It is stunning how after more than three months, the analysis on the repo market is still nowhere close to reality. I believe that those in the trenches are, like me, afraid to really explain what is taking place for fear they will be blamed for creating a financial panic.
The popular explanation in September was repeated by the Wall Street Journal: “For one, Monday marked the deadline for companies to submit their quarterly federal tax payments.” This was standard analysis put out by the countless pundits the press rely upon and they have to come up with some explanation and quick. When analysts spout out their explanations to mainstream media it is because they are trying to get business. People have often asked me why I do not do mainstream media interviews. First, I do not need the business. Secondly, when you have real clients, they prefer to pay for information and do not want it on the front pages of newspapers for free. They appreciate analysis that is exclusive rather than as common as dirt. Hence, the analysis put out in the press about the Repo Crisis is coming from people who have no real clients in the area and lack the expertise in the field to start with.
Not even the central banks understood what was going on because even they tend to be domestically oriented. Despite the obvious fact that we live in a global economy, all the economic theories, analysis, and experience have been domestically focused. Unless someone has been in the trenches globally, they will never see the wildcard coming from external sources. Hence, we get the calls to explain things ONLY because they know all the other major institutions are also coming to us as some sort of the central point of reference.
The question that is now dominating everyone’s inquiries, can the Fed exit the repo market after being the dominant source of liquidity for more than three months? What will it take for the Federal Reserve to withdraw from its daily liquidity operations in this $2.2 trillion market for repurchase agreements (repos)?
All I am prepared to say publicly is that the solution is beyond the powers of all the central banks combined. The solution is not attainable without political concessions, which politically are just off the table. This is going to require a major reform that is unlikely to take place and will not even be recognized until the crisis erupts on a much larger scale
Trump has called the Democrats the do-nothings. All they have been focused on is impeaching Trump for the polls they are looking at behind the curtain all show Trump will beat whoever they put up as their candidate. the motto has been – if you can’t beat him, impeach him. There is no other area where the Democrats have just failed to act with a major crisis looming in 2021 than the spreading of the Pension Crisis.
There are pensions that are multi-employer funds which are perhaps the first to fall in the private sector. The Republicans did slip a rescue package into the massive $1.4 trillion spending bill passed last month. That was all because the United Mine Workers of America pensions would have failed completely and the push from environmentalists against mining and energy only puts pensions in those areas at serious risk after 2020.
The Republicans, interestingly enough, have no problem with the bailout but want to raise premiums that employers must contribute. Conversely, the Democrats who have been backed by such unions have argued for low-interest loans and not to force higher premiums on employees or employers.
The Republicans and Democrats are so deeply divided on how to solve the broader pension crisis problem, that this immediate impasse illustrates what I have been warning about that government is just collapsing incapable of bipartisan solutions. The Democrats simply refuse to act for they fear that Trump would get the credit for solving the pension crisis among unions that traditionally have backed the Democrats.
This entire issue has become not about solving any crisis but who gets credit and thus we have a government incapable of acting for the benefit of the people. As I have said, this is how governments eventually collapse. They become so corrupt and divided, they are incapable of managing the state.
A very interesting development in the ongoing effort of former CBS investigative journalist, Sharyl Attkisson, to resolve the issue of who spied on her, planted spyware and infiltrated her computer systems for illegal surveillance. [Attkisson website here]
According to a recent court filing [Source Here] a person who was engaged in the “wrongful activity” has come forward to provide Ms. Attkisson with details about the operation. As a result of those whistle-blower revelations Attkisson is able to name specific individuals who were running the operation:
Former DOJ Deputy AG Rod Rosenstein is named as the person who was in charge of the operation; and the former head of the FBI DC field office, Shawn Henry is also outlined.
Mr. Henry is the head of Crowdstrike, a contractor for the government and a politically connected data security and forensic company. Those who have followed the aspects related to the FBI use of the NSA database to illegally monitor U.S. persons; and those who followed the DNC cover story of Russia “hacking”; will be familiar with Crowdstrike.
According to the updated lawsuit (full pdf below) Rod Rosenstein, as the U.S. Attorney for Maryland, was in charge of the Obama 2011 and 2012 operation to monitor journalists specific to Ms. Attkissons reporting on Fast-n-Furious and Benghazi.
What I find additionally interesting is the overall timeline in the bigger picture.
In the April 2017 release from FISC Judge Rosemary Collyer outlining the abuses of the FISA-702 process by FBI “contractors”, where the NSA database was being use for unlawful surveillance of U.S. persons, Collyer specifically noted the findings of her review of the period from November ’16 to May ’17 (85% non compliant rate) was likely to have been happening since 2012. [Go Deep]
The “IRS Scandal” were the DOJ was creating a list of U.S. persons for political targeting, and requested CD ROM’s of tax filings, was the lead-up to the 2012 exploitation of the NSA database. [The Secret Research Project] So there’s a larger picture of government surveillance under the Obama administration that becomes more clear.
Political spying 1.0 was actually the weaponization of the IRS. This is where the term “Secret Research Project” originated as a description from the Obama team. It involved the U.S. Department of Justice under Eric Holder and the FBI under Robert Mueller. It never made sense why Eric Holder requested over 1 million tax records via CD ROM, until overlaying the timeline of the FISA abuse:
The IRS sent the FBI “21 disks constituting a 1.1 million page database of information from 501(c)(4) tax exempt organizations, to the Federal Bureau of Investigation.” The transaction occurred in October 2010 (link)
Why disks? Why send a stack of DISKS to the DOJ and FBI when there’s a pre-existing financial crimes unit within the IRS. All of the evidence within this sketchy operation came directly to the surface in early spring 2012.
This is the same time-frame when DNI James Clapper falsely denied to congress about the U.S. government -through the NSA- collecting metadata on all U.S. electronic communication. This is the same time-frame where CIA Director John Brennan was monitoring the computer networks of congressional intelligence oversight staff.
When you overlay the new information from the Attkisson lawsuit, what emerges is the picture of an intentional effort by the Obama administration to weaponize the ability to collect electronic information on domestic political opposition. It’s one long continuum.
Here’s the new Attkisson lawsuit (using new information from a whistle-blower):
Within the lawsuit the DOJ inspector general is identified as adverse to the interests of the case. Meaning DOJ Inspector General Michael Horowitz was engaged in behavior to help the institution cover-up what independent computer forensic technicians were able to discover. Employees from the IG’s office also told Ms. Attkisson they had received instructions from the DC offices adverse to the interest of truthful discovery.
In addition to the institutional cover-up effort; it would be worth noting that current DOJ and FBI officials, who have been identified as holding corrupt motives, are still being positioned at key offices. An example is FBI Supervisory Special Agent David Archey (Mueller Team) being promoted to head up the Virginia FBI field office.
Obviously the DC institutional swamp is very deep and very corrupt. Current and former politicians and federal officials who have engaged in corrupt behavior, or who have facilitated corrupt -potentially unlawful- surveillance activity, are still working within the system to avoid exposure.
Another recent example is former Christine Blasey-Ford hoax facilitator and Andrew McCabe attorney, Michael Bromwich, being hired by corrupt Chicago prosecutor Kim Foxx in an effort to protect herself from the outcome of the Jussie Smollett hoax in Chicago. Why does a Cook County, Illinois, State Attorney need to hire a DC-based lawyer?
It was obvious early on the Jussie Smollett hoax was connected to several members of the Obama team and network. Michael Bromwich is a former DOJ inspector general with ongoing direct contacts with corrupt DOJ and FBI officials inside the institutions. Chicago State Attorney Foxx hiring Bromwich is yet another example of DC managing the cover.
Whether it’s the identified weaponization of NSA databases; or whether it’s corrupt FBI officials covering for each-other and the DOJ ‘declining to prosecute’; or whether it’s current AG Bill Barr covering for the transparently corrupt former DAG Rod Rosenstein; or whether it’s the institutional need to hide DOJ scope memos which initiated a false investigation of a sitting United States President; one thing remains brutally obvious….
QUESTION: Mr. Armstrong; I was told that you were indeed the largest forecaster in foreign exchange. The story in London is you advised nearly all the Middle East and were the most important adviser on currency to BCCI, the bank the governments took down back in 1991 along with Salomon Brothers. They made a movie about BCCI. Is it true that you were an adviser to BCCI?
HS
ANSWER: The ’80s were the wild west in finance. I have told the story of how many banks operated back then. I would be called in and told someone wanted to give me $1 billion to manage back then when $1 billion was a lot of money (now it’s trillions). I would go to various banks and there would be a curtain between me and the potential client. I was not allowed to know who they were. I was turning down that business because it was just too wild for me.
Yes, we were advising BCCI on foreign exchange. They were passing it on to specific clients who at the time I did not know. I became concerned when I accepted an account for who I believed was a Saudi individual. The account was opened at Rudolf Wolf in London and after a few months of tracing all the various layers of corporations, it turned out I was managing money for none other than Muammar Mohammed Abu Minyar al-Gaddafi. I closed the account and within a matter of weeks, he was back through a completely different channel.
Perhaps one day I will write a book about those days. I ended up managing money for even Mr. Khashoggi once owned one of the world’s largest yachts, the 86-meter Nabila, which appeared in the James Bond film “Never Say Never Again,” which was later bought by Donald Trump. On top of that, what I thought was a company turned out to be a secret partnership between Gaddafi, Khashoggi, and Ferdinand Marcus of the Philippines.
The Floating Foreign Exchange Rate system had just begun in 1971. This was not a subject you could go get a degree in. This was a field built from scratch and it took a trader’s understanding of the world economy to cope with the events of the 70s and 80s. I was the leading adviser in FX because there really were no others with any track record. When I say I was called into just about every crisis from 1973 onward, it is not an exaggeration.
I was advising BCCI on currency globally. I was advising a company called GRANEDEX which turned out to be a front for Russia. I could never tell who was who. I had even the counter-revolutionary army in Iran coming to me for they were trading to make money to overthrow the religious government in Iran. I would be on a phone call with a client from Saudi Arabia who asked about gold and I said it depended on what OPEC would say that day. He put me on hold and dialed into the OPEC meeting and they put me on speakerphone. Those days taught me about war and how capital flows could be used to forecast war and geopolitical events. It cut my teeth of those wild west days.
I have handled some of the biggest projects ever and advised globally. To this day, we have people attending the World Economic Conference from 137 different countries. Because the world was such a crazy wild west sort of atmosphere, I turned to be just an institutional adviser of public corporations because I gave up on trying to figure out who the clients really were at times.
QUESTION: Marty, you said that central banks can only control short-term rates not long-term. Do you see a scenario where they could control the long-term rates?
Thank you for your insight
DH
ANSWER: If you ASSUME that there is a free market, then the answer is no possible way. Under a hybrid market, a central bank can split between public and private debt as is taking place in Japan. The Bank of Japan has announced it will buy unlimited amounts of government bonds to prevent interest rates from rising.
Under this hybrid market, a central bank can simply buy all government debt but this results in the total destruction of any free market in government debt. The government should at that point just print money and not even bother to issue any debt.
This results in a divergence between the fake government bond rates and the free market private interest rates. The spread will widen dramatically. Even during the Great Depression the spread between AAA corporate debt and government debt fluctuated according to where the confidence resided. As the sovereign debt crisis took place in 1931 with governments defaulting on their debts, the spread diminished as people began to trust corporate debt more so than government debt.
The third possibility is a closed market which means that the government can fix long-term rates that were done with usury laws. Even in Roman times, Cicero tells us how the cap on interest rates existed only in Italy. This led to excessive interest rates being charged by Brutus in Cappadocia of 40% compared to 10% in Rome.
Paul Volcker had to have the usury rates raised in order to raise interest rates to 14% to fight inflation back in 1981. It was also illegal for a Catholic to charge interest in loans so the Jews were the first bankers coming out of the Dark Ages. The Catholics got around that by stacking the interest costs into the price.
The final type of system that would control long-term rates would be Communism where everything is just outlawed and the economy is entirely closed.
Under a free market, the central bank sets the wholesale short-term rates which is why it has been focused in the repo market. If it attempts to just buy in all government debt, then private rates will rise and that is what is taking place right now. The Fed can peg long-term rates as they did during World War II, but that applied only to government debt. To prevent prices from rising the political legislature imposed wage and price controls.
So there are ways to fix the long-term, but at the cost of a free market.
As with all things MSM it’s worth considering with a dose of salt. However, that said, media are now reporting that U.S. Attorney John Huber has completed his review of the Clinton Foundation and Uranium-One and found nothing worth pursuing.
This would be a major disappointment for Q-decoders and Trusty Planners who claimed John Huber had hundreds of investigators spanning several states and were forecasting: (1) a suspension of Habeas Corpus, (2) military tribunals, (3) mass arrests based on over 60,000 sealed indictments; and (5) pending incarcerations at Guantanamo Bay.
WASHINGTON – A Justice Department inquiry launched more than two years ago to mollify conservatives clamoring for more investigations of Hillary Clinton has effectively ended with no tangible results, and current and former law enforcement officials said they never expected the effort to produce much of anything.
John Huber, the U.S. attorney in Utah, was tapped in November 2017 by then-Attorney General Jeff Sessions to look into concerns raised by President Trump and his allies in Congress that the FBI had not fully pursued cases of possible corruption at the Clinton Foundation and during Clinton’s time as secretary of state, when the U.S. government decided not to block the sale of a company called Uranium One.
As a part of his review, Huber examined documents and conferred with federal law enforcement officials in Little Rock who were handling a meandering probe into the Clinton Foundation, people familiar with the matter said. Current and former officials said that Huber has largely finished and found nothing worth pursuing — though the assignment has not formally ended and no official notice has been sent to the Justice Department or to lawmakers, these people said. (read more)
Reuters
✔@Reuters
U.S. inquiry into FBI, Clinton spurred by Republicans ends without results: Washington Post https://reut.rs/2QEj3kT
As with all things MSM it’s worth considering with a dose of salt. However, that said, media are now reporting that U.S. Attorney John Huber has completed his review of the Clinton Foundation and Uranium-One and found nothing worth pursuing.
This would be a major disappointment for Q-decoders and Trusty Planners who claimed John Huber had hundreds of investigators spanning several states and were forecasting: (1) a suspension of Habeas Corpus, (2) military tribunals, (3) mass arrests based on over 60,000 sealed indictments; and (5) pending incarcerations at Guantanamo Bay.
WASHINGTON – A Justice Department inquiry launched more than two years ago to mollify conservatives clamoring for more investigations of Hillary Clinton has effectively ended with no tangible results, and current and former law enforcement officials said they never expected the effort to produce much of anything.
John Huber, the U.S. attorney in Utah, was tapped in November 2017 by then-Attorney General Jeff Sessions to look into concerns raised by President Trump and his allies in Congress that the FBI had not fully pursued cases of possible corruption at the Clinton Foundation and during Clinton’s time as secretary of state, when the U.S. government decided not to block the sale of a company called Uranium One.
As a part of his review, Huber examined documents and conferred with federal law enforcement officials in Little Rock who were handling a meandering probe into the Clinton Foundation, people familiar with the matter said. Current and former officials said that Huber has largely finished and found nothing worth pursuing — though the assignment has not formally ended and no official notice has been sent to the Justice Department or to lawmakers, these people said. (read more)
Reuters
✔@Reuters
U.S. inquiry into FBI, Clinton spurred by Republicans ends without results: Washington Post https://reut.rs/2QEj3kT
This is a special report entitled “The Fate of Europe” which dives into the shocking reality behind the curtain of the Euro and why it has failed to become a major reserve currency. The Fate of Europe is a very important report to understand the backdrop to what we face going forward and the risks both for European readers as well as for the rest of the world in light of the risks of global contagions. Like the Great Depression, the crisis we face will begin in Europe once again and spread like a contagion eventually engulfing the world economy.
Nigel Farage delivered the keynote speech at the Rome WEC. He called the World Economic Conferences we have been holding since 1985 – the “alternative to Davos.” This report is unique for two reasons. First, when the Euro was being formed, the commission attended our WEC in London in 1997. I discussed directly on how the create the euro from scratch. We published detailed recommendations back then.
This report exposes the reality behind the curtain. The entire design of the EU is to deliberately deny any right of the people to ever vote on their own future. The politicians have assumed that the people are TOO STUPID to know what is best for them. In fact, Germany, the foundation of the entire European economy, was NEVER given the right to vote to join the Euro. Chancellor Kohl admitted that he acted as a dictator because he said if he ever allowed the German people to vote, he would have lost 7 to 3.
This report is essential to understand the risks in Europe. Most people have no clue because the second reason this report is unique is that no European analyst working in any of big financial institutions are ever allowed to criticize the EU or speak negatively about the Euro.
Many people continually talk about the dollar crashing. They say the dollar is supposed to crumble to dust and be dispersed into the wind. The bias against the dollar has been turned into a religion primarily propagated by the gold promoters. Unfortunately, they fail to understand the relationship of the dollar to the world economy. Additionally, they only look at the United States and ignore the economic trends outside the USA.
This report deals with the next monetary reform that many will call Bretton Woods II. What is the future for the dollar? Contrary to what many have been preaching since 1971, the dollar has survived. Right now there remains a dollar shortage, which is one reason the dollar has been rising since 2008 when the euro once stood at $1.60. The report also discusses the transition to digital currencies.
QUESTION: Dear Martin,
You have discussed the structural design flaw in the euro being due to the lack of consolidation of EU countries’ debt, as well as, EU policies that prohibit bank bailouts. Why could EU policies regarding the prohibition of bank bailouts just not be changed to allow for bailouts? If I understand correctly, wasn’t it also the case that the ECB was not legally allowed to buy EU country sovereign debt? That law was either changed or ignored (I’m not sure which) during the European sovereign debt crisis earlier this decade to allow for the ECB to buy sovereign bonds, which then brought down sovereign debt yields.
Correct?
Thank you for helping us all to grow in our understanding of what confronts us.
Sincerely,
WJ
ANSWER: Everything would function so much better if we had rational leadership. The problem is simply that government will NEVER avert a crisis. They must first experience the crisis before they will ever consider changing the policy. Yes, it seems easy to just fix the problem now. However, I can talk face-to-face until my face turns blue. They will NEVER prevent a crisis. Politicians know that they ONLY look authoritative when they respond to a crisis. Nobody will listen if they say they just prevent a crisis. People assume it is just BS.
Add to this reality the problem between domestic and international policy objectives. Politicians run for election, promising to do this or that, which all seems nice for it is presented to be within their power. That is what is under siege. The Federal Reserve has suddenly realized that it has become the central bank of the world. They were intending to lower rates to help emerging markets, Europe, and Japan. Then the Repo Crisis hit and the Fed was compelled to address the liquidity crisis. This was not about “stimulating” the economy, it was about preventing short-term interest rates from rising. In other words, the QE of 2008-2009 was about buying in long-term debt to try to lower long-term interest rates. Here the short-term rates were rising. Traditionally, the only thing a central bank can control is the short-term. The Repo Crisis exposed the fact that central banks are losing control of even the short-term.
Remember the inverted yield curve in the summer of 2019 that everyone said was a precursor to a recession? Ever since the Repo Crisis, the yield curve has steepened dramatically. This is confirming what I have been saying. This was never about stimulation, it was an attempt to prevent short-term rates from rising.
Therefore, the questions become: (1) Will Europe respond and realize that their no-bailout policy will create a worldwide banking contagion and crisis? (2) If they do recognize that they are the source of a worldwide crisis, how long will it take them to respond and reverse their policy? (3) Will they accept responsibility or blame the rest of the world?
Rational people respond completely differently than politicians who cannot publicly admit they were wrong.
QUESTION: Marty, Do you think it will be time to short the bonds with the ECM? Gold had bounced off the Downtrend line instead of electing the bearish reversals and it rallied after the Pi turning point. You said if gold peaked with the bottom of the ECM it could then fall back to retest support. It looks as if that happens, the Fed will lose the battle and interest rates will rise after the ECM. Is this all a set up like the gold rally back in 1979 following the Afghan invasion? It looks too familiar.
HB
ANSWER: Ah, you have a good memory. It would have been much better had gold made a new low, held the 1980 high, and then rallied with the ECM turn in 2020. That would have clearly been a long-term sustainable trend. Bouncing off of the Bear Reversals & Downtrend Line and then rallying with the Pi turning point 2018.89, pointed to a rally into the next ECM (2020.05). I warned that given that pattern we would rally to test the Yearly Bullish at 1432 and at the WEC I warned that a close above that pointed to a rally into the January 18th turning point with the next resistance at the 1585 level.
The spike up in gold is clearly reminiscent of the Russian invasion of Afghanistan on December 24, 1979. That was under the pretext of upholding the Soviet-Afghan Friendship Treaty of 1978. As midnight approached, the Soviets organized a massive military airlift into Kabul, involving an estimated 280 transport aircraft and three divisions of almost 8,500 men each.
Currently, our system resistance has stood at 1585 followed by 1620 with technical resistance in the 1575-1595 level. We most certainly have to be concerned if gold peaks with the ECM. This will not be a good omen and I agree it is reminiscent of the pattern of 1980. The interest rates the exploded and peaked in May 1981 with the top of the ECM back then.
With the Repo Crisis and the Fed desperately trying to prevent interest rates from rising, which was opposite back in 1979-1981, we still have to be very cautious about how all the markets line up on our model for this turning point. Back then, gold peaked on its own cycle on January 21, 1980, while the interest rates rallied further peaking with the top of the ECM precisely – 1981.35.
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This is a library of News Events not reported by the Main Stream Media documenting & connecting the dots on How the Obama Marxist Liberal agenda is destroying America
Centinel2012 