be there for private companies cannot default and then refuse to prosecute themselves as does government. There is simply no checks and balance when prosecutions are a political decision and judges are political appointments. When paper money first began, it paid interest to entice the people to accept it. Then we adopted the idea put forth in this New Economics was that government could “stimulate” by borrowing and that would be less inflationary than printing. This became the Quantity of Money Theory, which has been proven to be complete wrong.

While Draghi has expanded the money supply for almost 10 years, deflation has prevailed.  This entire idea of borrowing would be less inflationary is just insane. We have reached at time 70% of the entire national debt was composed of accumulative interest expenditures. So the money never went to build roads, schools, or help the poor as politicians pretend. So we are only fooling ourselves. Taxes have risen as deficits expand because government thinks inflation is the danger. They have been systemically reducing the standard of living and job creation.

Until we are ready to review this theory of “New Economics” and deal with it, our future is doomed. If we cannot start a dialog, there is no hope. The press is bought and paid for and is no longer truly free to protect our rights. There is hope, but only if we start to push the right issues.

Sep 25 2017

Merkel Wins but Still only 32.5% Down Significantly


Armstrong Economics Blog/European Union

Re-Posted Sep 24, 2017 by Martin Armstrong

Once again Merkel fails to win the popular vote in Germany. Angela Merkel’s Christian Democratic Union lost 9% compared to the last elections. Nevertheless, her party has remained as the largest party in Germany’s parliament. Merkel’s CDU won 32.5% of the popular vote far less than any president in the United States history. That was a major decline for Merkel yet she will still rule Germany and Europe for that matter.

Germany’s electorate is more divided than ever before. The AfD won seats for the first time and they now came in as a strong 3rd position. Traditionally, power has either been held by the Christian Democratic Union (CDU) plus its sister Christian Social Union (CSU) party, or the Social Democratic Party (SPD). This year, however, the AfD will be making things more interesting and will play a far more crucial role as they exploit the Refugee Crisis with each and every terrorist act.

Sep 24 2017

An Island in Crisis – Puerto Rico Devastated by Hurricane Maria…


Re-Posted from The Conservative Tree House on September 23, 2017 by

Puerto Rico has been devastated by Hurricane Maria.  CTH can confirm there is almost no communication with the majority of those impacted by the devastating impact of Hurricane Maria.   Local officials are using satellite phones to gain residents the ability to contact their friends and family in the U.S. mainland. Critical infrastructure has been severely compromised.  Cell phone service is sporadic to non-existent.

Adding to and amplifying the problem was a general dependency on government assistance, by a large portion of the population, for basic needs prior to the storm.  The comfort of dependency has now worsened the desperation of the people on the island.

(Via Fox News) A humanitarian crisis grew Saturday in Puerto Rico as towns were left without fresh water, fuel, power or phone service following Hurricane Maria’s devastating passage across the island.

A group of anxious mayors arrived in the capital to meet with Gov. Ricardo Rossello to present a long list of items they urgently need. The north coastal town of Manati had run out of fuel and fresh water, Mayor Jose Sanchez Gonzalez said.

“Hysteria is starting to spread. The hospital is about to collapse. It’s at capacity,” he said, crying. “We need someone to help us immediately.”

The death toll from Maria in Puerto Rico was at least 10, including two police officers who drowned in floodwaters in the western town of Aguada. That number was expected to climb as officials from remote towns continued to check in with officials in San Juan.

Authorities in the town of Vega Alta on the north coast said they had been unable to reach an entire neighborhood called Fatima, and were particularly worried about residents of a nursing home.

“I need to get there today,” Mayor Oscar Santiago told The Associated Press. “Not tomorrow, today.”

Rossello said Maria would clearly cost more than the last major storm to wallop the island, Hurricane George in September 1998. “This is without a doubt the biggest catastrophe in modern history for Puerto Rico,” he said.

A dam upstream of the towns of Quebradillas and Isabela in northwest Puerto Rico was cracked but had not burst by Saturday afternoon as the water continued to pour out of rain-swollen Lake Guajataca. Federal officials said Friday that 70,000 people, the number who live in the surrounding area, would have to be evacuated. But Javier Jimenez, mayor of the nearby town of San Sebastian, said he believed the number was far smaller.

Secretary of Public Affairs Ramon Rosario said about 300 families were in harm’s way.

The governor said there is “significant damage” to the dam and authorities believe it could give way at any moment. “We don’t know how long it’s going to hold. The integrity of the structure has been compromised in a significant way,” Rossello said.  (read more)

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The U.S. military is the tip of the spear in attempting to get aid and supplies to the residents in coordination with FEMA and emergency officials.  CTH had numerous conversations today with teams trying to get as much into the island as possible.

The leadership of the 26th Marine Expeditionary Unit (MEU) and Expeditionary Strike Group 2, met with key leaders with Federal Emergency Management Agency (FEMA) and the Puerto Rico National Guard to plan and coordinate for Hurricane Maria response efforts in Puerto Rico. The Department of Defense (DoD) is supporting FEMA, the lead federal agency, in helping those affected by Hurricane Maria to minimize suffering and is one component of the overall whole-of-government response effort. (U.S. Marine Corps video by Cpl. Adam D. Edwards)