Мартин Армстронг

где деньги, Зин?

Сообщение Mikhael » 11 фев 2018, 10:46

With Dow declining, we are failing to see a rally in cryptocurrency or gold and the long-touted flight to quality is not unfolding as most have expected.

When Equities typically decline, people run to the government bonds, and this we call the Flight to Quality. Others have touted that gold would soar when the stock market crashes. That too has not unfolded. Others have forecast that the dollar will collapse when the stock market crashes. Hm, even the Euro has declined.

What nobody seems to be talking about is what happens when the crisis is confined to government? Is that when gold rises? But then what about stocks? When CONFIDENCE collapses in government, the Flight to Quality becomes the opposite of tradition sell equities and buy bonds. Even when gold was rising moving up into 1980, bonds were declining.

So what is going on this time? We are in the midst of the Transition from the confidence in government to the private sector but nobody seems to understand what is unfolding. This is why we are getting mixed signals and strange relationships.

People will invest in the private sector and sell government bonds, smelling a default in the wind.We are more than likely going to get the first kneejerk reaction, where equities will DECLINE and people will rush into government bonds, even with negative yields. This should create the final bubble top in debt, and then it will reverse in a Flash Crash type move. Traditional people will buy bonds and lose a fortune. Others will sell their stocks at the lows and jump on short positions. This will set the stage for a crazy period that comes around every so often, measured in hundreds of years.
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Сообщение Mikhael » 13 фев 2018, 08:40

[url=https://www.armstrongeconomics.com/markets-by-sector/bonds/conflict-between-fiscal-monetary-policy/We are moving into a crisis of monumental proportions. There has been a serious fundamental problem infecting economic policy on a global scale. This conflict has been between monetary and fiscal policy. While central banks engaged in Quantitative Easing, governments have done nothing but reap the benefits of low-interest rates. This is the problem we have with career politicians who people vote for because they are a woman, black, or smile nicely. There is never any emphasis upon qualification. Every other job in life you must be qualified to get it. Would you put someone in charge of a hospital with life and death decisions because they smile nicely?

Economic growth has been declining year-over-year and we are in the middle of a situation involving low-productivity expansion with high and rapidly rising budget deficits that benefit nobody but government employees. Once upon a time, 8% growth was average, then 6%, and 4% before 2015.75. Now 3% is considered to be fantastic. Private debt at least must be backed by something whereas escalating public debt is completely unsecured. The ECB wanted to increase the criteria for bad loans, yet if those same criteria were applied to government, nobody would lend them a dime.

Monetary policy, after too long a phase of low-interest rates and quantitative easing, has created governments addicted to low-interest rates. They have expanded their spending and deficits for the central banks were simply keeping the government on life-support – not actually stimulating the private sector. Government have pursued higher taxes and more efficient tax collection. They have attacked the global economy assuming anyone doing business offshore was just an excuse to hide taxes.

The combination of fiscal policy and monetary policy around the world has produced historically the most irresponsible economic mismanagement in history. This assumption that government can manipulate the economy is extremely dangerous for we remain clueless about how the global economy even functions. This entire Marxist/Keynesian proposition that governments are capable of managing the economy has implemented various miserably conceived theories that will lead to a budget crash and a debt crisis for every reasonably rational contemporary society. Historically, there were debt jubilees mentioned in the Bible.

You shall then sound a ram’s horn abroad on the tenth day of the seventh month; on the day of atonement, you shall sound a horn all through your land. You shall thus consecrate the fiftieth year and proclaim a release through the land to all its inhabitants. It shall be a jubilee for you (Leviticus 25:1-4, 8-10, NASB).

Religion aside, was a debt forgiveness a way to prevent monument collapses of society? The Romans never even had a national debt. Today, we have government hawking 100-year bonds. We have pension funds that required 8% returns and then governments ordered that the bulk of such funds if not 100% should be “conservative” and invest in only government bonds. We are reaching a crisis point in longer-dated yields because investors are unwilling to lend money at low rates long-term. Smart money is beginning to wake up to the perpetual mismanagement of the long-term trend by the government. The central banks have been backing off of continually buying government debt and the Fed in the USA has announced it will not reinvest when its holdings of government debt mature.

This is the Sovereign Debt Crisis and Monetary Crises we face in the years ahead.
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CalPERS on the Brink of Insolvency

Сообщение Mikhael » 04 мар 2018, 10:26

The largest public pension fund in the United States is the California Public Employees Retirement System (CalPERS) for civil servants. California is in a state of very serious insolvency. We strongly advise our client to get out before it is too late. I have been warning that CalPERS was on the verge of insolvency. I have warned that they were secretly lobbying Congress to seize all 401K private pensions and hand it to them to be managed. Mingling private money with the public would enable them to hold off insolvency a bit longer. Of course, CalPERS cannot manage the money they do have so why should anyone expect them to score a different performance with private money? Indeed, they would just rob private citizens to pay the pensions of state employees and politicians.

CALPERS has been making investments to be politically correct with the environment rather than looking at projects that are economically based. Then, CalPERS has been desperate to cover this and other facts up to deny the public and transparency. Then, because stocks they thought were overpriced last year, they moved to bonds buying right into the Bond Bubble. Clearly, California’s economy peaked right on target and ever since there has been a steady migration out of the state.

Meanwhile, Governor Jerry Brown has been more concerned about bucking the trend with Trump effectively threatening treason against the Constitution. The insolvency at CalPERS has exceeded $100,000 owed by every private citizen in California. It was $93,000 every Californian owed back in 2016. In January 2017, Jerry Brown wanted a 42% increase in gas taxes to bailout CalPERS.

The pension crisis at CalPERS is getting closer by the day. The State looks to be totally bankrupt by 2021-2022. CalPERS has just decided to increase the contribution of local governments and cities to their fund. The cities say they are approaching bankruptcy because of rising subsidies, but CalPERS itself is approaching insolvency. The problem is that there really is no real reform in sight. The choice is clear – CUT pension benefits of government employees or RAISE TAXES!. CalPERS simply needs a bailout and very soon.

Board Member Steve Westly even told The Mercury News that a bailout was needed and soon. Currently, CalPERS manages approximately $350 billion of future pension claims of its members. Recently, CalPERS passed an amendment to the statutes, which resulted in higher contributions for the California municipalities. The amount of contributions has been increased several times over the past few years and this time the cities do not appear to be able to handle the increased costs.

Once CalPERS was 100% funded with assets under management. In fact, they had a surplus in the good old days before Quantitative Easing. Right now, the system no longer has more than two-thirds of future claims. CalPERS itself expects an annual return of 7 percent on its financial investments. Most pension funds run by the States are insolvent or on the brink. This is what I have been warning about that the Quantitative Easing set the stage for the next crisis – the Pension Crisis. The Illinois Pension Fund needs to borrow up to $ 107 billion to meet its payment obligations. Promises to state employees are over the top and off the charts. This is why Janet Yellen at the Fed kept trying to raise rates stating that interest rates had to be “normalized” for this was the crisis she knew was coming. And guess what – Europe is even worse and Draghi will not raise rates for fear that government will be unable to fund themselves.

There is NO WAY out of this crisis. The portfolio would have to be completely restructured and benefits reduced. Jerry Brown will do everything in his power to raise taxes and fees to try to hold CalPERS together. That is by no means a long-term solution.

Get out of town before you cannot sell property anymore!
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How the Euro Will Be Killed by Politicians

Сообщение Mikhael » 08 мар 2018, 10:07

The man who is killing the Euro as a viable currency is none other than Donald Franciszek Tusk who is a Polish politician who has been the President of the European Council since 2014. He is the living example why politicians MUST be prohibited from making any decisions whatsoever regarding economics and finance. These people have ZERO qualifications in the field yet rise to the top of politics and then assume positions based entirely upon politics – not economics.

The crisis that is pending for the Euro is all about political control. The desire of British banks to achieve free access to the European Single Market even after Brexit and this was rejected by the EU. Council President Tusk spoke out against maintaining the British-European financial center in London after Brexit. He fails to comprehend that NEITHER the French nor the Germans possess the infrastructure no less the expertise to maintain global markets in the Euro.

Tusk claims that Britain is trying to be like Norway which has free access but pays dues as a member of the EU for free access. On the other hand, Tusk characterizes British desires and trying to blend the Canadian position, which only has a free trade agreement, with full access like Norway but pays no dues like Canada. Meanwhile, France is taking the position that they want to fill the shoes of the London financial markets who have never been able to create deep markets.

This hardline position against the financial markets of Britain remaining as the core trading center for the Euro is extremely dangerous. The Euro holds a minimal position among the reserves of central banks. The exact composition of the foreign-exchange reserves of China is a state secret. Nevertheless, based upon reliable sources, about two-thirds of Chinese foreign-exchange reserves are held in U.S. Dollars. The rest is composed of Japanese Yen, British pounds with less than 15% residing in Euros.

Brussels is far more interested in punishing Britain than in securing a strong and viable market for the Euro. With respect to a banking center, the primary competitors running second and third are Switzerland and Luxembourg. Never the less, France and Luxembourg are seeking to gain from blocking Britain as they seek to strengthen their positions against Britain. Luxembourg has the EU President Jean-Claude Juncker in their corner, who traditionally has a good relationship with the banks in his home country of Luxembourg. Ironically, while Germany is the largest economy within the Eurozone, by contrast, it relies heavily on trade in goods and financing rather than banking. We have a conflict of interests here where Germany actually need the free market in London for trade deals whereas France and Luxembourg are more interested in capturing business from Britain.

Meanwhile, Brussels needs control so they can maintain the outlawing of shorting government bonds and make no mistake about it, they will prohibit shorting the Euro when it goes against them as well. The danger of politics making the decision over such an issue is that any free market in the Euro will suffer. This is becoming a high stakes financial poker game. Even the President of the Swiss bank UBS, Axel Weber, has come out warning against a withdrawal of the euro clearing from London. “We have to be very careful that we do not shoot any own goals on the subject of Brexit.”

If the EU blocks Britain from euro clearing, this will be the end of the Euro. Politics will present far too great a risk for the Euro to survive going forward.
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Сообщение Mikhael » 13 мар 2018, 10:15

Will US Companies Repatriating Cash Home Create Banking Crisis Outside USA?

ANSWER: That is a very interesting question and it is indeed unique. I cannot think of anyone who has asked that one yet. Let us assume that U.S. corporations will repatriate at least 25% of their estimated US$2.6 trillion of offshore funds to take advantage of a one-off 14% tax holiday. It will not matter if they are selling euros, yen, pounds, or yuan. Switching their fund from the offshore dollar funding markets to domestic dollars will have a similar impact to the same trend that took place between 1980 and 1985 that drove the dollar to all-time record highs.

American corporations moving capital sends a powerful impulse through global finance system. Despite the rise of China and the creation of the euro, the world has never been so “dollarized” as it is today. The euro is a complete failure for there is no single market with a centralize debt to compete with the dollar as an alternative. China is rising, but it is not ready for prime time. There is no alternative to the dollar. That is the real crisis in the world economy.

U.S. lending rates are critical to the world economy. The Bank for International Settlements (BIS) says offshore dollar funding has risen fivefold to US$10.7 trillion since the early 2000s, with a further US$14 trillion of global dollar debt hidden in derivatives. BIS research also confirms that the rise and fall of the dollar is the major cycle of dollar liquidity which is driving the world’s investment appetite and global asset prices. This liquidity spigot is clearly being turned off. The Fed is not only raising rates, it is also reversing bond purchases exactly OPPOSITE of the ECB which openly admits it will repurchase government debt as it expires. The Fed is shrinking its balance sheet while the ECB is trapped and cannot dare take the same steps.

The BIS is warning that China, Canada, and Hong Kong all have the risk of banking failures that are greater than that of Europe. Apple Inc. said it will bring hundreds of billions of overseas dollars back to the U.S., pay about $38 billion in taxes on the money and spend tens of billions on domestic jobs, manufacturing and data centers in the coming years. That is more than a quarter-trillion. The answer is YES – ABSOLUTELY. US companies will bring back a substantial amount of that money and this will reduce deposits overseas and that will increase the risks of bank failures outside the USA, but probably more so in Asia than Europe. The ECB will most likely prop-up banks no matter what it says.

Mario Draghi will NOT stop Quantitative Easing and he WILL NOT raise rates until he can get out the door. His term at the ECB is for 8 years and sources say he cannot wait to leave. Draghi will extend his signature landmark bond-buying stimulus programme that is just life-support for the member governments at least September 2018 officially but indefinitely until he leaves. He does not want to be blamed for the economic disaster he has created for the world and as such he is trapped in the ECB until October 2019. The question will be can he really keep up this insane losing position that much longer or will the entire house of cards come crashing down.

So look first to bank failure on the rise in Asia, and they will spread to Europe. Nonetheless, there is deep concern about Italian banks and that may be the spark which ignites the next catastrophe.
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