Thursday, February 27, 2020

Beatles & the Taxman





In 1966, George Harrison, who would have been 77 this year, wrote the famous song “Taxman” for the Beatles. Bernie Sanders must have hated this song.
If you drive a car, I’ll tax the street,
If you try to sit, I’ll tax your seat.
If you get too cold I’ll tax the heat,
If you take a walk, I’ll tax your feet.
Don’t ask me what I want it for
If you don’t want to pay some more
‘Cause I’m the taxman, yeah, I’m the taxman.
Now my advice for those who die
Declare the pennies on your eyes
‘Cause I’m the taxman, yeah, I’m the taxman
And you’re working for no one but me.

George Harrison explained why he wrote that song: “I had discovered I was paying a huge amount of money to the taxman. You are so happy that you’ve finally started earning money – and then you find out about tax. In those days we paid 19 shillings and sixpence [96p] out of every pound, and with super-tax and surtax and tax-tax it was ridiculous – a heavy penalty to pay for making money. That was a big turn-off for Britain. Anybody who ever made any money moved to America or somewhere else.”
The US top tax rate in 1963 was 91%, dropping to 70% during 1964-81. The top rate for British taxpayers in the mid-1960s reached 83%. The wealthiest among them paid a 15% super tax on top of that, pushing taxes as high as 98%. The pain came out in the Beatles 1966 song “Taxman.”

Wednesday, February 26, 2020

US Corporate Profits to Decline into 2021?





QUESTION: You posted that there should be a recessionary trend starting here in 2020 even in the United States. Does that mean corporate profits will decline which impacts the stock market?
JB
ANSWER: Yes. I warned at the WEC that we were approaching a point where we could see a correction unfold in US equities. Corporate earnings should have peaked after a 19-year rally in 2019. There was a major spike rally into 2018-2019 that has been impacted by the Trump tax cuts and the corporate buy-backs so earnings rise in proportion to outstanding shares. There should be a two-year correction into 2021.
Our correlation models show that since we actually have global cooling, despite all the desperate manipulation of the data to create an average that is rising, temperatures have been declining where people actually live. This is serious for as the real temperature declines, the flu season gets worse. The last major flu epidemic was 1968 and that became a pandemic that killed more than 1 million people. The over-reaction to this coronavirus may be an intentional manipulation of the economy as it undermining the economy. Cyclically, this is right on target. We have a Directional Change in 2021 and that is the next turning point. so I would expect we have seen the high in corporate profits and we have that correction unfolding into 2021.

Expansion of separatist movements and probably armed conflicts post-2020 into 2032.


Where to Go in the 12 Years Remaining for a Global Political Crisis



QUESTION: Hi Martin
I’ve been following your blog for some years now, its the first thing i check why I wake up daily. I feel I get a better perspective of the world around me reading your blogs rather than browsing news sites. There are so many questions on which I would love to hear your opinion. I’m an IT consultant here in the UK and fed up of politicians going after hard working folks. Its always the middle class that gets squeezed between low and high income earners. My question is which country in your opinion is the best amongst the lot where you would move. UK, I feel, will get bad under Boris and taxes have already started to go up. Europe is clearly down and US would also follow suit once Trump is gone. If you had to pick one country in Asia, Europe and Americas and finally in any part of the world, which one would it be? I’m originally from India so would be easier for me to move there. Is it Australia, New Zealand, Switzerland? or there is no place to hide ðŸ™‚
Thanks in advance.
R
ANSWER: All governments in the West are going to be raising taxes dramatically. They will NEVER reform and step back. That means they would have to change the very power structure of government. We are looking at the expansion of separatist movements and probably armed conflicts post-2020 into 2032. You will see separatist movements even in the United States. So you have to look at the region and be very specific.
It is very hard to pinpoint a place at this stage in the game. The USA will be better than the other Anglo-Saxon countries, but that may last only until 2024 at best. Southeast Asia will be OK, but keep in mind it has already seen protests against foreigners in places like Singapore.
Bottom line — this is not going well and we are looking at a global political crisis developing over the next 12 years

Sunday, February 23, 2020

Gold & the DEAD Slingshot - gold has lost a lot of its luster and that maybe indeed because of the generational shift



QUESTION: My reading of the gold was that for the slingshot up to dramatic new highs it needed the fakeout bear trap just below the 1000 mark. Since it took out your 1,362.50 number and the yearly bullish reversal at the end of 2019, does that mean the slingshot is now dead?  Do you think the shift to millennials and how they rush into Bernie’s arms means that gold is losing its luster for the next generation?
PL
ANSWER: I am preparing the new gold report. Basically, that slingshot is obviously dead as you say. This raises serious concerns about the future for gold. Yes, there is a serious shift that takes place with these major generational evolutions. The gold standard died in 1971. Most people born after that do not see gold as money. Those who were born in the 1980s onward saw money as paper. Nor we have those born post-1995 and they see no problem with cryptocurrencies and google wallets. Things are changing no doubt. You cannot judge the world with your personal beliefs.
Socrates has been buying gold on the rally for the numbers are the numbers. That is the near-term view. What you are talking about is the viability of going forward into 2032. Without the slingshot, gold has lost a lot of its luster and that maybe indeed because of the generational shift. Smoking is being replaced by vaps and marijuana is being legalized. Things are changing as are the tax authorities. A legitimate company was trying to pay $181,000 in cash for several trucks in Cleveland and the government confiscated the cash and refuses to return it. They confiscated that money on a domestic flight – not international!!!!! The man was an employee sent by his employer. They gave him $10,000 of the $191,000 and stole the balance.
You try to get on a plane with a roll of $20 gold coins they would probably confiscate it today. The very idea of gold as a replacement for the dollar is coming under attack. We will run the models on gold for without the slingshot, then the upside also comes down.
We will be issuing the 2020 Gold Report soon to sort out the real perspective long-term and well as short-term.

GMW 2-22-2020-C

Wednesday, February 19, 2020

Real Estate & Foreign Investment That Drives Up Prices




QUESTION: Hi Martin, Thank you for your free blog–I’ve learned heaps. I believe the greatest disservice a government can make is to allow foreign investment in real estate in their country. I have lived in Canada, New Zealand, and Australia where real estate is no longer affordable for many first home buyers. Inflated prices have destroyed the dreams of the citizens in these countries where empty (investment) houses are common. Governments have failed to protect the interests of the people. For first home buyers who manage to buy their first home they are burdened with astronomical mortgage repayments. I am wondering if Socrates saw this coming and what it anticipates will happen in the future.
Thank you.
PP

ANSWER: We have to understand the CAUSE of such capital movement. The more aggressive governments become with taxes, the more capital will seek to move. I have suggested that Europeans should open a bank account in a US bank that does NOT have branches in Europe. I have recommended that because the European government is highly Marxist, and it is a natural human instinct to leave. Capital can be moved, but labor cannot.
However, in many regions, real estate has risen also because of domestic shifts. In China and Italy especially, people have tended to look at real estate as a place to park money that is safe and outside the banking system. The rise in real estate has been greatly diverse and it is not entirely based upon capital inflows from foreign investors.


Then there is also the currency factor. I have written many times that I was living in London in 1985 when the pound fell to $1.03. The Americans were buying real estate in London like it was on sale at Harrods. The Brits saw the prices as exceptionally high and thought the Americans were going to lose a fortune. The pound nearly doubled, and in dollars they made a fortune. Remember when the Japanese were buying the trophy real estate in New York City? They also turned around and sold it back when the currency moved against them.

As far as Socrates and its forecasts on real estate, it is objective and looks at the patterns, cycles, and price movements on a daily basis.
Nothing is permanent. Everything flows in a cycle.

Monday, February 17, 2020

Online v Brick & Mortar




QUESTION: Sir,
My daughter works at a brick and mortar pet smart store as a 33 hour per week employee. She told my wife that PetSmart bought the online pet food store chewy.com ie their online competition. What’s also interesting is that they are focusing on non-online activities such as training and semi non-online activists like pet adoptions. That’s in line with your retail store’s comment.
I just checked the hospital bankruptcies. I can’t find a complete source to check for yearly closings. It seems though that 2019 was a banner year with the periphery having a good showing.
In the physician arena, the radiology services are being outsourced on the internet with Indian based sources. In this editorial, it seems that primary care physicians are also being outsourced.
Keep up the good work
DK
ANSWER: The trend in retail is moving toward online. Shopping malls across America are slowly dying. Many are spending money and adding restaurants to attract people in hopes they will buy something in person v online. I have explained many times that the economy has always evolved, as Schumpeter put it, in waves of Creative Destruction.
For those in the retail trade, you must consider providing services not attainable online. You must look at your competition. Move into areas where you need not compete with the online world of impersonal service. The cycle will eventually flip back but you are probably looking at post-2032. For now, immediately look to refocus the distinction between online and local touch and feel businesses or services. You can buy the dog food online, but the puppy can’t be put in a box and sent via FedEx

Climate Change & Do we Use Less CO2 than Romans to Light our Homes?



COMMENT: Marty; the Greta worshipers are really brain-dead. We just set a 77-year record low on Valentine’s Day and they say that proves its climate change caused by man. When you try to have an intelligent conversation, they simply say every scientist agrees with them. They are brainwashed beyond belief. The entire theory of CO2 and greenhouse is that it makes it warmer, not colder. They really are stupid people!
JB
REPLY: I know. Perhaps they are playing the role that the cycle demands. Civilization is collapsing and they are insisting climate is moving in the opposite direction when all the great deaths in human society come during cold periods, not warm. That is when the diseases rise like even the Black Death. The flu season comes during the cold period, not summer. There is no other explanation. They have convinced even politicians who mouth this out like Michael Bloomberg simply because he thinks that will get him the votes to overthrow Trump and destroy our economy all under the theory that we need to get to CO2 zero or the climate will burn everything up.
To me, it is just like the Biblical story of Joseph and the Pharoah. If you understand the cycle, prepare for its downturn, you survive. The climate change people are claiming there is no cycle and that climate change is all linear caused by human activity while they ignore the great cyclical swings in climate long before the Industrial Revolution. Wheat prices soared during the Little Ice Age simply because crops fail in winter.
Already, the winter wheat crop in Australia is at a 7-year low. The trend is clear, but the Global Warming crowd is determined to push their agenda regardless of the truth. We are is a serious political crisis. Today’s brand of the left-leaning politicians is all about pandering to Greenpeace and Al Gore substituting what sounds good for what actually works. We were all supposed to be dead by 2000, Then they moved it to 2010, then 2020, and now they realize that the claims we only have 5 years left sound questionable so they have switched it to the dire consequences will come in 50 years from now. A new study by the University of Arizona claims one-third of all plant and animal life will become extinct from climate change by 2070.
They concede that historically, mass extinctions have been caused by catastrophic events like asteroid collisions. This time, human activities are claimed to have set in motion the 6th extinction because of deforestation, mining, and carbon dioxide emissions. Of course, this is their opinion since there is no historical evidence that such a combination would result in a mass extinction. CO2 emissions have taken place far worse than the present. In ancient times they burned wood for heat not oil.
They also do not account for the fact that things such as producing olive oil reduce CO2 levels. For every litre of olive oil produced, 10.65kg of CO2 is extracted from the atmosphere. In ancient times, aside from burning wood for heat, the ancients burned olive oil for light. Lighting the average house for 5 hours at night regardless of the time of year produced 2.89 kg of CO2 being emitted per night. That was nearly 1,055 kg of CO2 per night and taking just the city of Rome with a population of 1 million, which was far more CO2 generated for light alone than we produce today. Half of the carbon emissions created are generated from the production of electricity. Lighting alone creates 17% of carbon emissions. Every 1KW of electricity generates 830 grams of carbon equivalents. Assuming the same 5 lights per house, today we generate 4.1 kg of CO2. The Roman Emperor Justinian I (527-565AD) enacted the first known Clean Air Act in 565AD.

Bloomberg’s Napoleon Complex or Super Sized Ego?



COMMENT #1: Hi Marty, love the blog. it’s the first thing I read every morning. on the subject of Mike Bloomberg, you mentioned the stop and frisk controversy but what’s even worse is the way Bloomberg got the city council to circumvent NYC’s term limits law to let him run for a third term.
JS
COMMENT #2: Bloomberg loves power. He eliminated the two-term limit to retain power and he would do the same in the White House.
HF
REPLY: I would have to say that after 40 years of meeting politicians from around the world, there are four major types (with sub-categories no doubt). This is just my opinion based upon years of observation. There are the good-hearted who enter politics to make a difference. They soon become corrupted by the flame of power when there are no term-limits. They then need to blend to the system to constantly run for office in each election.
Then there are those people who are just greedy and are attracted to money and prestige (i.e. Clintons). Then there are the genuine people who cannot be bought are by far the best we can ever hope for. They will usually break down into two primary subgroups. Those who see to impress themselves, such as Margaret Thatcher, or those who do it to be remembered, such a Trump. Then there are those who enter purely for the taste of power, such as Michael Bloomberg.
I understand that the whole Jewish issue is coming up because we have Bloomberg and Sanders running who are both Jewish. I have a Jewish friend who told me never to vote for a Jew in politics. When I asked; Why would he say that against his own people? He said just look at Karl Marx, George Soros, Henry Morgenthau Jr. (Sec Treasury who confiscated gold), Robert Rubin (terminated Glass-Steagal), Lawrence Summers (father of negative interest rates), Alan Greenspan (Fed Chairman), Ben Bernanke (Fed Chairman), Bernie Sanders (communist sympathizer), Bernie Madoff, and then there is Michael Bloomberg (eliminated term-limits to keep running for Mayor of New York City).
It was an interesting list no doubt. But there are non-Jews who also have shared some of those ideas. I do see Bloomberg as more dangerous than Trump. Bloomberg is much more of an authoritarian and would have no problem sends American boys to their death in the Middle East for absolutely nothing. I am a firm believer in the Business Cycle. We did not defeat Communism, for it collapsed itself because of its unsustainable economic profile.
The neo-cons, such as Bill Kristol, thought that eliminating the dictators in the Middle East would release democracy and thus that would secure Israel to me was a fanciful dream. The Middle East has a culture that has been shaken rather than stirred. I do not see them as embracing democracy that would eradicate the culture of dictatorships. Do we not have our own dictatorship when political parties support the same candidate perpetually without change?
Yes, both Kristol and Kaplan are Jewish. Does that mean that the idea of changing human behavior stems more from the Jewish community because of their persecution? I have no idea if I would ascribe to such a theory. I am opposed to the neo-con theories as I am against Marxists. To me, both attempt to alter the cycle by changing human behavior. I do not believe that is possible. I do not attribute these ideas to being exclusively Jewish whereas there are plenty of conspiracy theories that paint the Jews at the center of all financial crises based upon the bankers in New York City.
It was explained to me by a Jewish friend that Ashkenazic and Sephardic Jews represent two distinct subcultures of Judaism. Ashkenazi Jews are popularly contrasted with Sephardi Jews (also called Sephardim), who descend from Jews who settled in the Iberian Peninsula, and Mizrahi Jews, who descend from Jews who remained in the Middle East. I was told that a Sephardi Jew is looked down upon if they married an Ashkenazi Jew. Indeed, there is documentary evidence from 1735 where a Sephardi Jew petitioned the King of Prussia to dissolve the marriage where his son, without the permission of his father, married an Ashkenazic Jewish woman. By tradition, a Sephardic or Mizrahi Jewish woman who marries into an Orthodox or Haredi Ashkenazi Jewish family must raise her children to be Ashkenazi Jews and conversely an Ashkenazi Jewish woman who marries a Sephardi or Mizrahi man is expected to take on Sephardic practice and the children inherit a Sephardic identity. They practice differently just as we see differences in Christianity.
There have always been differences within the Jewish community itself. Even Bernie Sanders stated: “… in Israel it was okay to sterilize Ethiopian Jews until they were caught doing it and why it is still okay to treat Mizrahi like second class citizens.  ” Bloomberg took a stab at Bernie saying: “I know I’m not the only Jewish candidate running for president, but I am the only one who doesn’t want to turn America into a kibbutz.”
Bloomberg’s daughter Georgina told a biographer that the Bloomberg family would celebrate the major Jewish holidays but that her mother, who was born in Yorkshire, England, and “kind of raised us to be Church of England.” Thus, Bloomberg is not a practicing orthodox Jew. That issue aside, my concern is his reasoning behind stop-and-frisk and his desire to eliminate term-limits with no regard for the future.  He had to admit publicly he was wrong on the stop-and-frisk. Then there was Michael Bloomberg’s ban of soda which he was also overruled by the courts after he lost now his stop-and-frisk policy that police can just go search anyone on the street at any time has been struck down as unconstitutional. He was called by the Daily News as having a “Super Size Ego” in the abuse of power he would attempt on March 12, 2013 (Page 5). He has used his power in a dictatorial fashion and that bothers me.