That ultimate confrontation is due in 2023 (two 51.6-year cycles from 1920).

Turkey – Failed Coup – Real or Fake?

Posted Jul 20, 2016 by Martin Armstrong

QUESTION: Mr. Armstrong; You have been warning that we are in an upward trend now for civil unrest which includes coups to revolutions as distinguished from a foreign war or invader. At the Berlin cocktail party last year you said Turkey was a risk for the risk in civil war. You said it should begin next year. Was this failed coup attempt what you were referring to?

ANSWER: Turkey has a history of military coups— 1960, 1971, and 1980. It has had two cycles running through its political history since the fall of the Ottoman Empire in 1920. The two cycles are 8.6-year based frequencies. The armistice of October 31, 1918, ended the fighting between the Ottoman Empire and the Allies. However, it did not bring peace to the region. The Sultan, Mehmed VI, feared he would be deposed, but the Allies knew he was a figurehead and hoped that his retention would ensure post-war stability. They did not want to cut off his head in fear that his replacement would be far worse.

In November 1919, the Ottoman government did nothing to stop the Allies. The Allies delayed the signing of the peace treaty known as the Treaty of Sèvres (1920) with the Ottoman Empire only because they were arguing among themselves over who would take what countries. The treaty was not signed until August 10, 1920, confirming French and British possession of Syria, Lebanon, Palestine, Jordan, and Iraq in the guise of League of Nations mandates.

Sharif Hussein ibn Ali was rewarded for his leadership of the Arab Revolt with international recognition of the Hejaz as an independent kingdom. The treaty effectively gave the Greeks possession of eastern Thrace and ‘Ionia’ (western Anatolia); the Italians got the Dodecanese Islands and a ‘zone of influence’ in southwestern Anatolia. To the east, the Armenians were given an independent state, taking in much of eastern Anatolia, while the Kurds were granted an ill-defined autonomous region and promised a referendum on independence, which has yet to take place. The Ottoman state’s army was limited to 50,000 men and its navy to a dozen coastal patrol boats with no air force whatsoever.

It was at this point that Mustafa Kemal emerged as a leading figure in Turkey. His rule brought a form of Turkish nationalism that was very different from the pan-Turkic ideals up to that point. Kemal believed that the once-great Ottoman Empire had become a dead weight on the Turkish people who needed a homeland of their own. Keep in mind that the Turks invaded that region and took the territory from the Greek Byzantine Empire when the last emperor, Constantine XI (1448-1453), died on the walls of Constantinople in 1453, ending more than 1,000 years of history.

Kemal and his supporters sought to establish a new Turkish state based on Anatolia, where most of the empire’s Turkish population had traditionally lived since the fall of Byzantium. Kemal and other nationalists began hiding weapons from Allied disarmament teams and encouraged the formation of local Turkish civilian militias and political alliances between nationalist groups. They also attempted to divide the Allies through political intrigues, which was rather easy to do.

The greatest military threat to the Turkish nationalists came from the Greeks, whose claims to western Anatolia, eastern Thrace, and Constantinople were reinforced by the large ethnic Greek populations in those regions. The Greeks occupied Ionia for thousands of years and fought against the Persian invaders ever since Cyrus the Great. It was here that coinage was invented by the Greeks, first with the standardization of weight, and then by impressing a design to guarantee its authenticity by the king of Lydia. On May 15, 1919, Greek troops occupied the ancient port city of Smyrna (modern-day Izmir). More Greek forces arrived in the following months, gradually extending their control deep into the west Anatolian countryside. Clashes with Turkish civilians dogged their movements and greatly increased nationalist sentiment. Meanwhile, the Italians landed troops in south-western Anatolia to reinforce their claim on that region. This also played into the hands of the Turkish nationalists and fueled their movement.

As Turkish attitudes began to rise toward nationalism, the interim Ottoman government came under increasing pressure from the Allies to suppress these nationalist groups. In the end, they were reluctantly forced to act, but this backfired. On April 23, 1920, the nationalists convened a Grand National Assembly in Ankara. They elected Mustafa Kemal as its first president, establishing what was essentially an alternative government. This triggered a civil war.

The British and French had demobilized so there was no military support available for the Ottoman government. This civil war ended only when the details of the Treaty of Sèvres were publicized in August 1920. The harshness of the terms in the Treaty of Sèvres destroyed all credibility of the Ottoman government and exposed what they had agreed to that ended the Ottoman Empire. Turks of all political persuasions began to unite at this point behind the new Grand National Assembly, which completely stood up and rejected the Treaty of Sèvres. A showdown with the Allies seemed at this point inevitable.

Only the Greeks could muster any troops, but they saw this only as an opportunity to gain more land in Anatolia. This set the stage for what the Turks call the Turkish War of Independence. The Greek Army made rapid progress and advanced from Smyrna in June 1920, capturing much of western Anatolia. The Greeks initially outnumbered the Turkish nationalists and were better equipped. Kemal agreed to help Bolshevik Russia destroy the newly independent Caucasus states in exchange for restoration of most of the territory they had lost in the 1877–78 Russo-Turkish War. This secured eastern Anatolia and extinguished any chance of independent Armenian or Kurdish states taking emerging there.

American President Woodrow Wilson supported the Armenian bid for independence in that area and condemned these actions. Kemal knew the USA would not intervene with Russia on their side. Kemal’s government also bought off the French by promising to support their rule over Syria in exchange for tacit recognition that all of Anatolia was Turkish territory. Kemal was smart and played one side against the other. Kemal then struck an agreement over the Dodecanese Islands with the Italians, who in turn withdrew their troops from Antalya in June 1921. It was through such diplomatic maneuvering that the Turks gained access to the international arms trade. Kemal effectively isolated the Greeks. British support for the Greeks was a personal passion of Prime Minister Lloyd George whose cabinet did not share. Kemal has isolated the Greeks by playing the Allies against each other.

Kemal’s strategy was to render Greeks their only military opposition. In March/April 1921, the new Turkish Army turned back the first major Greek offensive. The Greek Army in Anatolia was increased to 200,000 men. Kemal assumed direct command at the Sakarya River and ended a three-week battle resulting in Turkish victory. Finally, in August 1922, the Turks carried out a large, carefully prepared offensive that threw the Greeks into a headlong retreat to the coast. All Greek troops were evacuated from Anatolia by September 16, 1922. The war was over and Turkish Independence was won.

On October 13, 1922, Ankara officially became the capital of the new Turkish state. On October 29, a republic was proclaimed with Mustafa Kemal as its first president. Turkey’s Grand National Assembly abolished the Sultanate on November 1, 1922. Mehmed VI and his family sought refuge with the British military authorities in Istanbul. They were smuggled out of the city and eventually went into exile in San Remo, Italy, where the former monarch would later die in 1926.

1960 Turkish coup d’état
1971 Turkish military memorandum
1980 Turkish coup d’état
1993 alleged Turkish military coup

Interestingly, the relationship between military coups and civil wars are tightly linked. The first 51.6-year cycle from 1920 brings us to the 1971 coup. The 1960 coup d’état incident took place at a time when there was social, economic, and political turmoil. The United States’ aid from the Truman Doctrine and Marshall Plan was running out. Prime Minister Adnan Menderes was planning a visit to Moscow in hopes of establishing alternative lines of credit. The coup was staged by a group of 38 Turkish military officers acting outside the Staff Chiefs’ chain of command to prevent the political leadership from realigning with Russia simply to get aid. The incident took place on May 27, 1960. However, as the 1960s wore on, the economic conditions worsened and many Turks migrated to Germany at this time.

Turkey was engulfed in violence and economic instability. An economic recession as Bretton Woods was in trouble sparked a wave of social unrest marked by street demonstrations, labor strikes, and political assassinations. This is when left-wing workers’ and students’ movements rose up, which were countered on the right by Islamist and militant nationalist groups. The left carried out bombing attacks, robberies, and kidnappings that began in 1968 and intensified moving into the economic decline that bottomed in 1970. The left-wing violence was matched and surpassed only by far-right violence under the Grey Wolves. Then on the political front, Prime Minister Süleyman Demirel from the center-right Justice Party was re-elected in 1969. The party experienced internal disputes and split to form splinter groups of their own. This essentially reduced his parliamentary majority and brought any political processes to a halt.

Finally, by January 1971, the state of the political-economy in Turkey descended into a state of chaos. The students began to embrace Latin American style, urban-guerrilla warfare by robbing banks, kidnapping US servicemen, and attacking American targets as they became increasingly Marxist. Neo-fascist militants bombed the homes of university professors who were critical of the government and factories went on strike, bringing all services and production to a near standstill during the first quarter 1971.

The Islamist movement was rising inspired by the books of Sayyid Outb (1906-1966) who was executed in 1966 for plotting the assassination of the Egyptian President Nasser. The Islamists formed the National Order Party, which outright rejected Atatürk and Kemalism, putting them in conflict with the armed forces. The government appeared too weak with defections and squabbling. This resulted in the military coup to save the country. This event became known as the “coup by memorandum,” whereby the military delivered in lieu of sending out tanks. This was the major event on the 51.6-year cycle as the government and economy fell into chaos.

The September 12, 1980, Turkish coup d’état followed the continuing conflict between right-wing/left-wing armed conflicts, which reflected the proxy wars between the United States and the Soviet Union. It has been argued that the military allowed these conflicts to escalate to provide justification to seize control of the government outright, but this is always with hindsight. However, the violence did abruptly end afterwards the coup. For the subsequent three years, the Turkish Armed Forces ruled the country through the National Security Council before democracy was restored.

Nonetheless, our models have identified interesting correlations that suggest some government officials will often resort to “regime change” as a tactic to prevent civil war from occurring. A military coup can often provide a mechanism to avoid a dynamic escalation of conflict that would otherwise lead to civil war. Hence, sometimes the means to avert an outright civil war necessitates a coup.

The leading indicator is typically the fractionalization of political parties, which results in a breakup of political movements that then enter into conflict when the economy turns down. That economy remains the most powerful driver in the global model, and it is unquestionably the most powerful driver at predicting regime change at the polls as well as within the civil unrest cycle. For the former to evolve into the latter, we need the fractionalization of political parties. For example, we are seeing that with the hard-line Republicans refusing to support Trump. This is all part of the process of taking a step toward civil war and the break-up of countries.

Considering that the driving force to set the stage is always economic, the fiscal mismanagement of the political state is critical. We are witnessing the process in Europe as a whole. This “fractionalization” is creating heated, opposing groups at the very top of the political ladder that ultimately lead to autocratic regimes as political elites try to protect their power base. This increases the danger of political instability that leads to civil unrest and can brew into military coups or go all the way to revolution. Hence, during regime changes, whether at the hand of the people with a right to vote or by military coups, the actual revolution phase is a process that can be forecast within a global model.

In the case of Turkey, this particular failed coup was either orchestrated to fail as a means to solidify ultimate power or we are witnessing the coming clash between Islamic and freedom of region rule in Turkey. That ultimate confrontation is due in 2023 (two 51.6-year cycles from 1920).

MUST eliminate income taxes at the federal level and states must be restricted to their territory.

Posted Jul 18, 2016 by Martin Armstrong

QUESTION: Mr. Armstrong; The taxation of the internet seems to be rising and at the same time it appears as though this could really harm the economy by reducing competitiveness of small companies trying to comply with collecting taxes of so many different states. Have you looked at this as a possible factor in creating the next economic depression?

ANSWER: Absolutely. There is a tremendous clash of jurisdictions and governments are fighting for more and more taxes to pay government pensions. It has turned into them against us and he who makes the rules typically wins until he provokes revolution. Most such revolutions are ALWAYS over taxes as was the American and French Revolutions. The Supreme Court ruled in Quill Corporation v. North Dakota 504 U.S. 298 (1992) that there was nothing inherently unconstitutional about requiring out-of-state retailers selling over the internet to collect state and local sales taxes on orders shipped to in-state residents.  The only question was whether imposing such a requirement would cross the line from an acceptable burden on interstate commerce to an unreasonable one. That they did not decide. They claimed that technology had greatly eased the burden of collecting taxes for multiple jurisdictions, the Court noted, but concluded that Congress should make the call.

The ruling demonstrates how courts cannot be trusted to defend our liberty when those judging are appointed by the political machine. What if every state applied taxation based upon the same methodology that the Feds do. Lets say you were born in New York but moved to San Francisco. New York could then claim that since you were merely born there, you owe taxation to them on your income yet use no services. California then imposes income tax on the theory you are a resident. Now you ow income taxes to two States plus the Feds. This would destroy the freedom of movement rapidly. Those who leave the United States suffer the same fate and owe taxes to the USA for the simple reason of their birth.

I the Congress enacted such a law demanding everyone on the interest are tax collectors for every possible taxing authority, the economy would collapse. Then cities could demand the same thing so places like Philadelphia or New York City that impose additional sales taxes of some kind would jump on the wagon and everything would collapse. This is why I have argued we MUST eliminate income taxes at the federal level and states must be restricted to their territory. No state has the right to impose any duty upon a non-resident of their jurisdiction – PERIOD.

The 2015.75 Crisis Moving into 2020.05

Posted Jul 13, 2016 by Martin Armstrong

The world financial crisis that is unfolding post-2015.75 is different from that which followed the 2007.15 peak in the ECM. As stated countless times, each event is a crisis in a different sector. The 2007.15 crisis was the over-leverage in real estate that the bankers created. This time, we are looking at the demise of governments. Under normal conditions, bond prices would be rising with interest rates in the public sector. We still see this unfolding in the peripheral markets. The markets where central banks have been buying government bonds to try to stimulate the economy has utterly failed and created a crisis beyond contemplation. We are looking at the collapse of government’s ability to issue debt as we move forward into this cycle.

The Sovereign Debt Crisis of the 1840s was the demise of the states, thanks to Andrew Jackson shutting down the Bank of the United States. This led to a banking crisis with individual states trying to support their banks. Because the states could not create money, they had no choice but to permanently default on their debt. The states issued debt to bailout the banks, but the crisis was far too massive, and as a result, the banks took down the government. This time, governments are trying bail-ins and this is causing confidence to collapse. Why should people trust banks at all? Once they hoard cash; that is it. The velocity of money implodes and you end up with an economic depression.

To answer all the questions about whether this will be covered this at the conference — of course. And to answer why we did not hold one in Berlin, yes, our models were warning about significant civil unrest in Europe as a consequence of the complete fiscal mismanagement of the ECB. It is our opinion that the negative interest rates are totally insane. This is the complete incompetence of those who think they know how to manipulate society from Larry Summers to Mario Draghi.

These people will never admit a fatal mistake. Thus, we have to stand by and what Rome burn.

Categor

Why does anyone believe government about anything?

Posted Jul 10, 2016 by Martin Armstrong

The State Department blew everyone away aft

Posted Jul 10, 2016 by Martin Armstrong

The State Department blew everyone away after admitting that an official intentionally deleted several minutes of video footage from a 2013 press briefing to mislead the press over the Iranian nuclear deal. We are risking the lives of our children with wars that are manufactured for political gain.
In school, we were taught that the Germans ruthlessly sunk a passenger ship, the Lusitania, to justify World War I. The problem was that the US was secretly putting arms shipments in passenger boats to get them to Europe. So they lied about that as well. However, Germany actually took out an advertisement in the New York Times to warn people not to travel on the Lusitania, but that was omitted from history books.
They knew about the pending attack by the Japanese on Pearl Harbor. They moved the big ships out and allowed the attack to happen so they could get into the war.
With Vietnam, Lyndon Johnson admitted that perhaps the sailors were shooting at whales. The Vietnamese never attacked the US navy in the Tonkin Gulf incident.
There were no weapons of mass destruction to invade Iraq.
The government proposed Operation Northwoods to justify an invasion of Cuba whereby they would kill Americans and call it a terrorist attack. This was later rejected by President Kennedy.
Why does anyone believe government about anything?er admitting that an official intentionally deleted several minutes of video footage from a 2013 press briefing to mislead the press over the Iranian nuclear deal. We are risking the lives of our children with wars that are manufactured for political gain.

In school, we were taught that the Germans ruthlessly sunk a passenger ship, the Lusitania, to justify World War I. The problem was that the US was secretly putting arms shipments in passenger boats to get them to Europe. So they lied about that as well. However, Germany actually took out an advertisement in the New York Times to warn people not to travel on the Lusitania, but that was omitted from history books.
They knew about the pending attack by the Japanese on Pearl Harbor. They moved the big ships out and allowed the attack to happen so they could get into the war.
With Vietnam, Lyndon Johnson admitted that perhaps the sailors were shooting at whales. The Vietnamese never attacked the US navy in the Tonkin Gulf incident.
There were no weapons of mass destruction to invade Iraq.
The government proposed Operation Northwoods to justify an invasion of Cuba whereby they would kill Americans and call it a terrorist attack. This was later rejected by President Kennedy.
Why does anyone believe government about anything?

Capital Flows & the Shift to USA for Taxes

Posted Jul 6, 2016 by Martin Armstrong

Since the publication of the Panama Papers, the assets of the wealthy from around the world have been flowing into United States at a sharply increased pace. Tracking capital flows has revealed that capital outflows of liquidity from the EU have distinctly accelerated.

The United States is definitively becoming the replacement for Switzerland. The IRS has even ordered cash sales of real estate in Miami and New York to be investigated to reveal the actual beneficial owners behind corporations.

This trend should increase even if BREXIT is defeated for our models are warning of a rise in civil unrest throughout Europe, especially in that event. More member states will be driven to hold referendums by the demand of their people. The Brussels Government cannot be replaced by any democratic process in Europe and that is very dangerous for it leaves only one way for people to disagree and demand change — through means of force. Even the US Civil War was fought over the denial of the right to separate, which the Supreme Court of the United States maintains there is no “right” to break from the federal government

We cannot even create a perpetual recession-free economy

The End of Global Warming — the New Ice Age — Bundle Up!

Posted Jul 6, 2016 by Martin Armstrong

I have received emails from people who claim global warming exists and I am in denial. To start, all of the studies that claim there is global warming end with the 19th century. The sun has a documented 300-year cycle between maximum and minimum energy output. It is a thermodynamic system, meaning the energy must fluctuate or else it would blow itself out if it dropped even 1 degree in temperature. So it must survive to exist like everything in the universe. It bursts into energy and rests just as we sleep every night.

Every possible data series warns that we are heading back into a cooling — not warming — period. This is a normal 300-year cycle. I bought a hybrid car, not because I think it has anything to do with global warming, but simply because it is an advancement in technology that is a cleaner alternative.

I lived in London when the buses were diesel. It was horrible in August. Now that the buses are hybrids, the air is free to breathe again. That should be our concern. We do not need conspiracy theories of changing the climate. We are a pimple on a fly’s ass when it comes to that. We cannot even create a perpetual recession-free economy, and politicians want to tax us so they can manage the climate? Come on. I would not trust these people to even direct traffic as they do in Rome.

I follow our own models. We are moving to the Tampa region in Florida. We have had the three best summers in a row in New Jersey. Perfect weather. At most, one or two days were really hot. Europe is experiencing colder summers as well. Sorry, but we have already begun a decline into a mini-Ice Age. So if you do not believe me, you better buy an extra shovel and some boots.

There is now growing concern among scientists that we may indeed be heading into global cooling rather than warming. The concerns center on the apparent weakening of the Atlantic Meridional Overturning Circulation. This seems to be triggering a growing amount of speculation about abrupt cooling. What does that mean?

Here you can see a map of major world cities. You will notice that the bulk of Europe is north of New York City. The warm Atlantic current keeps Europe from freezing, but that is starting to change. The summers are already getting colder. This is the natural cyclical change. If these people bothered to use data well before the 19th century, they might discover something entirely natural. But doing so would defeat their preferred theory that this has been caused exclusively by mankind. That does not explain previous Ice Ages or how the climate became warm again all by itself.

Sorry if you believe in the political propaganda to raise taxes. This is a natural cycle and it will take place far more rapidly than people ever assumed. Napoleon had to retreat from Moscow because of the winter. George Washington lost countless men to the cold winter during the American Revolution at Valley Forge. Well sorry, it’s back!

This is not my personal opinion. I liked global warming. But it is time to move south before it is too late. I do follow our own computer. I have learned it is far better than I could ever be.

Pound will drop to penetrate the $1 par level probably no later than 2018.

Declining Pound Savior of Britain

Posted Jul 4, 2016 by Martin Armstrong

QUESTION: Marty
It looks like Carney and Osborne are talking the pound down in order to frighten people.

Only one of their prophesies have come true – the lower value of sterling.
But it is unhelpful that they continue to be negative – even though they’ve proved to have been wrong on all the other things [cost of borrowing, asset prices, the UK deficit, cancellation of investments].

I fear [being a Brit] that too much unwarranted negativity from their position of power will take the pound down too far. Do you agree that can achieve that and that they, representing the establishment, are trying to win back some of the lost ground? I would say that is treason [not to carney as he’s a Canadian. I’d tell him to go home].

Thanks
JF, Manchester

ANSWER: The reason “value” investing and “fair value” theories fail is because markets ALWAYS over shoot and under shoot. Our next real zone for the pound is in the mid 120 level. However, ironically, European concepts of currency value is SERIOUSLY WRONG. Post-World War II, European politicians used the rise in their currencies as proof that they did a good job. That installed this concept that a strong currency was good for the economy which in fact if you are concerned about trade, you want a weak currency. The entire reason the Swiss put a peg on to the euro was because the rise in the franc was reducing exports and major companies threatened to leave.

The decline in the pound will BOOST British exports and have exactly the opposite effect helping the British economy. The EU is doomed. Over taxes, over regulated and it has no meaningful democratic process. Worse still, just as Merkel by herself tried to help her negative image because of her harsh dealings with Greece wanted to appear reasonable, she invited the refugees in without any right of other countries to object. She made a decision as Germany, but it automatically impacts all of Europe. Under the EU, no such power should be allowed if all governments must suffer because of one leader.

The pound will drop to penetrate the $1 par level probably no later than 2018. With the political chaos of French and German elections next year, that decline can take place sooner than later. But this is what will force a monetary reform as early as 2018. The rise in the dollar will reduce US exports and that will put political pressure in the States for reform not to mention a debt crisis in emerging markets.

The peak in bonds appears to be in place. We are seeing the rates rise already in the peripheral markets. This will spread from the peripherals in toward the core. So Southern European rates will rise faster than German but when capital figures out the crisis is the EU, then German rates will rise. The Federal rates in the USA will be the LAST to rise because the initial shock will be foreign capital fleeing to the States.

The remarks of British politicians are to be seen in their context of this false perception that a strong currency is good. You hear Trump criticizing China as a “currency manipulator” implying they lower the value of their currency to increase trade. As the pound declines, this will save British jobs – it’s a good thing; not bad.