Greece – A Reversal of Fortune on the Horizon?
Greece and its creditors stuck to their positions on Monday after the collapse of talks aimed at preventing a default and possible euro exit, while Germany’s EU commissioner said it was time to prepare for a “state of emergency”. Our models have long favored a Greek Exit (Grexit). We suspect that there will be the typical pro-Euro selling where we may yet get new lows in the Greek share market. But long-term, we are most likely preparing for a reversal of fortunes.
We still see this June/July period as key followed by September. If this reaction high turns down into the ECM turning point now, this would suggest that we may see the final low for Greece and leaving the Euro would be the best thing since inventing Greek olives.
Prime Minister Alexis Tsipras has ignored pleas from European leaders to act fast. Instead Tsipras has blamed creditors for the collapse of the cash-for-reform talks on Sunday, the biggest setback in long-running negotiations to secure more aid for Greece.
Some seven Greek cities are creating their own local currency. This is the same recourse we saw in the USA during the Great Depression when more than 200 American cities also created their own currencies known as Depression Scrip. This is why history repeats – human nature adopts the same course of action when faced with the same consequences.
We Apologize – We Are Expanding the Site
WE APOLOGIZE for the site going down. We are trying to work out the problems with the system as the number of followers has increased dramatically, so the system was slowing down trying to forward so many emails. We are expanding the site to deal with this problem. We will try to have the “follow” button back up as soon as possible. Please be advised that e-mail notifications are temporarily disabled as well.
Market Talk
Today was a very busy day for most assets classes. First there was news over weekend that S&P may look unkindly on the UK over Brexit issue (cable was weaker than euro but is recovering towards the end of the day). Greece, never out of the news, despite weekends, has been on your screens all day. Still talk of Grexit late in the afternoon seeing Greek 2yr paper trading over 28% and the stock market lower by 7%.
This has seen a bit of a move back into bunds from the peripherals (10yr BTP’s down 2 points at one stage). U.S./bund 10yr spread now 152bp.
Russia cut rates to 11.50 over the weekend and saw ruble lower by 0.7% to U.S. dollars in late trade.
Saudi Arabia opened the market for large investors.
Again, talk out there is just so much uncertainty as very few people are running positions. Gold had a $16 trading range, some people still try to see this as a safe haven every time a negative headline hits the screen, but gold still traded lower on the day. Stocks are also seeing few buyers, which again adds to all the uncertainty.
–Ashley Warren
The 800th Anniversary of Magna Carta – a Tax Revolt Against the Abuse of Government
QUESTION:
Hello Martin,
I enjoy reading your articles on historical events. It is a refreshing change from mainstream media’s spin.
It will be 800 years on the 15th June since the signing of the Magna Carta here in the UK. I would be very interested on your views of this document and what value its contents could be in the next few years as far as our freedoms are concerned. I understand that the Magna Carta was originally constructed for the benefit of a few elites and to keep the king in order, rather than to help the common people?
Many thanks for the great info
Steve
ANSWER: As with all historical events, you must always understand the context of the era in which an event takes place. True, King John (1166–1216) was forced to sign the Magna Carta on June 15, 1215 at the demands of the elite barons. The reason for that was rather important – the common man was not taxed, only the rich. At the core of this entire issue was a tax revolt over the abuse of government. The abuse was so profound that part of the demand included the right to trial by jury.
John lost the war in France, and desperately needed to raise money to try to regain Normandy. The king had three main sources of income available to him: revenue from their personal lands or demesne, money raised through their rights as a feudal lord, and revenue from taxation. However, whatever revenue a king would obtain from the royal demesne was inflexible and had been diminishing gradually since the Norman Conquest. This was further reduced as King Richard I (1157–1199) sold many royal properties in 1189 for the Crusades.
Taxation played a much smaller role in royal income at that point in time, for this was still more than 100 years from the Black Death of the 14th century that killed about 50% of the population, and resulted in wages at that time replacing serfdom. That led to the first Tax Revolt by the people in 1381.
The taxation that did exist was against the rich barons, not the common people, during the 13th century.English kings did have widespread feudal rights that could be used to generate income. One such feudal right included the scutage system, in which a cash payment to the king could help one avoid feudal military service. So if you did not want to be drafted into the military, you paid a fee to get out of it.
The king also derived income from fines, court fees, and the sale of charters and other privileges. Fines were called “amercements” and at the time, it was said that there was hardly an Englishman of substance who had not been amerced at least once a year. Magna Carta introduced the right totrial by jury, where the people decide if someone is guilty and what the fine should be. This drastically curtailed the king’s abuse of the legal system at that time.King John was very unpopular, for he had intensified his efforts to maximize all possible sources of income to regain Normandy. Contemporary commentators describe him as“Avaricious, miserly, extortionate and money minded.”
King John also used revenue generation as a way of exerting political control over the barons, which led to their revolt of 1215. Debts owed to the crown by the king’s favored supporters might be forgiven, while he would ruthlessly engage in the collection of those owed by enemies or those out of favor.
Magna Carta cut off the king’s ability to use the courts to raise money, as they are doing once again today. The demand for fines to be determined by jury was a major setback for the king’s revenue collection scheme. King John died a year after signing Magna Carta. After John’s death, the regency government of his young son, Henry III (1207–1272), reissued the document in 1216, but stripped off some of its more radical content in an unsuccessful bid to build political support for their cause.
At the end of the war in 1217, the document acquired the name Magna Carta. Henry III was forced to reissue the charter again in 1225 in exchange for a grant of new taxes. His son, Edward I (1239–1307) was also forced to repeat the exercise in 1297, agreeing to sign it in return for taxes. By this time, Magna Carta became a part of England’s statute law.
From a cyclical perspective, Magna Carta was signed on June 15, 1215 (1215.454). If we add the two main frequencies 51.6, we get to 1989.454, which marked the collapse of Communism in China and Russia, while the volatility frequency 72 brings us to 2009.854 – the major low and the start of the Sovereign Debt Crisis.
If we take the 224 year frequency that picked 1999.454, which is the low in gold and the turn in the economy, as well as when Britain sold off a part of its gold reserves making the low. If we add the 37.33 year Monetary Crisis Cycle that also produces 1999.384, confirming the major turn economically.It certainly appears that Magna Carta was an important turning point in history, for it lines up cyclically with critical modern turning points. This tends to support that we are indeed in a period of rising government abuse once again.
The Foundation of Everything – Not Just a Theory of Everything
COMMENT:
Mr. Armstrong;
I too have spent my entire life in Physics. You must get this Geometry of Time finished. I concur what you have done is solved the Rubik’s Cube of the Universe. This is incredibly important for the real world as a whole and how everything functions.
Truly amazing.
WK
REPLY: OK. It seems those who grasp the depth of what I have been writing about are starting to scratch the surface. The Theory of Everything is really the complexity of unity and therein lies our strength and weakness. The strongest geometric shape is the triangle and a full 3-dimensional representation is the Great Pyramid of Giza in Egypt, which is a representation of both phi and pi. It is interesting is how many things are based upon three, as in the Borromean rings.
Even if we look at telling jokes, they are normally a structured form of three: A priest, a minister and a rabbi walk into a bar… There are three primary colors because human color vision is usually trichromatic: red, blue and green, Three is the number of bones in the human ear, and then there is Freud’s theory of three personality types. There are even three main categories of humanity (the human species) – Homo habilis, homo erectus, and homo sapien (of course politicians never made it to the third).
Many things come in threes such as, “Hear no evil, speak no evil, see no evil” (Nara Monkeys) representing the three main senses. Columbus set sail on the Nina, the Pinta, and the Santa Maria. There is the Tripartite government structure (Legislative, Executive, Judicial) and the three panel court of judges. There are three feet in a yard. There are the Three Fates of judgment, Three Blind Mice, Three Ring Circus, Three Little Pigs, “The Three Stooges”, Three French Hens, and ancient beasts with three heads, like the Cerberus. And if someone is drunk, we say they are, “Three sheets to the wind.” We say, “On your mark, get set, go!” We also say “Up, Up, and Away.” A bicycle requires balance to ride but a tricycle does not. Then there is “… of the people, by the people, for the people…” in the Gettysburg Address.
Even if we put religion aside, since that is a very personal subject, what is the basic structure of God? It is known as the Holy Trinity. This may be the most basic stable structure possible seen throughout nature, yet at the same time it is the greatest of all Christian mysteries – The Foundation of Everything – we are born, we live, and we die. The trinity of life itself. Some will argue that is why there is the structure of three based upon the Holy Trinity.
It is the complexity that creates everything that enters by the third invisible dimension. Governments are tearing the golden threads of society that binds everything together. By dividing us and hunting cash in their self-interest, governments are destroying the very essence of what creates civilization – synergy. The sum of the whole is greater than its individual parts. Adam Smith expresses this as the Invisible Hand, which is exactly correct. Something emerges from the connectivity that is greater than the sum of the individuals, which binds everything together. Break those bonds and interfere with the economic intercourse of society, and you destroy the synergy, sending society (civilization) back into an uncooperative state that leads to the chaos and the Dark Age.
This is not just the Theory of Everything, it is the Foundation of Everything. (Pi = 3.14159265359 and counting)
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