Armstrong Economics Blog/Sovereign Debt Crisis
Re-Posted Jun 12, 2020 by Martin Armstrong
Illinois became the first entity to borrow from the Fed’s new facility known as the “Municipal Liquidity Facility” for state and local governments. The Fed’s legal authority lies in section 13(3) of the Federal Reserve Act. This authorizes the Fed to directly lend to “individuals, partnerships and corporations” in “unusual and exigent circumstances.” Section 13(3) is titled “Discounts for individuals, partnerships, and corporations,” raising questions whether the Municipal Liquidity Facility is actually authorized under Section 13(3). This has been capped at $500 billion.
To qualify they need a credit rating which is always up for sale to the highest bidder as we saw in 2007. Illinois is already insolvent and its debt is trading at junk bond status. However, as long as they pay the fee, one of the credit agencies can certify a rating which is arbitrary so they get the funds for a kick-back. Welcome to the wonderful world of corrupt credit ratings. This proves that Illinois cannot hope to raise money to borrow. Someone should just turn out the lights.
British Pound Down & Dirty?
Armstrong Economics Blog/BRITAIN
Re-Posted Jun 10, 2020 by Martin Armstrong
I have received a lot of emails from Britain asking if Boris is the new reason for the collapse of the pound. Fundamentals always emerge to support the projected trend. Boris is approving contract tracing which will undermine the economy dramatically. This is a plot by the socialists to realize their Marxist dreams. The press is so intensely keen on keeping COVID as a national security threat that it is really hopeless.
The British pound appears to be still destined to break the 1985 low. However, we first need the false move with the dollar down to trap everyone into short-dollars and then this will flip around. Contact tracing and certificates to prove you do not have COVID will end tourism for Europe. No Americans will be traveling there if they have their way. The stupidity of Boris and other European world leaders is beyond description. I think I have seen London for the last time already.
We are in a battle with the socialists on an unprecedented scale. They are deliberately destroying businesses under the pretense of the New Green Deal.
German Companies Plan to Reduce Investments
Armstrong Economics Blog/Germany
Re-Posted Jun 7, 2020 by Martin Armstrong
According to a recent survey conducted by the Institute for Economic Research (Ifo), German companies plan to reduce investments by 50% this year due to the lingering effects of the coronavirus. In fact, 28% of companies reportedly already canceled investments. The manufacturing sector, the heart of the German economy and therefore the entire Eurozone, purportedly plans to cut back projects and future investments by 64%, and 32% reported that they have already canceled business ventures entirely.
The coronavirus cannot account for the toll on German manufacturing, as 2019 was the worst year for that sector in a decade. In February of this year, the Financial Times reported that ECB President Christine Lagarde said low rates and inflation “significantly reduced the scope for the ECB and other central banks worldwide to ease monetary policy.” This was in February when the main concern was the US-China trade war, as Germany imports 9.4% of intermediate goods from China.
Chancellor Angela Merkel wants to pump $146 billion USD ($130 billion euros) into a stimulus package, while of course designating $56 billion USD of those funds to further the climate change agenda. The German economy already shrank by 2.2% in the first quarter. Merkel recently announced that she will “absolutely not” run for a fifth term, meaning she will leave her mess for the next person to clean up.
Sovereign Defaults Unfolding
Armstrong Economics Blog/Emerging Markets
Re-Posted Jun 3, 2020 by Martin Armstrong
In the Gulf, states are facing bankruptcy. Oman can hardly even pay his electricity bill. The IMF has been now lobbying to defer emerging-market debt for one year. We have been able to confirm from behind the curtain that more than 100 nations have asked the IMF for help. The sheer stupidity of this coronavirus lockdown is beyond belief. It seems no politician bothered to ask advice from anyone other than epidemiologists. Neil Ferguson may have resigned for bad judgment, but the politicians who failed to consult other fields including economics should resign. The lack of common sense amounts to the said fact that politicians have set off a Monetary Crisis cycle over the next two years, for they have seriously disrupted the entire world economy. These emerging markets will not be able to pay their debts any time soon, especially when European politicians are trying to convert the economy to a New Green Order.
Thatcher on the Redistribution of Wealth Rather than Creating Wealth
Armstrong Economics Blog/Economics
Re-Posted May 31, 2020 by Martin Armstrong
When Will a Light Go Off?
Armstrong Economics Blog/Economics
Re-Posted Apr 23, 2020 by Martin Armstrong
COMMENT: Mr. Armstrong; Your letter has circulated here in the _________________ Parliament. I must say, it is brilliant. The problem is most people see just writing checks is easier to understand than actually suspending expenses. I fully understand whilst you cannot terminate the income side of their balance sheet without also suspending the expenses, it is a concept that is not easily seen as a solution. I believe the pain has to get worse before they will listen.
Cheers
Anonymous
REPLY: I find it just astonishing that there is a complete lack of common sense in representative government. They cannot continue to just subsidize people with no comprehension of where this ends. The deleveraging in the global economy is more than $100 trillion dollars. You cannot create enough money to even soften the blow. You would think that after the failure of Quantitative Easing since 2008 its utter failure to rekindle the economy, that a light would at least go off in someone’s head and they would ask: Why has this never worked?
Will the Dow Make New Highs?
Armstrong Economics Blog/Sovereign Debt Crisis
Re-Posted Apr 20, 2020 by Martin Armstrong
QUESTION: Mr. Armstrong; I am a new reader. I was wondering if you agree with Trump that the stock market will make new highs.
Thank you for your time
JA
ANSWER: The market will make new highs, just not this instant. However, it will not make new highs because the economy will be strong. It will make new highs because governments have abused their power and their debts are far too excessive. Europe will be the first to default on its debt in a clever manner of transformation. The European Central Bank is dead in the water. They can offer no solution and have turned to ask for the cancelation of all paper money and the issue of federal coronabonds.
Capital will flee from government debt into equity when the people begin to realize we have reached the end game.
There is, a Reason, why YOUR, healthcare system is Broken — Obamacare, Obama!
Re-posted from the Canada Free Press By Andrew G. Benjamin —— Bio and Archives—April 7, 2020
If you’re wondering why this nation’s health care system is in disarray, unprepared, disorganized, and malfunctioning?First look in the mirror.
You voted for it in 2008 and then doubled down by voting for it again in 2012.
National health care system is called Obamacare
The national health care system is called Obamacare. It is still called Obamacare.
It’s been the law of the land for eleven and a half years, whereas rationing has begun weeks ago. Rationing of ambulances, rationing of beds and doctors, rationing of ventilators, rationing of medicine, and rationing of oxygen. Rationing of your lives!
Rationing for your family, children, parents and grandparents, friends and workmates.
Yes, You, AMERICA, voted for it.
You were warned what would happen.
You were warned about DEATH PANELS. You were warned about Obama’s Chief-of-Staff Rahm Emmanuel’s brotherEzekiel who drew up the plan, just as the Obamedia went on a coordinated campaign to defend it. You were warned about the former president and Nancy Pelosi who, in front of national cameras, told reporters “We’ll have to pass the bill so you will find out what’s in it.” We know what’s in it now, don’t we?
You were warned by Sarah Palin. You chose to draw mocking cartoons of her.
And then many of you laughed like neighing horses.
You mocked us. You parodied us
You mocked us. You parodied us on Saturday Night Live. You made fun of us. Accordingly, do not look to blame this president and Republicans to scapegoat, 100% of whom were solidly against Obamacare. Do not expect Donald Trump to FIX with more trillions of OUR hard-earned money, blood and sweat, what yours broke deliberately, stupidly, and irreversibly. Do not blame Trump for being behind the curve or out of touch when the CDC, NIH and the chief doctor you are defending now told the nation as late as January 21, there’s nothing to be concerned about
You will, but we, will, laugh, at, you. While sobbing as we bury ours.
Care to guess who, which family, friend, associate of yours will become the VICTIM of Obamacare next?
Even the far left agrees!
ELECTIONS HAVE CONSEQUENCES – INDEED!
Gates – Stupid or Diabolical?
Armstrong Economics Blog/Disease
Re-Posted Apr 8, 2020 by Martin Armstrong
Gates even admits it will take years to get back to the same economic level. He does not believe in Democracy. The people should have no right to vote for this shutdown. He believes in authoritarianism and we are too stupid to understand what is best for us.
There is no way the economy will EVER return to normal. People like Gates will insist upon his vaccines to be allowed to even work. He wants us to be tagged like cattle. What’s next? Sterilization and permits to have children? If you do not have a base level of IQ, you will be denied? Is that how he will reduce his paranoia about CO2?
Thomas Malthus FRS (1766–1834) had the same crazy ideas as Gates about the food supply. Malthus was wrong and Gates will be wrong. Society will expand as there is sufficient food supply. His analysis of the population is linear as is his analysis of CO2. Neither Malthus nor Gates every took into consideration there are cycles to everything.
Disease is a normal thing throughout history. When we head into these Solar Minimums, that is when plagues come because mainly of malnutrition. This is what Gates is accelerating. People who pick the crops are migrant workers. In Europe, people from Poland go south to pick the crops in Spain. They are locked down. Preventing people from working is already starting to impact the food supply. There is a risk of increasing starvation. For what purpose? To get Gates’ vaccine while you die from another disease and starvation?
This is a very serious situation. Gates is tipping society toward a serious human crisis because of his stupidity or diabolical plan to reduce population?
Why the Quantity Theory of Money will Fail ONCE Again
Armstrong Economics Blog/Economics
Re-Posted Apr 8, 2020 by Martin Armstrong
QUESTION: Your explanation of why increasing the quantity of money has failed seems to be the only explanation that is viable. Do you see the same outcome this time around?
PA
ANSWER: The academics assume we are morons. There is no comprehension of how human nature responds. Hoards of debased coins are found from the 3rd century and the fall of Rome. Under the academic view, inflation should rise by simply increasing the money supply presuming we will just be like kids in high school and party spending the cash with no regard for what comes tomorrow. When people do not TRUST the future, they will NOT spend the money – they hoard it. This is why the European Central Bank is moving to eliminate cash for Quantitative Easing since 2008 and negative interest rates since 2014 have absolutely PROVEN beyond a shadow of doubt that the Quantity Theory of Money is bogus.
Now ad to this reality the destruction of Capital Formation. My definition of this is not including capital goods. I use this term limited to liquid capital – cash, stocks, and bonds. Therefore, the Great Depression was so profound because when the sovereign debt of most countries was permanently defaulted on, this wiped out the Capital Formation in the United States because the conservative people bought the bonds and lost everything whereas the shareholders still have some value even if the company was liquidated.
What has taken place here is $2.2 trillion is nothing. It will not create inflation because the destruction of Capital Formation is just getting started. They already have to put in another $350 billion for small business relief and this will not be enough nor prevent permanent bankruptcies since these idiots want to keep the country locked down until June.
The loss to the economy will be close to $5-6 trillion in permanent damage so even $3 trillion will not be inflationary. If you lost $10,000 in the stock market and I hand you $2,000 for compensation, will you celebrate ane run out to party? Or will you hunker down and save it until you see a light at the end of the tunnel?
Centinel2012 