Content created by Som3thingwickeed who uses the Dennis Leary Ford commercial theme to create a commercial explaining the current state of politics. [A Little Salty]
Armstrong Economics Blog/USD $
Re-Posted Aug 13, 2019 by Martin Armstrong
QUESTION: Marty: If I have this correctly, you’ve said the Great Depression of the 1930s was a Global Capital Flow problem set in motion largely by sovereign debt issues that led to a massive capital flight into the dollar which created a tidal wave of deflation. Are we seeing this scenario today?
ANSWER: Yes. It is the economic crisis outside the USA that is compelling the dollar to move higher. This is what caused deflation and ultimately forced Roosevelt to devalue the dollar. You can see the dramatic spike and rally in the dollar as Europe defaulted on its debts but the US held.
Re-Posted Aug 13, 2019 by Martin Armstrong
There is a very Dark Cloud hovering over the world economy and at the center of this cloud lies not just Europe, but Germany – the strongest economy holding up all of Europe. The German manufacturing sector is in freefall. Trump will be blamed calling this the result of his Trade War. It is probably too late to get him to even understand that his advisers are old-school and completely wrong with respect to trade. Their obsession with currency movements is what they taught back in school during the 1930s. My advice to China, let the yuan float and Trump will quickly see that China has been supporting its currency, not suppressing it.
Manufacturing indicators have deteriorated globally, yet in a very disproportionate manner. Trump will be blamed for this and his badgering the Fed to lower interest rates is also a fool’s game. Nobody looks at the elderly who were told to save for retirement and you will live off the interest. Their house values were undermined in the 2007-2009 New York Banker’s Mortgage-Backed scam that blew up the world economy from which we have been unable to fully recover. The younger generation cannot afford to buy a house as they are saddled with student loans thanks to the Clintons for degrees that are worthless as 65% cannot find jobs in what they have degrees for these days.
The insanity of those in power knows no boundary when it comes to stupidity around the world. All they have is interest rates and after more than 10 years of excessively low to negative interest rates failing to stimulate the economy in Europe, what do they do? They argue that all physical money must be eliminated because people are hoarding cash and thus defeat their lower interest rates policy. The IMF recommends confiscating all cash and then driving interest rates deeply negative to force recovery. They remain ignorant that they have destroyed the retirement of the elderly now, as well as the those who have yet retired because they command pension funds must invest in government bonds to various percentages ensuring that pensions will collapse as well.
Manufacturing has been contracting compared to the service sector even on a global basis. The financial markets have appeared to be disconnected from the underlying economic trends because capital smells a very big rat. Capital has been shifting toward preservation rather than how much profit can it make today. Even the 10-year 3-month interest rates in the USA have tipped into the inverted yield curve confusing many that this is a sign of impending doom. They fail to read the tea leaves that capital is looking for a place to just park. Traditionally, inverted yield curves take place during recessions and we are in one globally heading into a major low come January 2020.
The Economic Confidence Model (ECM) has been on point despite the fact that schools warn you cannot forecast the business cycle yet the ECM has proven them wrong for decades. This particular cycle is exceptional. The central banks outside the USA have single-handedly destroyed their bond markets with Quantitative Easing. They are trapped and cannot allow interest rates to now rise to normal levels as they have kept the various governments on life-support.
While central banks have tried to “stimulate” the economy, federal, state, and local governments are in dire need of money and have been raising taxes and increasing enforcement. Government pensions are wiping out budgets in Europe, America, and Japan. The forces of the central banks have been directly opposed by the political fiscal side of government.
We are facing a very Dark Financial Storm from which there is no escape. There is no advice being given to so many governments to avoid this crisis and waking up next year to this error will be too late. There will be nothing that can be done to put it all back together and live happily ever after. Welcome to the reality we face. At least this will make for a very interesting WEC. Make no mistake about it. They will lay all the blame on Trump and attribute this to trade rather than finance.
Armstrong Economics Blog/Politics
Re-Posted Aug 13, 2019 by Martin Armstrong
Ghislaine Maxwell was more than the alleged protector and procurer of young girls for Jeffrey Epstein as well as his girlfriend based upon allegations. However, she is also the daughter of Robert Maxwell who I believe was a member of “The Club.” Interestingly, Maxwell’s protege was also William Browder who loves to run around claiming he is the number one enemy of Putin. While the prosecutor wants to charge Ghislaine with conspiracy, nobody knows where she is. That alone in today’s world seems unbelievable. Use a credit card or turn on your phone and they have you. You need cash and a burner phone just to start. Then you need fake passports for you to book a ticket in your name and they will be there when you land waiting with open arms.
Epstein grew up in Brooklyn with no money to speak of and never finished college. She is Paris-born, Oxford-educated, a jet-setter who partied with princes and billionaires. They are reporting that Jeffrey Epstine hung himself with his bedsheet in isolation when guards were supposed to check on him every 30 minutes. The Los Angeles Times attributed any doubt to just conspiracy theories. But nobody asks the question: Why was Epstein in the hole?
You are thrown in that dungeon supposedly for disciplinary reasons. Epstein at best should have been there for a few days assuming there was no bed space in population. To be in isolation is rare since they need every bed in MCC and they will often send people to Brooklyn’s MCC when they need more space. Epstein had been in prison before so it would be no dramatic shock. To be thrown in the hole from day-one is typically on the phone call from the prosecutor. The MCC is controlled by the prosecutors when that is supposed to be illegal. But nobody will ever investigate that one. Having him in isolation without another cellmate allows for anything to happen without a witness. Who ordered to put Epstein in solitary confinement?
The fascinating connection her is Ghislaine Maxwell is the daughter of Robert Maxwell who I believe was a member of “The Club” deeply involved with Salomon Brothers and had dealings also with Goldman Sachs. You got it. The official report issued by Britain’s Department of Trade and Industrysaid investment bank Goldman Sachs Group, Inc had “substantial responsibility” for allowing Mr. Maxwell to manipulate the stock market prior to the collapse of his businesses reported the Wall Street Journal back in April 2001.
JPMorgan Chase and Deutsche Bank, which did business with Mr. Epstein, are scouring their books for clues. There also runs a conspiracy theory numbering the deaths of people associated with JPMorgan Chase, not just the Clintons. Questions still surround billionaire Les Wexner, the financier’s most prominent client prior to his first incarceration. Exactly how Mr. Epstein used Mr. Wexner’s wealth to finance his own fortune is not clear. In August 2019, following Epstein’s second incarceration, Wexner addressed the Wexner Foundation by letter, delivering a detailed account of his dealings with Epstein, stating that the former financial advisor had “misappropriated vast sums of money” from Wexner and from his family. Wexner retained services of criminal defense attorney Mary Jo White of Debevoise & Plimpton, who used to be the head prosecutor in Southern District of New York. Why does he need a criminal lawyer who was the head of the New York prosecutors?
Then there is the infamous Epstein’s so-called “little black book,” of 92 pages with names, emails, and phone numbers of people Epstein knew or wanted to know, but in any event, had detailed information about. The list goes on and on includes top people from the entire financial spectrum down the food chain from Goldman Sachs to just low-level billionaires (under $2 bil).
Aside from the fact that they could NEVER allow Epstine to be put on trial with all the connections he had, there is something else beyond the sex scandal. I have explained that there is what I have called “The Club” where a number of players ban together informally to manipulate a particular market. One member will typically take the lead and take the publicity if need be. There were some hedge fund players but mostly bankers and a few big punters.
I also believe one of those in “The Club” was Robert Maxwell (1923-1991), the flamboyant billionaire British publisher, who allegedly drowned after falling off his yacht in the Canary Islands near the northwest coast of Africa. Maxwell’s last words in communication were on November 5, 1991.
Robert Maxwell is Ghislaine Maxwell’s father. The scandal unfolding was the manipulation of the US Treasury auctions back then. Note the date for the Salomon Brothers scandal manipulating the U.S. Treasury Auctions broke August 18, 1991. It was this event that I believe changed the direction of Goldman Sachs. After that scandal where the government was going to shut down Salomon Brothers who was the biggest bond dealer in the USA for manipulating markets, all of a sudden, people from Goldman Sachs started taking posts in government.
Robert Rubin began his career as an attorney at the firm of Cleary, Gottlieb, Steen & Hamilton in New York City which represents many banks in NYC. He joined Goldman Sachs in 1966 as an associate in the risk arbitrage department and became a general partner in 1971. Rubin then joined the management committee in 1980 along with Jon Corzine of MF Global fame. Robert Rubin then became Vice Chairman and Co-Chief Operating Officer from 1987 to 1990. Rubin then served as Co-Chairman and Co-Senior Partner along with Stephen Friedman from 1990 to 1992.
This trading atmosphere of “big swinging dicks” had not learned its lesson from the 1987 Crash. This was the culture instilled by PhiBro from the commodity side of the world. Trader Paul Mozer, who had a 12-year career at the firm coming from Morgan Stanley, allegedly submitted illegal bids for U.S. treasury securities in August of 1990, attempting to corner the market by purchasing more than the 35% share allowed per individual transaction. Yet, what he eventually plead guilty to was based on only two transactions in the five-year notes on February 21, 1991 for $6 billion, which was $2 billion more than the bank was allowed to buy. The plea did not match the events.
Other Salomon employees would later tell the NY Times they were shocked:
“This was not driven by personal gain, if this is true. There’s a game here. And it was a desire to win the game.”
Mozer’s supervisor, John Meriwether who later became a founder and a consultant for Long-Term Capital Management, a hedge fund which collapsed in 1998 forcing the Federal reserve to then bail out a hedge fund. Fed bailout of his hedge fund which had a position of nearly $100 billion. Meriwether, at the time in Salomon, claimed to have chastised Mozer for the manipulation when it came to his attention, but he did not fire Mozer raising serious questions about the trading culture overall inside Salomon Brothers.
Shortly before the Salomon Brothers scandal erupted, Paul W. Mozer must have been aware that the Treasury knew about the trade and there would be ramifications. Before the announcement by Salomon Brothers on August 9th, 1991, Mozer then sold about $1.7 million worth of Salomon stock, which was about 46,000 shares, confirmed by the firm. The government froze the funds for it smelled like insider trading in the real sense.
Within less than two years from the Salomon Brothers manipulation, Robert Rubin took a position in the Clinton Administration. I believe following the Salomon Brothers scandal, Goldman Sachs began to make large political donations. From January 25, 1993, to January 10, 1995, Rubin served in the White House as Assistant to the President for Economic Policy. In that capacity, he directed the National Economic Council, which Bill Clinton created after winning the presidency. Robert Rubinthen became the 70th United States Secretary of the Treasury on January 11, 1995, until he managed to get Glass Stegall repealed. He left the Treasury on July 2, 1999. He was of course followed by Hank Paulson from Goldman Sachs taking the post also of Secretary of the Treasury.
There was the Robert Maxwell (1923–1991) scandal that he had stolen hundreds of millions of pounds from his own companies’ pension funds to save the companies from bankruptcy. However, behind the scenes, there may have been trading losses with “The Club” and again if there had been a trial concerning the missing $700 million+, then all other parties are exposed. A swim in the Atlantic would certainly prevent that from happening.
Maxwell’s investment bankers included Salomon Brothers, confirmed by the NY Times. Eventually, the pension funds were replenished with monies from investment banks Shearson Lehman andGoldman Sachs, as well as the British government. There were complaints before Maxwell died about dealings between his other public company, Maxwell Communications Corp, and Wall Street bankers Goldman Sachs according to The Guardian.
It was 1991 when William Browder went to work for British billionaire Robert Maxwell as his “investment manager”. The BBC called Maxwell “the biggest fraud in British history”. Just how deep into the investment decisions of Maxwell did Browder participate as an investment manager. Interestingly, after Maxwell died, Bill Browder went to work for the notorious Salomon Brothers. Browder was put in charge of the Russian proprietary investments desk at Salomon Brothers.
Salomon Brothers’ historical dependence on proprietary trading and the type of atmosphere of “big swinging dicks” had on bond arbitrage which almost destroyed the firm, thanks to Warren Buffettwho stepped in to run the firm and himself getting involved in the silver manipulation (see Bonfire of the Vanities movie). If Salomon had not been sold in 1997 with the merger of Travelers Group(which owned retail brokerage, Smith Barney), no doubt Salomon Brothers would have collapsed in the 1998 Long-Term Capital Management debacle created by one of their own – John Meriwether.
William Browder left Salomon Brothers and joined with Edmond Safra (1932–1999) founding Hermitage Capital Management in 1996 for the purpose of investing initial seed capital of $25 million in Russia during the period of the mass privatization after the fall of the Soviet Union. Beny Steinmetz, who is an Israeli businessman, with investments in diamond and precious metals mining among other things, was allegedly another of the original investors in Hermitage Capital Management. This was the firm Safra through Dov Schlein solicited me to invest $10 billion.
I believe Safra lost $1 billion in Russia during the 1998 Long-Term Capital Management crisis over Russian bonds and investments which was why he put his bank, Republic National Bank, up for sale to HSBC in 1999. Following the Russian financial crisis of 1998, Browder remained committed to Hermitage’s original mission of investing in Russia, despite significant outflows from the fund. Hermitage became a prominent shareholder in the Russian oil and gas. It was in 1999 when VSMPO-AVISMA Corporation (Russian: ВСМПО-АВИСМА) is the world’s largest titanium producer, filed a RICO lawsuit against Browder and other Avisma investors including Kenneth Dart, alleging they illegally siphoned company assets into offshore accounts and then transferred the funds to U.S. accounts at Barclays. Browder and his co-defendants settled with Avisma in 2000; they sold their Avisma shares as part of the confidential settlement agreement. VSMPO-AVISMA also operated facilities in Ukraine, England, Switzerland, Germany, and the United States. The company produced titanium, aluminum, magnesium and steel alloys and it does a great deal of business with aerospace companies around the world, such as Boeing and Airbus.
In March 2013, HSBC, a bank that serves as the trustee and manager of Hermitage Capital Management, announced that it would end the fund’s operations in Russia. The decision was taken amid two legal cases against Browder: a libel court case in London and a trial in absentia for tax evasion in Moscow. In June 2018, HSBC reached a settlement with the Russian government to pay a £17 million fine to Russian authorities for its part in alleged tax avoidance.
When I met Edmund Safra in Washington, DC at an IMF dinner he put on, he asked me why I was always fighting the trend. I commented that it was a dangerous club to join. I said I do know how to swim, obviously referring to Maxwell. Safra just smiled. Maxwell was presumed to have fallen overboard from his luxury yacht off the Canary Islands, and his body was subsequently found floating in the Atlantic Ocean. He was identified only by his family. The Spanish declined to take a dental impression and his fingerprints on file in London were too old. This prompted speculation that he was still alive, but that did not seem plausible. Maxwell was buried on the Mount of Olives in Jerusalem with great official participation. His cause of death was declared to be an accidental drowning.
Maxwell’s death triggered the collapse of his publishing empire as banks called in loans. Why would they call in loans on a major company unless they knew something was not right? Maxwell’s sons briefly struggled to keep the business together but failed as news emerged that Maxwell had stolen hundreds of millions of pounds from his own companies’ pension funds. That was not to support a lifestyle, that was punting money. The Maxwell companies applied for bankruptcy protection in 1992 with debts of £400 million – $717 million in U.K.-based company pension fund assets are missing from his empire. The DOL joins the probe to see that U.S. affiliates’ $300 million in pension assets are safe. Those funds, I believe, were used as part of the “club” and were lost. Had Maxwell survived and been charged, he may have given up everyone else in the “club” which would never be allowed. In 1995, his two sons,Kevin and Ian, along with two other former directors, went on trial for conspiracy to defraud but were unanimously acquitted by a twelve-man jury in 1996.
Eventually, the pension funds were replenished with money from investment banks Shearson Lehman and Goldman Sachs, as well as the British government. This replenishment was limited and also supported by a surplus in the printers’ fund, which was taken by the government in part payment of £100 million required to support the workers’ state pensions. The rest of the £100 million was waived. Maxwell’s theft of pension funds was therefore partly repaid from public funds. The result was that in general pensioners received about 50% of their company pension entitlement.
Armstrong Economics Blog/Climate
Re-Posted Aug 9, 2019 by Martin Armstrong
Being 100% in agreement with you about Climate Change I thought you might be interested in 2 newly released research projects one from Finland and one from Japan: The Finnish researchers conducted by Turku University, state in one among a series of papers, see: (https://arxiv.org/pdf/1907.00165.pdf)
“During the last hundred years, the temperature increased by about 0.1°C because of carbon dioxide. The human contribution was about 0.01°C”. This has been collaborated by a team at Kobe University in Japan, which has furthered the Finnish researchers’ theory: “New evidence suggests that high-energy particles from space known as galactic cosmic rays affect the Earth’s climate by increasing cloud cover, causing an ‘umbrella effect’,” the just-published study has found, a summary of which has been released in the journal Science Daily.
These findings are extremely significant in that both groups have identified the ‘umbrella effect’ as the prime driver of climate warming rather than anthropogenic (human) factors.
I look forward to this information reaching your blog so that other readers can be informed.
Many thanks for all your work which you so generously share and for the huge body of work you have put into Socrates, which is of inestimable value to all those involved in finance and investment.
REPLY: I have spoken with many in the field and all say the same thing. The data is altered and there is just no evidence that human activity has changed the cyclical nature of climate. Pollution is a separate issue which they use to confuse the weak-minded. We all want clean air and water. I lived in London when the busses were still diesel. It was horrible in the summer. I would have to hold my breath when walking near a bus. That does not equate to altering the climate cycles. They cleaned up the air and that no longer is the case. But then stench from the busses back in the ’80s is not responsible for the natural cycles in the climate that date back millions of years.
Published on May 25, 2011
Armstrong Economic Blog/China
Posted Aug 6, 2019 by Martin Armstrong
We are clearly cascading toward the Monetary Crisis Cycle as the USA wrong accuses China of manipulating its currency for trade advantages. All one needs do is look at the trend of the dollar against other major world currencies and you will quickly see that the trend of the dollar against the yuan is in line with the global trend. This is the problem we face when politicians simply follow the academic view of currencies when they are still teaching Keynesianism based upon fixed exchange rates. About 80% of China’s trade is with the rest of the world other than the United States. One does not lower its currency to impact 20% of its trade at the expense of the rest of the world.
I have written before that I was asked if I would teach at one of the top 10 universities in the world. I was surprised, to say the least. When I asked why would they even ask me the response was even more shocking. They actually said to me over lunch that they “knew” what they were teaching was wrong!. They also said the problem they face is those who have real-world experience are NOT INTERESTED in teaching classes in school. I said I would be glad to do a guest lecture, but I too had no interest in teaching a class every day.
Cina has been doing the exact opposite of what the US is accusing it. They have been supporting their currency and if they stopped and allowed it to float freely, then the US would witness probable new record highs in the dollar which will bring about the crisis we see coming by 2021.
I do not know what it is going to take to get governments to stop this nonsense over currencies. If the dollar was declining against all major currencies and China devalued the yuan counter-global-trend, then there would be an argument. But that is just not the case.
The yuan has been under pressure also because the yuan is too expensive within Asia and manufacture has been migrating to South East Asia. China has become the world’s second-largest economy by GDP (Nominal) and largest by GDP (PPP). When we look at the trade between the USA and China, we must look at goods v services.
- The U.S. goods trade deficit with China was $419.2 billion in 2018, an 11.6% increase ($43.6 billion) over 2017.
- The United States has a services trade surplus of an estimated $41 billion with China in 2018, up 0.8% from 2017.
Yes, we are one of the few rare services who publish our forecasting in China. We fall into the Services Catagory. About 80% of China’s trade is with the rest of the world other than the United States.
- United States: US$479.7 billion (19.2% of total Chinese exports)
- Hong Kong: $303 billion (12.1%)
- Japan: $147.2 billion (5.9%)
- South Korea: $109 billion (4.4%)
- Vietnam: $84 billion (3.4%)
- Germany: $77.9 billion (3.1%)
- India: $76.9 billion (3.1%)
- Netherlands: $73.1 billion (2.9%)
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