Tag Archives: ECB

Mar 10 2018

The Economic Confidence Model & Why there are 6 waves


Armstrong Economics Blog/ECM

Re-Posted Mar 10, 2018 by Martin Armstrong

QUESTION: Dear Mr. Armstrong,

Firstly – sorry to hear about the passing of your mother.
Secondly – thank you very much for reading and answering questions.
My question – what is the significance of the six repetitions in the ECM? Six 8.6 years make a cycle and six of these make a larger cycle and then six of these make a super-cycle. Why six? Why not five or seven? Can you explain the significance?
Thank you
g
ANSWER: The Economic Confidence Model is actually a three-dimensional wave structure. The volatility is a different frequency and that is what determines the number of 8.6-year waves for this is building in intensity. What you get at the end of these 51.6-year waves is very profound. After the 1774.95 peak, we end up with a revolution against the monarchy. The next wave peak in 1826.55 Russo-Persian War, 1826-1828, Greek War of Independence, Battle of Monte Santiago between Brazil and Argentina, Mexican Constitution is formed, the Maryland Democratic Party begins creating the confrontation between the Democrats and Republicans (South v North), and even Thomas Jefferson and John Adams both died on the 4th of July 1826 (1826.50) whereas the peak of the wave was July 19th. The next wave 1878 saw the Long Depression which was called the “Great Depression” until 1929-1932. Then the next wave was 1981.35 which marked the peak in interest rates even to the day. The next one will be 2032 and this will be followed by the shift from the West to the East in economic power.
Mar 9 2018

The Creature from Jekyll Island – Unprofessional Propaganda Book


Armstrong Economics Blog/Central Banks

Re-Posted Mar 9, 2018 by Martin Armstrong

The_Creature_from_Jekyll_Island-2

QUESTION: Martin. Have you read the book Creature of Jekyll Island by Edward Griffin it is about the Feds and how they control? Many years ago I thought it was fiction but after reading it again it is true. My Question what can we do money will be what they want it to be the control?

ST

ANSWER: The book you refer to is propaganda. There are quotes in there that he simply made up about the Rothschilds. Go ahead and try and find the source. I have written about this before. That book is highly dangerous for it completely misrepresents and fails to understand that elastic money began in the 1850s and was created privately by clearing houses. It worked perfectly fine and it was not economically disastrous but BENEFICIAL!

The ability to create money by the Federal Reserve is essential. However, that design was directly beneficial for it would buy ONLY short-term corporate paper in a crisis when banks could not lend. Buying in corporate paper saved jobs. The key was a simple fact it was corporate and NOT the government. Corporates have to pay back – the government does not.

It was not that the Fed was evil, it was that the Fed was usurped by Congress during World War I and directed to buy only the paper of the government. It was that aspect that has altered the role of the central bank and is demonstrated who the ECB in Europe now own 40% of all government debt and they cannot stop without creating a crisis.

The Creature of Jekyll Island advocates what Jackson did, and that will lead to a massive Sovereign Debt Crisis among the States and undermined the entire economy both domestically as well as internationally. That is by no means the answer. The answer lies in the curtailment of politicians. The banks owned the Fed BECAUSE it was a bailout system that they paid into. It was never intended that taxpayer money would be used to bail out banks. Once the banks became the seller of government debt, they then had a grip on government and with the Fed only buying government debt, the entire system is nothing like the intended design.

Mar 9 2018

Interbank Market Collapsing


Armstrong Economics Blog/Banking Crisis

Re-Posted Mar 9, 2018 by Martin Armstrong

QUESTION: Mr. Armstrong; Has interbank lending collapse due to a lack of confidence concerning counter-party risk?

Thank you for being a rare source with experience

ER

ANSWER: Yes that is a correct statement. The failure of Lehman and Bear Sterns was the result of interbank lending when they could not make good on the collateral they posted the day before in the REPO market. Then we had the collapse of MF Global, which was also a loss linked to the overnight markets. Now mix in the LIBOR scandal and banks were scrutinized for manipulating LIBOR rates in the interbank market.

The interbank lending market is a market in which banks extend loans to one another for a specified term, typically 24 hrs. Most interbank loans are for maturities of one week or less, the majority being overnight. Such loans are made at the interbank rate (also called the overnight rate if the term of the loan is overnight).

The collapse of this market is a clear warning that liquidity is extremely vulnerable. When crisis strikes, liquidity will simply vanish entirely. This warns that volatility will rise sharply and it appears to be predominantly focused in on the debt market.

Mar 9 2018

The Analysts Are Turning Back to Bearish Again


Armstrong Economics Blog/Dow Jones

Re-Posted Mar 9, 2018 by Martin Armstrong

CNN Money is reporting the headline “A top JPMorgan Chase executive is warning that stocks could fall as much as 40% in the next few years.” CNN reports that Daniel Pinto, JPMorgan’s co-president, said on Bloomberg Television he believed that market gains should continue for the next year or two. However, he added that investors were nervous could result in a “deep correction” of between 20% and 40%, “depending upon the market values at the time the downturn starts.”

Indeed, this was the pause we were looking for from January. We did not see a collapse as in terms of 1987. Instead, this is simply the transition period where the marketplace must come to grips with a Sovereign Debt Crisis and that means rising interest rates will devastate the bond bubble. So exactly how does that equate to a 40% decline in equities?

What is clear is that the initial stages of this consolidation period involved the marketplace coming to grips with the shift from PUBLIC to the PRIVATE rationale. In other words, inflation, rising interest rates, the rapid rise in interest rates, explosion in public debt, and the inability of governments to fund their never-ending deficit spending at the federal, state, and local levels. Then as the economy begins to worsen, this will also historically lead to trade wars.

This is good news. We need the majority of analysts to turn bearish in order to restore the upward bias we have enjoyed for the past 8 years. We can see that our Energy Models are not in a position for a major high. They have been rising, not declining as new highs were made. This strongly suggests we will still see higher highs in the years ahead. The more analysts we get back to bearish, the strong the breakout to the upside later on.

Mar 7 2018

Paradoxes of the Sexual Revolution


As part of CCA III: The Sixties, Mary Eberstadt, author of An Anxious Age: The Post-Protestant Ethic And The Spirit of America, gives a lecture at Hillsdale College on the Sexual Revolution.

Mar 6 2018

Putin’s Address to the Nation & the World


Armstrong Economics Blog/Russia

Re-Posted Mar 6, 2018 by Martin Armstrong

 

Putin’s address on March 1st to the Federal Assembly seems to have sparked a lot of crazy emails with people talking nonsense about things they do not even come close to understanding. Yes, the headline grabber was Putin’s statement about a new invincible cruise missile. I will address that in a moment. Overlooked, however, was Putin addressing the real issues of economic concerns that seem to have gone over everyone’s head. The problem with the Oligarchs where he is implying that things need to change for the good of Russia. China moved to Capitalism directly from Communism and we see the difference with China poised to surpass the US economy by 2032 and is already the second largest economy in the world. Russia, on the other hand, simply moved from state-controlled economic system to one where political friends became Oligarchs and prevented a free market economy. Russia economically ranks 12th in the world behind the USA, China, Japan, Germany, France, United Kingdom, India, Brazil, Italy, Canada, and South Korea. This is what Putin was addressing, the need to truly open up the economy to competition. If you try to compete against an Oligarch by opening a restaurant in Moscow, you will be lucky to survive beyond 24 hours. Russia is economically a third world country with a lot of weapons. Putin realizes that for all its military power, it collapsed BECAUSE it did not have the economy to support its military ambitions.

Putin also addressed trying to keep people from leaving Russia. Despite the Global Warming movement that is really trying to reduce the population, in fact, the population is declining among the industrialized nations and Russia is no exception. The population of Russia peaked at 148,689,000 back in 1991, just before the breakup of the Soviet Union. Ever since the collapse of Communism, people realize that the State will not simply take care of them. As a direct result, the birth rates have been steadily dropping and there have been abnormally high death rates in Russia as well among the elderly. Russia’s population has been declining at an annual rate of 0.5%, or about 750,000 to 800,000 people per year since 1991. Add to this figure, the migration of Russian women looking for Western men, and you have a crisis brewing in the decline of population in Russia that threatens its long-term viability.

Nevertheless, the area of Putin’s speech that has sparked the wildest claims were those comments which mentioned the invincible strategic nuclear systems in various stages of development. The boast of a missile that can penetrate the US defense system has been known behind the curtain as the RS-28 “Sarmat” system which is a new land-based heavy intercontinental ballistic missile (ICBM). This is what is being fitted with advanced technology to assure penetration of any missile defense.

Putin definitely made global headlines with these comments. However, I really did not think it warranted comment since Russia’s ability to defeat U.S. missile defenses is nothing new. I suppose I have known that fact but it seems many did not. Let me explain something that may not be common knowledge. U.S. policy has been not to deploy a defensive system that could neutralize a Russian retaliatory response to a U.S. nuclear attack. The reason this is the basic policy is the concern that such a system which was called Star Wars, would destabilize the world and result in a new arms race where Russia would be driven to re-establish a retaliatory capability. Putin’s response was directed at Trump and his administration’s idea of reversing that policy creating a new Ballistic Missile Defense Review. This was part of the February 2018 U.S. Nuclear Posture Review which states that any improvements in U.S. defensive capabilities will be deployed in such a way as to “preclude an arms race” with China or Russia. Therefore, Putin was addressing this very issue and to make it clear that there MUST remain a balance between powers for all the nukes keep everyone in check.

Putin also addressed a maneuverable hypersonic glide the “Avangard” which is a new missile system with a vehicle of this type. Putin also mentioned a long-range nuclear-powered unmanned underwater vehicle that can be fitted with a nuclear warhead, known commonly as “Status-6.” Both of these systems are designed to evade any U.S. defensive measures — Avangard by presenting an unpredictable flight trajectory, while Status-6 is an entirely new sea-based way to deliver a nuclear weapon. Both are designed to maintain the power balance.

The invincible new cruise missile was really a statement to Trump not to start a new arms race. You simply have to understand what is going on behind the curtain right now.

Mar 6 2018

Italian Elections – Another Nail in the Coffin of Brussels?


Armstrong Economics Blog/European Union

Re-Posted Mar 6, 2018 by Martin Armstrong

EU CrisisThe Italian election results are in and once again it demonstrates that correlating economics with voting, you end up with a far more accurate forecast. Trying to predict based upon samples of calling people appears to be not merely questionable, but also prone to human bias. We have been warning that this trend toward nationalism is growing worldwide and especially within Europe. The Italian vote proves that the refugee issue is a major crisis and the people do not support it. Civil Unrest in Ital has been rising, but nobody listens to the people.

The politicians in Europe and even in the United States with respect to Trump, have assumed that this is merely a populist movement that would quickly fade into memory. Career politicians have had it their way for so long, they cannot fathom why after robbing the Treasury for decades and nobody said anything, why are the people suddenly mad now? The Italian vote should be a wake-up call to Brussels, but they will remain in a state of denial. Their attempt to PUNISH Britain they believed would prevent other states from leaving. They are sadly mistaken.

A majority of Italian voters have spoken and they supported the Eurosceptic candidates in the national election. Italy had been a steadfast championed the European project. However, the dreams have fallen to the ground as dusk in the winds of politics. Those in Brussels have been totally dishonest with the European people swearing that a single currency would solve all the ills and that they were not trying to take over Europe making it the United States of Europe with one government. The promise that a single currency would also produce a single interest rate for all proved also a complete lie.

The early results released by the interior ministry pointed to a hung parliament, with the only hope of perhaps a center-right coalition, with about 37% of the vote could perhaps secure a majority once parliamentary seats are allocated ignoring the people as they have done in Germany. Any way we cut this, the Italian vote is a complete repudiation of Brussels following the trend set by BRXIT for Britain to leave the European Union.

The newspapers are reporting that unlike British voters, Italians would NOT support an exit from Europe or a referendum on leaving the Eurozone. Nonetheless, the very populist parties who score big in this vote have previously been open to a referendum on the Euro and will remain as an important barometer of the mood of the country moving forward. The burning question comes down to – are Italians proud to be Italians? Or do they buy into this view that an Italian is nothing without Europe?

The Italian vote on Sunday also marked the rise of two relatively new political parties that had been ignored and laughed at as fringe movements – (1) the anti-establishment Five Star Movement (M5S), which early results showed had 31% of the vote, and (2) the anti-migrant and Eurosceptic League, formerly known as the Northern League. Neither group warrants being laughed at or ignored anymore.

The former prime minister Silvio Berlusconi appears to have lost to a younger rival on the far right, Matteo Salvini, who supports radical immigration policies that even include mass deportations of immigrants who are in Italy illegally. Many have called Salvini a racist, as they are using that label in Britain to disparage anyone who votes for BRIXT. However, this is not really a racist issue. During hard times, during the 1840s, there was a nationalist movement in the United States against the migration of Irish. That even turned into gun battles on the street of Philadelphia and it had nothing to do with RACE!

The RACIST label being used against anyone who opposes the mass immigration from Africa under the pretense of war in Syria is simply a tactic used to defend a policy that is indefensible. Regardless of race, this is a crisis created by conflicting cultures and no politician will address the issue because they must have to admit a mistake. The performance of Salvini’s has been a clear warning sign that this entire Refugee Crisis in Europe is indeed tearing the continent apart. It was implemented unilaterally by Merkel who was concerned that her image was being harmed by her position refusing to compromise or foregive any debt with Greece. Germany tried to cover-up the Refugee Crisis without success.  Only when the elections were coming up did Markel suddenly flip and said she too would deport refugees. This was only after Merkel’s party suffered a historical defeat in Berlin local elections. The statistics show that 70% of the migrants are young men who are economic migrants, not political refugees. Whatever happened to women’s rights in the middle of all this?

Salvini made a “gentleman’s agreement” with Berlusconi that if the center-right were to win a majority, whichever party comes out with the most votes within the coalition would name the next prime minister. I have written previously that removing Berlusconi from office was a coup staged by Brussels all because he was beginning to favor exiting the Euro. Salvini also publicly stated that the Euro as a currency was destined to fail, and he also said he would not rule out a referendum on the issue.

Then we have the former Prime Minister Renzi’s leading lieutenant, Maria Elena Boschi, won a safe parliamentary seat in South Tyrol in northern Italy, two other prominent politicians, the interior minister, Marco Minniti, and the culture minister, Dario Franceschini, were defeated. This is clearly demonstrating that there is an underlying rejection of Europe and the Brussels’ agenda.  Consequently, Renzi has stepped down as head of the Democratic party (PD). Renzi has seen his political career go down in flames all because he would not listen to the people.

The politicians have simply backed Merkel, who never put this entire refugee matter to a vote among politicians no less the people. The Refugee Crisis demonstrates that there is no democratic mechanism within the European Union because politicians have viewed that they are smarter than the people and they are just stupid sheep who do as they are told.

 

The results also demonstrated that Sicily, which had traditionally supported Berlusconi’s Forza Italia, also moved toward M5S, which is a broader movement rather than a party that is variously considered populist, embracing anti-establishment, environmentalist, alter-globalist, and Eurosceptic philosophies.