Italians Demanding Referendum on Euro – Only the People Can Save Europe
As Julius Caesar said: the die is cast. He also said I came, I saw, I conquered (Veni Vidi Vici). The entire idea of the Euro is a total disaster. This is now about a dictatorship in Brussels that has built a political infrastructure which will promote civil war in Europe – not peace and harmony. Now the biggest single party in the Italian parliament has at last expressed the will of the people – not an easy task in Europe these days. They are now demanding a euro referendum to end depression and save democracy. Hello! Remember Scotland? Spain? Greece? Maybe it will just take some Italians to clean up the mess.
The Economist may have called these two clowns, but they stand for democracy and just might have the last laugh. Beppe Grillo is an Italian comedian, actor, blogger and political activist. He has been involved in political activity since 2009 as the founder of the Italian political party Five Star movement. Beppe has launched a petition to drive for Italian withdrawal from Europe’s monetary union and for the restoration of economic sovereignty. Some times it just may take an actor to get things moving – i.e. Ronald Reagan comes to mind.
Beppe has stated bluntly: “We must leave the euro as soon as possible.” This is a man who speaks the truth. It was the EU Commission who staged a secret coup against Italy robbing the people of their right to vote to ensure Berlusconi would be removed from office because he too wanted to take Italy out of the Euro. ONLY Italy can save Europe. After all, it was in Italy in 509BC where they overthrew the king and sparked the first Republican form of government that inspired the birth of Democracy in Greece within a few months.
Someone has to break the Euro to survive or we will see civil war in Europe. Italy could be the key for historically that is where it all began. History repeats – could it be Italy that takes down Brussels? Brussels may not be taking a leak on the rest of Europe much longer. Even the peripheral spreads are now rising for smart money is starting to see the handwriting on the wall. The EU Commission may only invite to Brussels career politicians because they know how to manipulate and survive, but they cannot hold Europe together by mere decree.
Dow & 2015.75
QUESTION: Many thanks again for the stream of clarifying observations posted daily — hugely appreciated.
I was struck when reading that 2015.75 could be a low.Would this not permit a drop to cross 11,750? And would such a resulting chart pattern not be remarkably bullish?
In effect might not the drop be an amplified echo of that into the Oct 2011 low of 10404 ?
Continued strength to your elbow !
Best Rgrds
B
ANSWER: Typically the level of the market that defines the bull and bear market distinction is the Quarterly level in time. The Dow NEVER elected a single Quarterly Bearish Reversal from the 2000 high despite the 11 quarter decline into 2002. When we look at the 2007 high, we did elect the first Quarterly Bearish by the 3rd quarter 2008 at 10850. That resulted in the crash for the next two quarters signalling that would be a serious meltdown. We elected the first Quarterly Bullish just 2 quarters later – 3rd quarter 2009 at 9712. The low in 2002 during the 4th quarter elected the first Bullish Reversal right there at the low.
This potential correct could be the cycle inversion for the decline would be the shortest being just 3 quarters placing us in the 2nd quarter 2015. That does not line up perfectly with the ECM. However, that might produce the lowest closing with the 3rd quarter producing the intraday low. If we were to see such a low, then holding the 14470-15560 area at that time would be exceptionally bullish. Therefore, holding the 14700 level on a quarterly closing basis would keep the market tone very bullish.
Only a Yearly Closing beneath 10600 would reverse the bull market. Therefore, even a decline into 2015.75 without a Quarterly Closing beneath 14700 would confirm the extension. We MUST realize that a collapse in confidence with government that is clearly underway in Europe, is the requirement for a cycle inversion. Under this scenario, everything will rise but government debt – that is corporate debt, shares, gold, and commodities as well as real estate. This is what happens in a meltdown of confidence that is brewing everywhere from Hong Kong to Italy.
Dow for 10-14-2014
The Dow held the Daily Bearish at 16319. Therefore, if the low of 10/13 holds, we should bounce back into Thursday-Friday. But this would be just a bounce. We can see from the technical chart that once that uptrend line was broken, there was just the collapse. Typically, we would rally back and bounce off of that and then turn back down to test the 15900 area. A rally into the end of the week would still warn we may see the low the first week of November. If we were to make new lows and fall to test the 15900-16000 level this week, then a rally back into November 3rd week is possible with a turn back down into January. That would be the shifting of the cycle warning we are dealing with a cycle inversion that would extend the high into 2017-2018. That would be VERY VERY VERY bearish for government.
We would most likely see a strong dollar rally breaking most other currencies. The high dollar would set off another round of sovereign defaults since everyone issued debt in dollars and are thus short. That would push the talk of moving toward some one world reserve currency and then we may see gold come into its own at last.
Obama’s former chief economist has already suggested the US should abandon making the dollar the reserve currency. That is nice to say, but there is no alternative until the dollar rises and bankrupts many. The US national debt will then rise in real terms and that will turn the economy down even harder as the high euro wiped out Greece.
So When Will We Know?
All year we have been warning that a Phase Transition is coming, but when could not be ascertained until after September 2014. At some point everything must flip. Why? Because this is a Sovereign Debt Crisis not the normal plain vanilla decline. This is why retail participation is at historic lows and liquidity is at historic lows. We have a Phase Transition coming largely because when the majority of people begin to figure out the problem is government at all levels, then capital will panic and flee to the private sector.
Such panic shift from Public to Private vary in degree historically. This is actually what takes place in a hyperinflation where people move to private assets and dump the currency. But that is only one version for revolutionary type affairs following the overthrow of a government. This was the Communist Revolution in Germany during 1918, the French Revolution, and the American Revolution. Each experienced varying degrees of hyperinflation with either a default on the previous government debts or the currency. Today, we have governments with outstanding debt that did not exist in Germany or France since the new government defaulted on the previous government debt leaving only currency. The American colonies also assumed no portion of the English national debt.
This shift from Public to Private assets is WHY we could see the US share market extend into 2017-2018. The traditional business cycle decline you have the flight to quality with capital fleeing back to government bonds selling stocks. But what happens when it is government bonds that crash and burn? This is when the capital flows reverse and will shift back into private assets. For this immediate correction, cash is fleeing back to government bonds. This may be the last rally in bonds setting the stage for the extension.
So far we have the peak with the ECM in September right on target. In theory, if the market were to invert all the way into a low for 2015.75 next year, then we would be looking at a full blown cycle inversion with stocks moving up with the drop in the ECM. This would be a tremendous rally, but it would come at the cost of a real serious collapse in the confidence of government. This may be what we are facing. Instead of a Phase Transition that doubles the Dow Jones from the 2009 low of 6,440 (12,000), which we have already achieved, we are looking at a rally into 2017-2018 with the Dow reaching the 25,000-28,000 level. That would be the minimum target objective. To match the rally between 1921 and 1929, the Dow would need to reach 39,482. We have been looking at a 4.3 rally (430%) which is half the 8.6 year frequency.
This inversion pattern we have begun to see in the metals. Gold rallied in a sharp advance ONLY when the ECM turned down 2007 and it peaked in 2011. Gold appears to have made that transition and it should rally with the downturn in the ECM.
Completing this inversion process in stocks now will be interesting indeed. However, it also means we are about to face some very, very, very wild times ahead. Yes there will be money to be made – but we also have to be worried about the results.
We must pay close attention here. If this week closes higher in the Dow above 16544, then we may see a reaction into early November during the first week. However, we have another key turning point shaping up for the week of November 17 targeting the days of the 19th/20th.
We will let you know when is the best time to go back in. So far the September high with the ECM to be followed by a November low appears on target.
Will 2015 Break Germany?
While the German municipalities are short €118 billion euros for infrastructure repairs, reorganization of the German state finances may force even higher taxes. The German budget next year will see social spending is likely to exceed the €50 billion euros level. This will be more than the total business tax revenue in the nation. Everything will catch up rapidly. As the ECM turns down, tax revenue will decline with the economic downturn driving deficits higher and arguments for more austerity. Meanwhile, the people are rioting against austerity in France, Italy, and Spain.
There simply is no way to resolve this Sovereign Debt Crisis without major restructuring. Constantly borrowing more and more money every year with no intention of paying anything back is just nuts. We are simply now printing money that pays interest as it began in the 1860s. To encourage paper money to circulate, it use to pay interest. In effect, it was really bonds that circulated. We are doing the very same things once again. The US abandoned the interest payments and then they became known as just a “greenback” with no interest payment schedule on the reverse side.