Global Market Watch Jan 17, 2014
The Global Market Watch has been posted for the close of January 17th, 2014.
Violent Rioting is Spain Spreads
In Spain, people are just fed up with the collapse in government and this is now spreading to the local city governments that cannot afford the projects they dreamed of. In Burgos, they were intending to close a road and people have lost even a place to park their car. This erupted into riots forcing the city to back down.
Some have asked do I really think Americans would ever riot like this? They answer is absolutely YES. They rioted setting cars of firm even in Philadelphia during the gasoline shortages of the 1970s during the OPEC embargo.
Don’t forget the race riots of the 1960s that were widespread from coast to coast. This is the City of Detroit. California was perhaps the worst. To achieve this sort of violence, it requires an economic decline. People will not protest when they are fat and full – only when hungry and mean.
The Anti-Government Protests in Thailand Heating Up
Someone hurled an explosive device into the crowd of anti-government protesters in Thailand wounding at least 35 people. Governments worldwide are in a serious position where they are refusing to consider the course of their socialistic-Marxism and how this has only increased the cost of government lowering the standard of living. These protests are turning much more violent on both sides and they are appearing in Asia, South America, and Europe, while they are just beginning in the USA limited to state workers in places like Detroit that have not yet turned violent. This is all economic driven and we are looking at this entire trend erupting especially as the economy turns down once again from 2015.75.
Gold Production
QUESTION: Mr. Armstrong; Won’t the decline in gold prices reduce gold production? Isn’t that what eventually reverses the decline?
Thanks
FG
ANSWER: Actually the answer is NO. What happens is typically production increases. Mines will focus on the highest grades and they will slash their exploration costs. They will also increase hedging. The price for gold would have to drop under $1,000 before we will actually start to see any reduction and that will come with mine closures of those unable to focus on high grades or slash exploration costs. Precisely as the economy declines, government raises taxes because they need money. They kill their own economy but are too wrapped up in their own self-interest to care about doing the right thing. This is human nature – survival of the fittest.
Oil production did NOT decline when prices fell for the same reason. It initially rises with falling prices. The discoveries have declined but production rises when prices decline because they simply need the same amount of money that they were use to spending.
It is the same with inflation. People will buy when they anticipate prices will only rise. Lowering interest rates have never stimulated the economy because people hold back and wait for the low that never comes. They starting buying when rates begin to rise. This is the Paradox that Production within Supply & Demand. Correlate supply and demand in anything and the truth is revealed.
China’s Sovereign Wealth Fund $575 billion and growing
Europe and the United States cannot compete for the future because their governments are like black holes sucking in the wealth of their own people and squandering it on unproductive forces. When we look at the former communistic empires of China and Russia, we see countries building from clean slates rather than imploding trying to fund promises that cannot be kept. When I was working in the 1990s to try to privatize Social Security and transform that into a sovereign wealth fund that would have secured the future of pensions while expanding the economy, I ended up just walking away because the politics was so corrupt that nobody would say yes unless they got something out of the deal right down to their cousin managing the money.
They criticize China for being corrupt as they do with Russia. But the corruption is not at the strategic level where it is altering the long-term course of the nation. Back in the 1960s, my father took a part-time job as a judge. He soon quit because the politicians were insisting that all fines be imposed at the maximum to bring in revenue. This level of corruption at the state and local level is accumulative in the long-run and we are seeing that in the collapse of their budgets. Ye that does not alter the course of the economic trend at the federal level.
China’s sovereign wealth fund is at $575 billion so far. Japan’s Postal Savings Fund was the private deposits of citizens and when I was called in by them in 1989, their portfolio was at $1.2 trillion – the largest in the world back then. That fund was directed by the government to try to support the Japanese economy and by 1997, the funds were effectively lost and the government had to cover redemptions. At this stage, China’s Sovereign Wealth Fund is massive and a strategic investor globally. Eventually that will change. However, no for a few cycles yet.
NSA Collects more than 200 Million Text Messages Per Day
The Guardian has reported that the NSA has been collecting 200 million text messages per day. This is not about terrorism – it is about the obsession to know when (1) people will rise up in the USA and begin protesting, which appears to be 2017, and (2) taxes looking for spare change everywhere. They have gone too far and they are now even threatening relations with friendly nations such as Germany.
Riots in Spain Turning Massively Violent
In Spain, protests are turning into street battles between the people and police. In Madrid, violence erupted on Thursday in an all out street battle between protesters and police. The new laws against protesting only aggravate the situation yet thousands have been thrown in jails. The Cycle of War is alive and well and the turn of this model is simply amazing. Everything is right on schedule.
Deflation & Europe – Coming Great Depression
Sometimes you just have to be smacked in the face three times before you recognize when is happening. There is a rising tide thatDEFLATION is starting to be seen as the real threat facing the world economy emerging out of Europe. I cannot stress enough that Europe is disintegrating before our eyes. Between Hollande who wants to confiscate all wealth so he need not abandon his elitist view of French Communism where Marx got his ideas, and Merkel’s fears of hyperinflation from the 1920s so Germany turns to hyper-deflation, Europe has little to hope for in the years ahead as the unemployed youth are being driven into off the grid survival for European leaders have utterly destroyed their future.
There is at last a growing realization that Europe faces the threat of a Great Depression and that is thanks to DEFLATION. TheEconomist is reporting this risk now exists. Of course, the International Monetary Fund Managing Director Christine Lagarde is now also warning that Europe must fight againstDEFLATION yet cannot see her own recommendation to urgently confiscate 10% of all bank accounts in Europe to bail out the banks is MASSIVELY deflationary. We seriously need a whole new generation of thinkers. These elderly people running governments have to simply go. They are married to old ideas and are undermining the future. Their insanity is placing the entire world at risk both economically and from a geopolitical perspective. Even in Canada they are starting to see DEFLATION as a rising threat. When the Economic Confidence Model turns down in 2015.75, we are looking at a much deeper correction that the 2007-2011 drop.
Cycles of War – Guardian Asks is it Repeating?
Indeed, World War I does not erupt solely by the assassination of the Archduke of Austria. Resentment builds and you have to look for the subtle signs. In the case of World War I, it really began with old resentment dealing with the Christian;Muslim confrontation with the old Ottoman Empire. Even that goes back to the Crusades, and was followed by the peak of the invasion of Europe by the Ottoman Empire with the siege of Vienna that caused the Panic of 1683.
In the case of World War I, the initial rumblings began with the Italo-Turkish war of 1911, which began when the Kingdom of Italy attacked and invaded the Ottoman territory known today as Libya. There are rising tensions in Turkey once again and this is centered around religion where there is a push to swing to Islamic law. The tension in Syria is between Rebels who are religious extremists who also are trying to reestablish a religious state. TheGuardian Newspaper has observed the similarities asking is history repeating here.
The added dimension is the risk of massive deflation with the collapse of the European economy. These measures of austerity and the hunting down of capital is destroying the future of any economic hope in Europe and the next generation is being pushed to the brink of extinction thanks to socialistic-Marxism. We are infested with old politicians still caught in a time warp thinking they way to make their dreams come true is to shove more socialistic-Marxism down the throats of everyone.
History repeats because the passions of humankind never changes.
Ukraine Cracking Down on Protesters Restricting Use of Internet
Yesterday, the U.S. Senate Committee hearing on the Ukrainian question admired the bravery of Ukrainian protesters and in response today Ukraine announced a new law making all protests illegal. They said that nobody can even purchase a Sim card for a telephone without producing a passport. The government will now decide if one can even have any Internet access that they are now classifying as “benefits” rather than a right of the people.
Of course, let’s be really honest. If people were protesting in Washington, DC, the Senate would also declare them “criminals” as they did to the Bonus Army in 1932. When they protest against someone else, they are brave patriots. Protest against Washington and the same reaction will emerge. Obama already can turn off the internet by executive decree.
Even Goldman Sach’s Trading Profits Plunged 21%
Trading has been perhaps the worst in 2013 because of this constant domestic myopic perspective. Making the transition to comprehending the intricate movements of the global economy and its inter-connectivity is honestly like making the transition from believing the world is flat to a sphere. You just cannot rig the entire world economy. You have to become a “real” trader with “real” analysis. Even trading profits atGoldman Sachs plunged 21%.
It took the Fall of Constantinople in 1453 to send the scholars fleeing to the West where they set up schools and began teaching the primitive and superstitious Europeans the meaning of life. It was no coincidence that Columbus grew up in Genoa located in Northern Italy and was exposed to this knowledge. Yet he could not convince the Italians to fund his voyage and had to turn of Spain where Queen Isabella funded his dreams.
Welcome to the new age of Internationalism where domestic analysis and politics is as primitive as the old superstitions that plagued our thinking process and retarded our economic growth.
Trading Seminar March 23rd – Answering your Questions
This Special Trading Seminar is geared to enable you to Survive Your Own Trading Decisions and this is not merely a marketing phrase to sell a seminar. This is not a day trading seminar. This is about really how to trade, understand the global economy, and how to see the world so you can invest with confidence.
This is not limited to futures, but includes indices and individual equities. One object of this session is how to look at the world as a single entity. Everything moves constantly, yet it is all connected. One financial center’s demise is another’s gain. Simply put, it is impossible for everyone to enjoy a trade surplus. Someone has to have a deficit.
Grasping the world economy as a single entity is strategic to surviving the years ahead. Of course there will be technical and cyclical analysis including how and why cycles invert, If you have no trading experience or you have a lot, this is a session geared to revealing how the economy functions. Buying or selling any instrument cannot be done in isolation. Just as 2011 was the high in gold and the bottom in the Dow, the key to successful investment at the strategic level is seeing these connections. This is your test to being on the correct side of the market. You have to be correct being long equity when gold was declining. Using the world as your guide, you can strategically invest and ignore the nonsense of the talking heads. Everyday they have some fundamental news they announced caused the market to do something. How many even saw the potential for new highs in the share market back in 2011?
Barrons reported the turn we forecast in 2011. This isSTRATEGIC INVESTMENT. It is time to see the world in all its complexity revealed in a simplistic manner. Capital has been rushing around the globe for centuries. Cicero wrote that whenever there was some devastating news of some event in Asia Minor (Turkey), it sent a financial panic down the banking street in the Roman Forum. In 1720, there was the Mississippi Bubble collapse in Paris and then the South Sea Bubble bust in London. People have always been investing capital around the globe. International Capital Flows are nothing new – they are simply the way the world functions.
The mainstream press will normally never report our views because the implications are far-reaching. How can a politician run for office saying vote for me if he is incapable to actually changing the trend because it is driven internationally? How can TV or newspapers have something to offer audiences if the talking heads are irrelevant? The truth behind international movement alters so much. One day, perhaps with luck, we can pass to a new era of understanding. But for now, we have to use the world for STRATEGIC INVESTING and this opens a new dimension toAsset Allocation.
Global Market Watch Jan 15, 2014
The Global Market Watch has been posted for the close of January 15th, 2014.