Monthly Archives: July 2018

Jul 2 2018

Mexican President-Elect Andres Manuel Lopez Obrador: “We are conscious of the need to maintain good relations with the United States”…


Re-Posted from The Conservative Tree House on July 2, 2018 by

Mexico’s president-elect Andres Manuel Lopez Obrador “AMLO” easily won yesterday’s election with 54% of the vote; the highest vote total in three decades.  In addition his MORENA party won an absolute majority in both the Mexican Senate (38% +/-) and the Chamber of Deputies (38% +/-).

The multinational financial community is in the process of evaluating how the nationalist win will impact all prior investing.  One of the key issues is NAFTA.  Multinational corporations have poured billions into Mexico as a structural method to utilize the trade deal to gain access to the U.S. market.

Despite his campaign position, AMLO is now affirming a positive intention to renegotiate NAFTA; however, he is speaking from both sides of the current issue.  Example:

[Today] Lopez Obrador said he supports reaching a deal on renegotiating the North American Free Trade Agreement with the United States and Canada.

[…]  Lopez Obrador said he will propose that his own team of experts be included in the talks. The winning candidate said he will make that proposal in a meeting Tuesday with current President Enrique Pena Nieto.

Lopez Obrador told Televisa that he will respect the current team of negotiators, and let them continue representing Mexico until he takes office Dec. 1.

[…] Lopez Obrador said individual and property rights would be guaranteed, promised respect for the autonomy of the central Bank of Mexico and said his government will maintain financial and fiscal discipline.

He said contracts obtained under energy reforms passed under President Enrique Pena Nieto will be scrutinized for any corruption or illegality, but otherwise contracts will be honored.

“There will be no confiscation or expropriation of assets. … Eradicating corruption will be the principal mission,” he said.

[…] The polling firm Consulta Mitofsky predicted Morena allies would take between 56 and 70 seats in the 128-member Senate and between 256 and 291 spots in the 500-seat lower house.  (more)

On NAFTA the bottom line is easily identified.  There are no ongoing negotiations.  The NAFTA fatal flaw, which allows Canada and Mexico to act as pass-throughs for foreign products, is an impossible impasse to overcome.  Neither Mexico or Canada can negotiate away their economic process of importing foreign goods, assembling them, and then using NAFTA to trans-ship the finished product into the U.S market.

Neither Mexico or Canada manufacture much of the product they assemble.  The overwhelming majority of Canadian and Mexican products, including cars, are assembly operations for manufactured goods using parts from Europe and Asia, mostly China.  They do not have the raw materials, infrastructure, or heavy-duty manufacturing plants, to *create* component parts for manufactured goods.  Therefore in order to maintain their three-decades-long economic and trade system they cannot negotiate a NAFTA plan that demands high-content source of origination, for durable goods, from North America.

Nothing can change that.

China has invested tens of billions in ports and transport infrastructure to facilitate the current process.  Those port and transit investments would become functionally obsolescent if Mexico and Canada were forced to stop importing parts for assembly.

♦ In the food sector the Mexican farmer, and by consequence Mexican farm-worker, are caught in the same multinational big AG network.  Archer Daniels Midland (ADM), Monsanto, Nestlé, PepsiCo, Kraft (or, outside the United States, by the company’s alter ego, Mondelēz International).

Once the plowing, planting, nurturing, and harvesting are done, around 80 percent of major crops pass through the hands of four traders: ADM, Bunge, Cargill, and Louis Dreyfus.  This is a controlled market.

For farmers, BIG AG (oligopolies) mean fewer choices of supplier and sometimes no choice at all about whom they will sell to. This leads to “contract farming”, in which farmers grow according to corporate specifications, with all supplies provided by the company, in return for its commitment to purchase the farmers’ output if it is acceptable.

On the Agricultural side of NAFTA president-elect Andres Manuel Lopez Obrador and U.S. President Donald Trump can actually work together.  Neither AMLO, nor Trump, support the continuation of the corporately-controlled, Wall Street profit-driven, status quo.   An interesting dynamic.

Keep in mind this next article about AMLO is from “Reuters”, a media outlet owned, operated, and messaging service of Wall Street:

(Reuters) – Mexico’s next president, Andres Manuel Lopez Obrador, said on Monday he will seek to remain in NAFTA along with the United States and Canada and that he respects the existing Mexican team renegotiating the trade pact.

Lopez Obrador won a landslide election victory on Sunday, getting more than double the votes of his nearest rival, dealing a resounding blow to establishment parties and becoming the first leftist to win the Mexican presidency since one-party rule ended in 2000.

“We are going to accompany the current government in this negotiation, we are going to be very respectful, and we are going to support the signing of the agreement,” he told Milenio TV in an telephone interview, saying the aim was a deal on the North Atlantic Free Trade Agreement that was good for Mexico. (read more)

Overall, Obrador represents an ideological outlook almost identical to former U.S. Presidential Candidate Bernie Sanders.  [coincidentally the same as former Venezuelan president Hugo Chavez].   Hollywood celebrities and avowed leftists will likely embrace Labrador in 2018/2019 as they did Chavez in 2009/2010.  Watch, you’ll see.

AMLO has a governing philosophy almost identical to Bernie Sanders; the problem AMLO faces is his Mexican economic policy starts without any underlying Mexican wealth to spread around.  [Again, the Venezuelan issue]  Socialism only works when you have other people’s money, labor, and property to distribute.  The majority of the value in Mexico is owned by outside multinational interests.  Those multinationals will now have to figure out how to deal with a nationalist who despises their ownership and control.

[Again, see big picture Venezuela]

Eventually, in order to make good on his promises, AMLO is going to need to *take* value from private ownership and redistribute that wealth to his constituents.  That process may take a few years, but it is inevitable.   In the history of the world, a socialist economy has never survived itself (without absolute economic capitulation of the citizens).

When that process happens, those entities who have their wealth expropriated will exit the economic system.  It has always been thus; there has never been a socialist economy where that did not happen.. and that process begins the Venezuelan spiral.

The most dangerous time for a rescue swimmer is the moment when he reaches the desperate and drowning man.  The MOST IMPORTANT aspect for President Trump, and for the survival of the United States, is to make sure the U.S. is not pulled under when Mexico begins to drown.

That, my friends, is why we need the Southern Border Wall.  [Regardless of cost.]

Now, think carefully about AMLO’s quote again today:

“We are conscious of the need to maintain good relations with the United States.”

Yeah, I guarantee they are..

Jul 2 2018

Is Conversational AI Here?


Armstrong Economics Blog/AI Computers

Posted Jul 2, 2018 by Martin Armstrong

IBM has been working on what we call Conversational AI. When I was working on developing Socrates’ Natural Language, I was not interested in creating a machine to debate me. I was interested in creating a machine that I could at least have a conversation with. I teamed up with Dragon Systems back then when it was still hardware. I built a system and gave it to my children so that the computer could learn how to keep a conversation going. It would remember what they spoke about, so the next time they came back its knowledge base grew. I came home one day and found my daughter by the computer with all her girlfriends, for apparently they did not believe she could communicate with the computer. No doubt all her friends ran home and demanded a talking computer from their fathers. Needless to say, it taught me a lot about how to create a machine to have a conversation with and this was back in the 1980s.

IBM has been trying to take this to the level of debating humans. They call it Project Debater. They carried out their first such public debate. The IBM Debater managed to score points for it certainly has a knowledge base that would be unprecedented. It can easily retrieve facts and information to mount evidence for its arguments in a rapid short period of time. However, the answers it provided did tend to ramble a bit and lack the human understanding of finesse in how to deliver it with a punch. All said and done, the technology definitely demonstrated that this is just in the primitive stages for now but the future will certainly improve.

Jul 2 2018

Andrés Manuel López Obrador (“AMLO”) Easily Wins Mexican Presidential Election – Hugo Chavez 2.0 Now Running Mexico….


Re-Posted from The Conservative Tree House on July 1, 2018 by

The official announcement is coming momentarily.  All other candidates have conceded.  Looks like Andrés Manuel López Obrador, an avowed soft-Marxist, will EASILY end up with 53 to 59% of the vote and is the next President of Mexico:

Primary platform points:  ♦Amnesty to all drug cartels.  ♦No longer will work with U.S. immigration enforcement.  ♦Nationalize oil industry.  ♦Farm subsidies. ♦Elimination of multinational corporate influence on farming.  ♦Support and assistance for economic growth plan: using •mass migration of Mexican nationals into Southern U.S., •create AmeriMex border region, and •remittance of earnings back to Mexico as initiative for rapid domestic economic growth.

MEXICO CITY (Reuters) – Leftist outsider Andres Manuel Lopez Obrador won Mexico’s presidential election handily on Sunday, exit polls showed, setting the stage for a government that will inherit tense relations with Washington and the scrutiny of nervous investors.

Jose Antonio Meade, the candidate of the ruling centrist Institutional Revolutionary Party, or PRI, conceded defeat to Lopez Obrador, a 64-year-old former Mexico City mayor, within minutes of the polls closing.

“For the good of Mexico, I wish him the very best of success,” Meade said in a speech. Lopez Obrador’s other rivals also conceded that the race was lost.

Lopez Obrador is expected to move Mexico in a more nationalist direction as he becomes the first leftist to rule the country in decades. He has pledged to reduce economic dependence on the United States.  (read more)

Jul 2 2018

Cryptocurrency Crash – Has it Done Long-term Damage?


Armstrong Economics Blog/Cryptocurrency

Re-Posted Jul 2, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong; I am impressed with your computer system for without historical data depth, it still manage to correctly forecast the high in Bitcoin. The BIS had come out against cryptocurrencies as has our central bank here in Switzerland calling them crude and unlikely to become a world currency without impressive advancement in the technology. With Bitcoin off more than 70% from the high, I am amassed that people keep calling for new highs. They did the same on gold. It appears to be some sort of emotional drug that these people get addicted to or are they just frauds?

Thank you

PVC

ANSWER: The Global Market Watch is best on the higher levels. There are over 100,000 different patterns and it is still learning. It is matching patterns it discovers and when it discovers a new one, it records it and tests against it in the future. So it was able to forecast Bitcoin correctly from a pattern recognition perspective alone. That does not require heaps of historical data. It is a very interesting tool which completely evolves with time. I find it funny when people try to argue against it pointing their finger at me personally when it is the computer that is doing that job – not my personal opinion. The daily level is the most volatile for the complexity is off the charts. The reliability increases as we rise through the timing levels.

Nevertheless, there are some people who miss the high and refuse to admit that they are wrong. You had people constantly calling for gold to take off for a 19 year decline. Even after the 2011 high, I got intense hate mail blaming me for the decline from these same type of people. They prefer to blame me rather than admit that they were investing emotionally, which is the worst strategy of all. I have stated before that when I was doing an institutional conference in Tokyo at the Imperial Hotel, a guy bribed his way in just to ask me what to do. He bought the Nikkei the very day of the high with $50 million and it was his very FIRST attempt at investing in stocks. He still had the position despite being down some 40% at the time.

There is a basic rule that I have come to determine. A market can survive as long as the correction on a monthly level does not closed beyond 43% down from the high (8.6 /2). The next stage is 51.6%. Move beyond that and you cross into Meltdown Mode. Bitcoin crossed the 43% decline mark so that was a warning this was not a short-term correction from which new highs were possible. Moving beyond 51.6% meant that new highs are not likely for quite some time.

The Swiss National Bank has come out and stated it is not looking at cryptocurrencies and the blockchain technology for they consider them “far too crude” to support a digital franc. The Bank for International Settlements (BIS), the central bank to the central banks, has also come out with devastating prespective of the cryptocurrencies. They have highlighted the hacking and a number of perceived technical flaws as a major deterent to them advancing to a digital currency among nations. The BIS flat outright made it clear that they are too unsuitable to serve as a new global currency.

Of course, those who are the new crypto-believers will never yield. They believe what they WANT TO believe and close their minds to anything else. They analyze, forecast, and invest purely on emotion. Whenever emotions are involved, decision will NEVER be prudent, wise, or successful. This seems to be some strange human flaw for it is by no means confined to cryptocurrencies. As I have stated before, this same type of pattern appears throughout history in everything from tulips, stocks, gold, silver, and DOT.COMs just to mention a few. However, like the DOT.COM Bubble, there is valid shifts in technology that will advance in the years ahead.  The NASDAQ decline was 78.4% in two years 2000 to 2002 bottoming with the ECM turning point back then. BitCoin dropped 69.06% in the first two months. June made a new low bringing the correction to 69.83%. It took the DOT.COM Bubble 18 months to reach that same percentage decline. It took the Japanese Nikkei 106 months to reach that percentage decline. For the 1929 Crash, it took 24 months to reach that same percentage decline. Therefore, it is abundantly clear that the losses in cryptocurrencies have dwarfed most other bubble declines and it reflects the skepticism inherent within as smart money realizes this is not going to circumvent central banks and bring governments to their knees

Jul 2 2018

Trade War with China


Armstrong Economics Blog/World Trade

Re-Posted Jul 2, 2018 by Martin Armstrong

QUESTION: What is your “opinion” on the Trump tariffs dispute with China?

ANSWER: Years ago, an old friend from high school was in the Philadelphia Steam Fitters Union. They went on strike for a very long time. He finally came to me and asked for a job. I gave him one and all I ever heard was how if he stayed 15 minutes longer, he would be paid double time. I sent him to New York and everyone always came back by the end of the day besides him. When I asked what happened, he said it was 3 o’clock and there was no point to come back to the office for just a couple of hours. This was the 70s. He drove a Toyota. When I asked why he was driving a foreign car he said it was cheap and reliable. I asked what about the union jobs he was bypassing. He did not answer. Needless to say, I had to fire him.

It’s always comical to me how people always want the cheapest price they can buy, and then they want the highest possible wages to work. I believe in free trade. Tariffs are only forcing consumer subsidized high wages. If someone can produce the same product at a better price, that is the benefit of the consumer. Those people should move on and retrain to an industry that is higher paid rather than demanding excessive wages for jobs other can do for a lot less.

The United States really has a trade surplus of about $1.4 trillion when trade is allocated to the flag a company flies. The USA is moving more into the high-tech areas. Lawyers are a dying profession and medical is slowing by overpricing itself and there too we will see real price shocks. Let the free markets decide the future. That is what they are good at

Jul 2 2018

López Obrador Wins Mexico 43.7%


Armstrong Economics Blog/Mexico

Re-Posted Jul 1, 2018 by Martin Armstrong

López Obrador has won Mexico but its political system is flawed as is most parliamentary type systems. It allows for coalitions to be formed from very different parties. The French have a run off with the two highest winning candidates thus forcing the people to choose between the two. The problem with the Mexico election lies in the promises. The people were fed up with the corruption and they just wanted to throw out whoever is in power. However, Obrador is more like Bernie Sanders. There is NO POSSIBLE means available to him to pay for his ambitious slate of social programs. He will raise taxes dramatically and we will see Mexico spiral downward into 2020. He is illprepared to get rid the government of corruption when the bureacracy is the problem. In fact, many who were deeply involved in the corruption saw the shifting trends and were a part of Obrador’s campaign. It is also not likely that he will make a dent in the unyielding violence of the drug war. The people are fed up with the drug wars which has escalated out of control. There were more homicides last year in Mexico than any time in the last two decades.

The US dollar is still poised to rise against the Peso in the years ahead.

Jul 1 2018

Poll: Overwhelming Support For President Trump Immigration Positions….


Re-Posted from on July 1, 2018 by

Earlier today in response to questioning about the current Democrat platform to abolish ICE (Immigration and Customs Enforcement), President Trump said he hoped his political opposition would run on that issue because they are out of touch with the American voter.

A Harvard Harris poll (full pdf below) shows President Trump’s instincts are spot-on.  1,448 polled voters. [Poll ideology: Democrat 37%, Republican 32%, Independent 29%]

An overwhelming majority of American registered voters, 70 percent, support tougher immigration enforcement to include a border wall (60% support), deportation (64% support), and repatriation of all illegal border crossers including families with Children (61% support). Additionally 69% of voters do not support the position of disbanding I.C.E.

♦ Page #67 – Do you think current border security is adequate or inadequate? 61% Inadequate / 39% Adequate

♦ Page #69 – Do you support or oppose building a combination of physical and electronic barriers across the U.S.-Mexico border?  60% Support / 40% Oppose

♦ Page #72 – Do you think that the Immigration and Customs Enforcement officers, known as ICE, should be disbanded or not?   31% Disbanded / 69% Not Disbanded

♦ Page #68 – Do you think we should have basically open borders or do you think we need secure borders?  76% Secure / 24% Open

♦ Page #73 – Do you think we need stricter or looser enforcement of our immigration laws?  70% Stricter / 30% Looser

♦ Page #74 – Do you think that people who make it across our border illegally should be allowed to stay in the country or sent home?  64% Sent Home / 36% Stay Here

♦ Page #75 – Do you think that parents with children who make it across our border illegally should be allowed to stay in the country or sent home? 61% Sent Home / 39% Stay Here

♦ Page #78 – Do you think that people who illegally cross into the country should be allowed into the country and given a ticket to see a judge in the future or held in custody until a judge reviews their case?  55% Held in Custody / 45% Given Ticket

♦ Page #89 – Should cities that arrest illegal immigrants for crimes be required notify immigration authorities they are in custody or be prohibited from notifying immigration authorities?   84% Require to Notify / 16% Not Required to Notify

Here’s The Full Poll Response:

https://www.scribd.com/embeds/382979122/content?start_page=1&view_mode=&access_key=key-G51wwSnUgR5Fi6fEun3D

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Jul 1 2018

Sunday Talks: John Bolton -vs- Margaret Brennan (N.Korea, Russia, Iran)…


Re-Posted from The Conservative Tree House on July 1, 2018 by

White House national security adviser John Bolton appears on Face The Nation with Margaret Brennan to discuss North Korea and Russia.  Within the interview Bolton says the U.S. could dismantle North Korea’s nuclear and ballistic missile programs within a year if the North Koreans committed to scrapping their arsenal in accordance with the agreement reached in Singapore last month.

Jul 1 2018

The 6 Month Rule on Passports


Armstrong Economics Blog/Rule of Law

Re-Posted Jul 1, 2018 by Martin Armstrong

COMMENT:  Dear Mr. Armstrong, I look to help others as you do.

My wife turned 60 in June and we planned a trip to Milan and Lake Como on June 30.  We arrived at the airport in Nashville yesterday, checked in, printed our boarding passes and tagged our luggage, then presented our tagged luggage to the AA attendant.  She reviewed our passports to verify the name matched the luggage tags and boarding pass, then said we could NOT board the plane.  We were told that my passport expires less than 60 days before our return flight and we would not be allowed to board without an updated passport.  I spoke to the gate manager at AA and he indicated we would be deported if we arrived and checked in to Italian customs.  My passport does not expire until a month after our return, but we were told it has to be 6 months.

When we purchased the Airline tickets, we entered the passport information to include the exp date.  No problem was indicated.  We checked in the Airport with our Passports and entered the exp date. No problems. We had to process all the way to the gate to be told we could not travel.  How does this happen with the advanced computer systems we have today?  How costly could it be to update the program for buying tickets to reject a passport number with an exp date of 6 months or less?  AA told us it was not their fault, but they stand to gain significantly with change fees.  I have been traveling internationally since 1981 and have never encountered this problem.  I have not spoken to a person who travels internationally that knew about this rule.

….

Best,

John

 

REPLY: Each country has different rules. The 6 month rule is also applied by the USA to foreigners and that also applies to visas. Any employee from Ukraine has to have a visa that will not expire in less than 6 months in order to come here even if their passport is good for 10 years. I have a very good travel agent who books me on international flights in the most amazing ways. Often they will be one-way tickets because meetings pop-up often during a crisis and so it is not always black and white when I have to travel overseas. Some just learned through the grape-vine that I am in their country and requests begin.

Most of the time I have no problem even with one way tickets. The only country that causes a problem in France. I must have a return ticket out of France. One from Greece does not count for some strange reason. My agent will book a first class return fully refundable for me to land booking that the day before. When I arrive, he cancels it and I can then go on my way around Europe. The easier work-around is to travel to France within the EU and fly into Frankfurt or Brussels first.

It is the airline fault for their computers should flag a passport that expires in less than 6 months. There are many countries that do have that rule, yet it varies. Best to renew a passport more than 6 months before it does expires just to be safe.

 

Jul 1 2018

International Convention of Cousins – Intellectual Froglegs Latest Underground Dispatch….


Re-Posted from The Conservative Tree House on June 30, 2018 by

Hear Ye; Hear Ye;… it is officially announced, proposed, reactified and triggeringly proclaimed by the ICC that Froglegs vaccinations are once again available.

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