Thailand & Ukraine – The Common Link
Behind the Headlines for both Thailand and Ukraine, the mainstream press has ONLY given one side of the story. In the case of Thailand, this paint it only as the rural poor against the rich and in Ukraine they paint it as purely the youth upside for not joining Europe.
The other dimension in both regions that will be coming our way as well, is the sheer disgust with the corruption in government. This is the root where it goes beyond the poor in Thailand embracing the Middle Class as well, and in Ukraine where the corruption has become institutionalized. Applying for a passport there, the staff hand you their bank details and tell you a donation is welcome. You take that to the bank and actually pay money that goes to the employees of that office. It is an official tip jar with a bank account.
It is the sheer level of incompetence and widespread corruption that is pissing a lot of people off. As government workers demand full pensions, government merely raise taxes creating a cost-push inflation squeeze that leads to lower and lower standards of living for the people v government workers. Some unions got full healthcare benefits 100% for their state workers that nobody else will ever get in the private sector.
Welcome the ticking clock measuring how little time we have until this whole things just goes bust.
Political Change is in the Wind – Welcome 2014-2016
Nigel Farage’s EuroSkeptic Party has emerged as theNUMBER ONE party in Britain. This is right in line with our models and Britain tends to be 2 years ahead of the USA. This was evidenced even during the Great Depression where Britain bottomed 2 years ahead of the USA when it abandoned the Gold Standard (Austerity).
Cash = Money Laundering
It is actually a documented fact that unless you have cash that was hidden from the 1930s, the likelihood of there being drug residue on the notes is greater than 80% with $100 bills. They can seize cash now under money laundering laws and it becomes your burden to proven even why you have the cash. A man who wascarrying $153,000 in cash found that the money was seized and he was accused of money laundering just having possession of cash. It will now cost him at least 3 times that amount to defend with lawyers. He cannot even walk way.
This is the problem when government eliminates the Innocent until Proven Guilty right. Here is a political protest note from England where they made it death to possess a counterfeit Bank of England note. The problem was you were hanged for just possessing it ASSUMING possession was the same as counterfeiting. This is what they have done to the money laundering laws. You are presumed guilty and it becomes your burden to prove even why you have cash. And people actually think government will return to tangible coins or gold back currency? Come on! They want to eliminate all cash.
Yet the story illustrates another point and the whole danger of the NSA. They justify the seizure by a police officer merely putting in an affidavit saying the money was wrapped the way drug dealers do. I saw this with the Mafia prosecutions. Because they knew the FBI always tapped their phones, they would never speak on the phone. If the FBI then had a tape and the target even said “pick up two pizzas on the way home” the FBI agent got on the stand and said in his vast years of experience, “pizza” was a code word for “keys of cocaine”.
The problem this presents is they can say any word you use really means something else and you used code words because now everyone knows the NSA listens to every phone call, reads every text message, collects every email, watches every Skype phone call, tracks everything we search through Google, and creates circles of connections from Facebook etc, anyone really doing anything would be out of their minds to use any such media. And for drones and helicopters, when they can listen to conversation between two people standing on a street corner from more than a mile away and use face recognition to identify them, is there any place safe anymore? Don’t forget the black-box chips in our cars that can tell them where we were and how fast we got there.
Because of the NSA surveillance, absolutely ANYTHING you say can be sworn to by a government agent to be a code word for something else. You will be guilty of whatever they say and you have ZERO rights to protect you. The Constitution is as good as your wallet to pay for lawyers because they do as they like and it isALWAYS your burden to prove you have any rights whatsoever.Welcome to the REAL America – yes the land of theFREE (government agents are “free” to do as they like first and you prove they are wrong) and the home of the BRAVE (where they have the courts stacked and are brave because government agents are never prosecuted for their crimes).
This is the real world where rights honestly do not exist. When I was in the gold business in the late 1970s, an elderly man came in and was watching our ticker with prices from the exchange. He had a brown shopping back he was holding and said to me “Kid, how many Krugerrands would half a million buy?” I put the number into the calculator and gave him the answer. He said ok, he would take them. He handed me the brown bag, said here, I will be right back, I will get the other $250,000 it’s in the car. I opened the bag and it was full of cash. It smelled. And as I looked at it, it was all from the Great Depression. I told the story to someone locally and they told me who he was. His family had been the largest land holders on the East Coast. They lost money in banks, so they built their own vault in their house and never used banks again. Today, the government would ASSUME it was illegal when they paid their taxes, they just did not trust banks.
China
QUESTION: Dear Mr.Armstrong,
Long time reader here, have read all of your materials since posted online and continuing on to your blog now. I have also been to your conference held in Bangkok 2 years ago, and I remember I wondered if it was a suitable location given its constant political upheavals, it’s a shame politicians there are using “social justice” to justify thievery and creating political chaos.
Firstly I want to say how much I appreciate what you are doing with the regular blog updates, not only does it takes time to write blogs, but it takes much more time to write facts as information need to be confirmed and sourced. However, you are showing us how to think in terms of cycles, how to see the world and markets in an international perspective, and how everything is interconnected. The way I see things have been re-wired so to speak, and I’m very grateful to you.
I’m living in China right now and I have a few questions that perhaps you can explore for us Asian readers in the future (doesn’t have to be a direct reply), but before I ask, I want to tell you how powerful I think you are.
As you have mentioned, the Chinese government and its institutions have in the past (maybe currently also?) asked for your views and advice. Do you know that your blog is one of the very few blogs that I know of, being powered by WordPress and accessible in China? The top domain wordpress website is blocked in China. And Grantland, one of my favorite site for sports commentaries owned by ESPN, having just switched to being powered by WordPress, is now not accessible in China.
Except for your site. Your blog site is fully accessible, down to the pictures which the files are hosted and accessed via directories from WP.com. And you know why? Because on your blog, you post a lot of useful info and charts in pictures format, especially back when you started the blog after being released by government. Those pictures were initially not accessible, and so the blog would only show some words and since there was no picture placement holder, the reader wouldn’t know there are additional information in the pictures, until sometime later in your blogs you start to say, “as shown in the picture / chart below.” I think it was about several months after you started your blog when the pictures now “magically” all appear as they are downloaded and shown. I guess someone high up here in China, who has the authority to get the necessary departments to order the Chinese Internet Firewall to unblock your site, wants to get the full info and not use a VPN.
That is the power of your brand. Not even Facebook can do it.
If you start your school in Asia, I would be applying for it immediately! I really hope so, because you were so patient explaining your models in Thailand, I think you would also rock as a professor!
I’m a Hong Kong born Canadian citizen currently living in China. Since my wife and my family are there, I would like to know if China is “the place to be” economically and politically for the next 50 years. Since I have the choice of 3 places to stay, however, based on your models, they seem to suggest that China is a prime choice for this generation growing up (my daughter is about 3 years old). ,,, Is Chairman Xi the leader to lead China out of its current corrupt ways and lead the world economically? Is the global trend trending to have Shanghai as financial center coinciding China changing its IPO policies to be similar to the US model instead of the current approval based model? What about asset allocation for Chinese in face of a rising economy and inflation domestically while a massive deflation even defaults internationally?
Thanks again for devoting your time to the public, even to the haters, the goldbugs, etc., instead of just institutions. You are making a lot of people understand how the world really function. I’m going to take up programming again just so I can create in this digital world so I can try help the world be a little better. Just like you.
Thanks in advance,
Best regards.
JC
the Office at City Bank Plaza – Hong Kong
ANSWER: I am very familiar with China. Many people do not know, but I had half the floor in City Bank Building there in Honk Kong. People who visited saw two military guards with machine guns and they thought I had body guards and would always ask. I had to explain that the other half of the floor was the Chinese government who was there years in advance of the takeover. We were probably the first firm a lot of officials ever visited.
What the receiver Alan Cohen of Goldman Sachs and Tancred Schiavoni of O’Melveny & Myers put a stop to was taking our firm public and the deal we cut with China that was reported by Bloomberg. We were going to do all the forecasting for 1,000 agencies in China in return we would have had the exclusive deal to all economic data that others would have to come to our firm.
I am nonpolitical. I see things as cyclical and remain unmarried to any agenda. It is pointless to me because when you look at the popular vote, government is decided by less than 60% of the vote so it is a fickle population that swings back and forth. Nothing lasts forever and I do not judge. So as far as China goes, they also know what I stand for and that they respect. For that, I am thankful. We will be opening a service for China covering every share. Because this is a nonpolitical service and we are doing a computer system not individual opinions, China has no problem with our services. That may be unusual, but that is just the way it is. The key is consistency and reliability.
Chairman Xi is a leader who is at least trying to lead China out of its local corruption. There is no doubt that Shanghai is rising as a financial center and it will become the financial capital of the world. China has been changing its IPO policies to be similar to the US model instead of the current approval based model and that will greatly benefit the future. Asset allocation for China is something we are currently gathering data on to provide that service from the yuan perspective. When the West falls, China will decline much less. It lacks the “safety net” of Marxism that plagues the West. China and Russia effectively defaulted on that system and have risen as the new stars of the future.
Gold & the Inversion
QUESTION: Marty, Long time reader. According to your September 15, 2011 issue, the computer, in its first writing since 1999, pontificated it’s forecast on gold. On page 14 the computer said:
Utilizing a composite structure in cyclical timing analysis, the key months for a turning point in NY GOLD will be 10/2011 and 02/2014.
With everything happening in the press about gold, do you believe we’ll see a major inflection point in gold this Februrary?
Thanks,
S
ANSWER: Yes. But the first quarter is plagued by 3 Directional Changes warning of choppiness. The intraday low is still last year. However, the low in gold reached pretty close to our minimum projected target we gave back in 2011 of 1150. The low is 1151. So from a price perspective, the model is satisfied as far as the minimum objective. Now it is TIME. If gold drops to $890 that is fine. It will not change the cyclical trend – that is just a price objective on the max side.
The Goldbugs hate my guts when I say down. When I say UP, I become a hero. Gold will rise as capital flees the public sector and people begin to question government on a rising basis around the globe. It is not going to be gold up everything else down. Look closely at gold’s performance. It rallied from a 2008 low into 2011. Gold rallied with the downside of the ECM and not the bull leg as was the case going into 1980. That wave peaked in 1981.35. Gold has INVERTED and is starting to rally counter-trend to the economy. This is NOT a demand-push rally.
Dow Coming Phase Transition – Bull Market on Steroids?
QUESTION: Mr Armstrong,
I have been a fan since 1998 and want to understand the concept of phase transition.
If the Dow in Euros continues in a bull market while the value of the Euro is falling, then with the capital flows from EU into the perceived safe haven of the Dow, the Dow in Dollars must therefore have to simultaneously appear as a bull market on steroids, is this what you call a ”phase transition”? Or, does a phase transition have to occur in all currencies? Is the capital flow escaping EU sufficient enough to support and accelerate this Dow bull? Is this one of the reasons why you and your models continue to be bullish on the Dow while many Dollar-focused chartists are calling for an imminent top?
-SW
ANSWER: A Phase Transition is predominantly in the host currency. However, it normally soars in all currencies. Comprehending that everything moves according to its International Value was something I discovered thanks to my clients. Having offices all around the globe taught me to look at things from everyone’s viewpoint. I am not married to the left or the right in politics so I have no hidden agenda. I have learned always to go with the flow. This discovery was then essentially down the same path of Adam Smith. Everyone will act out of their own self-interest. That is determined globally according to the international value. If something declines by 50% in its host currency, then the rise will be in kind. This is not keeping up with inflation, but maintaining an international value. Illustrated here is why we had the 1987 Crash for the Dow was not quite making new highs yet.
There was a perfect CYCLE INVERSION whereby the crash bottomed on the Economic Confidence Model to that precise day rather than making a high. So the target worked, but we got a low instead of a high. That signaled new highs ahead into 1989 in dollar terms and then the breakout to record highs in international value that reached its first peak precisely on July 20th, 1998.
Here we are again on the verge of a breakout in International Value. That will take place when the Euro cracks as well as the Yen. The talking head will be talking to themselves as they always do believing their own bullshit. You cannot look at these things with only domestic colored glasses. If you do, you will never see what is coming. That accounts for a rally on steroids or a crash as 1987 because foreign capital saw the G5 Plaza Accord and manipulating the dollar down by 40% and that meant sell US assets.
Rubin started the same bullshit of trying to talk the dollar down for trade purposes. After I wrote again warning not to do this same stupid stuff as in 1987, he shut his mouth.
New Services
For those who are only interested in a few select markets, we will be offering the Global Market Watch on just singular markets for those not interested in the world. We will also have reducedGlobal Market Watch where you do not get the detail on several layers, just the Top layer at a substantially reduced price for individuals. We are trying to accommodate everyone.