The Dow To Be or Not to Be


The Dow has bounced slightly as to be expected, but we are now in a consolidation pattern for the balance of the month. Just pay attention to the Global Market Watch for it has been doing an excellent job at calling the turning points so far.

DJIND GMW 8-22-2017

Private the Global Market Watch and the blog posts are exclusively available to Socrates subscribers. To sign-up for Socrates or to learn more, please visit Ask-Socrates.com.

Will the Eclipse of 2017 Be the Omen of What Our Model is Forecasting?


The interesting question that will emerge is will this eclipse of 2017 over the United States be what everyone calls and omen in the months ahead? I find it terribly interesting that this shows up at this time when our model is forecasting the beginning of a serious Monetary Crisis ahead. I do not see any real physical influence to cause such an event based upon an eclipse. It merely appears that the eclipse cycle aligns with major events rather than being the cause of action. Nevertheless, what we face was forecast in 1985 and the closer we get the more chaotic the world seems to be.

European Banks – The Next Crisis – The Unseen Cause in Plain View


The clouds have not lifted from the heart of the financial center within the European Union on the continent. The origin of the next crisis is unseen yet in plain view if your care to look. Ten years since the financial crisis of 2007-2009, the core fundamental problems in the banking sector have not yet been resolved and still fester beneath the surface. Indeed, following the collapse of the investment bank Lehman Brothers, a financial tidal wave swept the world. The collapse of the mortgage backed securities market in the States, set off a contagion where the crisis spread at a rapid pace around the world. European banks tried to compete with New York adopting similar carefree lending. In the end, the Draconian measures from Brussels and constantly adding regulation to all levels of business mixed with tax increases, prevented the economy itself from truly recovering only further preventing a bank recovery.

The Federal Reserve had pumped in $250 billion into its big banks and Hank Paulson, I believe, allowed Lehman and Bear Sterns to collapse to reduce competition for Goldman Sachs eliminating two of the five investment banks. The entire affair was set in motion by the Clinton repeal of Glass-Stegall at the recommendation of the father of negative interest rates, Larry Summers.

In Germany, the second-largest bank, WestLB, and Hypo Real Estate (HRE), which had been the largest real estate finance provider, vanished from the financial landscape as did Lehman and Bear Sterns. “HRE and WestLB were the most difficult cases,” remembers Christopher Pleister, the head of the A bailout fund was created in Germany that ran between 2009 to 2014. The fund involved nearly a dozen banks putting in more than €200 billion of equity, guarantees and protective shields.

They are still “too big to fail” and “too big to jail” so nothing has changed on that score. For until the money pots are full again for a bailout fund, the risks are there for the next crisis to be far worse this time. The interdependence between states and their banks has not changed. Government still need the banks to exist themselves. Consequently, national interests prevent the crisis mechanisms from truly policing the practices and the banks are actually disappearing from the market as regulation destroys liquidity in the financial markets. The back offices have growth to exceed the front office doing the business, raising costs dramatically. When the next financial crisis comes, there is a serious question as to can the system hold again?

While every financial crisis typically emerged from an origin that is overlooked or not anticipated, the fundamentals causes are usually the same. There is no appreciable risk management that comprehend cycles and each crisis is typically set in motion by the solutions applied to solve the previous crisis. This is the true over-arching issue that is never considered because those applying the solution lack any comprehension of the dynamics of the economy as a whole.

The solution of negative interest rates has set in motion a coming crisis in pensions. As banks now anticipate that the ECB will finally reverse its policy and raise rates, they are dumping government bonds by the truck-load. Higher rates simply means a bond crash. Even the portfolio of the ECB will loss countless billions.

So while banks are “too big to fail” and “too big to jail”, government is not “too big to fail” since they depend upon people buying the debt which never ends, yet they may be “too big to jail” since they will never prosecute themselves, but they are not exempt from revolution be it non-violent or violent as history proves.

Rogoff Tell Central Banks More Negative Interest Rates Will Be Needed


Kenneth Rogoff,  the Professor of Economics at Harvard University, is stuck in a time warp where he cannot think out of the box even once. He is telling the central banks that the next recession they will have to resort to negative interest rates and they should prepare now. Despite the fact that negative rates have failed to work in Europe or Japan, seems to be nothing to really consider. So what after almost 10 years of failed policies at the European Central Bank, it will eventually work maybe in 12 or 13 years. It just requires patience.

This is the problem with academics. They don’t get the calls for help. These policies have created a Pension Crisis on the horizon and wiped out so many states. Keynes himself argued that there were times to lower taxes to stimulate. That is just never considered even once.

The Plague of One-Dimensional Analysis


Blood-Moon-NASA

The Blood Moon is a term that has been sometimes used to refer to four total lunar eclipses that happen in the space of two years. This is a phenomenon astronomers call a lunar tetrad. The eclipses in a tetrad occur six months apart with at least six Full Moons between them. Just saw one last night that was close and is preparing to the total lunar eclipse that will take place on August 21st, 2017. This event lined up with the Economic Confidence Model which was very interesting (2015.75).

However, all the reports of impending doom due to the Blood Moon prophecy that the world would end back in 2015 were clearly exaggerated, especially since 8 tetrads since 1 AD have coincided with Jewish holidays without the world going coming to an end.

Now the 21st, we have a total eclipse over the United States. The world will not come to an end. Yet this type of analysis is always the same – one-dimensional. They always seek to tie some effect to a single cause. This is in all fields even medicine as well as economics. This is just a human tragedy why too many people try to be analysts and just make a mess of the whole thing

Governments to Control Large Cash Transactions


 

I have been pointing out the crisis we face moving forward. The gist of this is the total fiscal mismanagement of government for which we, the people, are always blamed. This hunt for taxes has led down the path of arguments for eliminating currency. While people think Bitcoin is an answer, they do not understand government’s hunt for taxes no less the lack of a true rule of law. The government need only pass a law that anyone who fails to report what they have in Bitcoin is criminal and they get to confiscate all your assets.

Switzerland has its “wealth tax” which they argue is nothing just 0.02%. However, it requires you to report all assets worldwide. They then know precisely what you have and it is merely one vote away at anytime to raise the tax or impose criminal penalties for failure to report everything. Yet, once Switzerland has that info, under G20 they must share it with all other governments.

We have stood by and watched India cancel all high denomination notes. Try walking around with €500 notes in Europe and they look at you funny or won’t accept them. ATM machines have been reduced in Europe to taking a maximum of €200 in cash at best. This is all th hunt for taxes because government cannot function ethically no less morally.

Now the German Federal Minister of Finance, Wolfgang Schäuble, is proposing to control all large cash transactions claiming this will prevent black money transactions and money laundering. Of course, they see these two issues not as typical crime like drugs, but tax avoidance.

Schäuble is coming up with an alternative for the resistance to eliminating cash is rising globally. He knows he cannot abolish cash. If you cannot eliminate cash, then Schäuble said there should be an upper limit placed on cash transactions, from which cash transactions must be registered and reported to the tax authorities. This is also happening in Europe where you cannot pay for a hotel bill greater than €1000 in France. Schäuble said cash transactions must be registered declaring who are the parties to the transaction on each side to prevent the black money transactions, money laundering and terrorist financing.

It has become painfully obvious that the real winner in the Terrorism War was Osama bin Laden. What this single man did was change the entire world into a hunt for taxes destroying our liberty and right to privacy. He destroyed our liberty like no other invader in history. Osama bin Laden has certainly made the list of the top 10 most influential people in history, but has not surpassed Karl Marx.

Schäuble previously said he was against eliminating cash and imposing ceiling on cash payments as were the French and Italy. Schäuble is joining the ever increase microscope to hunt down citizens for taxes always using Bin Laden as the excuse. Even the IMF recently published a handbook on how the reduction of cash could be implemented as silently as possible.  Australia is stalking children going to private schools and has declared “cash is for criminals!”

This trend is only going to end in revolution. Historically, all revolutions are about money.

Wall Street Banks Stunned At Trump’s Proposed Reform


 

Trump’s economic consultant adviser, Gary Cohn, has declared a return to the separation system in the US banking system in effect restoring Glass-Steagall Act which dates from the 1930s and was adopted as a result of the Great Depression yet abolished in 1999 by the Clintons. Trump had already spoken during the election campaign for a new version of the Glass-Steagall Act. So Cohn is simply repeating this position. Yet we have to look deeper here. Why is a former Goldman Sachs guy now against the Glass-Steagall Act?

In the banking sector, restoring the Glass-Steagall Act will reduce competition for Goldman Sachs. JPMorgan Chase, Bank of America and Citigroup would all be cut-off from investment banking services. Goldman Sachs and Morgan Stanley would be benefactors. Expect now that Congress will drag its feet to protect the banks making sure this will not take place in the short-term. Much of the argument focuses on reducing the size of banks and separating the powers between investment and commercial banking will prevent the too-big to fail problems.

The Currency & Banking Crisis for Europe


QUESTION: Thanks for this free advice. But, in this comment: “/our-european-tour-part-ii-seizing-all-bank-accounts-throughout-eu/” You write: “Clearly, people should be fully aware of the thinking process in government. Brussels will become authoritarian when the free markets rain on their parade. I strongly recommend that everyone should keep 30 days worth of cash to cover your basic needs.”

But, it is better in dollars that in euros, no?

Thanks for all,

J, Portugal

ANSWER: Yes, the dollar will rise after this year from Political Hell. Keep in mind that a rising dollar will break the world monetary system – not a weak dollar. Keep in mind that the entire system is headed to a reset probably no later than 2021. So we are not talking about long-term decisions here. You have to stay fluid about this.

Gordon Chang Rightly Explains The Key-holder to North Korea is China…


Asian policy specialist Gordon Chang interviewed by Maria Bartiromo on her Sunday talk show and accurately outlines the key to a denuclearized North Korea is an economically defeated China.  It appears Mr. Chang fully understands the Trump policy of using economics to achieve national security.

As we have continued to outline, China, specifically the old guard communist control agents within Beijing, use Kim Jong-un as a foil against the west, specifically against the United States.  The long-term objective in using the DPRK is retention of China’s economic strategy, and blockage of President Trump from upending their goals.  Watch:

.

As we have outlined extensively, President Trump holds all of the cards in this economic and trade standoff.  The U.S. is China’s customer and there’s a $500 billion trade deficit.

However, President Trump cannot be completely open with the strategy because part of the long-term plan is to allow China to save face by giving up North Korea’s nuclear ambitions. It would be against Trump’s interests if the entire global and geopolitical community understood what was happening.

So they question becomes, how will we know when President Trump has won in the economic and national security challenge?

Well, first let’s look at the geopolitical landscape and the known and identified calendar to view the goal timeline:

♦We know President Trump is planning to attend an ASEAN meeting in November.

♦We also know that President Trump is planning to visit China later this year.  Most likely that trip will be part of the ASEAN engagement.

So it makes sense that President Trump would like to conclude the outline of the economic diplomacy by the time of the ASEAN and China visit – such that: A.) President Trump can outline the agreement and stroke the panda’s ego on his turf; and B.) President Xi Jinping can announce his magnanimous victory on behalf of great Panda’s incredible achievement in providing great security to the world.

::::smiling:::::

Yup.

Meanwhile, just prior to the ASEAN/China meetup, President Trump’s secret weapon, Ivanka, who happens to be the most beloved American in China, is deployed to India to capture the world’s attention with Narendra Modi hugs.

President Modi is the “Trump Card” in the geopolitical economic gamesmanship.  China is currently at odds with India’s rise to economic power; Ballywood is very hot in the U.S. right now; and a warm Modi – Trump economic relationship is a foil against China’s heavy-handed extortion of their economic partners.

Whoopsie sounds like the makings of a fork in China’s One Road/One Belt plan.

Strategery.

::::still smiling::::

Again, President Trump holds all the economic cards.  Just look at what he did to neuter Russia’s economy when everyone was paying attention to the bouncing laser dot on the wall.  The American and Western media missed it, but President Trump moved the entire geopolitical world via a strategic energy platform.

Sip this next paragraph slowly to enjoy:

From OPEC (Saudi Summit) to the EU and Baltic States (Poland Pre-G20); to North African energy development via President Macron (Libya and Mali); to walking away from the Paris Climate agreement; to discussions with Theresa May on a bilateral trade deal; to massive shipments of coal to U.K. and France; to closing a deal to deliver Ireland massive amounts of Texas LNG; to our own internal U.S. energy production policy with pipelines, Oil, Coal and Liquified Natural Gas (LNG) etc.

President Trump used all of those “allied” relationships to lower global energy prices.

The bigger part of the ‘big-missed-picture‘ was how that energy strategy impacted adversaries like Russia and simultaneously supported the larger America-First economic and geopolitical space.

President Trump thinks seriously long-term, and really BIG picture.

President Trump thinks so far out in front of his detractors they genuinely cannot fathom the sequential logic behind the day-to-day granular activity.

Yes, in large part this is what makes President Trump so enjoyable to watch politically. Just like the American media, our international adversaries and competitors have no reference point for a U.S. President that is entirely independent from influence.

::::Yup, smiling::::

So we can safely predict that sometime in late fall, most likely before the ASEAN visit timeline in November, President Trump and Rex Tillerson will be engaged in a new round of Six Party Talks, initiated by request of the increasingly desperate China.

China will structure the DPRK talking points to set up the meetings.  This is a part of how China is allowed to save face and sets up the magnanimous Panda narrative.

The six party talks will be essentially a Marshal Plan of sorts for North Korea.  Japan, South Korea, The United States, China, Russia and North Korea will enter into a set of negotiations publicly sold as engaging in diplomacy and reducing tension.

President Trump (or T-Rex) will sit on the patio complimenting Xi Jinping (or deputy), and Russian, Japanese and South Korean emissaries.

Meanwhile, in the conference room, Secretary Wilbur Ross, USTR Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin will play the role of Willy Wonka handing out the golden economic tickets to the representatives who all line up with their requests.

President Trump’s golf partner Shinzo Abe will already have his ticket, but he’ll play along.  The only real negotiations will be between the U.S. Russia and China.  Russia will be negotiating for higher regional energy prices to get their GDP growing again, and China negotiating to retain as much of the $500 billion trade surplus as possible.

The end result will be Kim Jong-un giving up his nuclear ambitions for good; the U.N. enters under carefully negotiated terms, and Big Panda promises to the world to be the magnanimous insurance policy therein.  Everything between now and that outcome is optically chaff and countermeasures.

That’s essentially the way the bright economic and national security future looks today.

Then again, it might get brighter – gilded even.

After all, this is President Donald Trump we’re talking about.

The Civil Unrest in Charlottesville is Part of the Cycle into 2020


The violence that erupted ahead of a planned rally where thousands of white nationalists were expected to gather for an alt-right protest in Charlottesville, Virginia, on Saturday, led to numerous injuries of which at least two people were seriously injured. A video appears all over YouTube showing the confrontation as a man is being dragged away by officials. The Unite the Right rally was being held at Emancipation Park with hundreds moving through the city, wearing militia uniforms, waving flags and chanting ‘Blood and Soil’ as they made their way towards the event.

Charlottesville Mayor Mike Signer had denounced the ‘cowardly parade of hatred, bigotry, racism, and intolerance march down the lawns of the architect of our Bill of Rights’ and warned for residents to stay away from the rally. Clearly, this rally is anti-immigration with many pointing the finger at Europe.

We must realize that such riots against immigrants is by no means new. Turn the economy down and unemployment rises, the first thing people blame is the immigrant. For the major to label this event simply caused by “hatred, bigotry, racism, and intolerance” demonstrates he does not comprehend the cause nor does he even think this is something that has occurred in the past. The people who oppose this alt-right also are typically the people who are students and have lost nothing yet.

We will most likely see these type events explode peaking out in real bloodshed by September 21/22nd, 2019 (2019.725). So expect to see this civil unrest continue to rise especially after 2017.