Armstrong Economics Blog/BRITAIN
Re-Posted Feb 23, 2018 by Martin Armstrong
From January 31st, 2018, the UK authorities have a new power. They can now use new and expansive investigative authority to require both individuals and corporate bodies to provide information as to how they acquired property. Known as Unexplained Wealth Orders (“UWOs”), which is another step toward tyranny all because governments are totally incapable of managing their own finances. They line their own pockets with promises of pensions for government workers and when they need to be paid their attitude is simply that the people are like an apple orchard – just go pick some more apples when you get hungry.
The new UWO imposes obligations to disclose information with respect to property anywhere in the world and can even be served on persons living outside the UK. Britain is taking a step closer toward imposing worldwide taxation for it is now requiring even non-resident to divulge information that historically was not taxable. The legal framework behind UWOs, and their interaction with other criminal and civil statutes, as well as the implications for individuals, institutions, and trustees are serious issues.
What has taken place is rather stark and we can expect that other countries will file Britain’s lead. This new law has turned the entire legal system on its head. We have always believed that we were supposed to be innocent until proven guilty. That has been completely eradicated from the law. The UWOs now presume guilty and it becomes your burden to prove you are innocent.
The Legal background
Sections 1 to 9 of the Criminal Finances Act 2017 (“CFA”) have now amended section 362 of the Proceeds of Crime Act 2002 (“POCA”), This has created a whole new regime of UWOs. As of January 31st, 2018, several of the UK authorities have new powers including the National Crime Agency, Serious Fraud Office, Financial Conduct Authority and HM Revenue & Customs. All of these agencies are now able to require both individuals and corporate bodies to explain how they obtained an interest in a specified property.
The Court may now also engage in a UWO requirement where the following four conditions are satisfied:
Condition 1: There are reasonable grounds to believe that the person holds the asset(s).
Condition 2: There are reasonable grounds to believe that the cumulative value of the asset(s) is greater than £50,000.
Condition 3: There are reasonable grounds for suspecting that the known source of the person’s lawfully obtained income would have been insufficient for the purposes of obtaining the property – for these purposes, the Court will consider any mortgage or other security that it is reasonable to assume was or may have been available and assume that the person obtained the property for market value.
Condition 4: The person falls into one of the following categories –
· The person is a “Politically Exposed Person” (“PEP”) i.e. someone entrusted with prominent public functions by an international organisation or any country other than the United Kingdom or another EEA state;
· The person is a family member, a close associate or a connected person of a PEP;
· There are reasonable grounds for suspecting that the person is, or has been, involved in serious crime (either in the UK or elsewhere) (“a suspected criminal”) – serious crime will include fraud, money laundering, tax evasion, sanctions offences, and bribery and corruption; or
· The person is connected with a suspected criminal.
UWOs must be served in accordance with the usual Civil Procedure Rules. So in other words, we are looking at a whole new type of power. You are now GUILTY and you must prove your INNOCENCE. I have explained that I was held in prison for “Civil Contempt” not CRIMINAL. The difference is one I was being “coerced” and the other is you are being “punished” so only then are you entitled to a real trial by jury.
Here we have the same pretense. The burden and standard of proof regarding UWOs fall under the civil investigative tools and as such they do not form part of the UK’s criminal law regime. Therefore, as long as it is civil, you can be stripped of all rights and any imprisonment is “coercive” so you are not being punished. Consequently, the UK authorities can engage in full-blown tyranny applying for a UWO they will only need to show “reasonable grounds” for their suspicions. This is a much lighter legal standard than the “realistic prospect of conviction” standard required in order to bring criminal prosecutions what is call in America “probable cause”.
The real danger her is there is no practical limitation on the scope. That means the UK is applying the scope to worldwide turning its citizens and corporations as well as trusts into tax slaves. Laws are normally limited to TERRITORIAL JURISDICTION meaning if you killed someone in Paris, you stand trial in Paris not in Hong Kong or wherever you are a citizen. Hence, here the scope of UWOs can be made in respect of any property, regardless of where in the world it is located converting everyone to a tax slave. This applies to any individual or corporate, whatever their place of residence, business or incorporation (there is no requirement to demonstrate a nexus to the UK). This is really tyranny for the way the code is written, they could bring this to anyone even if not British. UWOs can be made in respect of any property, including property acquired before January 31st, 2018, as well as property held by more than one person meaning partnerships and trusts. Laws have traditionally been regarded as tyranny if they are applied retroactively, known as Ex Post Facto. Here, because this is “civil” in pretense, they are circumventing all the historic safeguards against legal persecutions by writing a law after the fact to make something criminal.
The penalties of a failure to respond to the UWO within the prescribed time without reasonable excuse will give rise to a presumption that the property specified in the UWO is recoverable for the purposes of a civil recovery order (“CRO”) which means the property will be presumed to be ill-gotten gains and seized by the government. You then will have the burden to prove you are innocent and you are presumed to be guilty. If you refuse to answer, they can throw you in prison until you die as they did with me using the contempt of court powers. If you lie in any statement in response to a UWO, now this becomes criminal and punishable by a prison sentence of up to two years and/or a fine.
You will be deemed guilty unless you have “reasonable excuse” to have failed to comply with the terms of the UWO, yet what constitutes a “reasonable excuse” is not actually defined. In the States, a mother was required to pay her son’s student loan even though he had been killed and the court held that was not a “reasonable excuse” so this becomes a pure tyranny.
The UWO also allows in the legislative changes a new Interim Freezing Order (“IFO”). So, the government can freeze your assets until you comply. The High Court may grant a IFO to prohibit a respondent to a UWO (and any other person with an interest in the property) from dealing with the property specified in the UWO. If the court issues an IFO, the agency bringing the action must determine whether or not to instigate proceedings within 60 days. If it fails to do so, the IFO will expire, however, the relevant authority is still free to determine what proceedings it may take against the respondent “at any time” in the future without any statute of limitations – another tyranny under the law.
The DANGER in this legislation is simple. It is pure and unadulterated tyranny for it removes ALL protections of law and shreds the English Bill of Rights no less the Magna Carta. Then King John also derived income from fines, court fees, and the sale of charters and other privileges. Fines were called “amercements” and at the time, it was said that there was hardly an Englishman of substance who had not been amerced at least once a year. Magna Carta introduced the right to trial by jury, where the people decide if someone is guilty and what the fine should be. This drastically curtailed the king’s abuse of the legal system at that time. King John was very unpopular, for he had intensified his efforts to maximize all possible sources of income to regain Normandy. Contemporary commentators describe him as “Avaricious, miserly, extortionate and money minded.”
The entire right to trial by jury was to stop the king and his corrupt courts from fining people to raise money. This law has shredded the Magna Carta and has restored all the former tyranny of the King once again to raise money. In 2015, that marked the 800th year following the signing of Magna Carta.
Armstrong Economics Blog/Banking Crisis
Re-Posted Feb 21, 2018 by Martin Armstrong
Behind the curtain, there is a growing concern about a serious banking crisis beginning once again in Europe. Many governments are talking about the crisis behind-the-curtain and we are now beginning to see steps that are being taken to end the TO-BIG-TO-FAIL policies that dominated the 2007-2009 Crash.
The United States is looking at a new radical bank rescue policy where the government is proposing to revise a central pillar of the idea of bailing out banks creating new financial regulation with a new Chapter 14 bankruptcy procedure. They are looking at eliminating the risk of taxpayers’ costs to bail out banks. They are investigating the means for an orderly resolution so that the taxpayers do not have to bail out the banks. This development is causing some concern among the high-flying Wall Street banks, for if that is the case, then another crisis as 2007-2009 will result in even Goldman Sachs closing. The proposal looks to shift the burden to the shareholders and creditors of that bank. This means depositors who are thus creditors.
In Australia, we see similar legislation being proposed. This is the Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Bill 2017. This also authorizes bail-ins bringing an end to the bailout.
Armstrong Economics Blog/Interest Rates
Re-Posted Feb 22, 2018 by Martin Armstrong
While the stock market crashed as the pundit looked in their bag to try to come up with an excuse, they blamed rising inflation and interest rates. Yet, nobody is really paying attention to the underlying trend. The cost of carrying debt has been rising gradually and there are noticeable measurable impacts that the pundits are of course oblivious to since they have to explain every day’s movements and not the real trend.
Already, the 10-year rate is piercing above the 2.6% area. There is an impact on the currency once people begin to comprehend the trend. The 10-year German bond rate is 0.70%, and this has been maintained by the ECB buying 40% of European government debt to no avail for nearly 10 years.
The real crisis comes when they realize that the ECB will not be there to buy government debt. The bidders will demand a higher yield so rates will rise very rapidly.
Meanwhile, the Fed will pursue higher interest rates as they need to be normalized to help pensions funds that are rapidly collapsing. This idea of a lower dollar will raise the price of imports and with tariffs, inflation in consumer products will rise.
Mueller is still not ending his investigation. Why should he? He would have to go get a real job in the private sector. Keep the investigation alive to pay the light bills. He shows no sign of embracing unemployment. His pretend indictment is dancing between raindrops, indicting people in Russia knowingly there will never be a trial. We cannot count him out yet as a factor that will undermine the economic confidence.
So we stand at the threshold of rising rates that will then feed into the market and create a bid for the dollar it appears after March.
Armstrong Economics Blog/India
Re-Posted Feb 22, 2018 by Martin Armstrong
I have warned continually that the Sovereign Debt Crisis will unfold not so much by people selling government debt, but by the lack of people buying new debt. The greatest peril is when there is NO BID for the new issues because all governments are operating a PONZI scheme. The sell new debt to pay off maturing debt. Currently, holders of Indian government debt have been dumping 4.7 billion rupees ($73 million) of government bonds on average every day this year, according to data from the Clearing Corp. of India. Last year, their net daily sales totaled 368 million rupees.
The Sovereign Debt Crisis emerges when the government is unable to raise enough cash to pay off the maturing debt. India has crossed that threshold so as we have warned, the Sovereign Debt Crisis will begin from outside the USA and spread to the core. This is how all Empires, nations, and city-states collapse.
Armstrong Economics Blog/Agriculture
Re-Posted Feb 20, 2018 by Martin Armstrong
QUESTION: Mr. Armstrong; You previously mentioned that we can grow crops inside warehouses without the sun or soil. How did mankind survive the last mini Ice Age wit dropping temperatures as we have seen in recent winters here in Europe?
ANSWER: With each cycle, we tend to improve upon technology. Being able to grow food inside will be an important advance for us during this cycle. You can set one up in your basement.
Previously, there was the invention of the fruit wall which appeared around the beginning of the Little Ice Age that ran the course of about 200 years from about 1550 to 1850.
The invention of the fruit wall saved society. They built walls which reflected sunlight during the day essentially using solar energy to improve growing conditions. These walls also absorbed solar heat, which in turn was slowly released during the night, preventing frost damage. They created a warmer microclimate 24 hours per day.
Fruit walls also protected crops from cold blasts of winds from the north as we are experiencing today. They eventually began to construct wooden canopies to shield the fruit trees from rain and hail. They would also use mats suspending then from the walls in case of bad weather. I remember my grandfather loved figs and he had fig trees he would wrap during the winter to protect them in New Jersey. In Europe, these fruit walls were used as far north as England and the Netherlands.
Conrad Gessner (1516 – 1565) was a true Renaissance man. He was a Swiss physician, naturalist, bibliographer, philologist, zoologist, and a botanist. He wrote of the effect of the Fruit Walls which then popularized them in Europe.
The French began to improve the technology by pruning the branches of the fruit trees in such ways that they could be attached to a wooden frame on the wall.
The French botanist Charles Lucien Bonaparte (1803 – 1857) is credited with building the first practical modern greenhouse in Leiden, Holland, during the 1800s to grow medicinal tropical plants. The French called their first greenhouses orangeries since they were used to protect orange trees from freezing. Today, Holland grows more food in greenhouses than any other country.
Today, the next step forward is growing food in warehouses without the sun or earth.
Armstrong Economics Blog/Cryptocurrency
Re-Posted Feb 19, 2018 by Martin Armstrong
Credit Karma is reporting that of the first 250,000 tax filings, less than 100 people reported owning any cryptocurrency. Credit Karma is reporting that only 0.04% of cryptocurrency-traders are paying taxes to Uncle Sam.
The dangerous aspect here is the IRS got over 20,000 names from the exchanges and they will match their accounts to tax returns. Anyone who thinks this is an alternative currency that circumvents taxes and the central banks will have a new reality after April 15th. They will know everyone who has bought or sold any cryptocurrency.
Armstrong Economics Blog/Training Tools
Re-Posted Feb 19, 2018 by Martin Armstrong
QUESTION: Dear Martin,
In the private blog you mentioned a few times that the volatility will rise again in the week of the 12th. When you mention volatility, do you mean volatility as measured by the VIX index?
So far the VIX has lost around 1/3 this week so I suppose you mean something else?
ANSWER: The VIX is not a true indicator of volatility. We have three main volatility measurements and each is different.
(1) you have the traditional measurement of close to close. That is interesting, but it does not truly capture the concept of volatility.
(2) Then there is intraday volatility which we measure and simply the percentage movement between the high and low of that session. You can have a 1,000 point swing in the Dow intraday yet close nearly unchanged. The first volatility measurement would never even show a blip.
(3) The third measurement is overnight volatility. This is measured from the previous close to the open of the current day session. For example, Monday, February 5th the Dow opened at 25337.87 compared to Friday’s closing of 25520.96 gapping down.
Our indicators are intended for trading, unlike the VIX. In our Arrays, you will see Overnight Volatility, Intraday Volatility, and Panic Cycles, which are extreme moves in one direction or an outside reversal which exceeds the previous session high and penetrates the previous secession low.
The VIX is a convoluted formula that does not reflect trading but more of a trend lending itself to manipulations. Hence, the VIX is not very reliable. The VIX is a measure of expected volatility calculated as 100 times the square root of the expected 30-day variance (var) of the S&P 500 rate of return. The variance is annualized and VIX expresses volatility in percentage points.
where var = (365/30) x Expected 30-day variance.
The 30-day variance is the sum of squared standard deviations st (“volatilities”) of the S&P 500 rate of return at every point in time t during the 30 days:
Armstrong Economics Blog/Japan
Re-Posted Feb 18, 2018 by Martin Armstrong
The Japanese government once again reduced its holdings of US government bonds during December 2017. In total, Japan sold bonds worth $ 22.5 billion. This is not a huge amount. Nevertheless, this puts the total stock of US debt at about $ 1.06 trillion, which is the lowest level since 2012. Japan used to be the largest holder of debt externally. However, it has fallen to number two just behind China.
By contrast, the Chinese government increased its holdings by about $8.5 billion in December to $ 1.18 trillion. The acquisitions in the entire year 2017 were as extensive as last 7 years ago. Naturally, the hard-money biased reporting paints this as an imminent crash in the dollar. What they fail to understand is that helping to lower the dollar is a tactic to ease trade friction
Armstrong Economics Blog/Real Estate
Re-Posted Feb 17, 2018 by Martin Armstrong
QUESTION: Hi Martin,
I just finished your new NYSE Boom/Busty report. This is excellent work and as always extremely fascinating. Thank you for continuing to share these profound views with us.
My question relates to your view that we are looking at a complete collapse of Quantitative Easing and that will likely see a massive capital flight to the dollar and the major safe haven will be EQUITIES. In the context of this possibility, are you able to comment on how this may relate to Real Estate. Your ECM seems to be calling for Real Estate to top out and structurally fall in 2032. Is it not possible that with the collapse of QE and potentially economies that we will see more negative rates in the short end and with the government powers to seize assets in bank accounts, would it not be prudent to have zero cash in hand and hence we see a massive capital flight to Real Estate too? Or will the collapse of QE lead to significantly higher rates across the curve and hence blow all leveraged exposure sky high?
Many thanks as always,
ANSWER: The problem with real estate has been that its value depends upon lending. This was what the government did as part of the New Deal by creating 30-year mortgages. This was a scheme to get prices up by extending the period people could pay off the loan. Typically, the duration was 5 years previously.
The collapse in Quantitative Easing will have the effect of causing rates to rise on the long-term. However, there will be a shift toward private assets and this will help to a large extent. However, keep in mind that many institutions will be trapped and unable to shift to private assets. Many boards will not understand the shift and still believe, wrongly, that unsecured government debt is best.
Prices of real estate will decline in proportion to the decline in mortgage availability. We are already witnessing banks beginning to withdraw from lending on real estate.
I have provided the guide-posts for what is to come. This will be an interesting future.