Monthly Archives: October 2017

Oct 16 2017

Theresa May Needs to Got to Vegas to Learn Poker


Armstrong Economics Blog/BRITAIN

Re-Posted Oct 16, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; I know you use to live here in London and in Berlin, you said you still had your British driver’s license. Everyone knows you were friends with Prime Minister Margaret Thatcher and that you are the one they called when Britain had to face its disaster in joining the ERM. If you were to advise Prime Minister Theresa May, what would you tell her right now?

Thank you for your guidance in Britain

PH

ANSWER: Well the first thing, Theresa May should run to Las Vegas and take a course of playing poker and observe the game. You can win with a losing hand if you know how to project confidence and look like you have a winning hand. In law, I could get you on the witness stand and then ask when was the last time you beat your spouse. You will now have to deal with that agenda. You will swear you never beat anyone and you will want to call your spouse to say you never beat them. I will say that’s irrelevant because they will lie fearing you will beat them again. I have just set the agenda and you will be on defense the whole time. Forget everything else. You will leave the stand and people will think where there is smoke there is fire and surely I would have never asked that question without a reason.

This is what Brussels is doing to Britain. They have ABSOLUTELY no interest in actually negotiating any sort of a reasonable deal because their agenda is all about punishing Britain to set an example that nobody else will follow Britain out the door.

It is painfully obvious to anyone who is from the non-political world what is going on here. Britain has not yet realized there is no negotiating with the EU. The Brussels bureaucracy is protecting their jobs and it has NOTHING to do what is best for the people of Europe. So Theresa May is actually negotiating with herself. She offers a deal, the EU declines but makes no counter-offer, and she runs back trying to sweeten the offer.  She is trying to fit a square block into a round hole. Hello! The EU negotiators Michel Barnier, Jean-Claude Juncker and assorted company, are NOT negotiating in good faith because it is NOT in their best interest to do so.know four things that Britain’s team doesn’t seem to grasp.

As long as they can keep the uncertainty in play, they hope to see the pound collapse and that will make the British see they should stay. But the lower the pound declines, the better the British economy for exports are doing better. Companies I have talked with in Britain who were against BREXIT, are now saying it’s not so bad.

Juncker responded to Theresa May’s Florence speech saying of if she would stay until 2021, the Britain had to surrender sovereignty to the European Courts, which have consistently ruled against Britain just about every single time. The demands for a huge divorce payments is to fill the pension funds of the Brussels bureaucracy. This is a divorce where they want everything and Britain gets nothing in return.

Their refusal to make any counter-offer demonstrates their lack of good faith in any negotiation. This whole thing is a joke and Britain should refuse to pay anything and just leave. Do not forget, if Germany cannot sell cars to Britain, watch the economy in Germany collapse very fast. About a fifth of all cars produced in Germany last year, or around 820,000 vehicles, were exported to the UK, making it the single biggest destination by volume. The trade deal works both ways, yet you would think it is a one-way street according to Jean-Claude Juncker and his gang of self-aggrandizing bureaucrats.

May holds the winning hand in the game and she seems not to understand even what it is. First, I would say find, (1) negotiations are over since there is never any proposal from Brussels, (2) there will be no divorce payment at all, (3) I would exit NATO and let Europe spend to defend itself, and (4) join NAFTA and cut my own trade deals with China.

END OF NEGOTIATION!

Then, and only then, will you see Jean-Claude Juncker suddenly lose 2 stone (28 pounds) as his phone melts down from German Industry screaming you IDIOT!!!! May holds the winning hand because Britain pays the most for the defense of Europe and they are the biggest market for German exports in Europe.

 

Oct 15 2017

Geopolitical Adversaries Prepare To Defend Against Trump’s Iran Strategy…


Re-Posted From The Conservative Tree House on October 14, 2017 by

Just because western media doesn’t understand how President Trump executes a geopolitical strategy based on economic leverage, that doesn’t mean adversaries are not fully aware of the effectiveness of the approach.

The Trump Doctrine has two avenues toward dealing with national security adversaries.

The first route is direct assignment of responsibility toward the enablers: see China for North Korea; The Gulf States for Qatar (Sunni extremism); Russia for Syrian terrorism (Assad); and Pakistan for Afghanistan (Taliban); as recent examples.

However, when the geopolitical threat stems directly from the enabler, and not the enabled, the Trump Doctrine has a distinctly different and far more encompassing, approach.  Route two goes through leveraging regional allies and partners: See ASEAN and India for ¹China; and France, Poland, Baltic States for ²Russia.  And now President Trump is beginning to shift toward ³Iran.

In each case: China, Russia and Iran, unlike Western media, these powers assemble volumes of research to assist them in understanding the most likely sequence of events President Trump will take.

When we say volumes of research, we indeed mean hundreds of people researching and drafting position documents based upon every scintilla of every deal Donald J Trump has engaged in.  No expenses are spared as these state actors assemble information toward their own strategy to counter the most unpredictable adversary they have faced.

These states fully understand how President Trump intends to utilize economic leverage toward his next national security focus.  As soon as President Trump mentioned he was going to outline a strategy for Iran, all international adversaries immediately began road-mapping their defense.

How do we know?  Well, if you follow the twitches, and you understand the larger dynamic of how Trump weakens his opposition’s position prior to confrontation, you know exactly what to look for.  Example(s):

(Via CNBC) Russia has accounted for oil at £30.1 ($40) a barrel in its budget, finance minister Anton Siluanov said. Oil prices have fluctuated this year, falling below $45 a barrel and going above $59.

Russia has accounted for oil at $40 a barrel in its budget, the country’s finance minister Anton Siluanov told CNBC in a TV interview on Friday.

Brent crude was trading above $57 on Friday, but the Russian minister said that the budget has taken into account price fluctuations.

“In order to minimize price fluctuations on foreign markets we have prepared a budget which is based on a price of forty dollars a barrel. I think that this is a fairly considered and conservative price, which has been factored in for the next three years,” Siluanov told CNBC in a TV interview on Friday.

“Incidentally our balance of payments on our current account is balanced on a price of forty dollars a barrel. Therefore, the percentage of the federal budget from oil and gas revenues has gone down from 60 percent to 40 percent.”

But some analysts have predicted prices could go lower. Global stock builds, rising non-OPEC production and sluggish growth in demand could weigh on the oil price, the International Energy Agency (IEA) said in its report published Thursday.

Meanwhile, OPEC’s production hit the second highest monthly level this year in September. (read more)

Notice OPEC, particularly ‘The Gulf States’ (two-thirds of all production), now a Trump ally, are continuing to driving production. This is in combination with western nations domestic energy policies shifting as a result of Trump withdrawing from the Paris Climate Treaty.  [*Note* all nationalistic energy activity is driven by the economics of financial viability, not the ruse of planetary climate.]  Sword dancing has benefits.

Meanwhile Venezuela, an OPEC member and also China and Russia’s largest debtor, is in a state of economic crisis and under sanctions from Treasury Secretary Mnuchin.  This makes their ability to reach out to the international financial community very, well, challenging.

So what impact is all of this Trumpian shifting of geopolitical economic plates having out in the world of multinational finance?

(Via Bloomberg) The IMF’s steering committee warned that global growth is at risk of faltering in coming years given uncomfortably low inflation and rising geopolitical risks, injecting a cautious note into an otherwise improving economic outlook.

“The recovery is not yet complete, with inflation below target in most advanced economies, and potential growth remains weak in many countries,” the International Monetary and Financial Committee said in a communique released Saturday in Washington.

“Near-term risks are broadly balanced, but there is no room for complacency because medium-term economic risks are tilted to the downside and geopolitical tensions are rising.” (read more)

“Take all the money you can get“…

Q Mr. President, on the Iranian nuclear deal, why not just scrap it altogether now? You threatened to do so. Why not just end it now, withdraw?

THE PRESIDENT: Because we’ll see what happens over the next short period of time. And I can do that instantaneously. I like a two-step process much better.

Q Mr. President, you had said you were going to rip the Iran deal up, and you called it the worst ever.

THE PRESIDENT: Well, I may do that. I may do that. The deal is terrible. So what we’ve done is, through the certification process, we’ll have Congress take a look at it, and I may very well do that. But I like a two-step process much better.

Q How long will you give Rex Tillerson to get this new deal? And are strikes on Iran still a possibility if you don’t get what you want?

THE PRESIDENT: We will see what happens with Iran. We’re very unhappy with Iran. They have not treated us with the kind of respect that they should be treating. They should have thanked Barack Obama for making that deal.

They were gone. They were economically gone. He infused $100 [billion] to $150 billion into their economy. He gave them $1.7 billion in cash. And they should be, “Thank you, President Obama.” They didn’t say that.

Q Have you spoken with Theresa May or Emmanuel Macron about the Iranian Deal?

THE PRESIDENT: Yes.

Q What did they say to you? What did you say to them?

THE PRESIDENT: They would love me to stay in, only for one reason: Look at the kind of money that’s being sent. You know, Iran is spending money in various countries.

And I’ve always said it, and I say to them: Don’t do anything. Don’t worry about it. Take all the money you can get. They’re all friends of mine.

Actually, Emmanuel called up, and he talked to me. And I said, look, Emmanuel, they just gave Renault a lot of money. Take their money; enjoy yourselves. But we’ll see what happens.

Iran has to behave much differently. (link)

“Complicated business folks… Complicated business”…

Oct 15 2017

Being Humble is Required for Trading


Armstrong Economics Blog/Training Tools

Re-Posted Oct 15, 2017 by Martin Armstrong

QUESTION: I have a personal question. You have said that what you know has been taught to you by your clients. People who attend your WEC say you are humble and not arrogant. Could you explain that?

MN

ANSWER: Look. You cannot go to university to get a degree in trading or being a hedge fund manager. You have to be self-taught in this field. If you want to be a successful trader, you MUST be humble!!!!!! The market is the ONLY thing that is 100% infallible. So you better be humble and survive. If you want to be arrogant and try to dictate what the market should do, you will not survive very long. So I do not understand why that should be a surprise. This is about reading the markets and listening to what they are trying to tell us. This is NOT about being personally right or wrong. Your bank account will determine that. You can tell someone who will never survive because as soon as they start blaming other people for their own failures like Hillary Clinton, they should quit and save a lot of money for they will NEVER be a good trader.

Trading teaches you to be humble or you will not survive. The market is much bigger than you or even government. One primary trading tip I have perhaps been famous for saying is: Intelligence is not measured in the definitive knowledge that is never wrong. It is measured by the ability to see when you are wrong and quickly adapt to the new reality.

There are some people who could never do anything with respect to trading if they (1) cannot admit a mistake, and (2) be a dynamic thinker where you see everything around you.

I have been TRAINED by my clients. I was given a seminar in Zurich in the early ’80s. People were flying in from many different countries. This became the origin of the WEC events. Why are they so different? Because you have a very diverse audience. At that Zurich seminar, a client from Canada had asked about gold. I responded that it would be a short-term buy. The guy from Zurich quickly said that since I had said the Swiss franc would rise more than gold, he would lose money on that trade. Right then and there I began to realize that giving advice depended COMPLETELY upon your currency base.

Once I understood that I had to tailor advice and forecasts to the currency base of every client, that was the first step in understanding currency flows. From there, the world began to come into focus.

So if you define “humble” as being flexible to adapt to the changing trends, then you will survive.

Oct 15 2017

Rocketman May Have Destabilized the Ground in North Korea


Armstrong Economics Blog/North Korea

Re-Posted Oct 15, 2017 by Martin Armstrong

Sources in South Korea are reporting that there was another earthquake in North Korea of a 2.7 magnitude near the Punggye-ri nuclear test site. This was the fourth earthquake to hit the region since the last underground nuclear test on September 3rd, 2017. The first earthquake was a 6.3 magnitude. The last North Korea test was a hydrogen bomb. U.S. intelligence reportedly determined the blast was 10 times greater than that of the nuclear bomb dropped on Hiroshima at the end of World War II.

Rocketman just may have set in motion a natural disaster. Any more tests could rupture the region and radioactivity could contaminate much of the area.

Meanwhile, Trump has announced he will send ships off the coast of North Korea that will shoot down any missiles he tries to launch. Rocketman seems to be on an insane show of power to prevent his overthrow. If the USA shoots down any missile launch, all his efforts to show power will collapse and that would expose him to an internal coup.

Oct 14 2017

China Looking at Taking Stake in Aramco


Armstrong Economics Blog/China

Re-Posted Oct 14, 2017 by Martin Armstrong

According to local sources in the Middle East, financial difficulties in Saudi Arabia may see a cash injection coming for its oil industry – Aramco. The Saudis are considering a private placement of its shares instead of a traditional float of shares on the stock exchange. The buyer is of course China.

Saudi Aramco has been considering the international public offering but it has been pushed beyond its 2018 target according to sources. The initial public offering was expected to be the world’s largest stock sale, which would then be a major component of the Saudi government’s economic reform program which aims to diversify the desert kingdom away from its reliance on oil exports.

Selling shares in Aramco would raise billions for a government that it will really need because of budget problems. However, such an asset is never just about the money. The Saudis were looking for prestige with trillions of dollars trading in the world with Aramco becoming the cornerstone of a public investment designed to help pull Saudi Arabia’s economy into the 21st century.

Oct 14 2017

Larry Kudlow Extensive Interview With Commerce Secretary Wilbur Ross…


RE-Posted from The Conservative Tree House on October 14, 2017 by

This is a great interview from the perspective of seeing first hand how the disconnect between historic economic theory (Kudlow) runs into the reality of a person (Ross) who completely understands how Trade and Finance are enmeshed in a completely new economic paradigm. [The Myth of Modern Free Markets]

If you have read “The New Economic Dimension” you’ll note that Kudlow represents the economist sitting in the Atlantic, only able to see the Wall Street economy; while Wilbur Ross has a satellite perspective on both the Main Street and Wall Street economic engines.

Kudlow’s financial perspective runs into Ross’s reality about two-thirds of the way through the interview when Secretary Ross asks the question: “I bet you can’t give me an example of an economically sound investment that hasn’t found capital”.  It’s just a splendid thing to watch.

.

Despite his financial-centric economic focus Kudlow is a good MAGA ally.  However, Wilbur Ross understands every single pixel of the larger economic picture, and how trade interacts with the larger U.S. economy within the Main Street -vs- Wall Street dynamic.

RELATED:

♦The Modern Third Dimension in American Economics – HERE

♦The “Fed” Can’t Figure out the New Economics – HERE

♦Proof “America-First” has disconnected Main Street from Wall Street – HERE

♦Treasury Secretary Mnuchin begins creating a Parallel Banking System – HERE

♦How Trump Economic Policy is Interacting With The Stock Market – HERE

♦How Multinationals have Exported U.S. Wealth – HERE

♦The myth of Modern Global Markets – Exfiltration of Wealth – HERE

Oct 14 2017

It’s Always About the Money


Armstrong Economics Blog/Uncategorized

RE-Posted Oct 14, 2017 by Martin Armstrong

In Sweden, the government has realized that if fossil-fuel cars were to disappear, the government would lose around SEK 50 billion a year in tax revenues. Just like cigarettes, the government realized that stopping smoking is costly for them. So what did they do? They imposed taxes of e-cigarettes. And if everyone stopped e-cigarettes, they will probably have to tax air.

Sweden used the Global Warming issue to tax people driving cars to help the environment. But as soon as a tax is imposed, government becomes addicted to the revenue just like a drug addict. The purpose of the kilometer tax is to overcome the so-called Pajala / Stockholm syndrome. It will, therefore, be more expensive to drive a dirty car in the city’s congestion compared to a clean car in a rural area.

Europe is moving faster than North America towards an increasingly electrified fleet of cars. However, when fossil fuel-driven car traffic is decreasing supplanted by electric cars, the government starts to lose money. Sweden has authorized a new project that will last for two years. The goal is to develop a method for calculating a distance-based tax system so they can tax electric cars to compensate for their loss in revenue of the fossil-fuel cars.

It’s always about the money, wrapped in in some sort of noble pretense, to disguise the greedy intentions.

Oct 13 2017

What I Admire about Islam


Islam has many strengths that we need to learn from. For instance, Islam’s concept of civilizational war has no equal in the West. Muslims use a hijab as a weapon, for instance. Muslims have a perpetual optimism about winning. Muslims want to win; we want to tie. Muslims naturally form groups to advance their cause. They are a powerful political lobbying group.

We need to learn from Islam’s strengths so that we don’t lose.

Oct 13 2017

The Political Turf War in Europe and why Britain is Considering Joining NAFTA


Armstrong Economics Blog/BRITAIN

RE-Posted Oct 13, 2017 by Martin Armstrong

QUESTION: Marty; There is talk that Britain will join NAFTA rather than the EU. Does that make sense? What do you think?

ANSWER: The EU is in a death spiral. Every law they pass is to preserve their own power – not for the good of the people or Europe. Once again, the government solution always runs counter-trend to the Free Markets setting the stage for the next crisis. The EU banking rules allow them to just seize everything and shareholders get zero. This is what they did when Spain’s Banco Santander bought rival Banco Popular for €1. The bank which was valued in the collapse at €1.6 billion yet it was sold for €1. Now, banks are finding it extremely hard to raise new share capital. That will only result in more bank seizures. Hello! It would be nice to have someone in government with common sense.

Britain should run away from the EU and slam the door shut and then nailed it to be sure. The British should abandon the EU altogether and undeniably join the NAFTA trade agreement. If they do not, Britain will find itself being dragged down with the sinking ship.

A free trade agreement with the USA would be a slap in the face for the EU and even that will never cause the EU to look in the mirror. Like Hillary, they will blame everyone other than themselves.

The government data on British GDP clearly demonstrates that Britain has NOT benefited from joining the EU because of the secret agenda to federalize Europe to eliminate European War. This theory of one government in Europe, The United States of Europe, will end a possible war is just absurd.

This narrative that the entire purpose of the federalization of the EU is to stop any war was stated bluntly by Hollande in the European Parliament. You cannot get more one-world government than this theory. But this spills over into economic power and the surrender of all sovereignty to Brussels.

Margaret Thatchers Burges Speech was spot on about the European Project. It was clear behind the curtain back on September 21, 1988, that this was all about the federalization of Europe and the surrender of national identity. The Guardian ran the story: Thatcher sets face against united Europe. Let me make this very clear. Maggie was thrown out of office by a coup orchestrated by her own cabinet. They were eager to surrender sovereignty to Europe and bought into the whole idea of the United States of Europe.

The new government headed by John Major took the Pound into the Exchange Rate Mechanism (ERM) the same month that German unification began. The monetary policies of Germany were starkly different from Britain. I was called when the attack on the Pound unfolded and was asked what our model said about the Pound because they knew I was a friend of Thatcher. I relayed its analysis that the Pound had to be devalued. I was told that was impossible that John Major had said even the week before the Pound would be maintained in the ERM. I then said that the Pound must be suspended if not officially devalued. The pressure was intense. I explained that a fixed rate is a GUARANTEED trade. I can bet billions and if wrong, nothing happens and I get my money back. That finally made the point.

Black Wednesday, September 16th, 1992, was when the UK Conservative government that had thrown Thatcher out of power to take the Pound into the coming Euro was forced to withdraw from the ERM. While everyone blamed George Soros for making over US$1 billion from this GUARANTEED trade, the truth of the matter this is the only thing that SAVED Britain. Britain was headed into the Euro and the elite Conservatives would not listen to Margaret Thatcher.

Now that BREXIT is in play, the British should be on their hands and knees and be kissing their ground that they are not connected to continental Europe. There are many national and regional sensitivities that must be taken into account when it comes to trade. The British want to conclude agreements with India, Turkey, and China, that are not on the same page with the EU.

The government in London is targeting a free trade agreement following the BREXIT to limit disadvantages that people think exist for the domestic economy after the EU exit 2019. The EU is more interested in punishing Britain as an example of other member states that they better not leave the EU or else. This is all about punishment – not economics.

The British government is under pressure, as the EU will only negotiate the free trade agreement in London if the BREXIT divorce talks have made sufficient progress. Donald Tusk has been playing hard-ball to punish Britain and actually said the EU was negotiating in good faith without any evidence whatsoever to prove that statement. He said in turn: “We hear from London that the UK government is preparing a ‘no deal’ scenario. I would like to say very clearly that the EU is not working on such a scenario. “

There has been little tangible results in trying to negotiate with the EU. British Prime Minister Theresa May is expecting the conclusion of the BREXIT talks only before the departure from the EU in March 2019. Clearly, the British government is also preparing for a situation where no agreement is reached with the EU on exit and contingency plans are being put into place for this likelihood. Keep in mind that the EU will NOT make easy for they fear other states will take the same option.

This is a matter of pride for the EU. A hard BREXIT would hit especially the German economy. The representatives of the German economy are already nervous because of the slow negotiations. The German Federation of German Industries (BDI) has already warned the government that German companies had to “take precautionary measures for a very hard departure.” The Association of German Machinery and Plant Engineering (VDMA) said: “A tough Brexit is a conceivable but not acceptable scenario for the economy.”

Why is German industry getting nervous with its politicians seeking revenge? Britain is the world’s fourth-largest international market with an export volume of €7.4 billion euros last year for German products. Conversely, the Britain delivered 2016 machinery construction products worth €2.4 billion to Germany.

The problem is purely political and has become a turf war and pressure builds against the dreams of the centralized federalization of Europe.

 

Oct 13 2017

Fake v Real News – A Turf Battle


Armstrong Economics Blog/Press

RE-Posted Oct 13, 2017 by Martin Armstrong

Donald Trump launched his Real News to combat the Fake News. Interesting turf battle. What I can say is that many people in Florida are very upset with CNN and their whole coverage. They frightened people so much that they were paying $7,000 for a flight out of town. There was no 15-foot wall of water and many see it now as FAKE NEWS not just with respect to politics, but everything is exaggerated to get people to watch.