More on the end of the EU


ECB & The Failed QE Stimulus

Stimulate

The central banks are simply trapped. They have bought in bonds under the theory that this will stimulate the economy by injecting cash. But there are several problems with this entire concept. This is an elitist view to say the least for the money injected does not stimulate the economy for it never reaches the consumer. This attempt to stimulate by increasing the money supply assumes that it does not matter who has the money. If we are looking only at the institutional level, then this will not contribute to DEMAND inflation only ASSET inflation by causing share markets to rise in proportion to the decline in currency value.

Negative-Rates

 

The European Central Bank (ECB) then pushes interest rates negative to punish savers and consumers for not spending money that never reaches their pocket. Negative rates promotes hoarding cash outside of banks which in turn then inspires the brilliant idea of eliminating cash to force the objective and end hoarding. But negative rates have been simply a tax on money. The attempt to “manage” the economy from a macro level without considering the capital flow within the system is leading to disaster.

ElasticThen we have the problem that the central banks in attempting QE operations, cannot figure out how to reverse the process. They cannot sell the debt back to the market thereby defeating the original concept of creating elastic money supply. You increase the money supply during a recession to prevent banks being forced to sell assets to meet a panic demand for cash. Transactional banking has altered the classic borrow short lend long operations of banks cancelling out the idea of requiring and elastic money supply. All central banks can do now is allow the bonds they bought to mature and expire. If they attempt to sell the bonds they bought back into the marketplace, they will drive rates higher in a panic.

Draghi-Lagarde

The ECB is now expected to inject “fresh” stimulus into Euroland’s economy come Thursday given Mario Draghi said he and his policymakers would “do what we must” to return inflation from its current level of 0.1% to 2% asap. Draghi now implies that he has failed for unless he takes aggressive action, there is a tremendous risk of a dramatic disappointment in financial markets as QE is revealed as a failure.

The combination of a continued declining recovery and a deflationary atmosphere present a compelling case that the ECB will accelerate it program despite strong opposition from German policymakers and others on the 25-strong committee. Since late October, many officials from Euroland have gathered in Frankfurt to brainstorm just what the central bank could do now to turn things around.

Many can only see that the same course must be extended and pledging to buy about €60bn of bonds a month from March 2015 until September 2016 was not enough as they assumed would create inflation to achieve 2%. This has produced a total buying spree of about €582bn out of a planned €1.1tn. All this did was ease up some credit markets, but bad loans are still the huge problem for banks and raising taxes dampens the BELIEF that there is a viable future to even borrow to expand the economy.

European economic growth remains extremely weak and inflation has failed to pick up as much as the ECB had anticipated BECAUSE they are NOT lowering taxes and that is the ONLY way to reignite DEMAND inflation from the consumer. Increasing the money supply which never reaches their pockets is pointless especially when banks are not interested in lending in the face a serious unperforming loans as taxes and tax enforcement increase. Clearly, the ECB has already changed its tone on the September 2016 deadline.

Draghi Mario

The ECB’s position is to remain in denial arguing that QE is indeed working, but it is just not working fast enough. Without the ability to control taxation, buying bonds and attempting to simply inject capital that cannot reach the consumer becomes a joke. It is more like a medieval doctor who bleeds his patient and assumes when the patient dies it was not the method of bleeding and perhaps he took out too much blood but the fact he did not bleed him soon enough. Inflation by their own measurement has remained under 1% for two years.

3FACESn-of-Inflation

 

There is absolutely no credibility in terms of returning inflation to a 2% target. Obviously, the argument is to bleed the system further by buying even more bonds. The burning question is the very theory of QE being inflationary. The ECB has bought mostly government bonds amounting to slightly less than 75% of all purchases. The balance is composed of repackaged loans as covered bonds or as asset-backed securities.Buying in government debt clearly creates no jobs and it certainly does not expand the economy. Government produces nothing but a drain upon the wealth of a nation that is produced only by the people. The larger the government, the lower the economic growth for you are spending more to sustain government that creating an economy.

The Federal Reserve was established in 1913 with the directive that to stimulate they would buy directly corporate paper – NEVER government. When banks were reluctant to lend, the Fed would buy the corporate paper and that would prevent unemployment. Thanks to World War I, the structure of the Fed was altered and they were directed to buy government bonds. That directive was never reversed. Today, while most central banks have stuck to buying mainly government or quasi government bonds which do not directly stimulate the economy,they have failed to comprehend the significant difference between buying corporate debt issues compared to government. This is a primary misconception of how to manage an economy and holds a large key as to why QE has failed combined with raising taxes and increasing tax enforcement to pay for QE.

3FACESn-of-Deflation

Japan-RE IndexIndeed, if we look at central banks as a whole, the Bank of Japan purchased exchange traded funds and property directly that was in the form of Japan real estate investment trusts,as part of its QE program. However, real estate trusts are a dead asset class. They also produce nothing and represented purely a collapsing asset value. This failed utterly to “stimulate” the economy for it merely relieved others of sure losses.

IntRate-Manipulate

Summers-LarryThe ECB became the first major central bank to follow Larry Summer moving into negative interest rate territory which was really aq tax on money. The ECB cut its deposit rate below zero last year punishing people for saving money when in fact they fear the future and will not spend lacking confidence. We have now seen this policy adopted in Scandinavia and Switzerland. The US Federal Reserve is not following this course and sees that negative rates destabilizes pension funds and the efficient use of capital. The Fed counters this trend warning that its domestic policy objectives cannot be held hostage to international and it sees that interest rates must rise to be “normalized” to prevent a further economic crisis. This clash between policies between the ECB and the Fed are more likely to weaken the euro against the dollar.

Fed Excess Re3s 2015

 

Moreover, I have argued that the Fed should abandon paying 0.25% on excess reserves. Foreign institutions are moving cash to their US branches to simply deposit money at the Fed. This money is  accumulating massively and obviously it is NOT stimulating the economy. The ECB can buy European bonds and the cash is being sent into the dollar and deposited at the Fed. Total deposits at the Fed in excess reserve facility is approaching $3 trillion. This may be creating money which in theory would be inflationary, but if it is simply parked, it has no inflationary impact for the velocity of money in this cash become zero.european_union_flag_perspective_anim_500_clr_4611

Clearly, the ECB cannot stimulate the European economy with QE unless it also lowers taxation and buys private debt directly to stimulate the economy when banks are now simply transactional. Allowing the ECB to buy bonds with lower negative yields while raising taxes is proving to be a lethal policy that is sending capital on every boat to the USA. Currently, the ECB has a ban on buying anything with a yield below minus 0.2%. The ECB somehow must convince markets not only that it can hit its inflation target, but that its policy is even sound. QE is not working and it cannot work under these conditions.More on the end of the EU

ECONOMICS 101


Efficient Market Theory vs. Behavioral Economic Theory

Efficient Theory-2R

QUESTION: Hi,

Thanks for a great blog.
Mr. Armstrong,
I´d like to know your opinion for efficient market hypothesis. Theory states it is impossible to beat the market because market efficiency. I know you disagree with that, but is there any theory which states that markets can´t be efficient? And what’s your opinion of behavioral finance theory?
Thank you,
Kind Regards,
IP
ANSWER: Efficient market theory does not work because markets always overshoot and undershoot. Markets can remain undervalued for decades as was the case for the Dow Jones between 1934 and 1985. Then they play catch-up all of a sudden. Commodities also perform in such a manner others claim are manipulations.
Behavioral economic theory, which many are just now starting to realize, states that markets trade on anticipation, and not necessarily on facts — buy the rumor, sell the news. This is all behavior oriented. We panic not always understanding why, just following the herd. Investing becomes a herd mentality or behavioral economics

The Armstrong Economic Confidence Model (ECM).


Is Russia Subject to the Economic Confidence Model

ECM-Russia 1991

QUESTION: Has the ECM worked to the day in politics outside of the United States as in my home country Russia?

pi_symbol_1600_clr_12661

ANSWER: Absolutely. Putin was elected on March 26th, 2000 (2000.23). That is precisely to the day from the collapse of the USSR on August 19th, 1991 (1991.63). This is a UNIVERSAL frequency. It is not some theory on mine. It is something I bumped into and discovered. It is not restricted to financial markets or any nation. Pi is starting to be discovered in other fields even quantum mechanics. We are just scratching the surface when it comes to understanding how everything truly functions.

ECM Greece

 

The start of the Sovereign Debt Crisis in Greece took place to the day on the ECM as did 911 in New York. This is by no means confined to any country.

flat-earth

Bruno-2Naturally, people will fight against this and they will say it is all coincidence or bullshit. They offer no proof to the contrary, simply an opinion. No different than all those who burned people like Bruno for daring to say the Earth revolved around the Sun or the Earth had to be flat for you could not stand upside down on a ball – it was illogical.

There are always going to be doubters who cannot see the world nor do they accept any change to their rigged way of thinking. A closed mind is always the hallmark of ignorance.

Man Made Climate change is a 100% total scam!


The Climate Change/Global Warming Crowd Paid to Produce Bullshit

GlobalWarming-Propaganda

Government is always about money — just show me the money. It is a shame that we have to deal with such corruption in academia. They can do as they like because they know students will get loans that they can never pay off so they teach nonsense and tell people they cannot find a job without their piece of paper. But then they have to be retrained anyway or they end up in a field other than what they have a degree in. So you can get a degree in basket weaving and find a job.

This same crew is putting out total bullshit about climate change when in fact they have ZERO analysis prior to 1900 to prove anything remotely close to what they claim. But as long as they can bullshit the people, they get the grants from the government to end up raising our taxes. This is just economic treason and the people are ALWAYS the target.

Calif-DroughtMoS2 Template Master US Weather CoolingIceCores1

Now three leading experts have all jumped ship, coming out to state that climate change is just propaganda. MIT climate scientist Dr. Richard Lindzen, Princeton physicist Dr. Will Happer, and Greenpeace Co-Founder Dr. Patrick Moore all have stated publicly this is pure political propaganda. This is simply a tax agenda and not science. I have yet to see any long-term analysis to support their arguments. It is pure bullshit. Please explain all the historical data that shows it has been hotter and colder than before the Industrial Age.

Now they argue, for our own benefit, that government should tax sugar at a global G20 level. This is really getting out of hand.

I would watch this blog very closely for the next two years!


USA Losing Sovereignty to World Fiscal Mismanagement

Dollar Burning

The IMF and many economists (domestic and foreign) are now warning that a rate hike by the U.S. Federal Reserve, no matter when, will spark a major economic crisis in the emerging markets. They see this crisis being ripe for countries with high budget deficits, such as Turkey, as well as commodity-based economies. This includes the oil exporters such as Russia and even Saudi Arabia who has now begun to issue debt.

This is holding the Federal Reserve’s feet to the fire to the point that they are losing control of their own domestic policy objectives as a consequence of the dollar becoming the WORLD’S ONLY RESERVE CURRENCY no matter what the IMF inserts into the SDR. The emerging economies have issued debt worth nearly half that of the USA without the economic strength to back up that debt. True, there is going to be a debt explosion by 2017 and this is not going to look very nice at the end of the day. Clearly, the Fed is being pressured externally to give up its domestic policy objectives to help the debt burden of everyone else. And people keep saying the dollar will go into hyperinflation? Obviously, they do not understand the world economy or that what is taking place is OUTSIDE of the United States. Sorry, the dollar is not quite ready to burn to ashes.

1927-Secret-Banking-g4

The Federal Reserve has called a meeting on Monday. This issue of sovereignty will come to a head. The Fed has called this meeting to perhaps change interest rates. The question becomes for who? The lobbying against the Fed to raise rates has been intense. My recommendation is to eliminate the 0.25% paid to banks on excess reserves and raise rates. We must normalize rates ASAP to prevent a major crisis in Pension Funds of which the average hold 40% in government debt and cannot meet future obligations. But this is the domestic sovereignty issue. Does the Fed lower rates and make the same mistake it did in 1927 to try to save the world which will never reform its debt load?

Fed1927

If the Fed lowers rates, the markets may see this as a CONFIRMATION that the sovereign debt crisis is becoming critical and the capital inflows will then intensify into the USA as it did between 1927-1929. So let’s see if the Fed has learned its lesson or are they stupidly going to try to save the world who will then only expect more of the same in the end.

Massive Data Manipulation by NASA and NOAA


UNFCCC COP 21 starts on November 30, 2015 in Paris France with additional security including no demonstrations at the conference as a result of the November 13 Jihadist attacks that killed 130 and injured 368. For the past 10 months I and others have predicted that NOAA and NASS would make October 2015 the hottest month ever and just as predicted they have published October’s temperature and it is the hottest ever. However to get there they did have to change past temperatures to make then colder.

For example in the LOTI report issued by NASA on April 2010 the following temperature anomalies were reported in their January 1880 to April 2010 LOTI listing.

March    2002 102

January 2007 108

March    2010 106

Then, only a few days ago in the current report for October 2015 the following temperature anomalies were reported in their January 1880 to October 2015 LOTI listing.

March    2002  91

January 2007  97

March    2010  92

October 2015 104

So we can see that by changing the past we can make October 2015 the hottest moth ever recorded by NASA.

George Orwell, “Who controls the past controls the future. Who controls the present controls the past.”

Taxing money is one of the last desperate steps taken before an economic system collapses.


Post navigation

Taxing Money: The Call to Arms by the IMF

Lagarde-Christine-imf

COMMENT: Dear Martin –

 I have been a follower for some time now and had great pleasure in hearing you speak at the Princeton WEC.  Thank you for so readily sharing your knowledge with those that are willing to listen and learn.
I recall you mentioning that governments will often have a desired policy “floated” through another source, so as to provide the appearance that they are adopting an independently conceived course of action.  I noticed that just yesterday the IMF published Staff Discussion Note SDN/15/22 ( http://www.imf.org/external/pubs/cat/longres.aspx?sk=43162 ).  To my reading, this paper advocates further QE by the ECB.  Maybe the most notably questionable comment to be found in the paper is that “governments do tend to take corrective measures in response to an increase in government debt”, as indicated under point 14. I thought you might find this article interesting and foretelling.  If nothing else, it seems to be further confirmation of the predictions provided by Socrates.
Best, WN
REPLY: Europe has become one giant experiment for taxing money, which is popularly called negative interest rates. They meant precisely this when they stated “governments do tend to take corrective measures in response to an increase in government debt.” It is NOT a trend toward hyperinflation, as in revolutionary or defunct governments where they just disavow the prior debt of the previous government. This is the deflationary course which shrinks the economy rather than dealing with the debt. The IMF is advocating taxing money itself, and this will only lead to hoarding and trying to get off the grid.

Analysis of Global Temperature Trends, October, 2015 What’s really going on with the Climate?


The analysis and plots shown here are based on the following: first NASA-GISS temperature anomalies (converted to degrees Celsius so non-scientists will understand the plots) as shown in their table LOTI, second James E. Hansen’s Scenario B data, which is the very core of the IPCC Global Climate models (GCM’s) and which was based on a CO2 sensitivity value of 3.0O Celsius, lastly, a plot based on an alternative climate model designated ‘PCM’ and based on a sensitively value of 0.65O Celsius.

An explanation of the alternative model designated, PCM, is in order since many have interpreted this PCM model as a statistical least squares projection of some kind. Nothing could be further from the truth. A decade ago when I started this work the first thing I did was look at geological temperature changes since it is well known that the climate is not a constant; I learned that in my undergrad geology and climatology courses in 1964.

The following observations give a starting point to any serious study. First, there is a clear movement in global temperatures with a 1,000 some year cycle going back at least 3,000 to 4,000 years; probably because of the apsidal precession of about 21,000 years for a complete cycle. However about every 10,000 years the seasons are reversed making the winter colder and the summer warmer in the northern hemisphere. 10,000 years from now the seasons will be reversed. Secondly, there are also 60 to 70 year cycles in the Pacific and the Atlantic oceans that are well documented. Lastly we also know that there are greenhouse gases such as carbon dioxide. The National Academy of Sciences (NAS) estimated that carbon dioxide had a doubling rate of 3.0O Celsius plus or minus 1.5O Celsius in 1979.

The core problem with the current climate change theory is that the IPCC still uses the NAS 3.0O Celsius as the sensitivity value of carbon dioxide and a number in that range is required to make the IPCC GCM’s work. The problem with using this value is it leaves no room for other factors and hence the need of the infamous hockey stick plots of the IPCC from Mann, Bradley & Hughes in 1999. The PCM model is based on a much lower value for carbon dioxide consistent with current research. This places the value between 0.65O and 1.5O Celsius per doubling of carbon dioxide. If the long and short movement in temperatures and a lower value for carbon dioxide are properly analyzed and combined a plot that matched historical and current (non manipulated) NASA temperature estimates very well can be constructed. This is not curve fitting.

The PCM model is such a construct and it is not based on statistical analyses of raw data. It is based on creating curves that match observations (which is real science) and those observations appear to be related to the movement of water in the world’s oceans. The movements of ocean currents are well documented in the literature. All that was done here was properly combine the separate variables into one curve which had not been previously done, to my knowledge. Since this combined curve is an excellent predictor of global temperatures unlike the IPCC GCM’s, it appears to reflect reality a bit better than the convoluted IPCC GCM’s, which after the past 19 years of no statistical warming have been shown to be in error.

Now, to smooth out highly erratic monthly variations a 12 month running average is used in all the plots. This information will be shown in four tables and updated each month as the new data comes in about the middle of the month. Since no model or simulation that cannot reasonably predict that which it was design to do is worth anything the information presented here definitively proves that NASA, NOAA and the IPCC just don’t have a clue.

Note, starting in late 20014 and continuing to the present NASA has made major changes to the way they calculate the values used in their table LOTI. These changes have significantly increased the apparent global temperatures (political reasons) and these changes are not supported by satellite data; so they are probably not real. For example in the report issued in April 2010 the following temperatures were reported March 2002 102, January 2007 108 and March 2010 106. The current report October 2015 shows March 2002 91, January 2007 97 and March 2010 92 and October 2015 as 104; which makes October 2015 the hotest ever . This paper uses the questionable NASA data since it is all that is available at this time. Prior to this “change” the PCM plot showed almost no error for NASA data as can be seen in the plots posted here last year.

2015-10

The first plot, UL is a plot of the NASA temperature anomaly converted to degrees Celsius and shown in red with a black trend line added. There has been a very clear reversal in the upward movement of global temperatures since about 2001 and neither the UN IPCC nor anyone else has an explanation for this 13 years later. Since CO2 has continued to increase at what could be argued an increasing rate, this raises serious doubts about the logic programmed into all the IPCC global climate models.

The next plot UR, also in red, shows the IPCC estimates of what the Global temperature should be, based on Hansen’s Scenario B, with the NASA actual temperatures’ subtracted from them. Therefore this plot represents a deviation from what the Climate “believers” KNOW what the temperature should be; with a positive value indicating the IPCC values are higher than actual and a negative value indicating the IPCC values are lower than actual, as measured by NASA. A black trend line is added and we can clearly see that the deviation from expected is increasing at an increasing rate. This makes sense since the IPCC models project increased temperatures based primarily on the increasing level of CO2 in the earth’s atmosphere. Unfortunately, for them, the actual temperatures from NASA are trending down (even as they try to hide the down ward movement with data manipulation) since other factors are in play, therefore each year the gap between them widens. Since we have 13 years of observations’ showing this pattern it becomes hard to justify a continuing belief in the IPCC climate models, there is obviously something very wrong here.

The next plot LL shown in blue is based on the equations in the PCM climate model described in previous papers and posts here and since it is generated by “equations” a trend line is not needed. As can be seen the PCM, LL, and the NASA, UL, trend plots are very similar the reason being that in the PCM model, there is a 68.2 year cycle that moves the trend line up and then down a total of 0.30O Celsius (currently negative .0070O Celsius per year); and we are now in the downward portion of that trend which will continue until around 2035. This short cycle is clearly observed in the raw NASA data in the LOTI table going back to 1868. Then there is a long trend, 1052.6 years with an up and down of 1.36O Celsius (currently plus .0029O Celsius per year) also observed in the NASA data. Lastly, there is CO2 adding about .005O Celsius per year so they basically wash out, which matches the current holding pattern we are experiencing. However within a few years the increasing downward trend of the short cycle will overpower the other two and we will see drop of about .002O Celsius per year and that will be increasing until till around 2025 or so. After about 2035 the short cycle will have bottomed and turn up and all three will be on the upswing again. These are all round numbers shown here as representative values.

The last plot LR in blue uses the same logic as used in the UR plot, here we use the PCM estimates of what the Global temperature should be with the NASA actual temperatures’ subtracted from them. A positive value indicates the PCM values are higher than actual and a negative value indicates the PCM values are lower than expected. A black trend line was added and it clearly shows that the PCM model is tracking the NASA actual values very closely. In, fact since 1970 the PCM model has rarely been off by more than +/- 0.1 degrees Celsius and has an average trend of almost zero error, while the IPCC models are erratic and are now approaching an error rate of +0.5O above expected.

Note: Since I first started posting this monthly analysis a year and a half ago NOAA and NASA were directed make the global temperatures fit the political narrative that the planet was over heating and something drastic need to be done right now. The problem was as shown in this analysis the “real” world temperatures were not at the level that the IPCC GCM’s said they should be. Major adjustments to the data have been made that give the illusion that temperatures are going up even though they are not. However, as this analysis shows even with the manipulation that has destroyed all credibility from NOAA and NASA they cannot get the global temperatures even close to what their false theory claims they should be.

In summary, the IPCC models were designed before a true picture of the world’s climate was understood. During the 1980’s and 1990’s CO2 levels were going up and the world temperature was also going up so there appeared to be correlation and causation. The mistake that was made was looking at only a ~20 year period when the real variations in climate move in much longer cycles. Those other cycles can be observed in the NASA data but they were ignored for some reason. By ignoring those trends and focusing only on CO2 the models will be unable to correctly plot global temperatures until they are fixed.

Lastly, the next chart shows what a plot of the PCM model would look like from the year 1000 to the year 2300. The plot matches reasonably well with history and fits the current NASA-GISS table LOTI date very closely, despite homogenization. I understand that this model is not based on physics but it is also not curve fitting. It’s based on observed reoccurring patterns in the climate. These patterns can be modeled and when they are, you get a plot that works better than any of the IPCC’s GCM’s. If the conditions that create these patterns do not change and CO2 continues to increase to 800 ppm or even 1000 ppm than this model will work into the foreseeable future. 150 years from now global temperatures will peak at around 15.5 to 15.7 degrees C and then will be on the downside of the long cycle for the next 500 years. The overall effect of CO2 reaching levels of 1000 ppm or even higher will be between 1.0 and 1.5 degrees C which is about the same as that of the long cycle.

Carbon Dioxide is not capable of doing what Hansen and Gore claim!

000 2015-03 b

The purpose of this post is to make people aware of the errors inherent in the IPCC models so that they can be corrected.

The Obama administration’s “need” for a binding UN climate treaty with mandated CO2 reductions in Europe and America means there will be such a resolution presented at the COP12 conference in Paris in December. To support this NASA will be forced to show ever increasing global temperatures for the rest of 2015 that will make less and less sense based on observations and satellite data which will all be dismissed or ignored.

Sir Karl Raimund Popper (28 July 1902 – 17 September 1994) was an Austrian and British philosopher and a professor at the London School of Economics. He is considered one of the most influential philosophers for science of the 20th century, and he also wrote extensively on social and political philosophy. The following quotes of his apply to this subject.

If we are uncritical we shall always find what we want: we shall look for, and find, confirmations, and we shall look away from, and not see, whatever might be dangerous to our pet theories.

Whenever a theory appears to you as the only possible one, take this as a sign that you have neither understood the theory nor the problem which it was intended to solve.

… (S)cience is one of the very few human activities — perhaps the only one — in which errors are systematically criticized and fairly often, in time, corrected.

None of the old rules apply now!


Welcome to the New Age Economy – Even Buffet Cannot Make the Transition

Behind-Models

QUESTION: Mr. Armstrong, I diversified my money into a number of hedge funds and I lost on each and every one from gold, commodities, stocks that did not even match the S&P 500 to those who piled into oil. It seems 2015 has been a total wipe out for professionals. It would be great if you restarted your hedge fund. You won hedge fund manager of the year when everyone blew up on Lon-Term Capital Management. What will it take to get you back in the game?

PD

ANSWER: I understand. Sorry, I really do not want to get “back in the game.” It is a personal issue of time and quality of life rather than money. I could not spend it anyway. When you make billions, it becomes monopoly money for punts. It is way too much to alter your life. Go too far and the money owns you.

We are entertaining proposals to set up funds using our models. It is hard because you have to have the discipline to do whatever it says and sometimes its most fantastic calls even made me say, “OMG!” So if it made me question whether it would be right, I knew it would be because the majority must be wrong.

I understand this has been the worst year for professionals since the 2007-2009 crash. Even Warren Buffet’s Berkshire has been unable to match the returns on the S&P 500. Buffet’s traditional investment strategy is not cutting it for this New Age of Economics. Buffet has had a very bad year so far. The flavor of the year was to pour into debt, which has come back to haunt many hedge funds. Overall, this has been the worst year since 2007 for hedge funds. They had their head handed to them on oil stocks to say the least. This has led many to question if hedge funds have simply lost their way. Those funds that piled into commodities and gold have lost billions. One fund lost $830 million on a single Swiss Franc trade.

This is a new era and if you do not comprehend what is going on — even if you are a professional — you will lose everything based upon what is coming. This is not going to be easy for anyone. What lies behind the curtain is far more complex than anyone realizes right now. The next couple of years will see some professionals completely blown out of the water. Traditional models will simply fail.

The EU will be gone before the end of next year.


France Exempting Itself from all EU Rules

hollande-franc3a7ois-2

Do politicians ever really care about society? President Hollande wants to change the French Constitution, but he also wants to extend the state of emergency indefinitely. Why? Is this really about terrorism? Sure, more than 80% of the French are willing to give up civil liberties for security, just as Americans responded after 9/11. That is the problem, for once power is given to government it is never returned. That is just a fact of life.

However, it now turns out that France cannot meet the EU criteria, as was the case for Greece. Therefore, the politicians in power want to extend the state of emergency because that exempts them from all EU economic criteria. Nothing but nothing can ever be just straight up. Increase your security, of course. That’s understandable. But to extend a state of emergency for political purposes seems to be a secret political bonus. The euro is doomed anyhow. This just illustrates that the second largest member is also in the same position as Greece. They are using the siege of Paris as their get out of responsibility card in this game of Monopoly.ill not exist in 12 months