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Armstrong Economics: Entering Phase II of The Debt Crisis
In succinct synopsis of what lays just over the horizon ~ "the cycle of economic implosion" ~ for the ill-conceived amalgam known *today* as the European Union, phinance's phavorite political prisoner, Martin Armstrong, cautions that:
- "the EU is in dire position", on the precipice of shattering into default and civil unrest;
- the sovereign debt crisis materializing across Europe will soon reach US shores;
- the CFTC will curtail currency speculation by slashing leverage from 100:1 to 10:1, which "can cause a liquidity crisis that backfires, magnifying everything."
Since "debts will never be paid and interest expenditures are the greatest transfer of wealth in history", Armstrong suggests:
- freezing all national debt;
- issuing coupons whereby the debt is redeemable for local currency, which may then be invested in domestic debt or equity;
- each European nation establish an independent currency pegged to the Euro;
- swapping US debt to coupons that may be spent domestically.
Seeking to impart light from within the dark seclusion of maximum security solitary confinement, Armstrong concludes his (relatively minuscule by Armstrong standards) missive with stern warning.
" Western society is falling apart .... If we do not act, civil unrest will explode. The current choice is DEFAULT or HIGHER TAXES & CIVIL UNREST .... Someone has to step forward to save us or we may be doomed. It's time to wake up for this is the future of our children and their children at stake. "
http://www.martinarmstrong.org/files/Armstrong-From-the-Hole-3910-1-from-the-Hole.pdf
Just one note of caution for those who may be emotionally inclined to move all-in on gold here because they think 'the dollar be dead': any way ya slice it, the United States remains the lender of last resort (at least when the IMF isn't told to stand in) ... and while everyone "knows" that gold is the clear beneficiary of sovereign default concerns, please realize that Uncle Buck ($) sits alone at the head of the table. Worries of US hyperinflation and the death of the dollar are each absurdly premature at this juvenile juncture of the sovereign default crisis; each may occur, in due time, but certainly not before Uncle Sam has finished picking up everyone else's tab.
Euro Valuation ~ Fail
Until the deflationary spectre of sovereign default runs its coarse course over the next depressionary decade (what inning could this even be ?), those who want to become millionaires rooting for regicide of King Dollar ought study Patricia Heaton's method for valuing the Euro's "worth" ... just take a deep breath (c. 8 yrs), recheck your mental abacus and, eventually, you'll get there.
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Love the argument for GOLD...but at what price...THE million dollar question. There are more gold bugs around than I have ever seen...and that herd mentality is cheering each other on about smart they are about this trade...and when that happens, I always want to bet the other way...but again, the set up for this trade seems so obvious. Oh the conundrum! I think I will just stay clear of it...maybe a missed opportunity? Yes...but there is significant risk to the downside as well. "No brainer" trades always end up being ones that I wish I did have a brain before I made it.
Newsflash pal ~ it ain't a trade if it goes from FedEx into a safe.
Uh oh! Did I go against the herd? My bad! (And my point exactly). Sounds like some people are a little too attached to their trade. Good luck (pal).
Yay!
+1000.
Maybe these people should be asking themselves why serious investors aren't putting more than 2% of their portfolios in gold....
You're contrary view is appreciated. But I think you have tunnel vision...
If a small percentage of your portfolio equates to $Millions in holdings, I bet you''d be willing to speculate in a number of diverse investments... In fact, you'd pretty be imprudent not to do so.
Perhaps these "serious investors" aren't 100% certain about if/when gold shoots the moon, but don't want to look back with regret on the missed opportunity of a lifetime due to no exposure to gold.
You're foolish if you have no PM exposure unless you can predict the future with 100% certainty.
Just sayin'
"More gold bugs around than I have ever seen"?
In which area of the world do you live in? Just because a small minority of people on this blog are raving passionately about it and Drudge has started posting a few articles about it doesn't mean ordinary americans are physically buying it.
Sure, I'm sure there are some who have upped their purchases of GLD or the GDX but I assure you that 95% of this country doesn't even know where to go to find a trustworthy source to purchase physical bullion.
I'm the lowest ranking employee at the multi-billion dollar private equity firm I work at and I promise you I am the only one among all who owns more than 5 ounces of gold.
When my mom and her friends start asking me where to buy physical, maybe then I'll consider unloading some (into CADs).
They always keep the smart ones at the bottom where they are less threatening.
Here's the thing about gold. Most people don't like admitting to owning it because it opens them up to robbery. So running around asking people if they own gold usually is not a valid investigative technique.
That should tell you something about the long term viability of gold as an investment.
If "the lowest ranking employee" at a shop of financial wizardry is the only person interested in gold, then maybe you should be listening to the people who already make the money?
Goldbugs are on dope.
More gold bugs than you have ever seen, huh? Do you live exclusively on planet Zerohedge?
tricks of printing .. china will figure in this ,
whatt bag of tricks wind ,,, the political class want a ramp up.. fed does not go along they are history
so every one is all hot and bothered about gold ,, lol
where were the wise ones at 280,, still changing a a diaper ,, little dna in the learning experience
but lots of advice ,, duh
I'm as big a gold bug as they get... but I don't disagree with chopshop. Guys, the govt can pull a lot more tricks out of their bag before total collapse. Do not underestimate your enemy.
all ready the keynesian experiment has cost millions of lives , unemployment , poverty , wars .
and the under thirty crowd with zit laced faces believe we fix this mess with more taxes, health care , aand when some one at wal mart .. gets smart=ass on the PA system arrest them lol
for heaven sakes dont do an austrian thing..
armstrong may be in prison,, but the cycles of time marches on repeating itself .. like ground hog day,
every one a comedian ,, with the word.. lol
betcha most have not a clue ,, guttural noise , and tap dancing and sounds of the music playing with very few chairs ,
somebody please put some sort of monetary bet .. on all this yapping ,,
make it worth the while ,,
where is the skin,, mostly mouth,
i understand sinclair has a MILLION DOLLAR bet ..
on the outcome of gold,,
easy money for those who think they know squat.]\
go for it, a million easy ones,,, being much smarter than armstrong and sinclair combined
even armstrong sees 5000 gold
And "emotionally inclined"? On the contrary, I think somebody is "emotionally inclined" for the dollar.
BTW, it would be helpful if you let us know how long do we need to wait for $10 Gold...
Dont worry,GG. Chopshop's "technical analysis" will tell them to go long at $3000 to capture a "risk free" 7% move in Gold.
Think about it, we do not have one major hedge fund or individual investor who has made it really big with "technical analysis". Because at best it works 55% of the time. You think John Paulson ran a elliot wave count before shorting housing in 2006?
Exactly. Any investor who's made it (or going to make it) knows what's going on in the real world - the ground reality, if you will - as opposed to just sitting glued to a screen and counting waves and candles (ala Prechter). If Prechter is such a genius, how come he didn't make a billion shorting ANYTHING?
.
Yes, because ground reality, fundamentals, historically overwhelm technicals.
GG
You are apt to make smart a$$ed comments about third parties and think that you are so skilful, why don't you carry yourself across to Mish's board and rehash all of the garabage that you wrote about him previously. Have a one on one with the man.
As regards Prechter (even though I know little of the man) ... do the same.
The internt allows anonymous content from anonymous users. Granted that is part of the purpose.
But get some guts and go have a decent argument with some of those that you attempt to deride!
Can you please point out where I did this (with a link please)? Sure, I disagree with him on many things and I'll definitely be happy to have a one on one with him.
As regards Prechter, his record is out there for everyone to see and it ain't much. Even permabears like Tim Knight don't think much of him. The guy recommended 200% short going into 2010 for Chrissakes! Nonetheless, I'd still be happy to debate the guy, although I'm not sure if either Mish or Prechter would want to debate me (considering they might not have even heard about me)!
The quicker they realize that default is the only choice the quicker they save millions of lives. Otherwise it's pick a jerk and beat him silly if he even THINKS about joining some kind of gang. The next generation is going to be full of basement dads.
If your government wants to pay interest on counterfeited money like it means something then your government is too stupid to govern.
Playing devil's advocate here (ha ha ha)...
What is so wrong about higher taxes? Especially higher taxes on the bankster community?
There has been studies after studies that prove that, in the 1950s a company's CEO salary was about 30 times (on average) the lowest salary in the same company. Now, the ratio is around 180 to 330 times the lowest salary (!).
Frankly, given the choice between higher taxes and complete collapse, and given the general incompetence of today's CEOs, I'd rather tax the rich (especially the Goldman Sachs and JP Morgan crowds) to heck and back.
I mean, seriously, why should the incompetent people and assorted thieves and con-men in the TBTFs share billions in bonuses, while honest, hard-working people are losing their jobs left, right and center? Tax them, I say! Wring every last one of their ill-gotten gains out of their grubby hands!
Yes, I am well aware that this is going to raise howls of outrage on ZH. But what can I say? I love to hear the dogmatic libertarian on this forum howl...
This being said, in the absence of rational discourse and policies in the upper reaches of the political spheres, I am investing a large percentage of my money in Gold and Silver, with a hat tip to Mr Gordon Gekko and his convincing graphics. Physical ounces were down this week, so I fully expect to take physical delivery sometime next week from my usual bullion reseller.
Make of that what you will.
First, you cannot tax your way back to the healthier 50's salary structure. Those at the top largely control how much they make, and how they make it, so any attempt to significantly lower their pay would be futile... they'd quite easily find a way around it.
Second, it is not due to tax changes that the bottom-vs-top ratio is so out-of-whack. it's due to the structural changes in the American (and pretty much all advanced) economies.
In the past, most of our wealth was generated in manufacturing, energy extraction, and building. Those are industries where the actual wealth generating jobs are at or near the bottom of the company jobs pyramid. Because the wealth was made at the bottom, the wages of the bottom could be much higher in relation to the top.
Today, the majority of wealth generating jobs are in finance, computer software, creative arts (Hollywood, Nashville, TV...) and the like. In those industries, the wealth creating jobs are at or near the top. The lower ranks of employees are simply support staff for the creative types above. This has pushed the wages at the top upward, and has left the average worker in the dust.
Even though we still build, (well, up to the recent past) the importation of a million serfs per year has pushed the wages of the last remaining blue-collar wealth building jobs into stagnation.
Until our society throws the New Class leadership out of our schools, universities, and government, the story will stay the same. The New Class exists to benefit themselves, and since they are the folks who deal in the manipulation of words, numbers, and ideas they are unlikely to rebuild the manufacturing base of this nation. They simply do not like the tangible (and therefore blue-collar America)... they are much more comfortable with the abstract. They prefer a nation run by the manipulators (like them) of numbers, of words, and of perceptions. Manufacturing is too real, too concrete for them to work their "magic", so it's best if it goes away.
"What is so wrong about higher taxes?"
Higher taxes subsidize the activities of organized crime members who style themselves "congress."
Up your own ante. Pay double to your tax man this year. Make it a donation.
idea here ,, all those in favor of higher taxes .. belly on up to the bar,, and double the contribution... show you care lol
So? Replace them by more honest people. Governement, by, and for, the people, right?
Oh yes, I forgot, this is ZH, where libertarians don't believe in ANY form of government. Sorry, my bad. Never mind me, carry on.
What are you, an idiot? No definition of "libertarian" anywhere says they don't believe in "ANY form of government". All libertarians believe that government should provide defence against external enemies (army, navy, air force), and police forces and courts to enforce laws - which include fraud - within the country.
The people who don't believe in "ANY form of government" are called anarchists.
I'm a libertarian, and I think the people who sold MBS/CDO's out of one side of their mouths, while sneering about them to their friends should be strung up by their thumbs for committing fraud. Since a basic tenet of libertarian belief is you should trust your fellow man, this crime is particularly heinous. With widespread fraud, the entire system of contracts breaks down. As Reggie Valentine said "The best way to hurt rich people is take away their money". Fine these bastards 150% of their bonuses (bonii?), and let's see how much sneering they do then.
I'm a tyro in the study of the constitution, Anton, so correct me if my interpretation of the ties between the government and the constitution is misconstrued. I believe that the government was constrained in size and influence by the constitution, all men being equal etc.
Someone on this site wrote recently that the constitution is not self actuating (as it is merely a piece of paper with an idea written on it). As such, the framers of the idea, needed to set up a means by which to protect it through the ages.
A governing body of (men), was instituted to protect the constitution. On pain of death, they are voted in to uphold the constitution, as it was writ. The pain of death clause was written because the framers understood that there were and would always be, conniving (men) with ulterior and selfish motives, who would dearly love to see it changed.
The framers were right. Politicians have been bought, judges have been politically appointed, laws have been bent to pursue other ends. The constitution has been trampled.
No one has been charged with treason.
Perceptions have been changed into what constitutes government. Government as presently practiced is completely foreign to the constitution, its mere size being a "clear and present danger" signal we were forewarned about. Our constitution has been subverted and its proponents overwhelmed.
I can only speak for myself as a ZHer on this matter; It isn't zero government that I want, it's representative government that I crave, constitutional government.
Vigilance was all that was required of past citizens, to maintain what blood was spilt for. They failed in their duty. Their failure bequeathed their heirs a dilemma, namely; (IF) government has become overly large and dangerous, what actions will citizens need to carry out, this time around, to free themselves of their subjugation?
You are deluded....I believe in a Constitutional REPUBLIC.......
As it stands and the way it's set up now......
“Increasingly, left vs. right seems to us to be a diversion; it's mostly a matter of top vs. bottom.”
Like you'd actually be able to discover a majority of that income to actually tax it....
So your answer is to try to tax some thieves, and give the money to other thieves?
You are not playing a devil's advocate...
"There has been studies..." is usually written
"There HAVE been studies...."
You might, on the other hand, be playing a "has been".....
The 'system' WILL collapse, no matter who the hell you "tax"...wake up!
Hmmm...
Just call the IRS and the FBI - I am sure they have some idea on how to proceed with this crazy scheme of mine.
Actually, it's more along the lines of: "Let's kick whoever is in charge, since they are not doing a good job, and replace them with decent people, for a change". Easier said than done, I agree.
All I am trying to point out is that there are other solutions than total collapse. Your kind of defeatist attitude will get us nowhere fast. Besides, I am not convinced at all that the "system" will "collapse". Adolf Hitler and his sidekicks were very effective in ruling Germany for a while. And the USA, like many other nations, were tempted by Nazism in the '30s. And while history does not repeat itself, it kind of stutters very often. Food for thought.
I wouldn't describe you as playing "Devils Advocate," I'd describe you as playing Nieve Simpleton. The sad part is, I don't think your playing.
.
Here's something to keep Anton busy for a bit....
http://watch.pair.com/charter9.html
Listen to the Gerald Celente interview I posted up a few lines. That is my attitude EXACTLY.
There are a number of problems with your proposal (to tax banksters) starting with the fact that banksters don't pay more than a token amount of taxes.
The US is a country where families whose net worth is measured in the tens of thousands of dollars have been ruined to save speculators whose net worth is measured in the hundreds of millions of dollars.
The ruined families (the middle class) are largely unaware that they have been ruined because the impact has yet to be seen fully. (No doubt many of those same people are aware of this at a subconscious level however.) The ZH audience is filled with a disproprtionate number of people who understand the destruction that has taken place and that much worse destruction is going to take place.
To avoid a collapse, the ruination of the middle class must be reversed. It is unclear how this would be done, and apart from the parasites who understand that killing the host will also destroy themselves, there is not a strong desire at the richest/most powerful levels of the US govt to reverse this course of action. Rather the incentive is to keep kicking the can down the road (previously for a few years, now for a few months, at some point it will be for a few weeks).
Armstrong is writing about the time when the ruined middle class comes to understand that they have been ruined.
Ben Bernanke--not just person of the year, but also champion can kicker.
i can't believe i just woke up yesterday. what a story. USA #1 political prisoner. beyond strange doesn't seem to describe his incarceration. so the top came in november 08, dow 14000, guess we will wait and see the bottom. got a little time to get organized.
who do you think the member of the house finance committee is, maybe darrell issa? how does this dialogue get into public and published. well i am sure he is an honorary member of the Fight Club†
so nice to see you behind the curtain velo.
methinks the BOP allowed it initially cuz they thought he was certifiably off his rocker and that no one was listening.
me also thinks they don't have that same opinion any longer...hence the hole.
Martin gets a long mention in this interview.....turn down the sound on the BBall and give a listen!!
http://www.swarmusa.com/vb4/content.php/280-SwarmUSA-s-Nate-Martin-Inter...
All viable solutions require long time of pain and suffering.
There is no magic bullet that the politicians can use. So far the magic bullet has been inflate, take on debt and postpone the pain.
To get out of it, we going to need harder work, longer work, consume less and create localized economies due to transportation expenses.
(And let's not forget to restrict government's involvement)
Big cities we will have the toughest time and the highest crime.
Gold will be the king of deal making. Silver will be the prince of value and the local currencies will be the everyday exchange of goods and services. No one will hold too much of that.
Advice to the Hellenic republic:
DEFAULT-DEFAULT-DEFAULT
Start over by rolling out the drachma and don't pay the international banksters bustards
"All viable solutions require long time of pain and suffering?"
Maybe not.
As in all pain it can be substantially reduced with the right narcotics, analgesics, and other drugs.
Civil Unrest Will Explode...As In Bombs?
ATHENS, March 20 (Reuters) - A makeshift bomb exploded outside the residence of the head of the Pakistani community in central Athens early on Saturday causing damage but no injuries, police said.
It was the second incident in less than 24 hours as another makeshift bomb damaged the office of a far-right group in central Athens early on Friday without hurting anyone.
Blame Pakistanis for Greek debt woes? That's a stretch. If the world is that desperate in its search for scapegoats, we really are all fucked.
1) okay no new 30 year bonds, the value of the old bonds goes up, rates stay low?
2) no wait we're going to call those existing 30 year bonds and give the holders their cash back. they can't buy new T bonds, so they invest the money in corporates or stocks.
3) can we use the currency we already have? that would be easier. a dollar by any other name?
4) stiff the consumers? meanwhile the barter economy reasserts itself, and the tax collection bureaucracy moves from one agency to another. but it takes a couple years before they up are and running. why not just declare a one year tax holiday, all the way around?
5) wash rinse and repeat. just issue cash instead of credit, a move certain to give the credit monetization racket new life. to me this sounds hyperinflationary, but if that gets the money supply back on the right track, it makes sense. (hyper-reflationary)
but read on and he asserts this would stop the IMPLOSION, the deflationary cycle. why stop it, why not just let the value of assets fall to a level where credit and spending are once more in balance. i realize this is a good solution for the microeconomies, but not the government economy. hey the Russians have a new ICBM, we better build a better one, right now!
and there are those who think we owe the Chinese a living, if you can call that living.
all good ideas to bail out the financial wizards, but i say deflate or die!
Sure infinite deflation sounds good to me on one level but if taken to extreme in will ignite wars that will be a very high economic externality.
If you are welded to the notion of debt money then the solution is to continue the practise of warehousing government debt within commercial banks and using that money to give back more then just welfare - capital spending , which will be the only growth sector in the economy for many years
The system will then be forced to choose as the private sector will not be able to service their debt as they would be in competition with rapidly rising government debt - debt for equity would then become the norm.
If the new bank shareholders and operatives are compelled to only take a minimum dividend and no bonus over 10 years or so -they can convert the surplus into the purchase of more government bonds which will increase their capital ratios dramatically over time and will finance more infrastructure spending.
This would stabilise the money velocity at some point and create a base for future private investment.
Sorry kids, gold doesn't circulate, it hides. The name of the game is commerce and it's also hiding ... behind that $80 barrel of oil.
Wanna hard currency? We have one already! So much for the euro. The dollar will wind up killing all the other currencies as the world returns to those golden days of yesteryear ... 1931.
When all the world's banks failed or teetered and the world's economy was buying and selling gold. Oh well, it's now buying and selling dollars. Too bad if you don't have any ...
I've got a tenner around here somewhere ...
I like the local currency approach but better would allow individual euro- nations to emit their own euros or better still, euros for their neighbors in a sort of round- robin. If the countries construed their own interests as narrowly as possible they would take pragmatic issuance of euros at some point. Europe is starving on its German hard euro stance which is counterproductive since everyone 'wants' a competitive euro meaning one that isn't worth so damned much.
Germany, the euro issuer of Europe currently is being parsimonious with Greece and the outcome will be ruin for German banks. I suspect the banks are twisting Angela Merkel's arm right now.
But ... the cycle includes petroleum consumption and European exports (autos, mainly) only amplify consumption which put the Europeans in the hole in the first place. The only real solution is conservation and the end of wasteful consumption. It's going to happen, anyway ...
"The only real solution is conservation and the end of wasteful consumption. It's going to happen, anyway ..."
indeed, kicking & screaming only makes everything more difficult.
but you know us humans -- we love our drama.
I like points 1,2, and 4.
Points 3 and 5 are totally unnecessary. Once the various states default, there's no reason anyone should trust that they'll get currency right the next time. It's only through violence that they force people to use their rag money. Point 3 is just a Bretton Woods arrangement without even a remote backing by gold. That won't last much longer than a year or two before they hyperinflate it away. Point 5 lets me think that this guy doesn't quite grasp the issue of money. There is no correct supply of money and therefore there is no correct increase of supply of money that need be made in any given year. If the money supply needs to increase with the population and it doesn't, people will just use an alternative. It's really that simple. Personally, I'd prefer to use a money that can not be easily destroyed or created because I can be generally certain that it will maintain its store of value over time so long as the efficiency of producing goods and services increases over the time I plan to store the money.
Armstrong is in prison for running a Ponzi scheme. It seems like he thinks Ponzis might work, but only if he had done it a little differently...
running a ponzi scheme lol
hansel try a little harder to get your facts streight
your dead wrong with out a clue,, as a matter of fact .you may want to study and take a walk into the real reasons
Wikipedia? The Reader's Digest of the internet.