Armstrong Economics Blog/Germany
Re-Posted Jun 18, 2018 by Martin Armstrong
There are some saying that Angela Merkel will be overthrown in a matter of weeks and others saying that there is no plot to remove her. Nevertheless, scandal rising in Germany over the refugee crisis keeps brewing behind the curtain. Cyclically, 2018 may be a peak in Merkel’s career despite what people are trying to deny.
Angela Merkel was born in Hamburg, West Germany, on July 17, 1954, and was actually trained as a physicist. She entered politics after the 1989 fall of the Berlin Wall. She eventually rose to the position of chairwoman of the Christian Democratic Union party becoming Germany’s first female chancellor. Moreover, Merkel has actually become the best-known politician in Europe whose face is more recognized than anyone else in Europe no less Brussels.
Merkel grew up in a rural area of the German Democratic Republic or East Germany. She studied physics at the University of Leipzig, earning a doctorate in 1978, and later worked as a chemist at the Central Institute for Physical Chemistry, Academy of Sciences from 1978 to 1990. She has obviously not made the connection between physics and the economy for if she just looked at the laws of thermodynamics she would have an epiphany and realize that there MUST be a business cycle.
Nevertheless, with the fall of the Berlin Wall in 1989, Germany was caught up in a euphoric moment and many expected East Germans to have the same work-ethics as those in the West as well as an understanding of the way things really worked. Merkel joined the Christian Democratic Union (CDU) political party and was quickly appointed to Helmut Kohl’s cabinet as minister for women and youth. She rose simply because she was a woman and from the East. It made good political propaganda. Merkel would later serve as minister for the environment and nuclear safety.
The political tide began to change and with Kohl’s defeat in the 1998 general election, she was named secretary-general of the CDU. Then in 2000, Angela Merkel was chosen party leader, but she lost the CDU candidacy for the chancellor to Edmund Stoiber in 2002.
Finally, on October 10th, 2005 Germany was on the brink of a new and volatile political era until a deal was cut that made the conservative leader Angela Merkel the country’s first ever woman chancellor. It came only after three weeks of a long, complicated dispute over the previous month’s indecisive election, Gerhard Schröder announced he was resigning. Angela Merkel became chancellor leading a “grand coalition” between her Christian Democrat party and its Bavarian ally the Christian Social Union, and Schröder’s Social Democrats.
Many questioned just how long such a coalition would last. Nonetheless, Schröder’s resignation came with a huge price tag. The Social Democrats emerged from days of secret negotiations with eight seats in Germany’s new cabinet and virtually all the big portfolios – including foreign, finance, health, environment, and transport. Merkel gave up tremendous economic power to become chancellor with the CDU taking only six cabinet posts. Merkel denied that the Social Democrats had got all the best jobs, and instead called it a “new beginning for Germany”.
Therefore, Merkel became Germany’s first female chancellor since it became a nation in 1871 who was also from East Germany fulfilling a dual role as the first female chancellor and the first East German chancellor to take control of Germany. Merkel was then elected to a second term in 2009.
Angela Merkel was reelected for a fourth term as chancellor in September 2017 with a vote that was well below 35%. However, although her CDU party held its majority in the Bundestag, because of her policy on allowing all the refugees into Germany, the far-right Alternative for Germany (AfD) won 13% emerging as the new third-largest group in parliament for the first time a right-wing political party regained any power since 1961.
Following the 2017 election, political problems surfaced by mid-November 2017 in the attempt to form a new government coalition collapsed. The Free Democratic Party (FDP) pulled out of talks with the CDU/CSU and the Greens, over differences regarding the refugee crisis.
The entire refugee crisis is clearly going to be Merkel’s downfall. Then in March 2018, the SPD voted to renew its coalition with the CDU after its leader Martin Schulz resigned. This step finally cleared a path for Merkel to retain the position as chancellor, but she would have to give up financial control to the socialists to maintain her political power for a fourth term.
Nevertheless, the refugee crisis and the mismanagement of the entire issue has resulted in clashes between Angela Merkel and German interior minister Horst Seehofer. There is a serious political crisis brewing where Merkel could be forced out of her chancellor position.
Armstrong Economics Blog/Central Banks
Re-Posted Jun 18, 2018 by Martin Armstrong
Mario Draghi said the euro-area economy is strong enough to overcome increased risk, and therefore this justifies the European Central Bank’s decision to end bond purchases bringing to an end a decade-long failed experiment. The truth behind this statement is starkly different than being portrayed in the press. Draghi also pledged to keep interest rates unchanged at current record lows until his personal term is finished next year. There is the contradiction for if the ECB stops buying debt, who will do so at artificially low rates of interest?
Draghi knows full well that he has utterly destroyed the bond markets in Europe. The ECB has also made it clear that they will REINVEST when the bonds previously purchased mature. The Federal Reserves has taken the opposite position and will NOT reinvest allowing their balance sheet to shrink.
If the economy is that strong, then why not end the QE right now? The fallacy here is that this has nothing to do with the economy. The ECB has simply had the member states on life-support. Interest rates will soar in Europe on long-term debt or there will be no buyers. Pension funds cannot buy 10-year bonds at even 3% when they need 8% to cover liabilities.
The statement by Draghi is creating a total paradox. You cannot keep short-term interest rates where they are and charge negative rates for deposits and simultaneously end QE and expect to sell bonds to the public at insanely low levels.
The press interprets this as the ECB with ending QE because they are “betting that the euro-area economy is robust enough to ride out an apparent slowdown amid risks including U.S. trade tariffs and nervousness that Italy’s populist government will spark another financial crisis” reported Bloomberg. What is seriously omitted here is that the member states will be UNABLE to sell long-term debt at these low levels to the private sector and the free market will send rates higher. This means that the states will have to then raise taxes to stay within the EU criteria and that will further suppress the European economy.
We are simply at the end of the road of this complete insanity. So buckle up. Get ready for the ride of a lifetime and make sure you keep your hands and feet safely inside the vehicle. Is the ECB risking a total collapse in public confidence when they discover you cannot keep rates artificially low and end QE simultaneously
Armstrong Economics Blog/Southeast Asia
Re-Posted Jun 18, 2018 by Martin Armstrong
May was an important turning point in Southeast Asia. The corruption that has engulfed the previous Malaysian government centered around a sovereign wealth fund involving Goldman Sachs has rocked the entire Malaysian peninsula. The national debt, which was believed to have been $170 billion, appears to be more like $250 billion of 80% if the national GDP.
Prime Minister Mahathir Mohamad was sworn in on May 10th. When his aides first entered the government offices, they were confronted with a shocking sight. There were garbage bags filled with shredded documents intermixed with left-over food half eaten thrown everywhere. It was clear, the previous government sought to destroy all the evidence of their corruption.
The new finance minister discovered computers that even the highest-ranking bureaucrats could not access. Computers were set up to prevent access by anyone other than one or two people. Evidence of massive corruption was what turned the election on May 9th, 2018.
Goldman Sachs’ role, I wrote back in 2015, has been highly criticized in the Malaysian media and political circles after it emerged that 1MDB sovereign wealth fund paid hundreds of millions of dollars to the bank for helping it raise $6.5 billion in three bond deals in 2012 and 2013. Goldman Sachs earned around $590 million in fees plus commissions and expenses from underwriting the bonds, according to Reuters. The reported fees are highly excessive, nearing 10% when such fees are typically only 1% in bond underwriting.
There is now talk about filing suit against Goldman Sachs for its role in this scandal. The likelihood of filing a lawsuit against them in New York City being successful is probably zero. They will have to deal with the most corrupt court perhaps in the world that is notorious for protecting its local banks – Southern District of New York and the Second Circuit. My recommendation is to petition the Supreme Court to bring the suit in Washington DC that they will NEVER receiver a fair trial in New York City and they should get on the phone to Donald Trump to start applying political pressure
Inspector General Michael Horowitz and FBI Director Christopher Wray will appear before the Senate Judiciary Committee tomorrow at 2pm. Thus begins the Potomac Two-Step; a generally well known DC approach to protect the interests of the swamp.
Senate Judiciary Chairman Chuck Grassley might ask some pointed questions; however, other than re-election ‘talking point’ campaign questioning by Senator Ted Cruz, expect little in the way of actual accountability with this crew. A person only needs to look at the names on the Senate Judiciary Committee to predict the insufferable obfuscation.
Senators: Orrin Hatch, Lindsey Graham, Mike Lee, John Cornyn, Ben Sasse, Jeff Flake, Mike Crappo, Thom Tillis, John Kennedy, Kamala Harris, Corey Booker, Richard Blumenthal, Chris Coons, Amy Klobuchar, Sheldon Whitehouse, Dick Durban and Dianne Feinstein…. resist we much, and we must, we much, about that, be committed.
It is the Tuesday joint-house hearings, when the actual questions *might* be raised:
For about eight months columnist Andrew McCarthy appeared on television and wrote dozens of articles about the slow-drip of information stemming from the Trump-Russia probe and the IG Horowitz investigation. Almost all of the articles were sympathetic to the institutions being challenged. However, in mid-May a funny thing happened.
The weekend before May 15th McCarthy actually broke down and read the six-month-old Lisa Page and Peter Strzok text messages he had been delivering opinion on; and guess what happened? Yup, his perspective changed within a period of 36-hours, and with it – a radical shift in tone and delivery. In essence, he red-pilled himself.
What does that have to do with FBI Director Christopher Wray and Attorney General Jeff Sessions? Please bear with me.
When Christopher Wray appeared before the media three hours after the IG report, one thing was stunningly obvious: he never read the report. Wray might have been briefed on a summary of the report, but there was no way Director Wray actually read the documented substance, the details and the facts, within the center of the report.
As a direct consequence Chris Wray looked and sounded like Baghdad Bob standing in front of the cameras. “There are no Americans bombing Baghadad”, as the explosions are seen over his shoulders, was akin to “there’s no structural or institutional bias” as nom de plume FBI agents madly wave “F**k Trump” banners in the background.
It was an absurd display of a disconnect from the institution he is leading.
If you only read the executive summary of the IG report, you might not see how ridiculously absurd Director Wray’s presentation was. In the old school corporate world we used to have a saying: “never allow your leadership to be compromised“; obviously those who briefed Wray had no issue watching him make a professional ass out of himself. Then again, perhaps that was the intention.
That stark reality should be alarming to everyone given the intended responsibilities of the Federal Bureau of Investigation. Alas, the reality now highlights why the FBI is a collapsing institution. With a reputation in tatters, it is soon to become a caricature of its former self…. unless something happens quickly.
Attorney General Jeff Sessions didn’t read the IG report either. If he did he would have quickly called Wray and asked him ‘what the f**k‘ he was doing. Instead the AG doubled-down on the Baghdad Bob approach.
When CTH says that neither AG Jeff Sessions nor FBI Director Wray actually read the report, that statement is not from some snarky click-bait arbitrary opinion. In the same way the lack of informational absorption was visible with Andy McCarthy from Oct. 2017 through May 2018, some things are transparently obvious. We just have to accept them.
It takes a good 30 hours to fully read the IG report; approximately the same amount of time it takes to read all of the Page/Strzok text messages. There’s lots of back and forth cross referencing needed. My current review of media analysis lends me to believe that only a few, perhaps three so far, have actually read the 568-page report.
And that brings me to another reason why, at least to me, both Jeff Sessions and Christopher Wray are suffering from Battered/Disconnected Institutional Syndrome.
Within the IG report almost all of the key participants’ names are hidden. Instead the reports’ authors chose to use descriptions like: “FBI Agent #1, #2, #3, #4, #5, etc.” Or “Analyst 1, 2, 3”; or “FBI Lawyer-1, FBI Lawyer-2”; or the ridiculously byzantine insider acronyms for all of the positions of the officials. A conveniently useful bureaucratic mess of acronyms to hide behind. Flippin’ ridiculous is what it is. I digress…
The point is – by using descriptions the IG hides the obvious. Those acronym-hidden officials still work inside the current FBI and DOJ; and that’s another big issue creating the Battered Institutional System that infects both of the Trump appointees.
Case in point: FBI Lawyer #1. We know who she is because we’ve done a great deal of research on the issues, and many of these titles/acronyms are listed by name in the Page/Strzok messages. FBI Lawyer #1 is Tashina “Tash” Gauhar, literally from the school and law firm of former Obama “wingman” Attorney General Eric Holder.
2009- Tashina Gauhar is the Deputy Assistant Attorney General for Intelligence. Ms. Gauhar has extensive experience working with the U.S. Intelligence Community and has held a variety of national security positions within the Department since 2001, including serving as an Assistant Counsel in the Office of Intelligence Policy and Review and later as the Deputy Chief of Operations in the Office of Intelligence, and recently the Chief of Operations. Prior to joining the Justice Department, Ms. Gauhar was an associate at the law firm of DLA Piper (then Piper Marbury Rudnick and Wolfe, LLP). (link)
Tashina was the MYE team member who was on a September 29, 2016, conference call with the FBI New York field office about the Weiner/Abedin laptop. FBI Lawyer #1 Tashina Gauhar was directly at the center, no, the epicenter, of the most controversial time frame for the Mid-Year-Event team.
Tashina was one of only three MYE people who actually had the responsibility to review the Clinton emails from the Weiner/Abedin laptop. [The other two were Peter Strzok and the unknown “lead analyst]
Tashina is probably only eclipsed by Lisa Page and Peter Strzok in the level of influence within the entire Mid-Year-Team apparatus. “Tash”, as she was known to the team, is a hub amid a very tight circle. Tashina Gauhar held a great deal of influence… Suffice to say, the spawn of Eric Holder is a big deal in the story.
You know what other decision Tashina Gauhar was influential in?
Attorney General Jeff Sessions recusal:
Note this meeting was on March 2nd, 2017. Which prompted this announcement:
WASHINGTON POST, March 2 2017 – Attorney General Jeff Sessions said Thursday that he will recuse himself from investigations related to the 2016 presidential campaign, which would include any Russian interference in the electoral process.
Speaking at a hastily called news conference at the Justice Department, Sessions said he was following the recommendation of department ethics officials after an evaluation of the rules and cases in which he might have a conflict.
“They said that since I had involvement with the campaign, I should not be involved in any campaign investigation,” Sessions said. He added that he concurred with their assessment and would thus recuse himself from any existing or future investigation involving President Trump’s 2016 campaign. (link)
Yes, the DOJ/FBI lawyer at the heart of the Clinton-email investigation; the DOJ/FBI lawyer hired by Eric Holder at his firm and later at the DOJ; the DOJ/FBI lawyer who was transferred to the Clinton probe; the DOJ/FBI lawyer at the epicenter of the Weiner laptop issues, the only one from MYE who spoke to New York; the DOJ/FBI lawyer who constructs the FISA applications on behalf of Main Justice;…. just happens to be the same DOJ/FBI lawyer recommending to AG Jeff Sessions that he recuse himself….
Battered Institutional Syndrome!
A letter from FBI Agent Peter Strzok’s attorney (presented below) outlines his client’s joyful willingness to testify before any congressional committee that invites him, and welcomes the opportunity to clear his name. According to the Washington Post:
(Via WaPo) Peter Strzok, who was singled out in a recent Justice Department inspector general report for the politically charged messages, would be willing to testify without immunity, and he would not invoke his Fifth Amendment rights in response to any question, his attorney, Aitan Goelman, said in an interview Sunday. Strzok has become a special target of President Trump, who has used the texts to question the Russia investigation.
Goelman said Strzok “wants the chance to clear his name and tell his story.”
“He thinks that his position, character and actions have all been misrepresented and caricatured, and he wants an opportunity to remedy that,” the lawyer said.
[…] Goelman said he had not discussed any dates with lawmakers on when Strzok might appear at a hearing.
[…] Goelman, who is with the firm Zuckerman Spaeder, wrote in a letter to Goodlatte that a subpoena would be “wholly unnecessary.” (read more)
However, don’t get too excited…. remember, Peter Strzok is the primary witness in both the Trump-Russia investigation (ongoing Mueller probe), and the more recent OIG FISA Abuse/Campaign Spying investigation initiated by Michael Horowitz.
As such, dontchaknow, Mr Peter Strzok would have to politely refuse to answer questions about “ongoing investigations”, and could only testify issues specifically related to the Clinton-email probe which was the subject of the most recent IG report release.
And the administrative state, both inside government and outside government, have had over a year to assist Mr. Strzok in the coordination of his narrative and talking points.
The Southern Poverty Law Center (SPLC) came to my hometown at the invitation of the Jewish Federation. Now the SPLC is the supreme judge of social morality. The SPLC is the US hate monitor and is the basis for censorship by Twitter, Face Book, Google, and You Tube. I am a racist-hater-bigot- Islamophobe according to the SPLC because I talk about political Islam.
Part of the problem with the SPLC judgment or decree is that there is no due process or redress. There is no way to challenge them. Their purpose is to shame and drive their victims out of business.
The purpose of the SPLC is to censor all those who have different political ideas. They oppose free speech as hate speech. They reject fact based reasoning and critical thought. The Jewish Federation is a partner with these totalitarians. They are joined by the Christians who are apologists for Islam.
The SPLC, the Federation or the other apologists cannot stand a critical view of political Islam. Their only response is that critical thinkers are racist-hater-bigot Islamophobes. Knowledge is bigotry and denial is a virtue.
House Intelligence Committee Chairman Devin Nunes appears on Fox News with Maria Bartiromo to discuss the particulars of the IG report and the upcoming week.
Bartiromo is one of the few pundits who has actually absorbed the entire landscape of the back-story, read the actual reports and invested her time into the details. As such Ms. Bartiromo is able to take a comprehensive understanding forward into her interviews:
When we see that justice is measured, not by due process, but by compulsion; when we see that in order to invoke our fourth or sixth amendment right to privacy and due process, we need to obtain permission from men who rebuke the constitution; when we see that justice is determined by those who leverage, not in law, but in politics; when we see that men get power over individual liberty by graft and by scheme, and our representatives don’t protect us against them, but protect them against us; when we see corruption holding influence and individual liberty so easily dispatched and nullified; we may well know that our freedom is soon to perish.
Appearing on Fox News Sunday, House Oversight Chairman Trey Gowdy discusses the recently released Inspector General report on FBI and DOJ conduct in the run-up to the 2016 election and the exoneration of Hillary Clinton.
Additionally, Chairman Gowdy discusses the meeting held last Friday night with FBI Director Christopher Wray and Deputy AG Rod Rosenstein. In the meeting Speaker of the House Paul Ryan, along with a group of house chairmen (Gowdy, Nunes, Goodlatte), told the FBI and DOJ the House of Representatives will move forward with “floor action” to enforce compliance.