Real Estate v Quantitative Easing


QUESTION: Hi Martin,
I just finished your new NYSE Boom/Busty report. This is excellent work and as always extremely fascinating. Thank you for continuing to share these profound views with us.
My question relates to your view that we are looking at a complete collapse of Quantitative Easing and that will likely see a massive capital flight to the dollar and the major safe haven will be EQUITIES. In the context of this possibility, are you able to comment on how this may relate to Real Estate. Your ECM seems to be calling for Real Estate to top out and structurally fall in 2032. Is it not possible that with the collapse of QE and potentially economies that we will see more negative rates in the short end and with the government powers to seize assets in bank accounts, would it not be prudent to have zero cash in hand and hence we see a massive capital flight to Real Estate too? Or will the collapse of QE lead to significantly higher rates across the curve and hence blow all leveraged exposure sky high?

Many thanks as always,

David

ANSWER: The problem with real estate has been that its value depends upon lending. This was what the government did as part of the New Deal by creating 30-year mortgages. This was a scheme to get prices up by extending the period people could pay off the loan. Typically, the duration was 5 years previously.

The collapse in Quantitative Easing will have the effect of causing rates to rise on the long-term. However, there will be a shift toward private assets and this will help to a large extent. However, keep in mind that many institutions will be trapped and unable to shift to private assets. Many boards will not understand the shift and still believe, wrongly, that unsecured government debt is best.

Prices of real estate will decline in proportion to the decline in mortgage availability. We are already witnessing banks beginning to withdraw from lending on real estate.

I have provided the guide-posts for what is to come. This will be an interesting future.

The 2018 Mid-Term Elections


The Mid-Term elections are starting already. There is a huge amount of money being poured into the Democrats to retake the Senate. The entire object here is to reverse the Republican agenda and to return the country back to the class warfare traditions of the Democrats. Of course, this is what will be the final straw to send the USA down the tubes. We have state and local governments in great stress and the solution is to raise more taxes. There is nobody even remotely addressing reform and that even applies to Trump. What he fails to understand is that whatever he accomplishes can be easily undone by a swing in politics. This is why we must just crash and burn

President Trump and First Lady Melania Visit Broward County Hospital (video)…


President Donald Trump, accompanied by First-Lady Melania Trump, traveled to Broward Health North Hospital in Pompano Beach, Florida, to visit some of the shooting victims from Marjory Stoneman High School and thank the doctors, medical staff and first responders.

President Trump delivered brief remarks to the traveling press pool while colluding with Dr. Igor Nichiporenko and discussing the hospital’s efforts.

Say Something, Do Nothing – FBI Statement On Parkland Florida School Shooting…


The specificity here is pretty damning.  The FBI released a stunning admission today admitting they received prior a specific warning about Broward County Nikolas Cruz and his threats to carry out a school shooting.  The FBI took no action.

WASHINGTON DC FBI – On January 5, 2018, a person close to Nikolas Cruz contacted the FBI’s Public Access Line (PAL) tipline to report concerns about him. The caller provided information about Cruz’s gun ownership, desire to kill people, erratic behavior, and disturbing social media posts, as well as the potential of him conducting a school shooting.

Under established protocols, the information provided by the caller should have been assessed as a potential threat to life. The information then should have been forwarded to the FBI Miami Field Office, where appropriate investigative steps would have been taken.

We have determined that these protocols were not followed for the information received by the PAL on January 5. The information was not provided to the Miami Field Office, and no further investigation was conducted at that time.

FBI Director Christopher Wray said:

“We are still investigating the facts. I am committed to getting to the bottom of what happened in this particular matter, as well as reviewing our processes for responding to information that we receive from the public. It’s up to all Americans to be vigilant, and when members of the public contact us with concerns, we must act properly and quickly.

“We have spoken with victims and families, and deeply regret the additional pain this causes all those affected by this horrific tragedy. All of the men and women of the FBI are dedicated to keeping the American people safe, and are relentlessly committed to improving all that we do and how we do it.”  (link)

The backdrop of this admission is especially troublesome as the FBI previously also admitted they were forewarned about the Tsarnaev brothers in the Boston Marathon Bombing 2013 and did nothing; and perhaps even more disturbing was the prior warning about the 2016 Orlando Pulse Nightclub shooter Omar Mateen.

[…] Mateen’s background, however, was checked again by G4S in 2013 after the St. Lucie County Sheriff’s Office requested he be removed from the St. Lucie County Courthouse patrol after he allegedly made derogatory comments to a deputy.

A deputy at the courthouse mentioned the Middle East to Mateen, who reacted by threatening the deputy, said Sheriff Ken Mascara, who attended the Wednesday night meeting at the community’s Island Club.

Omar became very agitated and made a comment that he could have al-Qaida kill my employee and his family,” Mascara said Wednesday. “If that wasn’t bad enough, he followed it up with very disturbing comments about women and followed it up with very disturbing comments about Jews and then went on to say that the Fort Hood shooter was justified in his actions.

The FBI launched an investigation into Mateen after Sheriff’s Office officials reported the incident to the agency. As part of its investigation, the FBI examined Mateen’s travel history, phone records, acquaintances and even planted a confidential informant in the courthouse to “lure Omar into some kind of act and Omar did not bite,” Mascara said. The FBI concluded Mateen was not a threat after that, Mascara said.  (read more)

Obviously the apparatus of the bureaucracy within the FBI needs a top-down review and re-focus.

White House Statement on Russian Election Interference Indictments…


WHITE HOUSE – Earlier today, Deputy Attorney General Rod Rosenstein announced indictments against 13 Russian nationals and 3 Russian entities for meddling in the 2016 Presidential election, which began in 2014 before the President declared his candidacy. President Donald J. Trump has been fully briefed on this matter and is glad to see the Special Counsel’s investigation further indicates—that there was NO COLLUSION between the Trump campaign and Russia and that the outcome of the election was not changed or affected.

President Trump says, “it is more important than ever before to come together as Americans. We cannot allow those seeking to sow confusion, discord, and rancor to be successful. It’s time we stop the outlandish partisan attacks, wild and false allegations, and far-fetched theories, which only serve to further the agendas of bad actors, like Russia, and do nothing to protect the principles of our institutions. We must unite as Americans to protect the integrity of our democracy and our elections.” (read more)

Asst. Attorney General Rod Rosenstein Announces Robert Mueller’s Russian Election Interference Indictments…


There is a particular transparency in timing as Deputy Attorney General Rod Rosenstein announces indictments from Special Counsel Robert Mueller’s ‘Russian Interference in U.S. Election‘ investigation on the same day as the FBI is forced to admit they made massive mistakes from reports against the Parkland Florida school shooter.

The thirteen indictments are based on very weak structure. Here’s the DOJ Announcement; and here is Rod Rosenstein’s press conference. Specific wording is used tactically to generate maximum value; however, when you peel back the onion skin and look at the actual indictment itself (full pdf below) there’s not much ‘there’ there:

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The indictment itself is full of fluff and clearly presents itself as political posturing.  The Mueller investigation had to find something, anything; and what they came up with reflects how little substance exists.  This is one of those examples where it pays to read the actual indictment; and contrast the facts laid out against the method of salesmanship and parseltongue. It is not a difficult read – even Boris and Natasha could do it.

Example: “unwitting Trump campaign official” is really  – A single New York volunteer campaign worker agreed to give some signs to a pro-Trump rally.

https://www.scribd.com/embeds/371682469/content?start_page=1&view_mode=&access_key=key-V5DvZrJBotkjuts8SlvA

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What is it like to be Wounded in Combat?


While in Vietnam in a Special Forces Camp A-341 near the Cambodian Border in 1967 I was the team XO and a 1st Lieutenant and this is my story

The Camp had been under attack for several weeks by VC/NVA units to our north and east when we came under attack for the third time and over the next several hours we continued to receive sporadic incoming mortar rounds from the Northeast. There was also some small arms fire but no signs of any kind of ground assault like we had beaten off previously. It appeared that this time we were just being harassed or probed and not attacked. As I remember it about 20 or 30 mortar rounds were fired at Bu Dop and the a joining 1-28th infantry positions during the night, more to keep us from sleeping than to inflict major damage. The 1-28th infantry was taking some casualties from shrapnel but I don’t think they had any KIA’s during this mortar bombardment. We fired counter mortar fire as did the 1-28th infantry but I don’t think any of us hit the VC/NVA mortar positions. They were probably just moving around firing a few rounds from one position and then a few rounds from another nearby position.

However, early in the morning at about 0300 hours one of these incoming rounds landed either: near the 4.2″ pit sending hot shrapnel into the ammo bunker; or it landed directly on the ammo bunker itself penetrating it with flash or hot shrapnel. In either case it didn’t matter for it ignited the propellant charges on the staged illumination rounds which are what propels the round to the target. Maybe even some of the illumination rounds themselves that we were getting ready to fire were set off. I do remember that there was a dull explosion and then several very intense waves of heat that went through the position igniting everything that could burn. Fortunately we had used up all the HE rounds that night and only a few illumination rounds were left unfired. If there had been any HE rounds in the pit and they had gone off when the incoming round hit they wouldn’t have found much if any of us. Just a few pieces and parts here and there scattered around the camp. For sure I wouldn’t be here talking to you.

I had on a standard issue steel pot, a nylon flack vest, jungle fatigue pants and jungle boots, your basic standard uniform for combat in Vietnam. Because we were in camp I did not have on any web my CAR-15 was in the pit with me but I did not have it in my actual possession. Most of us didn’t wear socks or underwear to try and prevent getting fungus infections from the heat and moisture that was always present. The heat from the blast hit me from the right rear while I was talking on the PRC-25 radio. I remember being engulfed by the flames as the fire ball rolled past me and several intense waves (I could feel the pressure as they hit me) of heat hitting me on the back and right side. These blasts or waves of heat were extremely hot such that the intensity of them melted the nylon flak vest completely off me as well as instantly setting fire to my pants and jungle boots. I must have instinctively closed my eyes as the fireball engulfed me and then there were a few seconds where I don’t remember what happened. The blast either blew me out of the pit or I crawled out (I’m not sure which), the next thing I do remember a few seconds later was that I was laying on the ground just outside the pit and seeing that I was on fire.

My first action was to put out the flames that were still consuming what was left of my clothes and flack vest. That probably took 20 or 30 seconds and while I was doing that I also saw there was an intense fire still burning in the 4.2″ mortar pit. After I put out the flames with dirt I got up and saw that SFC Broom and SP4 Schroeder were down on the ground in the pit and still burning, I think they were both unconscious. They were behind me, closer to the explosion, when the blast hit and so this was the first I saw of them after the fireballs rolled over us. I was in the process of climbing into the pit to help them when some of the other team members showed up. They stopped me and took care of the other two guys in the pit. I don’t remember which team members helped me besides that being a long time ago I probably wasn’t in the best state of mind.

I knew I was injured and burned but I had no sense that I might be seriously wounded. I was placed on a stretcher and I do remember getting a shot of morphine. A dust off was called and by 0400 hours we were loaded in it and we left Bu Dop for the last time. It was still dark and as we left I could see the camp and 1-28th positions dropping away as the chopper rose into the dark night sky. Still, not realizing the extent of my injuries I was concerned over my team and that I needed to get back right away, they needed my experience. I was thinking that I’d be gone for a few days, get some rest and then join my team in a week or so. I was very wrong in this assessment of the situation.

We were all medevacked to the 24th Evacuation Hospital in Long Binh for emergency treatment. I can remember going into the triage room and answering a few questions but then my memory starts to get fuzzy. Probably by that time shock was setting in as the next several days were disjoined and what I can remember is only a few images and feelings. At some point I remember being loaded on a medical transport and then being moved to the 106th army hospital in Japan I spent several days in Japan, of which I remember almost nothing but a few images of being in a hospital ward that I remember as being dark However, I was experiencing shock by this time and so I can’t really rely on anything I remember as being absolutely true. Then all three of us were placed on a military hospital plane and flown back to the states along with a lot of others. The ride back was one of constantly dropping in and out of consciousness and blurred images of patients, nurses IV’s and being very cold. I think there was a plane transfer somewhere in this process and then the three of us from Bu Dop were taken to the Brooke Army Medical Center in San Antonio, Texas. I remember very little of that plane ride from Japan but I do remember the airfield in the states and the ambulance ride to the hospital.

Brooke Medical Center was then the premier center, in the world, for treatment of burns, so if you were going to be burned this was where to be. I had 3rd degree burns on my legs and 2nd degree burns on my arms, back, neck and face for a total of 67% of body area). I had also inhaled hot burning gases in the pit when the fire balls rolled over me which had burned the inside of my mouth, tongue and my lungs. Besides that I had some shrapnel wounds and was experiencing a sever loss of body fluids. In general I was in very, very bad shape Later, when I was discharged from Brooke Medical Center, the Doctors told me that when I reached the hospital in December they had given me only a 10% chance of living through this trauma. There had been so much physical damage to my body that they just didn’t think I would be strong enough to make it. However, I’m certainly glad they didn’t give up and that they did still tried to save me despite their doubts. As I contemplated this brush with death a few years later I came to the conclusion that my life after this was a gift and that since I should have died then, but instead I had lived, that I would do something before I died to justify my existence. As a result I have been driven to accomplish something ever since and what I’ll do if I’m ever successful I don’t know.

Being burned extensively is not pleasant and the burned person’s body reacts to this, in part, by allowing the mind to hallucinate. I guess the hallucinations allow time to pass without direct knowledge of the pain the body is going through. I was no exception to this developing situation even when I knew what was happening to me. However, to me going into the hallucinatory state was a very frightening situation, much more so than the burns and associated pain. The pain, I could control mentally to the point of being the only patient in the ward that didn’t scream or in any way get violent during the treatments. That’s not to say that I in any way enjoyed it but only that between the two at least the pain was real. The real I could deal with but the loss of reality was frightening to me.

I had always prided myself in being in control of my internal self as I recognized that I could not control the external world in any way. However the pain and shock I experienced induced a hallucinatory state in me that I would go in and out of, a dream world and that I could not stop from happening nor recognize that I was in this state after it happened. While in these dream states I actually “believed” that what was happening to me was real no matter how bizarre the situation I was experiencing was. Many of these dream states involved some kind of fight with a tiger which made no sense to me at the time. After this hallucinatory state happened to me a few times I could sense it coming on but it was way too powerful a force to fight and no matter how much as I tried to stop it from happening, it would take control of me and I would be in another world.

During the initial period of my treatment at Brooke I dropped from over 180 pounds to under 100 pounds (98 pounds if I remember correctly). As I started my recover I started to gain weight back and also to have fewer and fewer hallucinatory states. After getting skin grafts from by chest to my legs where the skin had been completely burned off and healing from those operations began I had to learn to walk again. That was a task, as the grafted areas would quickly swell up when standing as well as being very uncomfortable. It was probably five or six years later before I really felt comfortable walking and I was never able to run again for any length of time.

While I was in the hospital I received several operations and skin grafts to repair the massive burn and shrapnel damage I had received in Vietnam. Unfortunately, both SFC Broom and SP4 Schroeder died at Brook Army Medical Center while I was there. I was therefore the only one of the three wounded in the mortar pit at Bu Dop that made it. SFC Broom was very severally burned and there was probably never any chance that he could be saved. I was bad but he was even worse as he was the closest to the explosion when it when off. He may even have shielded Schroeder and I from some of the blast. SP4 Schroeder was only slightly burned and was actually on his way to being released. He had been transferred to a different, non-critical, ward and then he developed an infection which ravaged his body with extremely high temperatures eventually killing him. Fortunately for me I was not that aware of what was happening and so I didn’t really comprehend that they were both gone until later when I was out of immediate danger.

The following paragraph was something I wrote to summarize what happened to me after that night in Vietnam over 30 years later when I decided to write about my experiences. By then I realized it was a major turning point in my life that was actually beneficial to me as it showed me how vulnerable we all are to what we think we know, rather than knowing what the truth is and what we don’t know.

On that night in Vietnam I was mortally wounded (all mortal wounds don’t kill you immediately). I was medevacked and sent to a hospital in Texas where I meet the grim reaper soon after arriving. He told me he was coming for me but I told him I wasn’t ready; he laughed at me and said he was going to come anyway. I told him it didn’t matter whether he came or not I just wasn’t going with him. But he wasn’t to be denied and so he visited me every night in the form of a large Bengal tiger and we battled all night for the rights to my soul. He was a very vicious and determined tiger and he tried his best to rip my soul from my body with his sharp teeth and claws but I was strong and stubborn and I would not let go. This battle lasted for two months and he chewed me down to 98 pounds but in the end I prevailed and he disappeared and I was not dead and he had to settle for taking the souls of the two men who were standing next to me in Vietnam.

The lesson I learned was that we are a creation of our teaching and experiences, but and this is a big but, how do we know what we are taught is the truth? Vietnam killed almost 60,000 boys and men and a few women as well plus wounding another 300,000. The war was a pack of lies from our government from the start to the end from both political parties. I did not realize this until the 90’s when I started to write about my Vietnam experiences. I realized at that point why I had lived and not died — it was to write my story about what happened to America after Vietnam so that others in the future would understand what happened and why. That will only happen after I and all the other boomers are mostly gone after 2040 or 2050. In summation my research can summed up in the following nine words.

Passion of purpose does not constitute correctness of thought!

 Then from Sir Karl Raimund Popper (28 July 1902 – 17 September 1994) was an Austrian and British philosopher and a professor at the London School of Economics. He is considered one of the most influential philosophers for science of the 20th century, and he also wrote extensively on social and political philosophy. The following quotes of his apply to the subject of research.

If we are uncritical we shall always find what we want: we shall look for, and find, confirmations, and we shall look away from, and not see, whatever might be dangerous to our pet theories.

Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.

… (S)cience is one of the very few human activities — perhaps the only one — in which errors are systematically criticized and fairly often, in time, corrected

Mueller Creates his Own Conspiracy


Robert Mueller III issued a 37-page indictment detailing a description alleging that there was Russian interference in the election targeted against Hillary. The alleged culprit is the Internet Research Agency which targeted over 100 people including the U.S. citizens. Mueller claims they supported Bernie Sanders and Donald Trump.

The clever tactic of Mueller here appears to be grand-standing to justify his bias against Trump. The reason I say this is the simple fact that none of those charged are in custody. Consequently, there will never be a public trial and no test of Mueller’s allegations. He can say whatever he likes in an indictment and it is supposed to be a trial that proves the case. The one terrorist they put on trial had 224 counts and the jury found him not guilty of 223. There will never be a trial on the entire issue so Mueller can allege whatever he wants and the press will take this as FACT!

Russia does not allow any of its citizens to be extradited to the USA to face trial. This ensures Mueller will never have to prove any allegations, which is very clever. But his scheme gets even more clever. He states that some of the Russians posed as U.S. persons and, never revealed their Russian identities, “communicated with unwitting individuals associated with the Trump campaign and with other political activists to seek to coordinate political activities,” the indictment said.

This cleverly provides “proof” for CNN that Tump’s people did interact with Russians against Hillary but they DID NOT REALIZE what they were doing.

The bottom-line here is Mueller gets to say Trump’s people did conspire with Russians against Hillary so she can say “see I told you so” but then exonerates them saying they had no idea so he cannot indict anyone and this avoids having to prove anything at a trial. Indicting Russian who will never be extradited to the USA avoids a trial altogether.

Hence, Mueller has cleverly conspired to claim he has found proof, but he is avoiding any public trial where it would have to be proven. The Sixth Amendment to the Constitution states there MUST be a Public Trial  to prove allegations which Mueller has cleverly avoided.

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

The Story of Drew Ferguson, a Special Forces Trooper


I belong to the Special Forces Association (Green Beret’s) and last year we, in north east Ohio, were notified that one of our brothers had died and we were invited to the ceremony to be held on August 5, 2017 at 10 AM at the Veterans Memorial Park in Avon Lake Ohio. We always go when possible to these events as is it is a very small and close group. Most NCO’s and all commissioned officers are college grads and of course are in top physical shape. The 5th Special Forces Group “The Legion” is I believe the most highly decorated united in the Army (I was in the 5th in Nam). And we have almost all seen combat and lost good friends. About half on my local chapter made it to the service.

Drew was a very unique individual (most of the Green Berets are but he was the ultimate and I wish I had known him we had much in common) and, as proof there were hundreds there from his high school class in Avon Lake including teachers, to college friends from Ohio University, to active duty Green Berets and retired Green Berets. The speakers told of story of his life which was in summary: top of his class academically, an accomplished artist and musician, a top notch athlete. He went to Ohio University and while there it was much the same except he was also in ROTC and graduated with honors including being number 13 out of over 4,000 ROTC grads the year he graduated (I’m not positive on the exact numbers).

He was commissioned a 2nd Lieutenant and severed in the 10th Mountain Division we he got jump wings (Paratrooper) and a Ranger Tab. He did two tours in Iraq. After making 1st Lieutenant and being on the way to Captain he applied for and was accepted to undergo Special Operations training and of course became a Green Beret and did one or two tours in Afghanistan. I may not have this exactly right but its close enough since they didn’t give all the dates.

While he was doing service to his country he continued to work on his art, poetry and music; I’ll type in a sample at the end of this. Needless to say he was good at that as well. I would guess Drew was born ~1984, graduated from HS in ~2002 (after 9/11), graduated from college ~2006 and left the service in ~2016 after 10 years; making him ~33 when he died.

After getting out he turned back to is art and was in the process of setting up a website for artists called Lifeblood Art when he committed suicide; the exact date was not given so I would guess it was sometime in late July.  The family continued that work he started and The Cleveland Foundation set up the “Lifeblood Art Fund” How the hell could this happen and then I read his poetry.

 

Drew’s Song, I Know A Place

I know a place, I know a place where we can go, to pass the time
Pass. pass, pass the time

I know some friends, I know some friends, we can call, to share our night
Share, share, share our night

I know a drink, I know a drink, we can drink, to warm our bones
Warm, warm, warm our bones

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls

I know a dance, I know a dance, we can dance, to fill our hearts
Fill, fill, fill our hearts

I know a bed, I know a bed, where we can go, to rest our heads
Rest, rest, rest our head

I know a dream, I know a dream, we can dream to change our lives
Change, change, change our lives

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls

I know a song, I know a song, we can sing to lift our souls
Lift, lift, lift our souls
Lift, lift, lift our souls
Lift, lift, lift our souls

When I read this I know what happened since I had just finished ready CG Jung’s The Archetypes and the Collective Unconscious (as an artist I think you would appreciate his writing) and based on his work, which I agree with, we all have the male Yin and female Yang in us which leads to conflicts in some cases. Drew had both the warrior and the artist in him. What was bad was he was strong in both and so when he went in the army after 9/11 he was driven to be the best a Green Beret when then that put him in direct conflict with his artist side. Based on his rank and accomplishments there is no doubt that if he would have stayed in he would have made general so why did he get out? And why did he committee suicide right after getting out?

The 10 years of being in the military and being deployed 3 or 4 times where he was there to destroy things ripped his soul apart I know for I felt some of that after I got out; obviously not to the same degree, but I could see the conflict in that poem. After I got out I was working with a bunch of engineers at GE in New York and a lot of them hunted deer. I went out with them a couple of times after buying a rifle and I found I could not shoot a deer.

Right Angle: A Real Black Panther


Meet Robert Smalls, a swashbuckling hero of the Civil War, whose story has been lost to history. Unfortunately, he’ll stay there unless we’re willing to admit the real history of our political parties.