“Meddling” in the 2000 Russian Election


QUESTION: Mr. Armstrong; I watched your movie the Forecaster with great interest. I then watched the Showtime interview of Putin by Oliver Stone. It suddenly struck me that he stated that U.S. intelligence agencies, interfered in the Russian 2000 election. That why they blocked your movie from appearing in the United States when it was on TV here in Canada and a friend of mine watched in on the airplane traveling here from Europe. That’s how Putin became president because of the attempt to blackmail Yeltsin. I had an OMG moment.

Are they still going forward with the Hollywood movie? Will this be the typical movie funding issues where people can invest in a film for a piece of the action?

Thanks. You really were the guy that knew too much.

EL

Hermitage_Capital_Management

ANSWER: I just got the script for the Movie. Handed it out to some friends and the comments are that they could not put it down. The comments from the professional Hollywood script reader’s review was:

“The Forecaster Of Princeton is a fast-paced financial
thriller in the vein of such classics as Wall Street and
The Wolf Of Wall Street. However, the script manages to set
itself apart from similar offerings by crafting a
protagonist that isn’t necessarily motivated by greed and
excess. Further, the script features a unique component,
which is the protagonist’s ability to predict foreign
events. Overall, the script is strong enough to warrant
consideration.“
Many have asked can they invest in the film production for a share. Yes. That is how it goes. I have no details on any of that. All I know is they are doing private funding. Most movies go to the banks for funding. For obvious reasons, that will not be the case here. My deal was I was only interested if it portrayed the truth about the issues of international intrigue. That has been met. It now goes to a director and then they select the case. None of that has been completed yet. I think the script was well written for the writer had legal background which helped a lot.

As for the other part of your question, the answer is also Yes. Just about everyone in that matter which surrounded my case was killed insofar as those involved with Russia. I helped Dominic Dunn break that story – Death in Monaco. Safra tried to get me to invest with him in his Hermitage Capital. I refused and warned him my model was forecasting the collapse of Russia, which ended up as the Long-Term Capital Management collapse.

Safra-Berezovsky

If it were not for the “meddling” in the 2000 Russian election blackmailing Yeltsin not to run and install Berezovsky as President to control the natural resources of Russia, Putin would never be in charge to begin with today. Berezovsky fled to Britain where he supposedly hung himself and Safra died in Monaco. There were several others who died as well. So Putin’s comments regarding the 2000 election he did not give details. I did in the Forecaster and the movie will be a fast-paced international thriller.

Welcome to Deflation


People are just starting to grasp why deflation is also present in the USA. Despite all the screaming about Quantitative Easing, most remain confused why hyperinflation has not taken place. Most are obvious to the fact that there is a dynamic process involved that is a lot more complex than traditional economics teaches in school. Sorry, but the quantity of money theory does not work. It is way too simplistic and this has led to massive confusion. Even the central bankers are staring to call for help.

The latest news that Amazon was buying Whole Foods saw a plunge in retail and grocery stocks. Amazon put book stores on the list of bankruptcy victims and we see similar troubles for Sears, the company that made its name using the railroads to deliver goods by mail order. The deflationary tone has been in place since 2015.75 and it is a combination of problems one of which is the technology advancement. Many people see the advance of robots displacing jobs. However, the reason unemployment rose dramatically to 25% during the Great Depression was not from the collapse of industry. It was (1) the advancement of technology with the combustion engine that wiped out agricultural jobs (aside from the horse industry) and (2) the vast dust bowl which then wiped out farms entirely.

The Amazon takeover of Whole Foods is highlighting this technology shift. The jobs of the future will be more in the technology programming area. All the office spaces I looked at for moving our office were, without exception, law firms closing down. Lawyers are now far too common and we are seeing the saturation reducing the once high paying jobs that enticed kids into law school.

Cyclically, everything evolves. Retail stores are declining and Amazon has been opening showrooms rather than stores. You get to go touch the product and it will be delivered to your home. They are also bringing in fully automated stores. You will have an app on your phone, walk into a store, take whatever you want, and your card will be billed as you walk out the door. There go the store clerks.

Things are changing rapidly. The high cost of labor because of Obamacare has been destroying a lot of jobs. The first thing your account tells you is not to higher employee number 26. Technology is helping to reduce the high cost of labor, which is being driven up because of taxes and healthcare which the employee never sees.

Improving you skills for the future is absolutely paramount to survive

Top Executives of Barclays Charged


The British Serious Fraud Office (SFO) has brought charges against Barclays and four former executives surrounding the Qatari investment during the 2008 financial crisis. You may remember at the time Lloyds and RBS were offered UK government support with certain strict conditions attached. However, Barclays declined the government offer and instead turned to Qatar which eventually became the biggest single shareholder, with around 6%.

The rumor around the financial markets at the time was that the UK government offer was better for the shareholders (unqualified) but the restrictions imposed meant that no board members would receive bonus payments until monies had been repaid. Talk at the time was that faced with that proposition of spending bank money to secure future bonus payments – the board declined the UK Government offer and went with the Qatari investment. The SFO also charged former top Barclays executives after investigating a two-part fundraising that included a $3 billion Barclays loan to the Qatar Gulf state.

The men are the most senior bankers ever to be charged in Britain for alleged crimes during the financial crisis. They face jail sentences of up to 10 years if found guilty.

Public Education Has Always Been a Weapon Employed by the State


COMMENT: I found your comment on public education fascinating. Has it been a tool for centuries to alter the minds of children?

ANSWER: Yes. There have been plenty of examples restricting what can be taught and what is prohibited. Joseph Stalin is famous for his state control of education. He boldly stated: “Education is a weapon whose effects depend on who holds it in his hands and at whom it is aimed.”

The trial of Socrates (399 BC) was held to determine the philosopher’s guilt on two charges: (1) asebeia (impiety) against the pantheon of Athens, and (2) corruption of the youth of the city-state. He was charged with “failing to acknowledge the gods that the city acknowledges” and “introducing new deities” which corrupted the ideas of the youth.

Education has been a tool of government for a very, very long time.

Suicide Over European Banking Crisis


Greece-Pensioner-2

The European “bail-in” rules have been cheered claiming taxpayer money will be spared. However, many seniors bought bank bonds for their retirement. In the rescue of the small Banca Popolare d’Etruria, a retiree who had lost more than 100,000 euros worth of bonds lost everything and committed suicide. There have been many such events that do not always make the press. In Italy,  the death of a pensioner who also committed suicide after losing his life savings as a result of a controversial move by the government to rescue four banks. The 68-year-old hung himself at his home in Civitavecchia, a port town near Rome, after the so-called “save banks” plan wiped out €100,000 in savings held at Banca Etruria, one of the four lenders included in the government rescue deal announced on November 22nd, 2015. There was the 23-year old who committed suicide over £8000 in debts for student loans. A Greek pensioner who was 77-years old committed suicide in central Athens shooting himself with a handgun just several hundred meters from the Greek parliament building in apparent despair over his financial debts.

The government have made promises and socialism was all about protecting the people from the evil capitalists. But the politicians became the capitalists and now all the promises are being reversed or modified. The crisis we face ahead is so many people believed in what they told everyone. What happens when they discover it has been just a lie?

Amazon Purchases Whole Foods For $13.7 Billion (Cash)…


The business world is buzzing over Amazon’s $13.7 billion purchase of Whole Foods. CTH has received requests for opinion. Amazon stockholders may not like the perspective.

(Via CNN Money) The online retail giant announced Friday that is buying organic grocery chain Whole Foods (WFM) for $13.7 billion in cash. The deal values Whole Foods at $42 a share, 27% higher than where the stock was trading Thursday.

Amazon (AMZN, Tech30) said Whole Foods stores will continue operating under that name as a separate unit of the company. Whole Foods CEO John Mackey will stay on to lead Whole Foods, which will keep its headquarters in Austin, Texas. (link)

Here’s my review. Firstly, Whole Foods was available for purchase because Whole Foods business model was limited; and like the progressively minded organization they are – they allowed their Birkenstocks to travel beyond their limits, which always leads to failure.

In the PC corporate world ‘pending failures’ are called “challenges“, or “opportunities” if you don’t want to get kicked out of the boardroom.

Whole Foods is a high-priced (nicknamed “Whole Paycheck” for a reason) grocery outfit specifically because they were/are generally a niche market operation.

The cost of organic products, in combination with their fundamental flaw (Achilles heel) that economies of scale (warehouse and distribution) are a prerequisite within the low margin industry for cost savings, kept their prices high.

As a regional business, inside specific markets with specific access to locally sourced product, Whole Foods would be ok.  It’s their core operations and reason for their initial success.

However, attempt to expand that operational model nationally (which they did), and you enter a dynamic of trying to sell products in markets that don’t appreciate or value the Vichy experience of dropping $300 for two Eco-friendly canvas bags of fruits, vegetables and oddly pronounced olive oils.

High prices are necessarily part of the Whole Foods overall business model. Expand operations beyond niche markets that can afford such prices and, well, failure (ie. their Birkenstocks traveled to far).  That position is exactly where they were.

♦ Enter Jeff Bezos, Amazon and a distribution network with a high-minded belief their distribution can/will enhance the logistic and efficiency challenges encumbering Whole Foods future success.

No doubt Bezo’s gender neutral Latte bean counters found some like-minded suave millennials, complete with man-buns and algae cakes, to deliver a fabulous Apple-powered presentation therein.  Business graveyards are filled with such enamored and well-meaning carcases.

Whole Foods operates approximately 460 stores.  [How many of them actually turn a profit, and hold up the loss leader footprint, is unknown.] Amazon reportedly paid $13.7 billion (yes that’s billion with a “B”) for the footprint.  Or approximately $29.8 million per retail unit.

$29.8 million per store is approximately $10 million more (per unit) than anyone with a modicum of practical common sense would normally pay.  Then again, Amazon is cash heavy, so what’s a few billion amid like-minded latte power-point-pals; and Mackay’s crew of fellow travelers know how to burn cash better than most.  (See Hillary Clinton’s 2016 boondoggle expenditure for reference.)

However, in Bezo’s world, amid the giddy financial generation, money seems to grow on trust-fund trees.  The bottom line of actual profit is transparently non-existent in this $13.7 billion expenditure.  Even with a modicum of success, it would take a generation of successful operations for all 460 units to pay back such an over inflated purchase price.  So, obviously this is not a decision based on bottom line profit generation for the parent company Amazon.

That brings us to the next set of points which lean more remarkably toward failure.

Technology, and more specifically technological mobility, is now creating individual efficiencies in consumer personalization to exceed any investment value that a retailer would necessarily place in infrastructure.

Does that sound like corporate gobbledyspeak?  Good, it was supposed to.

Plain english version – People are assuming Amazon will be looking to generate shop-at-home (direct delivery) value via a synergy of Whole Foods grocery operations and Amazon’s exhaustive distribution network.   [All of the highfaluting Brioni suit and disposable tailored white shirt crews are espousing that opinion.]  Amazon is anticipated to be able to deliver groceries through this acquisition.

In order for that to be a possible future outcome, layers of cost efficiency would need to be the driver of Whole Foods boardroom discussion very soon. Very unlikely.  Apparently unbeknownst to the algae-cake community, the overall industry, as a direct result of the technological mobility of the consumer, is now less invested in such an approach.

Why?

Simple.  Technology is also creating efficiency for consumerism.  It is entirely possible to go on-line for your grocery purchase, submit your grocery list to your local market, and then utilize Über transport as the pick-up and delivery method.  Über and Lyft won’t be just for taxi service anymore…. watch/wait for it.

The all encompassing process of ‘field-to-fork’ within the food industry is poised to break down into various competing sub-sets and sub business units, external to the food retailer.  Again, efficiency of scale and specialization is essentially the driver (no pun intended).

On the upside of angled considerations for Amazon, they are also looking into entry in the retail store market, and with that in mind actual foot traffic is a prime factor.  No industry drives a higher measure of consistent foot traffic than your local supermarket.  So there can be a reasonable expectation that Amazon stores will have some connective tissue to the locale of Whole Foods. [Somewhat guessing here]

However, in the direct-to-home market for grocery operations, specifically because of the aforementioned mobile distribution specialization, the synergy of Whole Foods and Amazon shouldn’t be predicated on a belief such a new market will necessarily emerge.

Yes, the upper-east side, and those of similar refinement, may welcome Amazon delivery of Whole Foods products.  But that doesn’t change the issues of regional limits for such consumer evaluations.  The baseline Achilles heel of Whole Foods still exists, albeit with a possible delivery service.

Tear it all apart and Amazon just paid about $30 million per store for a business enterprise worth about 30% less than that.  There is no reasonable way, from a profit perspective, for Amazon to ever recapture such an expenditure.  Then again, as stated, it doesn’t look like profit is their motive.

That said, as history customarily shows, sooner or later the value of a common stock will not support the best intentions of well worn Birkenstocks.

France Police Hunting Tourists To Shake Them Down


COMMENT: Mr. Armstrong; I had the wonderful experience of flying to France to see my son going to school there. Upon my arrival, I was immediately commandeered by the French police asking me how much money I had. I didn’t even get out of the Paris airport. I was not dressed elegantly; just jeans. I wanted to send you this not because reading what you write and experiencing it are two different things.

Thank you for what you do

GK

ANSWER: Yes. France is going nuts. They are stopping trains that pass through France and searching people’s bags for cash. And this is where they want the financial markets moved to from London? I would not have any account there. They cannot be trusted

Merkel Wants G20 Global Taxation of Internet


Markel is calling upon the G20 to regulate the internet. While she if pretending to be concerned about cyberattacks, which no regulator can prevent, you have to look into the finer details. Chancellor Angela Merkel called for a global regulation sayying: “Industry 4.0 will have to go through the process that we have already gone through at the World Trade Organization (WTO) with real trading operations that we have gone through in the G20 process with financial market regulation.” 

She noted that the “concerns” include “cyberattacks, the responsibility of social platforms to tax issues in international trade, and growing concern in the world Of policy. “

In other words, she wants to tax all sales on the internet. So anyone from Germany buying anything anywhere would have to pay VAT and every online merchant would have to comply with global regulation. Additionally, governments are increasingly becoming concerned about blockchain technology and the avoidance of taxes.

As always, government pretend to be concerned about security, but it is always about the money. She also wants to shut down anyone who talks against government in the social media.

EU Wants to Order All Euro Trading Moved from London to Paris


The European Union is preparing the legal basis to take over London’s extensive trading business with euro derivatives. This is just another complete failure of bureaucrats to comprehenmd market function. Perhaps they should also outlaw euro trading in the USA and Asia. That would be real smart. Then they can all sit down and play cards with euro themselves and guarantee it will never be anything to anyone else no less convertible worldwide.

The EU Commission wants to withdraw the multi-billion-dollar derivatives market from London after leaving the UK from the European Union. Transactions with securities settled in euro should then be transferred to the European Union if the relevant clearing house plays a key role in the financial system with its trading volumes. Their draft law is still in draft form. It is the testament to just how stupid bureaucrats can really be. They have already outlawed naked shorting of the government debt to prevent a crisis in sovereign debt. They fail to comprehend that in the middle of a crash, they ONLY people buying are shorts. No shorts = flash crash and no bid.

You just can’t get more brain-dead than this.

 

The Right to Vote Should Attach to Only Those Who Pay Taxes


There is a rising tied that many people are not paying attention to. That is the rising unrest among the youth. The problem with allowing the youth to vote on economic issues is simply they want to rob others so they have their free world. In Britain, they have been fighting to bring the age to vote down to 16. How can someone make any intelligent decision concerning the fate of the nation before they even have a job and pay taxes?

When it comes to war and if they are to fight such a war, then absolutely, they should have a right to vote. But when it comes to economic policies, you should not be allowed to vote unless you pay taxes. If you do not have a job, it is always easy to demand socialism to go rob someone else who has what you want. If you walked down a street and you are grabbed and told you cannot leave until you hand over money, isn’t that a crime? Yet somehow we elect politicians who will do that exact thing under threat of imprisonment if you do not hand over whatever they demand.

 

Hoe can a man write a book and explain how it feels to go through childbirth? It’s impossible! The same applies to voting. If you want to vote on anything that involves economics, you should have a stake in the process by paying taxes. Otherwise, go to your party with friends and complain about the world until you are old enough to know what the world really is.

Allowing everyone who has no stake in the game vote against others who do, it not Social Justice – it is servitude. Sorry, it is not no vote no hope, it is no vote if not responsible.