The Trade of a Lifetime?
COMMENT: Marty, the Wall Street Journal finally explained on October 1st, 2014 that investors suddenly see a rising dollar as bullish for the US stock market. I just wanted to say they are 3 years behind you it seems all the time.
Thanks so much for pointing the way. I got out of gold and moved to stocks as you advised back in 2011. I really hope your efforts to go public to secure the model for the future goes well. I will be an investor in that IPO.
WC
REPLY: I really do not understand why the analytical community is so slow to ever catch on. The Nikkei rose after the 1987 Crash for capital contracted. As that took place, the dollar declined into late 1988. The last 12 months of the rally foreign institutional investors were exiting. The Japanese became excessively bullish. It was then you saw the dollar rise and foreign capital fled.
I have warned we could see a phase transition in the US share market. I have warned that to create such a blast, the dollar would have to rise. Of course the Cycle of War was lined up. So was the demise of the European economy. All of this pointed to foreign capital fleeing to the dollar. Can you image what will happen if China and Japan clash sabers? The dollar will scream higher.
I have stated countless times, you cannot forecast anything in isolation. Absolutely everything is linked together. The world economy is an intricate complex mechanism. Those who still try to do this from an “opinion” perspective is no different from a witch-doctor chanting to create the cure.
We are now preparing that report, which will be published in five parts as well – North America, South America, Europe, Middle East, and Asia. This could be the trade of a lifetime.
IMF – Threatening the World – A Undemocratic Institution That is Off the Chain
Behind the Curtain the IMF has been running around threatening all the small countries that use to be tax havens to give up all the names of foreigners. Christine Lagarde has not skipped any even Panama. This is why she was installed as head of the IMF by Obama. She has abused the power of the IMF and used this institution to threaten nations to end tax havens. The real issue is when these people have collapsed the free markets globally and there is no more loose change to be found because people then hoard money, what will they do then?
During the Panic of 1893 President Cleveland explained that capital could always flee or hoard. The average working person cannot hoard his labor. Yet jobs are only created by those with money for investment. Government creates nothing but consumes everything. When in doubt, they merely think building roads and bridges will stimulate the economy. Only where there are no roads will this approach work. They tax people to squander their money on what they merely get kick-backs on.
Never will government reform and that is what is necessary to survive the turmoil coming our way. Obama’s conspiracy against anyone with investment money is a sad state of affairs. But Obama has used the IMF to do the dirty work for the IMF is by no means a democratic institution. Obama handpicked Lagarde to head the IMF and it is highly suspicious that IMF Managing Director Dominique Strauss-Kahn was forced to resign as a staged maid in NYC said he raped her only to find out it was all a hoax. Strauss-Kahn was not in Obama’s camp and it very strange that such a sex scandal was used and he resigned only to be cleared after Obama stuck in Lagarde. I have learned one thing – there are no such thing as coincidences in politics where money is at stake.
The people have no right to vote on anything the IMF does. It is not beholding to anyone. The IMF is simply off-the-chain and like a crazed dog, just hell-bent on tearing the world economy apart with confiscations and threats. What is coming out of the IMF is neither based upon economics nor democratic principles.
Why the Rich Get Richer
The great evil the socialist/communist economists like the French economist Thomas Piketty who distorts data in order to harp about that the rich always get richer. Piketty is like the Global Warming crowd, if the data disproves your argument – alter it. You are working for a higher cause than just truth. Piketty claims the bottom 90 percent’s income dropped by over $3,000 between 1979 and 2012. However, the official Census Bureau estimates indicate that the bottom 80 percent of households saw an increase of nearly $3,500. Median income—the income of the household in the middle of the distribution—rose by $2,500. No matter what way you cut it, Piketty’s argument comes up shy of the facts.
Nevertheless, Piketty and others fail to explain HOW the rich get richer. It’s investment stupid that ends up creating jobs for the youth that the French have done an excellent job in destroying so the almost 40% of the youth want to leave France. This Piketty and others do not get or should I say ignore for they are trying to tax those who produce 80% to pay for those who do not want to produce - Atlas Shrugged. Instead of trying to stop global investment, they need to return to it for Piketty and others are trying to restore French Communism that was sold to Karl Marx. When we look at the year 2013, we see almost 10% growth in global financial assets compared to 29% growth since 2007. This illustrates that the growth has been anemic to put it best but the participation in share markets where that growth has taken place is at an all-time low for the retail investor who has been hoarding cash in banks collecting virtually nothing.
The 2007-2011 crisis may appear to have been confined to the history books at first glance, however, the dark hidden truths lurking behind curtain only remind us that we have no reason to become complacent. The strong growth witnessed in 2013 is largely due to the performance of the stock markets in the US, Japan and Europe that then attribute to the measurement of wealth for those who track the “rich” who they define as anyone having more than the tracker. Earn just US$100,000 and you have made it to the hated top 1% that they argue deprive the 99% without exactly explain why it is such people rather than governments. Oh yes, there are the “super rich” who are very few in number yet even they are not so politically influential. The real culprits, bankers, have been able to manipulate governments because governments need them to sell their debt. Therein lays the corruption – not simply because someone earns a few hundred thousand and he is transformed into the dark lord of finance.
Taxes have been increasing exponentially and this has reduced new job creation from small business because in many developed countries, savings are still at rock bottom levels after the tax burden. This is just glaringly obvious when we look at Western Europe. The growth since 2007 in the sheer the volume of financial assets that have been accumulated is down by about 50% on average whereas Germany has been hit even harder as wealth has fallen to just 40% of the pre-crisis level. Germans on average now pay more than 50% in taxes and with the pending confiscation of 10% of their asset to bailout banks and an additional 5% tax to bailout the municipal governments, this trend in Germany may wipe out its ability to even create wealth moving into 2032.
When we turn to look at the situation in the majority of emerging markets, we do observe quite a totally different perspective. Here we see a far more rapid asset accumulation is being fueled primarily by rising incomes and an increase in the sheer volume of funds that they are setting aside as savings thanks to substantially lower taxation upon the new rising middle class. This is the foundation for our long-term models that project the shift in the World Financial Capital from the USA to China. As the Chinese grow richer among the middle class, something that Russia failed to truly accomplish, we will see the rise of Asia at the demise of Europe and America thanks to Marxist-Socialism with its foundation of bigger governments with centralized planning for the purpose of manipulating society to complete their dreams.
Of course, not only assets have experienced stronger growth last year, but debt levels have begun to rise as well among the consumer class in a number of Asian countries. The Asian increase in private household debt is setting alarm bells in the economic community which expects consumers to buy but without debt for some reason. Much of this has also been in the Chinese housing boom. There, the middle class have discovered wealth and this is being expressed in real estate since the share market has declined and not exceeded the 2007 high.
Strangely, even with the French-elite socialist inspired IMF proposal to just confiscate 10% of everyone’s bank accounts in Europe, it appears that the majority of people do not pay attention to the financial news. In Europe, bank deposits are still the investment of choice, whereas long-term investments, including equities, are still being avoided as evil and untrustworthy since 2007. This has contributed to the historic low in retail participation in the stock market that is only furthering the gap between the “rich” and the “poor”. Money is just being “parked” rather than invested and this is clearly a major concern for any downturn from here will have even less wealth to provide a cushion for the middle class. Consequently, the next downturn appears to be far worse than anything previously. This is at odds with individuals facing retirement when the governments have unfunded liabilities and keep turning to higher taxes rather than looking at the problem long-term
While most economists argue that the strong asset growth alone is not a sustainable development on the whole, what they fail to grasp is that capital is fleeing (1) higher tax, (2) global political instability, and (3) the dire ideas of asset confiscation in Europe championed by the French lawyer Christine Largarde, who Obama handpicked to head the IMF. A review of most economic analysis of the global asset and debt situation inside private households, we find an overwhelming force where most keep predicting a sobering conclusion that the future is bleak until behavior can be changed by government – of course. The assumption is that only government possesses the power to create sustainable prosperity.
The rising disparity between the “rich” no one wishes to actually define and the “poor” who is defined as having less than the “rich”, is impacted by the rising taxation that is also reducing job creation and sending interest in borrowing for investment in Europe to record lows. That trend will hit the US shores starting in 2016. This should be defined as those who invest v those who do not. Capital appreciation in a stock portfolio is used to say the “rich” are getting richer, yet this is paper profits not actual profits – something else that has been grossly distorted and left undefined by the socialists. If you bought a house for $125,000 and suddenly the land on which it sits is needed for a major project, it will increase in value proportionately. To them, you would suddenly move into that hated 1% if you doubled your money and Picketty argues you should hand government 80%.