Tag Archives: TPP

Jul 1 2017

France’s President Says He is TOO SMART to Communicate with the Fools Who Voted For Him


Armstrong Economics Blog/France

Re-Posted Jul 1, 2017 by Martin Armstrong

The French President Emmanuel Macron will break with the long-standing tradition of the President making a speech on Bastille Day to celebrate winning independence. He says his “complex thoughts” may prove too much for journalists. The truth is, his agenda is to surrender the independence of France and hand it to Brussels. He has no interest in celebrating Independence Day when he intends to end that Independence. Just astonishing. We now have a president in France who is too intelligent to communicate with the scum beneath time for they are just stupid fools. Perhaps so – since they elected him.

Jun 30 2017

Are Bail-Ins Supported by Free Market Philosophy?


Armstrong Economics Blog/Banking Crisis

Re-Posted Jun 30, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; Reading between the lines, it seems that you support bank bailouts at taxpayer expense. Is this not counter to free market philosophy?

KE

ANSWER: Yes it is contrary to free market philosophy. However, it is the only reasonable solution at this moment in time without structural reforms to the financial system. If we accept the bail-in that Europe just did in Spain selling the bank for one euro, the reality of that decision compels me to advise clients NOT TO OWN any bank shares. Seizing a bank and auctioning it off for one euro when its value, if liquidated, would have been significantly higher is in itself anti-free market.

The bailout conducted by the Fed was absurd. The theory that they just lend money to banks when in trouble is seriously flawed under the current system. Bill Clinton repealed Glass-Steagall and in doing so he seriously altered the banking system completely. The 1007 crash took place because banks no longer engage in relationship banking but have flipped everything to transactional banking. They make the loan, package it into a security, and then sell it off. The banks say this makes them stronger. Fine, I accept that principle. But then handing bankers trillions to “stimulate” the economy failed because they did not lend the money out and parked it at the Fed in excess reserves. They stopped securitizing debt and would not lend because of risk.

The problem is how our government operates. If they are trying to “stimulate” the economy then they need to cut taxes. You must put money directly into the hands of the people – not the banks who do not lend to the average person. This is why quantitative easing has failed. Mario Draghi needs to get out and really see how the economy functions live.

Under the current terms of the bail-in, I must advise clients to sell bank shares and stay with industrial shares. You can flip the coin. Both sides are anti-free market.

Jun 30 2017

Tell as Lie Often Enough it Becomes the Truth – How Lies Now Defeat Gold & Dollar


Armstrong Economics Blog/Gold

Re-Posted Jun 30, 2017 by Martin Armstrong

A flood of comments from central banks this week has been signalling that the era of easy money is coming to an end. Of course, the nonsense spouted out by the Gold Promoters that hyperinflation was coming has left 10 years of continually wrong forecasts yet the pretend analysts have done far more damage to the marketplace that is only now revealing itself. Note carefully, that gold has declined WITH the dollar. Something else the promoters said would never happen.

Gold had soared to reach record highs at $1,920.30 an ounce back in 2011 on the propaganda of hyperinflation coming because of Quantitative Easing (QE). Now with QE coming to an end, why buy gold? We see the same nonsense setting the euro up ripe for the slaughter. The prospect of QE ending at the European Central Bank (ECB) has been sending the euro up, yet once again to the delusion that all will be reversed and higher interest rates will save the Euro.

The German 10-year government bond yields hit five-week highs and the Euro a 14-month peak as investors geared up for the prospect of the ECB scaling back its massive monetary stimulus program. Comments from ECB’s chief Mario Draghi on Tuesday were seen as opening the door to monetary policy tweaks, while Bank of England Governor Mark Carney also raised the prospect of a UK interest rate hike in the coming months this week. This has all sent the dollar down as the fools rush in where no wise-man would dare go.

Now higher interest rates have miraculously flipped into bullish news. The problem is, the economy has not changed. Higher rates will not reverse the deflation in Europe. The idea is that higher rates will bring capital back to Europe. Nobody is addressing what comes next

Jun 29 2017

European Refugee Crisis Was Created in an Undemocratic Manner


Armstrong Economics Blog/European Union

Re-Posted Jun 29, 2017 by Martin Armstrong

The very issue of the European Refugee Crisis highlights the entire problem with the European Union. There is no democratic union whatsoever. The issue of accepting refugees was a unilateral decision by Merkel alone. It was never put to vote in Europe. Once the migration turned to a full blown crisis, Merkel then insisted that all member state had to accept their share.

The statistics show that 70% of the migrants are young men. Not families or women and children. This is resembling an invading army. Brussels is using the Refugee Crisis to push the federalization of Europe and suppress all member states to second class sovereigns subject to authoritarian power, denying the people any right to vote on any issue in Brussels.

This is now about seizing power in Brussels by virtual dictatorial means. The arrogance of those demanding the surrender of sovereignty over the Refugee Crisis is unbelievable. There is absolutely no consideration whatsoever for the consequences to European culture if they are wrong.

Jun 29 2017

India Taxing Gold (Hunt for Taxes)


Armstrong Economics Blog/Gold

Re-Posted Jun 29, 2017 by Martin Armstrong

India has been fighting the gold trade for the past few years. They have sought to highly restrict it to prevent the net capital outflow. They even attempted to impose a 18% tax. As of July 1st, 2017, India is imposing a tax on gold bullion be it in coin or bar form of 3%. Gold jewelry in India is subject to a 5% tax. Many families have been rushing to buy gold jewelry in particular before the tax comes at the end of the week, Gold has played a traditional role in Hindu weddings. The “wedding season” actually begins only in the winter, but the advent of the tax is causing a mad rush. We saw the same human response in Japan the monthly prior to the imposition of the sales tax.

Narendra Modi has not merely tried to outlaw cash as much as possible last November, he is also responsible for the introduction of new taxes on the trading of physical gold. Modi has been very repressive in his policy objectives. Over the past few months, several complaints have been filed that financial officials of the government confiscates gold stocks of citizens without giving reasons .

Modi is trying to force India into the 21st century to comply with G20 objectives of eliminating all cash to enable a more efficient tax collection effor

Jun 29 2017

South Australia in Financial Trouble


Armstrong Economics Blog/Australia & Oceania

Re-Posted Jun 29, 2017 by Martin Armstrong

COMMENT: Marty; Thank you for doing your conference in Hong Kong. It made it really convenient for all us from Downunder. You are probably aware that South Australia is broke and they just imposed a huge tax on the banks. They are calling it the “surprise tax” of $280 million on the top 5 banks. Many who just hate the banks are cheering. You said at the cocktail party that South Australia was in deep trouble. While most cheer because they hate the bankers, they are missing the real krass here. The government is broke.

Thanks for a great conference, BTW, I attended your Adelaide conference in the nineties.

PK

REPLY: Yes, it is the “krass” point that South Australia is broke. They cheer taxing the bankers, but they are indeed overlooking the cause why they imposed the “surprise tax” in the first place. South Australia is struggling with the country’s highest unemployment rate, which has reduced tax revenues when they expected more.

I haven’t been to Adelaide since then. That was a good conference. I took some time to go into the bush. It was beautiful. Bought a painting of the landscape there I still have.

Hope you met Phil. He attended the Perth Conference around the same time I did that Australian tour

Jun 27 2017

May Forms Government To Retain Power in Britain


Armstrong Economics Blog/BRITAIN

Re-Posted Jun 27, 2017 by Martin Armstrong

Britain’s Prime Minister Theresa May has at last secured a governing majority in the UK Parliament by agreeing to spend £1 billion on top of £500 million previously promised to Northern Ireland. Of course the stability of the May government going forward will be delicate as Jeremy Corbyn does his best to bring down the May government and seize control for Labour.

The deal with the Democratic Unionist Party (DUP) will provide its 10 members to back May’s minority government over the Queen’s Speech. This will relate to the national security of Britain and maintain Brexit. Theresa May made the public statement:

“I welcome this agreement which will enable us to work together in the interest of the whole United Kingdom, give us the certainty we require as we embark on our departure from the European Union, and help us build a stronger and fairer society at home.”
Jun 27 2017

EU Extends Sanctions Against Russia Killing Their Own Economy


Armstrong Economics Blog/European Union

Re-Posted Jun 27, 2017 by Martin Armstrong

The EU has extended its economic sanctions against Russia for another six months, which really makes no sense. No sanction will cause Putin to abandon a strategic port in Crimea that was originally Russian territory before it gave it to Ukraine to be administered. President Donald Tusk announced it on Twitter interestingly revealing that Chancellor Angela Merkel calls the shots for all of Europe. True, France’s President Emmanuel Macron also was consulted and agreed, naturally he will do as he is told, and then the rest of the Heads of State and Government at the EU summit in Brussels were informed of the decision.

The punitive measures imposed by the sanctions since 2014 in the wake of the Ukraine crisis have produced nothing but a new cold war. The sanctions are now extended until January 2018. Russia naturally imposed counter-sanctions against the EU which hit the European industrial companies as well as the agriculture.

Demonstrating how successful sanctions have been, Russia shocked the world with a surprise where they have entered the airline industry. They had a successful test flight of a new medium range passenger plane owned by the state controlled United Aircraft Corporation. This new plane, the MC-21-300, flew at a speed of 300 kilometers per hour on its maiden flight.

 

The MC-21-300 has a capacity between 163 and 211 passengers and a maximum flight range of 6,000 kilometers. So the sanctions only produced competition for the Boeing 737 and the Airbus A320.

Jun 26 2017

European Commission Trying to Seize Control of Euro


Armstrong Economics Blog/Euro €

Re-Posted Jun 26, 2017 by Martin Armstrong

I reported previously that the European Commission is seeking to take the clearing of the Euro derivative transactions from London and move them to Paris. The European Central Bank (ECB) is warning that it must secure strong access rights for the supervision of the cross-border settlement of financial transactions after the departure of Great Britain from the EU. About 90%+ of all euro derivatives transactions are settled via clearing houses in London such as LCH.Clearnet. In the middle of a crisis, the ECB would have no power to shut the market to protect the euro from the free market forces. Of course, what they fail to grasp here is trying to seize the euro clearing and move it by decree to Paris will only undermine the euro even more. What will they do next? Forbid the euro to trade in New York, Chicago, or Asia? Do that and the euro will become a massive short.

The ECB actually came clean and the papers filed at the Commission seems to suggest that the central bank indeed expects the possibility of a very major and serious financial crises ahead. That reflects what I have been warning about that they are trapped. Once Draghi stops buying government debt, we may see a meltdown in the euro altogether. The ECB wrote: “It is to be expected that significant developments on both the global and the European level will increase the risks posed by clearing systems.”

Keep in mind that the European Commission has already outlawed naked short-selling of the sovereign debt and European shares. The ECB is now focusing on clearing houses of financial products to control any emergency they see against the euro.  Mario Draghi has been ringing the warning bell that they would have at best minor oversight of the UK-based clearing houses after a BREXIT. He believes they can simply muscle the markets to prevent a collapse.

The ECB estimates that repo transactions denominated in euro in the daily volume of €101 billion and open positions in interest rate swaps in euro reach daily trading volume of €33 trillion are cleared through clearing houses in Great Britain. Draghi has proposed that Article 22 of the ESCB Statute be amended in such a way that, even after the BREXIT, they still have sufficient control rights over euro clearing. Draghi wants it both ways. He wants the euro to be a world class currency, but then wants absolute control to shut down any undesirable counter trends.

Jun 25 2017

Wow – Standard and Poor’s Threaten Illinois With Municipal “Junk Bond” Status – First State Ever Facing “Junk Bond” Status…


Re-Posted from The Conservative Tree House on June 24, 2017 by

There was a widely read Chicago Tribune op-ed written a few days ago outlining an approach to dissolve the entire state and apportion the geography to Wisconsin, Indiana, Kentucky, Missouri and Iowa. –SEE HERE–  It was written tongue-in-cheek, but with an uncomfortable level of reality behind it.

Illinois has been struggling with its finances for a long, long time.

The Illinois long-term labor pension liabilities are ridiculous in the extreme.  However, things just went from bad to jaw-droppingly, gobsmackingly, unbelievably worse.

 

According to the latest financial media reports, Standard and Poors Global Ratings agency has positioned Illinois bonds to drop below “investment” grade; that would make Illinois the first state in the nation to achieve “junk bond” status.

(Via ABC) Illinois is on track to become the first U.S. state to have its credit rating downgraded to “junk” status, which would deepen its multibillion-dollar deficit and cost taxpayers more for years to come.

S&P Global Ratings has warned the agency will likely lower Illinois’ creditworthiness to below investment grade if feuding lawmakers fail to agree on a state budget for a third straight year, increasing the amount the state will have to pay to borrow money for things such as building roads or refinancing existing debt.

The outlook for a deal wasn’t good Saturday, as lawmakers meeting in Springfield for a special legislative session remained deadlocked with the July 1 start of the new fiscal year approaching.

That should alarm everyone, not just those at the Capitol, said Brian Battle, director at Performance Trust Capital Partners, a Chicago-based investment firm.

“It isn’t a political show,” he said. “Everyone in Illinois has a stake in what’s happening here. One day everybody will wake up and say ‘What happened? Why are my taxes going up so much?’”  (read more)

Ouch !