Tag Archives: Hunt for Taxes

Sep 6 2017

The Insanity in Korea – But Is it Logical?


Armstrong Economics Blog/North Korea

Re-Posted Sep 6, 2017 by Martin Armstrong

The South China Post reported that Chinese scientists fear that a mountain in North Korea under which the last five bombs detonated as tests, may collapse crumbling into a crater. They fear that the radiation underground would then leak across region.

Russian President Vladimir Putin has warned that the escalating crisis concerning North Korea’s weapons program is placing the world at risk of developing into a “global catastrophe” with massive casualties. Putin has UNREALISTICALLY said that the only way to resolve the crisis was through diplomacy. For that to be even a possibility, it requires talking. Kim Jong Un has not even met with the leader of China – its once closet Allies.

Let’s put this is perspective. Why is Kim pushing the world to the brink? Kim Jong Un looks at this differently He believes that the survival of his regime depends on possessing nuclear weapons. He is most likely NOT interested in starting a nuclear war for he cannot be so stupid to believe he would win. Yet, Kim also realizes that the prospect of the USA sending a nuke to North Korea is also not likely for that would antagonize China and risk pollution drifting to South Korea and Japan, not to mention China. So with all the saber rattling, Kim is not stupid and realizes that the USA cannot launch a first strike.

Now, why is the goal of Kim? To be honest, Kim Jong Un does not trust the USA for from the outsider perspective, he has watched how American intervention in Iraq ended in the overthrow of Saddam Hussein, his execution as well as family members, and left the country ravaged by war and a puppet of Washington. Obviously, Kim has made the determination that had Saddam truly possessed nuclear power then the USA would never have intervened. This logic is understandable for it creates the stalemate between USA, China, and Russia. The USA invading Iraq, Afghanistan, and Syria with the objective of regime change creates the image that one must protect themselves and this is Kim’s perspective.

Sanctions will never work because Kim would starve his people before giving up his power. Also, as long as he appears to be strong, then there is little risk of an internal coup. If he backs down and appears weak, the prospect of being overthrown becomes probable from within.

Sep 6 2017

The Rising Tone of Private Equity v Public


Armstrong Economics Blog/Stock Indicies

RE-Posted Sep 6, 2017 by Martin Armstrong

QUESTION: Dear Martin,

With the U.S. stock market hits all-time highs, some sources say a lot of smart money is pulling out of the stock market and piling into private equity. One of the reasons being increased regulation making many companies choose to avoid the hassle to go public and stay private.
The thing is, very few small investors have access to private equity. Could the remainder of the Private Wave develop in private equity rather than in stocks?
Thanks for all the advise,
ANSWER: There is a major thrust toward private equity. We have been getting serious offers to come in now asking to hold off on going public. The amount of money in cash looking to go someplace is really staggering to put it mildly. If it were just a question of money, yes it would be tempting. But personally it would require a good fit – not simply money.
With all the buy-backs over the years, there is also a growing shortage of stock. This is one reason why the market has a lot more to go on the upside broader-term, with the near-term correction put aside.
There is no question that we suffer from serious over-regulation and if we were to go public it will be in Asia – not the USA. From a personal perspective, I see where you are coming from. Even the Hollywood movie seems to be a vehicle that is best to open up to investors to finance and many people want to join in for the profits and tax-credits.
Things are changing, indeed. Private equity is rising. Even a friend just sold his small business to a public company who sought to raise funds for the purchase and they were shocked to receive 3 times what they sought to raise in offers. It clearly seems that those who are first get in.
Sep 6 2017

Opening the Door to September


Armstrong Economics Blog/Basic Concepts

Re-Posted Sep 6, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; I have followed you for many years. I have to say, I am truly amazed at what your computer projects. You have never missed a move yet. Here we have the rally in gold into September, yet the August high stands in the market, and even Korea went nuts on your target date and your next target for the 11th concerning Korea I do not want to think what is going on.

I understand you say you never pursued this research based upon a preconclusion but bumped into this in the middle of the night. My question is this. Do you think what you have discovered is somehow a mysterious force that just compels things to happen on target? It’s hard for me to put into words. Do you have any idea why all these things happen when you forecast they will happen?

Definitely see you in Orlando.

PH

ANSWER: I get this question a lot. I really do not know what is the answer. We clearly respond to events the same today as humans did in Roman times. Politicians never change and are always greedy and will exploit the people. If this was not true, then we should all be speaking Babylonian.

I can see that is you do X then Y will always follow. But this is some strange complexity that is far beyond what people are willing to expect. The government simply said I manipulated the world economy. Now that’s really nuts. All I have done is comprehend the inter-connectivity and mapped it out with TIME.

There is a very interesting regularity to everything and it is truly predictable. Yet the majority still prefer to blame me (messenger) rather than stop and explore that there is a mysterious order of complexity far beyond comprehension. The consequence of that (Invisible Hand) runs contrary to politicians who try to manipulate society in the spirit of Karl Marx. So if I am right, that means a politicians can not keep their promises for they cannot control the world economy.

Sep 5 2017

Bigly


Re-Posted from The Conservative Tree House on September 4, 2017 by

Bigly

Sep 5 2017

Looming Economic Sanctions Split China and Russia From U.N. Approach – Geopolitical Economic Warfare Increasingly Likely…


Re-Posted from The Conservative Tree House on September 4, 2017 by

As you might remember, in response to a thermonuclear atomic weapons test by North Korea Treasury Secretary Steven Mnuchin is now in the process of writing additional sanctions he will guide into the hands of U.N. Ambassador Nikki Haley.

Ambassador Haley will then create a U.N. Security Council resolution containing further economic sanctions toward North Korea using treasury department guidance.

However, as a direct result of the escalation from the DPRK, we can easily predict the final draft will not just target North Korea, but will more substantively target North Korea’s economic enablers.

This is where things get super interesting because all prior U.N. action has built upon itself to these specific ‘enabler’ state sanctions.

Through two rounds of Security Council resolutions both China and Russia have supported the economic sanctions, knowing they would use various workarounds to continue their duplicity.  However, now those sanctions become a risk to the economies of China and Russia because Secretary Mnuchin is likely to use the weight of the dollar in trade contracts as the trigger for sanctions against China and Russia.

Here’s where the real fun begins.

There’s no way China is going to stop supporting their proxy province, North Korea.  The entire Beijing approach (to fighting Trump’s economic battle against them) has been through the use of Kim Jong-un to try and gain some economic leverage.

As a consequence there’s no way China will support sanctions against DPRK enablers; that would essentially be against Beijing itself.

So now, with sanctions anticipated to target the enablers, China must break away from supporting the Security Council; but they can’t break away freely without running the risk of dropping the panda mask.  So they need Russia to keep up pretenses on their behalf.

New York – The United States on Monday flatly rejected a proposal from China and Russia on how to lower tensions on the Korean Peninsula, which is likely to make it difficult for the United Nations Security Council to agree on a response to North Korea’s hydrogen bomb test over the weekend.

U.S. Ambassador to the U.N. Nikki Haley said the U.S. would be circulating a proposed resolution on North Korea this week, and would push for a vote next week.

While it’s not clear what that language will say, both China and Russia made it clear they were unlikely to support more sanctions, and instead played up their joint call for North Korea to stop its military aggression in return for both South Korea and the U.S. to stop their military exercises.

Haley called that idea “insulting.”

“The idea that some have suggested, a so-called freeze for freeze, is insulting,” she said. “When a rogue regime has a nuclear weapon, and an ICBM pointed at you, you do not take steps to lower your guard. No one would do that. We certainly won’t.”

Instead, she hinted at the idea of tough sanctions that would be imposed on any country that does any business with North Korea.

But after she spoke, both Russia and China made it clear they don’t like that idea. (read more)

“Halp”

Communist Beijing has boxed themselves into this inescapable cycle.  The reason they keep authorizing Kim Jong-un to take action is simply because China has no alternative leverage to use against President Trump.  China has nothing in their economic arsenal they can use to hit back against President Trump, so Beijing keeps using North Korea in an attempt to create leverage.

However, President Trump doesn’t play along with the bluff, he knows every card China is holding. Trump knows China has no substantive economic leverage against the U.S., and Trump also knows China has boxed themselves into this cycle.  It’s a ridiculous three step process.

¹China tells DPRK to do stupid thing.  ²DPRK does stupid thing.  ³Trump hits China with economic punishment for stupid thing.

This cycle has been ongoing for months now, yet the media apparently doesn’t notice it. Each time Kim Jong-un does a stupid, Donald Trump slaps Xi Jinping.

The reason this Trump economic approach is so effective is because there’s an endless supply of economic things President Trump can do to punish China (closer economic ties and better trade deals w/ India; removal of China’s MFN trade status; recognition of Taiwan; increased economic relations with ASEAN, etc.), and yet virtually nothing China can do economically in return.

Communist China’s geopolitical economic relationship with the U.S. can be replaced with Democratic India and/or a host of ASEAN allies (S-Korea, Japan, etc.)

Remember, China is seeking conquest through economic power. China must be confronted economically. China must be defeated economically. The moment China sees economic defeat, it will act differently. China will call for six party talks.

President Trump can play out this action/response dynamic as long as it takes to reach economic victory. There is no substantive downside in the economic battle for the U.S.

Beijing is referencing what has worked for them in the past without realizing they are not up against the same adversary. The resulting economic damage in this cycle hurts China more each time by weakening Beijing’s economy.

Sep 5 2017

EU Refuses to Honor Solidarity to Share Expenses of Refugees


Armstrong Economics Blog/European Union

Re-Posted Sep 5, 2017 by Martin Armstrong

The EU has been dictating to the member states but has failed to shoulder common costs for the refugee crisis they did not create. The EU denied Italy to subtract the cost of feeding refugees from their budget restrictions imposed by the EU. Now the Hungarian Prime Minister Viktor Orban called for a payment of €400 million for the Hungarian border fence. What is clear is that “European solidarity” is a one-way street. Everyone must do as the EU commands and pay up to support Brussels, but Brussels will not share the costs of the crisis they have created. This is tearing the “solidarity” apart because it is clearly a one-way arrangement.

Sep 5 2017

The Crash & No Bid


Armstrong Economics Blog/Uncategorized

Re-Posted Sep 5, 2017 by Martin Armstrong

QUESTION: Hey Marty,

Love your blog and the insight you have given all your readers. However I am wondering that when you say the markets are going to become more volatile – how does that effect the trigger that sets off the dominoes ??
what i mean is, if the economy around the world hits rough water; what is the rogue wave that sinks the ship? is it a quantity/ volume of capital money that shifts, or is it a short circuit due to political turmoil?
I read that the whole 2008 “crash” was triggered by 500 billion dollars, which is minuscule amount of the total USA GDP. But i have also read from your blog that Germany has 5X its GDP in synthetics on the book !
*IF the markets are more volatile, does that mean there is LESS threshold due to a minor tremor in the gov or markets?
your insight on how volatility increases with regards the tipping point, and WHY the tipping point may happen would be of great interest.
N From Canadaor
ANSWER: Markets crash when the majority are long and anything can spook them because there is a lack of new buyers coming in to carry the market higher. Some longs try to sell and they find a lack of bids. The crash comes when you hit the no bid and market-makers withdraw. That is the sharp increase in price volatility that is different from volume volatility. With price volatility, there need not be major volume – just a gap and a lack of bids. The event need not even be real – just a rumor.
The panic unfolds because of price movements rather than volume. When large gaps appear WITHOUT supporting news, even professionals sell because they cannot make a decision in a vacuum.
Sep 5 2017

Wyoming’s Money Grab Against VW Dismissed


Armstrong Economics Blog/Germany

Re-Posted Sep 5, 2017 by Martin Armstrong

A Federal Judge Breyer ruled against Wyoming and in favor of Volkswagen (VW) dismissing the claim that because of VW’s manipulation of diesel emissions, they caused environmental damage and should pay damages to the State in addition to individual car owners. Judge Breyer stated that despite the fact that VW was indeed responsible for manipulation. However, since these were carried out during the production of the diesel cars, the Congress had decided that the EPA, rather than the individual federal states, was in the best position to deal with damage regulations.

VW had agreed with Wyoming and most other states in the controversy about claims from buyers. What this suit was focused on getting fines in the billions of dollars from the company based upon alleged environmental damage. This was clearly a political decision because if Wyoming was allowed to proceed, every state and local country would jump on the free lunch and claim they too are entitle to damages that could never be proven since the air is not stagnant over any single State or county.

VW had already agreed to pay $2.9 billion as punishment for the increased pollution caused by its diesel cars. The company had committed $25 billion to meet claims from buyers, dealers, environmental authorities and federal states. In addition, the company has offered to repurchase half a million diesel vehicles. If every single jurisdiction then sued VW, they company would go into bankruptcy.

Sep 4 2017

Report: Trump Will End DACA Tuesday With 6 Month Delayed Deportation Enforcement Window For Congressional Action…


Re-Posted from The Conservative Tree House on September 3, 2017 by

Generally speaking, anticipatory media reports can often be subject to incorrect assumptions and false conclusions.  However, a Politico report on the outline of President Trump eliminating the DACA program passes the general sniff test of a process likely to be consistent with the actual outcome.

Encapsulated, the report states President Trump will announce the end to the Deferred Action on Childhood Arrivals on Tuesday, but will delay implementation of the enforcement therein for a period of six months allowing congress to debate legislative action prior to DACA designee’s receiving deportation notices.

This tracks with what most people have anticipated because President Obama’s DACA executive action is similar in unlawful executive overreach as the courts, including the Supreme court, upheld in the prior DAPA ruling.  Any state that challenges Obama’s DACA program will likely win, and it’s impossible for President Trump’s DOJ to legally defend it.

The delayed enforcement aspect will allow voters the ability to begin primary challenges against congressional Republicans who are guaranteed to drop their masks and work earnestly to deliver UniParty legislative amnesty to illegal aliens.

WASHINGTON DC – […]  Conversations with Attorney General Jeff Sessions, who argued that Congress — rather than the executive branch — is responsible for writing immigration law, helped persuade the president to terminate the program, the two sources said, though White House aides caution that — as with everything in the Trump White House — nothing is set in stone until an official announcement has been made.

In a nod to reservations held by many lawmakers, the White House plans to delay the enforcement of the president’s decision for six months, giving Congress a window to act, according to one White House official. But a senior White House aide said that chief of staff John Kelly, who has been running the West Wing policy process on the issue, “thinks Congress should’ve gotten its act together a lot longer ago.”  (read more)

This Politico Report tracks with our previous discussions and outlines on the need for President Trump to show the American electorate the issues with the UniParty.

There is one political enterprise within Washington DC and national politics. There is only one enterprise. That enterprise is the UniParty. There is only one political party in Washington DC, with two internal caucuses – Republicans and Democrats.

The “Big Ugly” is the moment when President Trump decides to rip the masks off the remnants of the Republican wing of the UniParty within Washington DC.

In many ways the “Big Ugly” is the elimination of the Republican party, and the beginning of an era when a second party, a MAGA party, actually enters the blood stream of U.S. politics and stands against the UniParty.

The confrontation is inevitable. It has been inevitable since the entire GOPe apparatus, including every single GOPe candidate within the 2016 Republican primary, stood up against Donald J Trump. Candidate Donald Trump held an entirely different series of campaign platform issues the Republican apparatus abhors. That’s why he won, and they didn’t.

However, Since the 2016 victory, the UniParty has thrown everything they can in front of him to block any advancement of those policies and platform issues. Every political tool in the Republican armory has been deployed to eliminate the threat Trump represents. Reminder:

President Trump gave them a budget that reduces a trillion in spending; the republicans in congress balked. They openly said reducing spending is not their goal. Those same republicans are now suing President Trump and trying to force the State Department to spend on USAID and NGO’s. Those same republicans supported Omnibus spending bills. Those same republicans will not support removing ObamaCare. Those same republicans are fighting renegotiated trade deals. Those same republicans don’t support a border wall. Those same republicans supported launching ridiculous Russian conspiracy investigations; and the list goes on, including senate republicans using a strategic maneuver to block their own President from recess appointments during their summer recess…

This is the behavior of opposition, UniParty opposition. During the recent Arizona speech and MAGA rally, President Trump came closer than ever before to igniting the fuse on the Big Ugly.

Now, with President Obama’s unconstitutional DACA being eliminated, we see yet another example of masks falling. Many republicans will oppose the unlawful Obama DACA program being removed.  This reality only amplifies the signs the Big Ugly confrontation is needed more than ever.  It’s President Trump against a unified DC system.

Corporations (special interest groups) write laws. Lobbyists take the law and go find politician(s) to support it. Politicians get support from their peers using tenure and status etc. Eventually, if things go according to norm, the legislation gets a vote.

Within every step of the process there are expense account lunches, dinners, trips, venue tickets and a host of other customary way-points to generate/leverage a successful outcome.

But the important part to remember is that the origination of the entire system is EXTERNAL to congress.

Congress does not write laws or legislation, special interest groups do. Lobbyists are paid, some very well paid, to get politicians to go along with the need of the legislative group.

When you are voting for a Congressional Rep or a U.S. Senator you are not voting for a person who will write laws. Your rep only votes on legislation to approve or disapprove of constructs that are written by outside groups and sold to them through lobbyists who work for those outside groups.

While all of this is happening the same outside groups who write the laws are providing money for the campaigns of the politicians they need to pass them. This construct sets up the quid-pro-quo of influence, although much of it is fraught with plausible deniability.

This is the way legislation is created.

This is the reason why congress had ZERO legislation for President Trump’s platform. There is no entity within Washington DC, republicans or democrats, who support the Trump agenda. That’s why no legislation has advanced. President Trump’s entire patriotic perspective on MAGAnomics, national security, and focus on “America-First” as a priority is adverse to Washington DC’s decades-long political and financial interests.

There are dozens of “Amnesty Bills” and “Open Border” legislative constructs, created by special interest groups and supported by lobbyists, waiting for the UniParty to pick them up.  We will now enter a phase where those bills will be advanced.

The bank accounts of the lobbyists are bulging with cash to pay off congressional representatives, and they have the Citizens United decision to spend unlimited amounts of money in the 2018 election to protect the purchased congressional representatives from primary challenges.    The lobbyists have billions at their disposal to influence this process.

A confrontation to draw out this truth is needed. That confrontation is “The Big Ugly”. DACA is merely symptomatic as a potential trigger for the confrontation. The federal budget, trade-deals, non-military global intervention, corporate regulations, immigration enforcement, the border wall, financial bailouts etc. are all similar triggers.

Ever since Donald Trump entered into politics there is a key element he knows he needs to keep at the forefront to succeed against the UniParty. To continue succeeding Trump needs all of his adversaries, our adversaries, to drop their masks.

Donald Trump has done a remarkable job at drawing-out the enemy behind the wire. No-one would argue they hold the same perspectives on the Republican apparatus, and the GOPe punditry, they previously held prior to Businessman Trump becoming Politician Trump.

As both a candidate and a president Donald Trump has exposed a jaw-dropping number of political deceivers. He’s also single-handily exposed their hidden agenda(s), and proved beyond a shadow’s doubt that Republican’s were lying about policy and principle for years.

When President Trump speaks, he’s always highlighting these issues. He is also speaking on these issues, repeatedly, to draw out the hidden truth and create a larger awakening. It is really, really, important to see that Trump is always trying to engage that larger awakening.

This weekend he probed again. Judged the UniParty and media response to his visit to Houston. Sensing their attack position. Measuring the severity of the opposition. Always probing, always working on instinct. Always aware of the need for the larger awakening.

If, following his probes this weekend, President Trump does decide to eliminate the President Obama DACA program, yes it will clearly indicate the Big Ugly has begun. The reason is simply because of the predictable consequences.

With the elimination of DACA, the Republicans will threaten funding for border enforcement and the border wall.  The Republicans will demand immigration amnesty. The Republicans will openly threaten every principle of ‘America First’ trade renegotiation as leverage to fight back against President Trump.  The Republicans will also hold the debt ceiling as hostage and fight Trump’s budget cuts.  The Republicans will be willing to join with Democrats and force a presidential shut-down of government, etc. the list of unity enterprises within the UniParty is longer than you can imagine.

Within all of that action the Republicans will be fully unmasked; and with that unmasking the U.S. electorate will see that President Trump’s opposition is a UniParty of Paul Ryan joining with Nancy Pelosi, and Mitch McConnell joining with Chuck Schumer, and both Democrats and Republicans united against President Trump.

Just like it was during the 2016 GOP primary and general election, for the UniParty it becomes a zero-sum game.  Destroy Trump and the existential threat he represents; or their very livelihood is at risk.

President Trump will, yet again, be one man against an entire well-financed and corrupt political apparatus with only deplorable voters on his side.

Sep 4 2017

Gold – Oil – Dollar


Armstrong Economics Blog/Energy

Re-Posted Sep 4, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; At the cocktail party in Hong Kong I am the one who asked you how China should proceed to make the yuan a reserve currency. You said the rule of law must first protect property and surprisingly you said to issue commodity contracts redeemable in gold. Well, everyone knows whatever you seem to advise China does and very fast. The news is they will now do exactly that. Start a oil contract redeemable in gold. Can you explain why you took this position? You were surrounded at that moment and did not explain in detail why oil should be redeemable in gold.

DK

ANSWER: It was not based upon the rise or fall of gold. The objective is to establish the yuan as a reserve currency until we reach the Monetary Crisis Cycle conclusion. The logical step is to try to boost the yuan as a redeemable reserve currency with stability. You either PEG it to the dollar (unwise for political reasons) or you “LINK” it to gold – but do not PEG it to gold. If you attempt to PEG the yuan to gold, that would fail for you are making the same mistake as Bretton Woods. The only possible way is to “LINK”  it to gold but on a floating exchange rate. That way you are encouraging confidence in the yuan allowing it to be redeemed on a floating basis with gold. Hence, the political risk of the currency is reduced for it could become possible that the currency system breaks apart and politically currencies could be politically frozen and nonredeemable.

This is a long-term structural reform. Do not expect it to be a real game-changer just yet. There will be hype, of course, but we are looking at structural reforms that will take some time. Naturally the hype will claim this is the end of the “petro dollar” for they will use any excuse to call the dollar down. They do not understand that ONLY a rising dollar will break the world monetary system. A lower dollar will buy everyone a lot more time because most foreign borrowing is in dollars. They also are living in the past. The USA is not a net exporter – its a net importer.