Italy’s Version of the Patriot Act?
The Italian government is preparing to enact stronger anti-terrorism laws in the wake of the Paris attack. Our sources in Italy see this as an opportunity much like the Patriot Act was used in the USA after 911. Any terror suspects who wish to leave the country, their passport can be withdrawn. The police should have more rights to block websites that used the terrorists for propaganda as well. The definition of “terrorist”: is rapidly becoming anyone who disagrees with government. The problem in italy is the rise resistance against Europe. This is being fueled as unemployment among the youth exceeds 50%.
I am Charlie
The Islamic Radical attack on Charlie Hebdo, the satirical weekly magazine in France, has illustrated that we are entering this new age of the cycle of war thyat has engulfed civil unrest. Charlie Hebdo has courted controversy in the past with its irreverent take on news and current affairs. It was firebombed in November 2011 a day after it carried a caricature of the Prophet Muhammad. The latest tweet on Charlie Hebdo’s account was a cartoon of the Islamic State militant group leader, Abu Bakr al-Baghdadi.
Charlie Hebdo’s website, which went offline during the attack, is now showing the single image of “Je suis Charlie” (“I am Charlie) on a black banner, referring to a hashtag that is trending on Twitter in solidarity with the victims.
This is a sign of the times. The more the economy turns down, the greater the tensions will rise. One group will blame another. We are seeing resentment starting to rise against Islam in some Western countries like France and others are experiences rising tension over Jews thanks to the bankers. Still others are targeting anyone foreign. This is part of the cycle.
The Bond Bubble
QUESTION: Dear Mr. Armstrong,
Thank you for the amazing information you provide so freely. I have been trying to warn friends & family about the bond bubble that you have identified. It’s easy enough to explain why international capital flows are pushing the USD and bond market higher, but I am having trouble explaining WHY the US bond bubble will pop after 2015.75.
I understand that the 8.6 year cycle is the underlying pattern, but what will actually cause the bond market to drop? Will it just be a loss of confidence in US bonds, based on the defaults in Europe and in emerging markets, or is there more to it?
I am grateful for any light you can shine on this.
Many thanks,
- A
ANSWER: Historically, CONFIDENCE is a contagion game. Herbert Hoover wrote in his memoirs how capital acted during the 1931 Sovereign Debt Crisis. With interest rates going negative, this is the extreme point in PUBLIC confidence. So how far will it go? Will you pay the government 5% to hold your money? Once one government cracks, people will lose confidence gradually in all governments. The primary difference we have this time is the hunt for loose change. This is making it extremely difficult to protect yourself when they are hunting everything. You cannot even take $3,000 out of your account without setting off red flags.
This is why I say you should have cash and gold COINS, not bullion. Not that we are headed into the Mad Max or Hunger Game scenario, but with money going electronic, you can find everything frozen. Just have plan B. You need something that is recognizable by the public, and that includes CASH.
All I can do is advise you on what has happened before. Once one country goes, capital will look around and turn on whoever they think is next. Eventually, this will move from one to the next. The dollar will be the last man standing. After that, we are looking at some new world currency that should emerge. We have reached the extreme point in government debt.
Woe is Europe – Watch What Happens When Lawyers & Socialists Rule
QUESTION:
Hi,
Your call on this has been absolutely and impressively correct. You have said that the Dollar is going to ‘vertigo and that the Euro is dead”. Is it possible to give us some idea of what you mean by this please?
As always, thanks.
ANSWER: Here is the chart I displayed at the Berlin Conference. That is where I delivered the forecast that Greece would leave the Euro. I find it just amazing how a simple concept of understanding what a floating exchange rate system truly means appears to be beyond the understanding of politicians and most people.
If I lend you gold at $300 and ounce and you sell it to use the cash but ultimately must replay me in gold when gold rises to $1200, you now must spend 4x the amount of dollars to repay me with gold. This is how the floating exchange rate system operates and is WHY the Euro will crash and burn.
The committee to create the Euro attended my London World Economic Conference back in 1997. I explained that the Euro would fail if the debt was not consolidated. WHY? Because the outstanding debt of Greece ROSE in value under the Euro and for Greece to pay off its old debt meant that it was strip-mining its domestic economy. Just like the gold example, the Euro created DEFLATIONon a grand scale.
The Euro cannot function in that deflationary manner. Once we see the Euro break the 11640 level on a weekly, monthly and yearly closing basis, it is good night Irine. We will see Europe continue to battle against the rising separatist movements and once Greece leaves, the capital markets will turn against the next round of players.
Because analysis in Europe at the banks and institutions MUST be POLITICALLY CORRECT rather than economically correct, there is little hope of reform. Brussels will cling to their jobs until the last drop of blood is drained from the people. The idea that one currency and one government would prevent war, will only prove to be the catalyst for war. Europe is doomed without a reversal in political trend. Woe is Europe – Watch What Happens When Lawyers & Socialists Rule.
Are We Headed into Fascism?
Banks in the USA now are required to report any wire of $3,000 or more and any cash withdraw as well. If you want to withdraw $5,000 in cash, you have to now fill out a form. Your money is no longer yours. Big Brother and his entire Family is now here to stay. Little by little, government needs money so desperately to keep funding their pensions at the expense of the people that they have now put in place a stranglehold on the global economy. This is setting the stage for the worst economic decline since the birth of Capitalism during the 14th century. It does not get any worse than this. They are destroying everything that has been built in a fraction of the time it took to create it. This is what happens when lawyers control the state. They know how to write laws, but not run a country.
Our crisis is simply Adam Smith’s Invisible Hand. Government also acts only in its self-interest and therein lies the problem. They are INCAPABLE of even contemplating that what they are doing is killing the world economy. Pure BRAIN-DEAD management.
Hong Kong – A Bird of a Different Feather?
QUESTION:
Dear Marty,
I have been reading your writings a few years already and am so inspired by your analysis and ECM model. I understand you mentioned many times about the deflationary cycle that is coming and actually happening in Europe and reflected in oil prices. From many data, the inflation rate in US and UK are close to 1%, however, in hk, the official figure announced in Dec was 5.1% (which was still too low if compared to daily goods and property price). The continuous increase in property prices and daily goods, groceries are killing us. I really wanna see how you see such a gap and how we should react in this part of the world. Maybe Hong Kong is such a small and strange place but being pegged with US dollar, I’m really worried.
Your little fan.
K
ANSWER: I am familiar with Hong Kong. This was actually a headquarters. Most likely when we do go public it will be there. Understanding the way the world functions is rather simple. Not everyone can have a trade surplus for someone has to have a trade deficit in order to allow that to happen. The ECM represents turning points. At those same points, some markets are peaking while others bottom. For example, gold peaked with the bottom of the ECM in 2011 not the top in 2007 for that is when its rally took off – the HEDGE AGAINST GOVERNMENT never inflation.
Look at the Asian Crisis. We see the peak in share markets took place in 1994, the bottom of the ECM following the high at the peak in 1989.95, which marked the high in Tokyo. The Asian Currency Crisis took place and bottomed in 1998 with the collapse in Russia.
Now look. The bottom of the ECM was April 1st, 1994. Asia peaked and the US bottomed. The capital flows shifted out of Asia and back to USA to the day.
Honk Kong is moving up in opposition to Europe. Not everyone experiences the same thing simultaneously. This is how capital simply moves like the water on the deck of a ship from side to side in a torrential sea storm. Hence, expect inflation to still rise into the ECM as capital flees the Euro.