The Terrorist Exchange – Fake or Real?
A lot of people have written asking my take on the Terrorist Exchange. The first question to ask – are they really terrorists? Assume nothing. The answer is probably no. Why?Obama promised on 60 Minutes to stop the torture and to close Guantanamo Bay. He used that citing Bush during the Presidential Campaign. Why did he not follow through on anything?
Those held in Guantanamo Bay are victims of the propaganda of the US administration and the refusal to ever admit they make a mistake. Before you go getting all patriotic, the reason I say this is because Obama did follow through and placed their BEST case on trial in New York. Ahmed Ghailani was put on trial in Manhattan Federal Court because government assumed that New Yorkers would just do what the government told them. This was the first civilian trial of a Guantanamo prisoner that Obama promised would happen and it was the last. Why? That trial ended with a totally shocking acquittal of an accused Al Qaeda operative on all but a single count. The only count of conspiracy to do something undefined (guilt by mere association) out of 224 counts was what the jury found him guilty of. In a 4 1/2 hour deliberation, very short, sweet, and to the point, the jury did what they were supposed to do, acquit if there is no evidence beyond a reasonable doubt.
If this was the BEST they had, is it any wonder Guantanamo remains open and nobody else has been given a fair public trial. Sorry. I “think” the exchange was good reddens. They do not know what to do with these people who have been there way too long with noPUBLIC trial. So the exchange I think was fair and an escape for the Administration. If these people were really terrorists, they would NEVER let them go. They would have been paraded around and tried.
When government FAILS to do what it is supposed to do, there is always a reason.
Stock Market – Has the Bull Been Replace with the Pink Bunny?
QUESTION: Marty; I do find it curious how Barron’s quoted your forecast for new highs in 2011, and you seem to be the only person who was correct, yet they constantly turn to people who have never been right to talk bearishness about the market. You once wrote that the Wall Street Journal refused to quote Jessie Livermore because he was correct saying the market would rise and they were wrong just like today. Why are the financial moguls always eager to air the bearish opinions and will not provide a single balance to that view even if you are the only one who was correct? I hate to say conspiracy, but it seems like the majority of the press is always bearish, even those who claim to be real on the internet. Very strange. What is your take on all these buybacks? They seem to be the latest excuse as to why these perpetual bears are wrong. Looks to me they are as bad as the goldbugs crying manipulation when they are wrong.
ANSWER: That is a curiosity indeed. Yes Barrons correctly forecast that our model was turning back in June 2011, but that may have been more of a curiosity itself. I do not think it is an intentional conspiracy refusing to give the other side, but the overwhelming press preach to the choir. They are not there to advise people. Even the internet news outlets are selling advertisements on their sites. They need also to preach to the choir to keep readership high to collect advertising revenue. Their job is the same. Churn out news and comment, not advice. That is simply the way it is – the Invisible Hand with each pursuing their own self-interest.
The market keeps churning higher ironically because people keep shorting listening to this nonsense. These constant short positions are the fuel that makes the market rise on a gradual basis. Keep in mind, people are running into the 10 year at 2.6% because they fear even lower rates coming. This is a different crowd. Many do not invest in stocks or do so with one-eye open all the time. This is the attitude behind Andrew Melon’s famous quote at the beginning of the Crash in 1929 – Gentlemen Buy Bonds.
Nevertheless, while the market then crashed in a normal fashion and started to recover, then the second shoe fell in 1931 that began with the sovereign default in Austria. That turned into a collapse in confidence and people ran from government debt in Europe and elsewhere pouring into the USA driving our rates to barely 1%. That proved that gentlemen also lose money.
Part of that trend was also the buybacks. We are seeing that again this time but into the rally. The first target for the high on this trend lines up with the ECM turning point on 2015.75. That will be 26 quarters from the low in 2009.
This buyback trend combined with declining rates attempting to stimulate spending, is more likely to lead to an investment rally and the mainstream media (including internet) who constantly preach the end of the world, will be wrong and stubborn. When the Wall Street Journal accused Jesse Livermore of trying to influence the Presidential Election and they were proved dead wrong, Even when the market rallied during the summer of 1926, Time magazine, the New York Times and the Wall Street Journal all reported the rally skeptically and they doubted how much it truly reflected business conditions. They were predominately bearish back then during the rally as they are today. In the February 25th, 1924 edition of Time Magazine, they reported the prejudice of the Wall Street Journal who after falsely accusing Livermore, simply refused to ever quote him again.
“At this stage enters Mr. Livermore, the noted operator. His last two main prophecies on the stock market had been sufficiently fulfilled so that he had attracted considerable speculative following. From his vantage point in Miami, he sent a statement to the press which was widely published, although the Wall Street Journal refused to include it in its columns.”
Unfortunately, this is reality. They press will NEVER quote what I have forecast because it does not fit their agenda. You can tell easily who is biased and who is not. When they give only one-side of a story, beware, there is something rotten in the core. Refusing to be balanced is not journalism – it is propaganda.
Here is a chart showing the rally the WSJ did not believe back then. Look at the oscillator. It remained high into 1929.
The Theory Behind NEGATIVE Interest Rates
QUESTION:
Not sure if this is even possible.
Can the consumer savings interest rates go to a level at or below Zero that will drag down the lending interest rate lower?
Thus making borrowing even cheaper to stimulate
the economy with more cheaper debt and punish savers.
the economy with more cheaper debt and punish savers.
Will our designed economic system sustain this thinking or will the system implode because people must save for banks to lend?
Even Japan had low interest rates but not zero.
Is that taboo?
Is that taboo?
Cheers,
R
ANSWER: The whole idea of moving to negative interest rates is seriously flawed and grossly misunderstood. The idea stems from the whole Keynesian concept that you lower interest rates to stimulate borrowing. That notion of stimulation not only completely failed in Japan, but as with everything else government reasons and unfortunately the talking heads just repeat, it is one-dimensional and fails to grasp that everything is connected. Lowering rates to try to “stimulate” fails for simultaneously you are destroying the fixed income of the elderly and pension funds based upon a theory that is bogus.
We have the largest database in the world. That has come in handy in combination with the Adam Smith approach of staying unbiased and letting the data speak instead of the Marx-Keynesian approach of trying to force the free markets to do as you think best. When we step back and try to just figure out HOW THE ECONOMY works as did Smith, what emerges from the data is quite interesting.
The business cycle has NEVER peaked twice with the same level of interest rates. Just look at the call money rates from the NYSE from 1880 to 1932. Likewise, interest rates collapse with the business cycle NOT because you will stimulate demand, but because demand collapses. That demand will return ONLY when the expectation of future gain reappears regardless of the level of interest rates. Consequently, the real formula is:
Economy Turns Up = (Expectation of Gain > Rate of Interest)
Therefore, lowering the rate of interest alone will not stimulate the economy. We have to take in account the entire picture. If you are raising taxes diminishing the disposable income, then you are creating more damage without any hope of stimulating spending that is not available.
I have explained that government’s approach is not only seriously flawed in thinking that rates alone will do anything, but then they fail completely to actually implement a policy. During the TARP bailout, all they did was hand the banks money and HOPE it will lead to lending. It never does. NOT EVEN ONCE!
Right now, deposit rates collapse because that is controlled by the central bank, but they then do not regulate the lending rates – DAH! We have ended up with the historical high in the spread between what banks pay depositors and what they charge. Therefore, going negative will still not stimulate, but it may at last force people to invest without borrowing shrinking the bank deposit base and ONLY then will banks start acting like banks. The money center banks have been trading to make profits NOT lending. Why lend when you can trade for less risk? This is why I am against banks being traders. That is a hedge fund – not a bank.
The Rise of Nationalism – Just Part of the Cycle
Last November I warned that as part of the cycle turning up in war and civil unrest in conjunction with the Sovereign Debt Crisis, we should Expect Riots & Rise of Nationalism After 2015.75 To Pick Up Steam. Because Greece is where this cycle began on the Pi turning point from the 2007.15 high in the ECM to the very day, this is where we should look closely for the unfolding of events.
Helena Smith reports from Athens on how Golden Dawn has taken on a sinister new tone in the Guardian. She reports what is going on there and the rising nationalism that people are perhaps associating with the old Nazis of Germany that is confusing the issue for this is a very common human reaction. Yes the Nazi movement went after the Jews. But keep in mind this began as NATIONALISM from the basic street level. We have to analyze this trend carefully and do not confuse it with just anti-Semite. Nationalism is entirely logical during an economic downturn, not that it is right, but rather it is always directed at whoever they see as foreign. Hitler’s political establishment profited from the extermination of the Jews for he got to confiscate their assets at the governmental official level. However, if we set aside the anti-Semite issue from Nationalism, we can begin to see that the issue underlying everything is a common bond that has emerged during economic declines.
Nationalism always raises its head every time there is a serious economic decline. Who it is directed at is some minority that is typically considered to be foreign and not part of the society as a whole. Even all the persecutions of the Jews by Spain, England, and France, only took place during an economic decline when Spain was collapsing into a Third World country, and Edward I of England was broke with the war against Philip IV of France who also confiscated the Catholic Church, Italian Bankers, and the Knights Templar. Even the greatest period of Christian persecutions during the Roman Empire took place during the economic collapse of the 3rd Century. Just follow the money. Henry VIII seized the Catholic Church when he was on the verge of bankruptcy as well reflected in the massive debasement of his coinage that gave rise to Gresham’s law.
There was the Boxer Rebellion in China, also known as the Yihetuan Movement, that was a violent anti-foreigner movement displaying nationalism when China beginning its decline from being the Financial Capital of the World handing that mantle to Britain. The Boxer Rebellion took place in China between 1899 and 1901 starting with the end of Wave 920 in the ECM.. It was initiated by the Righteous Harmony Society and was motivated by proto-nationalist sentiments and opposition to foreign imperialism and Christian missions. The Great Powers intervened and defeated the Boxer Rebellion, in a humiliation for China actually waging war on their soil against their own people. This would be like Homeland Security going to Europe to put down a revolt in Poland.
So you begin to put the pieces together in your mind, correspondingly, this was the simultaneous peak in US interest rates at nearly 200% during the Panic of 1899. This was the low in the USA and the beginning of its rise to dominant power against Britain. What we have is a very nice ballet where China has peaked and is losing its economic power to Britain, yet the USA is bottoming and preparing to take the crown from Britain. The timing is interestingly the same. This is why I say the ECM is global, but when one country peaks another is bottoming.
After the Panic of 1837 with the massive collapse of the State Banking systems thanks to Andrew Jackson, some states issued bonds trying to support the banks. They too were forced into permanent Sovereign Default. The economic decline resulted in violent riots in the USA that were against foreigners taking American jobs – precisely what we see in Greece today.
This is just how things function. Like most conspiracy theories, they try to isolate blame to one thing and that is typically wrong anyway. Just follow the money and look for the common bonds. It does not matter if they are Jews, Arabs, Christians, black, white, yellow, red, or blue-grey aliens from another planet, it is always the same in an economic decline. Whoever is from someplace else suddenly does not belong.