Britain pays the most for the defense of Europe & are biggest market for German exports in Europe

Theresa May Needs to Got to Vegas to Learn Poker

Posted Oct 16, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong; I know you use to live here in London and in Berlin, you said you still had your British driver’s license. Everyone knows you were friends with Prime Minister Margaret Thatcher and that you are the one they called when Britain had to face its disaster in joining the ERM. If you were to advise Prime Minister Theresa May, what would you tell her right now?

Thank you for your guidance in Britain

PH

ANSWER: Well the first thing, Theresa May should run to Las Vegas and take a course of playing poker and observe the game. You can win with a losing hand if you know how to project confidence and look like you have a winning hand. In law, I could get you on the witness stand and then ask when was the last time you beat your spouse. You will now have to deal with that agenda. You will swear you never beat anyone and you will want to call your spouse to say you never beat them. I will say that’s irrelevant because they will lie fearing you will beat them again. I have just set the agenda and you will be on defense the whole time. Forget everything else. You will leave the stand and people will think where there is smoke there is fire and surely I would have never asked that question without a reason.

This is what Brussels is doing to Britain. They have ABSOLUTELY no interest in actually negotiating any sort of a reasonable deal because their agenda is all about punishing Britain to set an example that nobody else will follow Britain out the door.

It is painfully obvious to anyone who is from the non-political world what is going on here. Britain has not yet realized there is no negotiating with the EU. The Brussels bureaucracy is protecting their jobs and it has NOTHING to do what is best for the people of Europe. So Theresa May is actually negotiating with herself. She offers a deal, the EU declines but makes no counter-offer, and she runs back trying to sweeten the offer.  She is trying to fit a square block into a round hole. Hello! The EU negotiators Michel Barnier, Jean-Claude Juncker and assorted company, are NOT negotiating in good faith because it is NOT in their best interest to do so.know four things that Britain’s team doesn’t seem to grasp.

As long as they can keep the uncertainty in play, they hope to see the pound collapse and that will make the British see they should stay. But the lower the pound declines, the better the British economy for exports are doing better. Companies I have talked with in Britain who were against BREXIT, are now saying it’s not so bad.

Juncker responded to Theresa May’s Florence speech saying of if she would stay until 2021, the Britain had to surrender sovereignty to the European Courts, which have consistently ruled against Britain just about every single time. The demands for a huge divorce payments is to fill the pension funds of the Brussels bureaucracy. This is a divorce where they want everything and Britain gets nothing in return.

Their refusal to make any counter-offer demonstrates their lack of good faith in any negotiation. This whole thing is a joke and Britain should refuse to pay anything and just leave. Do not forget, if Germany cannot sell cars to Britain, watch the economy in Germany collapse very fast. About a fifth of all cars produced in Germany last year, or around 820,000 vehicles, were exported to the UK, making it the single biggest destination by volume. The trade deal works both ways, yet you would think it is a one-way street according to Jean-Claude Juncker and his gang of self-aggrandizing bureaucrats.

May holds the winning hand in the game and she seems not to understand even what it is. First, I would say find, (1) negotiations are over since there is never any proposal from Brussels, (2) there will be no divorce payment at all, (3) I would exit NATO and let Europe spend to defend itself, and (4) join NAFTA and cut my own trade deals with China.

END OF NEGOTIATION!

Then, and only then, will you see Jean-Claude Juncker suddenly lose 2 stone (28 pounds) as his phone melts down from German Industry screaming you IDIOT!!!! May holds the winning hand because Britain pays the most for the defense of Europe and they are the biggest market for German exports in Europe.

Everything is exaggerated to get people to watch

Fake v Real News – A Turf Battle

Posted Oct 13, 2017 by Martin Armstrong

Donald Trump launched his Real News to combat the Fake News. Interesting turf battle. What I can say is that many people in Florida are very upset with CNN and their whole coverage. The frightened people so much that they were paying $7,000 for a flight out of town. There was no 15-foot wall of water and make see it now as FAKE NEWS not just with respect to politics, but everything is exaggerated to get people to watch

A hard BREXIT would hit especially the German economy

The Political Turf War in Europe and why Britain is Considering Joining NAFTA

Posted Oct 13, 2017 by Martin Armstrong

QUESTION: Marty; There is talk that Britain will join NAFTA rather than the EU. Does that make sense? What do you think?

ANSWER: The EU is in a death spiral. Every law they pass is to preserve their own power – not for the good of the people or Europe. Once again, the government solution always runs counter-trend to the Free Markets setting the stage for the next crisis. The EU banking rules allow them to just seize everything and shareholders get zero. This is what they did when Spain’s Banco Santander bought rival Banco Popular for €1. The bank which was valued in the collapse at €1.6 billion yet it was sold for €1. Now, banks are finding it extremely hard to raise new share capital. That will only result in more bank seizures. Hello! It would be nice to have someone in government with common sense.

Britain should run away from the EU and slam the door shut and then nailed it to be sure. The British should abandon the EU altogether and undeniably join the NAFTA trade agreement. If they do not, Britain will find itself being dragged down with the sinking ship.

A free trade agreement with the USA would be a slap in the face for the EU and even that will never cause the EU to look in the mirror. Like Hillary, they will blame everyone other than themselves.

The government data on British GDP clearly demonstrates that Britain has NOT benefited from joining the EU because of the secret agenda to federalize Europe to eliminate European War. This theory of one government in Europe, The United States of Europe, will end a possible war is just absurd.

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This narrative that the entire purpose of the federalization of the EU is to stop any war was stated bluntly by Hollande in the European Parliament. You cannot get more one-world government than this theory. But this spills over into economic power and the surrender of all sovereignty to Brussels.

Margaret Thatchers Burges Speech was spot on about the European Project. It was clear behind the curtain back on September 21, 1988, that this was all about the federalization of Europe and the surrender of national identity. The Guardian ran the story: Thatcher sets face against united Europe. Let me make this very clear. Maggie was thrown out of office by a coup orchestrated by her own cabinet. They were eager to surrender sovereignty to Europe and bought into the whole idea of the United States of Europe.

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The new government headed by John Major took the Pound into the Exchange Rate Mechanism (ERM) the same month that German unification began. The monetary policies of Germany were starkly different from Britain. I was called when the attack on the Pound unfolded and was asked what our model said about the Pound because they knew I was a friend of Thatcher. I relayed its analysis that the Pound had to be devalued. I was told that was impossible that John Major had said even the week before the Pound would be maintained in the ERM. I then said that the Pound must be suspended if not officially devalued. The pressure was intense. I explained that a fixed rate is a GUARANTEED trade. I can bet billions and if wrong, nothing happens and I get my money back. That finally made the point.

Black Wednesday, September 16th, 1992, was when the UK Conservative government that had thrown Thatcher out of power to take the Pound into the coming Euro was forced to withdraw from the ERM. While everyone blamed George Soros for making over US$1 billion from this GUARANTEED trade, the truth of the matter this is the only thing that SAVED Britain. Britain was headed into the Euro and the elite Conservatives would not listen to Margaret Thatcher.

Now that BREXIT is in play, the British should be on their hands and knees and be kissing their ground that they are not connected to continental Europe. There are many national and regional sensitivities that must be taken into account when it comes to trade. The British want to conclude agreements with India, Turkey, and China, that are not on the same page with the EU.

The government in London is targeting a free trade agreement following the BREXIT to limit disadvantages that people think exist for the domestic economy after the EU exit 2019. The EU is more interested in punishing Britain as an example of other member states that they better not leave the EU or else. This is all about punishment – not economics.

The British government is under pressure, as the EU will only negotiate the free trade agreement in London if the BREXIT divorce talks have made sufficient progress. Donald Tusk has been playing hard-ball to punish Britain and actually said the EU was negotiating in good faith without any evidence whatsoever to prove that statement. He said in turn: “We hear from London that the UK government is preparing a ‘no deal’ scenario. I would like to say very clearly that the EU is not working on such a scenario. “

There has been little tangible results in trying to negotiate with the EU. British Prime Minister Theresa May is expecting the conclusion of the BREXIT talks only before the departure from the EU in March 2019. Clearly, the British government is also preparing for a situation where no agreement is reached with the EU on exit and contingency plans are being put into place for this likelihood. Keep in mind that the EU will NOT make easy for they fear other states will take the same option.

This is a matter of pride for the EU. A hard BREXIT would hit especially the German economy. The representatives of the German economy are already nervous because of the slow negotiations. The German Federation of German Industries (BDI) has already warned the government that German companies had to “take precautionary measures for a very hard departure.” The Association of German Machinery and Plant Engineering (VDMA) said: “A tough Brexit is a conceivable but not acceptable scenario for the economy.”

Why is German industry getting nervous with its politicians seeking revenge? Britain is the world’s fourth-largest international market with an export volume of €7.4 billion euros last year for German products. Conversely, the Britain delivered 2016 machinery construction products worth €2.4 billion to Germany.

The problem is purely political and has become a turf war and pressure builds against the dreams of the centralized federalization of Europe.

Demise of socialism. Do not forget, Communism began in France

Over 5 Million Government Employees Strike Against Fall of Socialism

Posted Oct 12, 2017 by Martin Armstrong

In France, tens of thousands of people went to the streets for the first time in ten years in protest against Macron. All 5.4 million public employees went on strike. The protests are directed against the planned elimination of 120,000 official posts and the end of the welfare state as many see it. In addition, Parliament has authorized President Emanuel Macron to implement the disputed labor market reforms by means of regulations.

Macron’s battle against high unemployment does realistically look to relax the rigid labor law that is one-sided for the worker against companies under the theory of Marxism. Macron realizes that more flexibility must be provided to employers or they will not hire people – plain and simple. He wants to implement his controversial reform through ordinances, or what we would call executive orders in the States, and is therefore faster than the usual parliamentary legislative process. The parliament had to grant him the right of revise regulations, but by law. The law now allows Macron to revise regulations and at the same time fixes the outline of the reforms.Macron promises “more freedom” for companies and at the same time “more security” for workers.

Criticism of the reform comes from trade unions and left parties who cannot see the opposite side of the table. They say Macron has taken an entrepreneur-friendly policy and is dismantling the welfare state. This is what the strikes are all about. Once again, we are looking at the demise of socialism. Do not forget, Communism began in France and it was sold to Marx as a great idea. The idea of the commune emerged in the late 18th century

Taxes the Lynch-Pin of Civilization. Govt creates nothing to advance society or to increase GDP

Posted Oct 12, 2017 by Martin Armstrong

QUESTION: Mr. Armstrong: I find it disheartening the the more I try to advance my family to build a better future for them, the more I realize that the harder I work we do not really get ahead. I agree that taxes just keep moving higher and I am now looking for a job in my field to leave California. A friend of mine from school left Illinois and moved to Texas. He said he feels much better and is gaining ground instead of losing it. Has taxes been the driving force to create migration in advanced civilization?

ANSWER: Absolutely. I have written how Rome fell and just mapping the population of Rome you can see the fate of Illinois – people sell and just leave. It is different this times because under socialism, government has become abusive. When it came to integration, they sought to implement it by sheer force.

You simply can’t legislate the poor into prosperity by legislating the wealthy out of prosperity. Jobs are created by the wealthy who become wealthy because of their innovation as vision – i.e. Henry Ford, Bill Gates, Steve Jobs and so on. Government creates nothing to advance society or to increase GDP in any positive manner. It is a natural human response not to pay taxes and this is why taxes have been the number one reason for civil war and revolution. It is always resentful to pay taxes whereas to give money to help someone is rewarding. Taxes tend to support politicians and their pensions which they exempt themselves from everything from Inside Trading to Obamacare. If they must sell some asset to take a government job, it is tax free.

The great welfare state has produced a large segment of fraud and kept many people down since they would rather be taken care of than working to take care of themselves. Even in prison, many people are sentenced to 10 or 20 years and the first thing they do is commit a crime to get back in where they do not have to pay taxes and they are taken care of. You destroy people’s lives for such a long-period for non-violent crimes and then expect them to have a fulfilling life thereafter?

Clearly, New Zealand once had a program where if a woman was pregnant and she had no idea who the father was, the government provided everything right down to a free home. They ended up with the highest percentage of women who had no idea who the father of their child was. Naturally, they did and he would jump out the back window when the social worker visited. They got everything for free then.

Any of these types of programs divide and conquer. The government cannot give to anybody anything that the government doesn’t first take from somebody else.  When you reach a state where 50% of the people depend upon the other 50% to pay their bills, you end up with class warfare and bitterness. The is the cycle where civilization rises, peaks, and then crashes when government becomes the enemy of the people.

It’s the capital flows that are the key – not trade.

Will China take over US as the top Superpower

Posted Oct 3, 2017 by Martin Armstrong

QUESTION: I read a credible theory recently about China taking over US as the top superpower via economic pressures. Namely by replacing the US dollar with the Yuan as the standard currency for international trade. This shift is (supposedly) being enacted through 1) increased control over Developing countries through international lending from the New Development Bank, 2) increasing control over global oil via financial ties to Saudi Aramco and Russia’s Rosneft, 3) trying to denominate global oil transactions in Yuan through the Shanghai oil futures market & backing up the Yuan value with the massive gold reserves China has been accumulating.

My question is whether you see this strategy unfolding as a credible threat to usurping United States’ global domination by China and if so – what might the investment world look like during such a massive upheaval?

Thanks – love your blogs & insights!!

WM

ANSWER: China is on the rise and it will become the financial capital of the world after 2032. However, it has a long way to go. China can price every commodity in yuan and demand all trade deals are in yuan. That still will not displace the dollar. The center core issue behind the dollar ironically in the US National Debt. For now, this is the place institutions can park their money. You can trade in any currency, but where do you park you profits?

China will displace the USA as the financial capital of the world when (1) people begin to trust China as a place to park money. Bitcoin exploded because the Chinese were using it to get money out of China, which had reach 98% of trading. China has been steeping in against BitCoin to stop the capital outflow.

It’s the capital flows that are the key – not trade. The daily trading volume in FOREX alone has exceeded $5 trillion. Most investors are familiar with the stock market, yet they are unaware how small in volume share trading is compared to foreign exchange. The Forex market dwarfs the trading in equities and futures markets.

FOREX trade and investment capital flows DWARF trade flows. Absolutely nothing compares to the Foreign Exchange Markets.

Anyone can write a contract in dollars. You cannot do that in Japanese yen. If you issue a bond in yen you have to apply for permission back in Tokyo. All these argument are made up by the dollar-haters who are so desperate to find an excuse that the dollar will crash. It’s time will come. Just not yet.

Why would anyone buy European bank stocks?

Posted Oct 10, 2017 by Martin Armstrong

The European banking crisis is still brewing. The biggest problem rises from the rules that if a bank is in trouble, they just seize the bank and sell it for $1 and all the shareholders lose everything. This is having serious impacts on the European Banking System as a whole as I previously warned. The Italian bank Carige has had difficulty in trying to raise capital to meet requirements. If any bank cannot raise enough capital to meet the requirements, the European supervisory authorities can seize the bank in accordance with the new rules. Once again, the government solution is to make up rules that totally disregard the private reality. 

Why would anyone buy bank stocks in Europe today if the government can seize everything and shareholder get zero? Spain’s Banco Santander bought rival Banco Popular for €1. This is Brussels’s new system to rescue failing banks without burdening taxpayers or stressing markets. This was cheered around the world because the shareholders lost absolutely everything. The bank which was valued in the collapse at €1.6 billion was bought for €1. Why would anyone buy European bank stocks?