Europe’s Lack of Integration v USA Discrimination
There is little doubt that Europe is moving into what Jefferson described as the third phase of government: Force. The federalization of Europe is now the number one agenda to project the jobs in Brussels. There is no such thing as “European”. If you ask anyone in Europe what they are, they will NEVER respond “European”. Instead they will say German, French, Dutch, Italian etc.
What made the United States work was more than a single currency – it was a single language. The key was DISCRIMINATION, which was always very fair; whoever was the last off the boat was discriminated against. That forced each group to speak English to get a job and blend in. As that developed, today ask an American what they are and you will get half German and half Irish etc. You will get only such an odd mix in Europe, so no matter what Brussels does by force, the language divide will remain.
Europeans do not see themselves as Europeans; they see themselves as separate distinct ethnic groups. We even see divisions in the Jewish community. Jewish ethnic divisions refers to a number of distinctive communities within the world’s ethnically Jewish population. Although considered one single self-identifying ethnicity, there are distinctive ethnic divisions among Jews, most of which are primarily the result of geographic branching from an originating Israelite population, mixing with local populations, and subsequent independent evolution. Sephardi Jews, the Jews of North Africa, Spain, and Portugal, are traditionally very distinct and it is generally considered that they will not marry another Jew who is from a different branch.
After the latest shooting in a black church, the media began to call for the removal of the Confederate flag. They are asking presidential candidates if they are in favor of the flag, trying to paint them as a racist if they refuse to ban it. People are rushing out to buy the flags now in the South because stores are pulling them and are refusing to sell them. This is strangely raising the distinction once again that had faded. Not that it is racist support, but an identity. This is the beginning of a rise in distinction once again, which will ultimately lead to the break-up of the United States in the decades ahead.
The attempt of Brussels to create Europeans by sheer force will fail. People inherently cherish their roots and if you try to eliminate that by force, you will fail. The incident of the Confederate Flag will historically reignite the trend toward separation. Despite speaking the common language, we will see resentment rise both in Europe and the United States as the economy turns down.
The Dow & Rising Interest Rates
COMMENT: Between the early 1960s to 1982 the Dow was basing with an overhead resistance of approx. 1000. The prime interest rates during those 20 years varied from 5% to a high of 21.50% in 1980. In 1982, the Dow broke out. In eight years, the Dow increased ten fold while interest rates were declining. Then, the Dow resumed basing for ten years. Can you reconcile your statement that booms unfold with rising interest rates with what happened during the period of 1982 to 2000? Rates did rise from 1975 to 1980. Did that rise unfold the 1982-2000 boom?
–JM
REPLY: Your perspective is seriously flawed. The market based in dollar terms only. It did not crash with rising interest rates. From the international perspective, the US share market rose, it did not crash. When you look at the Dow in Swiss francs, you see the rally which is why there was no meltdown despite rising rates. Even the sharp correct into 1974 was mitigated by the rise in the dollar. You review is one-dimensional and that is what prevents you from seeing reality.
Your dates are seriously off. You ignore the fact that rates rose from the 1960 low into 1966 which was the first major high at 1000. Rates nearly doubled from 1960 into the second high 1968. Your very broad assessment is highly misleading.
The peak in rates was 1981 not 1982, and the low 1986. The breakout began when the ECM shifted from Public to Private in 1985. Rates began to rise from that point and the market exploded. Your analysis is questionable at the very best.
The breakout in the Dow came with the turn in the ECM major wave starting in 1985. That was the beginning of the Takeover Boom for price relative to book value reached historic lows by the end of the Public Wave.
The low on the 30 year bond (high in rates) was 1981 and the peak (low in rates) was 2012 – 31.4 years. That ended the peak in government and we have seen the 10 year crash this May and the short-end will be October. The Dow turned up with the ECM in 2011 and we warned it would make new highs. Barron’s even reported that forecast. Yet long rates have moved up and the 30 year bonds peaked starting their decline (rates rising) as the market rally to new highs.
The problem with your attempt to argue reveals your one-dimensional perspective and glossing over critical correlations and ignoring the complexity of the currency. The world economy is not as simple as traditional economists portray or the talking heads on TV. You must realize that both are the world’s worst analysts. It is like Einstein says. You cannot solve the problem with the very same line of thinking that has created it. This is WHY the majority must always beWRONG. They are the FUEL that propel the swing into the opposite direction.
So no problem. We always need someone on the opposite side to trade against. That is what makes it all work. Rising rates are a reflection of inflation for if they are not greater than inflation nobody will lend. You will see the negative rates now become the new peak in short-term and rates will then rise with inflation and so will share prices. With a rising dollar, foreign investors will be pouring into the States just as they did into Japan between 1987 and 1989.
SOLUTIONS
COMMENT:
Hi Martin,
I like your idea of capping government spending at 5% of GDP. I also agree that simply increasing the money supply would work just fine instead of destructive taxation. However, your plan still assumes that we’ll have benevolent politicians in charge who actually give a damn about the nation.
The Founding Fathers put restrictions in place to shackle government, but that didn’t seem to work for very long either. How long would it be before the 5% cap is moved to 7%, 10%, then 12%? Or they could simply change the calculation of GDP to boost their ability to spend.
The income tax was originally touted as only a tax on the “rich” or the top 1%. Now here we are with the average American having at least a third of their income confiscated and consumed by unproductive bureaucrats. Nothing ever changes.
REPLY: We are talking about a palatable solution, not a revolution. Ideally, you are correct. We should eliminate career politicians. But we must comprehend, they would never eliminate their own jobs. The best we can hope for is that the older ones will vote to end career politicians, imposing term limits on their way out the door. So how do we save our future without revolution and bloodshed?
The solution presented is one that assumes there are no benevolent politicians, but ones who would vote for something that makes the basic changes we need without driving a stake through their own hearts. So this is by no means thePERFECT solution, only a palatable one.
Jefferson’s Three Stages of Government
We are moving toward government by sheer force. This is the third and final stage of government as identified by Thomas Jefferson. Traditionally, government begins to lose power and as it does, it tightens the noose around the economy. FATCA is the classic example of the final stage – Government by Force. There is never the realization that the best means to govern the people is by reward the same as you train a dog or a fish to do tricks. If you train by force (punishment) you end up with the animal eating the trainer and in human terms that is civil unrest or revolution.
Jefferson explained:
“Societies exist under three forms sufficiently distinguishable.
- Without government, as among our Indians.
- Under governments wherein the will of every one has a just influence, as is the case in England in a slight degree, and in our states in a great one.
- Under governments of force: as is the case in all other monarchies and in most of the other republics.
To have an idea of the curse of existence under these last, they must be seen. It is a government of wolves over sheep. It is a problem, not clear in my mind, that the 1st. condition is not the best. But I believe it to be inconsistent with any great degree of population. The second state has a great deal of good in it. The mass of mankind under that enjoys a precious degree of liberty and happiness. It has it’s evils too: the principal of which is the turbulence to which it is subject. But weigh this against the oppressions [sic] of monarchy, and it becomes nothing. Malo periculosam, libertatem quam quietam servitutem. Even this evil is productive of good. It prevents the degeneracy of government, and nourishes a general attention to the public affairs. I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical. Unsuccesful [sic] rebellions indeed generally establish the incroachments on the rights of the people which have produced them. An observation of this truth should render honest republican governors so mild in their punishment of rebellions, as not to discourage them too much. It is a medecine [sic] necessary for the sound health of government.”
– Letter of Thomas Jefferson to James Madison, Paris, January 30, 1787
Investor v Trader
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