IMF Warns That We Have a New Crisis Coming
Thank you for caring
BG
ANSWER: I
absolutely could mitigate the crisis. There would be much I could stop
in 30 days or less. But the trend is the trend. The system is
collapsing. It is not because of some derivatives bubble. It is not
because of fiat. This is because of the debt gone wild and governments
run by politicians who are clueless and assume that they can bully their
way through this by writing laws. LaGarde is now warning that we have not fixed the problems from the last crisis and we have another one brewing.
Yet
the IMF is focused on the rising risk of a global financial crash
because of a slowdown in China, which undermines the stability of highly
indebted emerging economies. The IMF is not saying much other than
there are three crisis epic centers within the emerging market
crisis including China, Brazil, Turkey, and Malaysia. This could shave
3% off of global GDP, which would devastate Europe in particular. Then
there is the chaos of debt in Europe because of the failed euro, but
that is a political problem and means politicians need to admit error.
The IMF has warned about the battered global markets that have
experienced a sharp decline in liquidity since 2007 and are more likely
to transmit shocks rather than cushion the blow.
These
three areas that the IMF is warning about are the symptoms rather than
the causes. The IMF has not identified the root cause of this chaos and
that is all emerging from the fact that governments borrow, owe debt,
and in turn raise taxes, which lowers growth and reducing living
standards. Wait for the pension crisis to hit. A further decline will
undermine the European banks and will cause a real meltdown.
Belgium to Introduce 33% Tax on Investments
The Belgium government wants to introduce what they are calling the “speculation tax” that will impose a 33% tax on investments liquidated within 6 months. They fail to grasp that this will only send capital elsewhere. Politicians never understand that they are the source of all evil.
Merkel’s Dream
HS
ANSWER: Angela
Merkel is pursuing a policy of open borders. She assumes she will
revitalize the German economy to shift from export-dominated to domestic
consumption. This is clearly a major radical change in
political-economic policy that is purely another fictional fantasy like
the EU ending wars by
creating one unified government. The immigrants, whom she thinks will
boost the German economy, will cause it to implode. Consequently, Merkel
is following the elitist views of the IMF. This is all in line with the
trade deal. This is a high-risk strategy since what she is doing took
the U.S. more than a generation to accomplish. She will never see what
she thinks will happen in her lifetime.
Market Talk 10-12-2015
We also saw a quiet day within the FX arena with the DXY (US Dollar Index) closing unchanged at 94.885 (+0.0%). The Bond market was also quiet but managed to edge higher on extremely thin volume. The curve managed to flatten with 30yrs eventually closing at 2.94% with 10’s marginally squeezing into the close. Gold had another healthy days return gaining $12 at one stage to $1167.
We do have a lot of economic data later in the week from PPI, CPI and a number a confidence indicators. In Germany this week we CPI (0% previous) and ZEW (67.5 previous). The US, UK and China also see similar data releases so we do not see today’s dull markets staying with us for that long.
How to Convert ECM Dates
Note: Because this was over .5 of a day, we refer to this target as September 30/October 1.
Austerity: Good or Bad?
QUESTION: Martin,
The ‘Austerity’ argument seems a bit confusing.
Surely, “Austerity” means reducing the size of Government and is an understanding that we can’t keep funding zillions of civil/public servants and on the other is a reduction of the Social Security Bill – healthcare, social benefits, the cost of the un and underemployed etc – both of which seem to be excellent objectives unless you are in one of the groups affected. Isn’t it impossible to return to or have a vibrant economy unless and until these objectives are achieved?
AB
ANSWER:
The problem with austerity carried out in this fashion is that they are
turning off the spigot and it is ending in Marxism/socialism. To
continue to service the debt, governments hunt the rich and raise taxes
then agree to exchange all info. In the process, they cause capital to
hoard and not invest. So you are not really ending socialism, rather you
are moving more toward totalitarianism.
We
will see riots for they are not just people who receive; these are the
people who cannot find a job because nobody is creating them with
deflation. We have to look at both sides and this is why our proposal is
to eliminate taxation at the federal level to unwind this mess from
both directions.
So
there is more to this than just reducing social programs. Doing that
and raising taxes to continue to service debts will result in taxation
without representation as the current workforce must then pay for
spending without receiving anything in return.
U.S. Shares & Slingshot Move
The
potential for a slingshot move has not been negated. To negate a
slingshot, we need a daily closing in the Dow above 17735. If we have
the slingshot and trap the majority, then we should see this rally fail
and new lows by the first quarter.
Can
we merely go into a Phase Transition without the slingshot? Yes. That
would require a key annual closing and consolidation into the first
quarter before electing the Weekly Bullish Reversals.
Either
way, it still appears that we will have that shift from public to
private assets and the quantitative easing has shortened the duration of
the debt so the slightest uptick in rates will have devastating
effects. Even in Britain, Osbourne has doubled the national debt at
these low levels of rates. Can you imagine what will happen when rates
are forced to rise? The exit from public assets will become a huge one-way street. This is how empires fail and
die. We deserve what we get by filling government with lawyers who
assume the answer is more laws to dictate to society.
Belgium Riots Reach up to 100,000 People Against Austerity
Major protests have broken out in Belgium over AUSTERITY, according to Le Monde. According to the police, up to 100,000 people demonstrated in the center of the capital against the AUSTERITY measures imposed by Prime Minister Charles Michel. The protests in Europe will get much worse on the other side of 2015.75.
Malaysia, Goldman Sachs, and the ECM Turning Point
Malaysia
is becoming the poster-child for the crisis in emerging markets. The
rising tensions between the people and government are clearly
demonstrated by this story developing within the emerging markets. In
Malaysia, we hear the central bank is recommending criminal prosecution
in connection with the controversial investment fund 1MDB, the BBC reported. 1MDB was a sovereign wealth fund that was set up by Malaysian Prime Minister Najib Razak.
The fund invested nearly $1.83bn abroad without using proper
procedures. The investment bank Goldman Sachs is at the center of the
criminal investigation in Malaysia since it organized 1MDB to raise U.S.
dollar debt to finance acquisitions of power plants. Goldman Sachs also
did the currency swap from dollars.
Goldman
Sachs’ role has been highly criticized in the Malaysian media and
political circles after it emerged that 1MDB paid hundreds of millions
of dollars to the bank for helping it raise $6.5 billion in three bond deals in 2012 and 2013. Goldman Sachs earned around $590 million in fees plus commissions and expenses from underwriting the bonds, according to Reuters. The reported fees are highly excessive, nearing 10%, when such fees are typically only 1% in bond underwriting.
The Wall Street Journal reported last July that investigators looking
into 1MDB had discovered nearly $700 million transferred to Najib’s bank
accounts. Malaysian Prime Minister Najib Razak also acts as finance
minister in Malaysia and on top of that chairs 1MDB’s advisory board.
Malaysia’s anti-corruption commission said the funds deposited in
Najib’s accounts were from a donation, not from 1MDB. However, they
declined to reveal who the donor was and for what reason they donated.
Then this financial mess gets even more convoluted. Abu Dhabi is
in the mix through IPIC established in the 1980s to focus on energy
investments. For some strange reason, they have been a supporter of
Malaysia as part of its expansion to developing countries and have
already offered financial support. An Abu Dhabi government-owned
investment firm revealed that it would pay $102.7 million (U.S. dollars)
in interest payments due this month, in addition to paying for two
$1.75 billion bonds next month that were issued by 1MDB units and are
co-guaranteed by IPIC.
Growing pressures
of this corruption scandal are clearly demonstrated in the depreciation
of the Malaysian Ringgit over the past few months, as illustrated
above. However, this is at the heart of emerging market debt that is
going to explode with a rising dollar. The total debt, which rose after
2007 in dollars, is nearly 50% of the total U.S. national debt without
the economic infrastructure to support it.
This corruption scandal is starting to make worldwide press with the turn in the ECM on 2015.75.
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