What’s Coming After 10/1/15?

Anyone that has followed the forecasting ability of Martin Armstrong’s models knows that his projections should be taken seriously. What adds to the respect for his work, beyond the accuracy of the results and effort/cost to assemble the world’s largest database of economic-relevant data, is that it all makes sense to anyone that appreciates nature (human and non-manmade), physics, thermodynamics, and to put it more simply – reality. There is a reason an Asian country offered $500 million for his model/database, and the US govt threw him in jail for so long without charges.

Slide from Armstrong’s 1998 World Economic Conference

1998 WEC

​Before getting to the economic and market forecasts associated with the big turn in Armstrong’s Economic Confidence Model on October 1st (2015.75), I first want to highlight something that’s related to what lies ahead.

While the average Joe has his nose to the grindstone, the psycho’s at the UN, IMF, Vatican, White House and the unelected bureaucrats in Brussels are seriously trying to convert the world to socialism, even though it is govt largess that is imploding the world economy as you read. Any freedom-loving person will get sick from reading the translated article linked in Armstrong’s warning.

The politicians and Pope should be castigated for this socialistic message, and for spreading the great hoax of man-made global warming (which will be cooling as the sun is getting ready to take a nap over the coming decades). The record cold blob that NOAA has reported in the North Atlantic is just the start of this change in climate that, not coincidentally, also tracks with economic declines and revolutions. Climate change is just another false flag by govt that preys on the good nature in most people. It’s no different than using 9/11 to prey on people’s patriotism to pass the Patriot Act.

The UN is one of the most corrupt organizations on the planet, along with the IMF, World Bank, and EU. The unelected bureaucrats in these organizations push their self-serving agendas because it protects their jobs, perks, and power – the same way so-called scientist and academics promote what ever their funders demand. Why is it that these organizations, including the Pope, want to eradicate poverty by taxing the means that can best end it, and not demand the eradication of the systems that create it – socialism, communism, dictatorships, and generally speaking, more govt?

It’s freedom that is directly correlated to prosperity and reduced poverty. Just as we are seeing in the US, when freedom and rights are taken by govt, a country eventually becomes less prosperous. As G. Edward Griffin notes, the Pope is chasing a myth.

What is most perplexing is why do seemingly reasonable people continue to believe and put their faith and trust in bureaucrats? I guess it’s the same reason that anti-religious people miraculously find faith in the Pope’s expertise on global warming and economics.

UN

The organization that is looking to have Saudi Arabia head the U.N.’s Council on Human Rights, is NOW trying to “Transform Our World”, with their “2030 Agenda for Sustainable Development”. You can read the entire Output Document from this past weekend’s “work”, but let me jump directly to where the rubber meets the road. After 22 pages of Utopian Goals, you come to the “Means of Implementation”:

Means of implementation and the Global Partnership
60. We reaffirm our strong commitment to the full implementation of this new Agenda. We recognize that we will not be able to achieve our ambitious Goals and targets without a revitalized and enhanced Global Partnership and comparably ambitious means of implementation. The revitalized Global Partnership will facilitate an intensive global engagement in support of implementation of all the goals and targets, bringing together Governments, civil society, the private sector, the United Nations system and other actors and mobilizing all available resources.
61. The Agenda’s Goals and targets deal with the means required to realize our collective ambitions. The means of implementation targets under each SDG and Goal 17, which are referred to above, are key to realizing our Agenda and are of equal importance with the other Goals and targets. We shall accord them equal priority in our implementation efforts and in the global indicator framework for monitoring our progress.

So, what is Goal 17?

Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development
Finance
17.1 Strengthen domestic resource mobilization, including through international support to developing countries, to improve domestic capacity for tax and other revenue collection

As is always the case, bureaucrats coincidentally choose to tax instead of reforming themselves and the govt’s they represent. Everyone knows that you get less of what is taxed and penalized. This fact is proven over and over again in the socialist and dictatorial govt’s around the world. If the UN and Pope want to end poverty around the world, the first thing they should do is advocate for freedom, property rights, and the ability of citizens to freely pursue their personal goals and dreams.

The second thing they should do is support laws that are equally enforced, and insures bureaucrats must live by the same laws they pass. The USA can lead the way by requiring Congress to use Obamacare and be subject to insider trading laws. The IMF and EU could demand that the incomes of citizens in their member states be also exempt from income taxes (as their salaries are).

Many will say that the UN will never be able to enforce these Utopian policies, just as they think they cannot ban guns in the USA. Whether this attempt at economic totalitarianism is successful or not, the pursuit alone can destroy our economy and liberties, not to mention the huge waste of money by these self-serving ideologues. Anyone that has read the history lessons that are available on Armstrong’s free site, or the warnings from our Founding Fathers knows that at a minimum we should be very diligent, for as the global economy turns down, civil unrest rises along with nationalism, as politicians look for scapegoats.

If you want less poverty, focus on freedom. If you want less pollution, focus on pollution, not global warming. Only the sociopathic hubris of a Central Banker or politician would think that man can manipulate the world economy or climate.

ECM-Wave-2011-2020-300x233
​With the 10/1/15 turning point right around the corner, it’s appropriate to now look at the economic and political changes that are coming, and why. One may have noticed that establishment govt’s around the world are under attack (along with academics and scientist who depend on govt funding). In the US, outsiders are leading in the polls, and an establishment poster-child, John Boehner, just resigned as Speaker of the House – events that were forecasted by Armstrong. Separatist movements in Spain, Scotland, Texas, and elsewhere are gaining momentum as broke govt’s are getting more desperate – confiscating cash and rights from citizens. Just wait and see how bad things get on the other side of the sovereign debt Big Bang.

europe-separatist-movement

There are numerous dominoes that could topple around October 1st that would start the chain reaction of an inter-connected economic system dependent on debt, tier-one asset sharing, and over a $1 Quadrillion in derivatives. Right now, Deutsche Bank looks to be a potential catalyst, which would be Lehman Brothers on steroids. Another powder keg is Glencore, a multi-national commodity trading and mining company that has seen its stock plunge over 60% since June 1st on the collapse of commodity prices.

We’ve seen Brazil, Japan, and France get their credit ratings downgraded in the last month. There are also numerous oil related debts that could go bust due to the decline in oil prices. Of course, the pension crisis grows with every month the Fed keeps rates (thus returns) near zero. However, if the Fed raises rates, pop goes the balance sheets of govt’s that have continuously rolled increasing amounts of debt because the interest payments basically stayed unchanged as rates declined for over 30 years. You also have the Clinton trick still in practice of exchanging higher interest long-term debt for short-term, low interest debt to give the appearance of an improved balance sheet – that is until rates rise.  Corporations have also been borrowing in cheap dollars to re-invest in higher risk assets, including buying back their own stock.

With rates being near zero for six years, a 5000-year low, and the Fed scared stiff to  raise rates even a quarter point, it is not only obvious that the economy is chronically ill, but the govt bond bubble has to be very close to popping. Remember, bond prices move opposite to yields. Also, if govt bonds are at a top, guess what else is?

What Bernie Sanders supporters, along with all the lovers (dependents) of big govt cannot grasp is that when the bond bubble pops, that’s analogous to saying the bubble in govt has to pop. Where does govt get the money when they can’t borrow cheaply anymore? Sure, they will try to extract more out of the pockets of citizens through taxes, fees, penalties, civil asset forfeitures, and bail-ins, but there are limits before the natives get restless, as we are seeing all over the world. Socialistic policies, which always leads to more cronyism as govt gains power, have bankrupted the world. Those dependent on govt will scream (and much worse) saying we need more socialism, but sorry, the end of your time is here. What emerges on the other side is totalitarianism or true democracy.

Regardless of the trigger, the first casualties will be felt outside the US dollar, primarily because there are no other markets deep enough to absorb worldwide reserves, which are 10 times trading volumes. The US Dollar has already benefited from the economic and refugee crisis’ in Europe; the economic contraction in Brazil, China, and commodity-dependent countries (i.e. Saudi Arabia, Mexico, Canada, Australia, etc.); and the growing conflicts in Ukraine and Syria. When the debt dominoes start falling, the rush into dollar-based assets will only accelerate.

Since Mr. Market always punishes the maximum number of investors by scaring the masses over to the same side of the boat, one can expect one more good scare to get investors out of stocks and into the perceived safety of govt bonds. With the Dow failing to close today below 16,000, we may have to wait another month to get the scare, which could come when the anticipation of a rate hike becomes more obvious. It’s erroneous that stocks always decline when rates rise, but since most investors never bother to look what happened prior to the great depression, it’s likely that stocks will sell off when rates rise. This will blow the bond balloon bigger, which will maximize the energy to fuel the biggest panic that anyone alive has ever seen, as 30 years of exponential govt debt growth meets the same fate as mortgage debt holders (only orders of magnitude larger).

When the snap-back in stocks occurs and reaches new highs as rates rise when bond investors jump ship in fear of govt defaults, the Fed will continue to raise rates – not because they care about pensions or seniors trying to live on fixed income (that ship has already set sail), but due to their primary concern – their reputation. They do not want to be seen as blowing another stock bubble. Unfortunately, the theoreticians at the Fed will only compound the problem, as rising rates will only attract more money into the dollar, which will blow the mountain of dollar-based debts held around the world sky high.

dow-longbond-21-41

U.S. Stocks should at least double off the lows, just before the debt tsunami finally rolls up on our shores. As the chart above shows, this debt-related collapse last occurred prior to the great depression, as capital fled Europe to the US during WWI, creating the roaring 20’s that culminated in the doubling of stocks at the end of the decade, just before the crash.

When rates do normalize 4-5% higher the balance sheets of those entities that took on short-term cheap debt will explode. It will result in the US Govt’s interest expense exceeding defense spending. We could eliminate ALL the departments in govt, and we still wouldn’t be able to meet all mandatory spending on Social Security, Medicare/Medicaid, interest, etc. This insurmountable problem is coming in the next four years, and when rates start to rise, it will occur very quickly, trapping most in their bonds, praying they don’t default before maturity (assuming they own individual bonds). The crash in govt will occur from the periphery to the core, which means govt’s outside the US will fall first, then it will be on to the muni’s, before lastly impacting US treasuries.

While there are solutions that would minimize the carnage, they are dependent on politicians to suddenly admit they made a mistake, reform govt, and reduce their perks and power. The other opportunity is for a majority of citizens to continuously vote out incumbents (de facto term limits), and peacefully protest nonstop until the necessary reforms are made that forbids govt borrowing, reduces the debt through haircuts and debt-equity swaps, and re-instates equal protection and enforcement of the rule of law, just to get started. Since these opportunities will likely be squandered, the crash and burn scenario seems more likely.

 

 

 

 

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