QUESTION: Dear Mr. Armstrong,
I don’t know if you’ve heard the news but here down under in Australia, the Liberal party has just replaced the current Prime Minister Malcolm Turnbull to Scott Morrison. This is the 6th leadership change at the federal level since Kevin Rudd’s 2007 election. Each prime minister seems to only last about 2-2.5 years and never completes their full term. Do you think the invisible hand of cycles is playing a role here? It’s hard to believe this is all just a coincidence. The politics here is just insane, no one cares about the country and each party only cares about the next election. If you include the state level then we have had 66 leadership changes in 13 years!! Insane right?
Regards,
J

ANSWER: I fully understand. The Australian government is in crisis and they are only looking at themselves and how to weather the economic storm. This constant change in the leadership reminds me of Rome as it headed into the Great Monetary Crisis of the 3rd century. From the time of Maximinus I (235-238AD) when he declared all wealth belonged to the State (Him), until 268 and the final overthrow of Gallienus in (253-268AD),  there were 26 emperors in 33 years making the average reign just 1.26 years. So actually, you are beating the fall of Rome since your turnover rate is 6 political heads of state in just 11 years making it 1.83 years for an average reign. You are not there yet.

This is a reflection of the declining state of politics and government on a worldwide scale. We are preparing a special report on politics which will include the upcoming American mid-term election

President Recep Tayyip Erdogan of Turkey is finding his dreams of an all-powerful resurrection of the Ottoman Empire are falling apart. Qatar has come to the aid of Turkey offering $15 billion in a loan, but keep in mind that the entire issue with Syria began with Qatar proposing a pipeline through Syria to compete with natural gas with Russia. Therefore, it is in Qatar’s best interest to keep Turkey trying to invade Syria. The price will be the pipeline, which we seriously doubt will ever take place.

Erdogan has sent the Turkish economy into a downward spiral for some time. Its soaring inflation has exceeded 100% and rising debt-to-GDP of about 70% under President Recep Erdogan’s regime has been a growing problem. As central banks pumped money into the system over the past decade, nations like Turkey and other emerging market economies used the opportunity to raise more and more “cheap” debt to boost their productivity. Turkey has attracted capital from Europe seeking higher yields because of the negative interest rates policy of the ECB. Now we have a crisis in Turkey that is also the result of Draghi’s Quantitative Easing that drove capital to Turkey and FAILED to revived the European economy.

Erdogan’s dream of restoring the Ottoman Empire is no joke. It has been European money seeking higher yield that kept him in power. It is curious how those who seek dictatorial power are the ones who dream of restoring the power of empires long since dead. Erdogan has wanted to recreate the Ottoman Empire just as the dream of the reestablishment of the old Roman Empire as was the desire behind Napoleon and Hitler. The days of Empire Building are long gone and Erdogan has been living in the past. His goal was to expand his country’s military operations in Syria and this, he hoped, would be the first step as with Hitler’s invasion of Poland.

Nevertheless, the Turkish lira collapse and the expensive dollar have been conspiring against him reflecting his disastrous management of the economy and the collapse in confidence among the Turkish people. There remain serious questions about elections in Turkey being rigged to keep him in power. Therefore, on the one hand, Erdogan is attracted to dealing with Russia who is on the opposite side of the game board with Qatar. Erdogan has the free markets moving against him and he is more likely to turn to Russia than the West to retain personal power and the free markets show what most likely the real sentiment of the Turkish people was for the fake elections. Consequently, Erdogan turned to Qatar because he was desperate for money to retain personal power. If he loses the support of his military, then they will side with the people and Erdogan’s head may end up on a spike. Qatar will discover they are dealing with someone who will not be loyal to them either. Yet, the financial markets are working against Erdogan and as the crisis continues to evolve in the months ahead as $15 billion will not reverse the crisis, Turkey can hardly afford military adventures. Erdogan will be more likely to turn to Russia when he cannot retain power otherwise. He can blame the USA all he wants publicly, but the free markets are conspiring against him and that includes his own people.

Many European institutions rushed into Turkey and bought their bonds at 20%. Many Spanish banks had capital was invested in Turkish bonds to get the higher yield to the tune of on average 20%+. Based on the phone calls, there are way too many institutions who invested into Turkey. They simply assumed that NO government defaults because the powers that be will always bail out the bondholders. This time the IMF is really powerless. They can make some noise and others will say the crisis is subsiding. However, this is just talking. There is nobody who can save Turkey at this point as long as Erdogan remains in power. Qatar will discover that Turkey is a bottomless pit. They will try to now ease the crisis with words because of the extensive foolishness of banks and pension funds who bought Turkey bonds to try to get yield.

The fall in the Turkish lira has also benefited the Syrian Army, which launched an offensive on the last large mercenary fortress in Idlib. Turkey was actually against the offensive because it feared that it would fall to Syria and that is against Erdogan’s dreams of taking more territory. What is not really looked at internationally is the plain fact that Turkey does not have its own arms industry. Erdogan needs arms to be imported and as the lira crisis materialized, his Turkish operation Olive branch and shield of the Euphrates in Syria become rapidly too expensive. Back in January 2018, the Siyasi Haber newspaper reported that an estimated $400 million was being spent on Operation Olive Branch alone. Erdogan has spent over $1 billion so far in his attempt to conquer that region of Syria.

Instead of building his economy and benefiting the people of Turkey, Erdogan has been more interested in resurrecting the Ottoman Empire. It has been his mismanagement of the economy and his hostile attitude even to Greece that is behind the Turkish Lira Crisis. He has lost the confidence of his own people! August has been our target for the crisis and so far the computer has been correct on that score. However, volatility will remain high going into October and then we see it will return as the new year begins. Qatar coming to the rescue should help support the lira for now. Those who are wise had better sell their Turkish bonds and step oy of this trade. August should prove to be only a temporary low for the lira

You really cannot make up a story like this, because it sounds just so unbelievable. I am in Germany on business and did not see the place overrun with refugees as on my last trip. So I made some inquiries. To my complete astonishment, the German government is actually giving refugees three weeks paid vacations INCLUDING airfare BACK to the very countries that claim they are fleeing because it is unsafe.

So in other words, despite claiming their lives would be at risk if they were forced to return home, the government is paying them for a vacation to the very place they claim to be fleeing. You just cannot make up such a completely insane government policy. I know someone who works with the refugees and they confirm they are on vacation back home. Therefore, asylum seekers are nonetheless returning to their homeland for a “short time”.

I searched to see if I could find any article on the subject. I found how most are trying to cover the practice up. reported that a German Federal Employment Office spokesman said: “There are such cases.” Some stories are trying to deny the issue which was first reported by the leading German newspaper Die Welt am Sonntag, Refugees go on vacation, where they are allegedly persecuted which reinforces the growing problem caused by the fact refugees are allowed to leave the country for 21 days a year but are not obliged to say where they are going. Migrants are protected and are entitled to “privacy”.

My sources in Switzerland have confirmed the same problem, Dozens of asylum seekers who had apparently turned up penniless after fleeing what they said was a war zone were found to have flown home on holiday.

Die Welt reported just how screwed up the government is. There is no communication between government agencies. If an advisor in the Employment Agency gets wind that someone wants to go to Syria, for example, Die Welt reported they are not supposed to pass this information along due to data protection issues.

There is no actual proof that people a person is really persecuted in the home country. Syria was at least a war zone. People have been pouring in from all over North Africa which is not in a state of war. If someone is taking a vacation for 21 days at government expence back to the place they fled, common sense dictates they are not refugees. Government incompetent is just off the charts.

In Bulgaria, a farmer had one sheep that died unexpectedly and another which grew sick but survived. Both animals returned negative test results for a disease known as ovine rinderpest. The Bulgarian Ministry of Agriculture, Food and Forestry slaughtered the entire herd and paid the farmer below replacement cost to save money for the state and then banned them from having livestock for six months. The government explained in a statement that as an EU member state, Bulgaria can legally institute animal vaccines by FORCE if it is in the essential interests of the community it is affecting. However, if Bulgaria adopts that policy, then the EU automatically imposes a ban on live animal trade and the exportation of meat and dairy products for at least two years following such a decision. Therefore, simply because of an EU regulation, animals are just slaughtered on a wholesale basis even if they do not test positive for a disease but might.