Armstrong Economics Blog/BRITAIN
Re-Posted Dec 7, 2019 by Martin Armstrong
One of the major distinction is how politics has degenerated into who knows what, all we need to do is look at BREXIT and the chaos of the British elections come the 13th. We have never seen an election where former prime ministers have intervened to disrupt an election as they have this time around. Instead of coming out to support their successors, the former Prime Minister John Major, who staged the coup against Margaret Thatcher in an attempt to abolish the pound and join the Euro along with former Labour Prime Minister Tony Blair have both been condemning the leaders and questioning whether voters should back them over their positions on BREXIT. Both men support the full surrender of all sovereignty of Britain no matter what they claim. They both believe in trying to create the United States of Europe.
Meanwhile, Senior Diplomat Alexandra Hall Hall has left the UK diplomatic service over BREXIT claiming she is not taking a position. Her resignation letter read:
“I have been increasingly dismayed by the way in which our political leaders have tried to deliver Brexit, with reluctance to address honestly, even with our own citizens, the challenges and trade-offs which Brexit involves; the use of misleading or disingenuous arguments about the implications of the various options before us; and some behaviour towards our institutions, which, were it happening in another country, we would almost certainly as diplomats have received instructions to register our concern.”
Hall is really against BREXIT and her resignation one week before the election demonstrates that she is trying to “influence” the election rather than truly expressing her patriotic frustration. You would expect her to wait for the election to see if anything changes. Resigning ahead of the election and blaming the politicians is absolutely a staged ploy.
The British Pound has pushed above the key 1.18 level against the Euro and 1.31 against the U.S. Dollar over the last week among the rise in expectations for Prime Minister Boris Johnson’s Conservative Party to win a majority at the polls next week. This would mean no coalition and it would be a rejection of Labour which has become extremely left wing. Despite the resignation of Hall and both Major and Blair coming out against BREXIT, the markets are showing relief that Labour will lose.
Elections have consequences. On the same day the U.S. economy reports astoundingly successful jobs growth of 226,000 jobs and a drop in the unemployment rate to 3.5 percent; the Canadian state economic minister reports surprisingly terrible jobs losses of 72,200 jobs and a jump in unemployment from 5.5 to 5.9 percent.
The Canadian economy is roughly one-tenth the size of the U.S. So in equivalent terms the results from Canada reflect a comparative loss of 720,000 jobs on the same day the U.S. revises all figures upward to over 300,000 gains. A stunning economic contrast:
OTTAWA (Reuters) – The Canadian job market lost a surprise 71,200 net positions in November while the unemployment rate rose to 5.9%, the highest in more than a year, data showed on Friday, as analysts said a repeat of the weak numbers could force the Bank of Canada to rethink its monetary policy.
Analysts in a Reuters poll had forecast a gain of 10,000 jobs and had predicted the unemployment rate would hold steady at 5.5%. […] November’s numbers followed a weak report in October, when the labor market unexpectedly shed jobs despite a likely boost from hiring related to the federal election.
[…] Canada’s goods-producing industries saw a decline of 26,600 net jobs, largely on manufacturing. The services sector lost 44,400 net jobs.
November’s unemployment rate was the highest seen since the 6.0% reported in August 2018. 38,400 full-time jobs and 32,800 part-time jobs were lost in November. (read more)
It is worth remembering that Canada does not allow competition in their media sector. The Canadian government considers the news media a protected “cultural industry”; and through a process of subsidizing broadcast all news media is essentially state run media.
Why is this important? Well, when the expressed priority of the government is controlling broadcast information if you are intellectually honest you should apply that same ideological outlook toward any information from the government in a general sense.
The Canadian election was held on October 21st, 2019. The central control government of Justin Trudeau would likely hold-back any negative economic information in an effort to support the ideology of the central government and maintain public opinion in advance of the voting. However, with the election over the economic books need to be reconciled.
I strongly suspect the Canadian November jobs report encompasses some of that state run reconciliation effort. Meaning the Canadian economy was in much worse shape in the months leading up to the election than state media were broadcasting. The reality is now catching up….
Secondly, it was obvious in July of this year that Speaker Nancy Pelosi and Justin Trudeau entered into an agreement of mutual benefit. Trudeau would hold back submission of the USMCA for parliamentary ratification, and left-wing political ideologues in the U.S. would help Trudeau win re-election.
At the time CTH forewarned of what this type of political arrangement really meant.
In essence Prime Minister Justin Trudeau was willing to compromise the health of his own economy for stunningly political reasons. There was a perfect storm of negative economic dynamics clearly visible on the horizon…. but few were paying attention.
In combination with leftist economic policies on energy development that strangles economic growth through excessive regulation, the leftist government of Trudeau has dismantled the natural underpinnings of a market-based economy. The manufacturing base of Canada is compromised, perhaps to the point of no return.
For two decades liberal (left-wing) Canadian policy essentially transformed their economic model from manufacturing to “assembly“. The goods-based production within the Canadian economy was structured to take advantage of the NAFTA loophole.
Goods production in Canada was reduced from full manufacturing to a process of assembling parts brought in from overseas and then selling them into the U.S. market. This process exploited the NAFTA loophole allowing foreign companies to ship parts to Canada and then assemble for transport into the U.S. without tariffs.
Over time the Canadian economy became more and more dependent on this system of brokering goods, while Canada simultaneously dismantled their heavy industry at the request of extreme environmentalists.
The Canadian assembly system for durable goods was always at risk of the NAFTA loophole being closed. When President Trump renegotiated the USMCA, primarily with Mexico, the loophole was closed. The USMCA rules on origination now require the parts to come from inside the North American manufacturing system.
Importing parts from Asia and simply assembling them in Canada is no longer permitted under the USMCA agreement. The majority of the parts -which require heavy industry to produce- must originate from North America. Canada has little capacity to take advantage of this economic opportunity because they dismantled their heavy industry.
As a consequence, if any multinational company wanting to invest in a manufacturing system, that avoids tariffs, to bring their end product to the massive U.S. market… well, Canada is no longer a viable option for that investment.
The multinational banks and investment groups who fund corporate manufacturing investment; and who are now no longer willing to underwrite Asian investment due to the impact of Trump tariffs; are focusing on where that investment can support the economic activity.
As with this latest report, when we see: “Canada’s goods-producing industries saw a decline of 26,600 net jobs, largely on manufacturing” leading the headline, this is a direct consequence of the economic dynamic identified above.
Elections have consequences; and those economic consequences are extraordinarily impactful in the era when U.S. President Trump is dismantling global supply chains; focusing on bringing high-wage manufacturing industry back to the U.S; and driving a process of profound consequence through economic nationalism.
“Economic Security is National Security” ~ President Trump
Armstrong Economics Blog/Socrates
Re-Posted Dec 4, 2019 by Martin Armstrong
QUESTION: Marty; A friend of mine is an analyst at one of the major banks in New York. He said they are not allowed to forecast some things as you said. He used to work for a European bank and did say it was much worse. He said everyone who is anyone reads you. He also said that none of the mainstream media will ever report on Socrates because you will put all analysis out of business. Is this why you intend to go public?
Thanks so much for your insight in creating Socrates.
ANSWER: Mainstream press in the USA has never been interested in really covering our analysis. They are not interested in reporting that a computer can actually write reports and forecast the entire world. You have to understand, we remain the best-kept secret. Even when Nigel Farage was our guest speaker in Rome, he said he had to come after we forecast BREXIT. Now, not a single British newspaper ever reported our forecast before or after. Nonetheless, those in power and in strategic institutions and corporations, all know what our forecasts were. So it is an interesting paradox. We are the best-read, but the most under-reported.
Nobody wants to report there is a computer that forecasts the world for it at the same time exposes the true trend of the economy and all the interconnections, including climate change. In the summer when the Inverted Yield Curve was taking place, all the newspapers were forecasting Trump would lose because the economy was headed into a recession. That was their typical biased war against Trump. Our model showed there would be a moderate decline in the expansion into the ECM for January, but that we did not see a major correction or a major recession.
These types of forecasts are not luck nor are they based upon what “I think” for we are all human and thus we are subject to making mistakes. We need a dispassionate analysis of a computer to provide an objective outlook. People keep trying to compete with me personally which is often quite funny to me.
Socrates will only be recognized when (1) we go public, and (2) after my death. That is just how things work. Even in the Bible, Jesus said that a prophet has no honor or is recognized in his own country’ (John 4:44). That is the way it has ALWAYS been in every field. Not exactly sure why it is that way. It just is! I have always been covered more by the press outside the USA than inside.
Armstrong Economic Blog/Euro €
Re-Posted Dec 4, 2019 by Martin Armstrong
QUESTION: Dear Mr Armstrong,
When will the Euro begin the final drop against the USD?
My second question is property in Italy seems to be rising. Is this what you referred to a currency inflation?
ANSWER: The decline in the euro since 2008 has been steady, but gradual to some extent. The EU government has been warning banks not to accept short positions and they have done their best to try to hold the currency. The final blow comes ONLY when the general public realizes that there is a problem with all central banks. They cannot support the economy while the fiscal side makes no effort at reform. That is more likely in the 2021-2022 time period.
As far as property in Italy is concerned, Italians have a cultural attachment to property. Many have more than one place. They have traditionally sought to park money in property because the Italian lira was in a perpetual decline.
Pension funds on a global scale will become a major crisis. Japan has the worst aging population. However, the same problem exists in Europe and America. This is a long-term issue rather than instantly, right now
Armstrong Economics Blog/Germany
Re-Posted Dec 4, 2019 by Martin Armstrong
It can not be said enough: thank you for everything that you do.
I have a question that has been bothering me for some time now. I haven’t had the time to compose it until now.
You often talk of the fact that Hitler was elected with only 30% of the vote, and was allowed to propagate because of it. This changed the face of Europe and the world.
Was this the same for Merkel? Was she allowed, with only 30% of the vote, to open the borders and so change the face of Europe for decades to come?
If so, then Germany, with all its preoccupation about hyperinflation, has misread history and so should have focused on electoral reform rather than austerity.
Thanks, from a dedicated daily reader,
ANSWER: Yes, political reform in Germany is really essential. At the very least, it should adopt the French system where the first round of voting reduces the multi-party factions to two. Then the people have to vote between them. In the case of Germany, they form governments from groups to form coalitions. This means there must be compromises in what the people voted for. It is wrong that those compromises are then decided by politicians rather than the people. The next result, someone with only 30% can change the face of Germany and Europe
Re-Posted Nov 18, 2019 by Martin Armstrong
Following the recent State elections in Saxony, Brandenburg and Thuringia which reflected voter disillusionment and discontent with the CDU and SPD how do you view the German political scene to the 2021 Federal election?
REPLY: Bavaria came into existence in 1806 when Napoleon abolished the Holy Roman Empire. It was at this time that Bavaria’s land area was greatly expanded. Our cyclical model on Bavaria suggests that it will separate from northern Germany by 2030. This will be inspired by the austerity policies that have devastated the local economy. However, this will only be augmented by the difference in religion between Protestant v Catholic. That was also a factor in why Bavaria joined with Austria, which was also Catholic, in the Austro-Prussian War that resulted in Bavaria’s defeat in 1866. Bavaria had to cede several Lower Franconian districts to Prussia.
The Bavarian conservative party, the CSU, lost its absolute majority once the Economic Confidence Model turned in 2017 during the subsequent election in 2018. Meanwhile, the Greens emerged as the second-largest political force in southern Germany. Additionally, the Eurozone sovereign debt crisis is impacting the municipal level and the austerity policies imposed by the north continue to brew civil discontent. The loss of the CSU in Germany undermined the survivability of Merkel which instigated her demise.
The civil unrest will turn upward sharply when this current wave concludes 2021.32. The eventual separation of Germany will most likely unfold by 2030 at the earliest.
Armstrong Economics Blog/BRITAIN
Re-Posted Nov 15, 2019 by Martin Armstrong
QUESTION: I know you were rather close to Sir Alan and Prime Minister Thatcher. I also know you are close to a number of politicians here in Britain. I was at your Edinburgh conference where they introduced you as a seventh-generation Edinburgh Scotsman I found very interesting rather than an American. You are famous here in political circles for many forecasts with the latest being the BREXIT victory. Do you have any insight into the December election? It is getting crazy here with two former Labour MPs declaring that they planned to vote for the Conservative Party because they said Labour’s leader, Jeremy Corbyn, was unfit to be prime minister. Then Tom Watson quit because of Corbyn’s policies over Brexit and his anti-Semitism. But the Conservatives seem to be less reliable as well. I think Nigel Farage may surprise a lot of people in this election. What does Socrates say?
ANSWER: That is an interesting question. It is hard to map because of such a diverse breakdown in the “other” category. There is no question that Nigel’s party came out on top in the EU general elections. As we can see from the chart at the top, both Labour and the Conservatives are declining and there is a rise in both the Liberal Dems and “other” against the establishment so to speak. This is part of the global trend many outside the USA call the Trump Revolution. They are not referring to something that Trump did himself. Instead, this is a global trend against established political parties everywhere.
My advice to Johnson would be to cut a deal with Nigel’s Brexit Party. There is a trend underway that is bigger than most suspect. I know Nigel has no designs on being Prime Minister. However, fate will determine the roll of the dice. Nigel may end up in a position he did not wish to be in.
We will try to refine the models to do a proper forecast. Keep in mind that the “other” category is due for a strong showing and this will most likely be Nigel’s party. Also keep in mind that his Brexit Party does not hold any seats in Parliament at this time. That will change.
Armstrong Economics Blog/South America
Re-Posted Nov 15, 2019 by Martin Armstrong
Our model has been accurately forecasting the rise in civil unrest against governmental corruption on a worldwide basis. In Bolivia, ex-President Morales has fled to exile in Mexico. Previously, he was overthrown by the military under the pretext of electoral fraud. The country is drifting into political chaos. Bolivia happens to be home to the state-owned lithium industry, which is critical to driving electrical power by the global warming crowd. Bolivia has had a history of revolutions since 1781. The previous was 1949.
Armstrong Economics Blog/BRITAIN
Re-Posted Nov 13, 2019 by Martin Armstrong
There is absolutely no question that Jeremy Corbyn and the Labour Party poses a greatest threat to Britain than Brexit. Corbyn said, “Nurses, teachers, shop workers, builders, just about everyone is finding it harder to get by, while Morgan Stanley’s CEO paid himself £21.5m last year and UK banks paid out £15bn in bonuses.” What he fails to consider is that the solution is not to raise taxes on CEOs, the solution is to reduce government. Even if they seized 100% of CEO salaries, it would not pay the expenses for a single day. But they love to point to some individual rich person and make it sound like all will be well if they just seize his money.
Socialism is dead. Before income taxes pre-World War II, the wife could stay home and raise the children. Today, that is not a possibility for most people. It takes two salaries to pay for the very same living standard pre-World War II. The more government pretends to do something, the greater the cost of government becomes. Every time they introduce some new tax, they hire more people and create more regulations for that specific tax. It is simply an endless process where now about 40% of the civil workforce is dependent upon government, which means they do not produce anything that contributes to the GDP of a nation.
Corbyn has boasted that the Labour Party is a threat to the rich. All he will do is send a massive migration from Britain. We have already been getting questions about moving companies and their domicile to the USA, as has been taking place even with major public companies in Canada