Armstrong Economics Blog/Religion
Re-Posted Nov 23, 2017 by Martin Armstrong
QUESTION: hi martin
QUESTION: hi martin
Merkel faces the worst crisis of her career and many behind the curtain are starting to wonder if she will even survive. The German Federal President Steinmeier could not actually order new elections immediately. The procedure in this regard is quite complicated in Germany. The earliest possible alternative would be to hold new elections come the spring of 2018. It is likely that the AFD is likely to gather even greater support from new elections. Nonetheless, the CDU will continue to support Merkel at least right now. However, the CDU has been severely weakened by the election and if we do not see new elections until the spring, there is a distinct possibility that Merkel’s support even within the CDU could collapse if they see the AfD will win even greater support.
The head of the Federation of German Industries (BDI), Dieter Kempf, has chastised the political leaders calling on the SPD, FDP and Greens to form a coalition. The price that the SPD will demand is that Merkel leaves before they would consider any compromise. There is just bad blood now between the SPD and CDU. Of course, this makes it even more likely we see and even more difficult Brexit. The practical crisis is the fact that Merkel must attend to domestic issues and will not truly have the time or authority to assume a leadership role in Brussels.
This turmoil in German politics is actually shifting the stage to Macron. The uncertainty in Germany may be opening the door for Macron to reform the EU and the Eurozone pushing Germany to second place. The political fortunes for the EU may be far more uncertain than many suspects.
From a market perspective, political uncertainty in Europe still creates uncertainty in markets rather that confidence.
Stunningly even Chancellor Merkel herself admits her immigration intransigence is the leading reason for her inability to form a coalition government. Yet she is so committed to the ideology of ‘open borders‘ she will tender no compromise.
In an effort to leverage political blackmail against her opposition Merkel prefers the route of another election rather than trying to govern from the minority position.
BERLIN (Reuters) – Chancellor Angela Merkel said she would prefer a new election to ruling with a minority after talks on forming a three-way coalition failed overnight, but Germany’s president told parties they owed it to voters to try to form a government.
The major obstacle to a three-way deal was immigration, according to Merkel, who was forced into negotiations after bleeding support in the Sept. 24 election to the far right in a backlash at her 2015 decision to let in over 1 million migrants.
The failure of exploratory coalition talks involving her conservative bloc, the liberal pro-business Free Democrats (FDP) and environmentalist Greens raises the prospect of a new election and casts doubt about her future after 12 years in power. (read more)
It really is remarkable the level of entrenched ideology amid those who carry a far-left world view. The position of Chancellor Merkel is reflective of visible authoritarianism within a democratic assembly of government. There is apparently no limit to what Merkel is willing to do in order to retain her individual political outlook without concession.
Not surprisingly, the media fail to call out this representative reality; behavior which is, ironically, exactly what media falsely accuse President Trump of doing.
After the failure to form a new government, Chancellor Angela Merkel has made it clear she has no intention of withdrawing from the race. New elections in Germany are looking ever more likely. Merkel appeared on TV on ZDF and said that she had not thought of resigning. Federal President Frank-Walter Steinmeier urged the parties to make a new attempt to form a government. The SPD, however, reiterated it will not agree to a grand coalition.
The most serious forecast that we see from our computer models has been a rise in agricultural prices caused by Global Cooling – not Global Warming. Crops cannot grow without the sun and water. Historically, when the weather turns cold, the crops fail.
There is no question that food prices will rise during periods of war when crops cannot be planted and armies require food on a priority allotment.
However, Mother Nature sticks her finger into the pot to stir things up. The famine cycle is also an 8.6-year frequency, but the volatility aspect comes in units of 12 rather than 6.
Our database on wheat from 1259 forward (excluding our data on the Roman Empire grain prices), reveals that there is a serious risk of famine from 2020 onward. It appears that we may very well enter a 12-year rally into the year 2032. Our Bifurcation Models are reflecting also a gap in time between 2020 and 2031 suggesting a trend appears to last for that period of time.
The downside of taxation, and particularly inheritance taxes, has driven farmers to sell their land to conglomerates just to pay the inheritance taxes. This has resulted in genetically altering crops to increase yield. While genetically altered crops do not really appear to present a major health concern as many seem to argue, the real danger is the fact that during the past 100 years, 94% of the world’s edible seed varieties have vanished.
The downside of socialism which has attacked the rich, we have sacrificed the historical model in our food supply for corporate decision making that bribes politicians handing them their needed money to remain in office with each election. The consequence of this corruption has been the concentration of our food supply into an ever-shrinking basket of diversity. Today, 75% of the world’s food comes from only 12 plants and 5 animal species (see source). This lack of biodiversity has seriously increased this risk of widespread crop disease, and throw in the climate change turning colder, corporate decisions are not the way to protect society. Corporate boards are typically dominated by lawyers and accountants. They are not scientists nor do they even make proper decisions for investment or currency hedging. Corporations will never be able to cope with a sudden change and then make decisions that will impact the world. Major companies, such as Monsanto, could find themselves in control of the fate of human existence with the decisions being made by lawyers and accountants fixated on their bottom-line.
The period ahead, 2020-2032, appears to offer something much more different. While politicians keep pushing Global Warming because they can tax emissions, the risk of a monumental human disaster lies in the opposite direction.
The entire theory of Ice Ages emerged after the discovery in 1772 of wooly rhinos and mammoths were frozen in ice with plants still in their stomachs. Suddenly, science woke up and came to the shocking realization that climate can change drastically with no notice.
We have the technology today to drow food inside without even soil. This is something one should consider to put in your basement as 2020 approaches on the horizon.
COMMENT: Thank you for all or your recent posts in this regard. You have often said that we will be going through times that will try a man’s soul, and yes the Socrates platform will allow us to see it in motion, those of us who are prepared will stand a chance to survive and break even. The very sad part is that when you try to explain to people to educate themselves you are quickly dismissed, I nearly lost my sister over this discussion as she cant comprehend something like this happening and chooses to stick her head in the sand. I think and hope that my family will survive but it is really eating away at me at just how many family and friends will endure hardships that may be too great for them, there are children and elderly involved, no different from any bodies else’s situation I guess. I will be turning 60 soon and am afraid that I will be seeing the worst of everything to come, passing away just as we come out the turn in 32 give or take. The big question is when, you have often stated that major events occur when the pi cycle is due, wouldn’t surprise me if that is when something of this magnitude occurs. Everyone in Canada seems to think that our banks are the soundest in the world and cant comprehend the contagion when it occurs yet we have had Greece and Cyprus occur in recent memory. Guessing that people here think that life is still too good for any problems to occur. You have provided myself along with just a few others that I know a very great public service, so sad that more people are so closed minded. Take care and keep up the excellent work, perhaps when the dust hits the fan for real people will wake up and realize that the tree has truly been cut and choose the right path when the cycle shifts to a public one.
Some writers have so confounded society with government, as to leave little or no distinction between them; whereas they are not only different, but have different origins. Society is produced by our wants, and government by our wickedness; the former promotes our happiness positively by uniting our affections, the latter negatively by restraining our vices. The one encourages intercourse, the other creates distinctions. The first a patron, the last a punisher.
Society in every state is a blessing, but government even in its best state is but a necessary evil; in its worst state an intolerable one; for when we suffer, or are exposed to the same miseries by a government, which we might expect in a country without government, our calamity is heightened by reflecting that we furnish the means by which we suffer. Government, like dress, is the badge of lost innocence; the palaces of kings are built on the ruins of the bowers of paradise. For were the impulses of conscience clear, uniform, and irresistibly obeyed, man would need no other lawgiver; but that not being the case, he finds it necessary to surrender up a part of his property to furnish means for the protection of the rest; and this he is induced to do by the same prudence which in every other case advises him out of two evils to choose the least. Wherefore, security being the true design and end of government, it unanswerably follows that whatever form thereof appears most likely to ensure it to us, with the least expence and greatest benefit, is preferable to all others.
Paine’s Common Sense had turned the tide in just three months. So do not worry. They too will come around in their own time. Perhaps a Christmas gift of Common Sense if they will read it.
Chancellor Angela Merkel said on Monday her efforts to form a three-way coalition government had failed. Merkel only received 32.5% of the vote, which is probably the lowest vote of any major world leader. The FDP pulled out of negotiations thrusting Germany into a political crisis and ever closer to a possible new election.
Meanwhile, German hoard of cash is escalating and the cities debt burdens are exploding in Germany. The entire game4 was to hide the debt crisis in Germany until after the elections. With the failure to form a government, new elections are appearing likely extending this Year from Political Hell.
This is becoming the political crisis that just will not go away. Politics around the world remain in turmoil and as our computer had forecast, this would contribute to the collapse in public confidence. The fate of the Euro hangs in the balance.
It was massively unreported in 2014 when Egyptian President Abdel Fattah al-Sisi took control of the Gaza Sinai border and began removing the Hamas Terror tunnels. As we watched the local media reporting, it was almost unbelievable how western media were ignoring the events. (example)
A full one-third of all homes on the Gaza border with Egypt contained Hamas tunnels used to smuggle weapons. One of the discovered tunnels was 1.5 miles long (link). In order to deal with the scale of the issue, al-Sisi ordered the removal of houses to facilitate an almost mile-wide buffer zone. During the effort massive tunnels were discovered that the terrorist network Hamas was using to smuggle weapons.
It was al-Sisi’s efforts on that border that eventually forced the terms of a 2014 ceasefire between Hamas/Palestinian Authority and Israel. By forcing Hamas and the Palestinian Authority to speak with one voice President al-Sisi changed the paradigm of willful blindness supporting terrorism.
Since 2014/2015 the border area has been secured by Egypt and no weapons have been able to flow into Gaza. The inability of the Muslim Brotherhood and Hamas to fuel further terror created the space for the Palestinian Authority to extend it’s influence.
Eventually, absent their ability to fuel terrorist activity, Hamas and the Muslim Brotherhood diminished in influence; later granting the PA with unified governing authority. The “big squeeze” paid off.
Egypt opened its largely sealed border with Gaza on Saturday for the first time since a reconciliation agreement saw the Palestinian Authority take control of the crossing from Hamas.
A Palestinian official at the Rafah crossing said it had opened at 0700 GMT and was expected to stay open for three days.
“Egypt will open the crossing for humanitarian cases registered with the interior ministry,” the official said, adding that civilian and security personnel on the Palestinian side were all employees of the reconciliation government headed by Rami Hamdallah.
Up to 20,000 people from Gaza have applied to enter Egypt. during the brief reopening.
Egypt’s border with the Gaza Strip had been totally sealed since August, and was largely closed for years before that.
Under the terms of a Palestinian reconciliation agreement reached last month, Gaza’s Islamist rulers Hamas are supposed to cede civil power to the West Bank-based Palestinian Authority by December 1.
As a first step, they handed over control of its border crossings on November 1.
The Egypt-brokered deal is expected to lead to more regular opening of the Rafah crossing. (read more)
This is another significant step toward a possible Arab/Israel peace deal.
“The impossible is just where we begin”..
~President Donald J Trump
QUESTION: Mr. Armstrong, I greatly appreciate everything you do. I was moved when you ended you WEC in Orlando explaining that you see this as we are all in this together. You really make an effort to pass along sound advice without strings attached to solicit money. A very admirable effort I wish others would follow.
My question is this. At the 2015 WEC when Russia invaded Syria on the precise day of your model, you said this would be an important event moving forward. The entire refugee crisis began from that date and now they seem to be winning the war against these jihadists. Now the tensions are rising between Saudi and Iran. Is this part-II of the Middle East crisis? You said back in 2015 that the mere fact Russia entered Syria on the very day of you model signaled this will be the region we should watch. So will this escalate now?
ANSWER: Yes. I wrote in the 2015 War Cycle: “It is extremely disconcerting that on the very day of the peak on the Economic Confidence Model, September 30, 2015 (2015.75), Russia began bombing forces trained and funded by the United States to overturn the Syrian government of Assad.” In 639 AD, Muawiyah I (b. 602–680 AD; r. 661–680 AD) was appointed Governor of Syria as it fell to the Muslim Conquest. We are now in the 26th 51.6-year wave from that event which is a major turning point.
The focus is turning to Idlib, which is a city in northwestern Syria. It is the capital of the Idlib Governorate, which is about 59 kilometers southwest of Aleppo. Because the Syrian government wants to evacuate all jihadists to Idlib, this will present a problem to Turkey which it borders. The Syrian state has offered to give the jihadists safe conduct and let them go to Idlib. For about one to one and a half years, jihadist terrorists from all parts of Syria are being transported to Idlib.The majority of these militant fighters appear to belong to the al-Nusra Front. These terrorists are well armed and have between 30,000 and 50,000 tanks. They also have missiles, chemical weapons, and other assorted war equipment.
In Turkey, the fear is that they will eventually flee Syria and enter Turkey. At least half of the terrorists are from Chechnya, Dagestan, Central Asia and other areas of the Russian Federation. They are not even Syrian. They have been a foreign invading army in Syria driven by religion. Under Trump, the USA has agreed with Russia that Idlib needs to be cleared by al-Nusra terrorists. There is a serious cooperation between Russia and the US regarding Idlib, which did not exist under Obama.
The Bank of Italy, when it was headed at the time by Mario Draghi, knew Banca Monte dei Paschi di Siena SpA hid the loss of almost half a billion dollars using derivatives two years before prosecutors were alerted to the complex transactions, according to documents revealed in a Milan court.
Mario Draghi, now president of the European Central Bank, was fully aware of how derivatives were being used to hide losses. Goldman Sachs did that for Greece, which blew up in 2010. It is now showing that Draghi was aware of the problems stemming from a 2008 trade entered into with Deutsche Bank AG which was the mirror image of an earlier deal Monte Paschi had with the same bank. The Italian bank was losing about €370 million euros on the earlier transaction, internally they called “Santorini” named after the island that blew up in a volcano. The new trade posted a gain of roughly the same amount and allowed losses to be spread out over a longer period. We use to call these tax straddles.
The report was dated September 17th, 2010, and marked “private” demonstrating that the Bank of Italy was aware that by choosing not to book the trade at fair value Monte Paschi avoided showing a loss at the time. If the bank had used a mark-to-market valuation in the fourth quarter of 2008, it would have been included in its year-end report as the credit crisis was cresting.
This is the real picture behind the curtain. Draghi has known all about using derivatives to mask-over losses and pretend they are not there. The entire Greece Crisis was caused by Goldman Sachs constructing derivatives to pretend Greece made the criteria for the Eurozone.
Greece joined the Euro in 2001 under Costas Simitis. At the time, Greece owed about €3.4 billion euros it had borrowed. Goldman engineered a currency swap whereby the Greek debt, issued in dollars and yen, was exchanged for euros that were priced at a “historical” or entirely fictitious currency rate. Of course, swapping dollar and yen debt at nearly the low of 2000 when the euro was only 82 cents to the dollar became a nightmare. Greece’s debt doubled in real terms as the euro then rose to $1.60 by 2008. Obviously, Goldman offered no advice but structured a deal that only benefited itself by directing Greece to sell the dollar at the low. Goldman also set up an off-market interest-rate swap to repay the loan off the books, which was a currency position and therefore not technically a “loan” outside any reporting requirement as debt. The trade kept this part of the Greek debt off the books and cleverly hidden from scrutiny. This falsely created the idea that the Greek debt was moving in the right direction to meet the Maastricht rules eventually. Goldman overpriced the deal to such an extent that 12% of their $6.35 billion in trading and investment revenue for 2001 came from restructuring Greece. In total, they pocketed a premium fee of $300 million. Goldman also warned, as they typically do, Goldman would cancel the offer that if Greece shopped the deal around for a better price. Goldman further demanded that Greece pledge landing fees from Greek airports and revenue from the national lottery as part of the transaction to secure their own profits strip-mining Greece.
Within just three months of signing the deal, the bond markets took a major swing following the September 11 attack in New York during 2001. Furthermore, the dollar declined and the Euro soared. Greek officials began to realize that the deal was not going well in the least. The Greek national debt nearly doubled in size, and in real terms (currency adjusted), the debt would double by 2008 just in Euro terms nominally. Greece faced another financial crisis in 2005, which few understood. Goldman Sachs “restructured” the deal once again, but this time they were selling the interest rate swap to the National Bank of Greece under the new government that came to power in 2004 under Karamanlis. This increased the debt even further stretching-out the payments beyond 2032. Goldman managed to extract $500 million from the Greeks, according to numerous press stories (Independent Friday 10 July 2015; Greek debt crisis: Goldman Sachs could be sued for helping hide debts when it joined euro).
Goldman didn’t even blink and went to Athens to try to sell another deal. Goldman Sachs’ president Gary Cohn personally traveled there and offered to finance the country’s health care system debt, pushing that debt even further into the future. Goldman did not merely make huge fees, it even allegedly placed a bet on the economy of Greece that it would fail based upon its inside information. Goldman is known as Government Sachs and has been apparently beyond the reach of any law anywhere. Papandreou wisely declined Goldman’s 2009 deal and this is when he blew the lid off of what Goldman had done to his country.
Now Gary Cohen is in the White House orchestrating the resurrection of Glass Steagall to knock all the commercial banks out of the investment bank business leaving Goldman Sachs (Government Sachs) with just one competitor – Morgan Stanley.
Meanwhile, because the ECB will cut its bond purchases by 50% next year, Draghi will be unable to help the Italian government and rules against bailing out the banks may just explode in everyone’s face next year.
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