How Will Europe Respond to Being the Source of the Crisis?


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.

The Decline & Fall of Religion?


In truth, everything has its cycle. There is no escaping this reality upon which the entire universe was created. There has been a steady decline in church membership which has been consistent with perhaps the politically correct movement with the broader societal trends that also manifest in the declining church attendance. There appears to be a rising trend of an increasing proportion of Americans with no religious preference which is strikingly similar to the decline in religion which took place within the Roman Empire.

Indeed, Constantine’s (309-337AD) decision to decriminalize Christianity within the Roman Empire was a turning point for religious change cyclically. It was the year 313AD, when Constantine and Licinius issued the Edict of Milan decriminalizing Christian worship. Constantine thus became a great patron of Christianity but keep in mind his mother, Helena, was a devout Christian.  She searched all the holy places and constructed churches over them from where Christ was born to where he was crucified.

Note that the medallion pictured here showed Constantine with Sol, the sun god. The cult of Sol was becoming the supreme god even among the pagans – Sol Invictus (invincible sun because it roise every day no matter what). Constantine had set a precedent for the position of the Christian emperor within the Church and raised the notions of orthodoxy, Christendom, ecumenical councils, and the state church of the Roman Empire was officially declared by edict in 380AD. However, Constantine was not really such a devout believer. He adopted Christianity because the movement was rising substantially when people prayed to the pagan golds and nothing happened. The Christians exploited that and argued that the reason their pagan protectors failed was because they did not exist. The pagans, on the other hand, persecuted Christians because the barbarian invasions and the fall of the Roman Empire was taking place because the gods were angry at the Christians.

Constantine sought to be the sole emperor. He really wages civil war. He took a risk to move against Maxentius’ forces which greatly outnumbered his own. Constantine descended through the Genevre Pass and entered Italy. Several battles were fought as Constantine neared Rome itself. The final battle came on October 28th, 312 AD at Milvian Bridge. It was this battle where Constantine I claimed to have had a vision of Christ and marched against Maxentius under the Christian symbol of the cross. Despite the biased historical accounts, the Battle of Milvian Bridge was less of a battle between Christianity and paganism as it was a battle for power and control. While Maxentius may have been a pagan, he did not persecute the Christians and in fact built the first Christian church in Rome. Many of his own troops were Christians. No doubt, Constantine realized that placing the cross on the shield of his army would disrupt his opposing force. Many were Christian and were reluctant to kill a fellow Christian. It was a brilliant move.

Maxentius-Basilica

Historians have written much of the Battle of Milvian Bridge. It has been characterized as the battle between Christianity and Paganism. As Maxentius’ troops began to retreat across a temporary bridge constructed upon boats, Maxentius fell into the water when the bridge collapsed along with thousands of his troops. His armor proved too heavy and thus he drowned in the waters of the Tiber. That ended the battle.

It is not certain when Jesus Christ was actually born. The census that is the story of having to travel to Bethlehem was actually the Census of Quirinius which took place in 6AD after Herod I the Great had died and the Romans were dividing Judaea into thirds among Herod’s sons. There is no actual evidence of Herod issuing an order to kill the firstborn males when in fact he clearly died about 10 years before. Such an order would have to have been issued by one of his sons, yet there is no surviving evidence to support that as fact.

Nevertheless, our model does place a turning point about late 3AD when most scholars agree that Jesus was born based primarily upon the Census of Quirinius. We then have in 312AD the victory of Milvian Bridge by Constantine the Great who then decrees that Christianity will be the state religion primarily so he got to plunder all the wealth of pagan temples. It is rather stunning how we come to major religious events every 309.6 years. This appears to be a change in beliefs that do not necessarily suggest complete changes in religions. Often these are shifts that become more fundamentalist in their beliefs or a turn toward liberalism.

There are two primary cycles. First we can look at the cycle of change in religion which seems to follow the 309.6 year cycle which is, of course, the 8.6-year frequency. The second is to look at the derivative of the 8.6-year which produces a target for a major collapse in religion, which is underway at this time, by 2033.

From the Battle of the Milvian Bridge which took place between the Roman Emperors Constantine I and Maxentius on the 28th day of October 312AD (312.824), it was 309.6 years until the rise of Islam. At the age of 40 in 610AD, Muhammad is said to have received his first verbal revelation in the cave called Hira.

This was the beginning of the writing of the Quran that continued up to the end of his life. There was also the persecution of the newly converted Muslims like there had been among the Christians. Muhammad and his followers migrated to Medina in 622AD, an event known as the Hegira and the birth of the Islam calendar (622.298).

The next cycle produced the target where we see the beginning of pilgrimages to the Middle East during the 10th century. The belief that the world would end come the year 1,000 was very prominent, so much so that the English King Aethelred II (978-1016AD) replaced his image on the coinage with the symbol of Christianity – the lamb. We seem to fear whole even numbers like the 2000 Y2K bug which was going to destroy all computers.

The next target was 1241 which was the year of the Great Mongol Invasion. Poland fell to the Mongols that year who are eventually beaten back. We also see in this cycle was a new trend of Antipopes when France seized the Catholic Church and installed French popes as puppets of the French king that became known as the Avignon Papacy. This was the period from 1309 to 1376 during which seven successive popes resided in Avignon. The Seventh Crusade was a crusade led by Louis IX of France from 1248 to 1254. This was the cycle that we see Constantinople fall to the Turks in 1453.

The next cycle turning point began in 1551 when the Council of Trent reconvened to deal with the Protestant Reformation. This cycle also marks the attempt of Islam to conquer Europe and impose Islam as the state religion. The invading army was the new Ottoman Empire, which was defeated at the Battle of Vienna which took place on the 12th of September 1683 after the imperial city had been besieged by the Ottoman Empire for two months. The peak of that cycle arrives 212 years from the beginning. That was 1763 and the start of George II restrictions placed upon Americans which led to the American Revolution, which was also about the freedom of religion.

This brings us to 1860 and this is the beginning of the American Civil War, which was rooted in a religious question concerning slavery. This current cycle will reach its peak in 2072 and the next will begin in 2170. We are clearly moving toward a clash of philosophies both within Christianity as well as among different religious foundations. As we move into that major turning point, we will see rising discontent and religious confrontation engulf the world. In the USA, we have the liberal v conservative confrontation which is also incorporating the religious right and anti-abortion movements v women’s liberation factions. They see this as plain and simple – thous shalt not kill. Yet this is inconsistent with the idea of war itself. Perhaps it is ok to kill someone if the government tells you to do it?

This is part of the religious cycle as well. We will also see the conflict between Christianity and Islam build in Europe. This will be no different from the anti-immigration movement that surged into gun battles on the streets of Philadelphia during the economic depression that followed the Sovereign Debt Defaults by states during the 1840s. As the economic decline picks up speed from 2018 into 2020, the tensions against immigration will only rise. This is also behind the separatist movements in Europe.

 

 

While we are currently in the Seventh Wave 309.6-year cycle following the birth of Christ, from a pure cyclical perspective, the next turning point in 2072 may be a significant religious change. What comes, can only be subject to speculation. We have completed six waves of 309.6 years. The Seventh is where major change and conflict will be unleashed. However, if we just look at Christianity, from the Edit of 313AD decriminalizing this religion, then 2 x 8.6 = 17.2. Therefore, 1720 years from 313AD brings us to 2033 which aligns with the Sixth Wave of the ECM – 2032.

Further confirmation that we are in a major Private Wave is that the belief systems also shifts not merely away from government (Public v Private) but also from formalized religion and even sports. The evidence is very clear that church memberships have been declining. The various church membership data reflected the steady decline from the 76% level to the 50% level. There has been rising discontent even within the Catholic Church over the left-wing statement of Pope Francis. He has been alienating many Catholics. He has adopted the climate change agenda and supported the United Nations in this anti-industrialization movement. He has also adopted the Piketty argument against capitalism supporting the Marxist view of economic inequality. Many feel he has abandoned the faith since one of the Ten Commandments is thou shall not covert what other people have. This has led many to question if he is not just expressing his personal beliefs disguised as religion.

What is clear is that under Pope Francis, the finances of the Church has been declining significantly. Some argue it is due to his political statements that are not grounded in religion. There is a rather famous Italian investigative journalist, Gianluigi Nuzzi, whose new book, Universal Judgmentis the latest in a string of reveling dispatches on financial crises which he has helped to uncover within the church. In his latest book, he warns that the Vatican will run out of funds by 2023. Certainly, the attendance is declining sharply. His previous book, Merchants in the Temple, focused on the internal corruption in the Vatican bank.

 

Is World War III on the Horizon?


QUESTION:  Martin, I have been following your blog for several months and have begun to start reading older posts because it is all amazing work. When looking at your war cycle with Russia that started in 2014 and supposedly cycles roughly 25 years, I noticed that correlates nicely with your ECM on Russia peaking around 2039. Coincidence? Is it becoming pretty clear World War 3 between east and west seems just over the horizon past 2032?
Thanks,
CC

ANSWER: Socialism is dying and in the process, we are witnessing the rise in even domestic violence. In the United States, this hatred of Trump-inspired by the Democrats has unleashed the destruction of the United States as we have known it. The United States will most likely cease to exist after 2034 and the same result will impact Russia by 2038.

The crisis we face is that governments have made so many worthless promises that cannot be funded. When that takes place historically, the political states collapse internally. However, before that happens, they will turn to international war as a means to retain power and distract the people from the real economic crisis which is befalling civilization.

Gold, War, & the ECM


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.

We will do the gold report after the ECM turn.

Capital Flow Analysis


The clarify, in the Gulf War the USA was the aggressor and thus the capital flows moved away from the dollar. This was contrary to World War I & II and other Middle East events where the USA was not the aggressor. In the current situation, provided the USA does not engage an invasion of Iran, then the risk may lie initially more with Europe given that the Iranian cell groups have infiltrated Europe and are already there. A decline in the dollar appears more likely post-2022.

A Man named Harold; and a president named Barack!


This summarizes how most liberals view the US military:

Harold was a bright child.  He grew up in America.  He went to school and had a bright future ahead of him.  Harold was full of life but was cut short in a violent moment.  While few people had ever heard of Harold before his death, many did afterward  And in death, something very shocking happened.  What was so shocking, especially when it is compared to the death of someone else recently in the news?
Harold was Harold Greene, Major General, United States Army.  On Aug. 5, 2014, Major General Greene was killed by a Taliban terrorist.
He was returned to America with full military honors.
It has been a tradition that the president attends the funeral of General and Flag officers killed in the line of duty.
Richard Nixon attended the funeral of a Major General Casey killed in Vietnam and George W. Bush attended the funeral of Lieutenant General Timothy Maude, who was killed in the 9/11 attacks.
While Major General Greene was buried, Barack Obama was golfing.  The Vice President wasn’t there either.  Neither was the Secretary of Defense.
Flags were not even lowered half-mast.
Four days after Harold Greene gave his life for America, Michael Brown was killed in Ferguson, Missouri.
Brown was at best a young thug.  In the minutes before his death, he committed a robbery at a local convenience store.  According to other reports, Brown struck Officer Darren Wilson and shattered his orbital bone.  Obama sent a three-person delegation to Brown’s funeral!
Neither Obama nor Biden would attend the funeral of the highest ranking military officer killed in the line of duty since 9/11, yet he sent a delegation to the funeral of a thug.
When Margaret Thatcher, one of America’s staunchest allies and Ronald Reagan’s partner in bringing down Soviet communism died, Obama sent only a small low-level delegation to her funeral.  The snub was not missed by the British.
When Chris Kyle, the most lethal American sniper in history was murdered, there was no expression of sympathy from the White House.
But when Whitney Houston died from drug overdose, the Obama/Biden administration ordered all flags be flown at half-mast.
There was no White House delegation at the funeral of an American hero.  American heroes die and Obama goes to the golf course.
A thug dies and he gets a White House delegation.
No wonder most “REAL” Americans hold Obama in such contempt, especially members of our Military.
And Biden is now expounding on how great the Obama/Biden administration was.
Stand up for the “Harolds” in America.

Understand What is the Repo Market


QUESTION: Mr. Armstrong and thank you for what you are doing for us regular people. For my first ever question for you, would you please explain as simply as possible exactly what the REPO market is and how it works and how it affects our multi-faceted financial world.
I am truly grateful for your work and communication.
GLH

ANSWER: The REPo Market is where banks will post AAA securities and borrow against them for the night. Normally, the big banks like J.P. Morgan provide over $300 billion in liquidity daily which allows banks, hedge funds, and institutions to raise cash for the night. When the banks withdrew from lending into the Repo Market, the Fed was compelled to inject cash and thereby lending into the Repo market to prevent the short-term interest rate from rising as it did to 10% on September 17th, 2019.

A Reverse Repo (RRP) injects the purchase of securities with the agreement to sell them at a higher price at a specific future date. The party selling the security to raise cash in the market agrees to repurchase the securities (repo) from the lender at a future point in time which is known as a Repurchase Agreement (RP). Repos are classified as a money-market instrument, and they are usually used to raise short-term capital.

This is not a market that is open to the public. However, it is the basic market where everything else is factored on top of this rate. If the Fed did not intervene, then short-term rates would rise and instead of the consumer paying even 20% on a credit card, it would have jumped as must as 10%.

QE was where the Fed was trying to lower long-term rates after the mortgage-backed crisis hit in 2007 so they were buying 30-year bonds. This is the short-term which has nothing to do with QE. Here the Fed is trying to prevent short-term rates from rising rather than lowering long-term rates which they can only “influence” since the Fed posts only short-term rates like the discount rate (wholesale rate) which banks can borrow at.

Here the economy is not declining and unemployment is back to the 1960s. All the talk about QE makes zero sense for these people do not understand what is taking place and it takes professionals in the field to grasp this issue and they cannot speak since they are under confidentiality agreements.

The Demise of the Private Colleges


by Tabitha Korol

Private colleges are in financial straits, induced by their own progressive policies.

Private colleges are in serious financial trouble.  According to Bloomberg, they may have to merge with others or close their doors.  The seeds planted by the “homeless, tempest-tossed” academics from Frankfurt, Germany, 84 years ago, are now bearing fruit.

The private colleges are yet another casualty of the plot against American values and exceptionalism initiated by those outcasts from the Frankfurt School of Social Theory who arrived in New York, in 1935.  The theorists began their long march through the Institutions, including higher education, changing the system that was among the best in the world, and poisoning the wells as they advanced.  Whether fools or rogues, they soon realized that the Judeo-Christian West’s superiority could only be destroyed from within, by having their operatives join the machinery of the old institutions, and by collaborating with Third World liberation movements and other dissident minority.  It would take some generations, but the prize of the most envied capitalist country in the world – America and the Free West — was worth their patience.

The learned academics within the private colleges readily complied with the new Common Core curricula, textbooks, teaching films and scripts, recognizing the Frankfurt stamp of approval.  They introduced identity politics, which now requires a six-figure professional to help the children cope with the resultant tribalism and victimhood – sorely needed funds down the drain.

They welcomed new professors who spew antisemitism and anti-Americanism and stood mutely by while guest speakers with opposing opinions were jeered out of the lecture halls.  The students are emerging as leftists, socialists, communists, and Islamists, decidedly ignorant in every discipline, but eagerly engaged in social justice courses, community organizing, political protests, and deadly violence to destroy the spirit of freedom and the soul of our nation.  Critical Theory has taught the younger generation to break down fences before they understand why they were erected.

These are the rebels with a thousand empty causes, the socialists who will not support their universities, but who will expect compassion.  Unsurprisingly, this is affecting the coffers of Academe; the alarms have been sounded.

The business of destroying American education from within is gathering momentum.  As  Walter E. Williams explained in Fraud in Higher  Education, only 37% of white college students test as college-ready, but 70% are admitted, and  only 17% of black high school graduates test as college-ready, but 58% are admitted, with most unable to read, write, and do math at 12th grade level.  Forty percent of college students require developmental math and English classes at an annual cost of ~$7 billion.  Only 25 percent of students who took the ACT in 2012 met the readiness benchmarks in English, reading, math and science.  Students are advanced by their race, not by achievement, showing no significant improvement in critical thinking, complex reasoning and writing by the end of their sophomore year.  Education Secretary Betsy deVos just confirmed, “The country is in a student achievement crisis.”

                 

Ronald Reagan famously said, ”Freedom is never more than one generation away from extinction.” Every generation must uphold the legacy of freedom and to do so, it must understand the origins of democracy, our government structure, rights and responsibilities, and methods of public engagement.  But the work of the so-called Progressives (ultra Regressives) has brought the knowledge of civics and government to an all-time low.  Some young people are even learning tolerance and social justice from books supplied by the Southern Poverty Law Center, an FBI-recognized global and domestic terrorism-inspiring hate group, a perfect example of the bedfellows recommended by the Frankfurt outcasts.

National pride and patriotism are slated for destruction, corroborated by history classes that use Howard Zinn’s “A People’s History of the United States,” which focuses on the communist’s views of America’s historic injustice, with its dubious evidence and conclusions.  America is shown as colonialist oppressor of the poor and disenfranchised, with no reference to our 13th amendment to the Constitution that abolished slavery here.  The students are intentionally dumbed down about America’s history, and taught to accept a whitewashed Islam and Communism.  Their violence against the monuments is denial of our history and extends to disrespect and breakdown of our laws and law enforcement.

Progressives vilify our national pride and corrupt public trust so as to destroy our society and reconstruct it into another – hideous – image, with the morale or soul of the generation siphoned out.  Therefore, the bulk of high-quality fiction, poetry, theater and other imaginative and inspiring texts are replaced by informational prose, newspaper and social media stories – dry topics of social studies designed to enervate the individual and discourage reading.  Instead of topics that encourage and inspire, young teens read of emotional difficulties and social justice issues – topics such as teen angst, bullying and sexual harassment, underage drinking, sexual molestation, complex relationships in dysfunctional families, and suicide.  These depressing social issues, irrespective of the students’ emotional maturity, may well have a direct correlation to their increased suicide rate, doubled for boys and tripled for girls.  Our thirty million illiterate adults are a step toward the illiteracy of despotic regimes.

The intellectual depletion shows our 15-year-olds to be lagging behind in math at 39th of their peers in 69 other countries.  These are not “cultural differences,” as math is the most concrete and easiest way to judge across cultures.  Common Core math offers a “one size fits all” approach that holds the children back and thwarts autonomy.  DeVos reported that eighth graders failed to meet the low standard of the ‘90s, sinking below their predecessors from two years before.

In an unexpected twist, Progressives have found some inspiration in Islam and the two are now cooperating to destroy and restructure the society that has nourished them.  Common Core includes the study of LGBTQ history for a full year, with transgender organizations, activists, and websites abetting gender confusion, encouraging life-altering “treatments” that damage their bodies and mental health.  This is sold as “inclusivity,” but is a step toward fully accepting and imitating the Islamic family unit of one man with four wives as young as age 7, and the approval of pedophilia.  The Islamic family unit is a hotbed of dysfunction, complete with rivalry, tension, childhood rape, stealth homosexuality, blame, shame, and extreme violence.

The closer we come to emulating Islam, the further we fall from grace, from the morality of Judaism and Christianity, until we become no better than lower species.  Quotes from Islam’s most famous spokesman, Ayatollah Kohomeini, provided only partially here, may be found on the Internet: Sex and Islam, http://www.truthbeknown.com/islamquotes.htm    Pedophilia and Bestiality in Islam, by Jennifer King, stipulates that all Muslims are ordered to imitate Muhammad’s perfect example in thought, word and deed.  The Prophet engaged in bestiality; it is not forbidden, but bathing instructions must be followed.

The traditional family, based on fidelity, is the surest bastion against the collective-hive society that is being planned for us.  For this reason, schools are increasing sexualization even in Kindergarten, encouraging masturbation, sexual intimacy and intercourse. The comparison with Islamic practice is inescapable: the man has no need to develop self-control and the woman is responsible only to him, invisible, covered from head to toe and obedient under the threat of rape or death.  The Progressive is coalescing with the Islamic mindset to shape the future agenda.  The schools have replaced our Judeo-Christian values with a shared commitment to social causes – racism, supremacism, climate change, America’s evils, boycotting Israel, gun control, unlimited abortion, and more.

David Coleman was the architect of the Common Core standards.  It was developed by a leftist-Washington-based think tank, Achieve, and funded with millions of dollars from the Bill and Melinda Gates Foundation, the American Civil Liberties Union, the Center for American Progress, and others, allies of the left and George Soros groups.  Coleman’s vision was profoundly flawed, and parents were not consulte

Secretary of Education Betsy deVos admitted, “The results are, frankly, devastating.”  Literacy and civics must be made a national priority and it is time to denounce what socialism is doing to our children. This is America’s wake-up call.

 

Tabitha Korol

https://tinyurl.com/y7e6z63d