Trade Deficits & the Confusion Caused by the Methods used to Calculate it


QUESTION: Marty, just reported this past week America’s trade deficit hit a record $891 billion while, in the same week, unemployment report fell to 3.8%. Does this refute the conventional economic belief that trade deficits take away jobs and output?

Cheers, TGM

ANSWER: What is reported as trade is not simply trade. The numbers are all screwed up. It tracks actual goods as well as services and that includes capital flows. The accounting system is set up in such a way that capital investment buying bonds, stocks, and real estate go into the Capital Account. However, all dividends and interest earned by a foreigner on US assets then are accounted for in the Current Account. It is the Current Account that people report as trade which is not correct because it also includes interest and dividends. Thus, the more foreigners invest in a country, the more it will erroneously appear to be expanding the trade deficit as interest and dividends flow back on their capital investment.

Scottish Independence & BREXIT


QUESTION: Marty,
Big fat question for you regarding the UK and the SNP.
You seemed to support Scotland breaking away from the UK in 2014, but since then you’ve voiced your concern on the socialist policies of the SNP. I share that concern, as do a growing number of people here, in not so sunny Scotland.

Unfortunately, SNP seems to have introduced a few more taxes into the system in the last year. One of which is that the higher tax band in the rest of the UK has been raised to 50K, whilst in Scotland, it has been kept at 43k. The other latest tax is that if the company you work for have parking spaces and you drive to work and park your car there, you can be hit with around £450 per year.

Looking back on the history of UK general elections, the SNP hit a high point in the October 1974 general election, polling almost a third of all votes in Scotland and returning 11 MPs to Westminster. They then dropped to under 6 seats till the 2015 election, where they went from 6 seats (in 2010) to 56 in 2015. You could argue the rise to 56 seats was due to the fact people either wanted independence or voted for them as they were happy to be led by them in Scotland but not wanting to be independent. They dropped to 35 seats in 2017, primarily due to people being fed up with the independence record being regurgitated over and over.

To summarise then, the large rise in ’74 followed by a big drop in its support at the 1979 General election, followed by a further drop at the 1983 election. Will we see this again? Big rise in 2015, followed by a large drop in 2017 and the same again in the next election?

Personally, I think the tax rises will take a big toll on their support and they will get hammered in the next election.

Many thanks for your thoughts and wisdom.

G

 

ANSWER: I love Scotland. Every time I flew in to Edinburgh to do an institutional conference for a day, I was introduced as a 7th generation Scotsman – never an American. The separatist movement is separate and distinct from the SNP, which is one step to the right of communism. I was living in London when “Braveheart” came out. I remember going to the movies there, and on the way out everyone was saying how some member of their family was Scottish.

That said, the SNP socialist policies are brain dead and this idea that they must remain part of the EU is beyond stupidity even for someone who is dead mentally. There is absolutely no economic validity to remaining inside the EU. The British have NEVER won anything of significance in the European court. What will it take to make the British realize that they are not really welcome in the EU for resentment remains that it was the Brits who saved Europe from both Napoleon and Hitler.

Ann-Medal-Union-Scotland - 2The Scots voted for independence in a referendum which was clearly rigged by London and the EU. But that was the prelude to BREXIT, which the government is doing its best muck up again over this unwarranted fear over trade. The economy will turn down very hard in Europe in 2019 into 2020 before bottoming. This will alter the politics ahead rather significantly. In Brussels, they will be blaming the Brits, while the Italians will begin to voice their opinion that the Brits got it right after all.

Cyclically, the United Kingdom that was first created back on May 1st, 1707, under Queen Anne (1707.331). On the 309.6 year cycle of the Economic Confidence Model, we arrived at 2016.9315. The BREXIT vote took place on June 23rd, 2016 (2016.476). A referendum on Scottish independence from the United Kingdom took place on Thursday, September 18th, 2014 (2014.715). That meant the Scottish vote was 307.384-years from inception. This was cyclically a confirmation that BREXITwould, in fact, succeed in 2016.

However, the true Scottish Separatist/Nationalism Movement actually began back in 1934 during the economic hard times of the Great Depression. It was in 1934 when the Scottish National Party (SNP) was founded, making its primary goal the future independence of Scotland. The party gradually began gaining ground after World War II, which was propelled by the discovery of rich oil resources in the North Sea during the 1970s. Then in 1974, the SNP won 30% of the Scottish vote and 11 seats in Parliament after campaigning on the slogan “It’s Scotland’s oil!”

Of course, the first major step toward Scottish independence came in 1995. The first and greatest reason for creating a Scottish Parliament in 1999 was that the people of Scotland demanded and deserved the human right to democracy. The UK Government’s white paper on Scottish devolution, Scotland’s Parliament, was published in July 1997. It set out proposals for a new Scottish Parliament and drew heavily on the Scottish Constitutional Convention’s 1995 (see the report: Scotland’s Parliament, Scotland’s Right).

A referendum was held on September 11th, 1997 to ask the Scottish people whether they wanted a Scottish Parliament and whether it should have tax-varying powers. In that 1997 referendum, the Scots voted in favor of devolution of powers, which meant that although Scotland remained part of the United Kingdom, its government gained a broad range of new powers. It would have the power to set its own tax rates as well. Among these new powers was also the right to control education and healthcare. This lead to the creation of a Scottish Parliament for the first time since it was dissolved in 1707. At the peak of the economy in 2007, the SNP won an upset victory in the Scottish parliamentary elections, ending some 50 years of Labour Party dominance. Then the SNP leader Alex Salmond became the first elected minister of Scotland. He won a second term in 2011 and was able to use his party’s historic mandate to secure approval for a referendum on independence for Scotland.

It took just two 8.6-year cycles from 1995 to the beginning of the separatist movement in 2012. In 2012, Salmond and British Prime Minister David Cameron signed an agreement to hold that referendum in 2014. Subsequent negotiations lowered the voting age in the referendum for 16 and determined that it will pose a single question: “Should Scotland be an independent country?”

The problem the SNP faces is they have mixed up independence, socialism, and remaining in the EU rather than the UK. In this regard, they have truly lost their way and do not comprehend either trade of the fact that socialism is collapsing right in front of their face.

 

National Security Adviser John Bolton Discusses North Korea and Kim’s Dance With The Dragon…


National Security Adviser John Bolton appears with Maria Bartiromo to discuss recent reports that Kim Jong-un is moving toward more nuclear testing.

Obviously that discussion moves quickly into the influence of China and Chairman Xi Jinping.

The frustrating question no-one ever seems to ask is not “if” China controls the DPRK government, but rather “to what extent”?

It has become more obvious in the past few years that North Korea’s Chairman Kim Jong-un has much less control over officials and military leadership within his own government than previously thought.

Does Chairman Xi and Beijing structurally control everything around Kim? Is Kim a hostage; forced to ride a dragon he doesn’t control?  I think the answer is yes.

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Once people start to realize that China controls North Korea as a proxy province, then the discussion can evolve toward the true nature of the challenge, and the way President Trump is precariously negotiating a hostage release while refusing to pay the ransom.

In the second part of the interview Ms. Bartiromo discusses the scale of the threat from China; military, economic and national security. Here’s where John Bolton becomes less valuable to President Trump, and oddly Bolton even seems to admit it.

NSA John Bolton can assist and advise President Trump on the best way to move troops, position logistics, and bomb the shit out of an geopolitical adversary. However, the concept of using trade, finance and economics, as a much more powerful national security tool, is outside Bolton’s skill-set.

As a direct consequence of Bolton’s lack of expertise in the use of economics to achieve national security objectives, in the Dance with The Dragon he becomes less influential; you can see it in his responses…. that stuff is just foreign to him.

Deep inside the geopolitical fight against China the most valuable Generals are corporate titans, captains of industry, apex predators and business ‘killers’ who know how to contracts to remove the flesh from a financial adversary and enjoy the challenge of doing it.

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NEC Chairman Larry Kudlow -vs- Chris Wallace…


National Economic Council Chairman Larry Kudlow appears on Fox News Sunday to discuss economic policy, budgets and taxes. Since the discussion is the economy, Wallace quickly puts on his doomsday hat.

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How Did Socrates do at the 1929 High?


QUESTION: You said Socrates has been back tested. What did it write technical the day of the high in 1929?

PO

ANSWER: It has learned from all the data globally. Here is the technical analysis it wrote for 9/3/1929 without human editing:

The market scored a new major high on 09/03/1929 which is up 4 days from the last cyclical low. The broader rally has been over the past 17 days with a rise of 14%. This market has exceeded intraday 2 of three projected resistance points and it has closed below 2 others. Our underlying pivot providing some support lies at 37806. At the moment, the projected extreme resistance stands at 39120. Given the closing was weak, a lower opening followed by a break of this low of 37823 would warn that we may have an important temporary high in place as of this session.

The Uptrend Channel Resistance stands above the market at 39415 while the bottom of this Channel rests at 37966. Meanwhile, resistance provided by the top of this Channel will stand at 39648 for the next session.

The view from our Energy Models, the fact that the market is making new intraday highs in price and our Energy Models are declining, this warns of a divergence, which has been going on for the past day. Therefore, this immediate rally may prove to be unsustainable when such a divergence appears.

 

 

Here was the array. Note that it called for a 2-day correction into the 5th a bounce with a back to back Directional Change. There was a low on the 13th with a 4-day rally/consolidation and the 19th was the next Directional Change. The Panic then began on that Friday 20th. The Directional Changes are pretty good indicators.


Note: The Alpha cycles have been combined in the new arrays for display purposes. They were cycles only from high. The Beta Cycles were derived exclusively from lows

Hoover DC Book Discussion: Victor Davis Hanson on The Case for Trump


Streamed live on Mar 7, 2019

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Hoover Institution Senior Fellow Victor Davis Hanson discusses his new book, “The Case for Trump,” live from the Hoover Institution’s office in Washington, D.C.

Victor Davis Hanson – What Do We Mean By “Western Civilization?” (Video Lecture)


Published on Jul 19, 2018

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This is a fascinating lecture given by Victor Davis Hanson, a professor in Classics and Military History. I found this lecture to be incredibly insightful and gives a description of Western Civilization starting with the Greeks that I think everybody should be familiar with whether they want to support or critique the Western Tradition. Enjoy! If you enjoy this production, feel compelled, or appreciate my other videos, please support me on Patreon, or donate directly by PayPal or to my project fund by way of my website. Any contribution would be greatly appreciated. Thank you 🙏

Trump Trade Deficit Breaks 10-Year Record: Why Not Declare Victory?


Published on Mar 8, 2019

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Donald Trump ran for president largely on a promise to reduce the trade deficit, specifically with China. But the new report shows a 10-year record high trade deficit. Why doesn’t President Trump admit that trade deficits are largely a fiction, and it’s his booming economy that makes a “really really great, huge one” possible? Bill Whittle Now is a production of the Members at http://BillWhittle.com