Armstrong Economics Blog/Armstrong in the Media
Posted Nov 26, 2022 by Martin Armstrong
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New Interview: Energy, Russia/Ukraine, Cryptos, US Civil War, Real Estate Crash
Tag Archives: The Forecaster
Meloni Set to Abolish Italy’s Welfare State
Armstrong Economics Blog/Italy Re-Posted Nov 25, 2022 by Martin Armstrong
Italy’s new PM Giorgia Meloni revealed her first economic initiatives with a budget of 21 billion euros. The Italian government will no longer provide free handouts to those who simply refuse to work. This should not be controversial.
For starters, anyone eligible for welfare must actually reside in Italy. Those capable of working will have eight months to find employment before their free paycheck runs out. Alternatively, if someone refuses a job, they will be excluded from receiving welfare. The 5-Star’s citizens’ wage will be abolished by next year as the system has been abused by many who simply do not want to work. They are reviewing the pension system as well, but it’s too late to save the pension funds.
Italy’s first female PM is also encouraging couples to start families amid a birth rate crisis. Women may take a sixth month of maternity leave and still receive 80% of their salary. Meloni cut taxes on goods for newborns and feminine hygiene. Couples will receive a 50% increase in the “baby bonus,” and families with over three children will receive more incentives. Italy needs future taxpayers.
Everyone cheered when America appointed its first female vice president, but Kamala Harris has done nothing for women who still pay the pink tax and do not have access to maternity leave. It is astonishing how controversial this move has become with the papers calling Meloni a Fascist dictator for preventing working taxpayers from paying for those unemployed by choice.
Interview: The Economy and Geopolitical Trends
Armstrong Economics Blog/Armstrong in the Media Re-Posted Nov 24, 2022 by Martin Armstrong
Click here or on the video above to view my most recent interview with the Financial Repression Authority. Our friends at MoneyTalks created a nice overview of the interview that you may read here.
Housing Sales to Institutional Investors Dropped 30% in Third Quarter
Posted originally on the conservative tree house on November 24, 2022 | sundance
There is a significant lag in all data within the housing market. That said, the third quarter (July, Aug, Sept) data reflects a significant drop in institutional investment within the housing market.
If you look closely at the timing (keep in mind the data reporting lag) what you will notice is that financial institutions began a big surge in purchasing hard assets, specifically real estate, as soon as Joe Biden took office (Jan ’21), and the economic policy became evident. Intangible financial instruments became an immediate risk as the professional financial control groups recognized energy policy would drive inflation (supply side) and devalued money would fuel it (demand side).
As an offset to predictable inflationary policy (the insiders’ game), institutional money (Blackrock, Vanguard etc) was moved into hard assets with tangible value. This shift in asset allocation, institutional sales, helped fuel a false surge in home prices and their valuations. CTH was writing about this in 2021, and sounding alarms as it took place. 25% of all real estate purchases were being made by institutional investors.
The dynamic was predictable. The Biden administration economic policy, energy policy and monetary policy, was going to cause massive inflation. CTH was shouting about it in early 2021 and warning everyone to prepare for waves of price increases that would naturally surface first on high-turn consumable goods, and then embed into longer-term durable goods.
Despite claims to the contrary, this 2021 inflationary explosion had nothing to do with the pandemic or supply chain shortages. It is entirely self-created by western governmental policy; the collective ‘Build Back Better’ agenda. You can see now from the background moves within the financial sectors, they too knew the reality and their money shifts reflected that despite their ‘transitory’ pretending they were mitigating their own exposure.
We the People were yet again going to be victims of specifically intended monetary, regulatory, energy and economic policy.
The investment class rulers of the WEF assembly shifted assets to avoid the pain that we would feel. We “would own nothing and be happy,” and their shifts would position them to own everything and be in control.
Overall govt spending and regulatory controls drove inflation for these past two years. The ‘demand side’ was blamed, despite the lack of demand. I will be proven right when history is concluded with this. Interest rates were raised by central banks in an effort to support the policies that are driving ‘supply side’ inflation, not demand side.
Energy policy was/is crushing the consumer by driving up the cost of all goods and services. To support the overall goal of changing global energy resource and development (a false and controlled global operation), central banks raised interest rates. Various western economies, including our own, have been pushed deeper into a state of contraction by central banks crushing consumer demand, and eliminating investment via increased borrowing costs.
In short, the goal was/is to lower energy consumption by shrinking the economic activity. This, according to the BBB plan, was needed at the same time as energy development was reduced. These economic outcomes are not organic, they are all being controlled by collective western government agreement.
Within this control dynamic, there was always going to be a point where the reaction of the people to their economic reality means the financial control elements need to shift direction. They will always maximize profit and minimized risk, while knowing what the larger objective remains.
Just like every other durable good, housing demand contracts as prices and costs become unaffordable. The loss of equity within your home is damaging to your own value or ability to borrow against it. From the perspective of an institutional asset, that same equity drop is an investment loss. Thus, just as a consumer would exit the housing market, so too will institutional investment groups now control the slow dumping of the asset to remove the equity they pumped into it.
Much of the investment housing will be retained as rental housing, with the monthly rents being part of the returns on the investments. However, as this dynamic unfolds further purchases of houses stop, because the asset overall is declining in value.
(Via Wall Street Journal) – Investor buying of homes tumbled 30% in the third quarter, a sign that the rise in borrowing rates and high home prices that pushed traditional buyers to the sidelines are causing these firms to pull back, too.
Companies bought around 66,000 homes in the 40 markets tracked by real-estate brokerage Redfin during the third quarter, compared with 94,000 homes during the same quarter a year ago. The percentage decline in investor purchases was the largest in a quarter since the subprime crisis, save for the second quarter of 2020 when the pandemic shut down most home buying.
The investor pullback represents a turnaround from months ago when their purchases were still rising fast. These firms bought homes in record numbers last year and earlier this year, helping to supercharge the housing market.
Now, investors are reducing their buying activity in line with the decline in overall home sales, which have slumped with mortgage rates rising fast. (more)
At a macro level, if you bought a home in the last 18 months, or refinanced your home to pull out equity, you still have significant downside exposure. Home prices will continue dropping until they plateau on the downside at the price that existed in roughly June of 2021.
The drop in value is directly related to the regional purchases by the institutions. In areas where higher percentages of overall home sales were made by institutional investors, the subsequent drop in value will be larger (see chart above). In areas where actual people purchased homes to live in, the drop in value will be less significant.
I keep getting this buying question, so with the above in mind I will answer it in the most brutally honest way I can present…..
At a macro level, if you are going to purchase a home on this downslope, look at the historic valuation of that property (or a comparable property) in/around approximately the spring of 2021. Start there, and put your offer in that vicinity, then hold firm without any emotional attachment to it. Do not purchase another groups loss.
Australians Safe from Fifth Jab
Armstrong Economics Blog/Australia & Oceania Re-Posted Nov 23, 2022 by Martin Armstrong
After taking four vaccines and failing to curb the transmission of the coronavirus, Australian health officials will not recommend a third booster shot. Health Minister Mark Butler said the Australian Technical Advisory Group on Immunization (ATAGI) admitted that a fifth dosage of the mRNA vaccine would have “minimal” effect toward reduction efforts.
Australia once had some of the strictest COVID restrictions in the world, and this is huge news. ATAGI member Allen Cheng, Ph.D., mentioned that the risk of myocarditis in younger people is troubling. “Vaccinations are beneficial and protective even for younger people but the more doses you get the less benefit you derive from them and then we start to worry about causing side effects,” Cheng said.
Butler said that new booster recommendations will be made in early 2023. Australians are not off the hook yet. Everyone over the age of 30 has been eligible for a second booster since July. The government still recommends staying “up to date” on vaccinations despite that standard constantly changing.
Ukraine Supporters & Denial of History
Armstrong Economics Blog/Ukraine Re-Posted Nov 22, 2022 by Martin Armstrong
I apologize, the proposal began in 1991 for Russia to join NATO. But the final agreement with respect to Ukraine’s nukes was not in Belgrade but in Budapest. History has been rewritten to support the war against Russia for climate change. I have never seen any account of history that reports NATO invited Russia to join in 1991. Some people are so pro-Ukrainian that it is insane. They are really cheering for World War III and no doubt believed in COVID, Weapons of Mass Destruction in Iraq, and Hillary’s RussiaGate. They refuse to open their eyes to see that they have been played for fools as always to justify war.
So cheer all you want. This war will NOT be confined to just Ukraine you can watch it on TV as if it is some video game. Ukraine was the 3rd largest nuclear power. That was a fact. The US paid them to surrender their nukes to Russia and they in turn provided nuclear power rods for electricity. James Baker warned about loose nukes and Ukraine was one of the three republics that ended up with nukes. The difference was, Ukraine wanted to use them on Moscow. All my sources back then were deeply concerned that Ukraine just could not ever be trusted. It was Ukraine that kept the cold war going. Zelensky has supported the Ukrainian Neo-Nazis who have even bragged that they feed the bones of Russian-speaking children to their pet wolves. I have fact-checked that and it is a true statement made to the press.
My dealing with Ukrainian governments has always been: Just show me the money. Ukraine is a corrupt black hole. History will show who is on the right and wrong side if any side survives.
Good luck with your hatred. Remember, there is a funny thing about what we call karma. What you wish on someone else may be what becomes your own undoing. So don’t worry. Your hatred of Russia will end that nation, but it will be a Phryic War and nobody will survive. So cheer the loss of your future. You will get what you deserve in spades.
The Polish Association of Memory of Victims of Crimes of Ukrainian Nationalists documented 135 methods of torture and murder practiced by Ukrainian Nazis. Poland officially called the Ukrainian actions genocide. The Ukrainians have been protected by the CIA for decades ONLY because they hated Russians. They continue to protect the Ukrainian Nazis only because they are waging war against Russia.
The Ukrainians were unprecedented in their war crimes during WWII and the sheer outright cruelty one would expect only exists in some B-Rated horror movies. This included:
- Running children through with stakes
- Cutting a person’s throat and pulling their tongue out through the hole
- Sawing a person’s torso in half with a carpenter’s saw
- Cutting open the belly of a woman in an advanced stage of pregnancy, removing the fetus, and replacing it with a live cat, before sewing up her abdomen.
- Cutting open a pregnant women’s abdomen and pouring in broken glass
- Nailing a small child to a door.
Ignore all the history you want to keep fanning the flames of war. When you lose everything, remember – you asked for this result.
Multinational Advertisers Begin Pulling Out of Twitter
Posted originally on the conservative tree house on November 3, 2022 | Sundance
In the prediction section of the recent Twitter discussion {Go Deep} CTH mentioned the reason and unspoken motive behind a prediction that multinational corporations would start to pull their advertising money from Elon Musk.
We are simply in an era where there is no distinction between the WEF guidance for multinational corporations and the instructions toward governments’ they support. Free speech and freedom of expression are against both their interests.
Multinational corporations are political entities. The former distinctions between the private and public sector have been purposefully erased. Evidence can be found in the vaccination mandate and within corporate responses to voter outcomes during elections. {Go Deep}
As predicted, it begins….
(Via Wall Street Journal) – Food company General Mills Inc., Oreo maker Mondelez International Inc., Pfizer Inc. and Volkswagen/Audi are among a growing list of brands that have temporarily paused their Twitter advertising in the wake of the takeover of the company by Elon Musk, according to people familiar with the matter.
Some advertisers are concerned that Mr. Musk could scale back content moderation, which they worry would lead to an increase in objectionable content on the platform. Others are temporarily halting their ads because of the uncertainty at the company as top executives exit and Mr. Musk considers a raft of changes, some of the people said.
Kelsey Roemhildt, a spokeswoman for General Mills, whose brands include Cheerios, Bisquick and Häagen-Dazs, confirmed the company has paused Twitter ads. “As always, we will continue to monitor this new direction and evaluate our marketing spend,” she said.
A Twitter representative didn’t immediately respond to a request for comment.
General Motors Co. paused its spending on the social-media platform last week.
Several ad buyers say they expect the number of brands pausing Twitter ads to rise. They say that the platform isn’t considered a must-buy for many advertisers, with far larger budgets going to tech giants such as Alphabet Inc.’s Google and Meta Platforms Inc., and that pausing makes sense during the bumpy transition under Mr. Musk.
Many executives on Madison Avenue are uneasy with the rash of sudden executive departures from Twitter’s advertising sales and marketing units. Among those who have exited are Chief Customer Officer Sarah Personette, Chief Marketing Officer Leslie Berland, and Jean-Philippe Maheu, Twitter’s vice president of global client solutions. Those executives helped reassure advertisers that their ad dollars were being spent wisely and appropriately on Twitter. (read more)
Fascism was traditionally defined as an authoritarian government working hand-in-glove with corporations to achieve objectives. A centralized autocratic government headed by a dictatorial leader, using severe economic and social regimentation, and forcible suppression of opposition.
That system of government didn’t work in the long-term, because the underlying principles of free people reject government authoritarianism. Fascist governments collapsed, and the corporate beneficiaries were nulled and scorned for participating. Then, along came a new approach to achieve the same objective.
The World Economic Forum (WEF) was created to use the same fundamental associations of government and corporations. Only this time, it was the multinational corporations who organized to tell the government(s) what to do.
The WEF was organized for multinational corporations to assemble and tell the various governments how to cooperate with them, in order to be rewarded by them. Corporatism was/is the outcome. The government is now doing what the multinationals tell them to do, and in return the multinationals install the compliant politicians.
Fascism, the cooperation between government and corporations, is still the underlying premise; the World Economic Forum simply flipped the internal dynamic putting the corporations in charge of handing out the instructions.
What results is a slightly modified definition of fascism:
…A massive multinational corporate conglomerate; telling a centralized autocratic government leader what to do; and using severe economic and social regimentation as a control mechanism; combined with forcible suppression of opposition by both the corporations and government.
Doesn’t that define our current reality, especially visible in the era of COVID?
The instructions from the multinational corporations to government would be called the “Great Reset“, or as commonly transposed by the government officials receiving the instructions, “Build Back Better”.
~ Go Deep ~
Production Prices Continue Exceeding Current Consumer Prices, Meaning Higher Prices Still Coming
Posted originally on the conservative tree house on June 14, 2022 | Sundance
The “Producer Price Index” (PPI) is essentially the tracking of wholesale prices at three stages: Origination (commodity), Intermediate (processing), and then Final (to wholesale). Today, the Bureau of Labor and Statistics (BLS) released the May 2022 price data [Available Here] showing another 10.8% increase year-over-year in Final Demand products at the wholesale level.
The inflation within the total goods supply chain continues to accumulate at a more significant rate than the finished goods on the store shelves. This means replacement goods will continue arriving with higher prices than current. Final demand goods in May were 1.4% higher than April (16.8% annualized). And the May year-over-year prices show a 10.8% increase [See Table A]. However, there’s more trouble ahead:
More troubling than the final demand price increases (wholesale finished goods), are the price increases in the intermediate goods and unprocessed raw materials.
Intermediate processed goods increased 2.3% in May (27.6% annualized). The intermediate unprocessed goods, raw materials, jumped even higher in price at 6.3% for May (that’s a whopping 75.6% annualized increase). It would appear the raw materials coming into the goods sector are coming in with even higher built-in energy costs than most people anticipated.
Once those intermediate products reach the final demand stage (wholesale), the cumulative price increase will mean even higher consumer prices.
(VIA ABC) – WASHINGTON — U.S. producer prices surged 10.8% in May from a year earlier, underscoring the ongoing threat to the economy from inflation that shows no sign of slowing.
Tuesday’s report from the Labor Department showed that the producer price index — which measures inflation before it reaches consumers — rose at slightly slower pace last month than in April, when it jumped 10.9% from a year earlier, and is down from an 11.5% yearly gain in March.
On a monthly basis, producer prices climbed 0.8% in May from April, above the previous month, when they increased 0.4%.
Energy prices, led by gas, rose 5% just in May from April. Another big driver of the price gains last month was a sharp 2.9% increase in the cost of truck freight hauling, a sign that supply chain problems still aren’t fully resolved. Food costs were unchanged.
The figures indicate that rising prices will continue to erode Americans’ paychecks and wreak havoc on household budgets in the coming months. Inflation has created major political headaches for President Joe Biden and congressional Democrats and has forced the Federal Reserve into a series of rapid interest rate hikes intended to slow the economy and cool price increases. (read more)
Another Strike Against Cryptos
Armstrong Economics Blog/Corruption Re- Posted Jun 14, 2022 by Martin Armstrong
I’ve said it before and will say it again – cryptocurrencies are not a safe investment. I know it is not a popular opinion; people have had success with trading. The problems with cryptocurrencies: (1) they depend entirely upon the government; with the stroke of a pen, they can all be seized; (2) they depend upon a power grid; (3) they also become dependent upon others accepting them.
A fourth all too common issue is that crypto trading platforms can prevent people from trading with little or no explanation. Binance recently announced that users are not permitted at this time “due to a stuck transaction causing a backlog.” CEO Changpeng Zhao stated on Twitter that the issue would be fixed in under 30 minutes. Later in the day, he said the issue would “take a bit longer to fix than my initial estimate,” but would only impact the Bitcoin network. Uncoincidentally, this sudden system glitch occurred after bitcoin fell by 10% beneath the $24,000 level.
This happens more than they would like people to believe. A few years back, a friend of mine was blocked out of their Bittrex account as soon as one of their cryptos began crashing. At one point, Bittrex suspended and eliminated numerous accounts in 2017, and it took them days to respond. They claimed the issue was a “compliance review,” as these platforms can seemingly make up any excuse they please. During that instance, they did not even inform users before they were locked out of their accounts. Unpopular opinion but the fact of the matter is that cryptos are seriously flawed.
Credit Card Debt on the Rise
Armstrong Economics Blog/USA Current Events Re-Posted Jun 14, 2022 by Martin Armstrong
The various handouts and moratoriums during the pandemic drove the personal savings rate down to World War II levels. Everything was closed – there weren’t many opportunities to spend. US consumers paid off a record $83 billion in credit card debt during the pandemic, but that has all come crashing down.
The Federal Reserve reported that revolving credit card debt in April reached $1.103 trillion, surpassing pre-pandemic levels and spiking 20% from the year prior. Credit card balances reached an alarming $841 billion in the first three months of this year alone, and the Fed expects that figure to continue rising due to the unsustainable price of living. In addition, household debt is now close to $16 trillion after consumer debt spiked 1.7% in Q1.
Unfortunately for those already behind, the rising interest rates will only cause them to carry a higher balance of debt. Once the prime rate rises, credit card companies will follow. The APR on credit cards is already 16.61%, nearing the high of 17.87%, on average, but is expected to rise. Debt can easily become a vicious cycle from which there is little escape for the average person. Those who budgeted in the belief that Biden would actually cancel their student debt were misled if not gullible. As housing, food, gas, and other necessities rise, those who are already void of liquid assets will find themselves in a dire situation.
Centinel2012 