I was reading another blog yesterday and within the writing was an interesting thought. Picking up on Sundance’s USA aircraft carrier analogy what if we knew that the present Admiral and the ship’s captain had the carrier on a course that would take it into a class 5 plus hurricane. The crew didn’t know they danger they were in but the ships executive office (XO) did and was trying to get the Admiral to change course. The ships Captain a loyalist to the Admiral was bucking to be promoted to Admiral as the present Admiral was about to retire. The ship’s captain an aggressive female would be the first naval Admiral in change of a fleet and so she was ignoring the hurricane danger as to bring it up would embarrass the present Admiral. So the XO was faced with conducting a mutiny to save the ship or letting the ship stay on course and let the captain deal with the potential loss. The quandary would be that if the mutiny happened after it was too late to change course he would be blamed for the loss — so what should he do.
Trump is now in the same position as the XO I just described we are headed for some really rough times and if he cannot communicate the issues properly like say Churchill did as Briton was entering WW II he would be faced with being blamed for the financial collapse that appears to be building. Just like Bush was blamed for the housing and market collapse in 2008 even though neither were his fault.
Tag Archives: TTIP
Failure of Abenomics
Armstrong Economics Blog
Re-Posted Apr 23, 2016 by Martin Armstrong
Abenomics (アベノミクス Abenomikusu ?) in Japan are the economic policies advocated by Shinzō Abe since the December 2012 general election, which elected Abe to his second term as Prime Minister of Japan. Abenomics is based upon “three arrows” of fiscal stimulus, monetary easing and structural reforms. This has been a complete failure as the economy continue to implode. The Bank of Japan hinted possible proposals to take rates even further negative and the likelihood banks passing these levels on to the general public.
The dollar rallied against the yen right on target for 43 months (8.6 / 2), and has declined about 8.6 months from the high in June of 2015. It appears to be on target and the latest suggestion of further negative rates being passed on by the banks will most likely cause a flight from the yen besides admitting Abenomics has failed. This has also contributed to the Dow Jones Industrial Average rising and holding last year’s low distinct from the S&P500 and NASDAQ.
BREXIT
Armstrong Economics Blog
Re-Posted Apr 20, 2016 by Martin Armstrong
There is talk that Obama may go to Britain to express support for Cameron’s position on Britain remaining in the EU, even though it will surrender its sovereignty to do so. The USA would NEVER agree to such terms itself. How could anyone tell Britain to surrender its very soul to the insanity of Brussels, as if they have done such a wonderful job? The EU is being eaten alive from the inside and now 66% of Germans are against Merkel. Yet, Britain should surrender everything to this madness? It has been 43 years since Britain entered the EU. It did quite well before 1973. If Britain remains in the EU, well, these people have already passed laws against short-selling. They will destroy London as a financial hub and reduce it to a third world status.
We will be issuing a special report on Britain given the serious of what is at stake.
Since the issue is sovereignty being surrendered, the queen should rightfully say yes or no as well.
What Are Tangible Assets
Armstrong Economics Blog
RE-Posted Apr 20, 2016 by Martin Armstrong
QUESTION: Hi Martin,
In your April 20 blog post, you stated “You are better off with tangible assets for the transition when it comes.”
Please explain what “tangible” assets are, and what “non-tangible” assets are, assuming these also exist.
Thanks for the wonderful education,
M.
ANSWER: Tangible Assets are non debt related – fixed assets in general. This includes commodities, equities, and real estate. The commodities include non-perishable such as gold, silver, platinum, copper, etc.. The agricultural commodities are not really sustainable on a long-term basis. The primary advantage to silver and gold is that they are the same commodity in different nations where as you have even difference between Texas and Brent crude oil. Real estate varies depending upon location. You definitely have two problems. First, there is the risk of tax increases, and Second, there is the geopolitical risk in some areas. Equities (shares in public corporations), serve well and blue chips have never defaulted. Even if a company goes bust, you get something back. When government debt goes bust, you get nothing.
Central Banks Are Trapped – Higher Interest Rates the Only Answer?
Armstrong Economics Blog
Re-Posted Apr 20, 2016 by Martin Armstrong
COMMENT: Marty, well it looks like you have done it. The central banks are going to start raising interest rates right in line with your model. It is interesting how your computer puts the entire world before you to see. Keep up the good work. They obviously are starting to follow you.
SS
REPLY: I do not think that the central banks are simply beginning to follow us. Yes, they all probably read us no doubt. But make no mistake about it, they are going to raise rates not because of our model, but because they have no choice. Low interest rates have wiped out pension funds and destroyed the living standards of the elderly. These people are clueless and should never have followed Larry Summers down this path of absolute hell. The comments of Glenn Stevens, the meeting between Yellen and Obama, and the criticism starting to surface against Draghi at the ECB is the realization that interest rates must be “normalized” (raised) but they have created a nightmare for governments are addicted to low interest rates and their budget will explode and we will see a sharp rising in taxes from 2017 onward.
We will be putting out a very important special report. What is going on behind the curtain right now is state pensions are lobbying Congress to make it MANDATORY that everyone (not just government employees) contribute to state pension systems. They want to takeover your 401K and manage everything robbing your saving to pay for unfunded liabilities to state workers. This is how they are looking to bail themselves out. This is the dark side post-2017. This is going on right now and it is still all hush hush.
All the markets from metals to equities and oil, have pushed right to the limits. Almost all markets are approaching their key target resistance and reversals. Even silver has rallied to the Weekly Bullish at 1719 followed by 1775 just below last year’s high of 1850.5 causing the silver/gold ratio to bounce from resistance. The Dow has done almost the exact same type of move reaching the Bullish Reversals just beneath last year’s high. Gold has done the same thing stopping just 30 cents from the Weekly Bullish Reversal at 1287.50 shy of last year’s high of 1307.80. Of course oil has not come close to last year’s high of 62.58.
The point is, when we extract the emotion and opinion which is incompatible with forecasting, the entire purpose of our model is to provide a very black and white perspective without the hype and emotion that causes losses. We know when to get excited and when to hold back. Nearly 90% of people investing lose money because they are victims of their own emotion. Let the markets show you the trend. They are never wrong, only people. Over the years I have personally noticed that when it is the MOST difficult even for me to stand firm and I begin to question will it break through, that is precisely when it does not. So if the markets can move to such an extreme that even I get that feeling inside OMG, is this correct, that is when it is right in spades. This is an emotional game and people trade emotionally to their own demise.
So step back, we have the time and numbers. Just let the markets do what they do best. Never ANTICIPATE for that is how you buy the high or sell the low.
Surviving the Coming Transition
Armstrong Economics Blog
Re-Posted Apr 20, 2016 by Martin Armstrong
QUESTION: Dear Martin and co-workers,
Firstly, I want to express my appreciation for the writings at the blog (it opened my eyes! and I am very much awake now) and I read a daily. I am a stay-at-home-mother, artist, and I had never before gained knowledge about economics , it’s corruptive nature, and leading role in society. However Just a few months ago I saw the movie The forecaster. Martin you are truly an amazing guy!!! and I wish you the best!
My question:Do you have an advice or suggestion for people like myself. No traders, (middle income) families, living in Europe or the US, kids who would like to study. How can we accomplish that with just a little savings in order to the potential fall of the euro and collapse of the system?
P.S. I clearly understand that you don’t want to be a so called guru.
Sincerely, conny
ANSWER: It is very difficult to see forward in such a manner. Tangible assets will make the transition to the next world of finance. There will be a new base of currency and it will most likely be electronic. The reason for this is political. The USA peaked as did Britain. The financial power will move to Asia, and Europe along with the USA will crash and burn because they are caught in this fictional world created by Marx. Russia and China collapsed under Marxism. It is just our time.
I would support some practical basket of currencies since Russia and China dislike having the dollar as the reserve currency. Likewise, with the dollar being the only practical currency standing, the USA is realizing that it may lose control of its domestic economy because of international considerations. Clearly, there have already been discussions of removing the reserve status of the dollar, but this cannot be accomplished unilaterally. Under no circumstance would I support placing the IMF in charge of this instrument. That organization is way too corrupt and my advice to China and Russia (where we also have this blog in their respective languages) is to reject any such attempt to hand this power to the IMF. We need a clean house to start such a project and the IMF has way too much baggage.
Formal education is the way we perpetuate our mistakes forward. When I hire, I do not look at fake degrees. I look at the person and their thinking process. Samuel Butler (1835–1902) the iconoclastic Victorian-era English author, defined genius as “a supreme capacity for getting its possessors into trouble of all kinds.” If your child does not do well in school because they are bored rather than incapable of understanding such subjects, then they may be what people call a genius. Geniuses are often misunderstood in classrooms and are typically poor students whom teachers dislike because they are non-conformists. Studies at the University of Chicago and the University of Minnesota have found that teachers smile at children with high IQs and frown upon those with creative minds. When we had young people coming into the company who had to take their Series 7 exam, they would ask me questions. I quickly responded, “Do not ask me anything for if you do as I say you will flunk. Just memorize the answers, put them down, and then forget them and we will begin your REAL education in markets.”
The intelligent yet uncreative students accept conformity, never rebel, and complete their assignments quickly and perfectly. The creative child questions everything and accepts nothing. They are much more manipulative, imaginative, and intuitive growing up. They will often play one parent against another. In school, teachers dislike them because they will harass the teacher with questions that expose the illogical dogma they teach.
These genius children are often viewed as wild, naughty, silly, undependable, and lacking in seriousness or even promise. They even said that of Albert Einstein. Their behavior is typically distracting and they will often appear lazy, bored, and lacking any effort to try to advance, but in truth, they are absorbing everything around them. Such children will also give unique answers to banal questions because they are connecting the dots around them. Other children who are linear thinkers will typically reject these children which can cause them to be loners.
Ellis Paul Torrance (1915-2003) was an American psychologist who studied this subject and found that 70% of pupils rated high in creativity were actually rejected by teachers when picking a special class for the intellectually gifted. In a Stanford study, M.G. Goertzel, V. Goertzel, and T.G. Goertzel concluded that teachers would have excluded virtually everyone we consider to be a genius from Einstein and Edison to Picasso and Mark Twain. There is even a book on this called “The Price of Greatness: Resolving the Creativity and Madness Controversy” by Arnold M. Ludwig (1995) which explores the lives and achievements of over 1,000 extraordinary men and women. This book sought to answer the age-old questions about the relationship between mental illness and greatness. It also goes into factors that predict creative achievement in people. You will find a long list of very colorful stories about some of the most eminent artists, scientists, social activists, politicians, soldiers, and business people of our time.
Formal education is terrible. More than 60% of graduates cannot find employment in their field of study. Degrees are only useful to get jobs in brain-dead institutions that lack creativity themselves. Encourage your children to see the world dynamically and look for the connection between the dots. In ancient times, the key education was apprenticeship where you learned the field from the people actually doing the work rather than by those who lack experience. As they say, there are those who do and those who teach. I have been asked to teach at three of the leading universities. The problem is that I have no time. Those of us who really do things would find it boring and unfulfilling to simply stand up and teach a small class of kids. I might as well be a rock star singing the same song for 40 years (which is why rock stars need drugs to constantly do the same thing until they die).
If you understand what is coming, common sense will lead you to the answer. You are better off with tangible assets for the transition when it comes. From a European perspective, you are better off in dollars for now. The euro only gets interesting above 116. So you always have to define where you are right and wrong. Some people are keeping money in PayPal where they are not charged negative interest rates to simply have money there and they do not have bad loans on their books.
Illinois is Brooke and Cannot Pay the Politicians
Armstrong Economics Blog
d Posted Apr 20, 2016 by Martin Armstrong
I have warned that Illinois is on the brink of bankruptcy. Now, Illinois Comptroller Leslie Geissler Munger says she will delay monthly paychecks for lawmakers and statewide officials since there isn’t enough money to pay the state’s bills and other services should come first. This is really interesting. What will happen next when the politicians cannot get paid?
Who is the Bigger Manipulator of All Time?
Armstrong Economics Blog
Re-Posted Apr 20, 2016 by Martin Armstrong
QUESTION: Mr. Armstrong; You have stood up against the bankers for their manipulations when nobody else would do so and paid the price that these people who hate you never acknowledge. They even made a movie about you for standing up to these bankers yet these goldbugs do hate you for exposing their rantings. If they were not wrong, they would not be against you since you have even shown how you project $5,000 gold in the years ahead using real analysis not guessing. It is always kill the messenger. To me this reflects their lack of honesty. My question is simple. Who is the bigger manipulator, the banks or government? Since Hillary’s lack of trust is at 57% and Trump is around 60%, I suspect it is government. But I will defer to you.
Thank you for looking after us
JD
ANSWER: In my “opinion”, there is no question that government is the master manipulator. This is what Marxism and Keynesianism is all about — how to manipulate society to maintain political power. This is also coming to an end. The central banks have manipulated themselves into an impossible position from which there is no escape. This is what will make the metals and stocks rally. This has nothing to do with bank manipulations, hyperinflation or fiat; this has to do with the collapse in confidence within government.
Negative Interest Rates Destroying the World Economy
Armstrong Economics Blog
Re-Posted Apr 17, 2016 by Martin Armstrong
QUESTION: Mr. Armstrong, I think I am starting to see the light you have been shining. Negative interest rates really are “completely insane”. I also now see that months after you wrote about central banks were trapped, others are now just starting to entertain the idea. Is this distinct difference in your views that eventually become adopted with time because you were a hedge fund manager?
Just curious;
Bob
ANSWER: I believe the answer is rather simple. How can anyone pretend to be analysts if they have never traded? It would be like a man writing a book explaining how it feels to give birth. You cannot analyze what you have never done. It is just impossible. Those who cannot teach and those who can just do. Negative interest rates are fueling deflation. People have less income to spend so how is this beneficial? The Fed always needed 2% inflation. The father of negative interest rates is Larry Summers. He teaches or has been in government. He is not a trader and is clueless about how markets function. I warned that this idea of negative interest rates was very dangerous.
Yes, I have warned that the central banks are trapped. Their QE policies have totally failed. There were numerous “analysts” without experience calling for hyperinflation, collapse of the dollar, yelling the Fed is increasing the money supply so buy gold. The inflation never appeared and gold declined. Their reasoning was so far off the mark exactly as people like Larry Summers. These people become trapped in their own logic it becomes irrational gibberish. They only see one side of the coin and ignore the rest.
Central banks have lost all ability to manage the economy even in theory thanks to this failed reasoning. They have bought-in the bonds and are unable to ever resell them again. If they reverse their policy of QE and negative interest rates, government debt explodes with insufficient buyers. If the central banks refuse to reverse this crazy policy of QE and negative interest rates they will see a massive capital flight from government to the private sector once the MAJORITY realize the central banks are incapable of any control.
The central banks have played a very dangerous game and lost. It appears we are facing the collapse of Social Security which began August 14th, 1935 (1935.619) because they stuffed with government debt and robbed the money for other things. Anyone else would go to prison for what politicians have done and prosecutors would never defend the people because they want to become famous politicians. We will probably see the end of this Social Security program by 2021.772 (October 9th, 2021), or about 89 weeks into the next business cycle. These people are completely incompetent to manage the economy and we are delusional to think people with no experience as a trader can run things. If you have never traded, you have no busy trying to “manipulate” society with you half-baked theories. So yes. The central banks are trapped. They have lost ALL power. It becomes just a matter of time as the clock ticks and everyone wakes up and say: OMG!
We have government addicted to borrowing and if rates rise, then everything will explode in their face. Western Civilization is finished as we know it just as Communism collapsed because we too subscribe to the theory of Marx that government is capable of managing the economy. Just listen to the candidates running for President. They are all preaching Marx. Vote for me and I will force the economy to do this. IMPOSSIBLE! We have debt which is unsustainable the further you move away from the United States which is the core economy such as emerging markets. Unfunded pensions destroyed the Roman Empire. We are collapsing in the very same manner and for the very same reason. We are finishing a very very very important report on the whole pension crisis issue worldwide.
Saudi Threat to Sell U.S. Assets is No Big Deal
Armstrong Economics Blog
Ew-Posted Apr 17, 2016 by Martin Armstrong
Saudi Arabia has threatened the Obama administration and congressional leaders that it will sell billions of dollars in U.S. financial assets if Congress passes a bill to make the Saudi government legally responsible for any role in the 9/11 attacks. That bill would allow claims to freeze their assets in the USA by a judge pending the litigation. Obama has tried to stop Congress from passing the legislation, but this is a bipartisan Senate bill. Obviously, Saudi Arabia is worried that there are viable claims that are not frivolous. The typical dollar haters are championing this as a death knell, but Saudi Arabia’s assets of $750 billion are not exclusively government bonds. Saudi Arabia does not even make the top 10 list of holders of U.S. Treasury notes. Most of their “investments” are other assets which would be crazy for them to try to sell for the price would crash.
As far as Treasury notes, the Saudi holdings would be soaked up in minutes. Sorry, no big deal. I have warned that the whole Syria mess has involved a pipeline to deliver gas to Europe. They did threaten Putin that terrorism would hit Russia for the Olympics if they did not yield to Saudi Arabia. Then there are those pointing to the connection of terrorism in Brussels linked to Brussels’ largest mosque that is bankrolled by Saudi Arabia, a Salafist regime, which has tried to separate itself from the terror attacks. However, some say they are not revealing everything. There are more and more people pointing at Saudi Arabia so they are obviously trying to stop any lawsuits that might embarrass them even more. If people could file suits, either they just hand them default judgments or they defend, and to defend they have to provide a discovery of many things they do not wish to reveal.
Welcome to the other side of 2015.75 – the decline and fall of governments. This is a worldwide trend for their attempt to manipulate society is coming to an end. OPEC has been unable to control the price of oil. Governments have been unable to manage the economy. This is all coming to a shocking end. They will kick and scream all the way, but will not change the course of destiny.
Centinel2012 