Tag Archives: Progressivism

Mar 20 2019

Are Bonds Preferable to Stocks in a Crisis?


Armstrong Economics Blog/America’s Economic History

Re-Posted Mar 20, 2019 by Martin Armstrong

QUESTION: There are a few people coming out claiming the stock market will crash so buy bonds even though you will lose money. How can people keep calling for a mega-crash so long with constantly being wrong since 2010?

Thank you for your reason

NR

ANSWER: These people are still living in a world that is defined by the event of the Great Depression. Even Germany forces austerity upon Europe because they do not understand the events behind their own hyperinflation and stupidly assume it was merely an increase in the supply of money that caused the event. Nobody seems to be bothered to ask which comes first – the chicken or the egg?

Here is a chart of the stock market with the US Long Bond. Andrew Jackson paid off the national debt in 1835. President Jackson also shut down the Second Bank of the United States on Sept. 10th, 1833. Jackson announced that the government would no longer deposit federal funds in the Second Bank of the United States, which was a quasi-governmental national bank. The stock market peaked in 1835 and began its decline without a central bank. Then during July 1836, Jackson issued the Specie Circular. Under this act, the government would only accept gold or silver in payment for federal land.

Jackson’s Bank War closing down the Bank of the United States was personal because they funded his opposition. By shifting deposits to state banks, Jackson set off a major crisis undermining the entire monetary system. He effectively devalued all the circulating currency in the country with one law – the Specie Circular. Suddenly, there was a run on gold. The Panic of 1837 unfolds as New York banks suspended all withdrawals of gold. Jackson created massive austerity, but he had shut down the national debt as well. This was a very complicated financial crisis with an interesting mix of events combining together.

There were NO federal issues of paper money and the first paper dollar to be issued by the government did not unfold until 1860 to fund the Civil War. Therefore, Jackson effectively canceled all paper money by refusing to accept it and this resulted in a gold panic forcing the banks to suspend all payments. People were rushing to banks to exchange their paper currency for gold and banks could not meet the demand and suspended all demands for gold.

When federal bonds resumed in 1842, they had declined in value as interest rates rose. There was no flight to quality, only to gold given there were no federal bonds. This is when several states moved into default permanently upon their debt. Therefore, the Monetary Crisis Cycle that hit then was felt in the state and local levels – not federal. The Monetary Crisis Cycle that hit in 1931 resulted in widespread sovereign defaults outside the USA.

Each cycle that hits is slightly different characters and reasons. I highly warn against buying any sovereign debt whatsoever. Any federal debt to hold must be short-term no more than 90-day paper. In the case of the Hard Times of 1837-1842, the stock market crashed in terms of gold because all money was effectively canceled. Paper money collapsed as notes lost their legal-tender value. Thus, only gold rose in value as the medium of exchange thanks to Jackson refusing to accept anything but gold.

This time around, bonds are legal tender so that is the money that will decline in value far more than anyone expects. Both the Bank of Japan and the ECB in Europe have wiped out their bonds markets for they have been the primary buyer of government debt which they cannot now resell.

 

Mar 20 2019

The Stock Market – Up & Away or Crash & Burn?


Armstrong Economics Blog/Dow Jones

Re-Posted Mar 20, 2019 by Martin Armstrong

QUESTION: Mr. Armstrong,

In your blog you talked about a global recession and hard landing. Does this mean the US stock market will rally because funds will flow from the rest of the world to the US stock market? Or will the US stock market succumb to the global recession and go lower too?

This is very confusing for most of us and a very critical time in the markets. I hope you will guides us with your knowledge and experience.

Thank you for all you do!

KC

ANSWER: The key to pushing capital fleeing into the stock market will be the decline in public confidence within the government. Everything is unfolding on schedule. You see turmoil everywhere from Canada to France and Italy. The level of people distrusting government is climbing. Normally, it will take a 45% level of people turning against the government to set off the spark.

So no, there still does not appear to be a major crash of 50-62% as the majority are calling. The market is testing resistance, but here too we do not see this as breaking out and taking off just yet. We are in a choppy consolidation building a higher base that qualifies as a cycle low. We will be ready to take off soon. Just be patient.

 

Mar 20 2019

The Rally Beyond 2015 in the Dow Has Proven We are in a Cycle Inversion


Armstrong Economics Blog/Dow Jones

Re-Posted Mar 20, 2019 by Martin Armstrong

QUESTION: There are many people who are now saying we are headed into a recession. Your model shows we are coming to the end. Yet you have been the only analyst who has been correct. There are bankers warning the stock market will collapse by 50% because it always goes down in a recession. I watched the market rally to new high as you forecast back in 2010 going into 2015. Then you warned the market would invert and continue the rally after 2015. The market rallied into nearly your Pi Target in 2018. You said at the last WEC there would be a correction back to retest the monthly bearish reversal.

You have been correct at every turn. Back in 2014, you posted: “What will not go down when the cycles shift, inverts and rises even further.” It seems that this has been a cycle inversion where the market has just been rising through the upside and downside of your model. My question is this. You still forecast that this is just the staging ground and we are about to see a different pattern altogether. Is this all part of the cycle inversion you have been stating is underway?

NM

ANSWER: Yes. I also wrote in that post: “This is why I have been warning a cycle inversion is coming. We may be in that process now starting from November 19th/20th.” With all the craziness on the horizon economically, the government was the one in trouble, not the private sector. That meant we had to undergo a cycle inversion. That is what is underway. A normal cycle would have seen the market peak in October 2015 and then decline. The fact that the market has continued to rally past 2015 proves this is a cycle inversion. We will be addressing this at the Rome WEC. We are about to make a major play that will be critical to understanding for the future.

Mar 19 2019

Financial Collapse – Brexit Is The EU’s Flu But Italexit Is ItsTerminal Cancer


Published on Mar 16, 2019

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The bad news keeps coming out of the EU concerning Italy . Not only is Italy in recession but Germany and France are teetering there as well. Italy’s sovereign debt crisis and its Non Performing Loan fiasco is going to blow the whole house down. I’d hate to think of all the credit default swaps out there … Hmmm could be like all those ‘bad’ MBS’s that brought the whole house down (figuratively speaking)in 2007/8. Italy’s politics is exacerbating the situation. The politicians might want all the ‘benefits’ of being in the Euro BUT if Italian debt crashes and the ECB can’t foot the bill (i.e. Germany), it’s arriva derci, sayonara and bye bye to the Euro and Italy will Italexit!
Mar 19 2019

Macron Cracks Down on Yellow Vest Protests – Blocks Champs-Elysees Avenue, Replaces Police Chief…


Re-Posted from The Conservative Tree House on March 18, 2019 by 

Following a weekend of clashes, violence and stores burned in the city of Paris, French President Emmanuel Macron has replaced the police chief and announced blockades to keep yellow vest protesters away from key tourist destinations.

PARIS (AP) — France’s prime minister announced a ban Monday on yellow vest protests along the Champs-Elysees Avenue in Paris and in two other cities following riots on Saturday that left luxury stores ransacked and charred from arson fires.

Prime Minister Edouard Philippe said the ban will apply for an unspecified period in the neighborhoods that have been “the most impacted” in the cities of Paris, Bordeaux and Toulouse, where repeated destruction has occurred since the yellow vest protest movement began in November.

He also said Paris police chief Michel Delpuech will be replaced this week by prefect Didier Lallement.  Philippe announced the measures following a meeting with French President Emmanuel Macron and top security officials that sought to avoid a repeat of Saturday’s violence, in which rioters set life-threatening fires, ransacked luxury stores and attacked police around the Champs-Elysees. Many of those high-end boutiques remained closed on Monday, some of them charred from arson fires set.

He acknowledged “dysfunction” in French police operations on Saturday, rejecting “inappropriate” orders given to security forces to use fewer rubber bullets following a controversy about the numerous injuries they’ve caused at previous protests. (read more)

Recent National approval ratings amid G7 members:  Justin Trudeau, Canada; Emmanuel Macron, France; Angela Merkel, Germany; Theresa May, U.K.; Giuseppe Conte, Italy; and Shinzo Abe, Japan.

Mar 19 2019

Paris Riots Take Over the Champs-Elysees


Armstrong Economics Blog/Capital Flow

Re-Posted Mar 19, 2019 by Martin Armstrong

Paris on Saturday saw a second major uprising of Yellow Vest protests. Many are now arguing that the rioting on the Champs-Elysees has been instigated by extreme elements that have infiltrated the movement to further a second French Revolution. Some 20 stores were looted or set on fire as well as one bank. Needless to say, the Yellow Vest movement has now accepted violence as a legitimate tool to achieve their goals. In this regard, the Yellow Vests have indeed crossed the line and moved into a revolutionary posture. They are fed up with the diminishing standard of living in the name of endless socialism that justifies ever increasing taxation.

The government continues to ignore the Yellow Vests and believe they will just fade away. On the other hand, they argue that after 18 weeks of protests, the government still refuses to listen to anything. This refusal to even listen appears to be instilling more and more violence. Macron has no intention of surrendering the dream of the EU and he maintains that he is in charge and these protesters do not represent the whole of France.

Mar 17 2019

My Unfair Lady…


Re-Posted from The Conservative Tree House on March 16, 2019 by 

AOC Denies Being a Puppet Candidate, She’s Not Being Entirely Truthful…

Amid growing revelations surrounding Alexandria Ocasio-Cortez as a puppet candidate, enlisted by a group of far-left activists, Ms. AOC tweets a firm denial.

(AOC Tweet – Handler Saikat Chakrabarti Tweet)

Unfortunately, the AOC denial breaks an Alinsky rule.  When a leftist breaks an Alinsky rule, the opposite of their claim is generally accurate; counter-intuitively affirming a stronger likelihood Representative AOC is actually steered by a group of leftists.

The evidence to support the puppet proposition is quite strong, albeit somewhat overblown in construct; and unfortunately for Ms. AOC, the evidence that does exist completely reconciles what is factually visible.  However, the issues are more nuanced that most are willing to admit.

Apparently Ms. AOC and her handler Saikat Chakrabarti are responding to a recently viral video put together by a Youtube personality called Mr. Reagan.  Many of you have likely viewed the video; for those who have not seen it, it is worth the time:

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When you spend a lot of time deep in the granular weeds of politics, what Mr. Reagan is describing is not a conspiracy; in practice it is a well established fact.  The construct of recruiting political candidates for office is well known; the difference in modern politics is the type of candidate being recruited.

The video above is approximately 85% accurate.  Having spent time following the reaction of the progressive movement to the defeat of Hillary Clinton the thing Mr. Reagan gets wrong are some of the dates and the timeline.

The loss of Hillary Clinton in the 2016 election exacerbated a pre-existing fracture inside the Democrat party.  The far-left Bernie Sanders wing became more angry with the establishment Hillary Clinton wing.  The reaction was not dissimilar to the same thing that happened in the Republican party in 2008 and 2009 that gave rise to the Tea Party.

Immediately following the 2016 election defeat, and with massive anger amid donors who had contributed billions to the campaign effort, the Clinton-Wing led by David Brock, went into damage control and organized a meeting with the intent on re-branding their efforts. [SEE HERE]  Meanwhile the more progressive wing, the group that actually has a larger grassroots following, decided upon a different course.  That’s where Cenk Uygur comes in.

In the 2018 race the DNC was forced to ride the progressive dragon.  Nancy Pelosi and the Clinton/Brock crowd knew their rise to regain political power would not be possible without the grassroots Bernie leftists.  The Cenk Uygur, Saikat Chakrabarti, recruitment was left alone to keep the fracture from becoming toxic.  The ideological issue of party leadership -vs- grassroots extremists still exists; we see the dynamic playing out daily.

Yes, into this foray the Saikat Chakrabarti (Bernie-wing) 2017 operation to recruit primary candidates to challenge the Pelosi/Clinton-wing was the dynamic that brought forth Ms. Alexandria Ocasio-Cortez.  Take any recent college graduate who is interested in politics and has a reasonably attractive social profile and you can get an AOC.

This is what was immediately visible.  A political neophyte who only knows the catch-phrases from the educational indoctrination and social network.  This surfaces in an understanding of political issues, domestic and international, that is shallow and mostly lacking in substance and structure…  Cue the earliest audio visual.  Must Watch:

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Now, having said that, seen that, and admitting the video which outlines the people controlling the politics of Ms. Alexandria Ocasio-Cortez is generally true, there’s a dismissive element by her detractors that is unfounded.   Most of her words are her own; it’s her ideas, and the formatting of those ideas into content, that are not her own.

No-one knows how over-her-head she is more than AOC.  She’s, politically not well versed in issues but she is not a stupid young lady.  It is obvious she is working her 29 year-old butt off to get herself up to speed.  She’s trying, and those who installed AOC; and are still providing the majority of her education, are also invested in making sure that AOC is not exposed as the recruited 2017 bar-tender.

When we were recruiting constitutional Tea Party candidates (2009) to challenge the vulnerable Blue-dogs and simultaneously primary the GOPe (establishment) Republicans in 2010, we did the same thing as Cenk Uygur, Saikat Chakrabarti.  The difference is that our candidates were more mature, already engaged in political granularity, older and skilled.

Our 2009 through 2011 grassroots Tea Party candidate pool was comprised of those who already established themselves in life and were mature professionals in various fields.  The 2017 progressive candidate pool for Uygur and Chakrabarti are recent college graduates and young folks fresh from the indoctrination machine.  To this college crowd Omnibus is public transportation that goes in all directions.

So yes, AOC was a recruited bartender turned into a congressional candidate and successfully installed as a congressional representative.  But don’t allow yourself to become dismissive of the internal success that was needed to achieve this result.

Remember, the people who attempted to destroy the Tea Party were the GOPe; specifically the Paul Ryan and Mitch McConnell decepticon caucus. Sure the media were all-in to help them, but it was Boehner and McConnell who attacked the freshmen. Pelosi and Schumer saw the mistakes Boehner, Ryan, Cantor, and McConnell made with the dismissal of the Tea Party…. that’s why they now have President Donald Trump.

Do not expect Nancy Pelosi and Chuck Schumer to be as overt with their attacks against the young rebels within their progressive caucus.  Instead, look for Pelosi and Schumer to plan strategies to ‘use’ the movement.  If there is one thing Democrats excel at it’s strategy.

They have an ambitious, albeit politically naive, young lady who is intent on proving her individual merit and strength.  By disposition AOC will not be reliant upon the talking points and handlers forever.  Eventually Ms. AOC will form her own thoughts, speeches, congressional questioning and geopolitical opinions…. in short, she will become self-aware.

If the progressive movement is successful, by the time AOC fully matriculates she may find herself surrounded by a few hundred similarly recruited colleagues…. and just like the corrupt and rotten Paul Ryan who thrived throughout the rise of the Tea Party until he was faced with the sunlight of Trump, Speaker Pelosi ain’t stupid.