Armstrong Economics Blog/Interest Rates
Re-Posted Jun 28, 2019 by Martin Armstrong
Austria was able to sell its second 100-year bond in history at just a yield of just over 1.00%. Some argue that capital has been forced to buy anything that has a yield which the ECB has been forcing negative interest rates. Why would anyone in their right mind buy a 100-year bond for 1%? The buyers appear to be pension funds who MUST own government debt as a matter of law.
Austria launched the sale of a 100-year bond on Tuesday after overwhelming investor interest gave its debt officials confidence it could become the first Eurozone country to sell a “century” bond publicly through a group of banks. There has been no paper on this part of the yield curve. Because of comments by Draghi, it is also expected that positive yielding paper will vanish in the Eurozone. As it stands, it will take investors 44 years to recoup their original capital. That will surely be a huge loss.
Austria is planning to sell the bonds via syndication to help access a wider base of investors. The banks involved are Bank of America Merrill Lynch, Erste Group, Goldman Sachs, NatWest Markets and Societe Generale. There is a serious problem brewing where as a matter of law pension fund must buy government paper and at low rates, the pension funds face massive failures going into the next 6 years.
Income or Privilege Tax?
Armstrong Economics Blog/The Hunt for Taxes
Re-Posted Jun 28, 2019 by Martin Armstrong
QUESTION:
Hi Marty,
Mini AOC sure is funny isn’t she?
Here is a tax story for you. I’m considering a summer sublet in Sedona AZ, and while I tried to sell all my CA property by the end of last year – well long story short I am still a landlord out here. So I was curious, what is it like to be a landlord in AZ these days in comparison? So I just did a search on it expecting well – nothing much. Shocker!
Guess what? AZ has a “privilege tax” – what is that privilege you say?
Well it is the privilege of doing business in Arizona! ta da!
Excerpt from Article Below:
Arizona transaction privilege tax is a tax on the privilege of doing business in Arizona. TPT applies when an owner of Arizona rental real estate is engaged in business under the residential rental classification by the Model City Tax Code.
If you rent Arizona residential real estate all payments made by the tenant or on behalf of the landlord are taxable.
Happy (Florida) Weekend,
A
ANSWER: Florida tends to be better for there are enough retired people here to keep the school taxes down and they present a stiff level of resistance to taxes. Believe it or not, I was shocked to see my property taxes go down. They are indexed to property values. However, there is a sales tax on rentals, not income taxes. This is a classic example. When you buy insurance it is typically named for the risk (fire, burglary, flood, etc.). However, when you buy death insurance, they called it “life insurance,” because no one is ready to buy death insurance. Here you have an income tax by just calling it a “privilege tax.” There are others who impose an occupation tax. That is a fixed tax depending upon your job to get around income taxes.
Portugal’s Miracle?
Armstrong Economics Blog/Economics
Re-Posted Jun 27, 2019 by Martin Armstrong
The Portuguese economy was bailed out by the European Union eight years ago. It is now booming, also in part for its aggressive attraction of courting foreign investors. If you want to live in Portugal long-term or permanently, you will need to apply for Portuguese citizenship or Portuguese permanent residency. Portuguese permanent residency is available after five years of residence, while Portuguese citizenship is available after six years, or three years if claiming Portuguese citizenship by marriage. Both Portuguese citizenship and permanent residency allows you to remain in Portugal indefinitely and access similar benefits, although there are some differences between the two. While residents can stay in Portugal indefinitely by continually renewing their permanent residency, there are certain added Portuguese citizenship benefits to entice foreigners to take on the Portuguese citizenship application process.
This movement has been a major factor behind Portugal enjoying its highest economic growth in nearly two decades, with the major trend fueled by record tourism, an upswing in the housing market from foreign investors, a growing tech sector, and strong exports. Private investment has returned to 2009 levels, helped by foreign investors including Chinese companies who have focused on Portugal.
But for every glitzy new hotel and fancy restaurant in Lisbon, there is growing concern that the infrastructure is aging. This was illustrated by the locomotive that fell apart in late February, which was rented from Spain as a stopgap measure. There has been a lack of public investment which is beginning to become obvious. Its total debt is close to 120% GDP, which is one of Europe’s highest. The ruling socialists have limited room to finance their dreams under the EU rules and at the current artificially low interest rates maintained by the ECB. The budget deficit of the 2010 era of 11% of GDP has been reduced by attracting foreign capital and cutting spending on public infrastructure. The problem that Portugal faces is that its success of late has been constructed on the immediate results, not long-term.
Universal Basic Income & Gaming the System
Armstrong Economics Blog/Opinion
Re-Posted Jun 27, 2019 by Martin Armstrong
COMMENT: I was just reading your post, Universal Basic Income, and I feel the need to respond. I have always worked, always found whatever work I could. I have worked on market stalls and also on installation of Active Directory in a government institution. I managed to graduate with honours from uni. I am now retirement age. I brought my children up single handed and have never had any wealth but I have to point out that people who are living in poverty don’t automatically become criminal. There’s so much talk about playing the system, but we have to ask why so many people need support. It’s because industry has disappeared and we have developed a class system where the difference between haves and have nots has widened. I live in UK and it’s an industrial wasteland, we had jobs to go around not all that long ago but now there are none for the majority, except in self-policing call centres. It isn’t due to population increase alone, there is nothing for us. Closing the pits was a mistake. There’s no significant increase of carbon and when it becomes Cold which it will in a few years, we’ll be scratching for surface coal to cook and be warm, trees will be decimated. We import things that we used to make, steel, textiles etc, and we gave away our ship building and our fishing waters. Governments are using surveillance to protect themselves from our scrutiny of them, and putting the blame on the people for everything they have done wrong. I know this is simplistic but this is my perspective.
K
REPLY: I place most of the blame on Socialism. The unions became greedy and abused their power. New York City was once the major port. They chased all the shipping out to other ports who were more competitive. Today, no ships go to New York City. Then add the greed of politicians. Before World War II, yes the woman stayed home and raised the kids and managed the house. I knew European men who married Eastern European girls when the wall came down and they retained those old values and did not understand they were expected to go out and work. Taxes kept increasing so today, women lost the right to stay home and raise the kids. It now takes TWO incomes to do what one used to do prewar. In Europe, you pay unbelievable taxes not just on income, then 20% VAT on average. Taxes lower the standard of living for you will NEVER get your money’s worth in service in return.
As they say, the road to hell is paved with good intentions. If you create a network with social services, there will ALWAYS be people who game the system. Prisons have plenty of doctors for Medicare fraud in the USA submitting bills for people that did not exist.
Julius Caesar also confronted the abuse of welfare rolls in ancient Rome. He conducted a census and found that out of 320,000 pretend people getting free bread, only 150,000 were real.
“Caesar changed the old method of registering voters: he made
the City landlords help him to complete the list, street by street,
and reduced from 320,000 to 150,00 the number of
householders who might draw free grain. To do away with the
nuisance of having to summon everyone for enrolment
periodically, he made the praetors keep their register up to date
by replacing the names of the dead men with those of others
not yet listed.”
(Suetonius, The Twelve Caesars, Julius Caesar 41,3)
(Penguin Classics ed., translation by Robert Graves)
Therefore, people have been gaming the system for thousands of years. It is just part of human nature.
How the World Economy Works without Government
Armstrong Economics Blog/Economics
Re-Posted Jun 27, 2019 by Martin Armstrong
Rise in the Euro – Interesting Times Ahead
Armstrong Economics Blog/Central Banks
Re-Posted Jun 26, 2019 by Martin Armstrong
QUESTION:
Myths v Reality – Milton Friedman
Armstrong Economics Blog/Economics
Re-Posted Jun 26, 2019 by Martin Armstrong
Universal Basic Income
Armstrong Economics Blog/Economics
Re-Posted Jun 25, 2019 by Martin Armstrong
The idea of some Universal Basic Income has been around for a long time. Here is Milton Friedman on his proposal of a Negative Income Tax. There will always be welfare for there are people who cannot work for some disability and others who prefer not to work and game the system. Even programs where the state directly pays for the food rather than food stamps or restricts the food stamps to certain products, the ingenuity of some people cannot be underestimated. They will sell the products they get for cash. There are signs on the streets buying needles and strips from people who are diabetic and get them for free from the state. There are instances where a woman has a child and tells the state she has no idea who the father is yet a night he shows up and leaves when a case worker is due to arrive. These are abuses of the system that no matter what we try to do, there will be people who figure out how to work the system. So there will NEVER be 100% compliance no matter what system we devise.
The Dollar Decline
Armstrong Economics Blog/USD $
Re-Posted Jun 24, 2019 by Martin Armstrong
The Fed meeting this week has triggered a turn in the dollar as US rates dipped on the 10-year to their lowest since Trump took office. As a result, the greenback is the weakest among the majors for the week thus far as we should expect for a decline near-term. Although there has been an impressive rally in EUR/USD, that currency has significant overhead resistance. The euro has not gained nearly as much as its major counterparts such as the Swiss and the C$.
While everyone will focus on interest rates, at the end of the summer we will see a refocus back on the structural problems in the Euro. Trump will be jumping for joy with a lower dollar for that will help in trade issues. The lower interest rates will also help to reduce interest expenditures on the national debt. So once again, we are looking at the calm before the storm.
Manipulating the World Economy will be also available in Russian, German, and Chinese
Armstrong Economics Blog/Products and Services
Re-Posted Jun 23, 2019 by Martin Armstrong
We are looking at having it Translated into several languages. We hope this English version will be available by October in hardbound. I really hope this will help change the debate for what lies at stake is the future for us, but more so our posterity.
Russian
манипулируя мировой экономикой
German
Manipulation der Weltwirtschaft
Chinese
操縱世界經濟
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