Tag Archives: #CALEXIT

Dec 28 2017

Venezuela Oil Industry Collapsing & May Take the Gov’t With It


Armstrong Economics Blog/Economics

Re-Posted Dec 28, 2017 by Martin Armstrong

Venezuela has the largest proven oil reserve in the world. However, they are out of gasoline. The government has attributed this to poor management which has led to the stoppage of 80% of the country’s refineries. So much for socialism. The assumption that government is competent of managing anything is proven by this very example.

My old friend, Milton Friedman, said it best:

“If you put the Federal Government in charge of the Sahara desert, in 5 years there’d be a shortage of sand.”

A general with no energy experience was put now in charge of the state oil company. The problem has been political arrests has witnessed a mass migration of those with talent leaving the country with incompetent management. This has resulted in the oil industry simply collapsing as production is plummeting. A lack of investment compounded from the private sector and a collapse in cash flow coupled with chronic shortages of spare parts have crippled operations and we are looking at the first stage of how a government itself collapses under socialism.

Dec 27 2017

BRICS the Rise & Fall


Armstrong Economics Blog/Economics

Re-Posted Dec 27, 2017 by Martin Armstrong

The first thing to go when a country is moving into economic crisis is the arts. This is intermixed with various social programs. As the economic crisis broadens, demand for taxing the rich rise. However, all this accomplishes is to cause capital to hide and hoard even more refusing to invest or spend and this then adds to the economic decline.

The BRICS were touted as the new rage in the world economy. The BRICS were even holding their own summits and they were supposed to surpass the G7, were all the forecasts. Brazil, Russia, India, China and South Africa became known as the “BRIC” nations back in 2001 which was a term coined by of course Goldman Sachs.

This curiosity about how the BRICS would displace the G7 as the world leading economic power was up there with the DOT.COM bubble and more recently the BitCoin Bubble. This five-country association of emerging economies has demonstrated that such hype of counting on such fades to alter the future have always ended in disappointment.

Russia ran into an economic headwind and sanctions, China has slowed remarkably and has now shifted its focus to try to build its internal economy as we see in Suadi Arabia and the UAE in the Middle East. India committed suicide trying to force its economy out of a cash-based economy with his leftist Prime Minister who has done far more harm to India than good.

South Africa has seen political change sweeping the nation because of the failure of this BRIC dream. The new ANC government of South Africa wants to nationalize the central bank and expropriate the white minority. They want to now take control of the central bank 100% and you know what that means – total economic disaster. The bank will now become the political tool of government divorcing any economic management whatsoever.

Then there is Brazil, burdened with corruption and everything within the social structure is collapsing. The symbol of this economic failure is the effective closure of its Rio de Janeiro’s splendid Municipal Theatre which has gone dark as months of unpaid wages forced ballerinas and opera singers into poverty.

Dec 26 2017

SNP INCREASE INCOME TAXES IN SCOTLAND


Armstrong Economics Blog/BRITAIN

Re-Posted Dec 26, 2017 by Martin Armstrong
COMMENT: Mr. Armstrong,
In stark contrast to the USA which is heading for LOWER taxes which you say will invigorate the economy,the SNP Government in Scotland has announced HIGHER income taxes “to protect public services from the cuts being imposed by the Tories.”
Clearly the SNP Government is unconcerned that its tax policies make Scotland the highest taxed part of the UK.
Interestingly the SNP approach to taxation confirms three of your views:
1.Politicians keep lowering the definition of “the rich.”Earlier this year Derek Mackay,SNP Finance Secretary,an apparatchik with no financial background,described people in Scotland earning £43,000 a year as “rich.”However in his December Budget ,higher taxes start to take effect on people earning over £33,000 a year, according to the SNP, while The Telegraph claims that people in Scotland earning as little as £26,000 a year will pay more income tax than in the rest of the UK.
2.Faced with a choice of cutting public spending or increasing taxes politicians will invariably choose the latter.The annual cost to the Scottish Government of subsidizing free prescriptions is £1 billion.Of course means testing could substantially reduce the cost but this expenditure is regarded as sacrosanct because it is an SNP flagship policy.
3.The economic illiteracy of politicians.The SNP Government has pushed through these tax increases despite the fragile state of the Scottish economy where retail spending growth over the past eight years has averaged only 0.5% against a UK average of 2.2%.Scottish economic growth has also lagged the UK in recent years.It is transparently obvious to anyone with common sense that these tax increases will have serious consequences for the Scottish economy.
REPLY: Yes, the SNP does not get it. They are headed for a major political disaster. They fail to get what they are doing is not limited to transferring the wealth from the rich to the poor, but from the people to government employees. They will pay the price at the next election.
Dec 26 2017

China’s Housing Boom


Armstrong Economics Blog/China

Re-Posted Dec 26, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; What about the Chinese housing bubble. Why has this been so different in many ways?

IX

ANSWER: The primary difference is the simple fact that Chinese cannot take their money out of the country under the capital controls. Consequently, the property market has become their bank account. They have been moving from public to private assets in China as well. This is starkly different from housing bubbles in the West where it was not a capital shelter due to capital controls

Dec 26 2017

Canadian Separatists


Armstrong Economics Blog/Canada

Re-Posted Dec 26, 2017 by Martin Armstrong

COMMENT: I think the danger for Canada is not Quebec leaving because they get 11 billion dollars a year given to them by the federal government, it is the provinces paying the bills that are more likely to leave, western Canada in general but especially Alberta which has been getting hosed. As you noted before resentment is what is produced by giving billions of mostly western Canadian dollars to eastern Canada each year. Now Trudeau is attacking the oil industry that pays the bills, the man is insane and destroying Canada.

RB

REPLY: I am fully aware that the Separatist movement is rising very rapidly in Canada and it is the West v East. Trudeau’s socialist agenda is again imposing the philosophy of class warfare upon the whole of Canada. This only inspires uprising and discontent as we are seeing in Europe. The very same issues were behind the Trump Revolution. The media keeps desperately trying to overthrow Trump as president to save the socialist agenda in the USA.

Understand that this is the death of socialism. As it declines as an economic philosophy, those who are diehard leftists will do whatever they can to take power back.

Dec 23 2017

NAFTA & CANADA


Armstrong Economics Blog/Canada

Re-Posted Dec 23, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; Up here in Canada, the politicians seem to not even talk about the NAFTA agreement being changed by Trump. Has something taken place behind the curtain that they are not even worried about that issue?

CB

ANSWER: While playing a front row seat during the 2016 Election in the States, the truth is that Trump was focusing more on Mexico than Canada. The reason why was taxes. Manufacturing plants set up in Mexico, not Canada, which taxed even higher rates than the USA.

Even Stephen S. Poloz, Governor of the Bank of Canada, has set aside the issue of NAFTA claiming there remains uncertainty until he knows more about the nature of the risk, he will not focus of that topic.

The much greater risk to Canada will be the Trump Tax Reform. Canadians will also shift business to the States because it will save 50% in taxes. So, the tax reform is a far bigger issue than NAFTA

Dec 23 2017

The Trump Tax Reform & Housing Boom


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Dec 23, 2017 by Martin Armstrong

COMMENT: Martin,

It’s not just to make up for taxes lost because electric car use is up.

Rockwall, Texas has become one of the highest income per capita counties in Texas because of flight from income taxes states, especially California. Real estate prices have exploded because of growing business presence in the Dallas/Ft. Worth and flight from other states.

The business exodus and brain drain from California, coupled with the explosion of sanctuary cities there, have replaced tax paying citizens with illegals who neither pay taxes, nor get driver’s licenses, nor inspect nor register their vehicles.

The hunt for loose change continues to unfold.

Dec 22 2017

BitCoin Crash


Armstrong Economics Blog/Cryptocurrency

Re-Posted Dec 22, 2017 by Martin Armstrong

COMMENT: Mr. Armstrong; I am very impressed. Socrates called the high in BitCoin and Thursday it wrote: “As of the close of Thu. Dec. 21, 2017: Our immediate trend model is bearish as are our momentum models so we should still expect a retest of support. Projected technical Resistance stands tomorrow at 1626085, 1626085, 1626085 and 1626085. Opening above this area will cause it to become support. ”

Even Socrates could correctly forecast this crash. Absolutely impressive!

PJK

REPLY: Yes. It caught the high rather nicely. Even the Global Market Watch calling for a temp high on the monthly level. This is monitoring thousands of markets. There is absolutely no human being who can do this and it would take an army of analysts just to write so many reports.

Dec 22 2017

Are Democrats/Left-Wing Parties Really Marxists?


Armstrong Economics Blog/Economics

Re-Posted Dec 22, 2017 by Martin Armstrong

QUESTION: Why do you paint the left/Democrats as really being Marxist?

OP

ANSWER: Marx is the one that started the entire focus on the class warfare. Keep in mind that Marx began his position with socialism – not communism. It was the Commune Movement in Paris that persuaded Marx to adopt communism, which was the surrender of all property.

The reason I call the left Marxist is that this is where the class warfare begins. This philosophy did far more than simply invoke class warfare. It instigated the entire belief that government could manage the economy and eliminate the business cycle. John Maynard Keynes also followed that segment of Marx taking the position that government could control the business cycle. Therefore, both Marx and Keynes shared a common belief that the government could eliminate the business cycle. Towards the end of Keynes’ life, he relented that he had fought against the business cycle and Smith’s Invisible Hand, and came to realize he was wrong.

 

Here you have a video clip of Larry Summers being interviewed by Bloomberg. The question asked was simple. Why have economists been unable to ever predict a recession and manage the economy?

Then you have the former Chairman of the Federal Reserve, Arthur Burns, who was there for the end of Bretton Woods. He too stated bluntly that this entire philosophy that began with Marx advocating that government can manage the economy has failed.

The next Chairman of the Federal Reserve, Paul Volcker, also maintained the same position that the business cycle always won (Rediscovery of the Business Cycle). This “New Economics” was the Keynesian position that government could manage the economy eliminating the business cycle, which has utterly failed.

Therefore, anyone who says that this is not Marxism is really ignorant of where this entire line of economic thought began in modern times.

Dec 22 2017

Tax Reform – Businesses Moving to Florida & Texas ASAP


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Dec 22, 2017 by Martin Armstrong

TAX-REF (3)

QUESTION: Mr. Armstrong; Did Donald Trump take your Tax Reform Proposal you submitted to Congress back in the nineties?

RK

ANSWER: I know a lot of people have been asking that since his original corporate tax rate was 15%. What I can say is that the notion to eliminate deductions for State income tax has been bantered around for a long time. I believe that was added to the reform and was not actually Trump’s plan initially out of the gate.

What you have to understand is that if California gets 13.5% and Alabama is 5%, the States have seen this as welfare for California and other high taxes States. Their residents get to deduct that money and it is really a welfare check for the State. To make it fair, there should be NO deduction for State income taxes. That will then force the local politicians to be respectful of other people’s money perhaps for the first time in history.

This is why I knew it would be time to move to Florida where there was no state income tax. I cannot tell you how many friends from New Jersey have already called and want to move their businesses to Florida asking how hard was it.