Tag Archives: Communism

Jun 27 2017

May Forms Government To Retain Power in Britain


Armstrong Economics Blog/BRITAIN

Re-Posted Jun 27, 2017 by Martin Armstrong

Britain’s Prime Minister Theresa May has at last secured a governing majority in the UK Parliament by agreeing to spend £1 billion on top of £500 million previously promised to Northern Ireland. Of course the stability of the May government going forward will be delicate as Jeremy Corbyn does his best to bring down the May government and seize control for Labour.

The deal with the Democratic Unionist Party (DUP) will provide its 10 members to back May’s minority government over the Queen’s Speech. This will relate to the national security of Britain and maintain Brexit. Theresa May made the public statement:

“I welcome this agreement which will enable us to work together in the interest of the whole United Kingdom, give us the certainty we require as we embark on our departure from the European Union, and help us build a stronger and fairer society at home.”
Jun 27 2017

EU Extends Sanctions Against Russia Killing Their Own Economy


Armstrong Economics Blog/European Union

Re-Posted Jun 27, 2017 by Martin Armstrong

The EU has extended its economic sanctions against Russia for another six months, which really makes no sense. No sanction will cause Putin to abandon a strategic port in Crimea that was originally Russian territory before it gave it to Ukraine to be administered. President Donald Tusk announced it on Twitter interestingly revealing that Chancellor Angela Merkel calls the shots for all of Europe. True, France’s President Emmanuel Macron also was consulted and agreed, naturally he will do as he is told, and then the rest of the Heads of State and Government at the EU summit in Brussels were informed of the decision.

The punitive measures imposed by the sanctions since 2014 in the wake of the Ukraine crisis have produced nothing but a new cold war. The sanctions are now extended until January 2018. Russia naturally imposed counter-sanctions against the EU which hit the European industrial companies as well as the agriculture.

Demonstrating how successful sanctions have been, Russia shocked the world with a surprise where they have entered the airline industry. They had a successful test flight of a new medium range passenger plane owned by the state controlled United Aircraft Corporation. This new plane, the MC-21-300, flew at a speed of 300 kilometers per hour on its maiden flight.

 

The MC-21-300 has a capacity between 163 and 211 passengers and a maximum flight range of 6,000 kilometers. So the sanctions only produced competition for the Boeing 737 and the Airbus A320.

Jun 26 2017

European Commission Trying to Seize Control of Euro


Armstrong Economics Blog/Euro €

Re-Posted Jun 26, 2017 by Martin Armstrong

I reported previously that the European Commission is seeking to take the clearing of the Euro derivative transactions from London and move them to Paris. The European Central Bank (ECB) is warning that it must secure strong access rights for the supervision of the cross-border settlement of financial transactions after the departure of Great Britain from the EU. About 90%+ of all euro derivatives transactions are settled via clearing houses in London such as LCH.Clearnet. In the middle of a crisis, the ECB would have no power to shut the market to protect the euro from the free market forces. Of course, what they fail to grasp here is trying to seize the euro clearing and move it by decree to Paris will only undermine the euro even more. What will they do next? Forbid the euro to trade in New York, Chicago, or Asia? Do that and the euro will become a massive short.

The ECB actually came clean and the papers filed at the Commission seems to suggest that the central bank indeed expects the possibility of a very major and serious financial crises ahead. That reflects what I have been warning about that they are trapped. Once Draghi stops buying government debt, we may see a meltdown in the euro altogether. The ECB wrote: “It is to be expected that significant developments on both the global and the European level will increase the risks posed by clearing systems.”

Keep in mind that the European Commission has already outlawed naked short-selling of the sovereign debt and European shares. The ECB is now focusing on clearing houses of financial products to control any emergency they see against the euro.  Mario Draghi has been ringing the warning bell that they would have at best minor oversight of the UK-based clearing houses after a BREXIT. He believes they can simply muscle the markets to prevent a collapse.

The ECB estimates that repo transactions denominated in euro in the daily volume of €101 billion and open positions in interest rate swaps in euro reach daily trading volume of €33 trillion are cleared through clearing houses in Great Britain. Draghi has proposed that Article 22 of the ESCB Statute be amended in such a way that, even after the BREXIT, they still have sufficient control rights over euro clearing. Draghi wants it both ways. He wants the euro to be a world class currency, but then wants absolute control to shut down any undesirable counter trends.

Jun 25 2017

Wow – Standard and Poor’s Threaten Illinois With Municipal “Junk Bond” Status – First State Ever Facing “Junk Bond” Status…


Re-Posted from The Conservative Tree House on June 24, 2017 by

There was a widely read Chicago Tribune op-ed written a few days ago outlining an approach to dissolve the entire state and apportion the geography to Wisconsin, Indiana, Kentucky, Missouri and Iowa. –SEE HERE–  It was written tongue-in-cheek, but with an uncomfortable level of reality behind it.

Illinois has been struggling with its finances for a long, long time.

The Illinois long-term labor pension liabilities are ridiculous in the extreme.  However, things just went from bad to jaw-droppingly, gobsmackingly, unbelievably worse.

 

According to the latest financial media reports, Standard and Poors Global Ratings agency has positioned Illinois bonds to drop below “investment” grade; that would make Illinois the first state in the nation to achieve “junk bond” status.

(Via ABC) Illinois is on track to become the first U.S. state to have its credit rating downgraded to “junk” status, which would deepen its multibillion-dollar deficit and cost taxpayers more for years to come.

S&P Global Ratings has warned the agency will likely lower Illinois’ creditworthiness to below investment grade if feuding lawmakers fail to agree on a state budget for a third straight year, increasing the amount the state will have to pay to borrow money for things such as building roads or refinancing existing debt.

The outlook for a deal wasn’t good Saturday, as lawmakers meeting in Springfield for a special legislative session remained deadlocked with the July 1 start of the new fiscal year approaching.

That should alarm everyone, not just those at the Capitol, said Brian Battle, director at Performance Trust Capital Partners, a Chicago-based investment firm.

“It isn’t a political show,” he said. “Everyone in Illinois has a stake in what’s happening here. One day everybody will wake up and say ‘What happened? Why are my taxes going up so much?’”  (read more)

Ouch !

Jun 25 2017

Britain on the Edge of Collapse?


Armstrong Economics Blog/BRITAIN

Re-Posted Jun 25, 2017 by Martin Armstrong

 

So far, Prime Minister Theresa May has been unable to form a majority government. She is now officially on the clock and being unable to strike a deal means her government will fall apart. Negotiations with the Democratic Unionist Party, a far-right Northern Irish outfit whose support seems necessary for her to win the vote, have not gone well.

Jun 24 2017

ECB Declares Two Italian Banks Have Failed


Armstrong Economics Blog/Banking Crisis

Re-Posted Jun 24, 2017 by Martin Armstrong

The European Central Bank (ECB) has announced as of June 23rd, that it was declaring two Italian banks insolvent. Veneto Banca SpA and Banca Popolare di Vicenza SpA have failed since the two banks repeatedly violated the regulatory capital requirements. The determination was made in accordance with Article 18 (1a) and Article 18 (4a) of the Uniform Resolution Mechanism Regulation.

The European banking crisis continues.

Jun 24 2017

Germany Secretly Passed Total Surveillance of Everything


Armstrong Economics Blog/The Hunt for Taxes

Re-Posted Jun 24, 2017 by Martin Armstrong


Governments routinely pass laws that are expanding their powers to the detriment of personal rights that are buried deeply in legislation only a diehard will read. We have heard about these type of sneaky legislation in the USA, but all governments are the same and Germany just proved it is no more honorable than the the worst of American politicians.

The Bundestag passed a secret legislation giving government full espionage powers against the private sector claiming it is an urgent case. The German government is now authorized, thanks to politicians claiming to represent the people, with the right to secretly install spy software on computers and smart phones clandestinely. This will be used for taxes, not just terrorism.

The law was intentionally hidden in a law on driving bans. It was secretly attached at the last minute hoping nobody would notice. Now the German government can monitor messenger services on smartphones and targets WhatsApp so they can intercept or read messages BEFORE encryption. The government can secretly download their spyware to the cell phone of the suspect without their knowledge. The government claimed: “We are increasingly observing that criminals communicate in encrypted form. This makes it increasingly difficult for the authorities to clarify even the most serious offenses, “said Thomas de Maizière (CDU). The problem is the term “criminal” and tax avoidance is a criminal offense.

The government is loving hackers for they use this as the excuse to grab more power. Rather than simply develop better security, they naturally prefer to empower their intelligence services and police authorities for monitoring measures under the pretense of it being “criminal” and then expand this power to collect taxes.

This is all about government collapsing. They know it. But they refuse to reform. Why surrender a good power until you have no alternative? The problem is, that promotes revolution.

Jun 24 2017

Chicago Police Pension Goes Bust


Armstrong Economics Blog/Pension Crisis

Re-Posted Jun 24, 2017 by Martin Armstrong

Chicago’s police pension fund won’t have enough money to pay benefits to retirees in 2021, according to a projection by Local Government Information Services (LGIS). At the end of 2020, LGIS estimates that the Policemen’s Annuity and Benefit Fund of Chicago will have less than $150 million in assets to pay $928 million promised to 14,133 retirees the following year.

This is the fate of state and local pension funds. There is a storm gathering on the horizon and of course these state and local governments will be raising taxes to try to stay afloat. The system is collapsing and it is totally unsustainable. This is the very same crisis that destroyed the Roman Empire.

Jun 23 2017

The Plight of Junk Science in All Fields


Armstrong Economics Blog/Climate

Re-Posted Jun 23, 2017 by Martin Armstrong

Junk Science is the real crisis we face as so many people think that Global Warming is caused by man and Co2. Of course, those who really believe this is the problem that will destroy the world perhaps should just commit suicide and take the dog with them. Since we exhale Co2 that would reduce the problem in their mind and save the world by setting a good example.

Junk Science plagues us in every field of science be it economics to health. For 25 years we were told that eggs are bad. How many people ordered egg whites only. Then the Junk Science was revised, but after 25 years, nobody noticed. When scientists learned that high blood cholesterol was associated with heart disease, they immediate black-listed all foods with high cholesterol content. It took 25 years of study to figure out – oops, we were wrong! You just didn’t really hear the “oops we were wrong” but instead you heard of another great danger – saturated fat! It became evident that cholesterol in food by itself was not the culprit after all — the real great evil was saturated fat, This is what had a much bigger effect on blood cholesterol when it was discovered that full-fat dairy products and fatty meats are loaded with saturated fat and that triggers the body to produce cholesterol.

This is the problem with analysis. The can conclude that everyone who has eaten a carrot eventually dies. That is an absolutely correct statement. They study one component and draw a correlation and thus produce the definitive relationship. They did that with interest rates. Higher rates means the stock market will decline. Oops. The Fed just raised rates and the Dow made a new high. Interesting! See it is the carrot paradox.

Money Theory

In economics, we had the Quantity of Money Theory that has driven central banks into Quantitative Easing expecting inflation and after 10 years of desperately trying to stimulate inflation, they have been beaten to a pulp by deflation. As always, they make a false simple assumption at the outset which then leads to the false result. They also fail to comprehend that there is the contraction within the economy creating deflation from technology advances. The work force is stagnant and unless they stay current with technology, they will quickly find themselves UNEMPLOYABLE with no useful skills.

Jun 21 2017

Welcome to Deflation


Armstrong Economics Blog/Economics

Re-Posted Jun 21, 2017 by Martin Armstrong

People are just starting to grasp why deflation is also present in the USA. Despite all the screaming about Quantitative Easing, most remain confused why hyperinflation has not taken place. Most are obvious to the fact that there is a dynamic process involved that is a lot more complex than traditional economics teaches in school. Sorry, but the quantity of money theory does not work. It is way too simplistic and this has led to massive confusion. Even the central bankers are staring to call for help.

The latest news that Amazon was buying Whole Foods saw a plunge in retail and grocery stocks. Amazon put book stores on the list of bankruptcy victims and we see similar troubles for Sears, the company that made its name using the railroads to deliver goods by mail order. The deflationary tone has been in place since 2015.75 and it is a combination of problems one of which is the technology advancement. Many people see the advance of robots displacing jobs. However, the reason unemployment rose dramatically to 25% during the Great Depression was not from the collapse of industry. It was (1) the advancement of technology with the combustion engine that wiped out agricultural jobs (aside from the horse industry) and (2) the vast dust bowl which then wiped out farms entirely.

The Amazon takeover of Whole Foods is highlighting this technology shift. The jobs of the future will be more in the technology programming area. All the office spaces I looked at for moving our office were, without exception, law firms closing down. Lawyers are now far too common and we are seeing the saturation reducing the once high paying jobs that enticed kids into law school.

Cyclically, everything evolves. Retail stores are declining and Amazon has been opening showrooms rather than stores. You get to go touch the product and it will be delivered to your home. They are also bringing in fully automated stores. You will have an app on your phone, walk into a store, take whatever you want, and your card will be billed as you walk out the door. There go the store clerks.

Things are changing rapidly. The high cost of labor because of Obamacare has been destroying a lot of jobs. The first thing your account tells you is not to higher employee number 26. Technology is helping to reduce the high cost of labor, which is being driven up because of taxes and healthcare which the employee never sees.

Improving you skills for the future is absolutely paramount to survive